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ARTURO C. CALUBAD v. RICARCEN DEVELOPMENT CORPORATION

FACTS:

Respondent Ricarcen Development Corporation (Ricarcen) was a domestic corporation engaged in renting out real estate. Marilyn R. Soliman (Marilyn) was the president of Ricarcen from 2001 to August 2003. Marilyn, acting on behalf of Ricarcen, obtained a loan amounting to P4,000,000.00 from petitioner Arturo C. Calubad (Calubad). The loan was secured by a real estate mortgage over Ricarcen's property in Quezon City. The terms of the loan included an interest rate of 5% for the first month and 3% for succeeding months, and a penalty of 1% per month for delayed payment. On December 6, 2001, the loan amount was increased to P5,000,000.00 through an amendment to the mortgage contract. On May 8, 2002, Ricarcen took out an additional loan of P2,000,000.00 from Calubad. Marilyn presented a Board Resolution and Secretary's Certificates to prove her authority to execute the mortgage contracts. After Ricarcen failed to pay the loan, Calubad initiated foreclosure proceedings and eventually acquired the property through a public auction. Ricarcen later discovered Marilyn's transactions with Calubad and filed a complaint seeking the annulment of the mortgage contracts, foreclosure, and sale. The Regional Trial Court granted Ricarcen's complaint, holding that Marilyn failed to present a special power of attorney to prove her authority from Ricarcen.

The case involves a dispute over the validity of mortgage contracts entered into by Marilyn Soliman, the alleged President of Ricarcen Development Corporation, and Arturo Calubad. The Regional Trial Court (RTC) declared the mortgage contracts null and void, canceled the transfer certificate of title (TCT) in Calubad's name, and ordered the payment of damages. Calubad appealed to the Court of Appeals (CA), but his appeal was dismissed and the RTC decision was affirmed. Calubad then filed a petition before the Supreme Court. Calubad claims that Ricarcen is estopped from denying Marilyn's authority to enter into the contract based on the board resolution and secretary's certificates purportedly authorizing Marilyn to secure a loan and mortgage on behalf of the corporation. He also argues that Ricarcen benefited from the loan proceeds and impliedly agreed to the mortgage loans. Calubad presented documents, including a board resolution and secretary's certificates, to support his claim of Marilyn's authority.

The case involves a dispute regarding the validity of certain loan transactions entered into by the corporation Ricarcen Corporation ("Ricarcen"). Petitioner Arturo Calubad alleged that he extended loans to Ricarcen amounting to P2,000,000.00, secured by a real estate mortgage over a parcel of land owned by Ricarcen. Petitioner presented four documents as evidence of the loan transactions: a letter addressed to Ricarcen, a board resolution, a secretary's certificate, and an amendment of deed of real estate mortgage. The letter stated the terms of the loan agreement, including the amount, interest rate, and collateral. The board resolution authorized Ricarcen's president, Marilyn Soliman, to secure the loan and sign the necessary documents. The secretary's certificate confirmed the resolution's validity. Marilyn Soliman, on behalf of Ricarcen as its president, signed the amendment of deed of real estate mortgage. However, Elizabeth, Ricarcen's corporate secretary, denied signing any of the documents and claimed that she regularly signed blank documents that were left with Marilyn. Petitioner argued that the fact that Elizabeth entrusted signed, blank documents to Marilyn indicated that Ricarcen authorized Marilyn to secure loans and use its properties as collateral. Petitioner also presented several checks issued by Elizabeth or Erlinda, jointly with Marilyn, representing the loan proceeds. The checks were payable to Ricarcen and were deposited in its bank account, providing further evidence of Ricarcen's receipt of the loan proceeds.

ISSUES:

    • Whether Ricarcen Development Corporation is estopped from denying Marilyn R. Soliman's authority to enter into a loan and mortgage contract.
    • Whether the contracts of loan and mortgage can be ratified.

  3. Whether the case falls under the exceptions to the rule that only questions of law should be raised in petitions filed under Rule 45 of the Rules of Court.

  4. Whether the agent, Marilyn, had actual or apparent authority to enter into contracts on behalf of Ricarcen.

  5. Whether Marilyn had the authority to act for and enter into contracts on behalf of Ricarcen.

  6. Whether Calubad can be held liable for continuing to transact with Marilyn despite her unauthorized acts.

  7. Whether the petitioner's contract with Marilyn was valid and enforceable.

  8. Whether the petitioner is entitled to exemplary damages, attorney's fees, and costs of suit.

RULING:

  1. The Court held that Ricarcen Development Corporation is estopped from denying Marilyn R. Soliman's authority to enter into a loan and mortgage contract. The Court found that Ricarcen's officers, Elizabeth and Erlinda, acted in a manner that appeared to authorize Marilyn's actions and hold her out as having authority. Additionally, Ricarcen received and benefited from the loan proceeds, further supporting the estoppel. As for the ratification of the contracts, the Court ruled that they can be ratified if they were indeed invalid.

  2. The case falls under the exceptions to the rule that only questions of law should be raised in petitions filed under Rule 45. The Court found that the findings of the lower courts are contradicted by the evidence on record, which makes a Rule 45 appeal proper.

  3. The Court held that Marilyn had apparent authority to enter into contracts on behalf of Ricarcen. Under the doctrine of apparent authority, 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. The principal's liability, however, 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. It is incumbent upon the party claiming apparent authority to prove how the principal's acts led them to believe that the agent was authorized to act on behalf of the principal.

  4. Marilyn had the authority to act for and enter into contracts on behalf of Ricarcen. It was within her scope of authority to do so as evidenced by her possession of blank signed sheets of paper entrusted to her by the corporate secretary and the owner's duplicate copy of the land title covering the property mortgaged to Calubad.

  5. Calubad cannot be held liable for continuing to transact with Marilyn despite her unauthorized acts. Calubad can be considered an innocent third party dealing in good faith with Marilyn. Ricarcen, as the principal, should bear the consequences of its negligence in granting apparent authority to Marilyn. It should not be allowed to deny such authority and make Calubad suffer the consequences.

  6. The contract between the petitioner and Marilyn is valid and enforceable as there was no sufficient evidence to show dishonest purpose, ill will, or fraud on the part of the petitioner in challenging the said contract.

  7. Exemplary damages cannot be awarded in the absence of evidence of fraud or wanton behavior. Consequently, attorney's fees and costs of suit cannot be recovered.

PRINCIPLES:

  • Estoppel: Ricarcen is estopped from denying Marilyn's authority due to the acts of its officers and its receipt of loan proceeds.

  • Apparent Authority: Marilyn had apparent authority to enter into the loan and mortgage contracts due to the actions of Ricarcen's officers.

  • Ratification: The contracts can be ratified if they were invalid.

  • The rules of court require that only questions of law should be raised in petitions filed under Rule 45, as factual questions are not the proper subject of an appeal by certiorari. There are recognized exceptions to this rule, which include findings grounded on speculation, manifestly mistaken inferences, grave abuse of discretion, misapprehension of facts, conflicting findings, findings contrary to the admissions of both parties, and findings of fact without citation of specific evidence.

  • The burden of proving that a case falls under the exceptions to the general rule on a Rule 45 appeal lies with the parties. Mere assertion and claim that the case falls under the exceptions do not suffice.

  • Corporations exercise their powers and conduct their business through their board of directors, unless otherwise provided by law or the corporation's by-laws. The board of directors may delegate their functions and powers to officers or agents.

  • The two types of authority conferred upon a corporate officer or agent in dealing with third persons are actual authority and apparent authority. Actual authority can be express or implied, while apparent authority is based on the principle of estoppel and can be ascertained through the general manner the corporation holds out an officer or agent as having power to act or the acquiescence in his or her acts of a particular nature with actual or constructive knowledge thereof.

  • The doctrine of apparent authority provides that even if no actual authority has been conferred on an agent, his or her acts bind the principal as long as they are within the apparent scope of authority. Apparent authority is determined by the acts of the principal, and the principal's liability is limited to third persons who reasonably believed that the agent was authorized to act for the principal due to the principal's conduct.

  • If a private corporation intentionally or negligently clothes its officers or agents with apparent power to perform acts for it, the corporation will be estopped to deny that such apparent authority is real as to innocent third persons dealing in good faith with such officers or agents.

  • Moral damages are not automatically awarded in cases of breach of contract. It must be proven that the party who breached the contract acted fraudulently or in bad faith, in wanton disregard of the contracted obligation.

  • Contracts entered into in good faith are valid and enforceable.

  • Exemplary damages can only be awarded in cases where there is fraud, bad faith, wantonness, or a similar wrongful act.

  • Attorney's fees and costs of suit cannot be awarded in the absence of exemplary damages.