SECOND DIVISION
|
WESTMONT BANK (formerly ASSOCIATED
CITIZENS BANK and now UNITED OVERSEAS BANK, PHILS.) AND THE PROVINCIAL
SHERIFF OF RIZAL, Petitioners, - versus - INLAND CONSTRUCTION AND DEVELOPMENT CORP.,
Respondent. x - - - - - - -
- - - - - - - - - - - - - - - - - - x WESTMONT BANK (formerly ASSOCIATED
CITIZENS BANK and now UNITED OVERSEAS BANK, PHILS.), Petitioner, - versus - COURT OF
APPEALS and INLAND CONSTRUCTION
AND DEVELOPMENT CORP.,
Respondents. |
G.R. No. 123650
Present: QUISUMBING, J., Chairperson, CARPIO MORALES, VELASCO, JR. NACHURA,* and BRION, JJ. G.R. No. 123822
Promulgated: March
23, 2009 |
x - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
D E C I S I O N
CARPIO MORALES, J.:
Inland Construction and Development
Corp. (Inland) obtained various loans and other credit accommodations from
petitioner, then known as Associated Citizens Bank ([the bank] which later
became United Overseas Bank, Phils., and still later Westmost Bank) in
1977.
To secure the payment of its
obligations, Inland executed real estate mortgages over three real properties in
Inland likewise issued promissory
notes in favor of the bank, viz:
Promissory Note No. BD-2739-77
Amount: P155,000.00
Due
Date:
Promissory Note No. BD-2884-77
Amount: P880,000.00
Due Date:
Promissory Note No. BD-2997
Amount: P60,000.00
Due
Date:
When the first and second promissory
notes fell due, Inland defaulted in its payments. It, however, authorized the bank to debit P350,000
from its savings account to partially satisfy its obligations.[5]
It
appears that by a Deed of Assignment, Conveyance and Release dated May 2, 1978,
Felix Aranda, President of Inland, assigned and conveyed all his rights and
interests at Hanil-Gonzales Construction & Development (Phils.) Corporation
(Hanil-Gonzales Corporation) in favor of Horacio Abrantes (Abrantes), Executive
Vice-President and General Manager of Hanil-Gonzales Corporation. Under the same Deed of Assignment, it
appears that Abrantes assumed, among other obligations of Inland and Aranda,
Promissory Note No. BD-2884-77 in
the amount of P800,000 as shown in the May 26, 1978 Deed of Assignment
of Obligation in which Aranda and Inland, on one hand, and Abrantes and
Hanil-Gonzales Corporation, on the other, forged as follows:
x x x x.
WHEREAS,
among the obligations assumed by
Mr. HORACIO C. ABRANTES [in the May 2, 1978 Deed] is the account of the
FIRST PARTY (Aranda and Inland) in favor of the ASSOCIATED CITIZENS BANK as
evidenced by Promissory Note No. BD-2884-77
in the amount of EIGHT HUNDRED EIGHTY THOUSAND (P880,000.00) PESOS, x x x x;
WHEREAS, the parties herein have agreed to obtain the conformity of the ASSOCIATED CITIZENS BANK to the foregoing arrangement x x x x;
NOW, THEREFORE, the herein parties have mutually agreed that the SECOND PARTY (Abrantes and Hanil-Gonzalez) shall assume full and complete liability and responsibility for the payment to ASSOCIATED CITIZENS BANK Promissory Note No. BD-2884-77 x x x x.
THE SECOND PARTY shall make such necessary arrangements with the ASSOCIATED CITIZENS BANK for the full liquidation of said account, x x x x.
x x x x. (Emphasis and underscoring supplied)
The bank’s Account Officer, Lionel
Calo Jr. (Calo), signed for its conformity to the deed.[6]
On
Answering the amended complaint, the bank
underscored that it “had no knowledge, much less did it give its conformity to
the alleged assignment of the obligation covered by PN# BD-2884 [-77].”[9]
The trial court found that the bank ratified
the act of its account officer Calo, thus:
x x
x x. Culled from the evidence on record,
the Court finds that the defendant
Bank ratified the act of Calo when its Executive Committee failed to repudiate the assignment within a reasonable time and
even approved the request for a restructuring of Liberty Const. & Dev.
Corp./Hanil-Gonzales Construction & Development Corp.’s obligations, which
included the P880,000.00 loan (Exhibit “U” to “X”, and its
submarkings). Clearly, the assumption of
the loan was very well known to the defendant Bank and the latter posed no
objection to it. In fact, the positive
act on the part of the defendant in restructuring the loan of the assignee
attest to its consent in the said transaction.
The evidence on record conveys the fact that the Hanil-Gonzales Const.
and Development Corp. assumed the obligation of the plaintiff on the SECOND
NOTE. Later, it asked the defendant for
a restructuring of its loan, including the P880,000.00 loan. Thereafter,
payments were made by the assignee to the defendant Bank. The preponderance of evidence tilts heavily
in favor of the plaintiff claiming that a case of delegacion occurs.[10] (Emphasis and italics supplied; Underscoring
in the original)
It accordingly rendered judgment in
favor of Inland by Decision[11]
of
WHEREFORE,
judgment is hereby rendered in favor of the plaintiff and against the
defendants, permanently, perpetually and forever restraining and enjoining the defendants Associated
Citizens Bank and the Sheriff of this Court from proceeding with the foreclosure of and conducting an auction sale on
the real estate covered by and embraced in Transfer Certificates of Title Nos.
4820, 4821 and 4822 of the Register of Deeds of Rizal (now Pasig, Metro Manila)
and to refund to plaintiff the amount of P8,866.89, with legal
interest thereon from the filing of the complaint until full payment, with
costs.
SO ORDERED. (Emphasis and underscoring supplied)
The bank appealed the trial court’s
decision to the Court of Appeals which, by Decision[12]
of
WHEREFORE,
the decision appealed from is hereby AFFIRMED
only insofar as it finds appellant Associated Bank to have ratified the Deed of
Assignment (Exhibit “O”), but REVERSED
in all other respects, and judgment is accordingly rendered ordering the
plaintiff-appellee Inland Construction and Development Corporation to pay defendant-appellant
Associated Bank the sum of One Hundred Eighty Six Thousand Two Hundred
Forty One Pesos and Eighty Six Centavos (P186,241.86)
with legal interest thereon computed from December 21, 1979 until the same is
fully paid.
No pronouncement as to costs.
SO ORDERED. (Underscoring supplied)
In affirming the observation of the
trial court that the bank ratified the assignment of Inland’s Promissory Note
No. BD-2884-77, the appellate court discoursed as follows:
In the instant case, both the assignors (Aranda and Inland) and assignees (Abrantes and Hanil-Gonzales) in the subject deed of assignment have been major clients of Associated Bank for several years with accounts amounting to millions of pesos. For several years, Associated Bank had, either intentionally or negligently, been habitually clothing Calo with the apparent powers to perform acts in behalf of the bank. x x x x.
x x x x.
Calo
signed the subject deed of assignment on or about
“2) Conforme of Associated Bank signed by Lionel Calo Jr. has no bearing since he has no authority to sign for the bank as he was only an account officer with no signing authority;
x x x x.
5) I suggest, Mr. Calo be asked to be present at court hearings to explain why he signed for the bank, knowing his limitations”
The abovequoted inter-office memorandum is addressed internally to the other offices within Associated Bank. It is not addressed to Inland or any outsider for that matter. Worse, it was not even offered in evidence by Associated Bank to give Inland the opportunity to object to or comment on the said document, but was merely attached as one of the annexes to the bank’s MEMORANDUM FOR DEFENDANTS. Obviously, no evidentiary weight may be attached to said inter-office memorandum, which is even self serving. In fact, it ought not to be considered at all. (Emphasis and underscoring supplied)
The appellate court,
however, specifically mentioned that the “lower court erred when it rendered
a decision which ‘permanently, perpetually and forever’ restrains the sheriff
from proceeding with the threatened foreclosure auction sale of the subject
mortgage properties.”[14]
The bank moved for partial
reconsideration of the appellate court’s decision on the aspect of its
ratification of the Deed of Assignment but the same was denied by Resolution[15]
of
The bank, via two different counsels,[16]
filed before this Court separate petitions for review, G.R. No. 123650, Associated Citizens Bank, et al. v. Court of
Appeals, et al; and G.R. No. 123822, Westmont
Bank (formerly Associated Bank) v. Inland Construction & Development Corp.,
assailing the same appellate court’s decision. Owing to a series of oversight,[17]
the petition in G.R. 123650 was initially dismissed but was later reinstated by
Resolution of
The records[18] show
that Inland failed to file its comment and memorandum on the petitions.
Both petitions for review impute
error on the part of the appellate court in
…AFFIRMING THE FINDING OF THE TRIAL COURT THAT PETITIONER HAVE [SIC] RATIFIED THE DEED OF ASSIGNMENT (EXH. “O”).
The bank, which had, as reflected
early on, become known as Westmont Bank (petitioner), maintains that Calo had
no authority to bind it in the Deed of Assignment and that a single, isolated
unauthorized act of its agent is not sufficient to establish that it clothed him
with apparent authority. Petitioner adds
that the records fail to disclose evidence of similar acts of Calo executed either
in its favor or in favor of other parties.[19] Moreover, petitioner reasserts that the
unauthorized act of Calo never came to its knowledge, hence, it is not estopped
from repudiating the Deed of Assignment.[20]
The petitions fail.
The general rule remains that, in the
absence of authority from the board of directors, no person, not even its
officers, can validly bind a corporation.[21] If a corporation, however, consciously lets
one of its officers, or any other agent, to act within the scope of an apparent
authority, it will be estopped from denying such officer’s authority.[22]
The records show that Calo was the one
assigned to transact on petitioner’s behalf respecting the loan transactions
and arrangements of Inland as well as those of Hanil-Gonzales and Abrantes. Since it conducted business through Calo, who
is an Account Officer, it is presumed that he had authority to sign for the
bank in the Deed of Assignment.
Petitioner cannot feign ignorance of
the
This
refers to the accounts of Liberty Construction and Development Corporation
(LCDC) and our sister-company, Hanil-Gonzalez Construction & Development
Corporation (HGCDC) which as of July 31, 1979 was computed at P1,814,442.40,
inclusive of interest, penalties and fees, net of marginal deposits. This
includes the account of
Inland Construction & Development Corporation which had been assumed by HGCDC.[23] (Emphasis and underscoring supplied)
That petitioner sent the following
reply-letter, dated
We are pleased to advise you that our Executive Committee in its meeting last November 25, 1982, has approved your request for the restructuring of your outstanding obligations x x x x.[24] (Underscoring supplied)
Respecting this reply-letter
of the bank granting Hanil-Gonzales’ request to restructure its loans, petitioner,
as a banking institution, is expected to have exercised the highest degree of
diligence and meticulousness in the conduct of its business. When it received the loan restructuring request,
with specific mention of Inland’s Promissory Note No. BD-2884-77, petitioner-bank
was under obligation to fastidiously scrutinize such loan account. And since it clearly approved the request for
restructuring, any “uncertainty” that its reply-letter approving such request
may not thus work to prejudice Hanil-Gonzales or Inland.
Petitioner relies heavily, however,
on the Court’s pronouncement in Yao Ka
Sin Trading that it was incumbent upon, in this case, Inland to prove that
petitioner had clothed its account officer with apparent power to conform to
the Deed of Assignment.[25]
Petitioner’s simplistic
reading of Yao Ka Sin Trading v. Court of
Appeals[26]
does not impress. In Yao Ka Sin Trading, the therein
respondent cement company had shown by clear and convincing evidence that its
president was not authorized to undertake a particular transaction. It presented its by-laws stating that only
its board of directors has the power to enter into an agreement or contract of
any kind. The company’s board of
directors even forthwith issued a resolution to repudiate the contract. Thus, it was only after the company
successfully discharged its burden that the other party, the therein petitioner
Yao Ka Sin Trading, had to prove that indeed the cement company had clothed its
president with the apparent power to execute the contract by evidence of
similar acts executed in its favor or in favor of other parties.
Unmistakably, the Court’s
directive in Yao Ka Sin Trading is that
a corporation should first prove
by clear evidence that its corporate officer is not in fact authorized to act on its behalf before
the burden of evidence shifts to the other party to prove, by previous specific
acts, that an officer was clothed by the corporation with apparent
authority.
It bears noting that in Westmont Bank v. Pronstroller,[27] the therein petitioner Westmont Bank,
through a management committee, proved that it rejected the letter-agreement
entered into by its assistant vice-president.
Consequently, the therein respondent had to prove by citing other instances of the said officer’s
apparent authority to bind the bank-therein petitioner.
In the present petitions,
petitioner-bank failed to discharge its primary burden of proving that Calo was
not authorized to bind it, as it did not present proof that Calo was
unauthorized. It did not present, much
less cite, any Resolution from its Board of Directors or its Charter or By-laws
from which the Court could reasonably infer that he indeed had no authority to
sign in its behalf or bind it in the Deed of Assignment. The
Thus, the assertion that
the petitioner cannot be faulted for its delay in repudiating the apparent
authority of Calo is similarly flawed, there being no evidence on record that
it had actually repudiated such apparent authority. It should be noted that it was the bank which
pleaded that defense in the first place.
What is extant in the records is a reasonable certainty that the bank
had ratified the Deed of Assignment.
The assumption that a
ruling on the issue of ratification would affect any and all foreclosure
proceedings on the mortgaged properties remains unfounded. For the challenged appellate court’s Decision[29]
still mentioned the possibility of foreclosing on the mortgaged properties as
Inland was still indebted to the bank in the amount of P186, 241.86
covering the other two promissory notes (No. BD-2739-77 and No. BD-2997)
and other obligations that Inland was not able to satisfy upon
maturity.
Both the trial court’s and the
appellate court’s inferences and conclusion that petitioner ratified its
account officer’s act are thus rationally based on evidence and circumstances duly
highlighted in their respective decisions.
Absent any serious abuse or evident lack of basis or capriciousness of
any kind, the lower courts’ findings of fact are conclusive upon this Court.[30]
WHEREFORE, the
petitions are DENIED. The decision of the Court of Appeals in
CA-G.R. CV No. 39634 is AFFIRMED.
Costs against petitioner.
SO ORDERED.
CONCHITA
CARPIO MORALES
Associate Justice
WE CONCUR:
|
LEONARDO A. QUISUMBING Associate Justice Chairperson |
PRESBITERO J. VELASCO, JR. Associate Justice |
|
ANTONIO
EDUARDO B. NACHURA Associate Justice |
ARTURO D. BRION Associate Justice |
ATTESTATION
I attest
that the conclusions in the above Decision were reached in consultation before
the case was assigned to the writer of the opinion of the Court’s Division.
LEONARDO
A. QUISUMBING
Associate
Justice
Chairperson
CERTIFICATION
Pursuant to
Section 13, Article VIII of the Constitution, and the Division Chairperson’s
Attestation, it is hereby certified that the conclusions in the above Decision
were reached in consultation before the case was assigned to the writer of the
opinion of the Court’s Division.
REYNATO S. PUNO
Chief Justice
* Additional
member per Special Order No. 571 dated
[1] Records, pp. 2-3.
[2]
[3]
[4]
[5]
[6] Ibid. at 260; Exhibit “O-1.”
[7]
[8]
[9]
[10]
[11]
[12] Rollo (G.R. No. 123650), pp. 29-54.
[13] Penned by Associate Justice Cancio C. Garcia and concurred in by Associate Justices Arturo B. Buena and Delilah V. Magtolis..
[14] Rollo (G.R. No. 123822), p. 68.
[15] Rollo (G.R. No. 123650), p. 55.
[16] Agulto Hilao and Associates in G.R. No. 123650 and Villanueva Ebora & Caña Law Offices in G.R. No. 123822.
[17] Rollo (G.R. No. 123822), pp. 288-289; In the Status Report of August 18, 2005 by Atty. Enriqueta Esguerra-Vidal, First Division clerk of court, it was stated that “The motion for extension of time to file petition was denied in G.R. No. 123650 for failure to submit proof of service. The motion for extension of time in G.R. No. 123822 was granted.
However, the petition for review intended for G.R. No. 123822
was attached to G.R. No. 123650. This
was eventually dismissed in the resolution of
Owing to this confusion, counsel for G.R. No. 123822 filed a
motion for clarification with prayer that the petition in G.R. No. 123650 be
admitted as part of the records of G.R. No. 123822. Several other pleadings were filed to seek
correction of this mistake such as the motion to resolve another motion for
clarification and motion for reconsideration.
Eventually, on
[18] Ibid; Mrs. Corazon Aranda, wife of Felix
Aranda, President of respondent corporation filed a letter informing the court
of the formal withdrawal of the respondent corporation’s counsel and of the
death of her husband and requesting for time to look for another lawyer. In the resolution
Petitioner was required to submit the new address of respondent corporation but submitted the same address as before.
Despite the lack of comment on the petition, the case was
given due course and the parties were required to file memoranda on
Petitioner filed its memorandum but respondent corporation has no memorandum up to this date for the reason that resolutions sent to it have all returned unserved.
[19] Rollo (G.R. No. 123822), pp. 221.
[20]
[21] Premium Marble Resources v. Court of Appeals, G.R. No. 96551, 264 SCRA 11, 18 citing Visayan v. NLRC, G.R. No. 69999, April 30, 1991, 196 SCRA 410.
[22] People’s Aircargo and Warehousing Co. v. Court of Appeals, G.R. No. 117847, October 7, 1998, 297 SCRA 170, 184-185 citing Francisco v. GSIS, 7 SCRA 577, 583 (1963).
[23] Rollo (G.R. No. 123822), p. 17-18.
[24] Ibid. at 17.
[25]
[26] G.R. No. 53820,
[27] G.R.
No. 148444,
[28] Records, p. 557.
[29] Part of the CA Decision reads:
x x x x.
It is uncontroverted that Inland obtained numerous and separate credit accommodations from [Westmont Bank]. The obligation under Promissory Note No. BD-2884-77 is only the tip-of-the-iceberg of Inland’s numerous obligations to [Westmont Bank]. If Inland fails to pay the obligations incurred under Promissory Note No. BD-2884-77, [Westmont Bank] may not foreclose the subject mortgaged properties on that ground alone. However, if Inland defaults on its other obligations to [Westmont Bank], the latter is justified in foreclosing the subject mortgaged properties, x x x x.
[30] Cang v. Court of Appeals, G.R. No. 105308, 357 Phil. 129, 146 (1998) citing Del Mundo v. Court of Appeals, 327 Phil. 463, 471 (1996).