This case discusses the doctrine of apparent authority. Ricarcen Development Corporation's president, Marilyn, took out loans totaling P4,000,000 from Calubad and used Ricarcen's property as collateral. Ricarcen later claimed Marilyn did not have authority to do so. The Supreme Court ruled that Ricarcen is estopped from denying Marilyn's authority, as Ricarcen had clothed Marilyn with apparent authority through providing her broad powers and failing to monitor her actions, leading Calubad reasonably to believe she was authorized. The Court found for Calubad, saying an innocent third party should not suffer due to a company's negligence.
Original Description:
Doctrine of apparent authority
Original Title
Calubad vs Ricarcen Development Corp. GR. No. 202364, August 30, 2017
This case discusses the doctrine of apparent authority. Ricarcen Development Corporation's president, Marilyn, took out loans totaling P4,000,000 from Calubad and used Ricarcen's property as collateral. Ricarcen later claimed Marilyn did not have authority to do so. The Supreme Court ruled that Ricarcen is estopped from denying Marilyn's authority, as Ricarcen had clothed Marilyn with apparent authority through providing her broad powers and failing to monitor her actions, leading Calubad reasonably to believe she was authorized. The Court found for Calubad, saying an innocent third party should not suffer due to a company's negligence.
This case discusses the doctrine of apparent authority. Ricarcen Development Corporation's president, Marilyn, took out loans totaling P4,000,000 from Calubad and used Ricarcen's property as collateral. Ricarcen later claimed Marilyn did not have authority to do so. The Supreme Court ruled that Ricarcen is estopped from denying Marilyn's authority, as Ricarcen had clothed Marilyn with apparent authority through providing her broad powers and failing to monitor her actions, leading Calubad reasonably to believe she was authorized. The Court found for Calubad, saying an innocent third party should not suffer due to a company's negligence.
Doctrine: When a corporation intentionally or negligently clothes its agent
with apparent authority to act in its behalf, it is estopped from denying its agent's apparent authority as to innocent third parties who dealt with this agent in good faith. Case Title: Calubad vs. Ricarcen Development Corp. GR. No. 202364, August 30, 2017 (J. Leonen) Facts: Respondent Ricarcen Development Corporation (Ricarcen) was the registered owner of a parcel of land which was subdivided into two (2) lots. Marilyn, the President of Ricarcen, acting on the latter’s behalf as its president, took out a P4,000,000.00 loan from Calubad. To prove her authority to execute the three (3) mortgage contracts in Ricarcen's behalf, Marilyn presented Calubad with a Board Resolution Ricarcen's board of directors removed Marilyn as president and appointed Josefelix as its new president. In its Complaint, Ricarcen claimed that it never authorized its former president Marilyn to obtain loans from Calubad or use the Quezon City property as collateral for the loans. Calubad argued that even if Ricarcen did not authorize Marilyn, it was already estopped from denying her authority since the loan proceeds had been released and Ricarcen had benefited from them. *RTC- Granted respondent’s complaint and held that Marilyn failed to present a special power of attorney as evidence of her authority from Ricarcen *CA- Dismissed petitioner Calubad’s appeal and affirmed the RTC Decision Issue: Whether or not Ricarcen is barred by estoppel from denying Marilyn's authority to enter into a contract of loan and mortgage with Calubad Held: Yes. As a corporation, Ricarcen exercises its powers and conducts its business through its board of directors, as provided for by Section 23 of the Corporation Code: Section 23. The board of directors or trustees. - Unless otherwise provided in this Code, the corporate powers of all corporations formed under this Code shall be exercised, all business conducted and all property of such corporations controlled and held by the board of directors or trustees to be elected from among the holders of stocks, or where there is no stock, from among the members of the corporation, who shall hold office for one (1) year until their successors are elected and qualified. However, the board of directors may validly delegate its functions and powers to its officers or agents. Law and jurisprudence recognize actual authority and apparent authority as the two (2) types of authorities conferred upon a corporate officer or agent in dealing with third persons. Actual authority can either be express or implied. Express actual authority refers to the power delegated to the agent by the corporation, while an agent's implied authority can be measured by his or her prior acts which have been ratified by the corporation or whose benefits have been accepted by the corporation. On the other hand, apparent authority is based on the principle of estoppel. The Civil Code provides: The doctrine of apparent authority provides that even if no actual authority has been conferred on an agent, his or her acts, as long as they are within his or her apparent scope of authority, bind the principal. However, the principal's liability is limited to third persons who are reasonably led to believe that the agent was authorized to act for the principal due to the principal's conduct. As the former president of Ricarcen, it was within Marilyn's scope of authority to act for and enter into contracts in Ricarcen's behalf. Her broad authority from Ricarcen can be seen with how the corporate secretary entrusted her with blank yet signed sheets of paper to be used at her discretion. She also had possession of the owner's duplicate copy of the land title covering the property mortgaged to Calubad, further proving her authority from Ricarcen. Calubad could not be faulted for continuing to transact with Marilyn, even agreeing to give out additional loans, because Ricarcen clearly clothed her with apparent authority. Likewise, it reasonably appeared that Ricarcen's officers knew of the mortgage contracts entered into by Marilyn in Ricarcen's behalf as proven by the issued Banco De Oro checks as payments for the monthly interest and the principal loan. It appears as if Ricarcen and its officers gravely erred in putting too much trust in Marilyn. However, Calubad, as an innocent third party dealing in good faith with Marilyn, should not be made to suffer because of Ricarcen's negligence in conducting its own business affairs.
DIGEST - Y-I LEISURE PHILIPPINES, INC., YATS INTERNATIONAL LTD. AND Y-I CLUBS AND RESORTS, INC., Petitioners, v. JAMES YU, Respondent. G.R. No. 207161, September 08, 2015
16 - UNITED COCONUT PLANTERS BANK, VS. SECRETARY OF JUSTICE, OFFICE OF THE CHIEF PROSECUTOR, TIRSO ANTIPORDA, JR. AND GLORIA CARREON, G.R. No. 209601, January 12, 2021