Georg v. Holy Trinity College
REITERATIONFacts
The Antecedents: Sister Teresita Medalle (Sr. Medalle), President of Holy Trinity College (HTC), organized the Holy Trinity College Grand Chorale and Dance Company (the Group) in 1987. In 2001, the Group planned a European tour. Edward Enriquez, representing himself as HTC's agent, contacted Benjie B. Georg (Petitioner) to advance P4,624,705.00 for airplane tickets, secured by a Memorandum of Agreement (MOA) with a Deed of Assignment involving the S.C. Roque Foundation as a grantor. Sr. Medalle, then hospitalized after a stroke, affixed her thumbmark to the MOA. Petitioner paid for the tickets, but the loan remained unpaid. Procedural History: Petitioner filed a sum of money case against HTC and the Foundation. The Regional Trial Court (RTC) ruled in favor of Petitioner, finding that the Group was an alter ego of HTC and Sr. Medalle acted as HTC President. The Court of Appeals (CA) reversed, ruling that HTC was not a party to the MOA, Sr. Medalle lacked authority, and Petitioner failed to exercise due diligence. The Petition: Petitioner filed a Petition for Review on Certiorari under Rule 45, arguing that Sr. Medalle had full mental capacity when signing, that HTC is bound by the doctrine of apparent authority, and that the Group was under HTC's full control and supervision. Petitioner contends that HTC's long-standing support of the Group's activities constitutes acquiescence.
Issue(s)
Whether Sister Medalle's consent to the MOA was vitiated by fraud or lack of mental capacity. Whether the act of Sister Medalle in signing the MOA was ultra vires or if the Doctrine of Apparent Authority applies to bind Holy Trinity College. Whether the deposition of Sister Medalle was admissible despite non-compliance with the Rules of Court.
Ruling
The petition is GRANTED. The Decision of the Court of Appeals is REVERSED and SET ASIDE. The Decision of the Regional Trial Court is REINSTATED in toto.
Ratio Decidendi
On Issue 1: The Court held that Sister Medalle's consent was not vitiated. Under Article 1330 of the Civil Code, consent is voidable if obtained through mistake, violence, intimidation, undue influence, or fraud (dolo causante). While Sr. Medalle was hospitalized for a stroke, the respondent failed to provide medical evidence that her mental faculties were impaired. The Court found the testimony of Atty. Belarmino credible, noting that he took precautions to verify her identity and the Group's status before she affixed her thumbmark. Furthermore, a notarized document like the MOA enjoys a presumption of regularity that can only be overcome by clear and convincing evidence, which was absent here. On Issue 2: The Court applied the Doctrine of Apparent Authority to bind HTC. This doctrine states that a corporation is estopped from denying an agent's authority if it knowingly permits the agent to act within the scope of an apparent authority. The evidence showed that Sr. Medalle organized the Group in her capacity as President, and HTC provided financial support, costumes, and premises for rehearsals for over a decade. The Board of Trustees never questioned these activities, effectively clothing Sr. Medalle with the authority to manage the Group's affairs, including entering into the MOA for their tour. Therefore, the contract was not ultra vires as it fell within the apparent authority HTC allowed Sr. Medalle to exercise. On Issue 3: The Court ruled the deposition of Sister Medalle inadmissible for failing to comply with Rule 23 of the Rules of Court. Specifically, the respondent failed to obtain leave of court to take the deposition before an answer was served, violating Section 1. Additionally, the Notary Public failed to provide the required certification under Section 20, which must state that the witness was duly sworn and that the deposition is a true record of the testimony. Because the trial court has the discretion to disregard depositions that do not follow procedural rules, its decision to exclude the deposition was upheld.
Main Doctrine
The Doctrine of Apparent Authority provides that a corporation is estopped from denying an officer's authority if it knowingly permits that officer to act within the scope of an apparent authority and holds them out to the public as possessing such power. This authority is determined either by the general manner in which the corporation holds out the agent or by its acquiescence in the agent's acts with actual or constructive knowledge. Consequently, if a corporation clothes its President with the appearance of authority to manage and fund student organizations, it cannot later evade liability for contracts entered into by said President on behalf of those organizations.