Lapulapu Foundation, Inc. v. Court of Appeals
REITERATIONFacts
The Antecedents: Petitioner Elias Q. Tan, as President of co-petitioner Lapulapu Foundation, Inc. (Foundation), obtained four loans from respondent Allied Banking Corporation (Bank) in 1977, evidenced by four promissory notes, each for ₱100,000.00. As of January 23, 1979, the total obligation amounted to ₱493,566.61. The Bank filed a complaint for collection of the sum due, plus interests, penalties, and attorney's fees. Procedural History: The Regional Trial Court (RTC) of Cebu City ruled in favor of the Bank, ordering petitioners to pay jointly and solidarily the principal obligation, interests, service charges, penalty charges, attorney's fees, and litigation expenses. On appeal, the Court of Appeals (CA) affirmed the RTC's decision with modification, deleting the award for attorney's fees but upholding the joint and solidary liability. The CA found that the promissory notes indicated the Foundation as the obligor, contracted by Tan in his "official and personal capacity." It rejected Tan's claim of an unwritten agreement for renewal and payment from stock proceeds, applying the parol evidence rule. The CA also found that demand letters were sent and received, rebutting the claim of no prior demand. Furthermore, the CA applied the doctrine of piercing the veil of corporate entity, holding both petitioners jointly and solidarily liable. The Petition: Petitioners seek to reverse the CA's decision, arguing that the loans were not due and demandable due to the absence of prior demand, and that the CA erred in applying the parol evidence rule and the doctrine of piercing the veil of corporate entity to adjudge joint and solidary liability.
Issue(s)
Whether the loans were due and demandable despite the petitioners' denial of receipt of demand letters. Whether the Court of Appeals erred in applying the parol evidence rule to exclude evidence of an alleged unwritten agreement. Whether the Court of Appeals erred in applying the doctrine of piercing the veil of corporate entity to hold the petitioners jointly and solidarily liable.
Ruling
The Supreme Court denied the petition and affirmed the decision of the Court of Appeals in toto.
Ratio Decidendi
On the issue of demandability and receipt of demand letters: The Court affirmed the CA's finding that demand had been made and received. The CA correctly gave scant consideration to petitioners' denial of receipt of the demand letters dated January 3, 1979, and January 30, 1979. The registry return cards, marked as Exhibits "R-2" and "S-1," constituted documentary evidence showing receipt. The Court upheld the disputable presumption that a letter duly directed and mailed was received in the regular course of mail, as provided in Section 3(V), Rule 131 of the Revised Rules of Evidence. Petitioners failed to overcome this presumption with clear and convincing evidence, presenting only barefaced denials. Therefore, the loans were considered due and demandable. On the application of the parol evidence rule: The Court rejected petitioner Tan's claim of an unwritten agreement with the Bank for the renewal of the loans on a year-to-year basis, payable from his stock proceeds. The promissory notes, which are the law between the parties, clearly stated maturity dates and did not contain any such stipulation. Section 9, Rule 130 of the Revised Rules of Court mandates that when the terms of an agreement are reduced to writing, the writing is considered to contain all agreed terms, and no other evidence of such terms is admissible. The alleged unwritten agreement would vary or contradict the written promissory notes, and no fraud or mistake was alleged by the petitioners to warrant the admission of parol evidence. On the application of the doctrine of piercing the veil of corporate entity and joint and solidary liability: The Court agreed with the CA that petitioners could not hide behind the corporate veil. The evidence showed that petitioner Tan, as President of the Foundation, represented himself as such, opened corporate accounts, and signed loan documents in his official and personal capacity for the Foundation. He was given ostensible and apparent authority by the Foundation through a Secretary's Certificate to transact business, negotiate loans, and enter into obligations. The Foundation was estopped from questioning Tan's authority to obtain the loans, as it knowingly permitted him to act within his apparent authority. Conversely, Tan could not escape liability as he used the Foundation for his benefit. Thus, both petitioners were correctly held jointly and solidarily liable.
Main Doctrine
A corporation is estopped from questioning the authority of its agent to contract loans when it knowingly permits the agent to act within the scope of apparent authority, and the agent has used the corporation for his benefit.