Aguenza v. Metropolitan Bank & Trust Co.
REITERATIONFacts
The Antecedents: On February 28, 1977, Intertrade's Board of Directors authorized petitioner J. Antonio Aguenza and Vitaliado P. Arrieta to jointly apply for credit lines with Metropolitan Bank & Trust Company (Metrobank). Pursuant to this, Aguenza and Arrieta executed trust receipts from May to June 1977, totaling P562,443.46. On March 14, 1977, Aguenza and Arrieta executed a Continuing Suretyship Agreement, jointly and severally binding themselves with Intertrade to pay Metrobank up to P750,000.00 for Intertrade's obligations. Metrobank issued a Debit Memo showing full settlement of the letters of credit covered by the trust receipts on March 22, 1978. On March 21, 1978, Arrieta and Lilia P. Perez, Intertrade's bookkeeper, obtained a P500,000.00 loan from Metrobank, executing a Promissory Note jointly and severally. Arrieta and Perez defaulted, leading Metrobank to file suit against Intertrade, Arrieta, Lilia Perez, and her husband Patricio Perez. Subsequently, Metrobank filed an Amended Complaint to implead Aguenza, claiming his liability under the March 14, 1977 Continuing Suretyship Agreement for the P500,000.00 loan obtained by Arrieta and Perez. Procedural History: The Regional Trial Court (RTC) absolved Aguenza from liability, declaring the P500,000.00 loan as the sole responsibility of Arrieta and Lilia Perez, and dismissing the case against Intertrade and Aguenza. Metrobank appealed to the Intermediate Appellate Court (IAC), which reversed the RTC decision, holding Intertrade and Aguenza jointly and severally liable for the loan, setting aside the RTC's ruling. Aguenza filed a petition for review on certiorari with the Supreme Court. The Petition: Aguenza seeks the reversal of the IAC decision, arguing that the P500,000.00 loan was not a corporate liability of Intertrade and that he is not liable under the Continuing Suretyship Agreement.
Issue(s)
Whether the P500,000.00 loan obtained by Vitaliado P. Arrieta and Lilia P. Perez on March 21, 1978, constitutes a corporate liability of Intertrade. Whether petitioner J. Antonio Aguenza is liable under the Continuing Suretyship Agreement dated March 14, 1977, for the aforementioned loan.
Ruling
The petition is GRANTED. The questioned decision of the Court of Appeals is REVERSED and SET ASIDE. The judgment of the trial court is REINSTATED.
Ratio Decidendi
On the issue of corporate liability for the P500,000.00 loan: The Supreme Court found no factual or legal basis for the Court of Appeals' finding that Intertrade admitted corporate liability for the loan. The Court clarified that the general rule on judicial admissions is not absolute and can be contradicted by showing palpable mistake or that the admission was taken out of context. In this case, the alleged admission in Intertrade's Answer was deemed taken out of context and not a clear admission of corporate liability for the specific loan in question. Furthermore, even if an admission existed, it would not bind the corporation without enabling acts or ratification by its Board of Directors. The Court emphasized that the power to borrow money requires an enabling act of the Board of Directors, and no such resolution or authority was presented to show that Arrieta and Perez were empowered by Intertrade to contract the P500,000.00 loan. The Court noted that previous credit lines were authorized by a board resolution involving both Aguenza and Arrieta, highlighting the need for explicit corporate authorization for such transactions. The Court concluded that the loan was the individual and personal obligation of Arrieta and Lilia Perez, not of Intertrade. On the liability of petitioner Aguenza under the Continuing Suretyship Agreement: Since the P500,000.00 loan was determined to be the personal obligation of Arrieta and Perez and not a corporate liability of Intertrade, it logically follows that this undertaking was not covered by the Continuing Suretyship Agreement. The Court reiterated the principle that a contract of surety is never presumed, must be express, and cannot extend beyond what is stipulated. It is strictly construed against the creditor, with any doubt resolved against enlarging the surety's liability. As the loan was not an obligation of Intertrade, Aguenza's undertaking as a surety for Intertrade's obligations did not extend to this personal loan.
Main Doctrine
A continuing suretyship agreement, by its nature, is retrospective and prospective in operation, covering existing and future obligations of the principal debtor, unless revoked in writing. Furthermore, an admission made by counsel in a pleading, if not made through palpable mistake or taken out of context, can be considered a judicial admission, but such admission by counsel does not bind the corporation without proper ratification by its governing body.