Friday, February 03, 2012

Lapu-lapu Foundation Inc., vs. Tan, [G.R. No. 126006. January 29, 2004]

Facts: Elias Q. Tan, then President Lapulapu Foundation, Inc., obtained four loans from Allied Banking Corporation covered by four promissory notes in the amounts of P100, 000 each. When the entire obligation became due, it was not paid despite demands by the bank. The Bank filed with the RTC a complaint seeking payment by Lapulapu Foundation and Elias Tan, jointly and solidarily, of the sum representing their loan obligation, exclusive of interests, penalty charges, attorney’s fees and costs.

The Foundation denied incurring indebtedness from the Bank alleging that Tan obtained the loans in his personal capacity, for his own use and benefit and on the strength of the personal information he furnished the Bank. The Foundation maintained that it never authorized petitioner Tan to co-sign in his capacity as its President any promissory note and that the Bank fully knew that the loans contracted were made in Tan’s personal capacity and for his own use and that the Foundation never benefited, directly or indirectly, there from.

For his part, Tan admitted that he contracted the loans from the Bank in his personal capacity. The parties, however, agreed that the loans were to be paid from the proceeds of Tan’s shares of common stocks in the Lapulapu Industries Corporation, a real estate firm. The loans were covered by promissory notes which were automatically renewable (“rolled-over”) every year at an amount including unpaid interests, until such time as petitioner Tan was able to pay the same from the proceeds of his aforesaid shares.

Issue: May the Foundation correctly raise as a defense that it did not authorize Tan to obtain the loans involved and therefore it may not be held solidarily liable for them?

Held: NO. The Court agrees with the CA that the petitioners cannot hide behind the corporate veil under the following circumstances:

The evidence shows that Tan has been representing himself as the President of Lapulapu Foundation, Inc. He opened a savings account and a current account in the names of the corporation, and signed the application form as well as the necessary specimen signature cards twice, for himself and for the foundation. He submitted a notarized Secretary’s Certificate from the corporation, attesting that he has been authorized, inter alia, to sign for and in behalf of the Lapulapu Foundation any and all checks, drafts or other orders with respect to the bank; to transact business with the Bank, negotiate loans, agreements, obligations, promissory notes and other commercial documents; and to initially obtain a loan for P100, 000.00 from any bank. Under these circumstances, the Foundation is liable for the transactions entered into by Tan on its behalf.

Per its Secretary’s Certificate, the Foundation had given Tan ostensible and apparent authority to inter alia deal with the Bank. Accordingly, the petitioner Foundation is estopped from questioning Tan’s authority to obtain the subject loans from the Bank. It is a familiar doctrine that if a corporation knowingly permits one of its officers, or any other agent, to act within the scope of an apparent authority, it holds him out to the public as possessing the power to do those acts; and thus, the corporation will, as against anyone who has in good faith dealt with it through such agent, be estopped from denying the agent’s authority.

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