Facts: Sometime in 1995, Terp Construction planned to develop a housing project called the Margarita Eastville and a condominium called Margarita Plaza. To finance the projects, Terp Construction, Home Insurance Guaranty Corporation, and Planters Bank agreed to raise funds through the issuance of bonds worth P400 million called the Margarita Bonds. The three companies entered into a Contract of Guaranty in which they agreed that Terp Construction would sell the Margarita Bonds and convey the funds generated into an asset pool named the Margarita Asset Pool Formation and Trust Agreement. Planters Bank, as trustee, would be the custodian of the assets in the asset pool with the corresponding obligation to pay the interests and redeem the bonds at maturity. Home Insurance Guaranty Corporation, as guarantor, would pay investors the value of the bond at maturity plus 8.5% interest per year. Banco Filipino purchased Margarita Bonds for P100 million. It asked for additional interest other than the guaranteed 8.5% per annum, based on the letters written by Terp Construction Senior Vice President Escalona.
Terp Construction began constructing Margarita Eastville and Margarita Plaza. After the economic crisis in 1997, however, it suffered unrealized income and could not proceed with the construction. When the Margarita Bonds matured, the funds in the asset pool were insufficient to pay the bond holders. Pursuant to the Contract of Guaranty, Planters Bank conveyed the asset pool funds to Home Insurance Guaranty Corporation, which then paid Banco Filipino interest earnings of 8.5% per year. Banco Filipino, however, sent Terp Construction a demand letter alleging that it was entitled to a 15.5% interest on its investment and that it was entitled to a 7% remaining unpaid interest. Terp Construction refused to pay the demanded interest.
Terp Construction filed a Complaint for declaration of nullity of interest, damages, and attorney's fees against Banco Filipino. RTC ruled in favor of Terp Construction. CA set aside the RTC decision.
Issue: Whether or not the Terp Construction expressly agreed to be bound to respondent Banco Filipino Savings Mortgage Bank for additional interest in the bonds it purchased.
Held: A corporation's repeated payment of an allegedly unauthorized obligation contracted by one of its officers effectively ratifies that corporate officer's allegedly unauthorized act.
A corporation exercises its corporate powers through its board of directors. This power may be validly delegated to its officers, committees, or agencies. "The authority of such individuals to bind the corporation is generally derived from law, corporate bylaws or authorization from the board, either expressly or impliedly by habit, custom or acquiescence in the general course of business[.]”
The authority of the board of directors to delegate its corporate powers may either be: (1) actual; or (2) apparent. Actual authority may be express or implied. Express actual authority refers to the corporate powers expressly delegated by the board of directors. Implied actual authority, on the other hand, "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.”
Petitioner's subsequent act of twice paying the additional interest Escalona committed to during the term of the Margarita Bonds is considered a ratification of Escalona's acts. Petitioner's only defense that they were "erroneous payment[s]" since it never obligated itself from the start cannot stand. Corporations are bound by errors of their own making.
No comments:
Post a Comment