Reyes v. RCPI Employees Credit Union, Inc.
REITERATIONFacts
The Antecedents: The underlying dispute centers on a promissory note for P162,338.52 executed by David F. Halican, President and Chairman of the Board of Directors of RCPI Employees Credit Union, Inc., and Nestor Estremera, the Accounting Officer, in favor of Natividad G. Reyes. The note was payable on or before March 8, 1987. Upon default, Reyes filed a complaint for a sum of money with damages against the credit union. The credit union denied liability, asserting that its officers were not authorized to incur such a debt and counterclaimed for P1,049,515.70, alleging misappropriation by Reyes during her tenure as treasurer. Procedural History: The Regional Trial Court (RTC) of Caloocan City ruled in favor of Reyes, ordering the credit union to pay the principal sum, interest, liquidated damages, and attorney's fees. The RTC found that the credit union implicitly admitted Halican's authority to execute the note due to its failure to properly deny matters in Reyes' Request for Admission. However, the Court of Appeals (CA) reversed the RTC's decision, dismissing Reyes' complaint and finding her liable on the credit union's counterclaim. The CA held that Reyes failed to prove Halican's authority and did not sufficiently refute the counterclaim. The Petition: Reyes filed a petition for review on certiorari with the Supreme Court, assailing the CA's decision. Her main contention is that the CA decision is contrary to law and evidence. She argues that the credit union is estopped from disclaiming Halican's authority, citing his position, the issuance of postdated checks for the note, and his defense in a prior B.P. Blg. 22 case. Reyes also contends that the credit union implicitly admitted Halican's authority by failing to properly deny her Request for Admission. The petition seeks to overturn the CA's finding of liability on the counterclaim and reinstate the RTC's judgment in her favor.
Issue(s)
Whether the respondent credit union is liable to the petitioner on the promissory note executed by its officers. Whether the petitioner is liable to the respondent on the latter's counterclaim.
Ruling
The Supreme Court affirmed the Court of Appeals' decision in part, modifying it by absolving the petitioner of any liability to the respondent on the latter's counterclaim. The Court ruled that the respondent credit union is not liable to the petitioner on the promissory note, but also found that the petitioner is not liable to the respondent on the counterclaim.
Ratio Decidendi
On the issue of the respondent credit union's liability on the promissory note: The Court held that the respondent credit union is not liable to the petitioner on the promissory note. As a corporation, respondent could only act through its board of directors or officers duly authorized by the board. The petitioner failed to present any proof, such as a by-law provision or a board resolution, showing that David Halican and Nestor Estremera were authorized to contract the loan and execute the promissory note on behalf of the respondent. Therefore, Halican's act of executing the note did not bind the respondent credit union, consistent with the ruling in People's Aircargo and Warehousing Co., Inc. v. CA. The Court also rejected the petitioner's argument of estoppel, finding no ratification of Halican's act by the respondent. Furthermore, the Court clarified that the respondent's reply to the Request for Admission did not constitute an admission of Halican's authority, as it merely reiterated denials already made in the Answer, citing Po v. Court of Appeals. On the issue of the petitioner's liability on the respondent's counterclaim: The Court found the trial court's evaluation of the evidence more in accord with the records and thus absolved the petitioner of liability on the counterclaim. The trial court had ruled that the auditors' conclusions were based on conjectures and inferences, lacking factual and legal basis. It noted that the alleged deficiencies were not noticed by various internal committees and officers, suggesting a lack of conspiracy. The trial court also pointed out that if records were insufficient at the time of the external audit but sufficient at the time of the internal audit, no blame could be imputed to the petitioner, as she was not the record custodian. The Supreme Court agreed with this assessment, finding the evidence for the counterclaim insufficient.
Main Doctrine
The Supreme Court reiterated that a corporation can only exercise its powers through its board of directors or, when authorized by its by-laws or a board resolution, through its officers or agents. Acts of corporate officers that exceed their authority do not bind the corporation unless the corporation has ratified such acts or is estopped from disclaiming them. In this case, the Court found that the petitioner failed to prove that the corporate officers who signed the promissory note were authorized by the board of directors, thus the corporation was not bound by the note. The Court also clarified that a Request for Admission cannot be used to merely reiterate allegations already denied in an answer.