An attorney-in-fact is not a real party in interest

An attorney-in-fact is not a real party in interest

● An attorney-in-fact is not a real party in interest, that there is no law permitting an action to be brought by an attorney-in-fact, and hence an action brought by him cannot be maintained.

● Civil Procedure requires an action to be brought in the name of the real party in interest; and a corollary proposition requires that an action shall be brought against the persons or entities which are to be bound by the judgment obtained therein. An action upon a cause of action pertaining to his principal cannot be brought by an attorney-in-fact in his name; or can an action based upon a right of action belonging to a principal be brought in the name of his representative. Actions must be brought by the real parties in interest and against the persons who are to be bound by the judgment obtained therein.

● Even if the principal authorizes his agent to commence actions in court for and in behalf of the principal, such action must still be filed in the name of the principal who is the real party in interest.

May an attorney-in-fact, when so authorized in the power of attorney, bring an action in his own name for a disclosed principal?

This is a well settled question.

Section 2 of Rule 3 of the old Rules of Court provides that "Every action must be prosecuted in the name of the real party in interest."1 This provision is mandatory. The real party in interest is the party who would be benefitted or injured by the judgment or is the party entitled to the avails of the suit.2

This Court has held in various cases that an attorney-in-fact is not a real party in interest, that there is no law permitting an action to be brought by an attorney-in-fact, and hence an action brought by him cannot be maintained. In the case of "Jose M. Arroyo, as attorney-in-fact of Ignacio Arroyo, plaintiff and appellee vs. Matias Granada and Celedonia Gentero, defendants and appellants,"3 the plaintiff Jose M. Arroyo was given full power of attorney by his father Ignacio Arroyo to transact his affairs. Jose Arroyo brought the action as "apoderado" of his father. In dismissing the complaint, this Court held:

In a sense this opinion on the merits is useless, for the reason that the person bringing the action has no interest whatever in the subject matter thereof and can have no interest whatever in any judgment rendered therein. The action is brought in the name of Jose M. Arroyo as apoderado of Ignacio Arroyo. There is no provision of law permitting an action to be brought in that manner. Jose M. Arroyo, as apoderado, has absolutely no interest in this litigation. He has absolutely no right to bring the defendant into court or put him to the expense of a litigation. The real and only party in interest is Ignacio Arroyo. Under articles 114 and 122 of the Code of Civil Procedure he should be plaintiff. He is not a party to this action and has in no way appeared or taken part herein. A judgment for or against Jose M. Arroyo personally or as apoderado in no way binds or affects Ignacio. As a necessary result a decision in this case is utterly futile. It does nothing. It touches no interest, settles no question, binds no party, quiets no litigation. Courts ought not to be required to spend their time solemnly considering and deciding cases where nobody can be bound and no interests affected as a result of such deliberation and decision.

In the case of "Catalino Hilario, representing Andres Garcia, plaintiff and appellant vs. La Congregacion de San Vicente de Paul, Robert M. Loper, and Henry M. Jones, defendants and appellees"4 this Court, in affirming the judgment sustaining the demurrer to the complaint, held:

This action can not be maintained even though no account be taken of whether or not the complaint states facts sufficient to constitute a cause of action in the sense presented by the demurrer. The action is brought, as will be observed from the title, by Catalino Hilario in representation of Andres Garcia. The complaint alleges: "That Catalino Hilario, by virtue of a power of attorney executed in the City of Manila on the 31st day of January, 1911, has authority from Andres Garcia to represent him in the present action, and that he resides at No. 239 Calle Magdalena, Trozo, Manila, Philippine Islands."

It is not contended that the real party in interest, Andres Garcia, is a party to this action, or that he has appeared or taken any part therein or that he has in any manner submitted himself to the jurisdiction of the court. A judgment rendered against the plaintiff might have no force or effect against Andres Garcia. We have several times held that an action brought in this manner cannot be maintained, and this court will, of its own motion, refuse to proceed with its consideration. (Lichauco vs. Limjuco, 19 Phil. Rep., 12.) The question of the power of plaintiff to bring the action is raised, at least indirectly, by the demurrer based upon the ground that the complaint does not state facts sufficient to constitute a cause of action. On its face the complaint shows that there is no cause of action in favor of the plaintiff, but, rather that the cause of action if any, exists solely in favor of Andres Garcia. Hilario has no interest in the controversy and stands as a naked representative of the person who does have the interest. The complaint, therefore, does not state facts sufficient to constitute a cause of action in favor of the present plaintiff.

In the case of "C.E. Salmon and Pacific Commercial Company, petitioners vs. Chino Tan Cueco, Vicente Jocson, Judge of Thirteenth Judicial District, Antonio Babasa, provincial Sheriff of Batangas, and Gavino Singimoto, respondents"5 this Court reiterated the doctrine enunciated in the two cases above-cited, when it said:

It appears from the record that on the 21st day of February, 1916, a complaint was duly filed in the Court of First Instance of the Thirteenth Judicial District in an action entitled Chino Tan Cueco vs. Antonio Babasa, sheriff of the Province of Batangas, Agapito E. Garcia, attorney-in-fact of the Pacific Commercial Company, and C.E. Salmon, defendants. The action went to a judgment in favor of the plaintiff and against defendants....

x x x           x x x           x x x

As to the applicant the Pacific Commercial Company, there can be no question that the judgment obtained below is void. According to the record, not only was the Pacific Commercial Company not served with summons, but it was not even named in the process or pleadings as a party to the action. The title of the case shows that the company was not a party. The making of Agapito E. Garcia, attorney-in-fact of the Pacific Commercial Company, a party defendant does not make the company a party defendant. Section 114 of the Code of Civil Procedure requires an action to be brought in the name of the real party in interest; and a corollary proposition requires that an action shall be brought against the persons or entities which are to be bound by the judgment obtained therein. An action upon a cause of action pertaining to his principal cannot be brought by an attorney-in-fact in his name (Arroyo vs. Granada and Gentero, 18 Phil. Rep., 484); or can an action based upon a right of action belonging to a principal be brought in the name of his representative (Luchauco vs. Limjuco and Gonzalo, 19 Phil. Rep., 12). Actions must be brought by the real parties in interest and against the persons who are to be bound by the judgment obtained therein.

x x x           x x x           x x x

... As to the Pacific Commercial Company the judgment to which these proceedings refer, namely, that obtained in the case entitled Chino Tan Cueco vs. Antonio Babasa, sheriff of the Province of Batangas, Agapito E. Garcia, attorney-in-fact of the Pacific Commercial Company, and C. E. Salmon, is declared void and of no effect as against the said company.... (Emphasis supplied).

Respondent Pastor Ago contends, and respondent Court upheld him in his contention, that he could file the complaint in the case at bar because he is specifically empowered by his principal, Francisco Laiz, "to sue, file complaint, represent me in any government office and agency for the protection of my rights, interests and privileges as a timber licensed." This contention runs counter to the ruling of this Court in the case of "Ceferino Marcelo vs. Nazario de Leon."6 In this case Ceferino Marcelo, as "apoderado" of Severino P. Marcelo, filed the complaint in his name to recover the possession of a lot belonging to Severino P. Marcelo. Ceferino held a power of attorney in which Severino authorized him to "pursue any and all kinds of suits and actions for me and in my name in the courts of the land." This Court, however, citing the cases of "Arroyo vs. Granada" supra, and "Hilario vs. La Congregacion, etc.", supra, held that the action of Ceferino Marcelo, as plaintiff, must fail. This Court said:

At any rate, this action must fail upon the second ground of defendant's motion to dismiss: the plaintiff is a mere apoderado of the owner, Severino P. Marcelo. The rule is that every action must be prosecuted in the name of the real party in interest. (Sec. 2, Rule 3.)

It follows, from the ruling of this Court in the abovementioned case of "Marcelo vs. De Leon," that even if the principal authorizes his agent to commence actions in court for and in behalf of the principal, such action must still be filed in the name of the principal who is the real party in interest, pursuant to Section 2, Rule 3 of the Rules of Court.7

From what has been stated in the foregoing, it is clear that respondent Pastor D. Ago has no right to bring the action in his own name in Civil Case No. Q-7228 in the Court of First Instance of Quezon City. The action commenced by respondent Pastor D. Ago cannot be maintained and cannot prosper, and it would be a waste of time to have the court proceed with the case, because the decision that would be rendered in that case would not bind the parties in the case. We hold that respondent Judge acted with grave abuse of discretion when she denied herein petitioners' motion to dismiss the complaint in said case, upon the ground that the complaint was not brought in the name of the real party in interest. (Filipinas Industrial Corporation vs. Hon. San Diego, G.R. No. L-22347, May 27, 1968)

The suit against an entity without juridical personality may be instituted only by or against its owner

The suit against an entity without juridical personality may be instituted only by or against its owner

A sole proprietorship does not possess a juridical personality separate and distinct from the personality of the owner of the enterprise. The law does not vest a separate legal personality on the sole proprietorship or empower it to file or defend an action in court.[34] Only natural or juridical persons or entities authorized by law may be parties to a civil action and every action must be prosecuted and defended in the name of the real parties-in-interest.[35]

The records show that respondent enterprise, M.R. Vargas Construction Co., is a sole proprietorship and, therefore, an entity without juridical personality. Clearly, the real party-in-interest is Marcial R. Vargas who is the owner of the enterprise. Thus, the petition for injunction should have impleaded him as the party respondent either simply by mention of his name or by denominating him as doing business under the name and style of M.R. Vargas Construction Co. It was erroneous to refer to him, as the petition did in both its caption and body, as representing the enterprise. Petitioners apparently realized this procedural lapse when in the petition for certiorari filed before the Court of Appeals and in the instant petition, M.R. Vargas Construction, Marcial R. Vargas and Renato Agaro were separately named as individual respondents.

Since respondent enterprise is only a sole proprietorship, an entity without juridical personality, the suit for injunction may be instituted only against its owner, Marcial Vargas. Accordingly summons should have been served on Vargas himself, following Rule 14, Sections 6[36] and 7[37] of the Rules of Court on personal service and substituted service. In the instant case, no service of summons, whether personal or substituted, was effected on Vargas. It is well-established that summons upon a respondent or a defendant must be served by handing a copy thereof to him in person or, if he refuses to receive it, by tendering it to him. Personal service of summons most effectively ensures that the notice desired under the constitutional requirement of due process is accomplished. If however efforts to find him personally would make prompt service impossible, service may be completed by substituted service, i.e., by leaving copies of the summons at his dwelling house or residence with some person of suitable age and discretion then residing therein or by leaving the copies at his office or regular place of business with some competent person in charge thereof.[38]

The modes of service of summons should be strictly followed in order that the court may acquire jurisdiction over the respondents, and failure to strictly comply with the requirements of the rules regarding the order of its publication is a fatal defect in the service of summons. It cannot be overemphasized that the statutory requirements on service of summons, whether personally, by substituted service or by publication, must be followed strictly, faithfully and fully, and any mode of service other than that prescribed by the statute is considered ineffective.[39]

Agarao was not a party respondent in the injunction case before the trial court. Certainly, he is not a real party-in-interest against whom the injunction suit may be brought, absent any showing that he is also an owner or he acts as an agent of respondent enterprise. Agarao is only a foreman, bereft of any authority to defend the suit on behalf of respondent enterprise. As earlier mentioned, the suit against an entity without juridical personality like respondent enterprise may be instituted only by or against its owner. Impleading Agarao as a party-respondent in the suit for injunction would have no legal consequence. In any event, the petition for injunction described Agarao only as a representative of M.R. Vargas Construction Co., which is a mere inconsequentiality considering that only Vargas, as its sole owner, is authorized by the Rules of Court to defend the suit on behalf of the enterprise. (Ejercito vs. Vargas Construction, G.R. No. 172595, April 10, 2008) 

The president of a corporation may sign the verification and the certification of non-forum shopping even without the submission of a written authority from the board

The president of a corporation may sign the verification and the certification of non-forum shopping even without the submission of a written authority from the board

In Hutama-RSEA/Super Max Phils., J.V. v. KCD Builders Corporation,[13] Hutama as petitioner therein questioned the verification and certification on non-forum shopping of respondent KCD which the latter attached to its Complaint for Sum of Money filed before the RTC. According to Hutama, KCDs president did not present any proof that he is authorized by the corporation to sign the verification and certification of non-forum shopping. In explaining the requirement of verification and certification against forum-shopping and upholding the authority of the president of the corporation to execute the same sans proof of authority, this Court has this to say:

A pleading is verified by an affidavit that an affiant has read the pleading and that the allegations therein are true and correct as to his personal knowledge or based on authentic records. The party does not need to sign the verification. A partys representative, lawyer, or any person who personally knows the truth of the facts alleged in the pleading may sign the verification.

On the other hand, a certification of non-forum shopping is a certification under oath by the plaintiff or principal party in the complaint or other initiatory pleading, asserting a claim for relief, or in a sworn certification annexed thereto and simultaneously filed therewith, that (a) he has not theretofore commenced any action or filed any claim involving the same issues in any court, tribunal or quasi-judicial agency and, to the best of his knowledge, no such other action or claim is pending therein; (b) if there is such other pending action or claim, a complete statement of the present status thereof; and (c) if he should thereafter learn that the same or similar action or claim has been filed or is pending, he shall report that fact within five days therefrom to the court wherein his aforesaid complaint or initiatory pleading has been filed.

It is true that the power of a corporation to sue and be sued is lodged in the board of directors that exercises its corporate powers. However, it is settled and we have so declared in numerous decisions that the president of a corporation may sign the verification and the certification of non-forum shopping.

In Ateneo de Naga University v. Manalo, we held that the lone signature of the University President was sufficient to fulfill the verification requirement, because such officer had sufficient knowledge to swear to the truth of the allegations in the petition.

In Peoples Aircargo and Warehousing Co., Inc. v. CA, we held that in the absence of a charter or by-law provision to the contrary, the president of a corporation is presumed to have the authority to act within the domain of the general objectives of its business and within the scope of his or her usual duties. Moreover, even if a certain contract or undertaking is outside the usual powers of the president, the corporations ratification of the contract or undertaking and the acceptance of benefits therefrom make the corporate presidents actions binding on the corporation. (Citations omitted.)

Moreover, this Courts pronouncement in Cagayan Valley Drug Corporation v. Commissioner of Internal Revenue,[14] reiterated in PNCC Skyway Traffic Management and Security Division Workers Organization v. PNCC Skyway Corporation[15] and Mid-Pasig Land Development Corporation v. Tablante,[16] on the authority of certain officers and employees of the corporation to sign the verification and certification of non-forum shopping is likewise significant, to wit:

It must be borne in mind that Sec. 23, in relation to Sec. 25 of the Corporation Code, clearly enunciates that all corporate powers are exercised, all business conducted, and all properties controlled by the board of directors. A corporation has a separate and distinct personality from its directors and officers and can only exercise its corporate powers through the board of directors. Thus, it is clear that an individual corporate officer cannot solely exercise any corporate power pertaining to the corporation without authority from the board of directors. This has been our constant holding in cases instituted by a corporation.

In a slew of cases, however, we have recognized the authority of some corporate officers to sign the verification and certification against forum shopping. In Mactan-Cebu International Airport Authority v. CA, we recognized the authority of a general manager or acting general manager to sign the verification and certificate against forum shopping; in Pfizer v. Galan, we upheld the validity of a verification signed by an employment specialist who had not even presented any proof of her authority to represent the company; in Novelty Philippines Inc., v. CA, we ruled that a personnel officer who signed the petition but did not attach the authority from the company is authorized to sign the verification and non-forum shopping certificate; and in Lepanto Consolidated Mining Company v. WMC Resources International Pty. Ltd. (Lepanto), we ruled that the Chairperson of the Board and President of the Company can sign the verification and certificate against non-forum shopping even without the submission of the boards authorization.

In sum, we have held that the following officials or employees of the company can sign the verification and certification without need of a board resolution: (1) the Chairperson of the Board of Directors, (2) the President of a corporation, (3) the General Manager or Acting General Manager, (4) Personnel Officer, and (5) an Employment Specialist in a labor case.

While the above cases do not provide a complete listing of authorized signatories to the verification and certification required by the rules, the determination of the sufficiency of the authority was done on a case to case basis. The rationale applied in the foregoing cases is to justify the authority of corporate officers or representatives of the corporation to sign the verification or certificate against forum shopping, being in a position to verify the truthfulness and correctness of the allegations in the petition. (Citations omitted.)

From the foregoing, it is clear that Albao, as President and Manager of Cebu Metro, has the authority to sign the verification and certification of non-forum shopping even without the submission of a written authority from the board. As the corporations President and Manager, she is in a position to verify the truthfulness and correctness of the allegations in the petition. In addition, such an act is presumed to be included in the scope of her authority to act within the domain of the general objectives of the corporations business and her usual duties in the absence of any contrary provision in the corporations charter or by-laws. Having said this, there is therefore no more need to discuss whether the authority granted to Albao under Board Resolution No. 2001-06 is only limited to representing Cebu Metro in the court hearings before the MTCC or extends up to signing of the verification and certification of non-forum shopping on appeal. Again, even without such proof of authority, Albao, as Cebu Metros President and Manager, is justified in signing said verification and certification. Thus, the CA should not have considered as fatal Cebu Metros failure to attach a Secretarys Certificate attesting to Albaos authority to sign the verification and certification of non-forum shopping and dismissed the petition or should have reinstated the same after Cebu Metros submission of the Secretarys Certificate showing that Board Resolution No. 2001-06 confirmed the election of Albao as the corporations President and Manager. (Cebu Metro Pharmacy vs. Euro-Med Laboratories, G.R. No. 164757, October 18, 2010)