G.R. No. 132981 . August 31, 2004.
MAMITUA SABER, substituted by his HEIRS, represented by ORFIA ALICER SABER, petitioners, vs. COURT OF APPEALS, PHILIPPINE AMANAH BANK and ASGARI ARADJI, respondents.

FACTS

Dr. Mamitua Saber was appointed Executive Vice-President and Officer-in-Charge of the Philippine Amanah Bank (PAB). The PAB was designated by the President to manage the 1974 Hajj pilgrimage. Saber chartered the M/V Sweet Homes for the voyage. Due to competing pilgrim transports authorized for politicians, many prospective passengers canceled, leaving numerous cabin accommodations vacant. To mitigate the bank’s impending financial loss, Saber, on November 21, 1974, authorized the sale on credit of 70 tickets to Sacar Basman, payable by postdated checks, without prior approval from the PAB Board of Directors. Basman subsequently failed to pay the P488,000 obligation.
The PAB, through its Board Director Asgari Aradji, filed a civil case for damages against Saber, alleging the ticket sale was unauthorized and caused loss to the bank. The Regional Trial Court ruled in favor of Saber, finding he acted in good faith and within his apparent authority as the bank’s chief executive to avert a greater loss. The Court of Appeals reversed this decision, holding Saber personally liable for damages for acting beyond his authority.

ISSUE

Whether Dr. Mamitua Saber incurred personal civil liability for authorizing the sale of pilgrimage tickets on credit without prior Board approval.

RULING

No, Saber is not personally liable. The Supreme Court reversed the Court of Appeals and reinstated the RTC decision. The legal logic hinges on the doctrine of apparent authority and the nature of Saber’s actions. As the bank’s Executive Vice-President and Officer-in-Charge, Saber was the highest-ranking officer managing daily operations. The Hajj project was a special, urgent undertaking directly assigned to the PAB by the President. Faced with mass cancellations that threatened a significant financial loss on the chartered vessel, Saber’s decision to sell the tickets on credit was a managerial act done in good faith and under exigent circumstances to protect the bank’s interest. His authority, while not expressly granted by the Board for this specific transaction, was apparent given his position and the operational context. The bank accepted and implemented the arrangement through its Secretariat. Personal liability for corporate officers attaches only for bad faith or gross negligence, which were not present. The loss resulted from Basman’s default, not from Saber’s ultra vires act. Therefore, Saber acted within the scope of his apparent authority and is not personally answerable for the resulting debt.