Heirs of Josefina Gabriel vs. Secundina Cebrero, et al.

A complaint filed by an alleged attorney-in-fact who fails to attach a Special Power of Attorney to substantiate his authority to sign the verification and certification against forum shopping is not deemed filed, and the court does not acquire jurisdiction over the complaint. The substitution of heirs after the plaintiff's death does not cure the defect because jurisdiction over the plaintiff is acquired upon the filing of the complaint, and mere allegation of authority is not evidence.

Josefina Gabriel and Segundina Cebrero were parties to a prior case involving annulment of revocation of donation, Civil Case No. 83-21629, which was resolved through an amicable settlement dated January 11, 1991. Under the settlement, Gabriel recognized Cebrero's absolute ownership of a property in Sampaloc, Manila, covered by TCT No. 158305, in consideration of P8,000,000.00. Cebrero executed a real estate mortgage over the property on January 24, 1991, through her attorney-in-fact Remedios Muyot, to secure the payment. The property was registered under the name of Cebrero's late husband, Virgilio Cebrero.

On January 24, 1991, Segundina Cebrero, through her attorney-in-fact Remedios Muyot, executed a real estate mortgage over a 2,281-square-meter property in Sampaloc, Manila, covered by TCT No. 158305, as security for the payment of P8,000,000.00 to Josefina Gabriel. The mortgage was pursuant to an amicable settlement dated January 11, 1991 in Civil Case No. 83-21629, in which Gabriel recognized Cebrero's absolute ownership of the property and relinquished all her claims in consideration of the payment. When Cebrero failed to pay within the extended period until December 31, 1991, Gabriel filed an action for foreclosure in 1993, docketed as Civil Case No. 92-62638. The RTC of Manila, Branch 23, ruled in Gabriel's favor on December 15, 1993, ordering Cebrero to pay P8,000,000.00 with interest and attorney's fees, or the property would be sold at public auction.

When no appeal was filed and the decision became final, the sheriff initiated public auction proceedings. On July 12, 1994, Gabriel, as the sole bidder, purchased Cebrero's undivided share of one-half conjugal share plus her inheritance of one-ninth of the property for P13,690,574.00. The sheriff issued the Final Deed of Sale on November 16, 1995, after Cebrero failed to redeem the property. Gabriel did not register the Final Deed of Sale because she disputed the Bureau of Internal Revenue's estate tax assessment. During this time, she discovered the registration of a Deed of Absolute Sale dated September 27, 1994, executed by respondent Celso Laviña, Cebrero's attorney-in-fact, purportedly conveying the entire property to Progressive Trade & Services Enterprises for P27,000,000.00.

On November 27, 1996, Eduardo Cañiza, allegedly in behalf of Gabriel, instituted a Complaint for declaration of nullity of sale and of TCT No. 225341 registered under Progressive, a single proprietorship represented by its President and Chairman, respondent Manuel C. Chua. In their Answer, respondents alleged that Gabriel had no legal capacity to sue as she was bedridden and confined at the Makati Medical Center since 1993, and that the complaint should be dismissed because Cañiza signed the verification and certification without proper authority. Respondents also alleged that the December 15, 1993 RTC decision was void due to improper service of summons, that the Sheriff's Final Deed of Sale was not registered, and that Gabriel, as a mere creditor, could not annul the sale. On October 14, 1997, Gabriel died during the pendency of the case, and her heirs substituted her.

The RTC of Manila, Branch 52, ruled in favor of Gabriel on September 26, 2013, holding that Chua could not be considered the true and lawful owner as he was not a purchaser in good faith, since the mortgage pertaining to Gabriel remained annotated on TCT No. 225340 at the time of the sale. On appeal, the CA reversed, holding that there was no Special Power of Attorney attached to the complaint to substantiate Cañiza's authority to sign the complaint and its verification and certification of non-forum shopping, and that since the trial court never acquired jurisdiction over the complaint, all proceedings subsequent thereto were null and void.

• Finality of the RTC Order: Petitioners alleged that the Order dated June 13, 2007 of the RTC denying Laviña's motion to set a preliminary hearing on the affirmative defenses had long attained finality since respondents did not appeal the same, and respondents were now estopped from raising the issue on appeal.
• Compliance with Verification Rules: Petitioners alleged that the verification and certification of the complaint conformed with the rules since Cañiza, as Gabriel's attorney-in-fact, signed it, and any defect was cured when he, being one of the heirs, substituted Gabriel when she died during the pendency of the case before the trial court.

• Lack of Legal Capacity: Respondents alleged that Gabriel had no legal capacity to sue as she was bedridden and confined at the Makati Medical Center since 1993.
• Unauthorized Filing: Respondents argued that the complaint should be dismissed because Cañiza signed the verification and certification of the complaint without proper authority.
• Void Judgment: Respondents alleged that the December 15, 1993 RTC decision in the foreclosure proceedings was void due to improper service of summons.
• Failure to Register: Respondents pointed out that the Sheriff's Final Deed of Sale was not registered and recorded, and that the bid price was higher than the amount in the compromise agreement.
• Lack of Interest to Annul: Respondents argued that as a mere creditor, Gabriel could not annul the sale of the subject property to Progressive, especially when there was a judicial consignment of the payment of lien.

• Authority to File Complaint: Whether the Court of Appeals committed serious error of law in reversing and setting aside the RTC decision and dismissing the complaint on the sole basis of the technicality that the verification and certification of non-forum shopping was not supported with the Special Power of Attorney of Eduardo Cañiza.
• Effect of Substitution of Heirs: Whether Cañiza's subsequent substitution as one of Gabriel's heirs cured the defect in the complaint arising from his signing the verification and certification against forum shopping without apparent authority.

• Authority to File Complaint: No. The complaint filed by Cañiza, who failed to prove that he was validly authorized to do so, does not produce any legal effect, and the RTC never validly acquired jurisdiction over the case. The certification against forum shopping must be executed by the plaintiff or principal party, or by one duly authorized through a Special Power of Attorney.
• Effect of Substitution of Heirs: No. Cañiza's subsequent substitution as one of Gabriel's heirs did not cure the defect in the complaint because the trial court acquires jurisdiction over the plaintiff upon the filing of the complaint, and the substitution merely ensured that Gabriel's interest would be properly represented and that her heirs were brought to the jurisdiction of the court.

• Authority to File Complaint: The Court applied Section 5, Rule 7 of the Rules of Court, which requires that the certification against forum shopping be executed by the plaintiff or principal party, because the plaintiff knows better than anyone whether a petition has previously been filed involving the same case or substantially the same issues. If the principal party cannot sign, the one signing on his behalf must have been duly authorized. The Court cited the guidelines in Altres, et al. vs. Empleo, et al. distinguishing between verification and certification against forum shopping. While verification defects may be cured, the certification against forum shopping must be signed by all plaintiffs or petitioners, and if the party-pleader is unable to sign, he must execute a Special Power of Attorney designating his counsel of record to sign on his behalf. The Court noted that while an agent or attorney-in-fact who initiated the action may properly sign the certification, there was no duly executed SPA appended to the complaint to prove Cañiza's supposed authority. The mere mention in the December 15, 1993 Decision that he was Gabriel's attorney-in-fact was not evidence of his authority, and there was no evidence of substantial compliance or an attempt to submit an SPA after filing. The Court cited Palmiano-Salvador vs. Rosales, where a complaint filed by one who executed the verification and certification alleging he was an attorney-in-fact without a document attached to prove his authority was held to be no valid complaint, and the court did not acquire jurisdiction. The Court emphasized that mere allegation is not evidence and is not equivalent to proof.

• Effect of Substitution of Heirs: The Court explained that the substitution of heirs ensures that the deceased party would continue to be properly represented in the suit through the duly appointed legal representative of his estate, and its purpose is to apprise the heir or substitute that he is being brought to the jurisdiction of the court in lieu of the deceased party. However, since the trial court acquires jurisdiction over the plaintiff upon the filing of the complaint, and the complaint was not deemed filed due to Cañiza's lack of authority, the substitution could not cure the defect. The Court also noted that the real estate mortgage over a portion of the property was annotated on the transfer certificate of titles, and a mortgage is a real right that follows the property even after subsequent transfers. The purchaser or transferee is necessarily bound to acknowledge and respect the encumbrance, and Progressive, having bought the property with notice of the mortgage, could not invoke being a buyer in good faith. However, this did not change the outcome because the complaint was filed without valid authority.

• Verification vs. Certification Against Forum Shopping — A distinction exists between non-compliance with the requirement on or submission of defective verification, and non-compliance with the requirement on or submission of defective certification against forum shopping. As to verification, non-compliance or defect does not necessarily render the pleading fatally defective, and the court may order its submission or correction. As to certification against forum shopping, non-compliance or defect is generally not curable by subsequent submission or correction, unless there is a need to relax the Rule on the ground of substantial compliance or presence of special circumstances or compelling reasons. The certification must be signed by all plaintiffs or petitioners, and if the party-pleader is unable to sign, he must execute a Special Power of Attorney designating his counsel of record to sign on his behalf.

• Unauthorized Complaint and Jurisdiction — A complaint filed for and in behalf of the plaintiff by one who is unauthorized to do so is not deemed filed, and an unauthorized complaint does not produce any legal effect. Hence, the court should dismiss the complaint on the ground that it has no jurisdiction over the complaint and the plaintiff. Courts acquire jurisdiction over the plaintiffs upon the filing of the complaint, and to be bound by a decision, a party should first be subjected to the court's jurisdiction.

• Substitution of Heirs — The substitution of heirs in a case ensures that the deceased party would continue to be properly represented in the suit through the duly appointed legal representative of his estate. The purpose behind the rule on substitution is to apprise the heir or the substitute that he is being brought to the jurisdiction of the court in lieu of the deceased party by operation of law, for the protection of the right of every party to due process. Substitution does not cure defects in the original filing of the complaint.

• Mortgage as a Real Right — A mortgage is a real right that follows the property, even after subsequent transfers by the mortgagor. A registered mortgage lien is considered inseparable from the property inasmuch as it is a right in rem. The sale or transfer of the mortgaged property cannot affect or release the mortgage; thus, the purchaser or transferee is necessarily bound to acknowledge and respect the encumbrance.

• "An unauthorized complaint does not produce any legal effect. Hence, the court should dismiss the complaint on the ground that it has no jurisdiction over the complaint and the plaintiff." — This passage states the core ratio decidendi: a complaint filed without proper authority is legally nonexistent, and the court never acquires jurisdiction over it.
• "The basic rule is that mere allegation is not evidence and is not equivalent to proof." — This passage underscores why Cañiza's mere assertion that he was Gabriel's attorney-in-fact, without an attached SPA, was insufficient to establish his authority to file the complaint.
• "Considering that the complaint was filed by Cañiza, who has failed to prove that he was validly authorized to do so, the complaint does not produce any legal effect. The RTC never validly acquired jurisdiction over the case." — This passage encapsulates the Court's application of the rule to the facts, explaining why the petition was dismissed despite the merits of the mortgage lien issue.

• Altres, et al. vs. Empleo, et al., 594 Phil. 246 (2008) — Controlling precedent that restated the jurisprudential guidelines on non-compliance with verification and certification against forum shopping requirements, distinguishing between the two and establishing when substantial compliance may be allowed.
• Palmiano-Salvador vs. Rosales, 694 Phil. 1 (2012) — Followed; held that a complaint filed in the name of a party but with verification and certification executed by one alleging to be an attorney-in-fact without attached proof of authority is not a valid complaint, and the court does not acquire jurisdiction.
• Tamondong vs. Court of Appeals, 486 Phil. 729 (2004) — Cited for the proposition that a complaint filed by one unauthorized to do so is not deemed filed and produces no legal effect.
• Heirs of Dimaampao vs. Atty. Alug, et al., 754 Phil. 236 (2015) — Cited for the definition of final versus interlocutory orders, distinguishing appealable final judgments from interlocutory orders that may only be questioned as part of an appeal from the final judgment.
• Bandillion, et al. vs. La Filipina Uygongco Corp. (LFUC), 769 Phil. 806 (2015) — Cited for the rule that when an SPA was constituted precisely to authorize the agent to file and prosecute suits, the agent's signature on the certification against forum shopping satisfies the requirements.
• Garcia vs. Villar, 689 Phil. 363 (2012) — Cited for the doctrine that a mortgage is a real right that follows the property even after subsequent transfers, and a registered mortgage lien is inseparable from the property.

• Section 1, Rule 41, Rules of Court — Defines which judgments or final orders are appealable and lists instances where no appeal may be taken, including interlocutory orders. Applied to determine that the RTC Order dated June 13, 2007 denying the motion to set hearing on affirmative defenses was interlocutory and not appealable, but could be questioned as part of an appeal from the final judgment.
• Section 2, Rule 3, 1997 Rules of Court — Defines a real party-in-interest as the party who stands to be benefited or injured by the judgment in the suit. Applied to determine that Gabriel, as the highest bidder in the foreclosure sale, was the real party-in-interest in the case.
• Section 5, Rule 7, Rules of Court — Requires the plaintiff or principal party to certify under oath in the complaint that he has not commenced any action involving the same issues. Applied to require that the certification against forum shopping be executed by the plaintiff or principal party, or by one duly authorized through a Special Power of Attorney.

Leonen, J., and J. Reyes, Jr., J., concurred. Gesmundo, J., and Hernando, J., were on wellness leave.