22) PSCFC Financial Corporation vs.

Court of Appeals
Petitioner: PSC Financial Corporation (PSCFC)
Respondents: Court of Appeals
Private Respondents: Banco Filipino Savings Bank
Doctrine:
Generally, the lawyer can act as an agent to its client as long as it does not fall under
the situations stipulated in article 1878 and Rule 20 of the Rules of Court. In such
situations, Authority should be given by the client e.g. through a special power of
attorney.
Facts:
PSCFC filed a complaint against Banco Filipino Savings Bank for the annulment of
foreclosure proceedings and damages to RTC Makati.

Atty. Fortun had no personal knowledge of the Financial Scheme

There was no formal notice to intent to foreclose mortgage and no
publication was made

Respondent objected because it was irrelevant and denied the rest.

Petitioner asked the TC to rule that the private respondent impliedly admit the
second bid for admission because under Rule 26 of RoC, the answr to request of
admission should be made by the party himself not anybody else, not even the
lawyer. Mere reply made and verified by counsel is insufficient. Furthermore, the
answer was made by a lawyer who was not qualified to do so since he had no
personal knowledge on the matter. Petitioners insisted that only the client could make
a binding admission in the discovery proceedings. (cited Koh v. IAC)

The petitioner alleges that they are a land developer that availed of a financial plan of
Banco Filipino
They borrowed P6,630,690 as developer loan with the mortgage of several
lots in Pasay City as security
Agreement of the loan/Home Financial Plan: Loan would mature only when
lots are
o Subdivided
o Improved
o Sold to 3rd person substitute as mortgagors as to the extent of the
value of House & Lot
According to the petitioner, without the loan maturing, the land was extra judicially
foreclosed.

TC denied --- CA sustained TCs ruling

Private Respondent Banco Filipino admitted the loan but denied that the petitioner
availed a Home Financial Plan. The loan was made with a promissory note and
contract of mortgage
Loan would fall due 1 year from the date
Upon default, Banco Filipino can immediately foreclose

Petitioner has not shown that the case at bar falls under the recognized exceptions
found in article 1878 which enumerates the special instances when special powers of
attorney are necessary or Rule 20 regarding pre-trial

Petitioner served upon Banco Filipino Written request for admission of truth on
certain matters:
They availed the Home Financial Plan with the terms for maturity. It has not
matured yet because it was not sold to a 3rd persons
Private Respondents answer signed by the counsel Atty. Philip Sigfried Fortun
Admitted loan but denied petitioner availing the Home Financial Plan as
well as the agreement for the maturity of debt.
Petitioner requested another admission of truth by stating
Atty. Fortun was not an attorney yet when Banco Filipino inaugurated its
financial planning

Issue:
Whether a request for admission directed to an adverse party may be answered by
the counsel? YES
Held:
Section 21 of Rule 138 of the Rules of CourtAuthority of attorney to appear
An Attorney is presumed to be properly authorized to represent any cause in which
he appears, and no written power of attorney is required to authorize him to appear
in court for his client

Rule 26 states that a party shall respond to request of admission

It should not be restrictively construed to mean that a party may not engage
of the services of a counsel to make response on his behalf
Such interpretation would negate
o The principles of agency - Article 1868
o Section 23, Rule 138 of the Rules of Court
Even assuming that Atty. Fortun overstepped his authority, it is only the client not the
respondent which has the prerogative to impugn his act not the petitioner.
Banco Filiino has not objected to the response made by its counsel in its behalf.
DENY THE PETITION for lack of merit

Require counsel of private respondent to show cause within 10 days why she
should not be administratively dealt with for misquoting the text of decision
Koh v IAC.
Relevant Provisions:

(6) To make gifts, except customary ones for charity or those made to
employees in the business managed by the agent;
(7) To loan or borrow money, unless the latter act be urgent and
indispensable for the preservation of the things which are under
administration;

Art. 1878. Special powers of attorney are necessary in the following cases:
(8) To lease any real property to another person for more than one year;
(1) To make such payments as are not usually considered as acts of
administration;
(2) To effect novations which put an end to obligations already in existence
at the time the agency was constituted;

(9) To bind the principal to render some service without compensation;

(10) To bind the principal in a contract of partnership;
(11) To obligate the principal as a guarantor or surety;

(3) To compromise, to submit questions to arbitration, to renounce the right

to appeal from a judgment, to waive objections to the venue of an action or
to abandon a prescription already acquired;

(12) To create or convey real rights over immovable property;

(13) To accept or repudiate an inheritance;

(4) To waive any obligation gratuitously;

(14) To ratify or recognize obligations contracted before the agency;
(5) To enter into any contract by which the ownership of an immovable is
transmitted or acquired either gratuitously or for a valuable consideration;

(15) Any other act of strict dominion. (n)