G.R. No. L-69723 October 18, 1988
APEX INVESTMENT AND FINANCING CORPORATION AND JOSE S.J. VILLASECA, petitioners, vs. THE HONORABLE INTERMEDIATE APPELLATE COURT AND CROWN RADIO CORPORATION (PHILIPPINES), respondents.

FACTS

On December 6, 1968, Uy Han Kiat, then president of respondent Crown Radio Corporation, executed a promissory note for P250,000.00 in favor of petitioner Apex Investment and Financing Corporation and a corresponding real estate mortgage over corporate properties to secure it. The mortgage was registered only on May 24, 1977. Uy Han Kiat left the country shortly after the execution. In September 1977, Apex, through its co-petitioner Atty. Jose S.J. Villaseca, issued a notice of extrajudicial foreclosure sale due to alleged non-payment. Crown Radio claimed it only learned of the note and mortgage upon receiving this notice.
Crown Radio filed a complaint to declare the promissory note and mortgage null and void, alleging its former president had no authority to execute them on its behalf and that the stipulated interest was usurious. The trial court issued a restraining order against the foreclosure sale. Petitioners Apex and Villaseca defended that Uy Han Kiat acted pursuant to a board resolution authorizing him to mortgage corporate assets for the loan. Both the trial court and the Intermediate Appellate Court ruled in favor of Crown Radio, declaring the instruments void and awarding attorney’s fees.

ISSUE

Whether the promissory note and real estate mortgage executed by the corporate president are binding upon the respondent corporation.

RULING

The Supreme Court affirmed the appellate court’s decision, with modification regarding attorney’s fees. The Court upheld the factual findings of the lower courts that Uy Han Kiat lacked the requisite corporate authority to bind Crown Radio. Petitioners failed to present the original or conclusive secondary evidence of the alleged board resolution authorizing the mortgage. The testimonies presented to prove its existence and contents were deemed insufficient and unreliable by the trial court, a finding accorded great weight and respect. The legal logic rests on the principle that the authority of a corporate officer to execute such encumbrances must be clearly proven; absent such proof, the acts do not bind the corporation. Furthermore, the Court emphasized that it is not a trier of facts and will not disturb factual conclusions supported by evidence, especially when they involve credibility assessments best made by the trial court. The petition essentially sought a review of factual determinations, which is not permissible under Rule 45 of the Rules of Court, as only questions of law are reviewable in such appeals. No exceptional circumstance warranted a deviation from this rule. However, the award of attorney’s fees was deleted for lack of sufficient justification.