Blade International Marketing Corporation v. Court of Appeals
REITERATIONFacts
The Antecedents: Metropolitan Bank & Trust Company (Metrobank) filed a complaint for a Sum of Money with an application for a Writ of Preliminary Attachment against Blade International Marketing Corporation (Blade International), Evan J. Borbon, Edgar J. Borbon, Marcial Geronimo, and Elenito G. Santos. Metrobank alleged that it paid suppliers through letters of credit against bills of exchange, and the merchandise was delivered in trust under trust receipts. Petitioners allegedly failed to account for and turn over the proceeds of sale of the goods. Procedural History: Petitioners Blade International, Evan J. Borbon, Edgar J. Borbon, and Marcial Geronimo filed a Joint Answer with Counterclaim, denying liability. They asserted that the individual defendants signed the documents not in their personal capacities but for and in behalf of the corporation, and that they never agreed to be bound personally or as sureties or entrustees. They also claimed the trust receipts were simulated contracts, void ab initio, and that the suit was premature and filed in bad faith, causing them damages. The Regional Trial Court (RTC) dismissed both the complaint and the counterclaim. Metrobank appealed to the Court of Appeals (CA). The CA reversed the RTC decision, finding the appellees (petitioners herein) jointly and severally liable and ordering them to pay Metrobank the total amount of their obligation plus interest, penalty, and attorney's fees. Petitioners' Motion for Reconsideration was denied. The Petition: Petitioners elevated the case to the Supreme Court, questioning the CA's decision holding them personally liable jointly and severally with Blade International.
Issue(s)
Whether petitioners Evan J. Borbon, Edgar J. Borbon, and Marcial Geronimo are personally liable jointly and severally with Blade International for its obligations under the letters of credit. Whether the trust receipts were simulated contracts and therefore void ab initio.
Ruling
The Supreme Court affirmed the decision of the Court of Appeals in toto, holding the petitioners personally liable jointly and severally with Blade International Marketing Corporation.
Ratio Decidendi
On the personal liability of petitioners: The Court held that petitioners Evan J. Borbon, Edgar J. Borbon, and Marcial Geronimo are personally liable jointly and severally with Blade International. While petitioners claimed they signed the letters of credit and related documents in blank and not in their personal capacities, the documents themselves showed their agreement to jointly and severally undertake payment of the obligations and to consent to all stipulated conditions. The Court emphasized that an experienced businessman who signs important legal papers cannot disclaim the consequent liabilities therefor after being a signatory thereon. Therefore, the Court of Appeals was correct in finding that petitioners contractually agreed to hold themselves personally solidarily liable with the corporation in the fulfillment of its obligations to Metrobank. On the nature of the trust receipts: Although the petitioners argued that the trust receipts were simulated contracts and void ab initio, the Court's affirmation of the Court of Appeals' decision implicitly rejected this argument by holding them liable under the terms of the documents they signed. The core of the ruling rests on the contractual stipulations evident in the signed documents, which indicated a clear undertaking of solidary liability by the individual petitioners.
Main Doctrine
Individuals who sign legal documents, even if in blank or for and in behalf of a corporation, may be held personally and solidarily liable if the documents clearly indicate their undertaking to be jointly and severally bound, especially when they are experienced businessmen who cannot disclaim consequent liabilities after being signatories.