Aguenza v Metropolitan Bank
J. ANTONIO AGUENZA, petitioner, vs. METROPOLITAN BANK & TRUST CO., VITALIADO P. ARRIETA, LILIA PEREZ,
PATRICIO PEREZ and THE INTERMEDIATE APPELLATE COURT, respondents.
Facts:
On February 28, 1977, the Board of Directors of Intertrade, through a Board Resolution, authorized
and empowered petitioner Aguenza and private respondent Vitaliado Arrieta, Intertrade's President
and Executive Vice-President, respectively, to jointly apply for and open credit lines with private
respondent Metrobank. Pursuant to such authority, petitioner and private respondent Arrieta
executed several trust receipts from May to June, 1977, the aggregate value of which amounted to
P562,443.46, with Intertrade as the entrustee and private respondent Metrobank as the entruster.
On March 14, 1977, petitioner and private respondent Arrieta executed a Continuing Suretyship
Agreement whereby both bound themselves jointly and severally with Intertrade to pay private
respondent Metrobank whatever obligation Intertrade incurs, but not exceeding the amount
P750,000.00. In this connection, private respondent Metrobank's Debit Memo to Intertrade dated
March 22, 1978 showed full settlement of the letters of credit covered by said trust receipts in the
total amount P562,443.46.
On March 21, 1978, private respondents Arrieta and Lilia P. Perez, bookkeeper in the employ of
Intertrade, obtained a separate P500,000.00 loan from Metrobank. Both executed a Promissory
Note in favor or said bank in the amount of P500,000,00. Under said note, private respondents
Arrieta and Perez promised to pay said amount, jointly and severally.
Private respondents Arrieta and Perez defaulted in the payment of several installments, resulting
in the entire obligation becoming due and demandable. In 1979, private respondent Metrobank
instituted suit against Intertrade, Vitaliado Arrieta, Lilia Perez and her husband, Patricio Perez, to
collect not only the unpaid principal obligation, but also interests, fees and penalties, exemplary
damages, as well as attorney's fees and costs of suit. More than a year after the action, Metrobank
filed an Amended Complaint dated August 30, 1980 for the sole purpose of impleading petitioner
as liable for the loan made by private respondents Arrieta and Perez.
In the course of the suit, the Court of Appeals, reversing the trial court’s decision, found petitioner
Aguenza liable under the surety agreement between Intertrade and Metrobank, as Intertrade’s
President.
In its decision, the Court of Appeals ruled that the promissory note executed by private respondents
was a corporate undertaking based on the answer filed by Intertrade which the Court interpreted
as an admission of Intertrade’s default in payment of the P500,000 loan. The portion referred to
by the Court was a paragraph in Intertrade’s answer worded in the following manner: “defendant’s
obtention of the loan from plaintiff.”
From this basis, the Court ruled that “it is no longer in point to discuss, as the appealed decision
does, the question of capacity in which Arrieta and Perez signed the promissory note, Intertrade's
admission of its corporate liability being admission also that the signatories signed the note in a
representative capacity.”
Issue/s:
1. Whether or not petitioner Aguenza is liable as President of Intertrade to pay the loan
obtained by Intertrade’s General Manager and bookkeeper, private respondents Arrieta and
Perez
2. Whether Intertrade private respondents Arrieta and Perez have bound Intertrade as
signatories to the promissory note
Ruling:
1. No.
In the case at bench, we find that the respondent Court of Appeals committed an error in
appreciating the "Answer" filed by the lawyer of Intertrade as an admission of corporate
liability for the subject loan. A careful study of the responsive pleading filed by Atty.
Francisco Pangilinan, counsel for Intertrade, would reveal that there was neither express
nor implied admission of corporate liability warranting the application of the general rule.
Thus, the alleged judicial admission may be contradicted and controverted because it was
taken out of context and no admission was made at all.
In any event, assuming arguendo that the responsive pleading did contain the aforesaid
admission of corporate liability, the same may not still be given effect at all. As correctly
found by the trial court, the alleged admission made in the answer by the counsel for
Intertrade was "without any enabling act or attendant ratification of corporate act," as
would authorize or even ratify such admission. In the absence of such ratification or
authority, such admission does not bind the corporation.
These documents and admissions cannot have the effect of a ratification of an unauthorized
act. "Ratification can never be made on the part of the corporation by the same persons
who wrongfully assume the power to make the contract, but the ratification must be by the
officer as governing body having authority to make such contract." In other words, the
unauthorized act of respondent Arrieta can only be ratified by the action of the Board of
Directors and/or petitioner Aguenza jointly with private respondent Arrieta.
2. No.
Neither a board resolution nor a stockholder's resolution was presented by Metrobank to
show that Arrieta and Lilia Perez were empowered by Intertrade to execute the promissory
note.
The power to borrow money is one of those cases where even a special power of attorney
is required. In the instant case, there is invariably a need of an enabling act of the
corporation to be approved by its Board of Directors.
The respondents may argue that the actuation of Arrieta and Liliah Perez was in accordance
with the ordinary course of business usages and practices of Intertrade. However, this
contention is devoid of merit because the prevailing practice in Intertrade was to explicitly
authorize an officer to contract loans in behalf of the corporation. Neither has it been shown
that any provision of the charter or any other act of the Board of Directors exists to confer
power on the Executive Vice President acting alone and without the concurrence of its
President, to execute the disputed document.
