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Cebu Mactan V Tsukahara
Cebu Mactan V Tsukahara
159624 July 17, 2009 TSUKAHARA or order the sum of TEN MILLION PESOS
(₱10,000,000.00) on or before August 30, 1996, plus interest
CEBU MACTAN MEMBERS CENTER, INC., Petitioner, thereon at the rate of EIGHTEEN PERCENT (18%) per annum
vs. computed from the date of this instrument until fully paid.
MASAHIRO TSUKAHARA, Respondent.
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DECISION
CEBU MACTAN MEMBERS CENTER, INC.
CARPIO, J.:
By:
The Case
(Signed)
This is a petition for review1 of the Court of Appeals’ Decision2 MITSUMASA SUGIMOTO
dated 29 July 2003 in CA-G.R. CV No. 68321. The Court of In his capacity as Chairman and President
Appeals affirmed the Decision3 dated 24 September 1999 of the and in his personal capacity.
Regional Trial Court of Cebu City, Branch 58 (RTC).
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The Antecedent Facts
Upon maturity, the seven checks were presented for payment
In February 1994, petitioner Cebu Mactan Members Center, by Tsukahara, but the same were dishonored by PNB, the
Inc. (CMMCI), through Mitsumasa Sugimoto (Sugimoto), the drawee bank. After several failed attempts to collect the loan
President and Chairman of the Board of Directors of CMMCI, amount totaling ₱16,500,000, Tsukahara filed the instant case
obtained a loan amounting to ₱6,500,000 from respondent for collection of sum of money against CMMCI and Sugimoto.
Masahiro Tsukahara. As payment for the loan, CMMCI issued
seven postdated checks of CMMCI payable to Tsukahara, with Tsukahara alleged that the amount of ₱16,500,000 was used
4
details as follows: by CMMCI for the improvement of its beach resort, which
included the construction of a wave fence, the purchase of
The sole issue for resolution in this case is: Whether the Court c. Borrow money for the company by any legal means
of Appeals erred in holding that CMMCI is liable for the loan whatsoever, including the arrangement of letters of credit and
contracted by its President without a resolution issued by the overdrafts with any and all banking institutions;
CMMCI Board of Directors.
d. Execute on behalf of the company all contracts and
The Court’s Ruling agreements which the said company may enter into;
We find the petition without merit. e. Sign, indorse, and deliver all checks, drafts, bill of exchange,
promissory notes and orders of payment of sum of money in the
A corporation, being a juridical entity, may act through its board name and on behalf of the corporation;15
of directors, which exercises almost all corporate powers, lays
down all corporate business policies and is responsible for the It is clear from the foregoing that the president of CMMCI is
efficiency of management.9 The general rule is that, in the given the power to borrow money, execute contracts, and sign
absence of authority from the board of directors, no person, not and indorse checks and promissory notes, in the name and on
even its officers, can validly bind a corporation.10 Section 23 of behalf of CMMCI.1avvphi1 With such powers expressly
the Corporation Code of the Philippines provides: conferred under the corporate by-laws, the CMMCI president,
in exercising such powers, need not secure a resolution from
SEC. 23. The Board of Directors or Trustees. — Unless the company’s board of directors. We quote with approval the
otherwise provided in this Code, the corporate powers of all
ruling of the appellate court, viz:
corporations formed under this Code shall be exercised, all
business conducted and all property of such corporations x x x The court a quo correctly ruled that a board resolution in
controlled and held by the board of directors or trustees x x x. this case is a superfluity given the express provision of the
corporate by-laws.
In People’s Aircargo and Warehousing Co., Inc. v. Court of
Appeals,11 we held that under Section 23, the power and the To insist that a board resolution is still required in order to bind
responsibility to decide whether the corporation should enter the corporation with respect to the obligations contracted by its
into a contract that will bind the corporation are lodged in the president is to defeat the purpose of the by-laws. By-laws of a
board of directors, subject to the articles of incorporation, by- corporation should be construed and given effect according to
laws, or relevant provisions of law. However, just as a natural the general rules governing the construction of contracts. They,
person may authorize another to do certain acts for and on his as the self-imposed private laws of a corporation, have, when
behalf, the board of directors may validly delegate some of its valid, substantially the same force and effect as laws of the
functions and powers to officers, committees or agents.12 The corporation, as have the provisions of its charter insofar as the
authority of such individuals to bind the corporation is generally corporation and the persons within it are concerned. They are
derived from law, corporate by-laws or authorization from the in effect written into the charter and in this sense, they become
board, either expressly or impliedly by habit, custom or part of the fundamental law of the corporation. And the
acquiescence in the general course of business.13 This Court corporation and its directors (or trustees) and officers are bound
has held, thus: by and must comply with them.
A corporate officer or agent may represent and bind the The corporation is now estopped from denying the authority of
corporation in transactions with third persons to the extent that its president to bind the former into contractual relations. x x x16
[the] authority to do so has been conferred upon him, and this
includes powers which have been intentionally conferred, and Thus, given the president’s express powers under the CMMCI’s
also such powers as, in the usual course of the particular by-laws, Sugimoto, as the president of CMMCI, was more than
business, are incidental to, or may be implied from, the powers equipped to enter into loan transactions on CMMCI’s behalf.
intentionally conferred, powers added by custom and usage, as Accordingly, the loans obtained by Sugimoto from Tsukahara
usually pertaining to the particular officer or agent, and such on behalf of CMMCI are valid and binding against the latter, and
CMMCI may be held liable to pay such loans.
WHEREFORE, we DENY the petition. We AFFIRM the Court of SO ORDERED.
Appeals’ Decision dated 29 July 2003 in CA-G.R. CV No.
68321.