J. ANTONIO AGUENZA, petitioner, vs.
RULING :
METROPOLITAN BANK & TRUST CO.,
VITALIADO P. ARRIETA, LILIA PEREZ,
PATRICIO PEREZ and THE INTERMEDIATE
APPELLATE COURT, respondents
Facts :
The board of directors of INTERTRADE,
through a Board Resolution, authorized
and empowered ANTONIO AGUENZA
and Vitaliado Arrieta to jointly apply for
and open credit lines with Metrobank
Aguenza is the President
While Arrieta is the executive vp
Hence, they executed several trust
receipts
With Intertrade as the entrustee and
Metrobank as the entruster
Aguenza and Arrieta executed a
CONTINUING Surety Agreement
whereby both bound themselves
jointly and severally with Intertrade to
pay private respondent Metrobank
whatever obligation intertrade incures
But not exceeding 750K
In this connection, Metrobank Debit
Memo to intertrade showed full
settlement of the letters if credit
covered by said trust receipts in the
total amount of 560k
Arrieta and the bookkeeper of
Intertrade (Perez) obtained a 500k
loan from metrobank
Perez and Arrieta executed a
Promissory note in favour of MB worth
500k
They held themselves jointly and
severally liable
P % Arrieta failed to pay some
instalments
Hence, it became due and demandable
MB instituted a suit against Intertrade,
A & P for payment
Then MB filed an amended complaint
impleading Aguenza as liable for the
loan made by A & P
560K Trust receipts was paid by
Intertrade
RTC: absolved Aguenza and dismissed MBs
complaint against him
CA : Set aside . Intertrade and Aguenza are
jointly and bseverally liable
The complaint against A&P was dismissed
ISSUE : Was CA Correct, are Intertrade and
Aguenza jointly and severally liable?
CA was wrong
CA said that Intertrade admitted that
the loan by A&P as its own obligation
The rule that the allegations,
statements, or admissions contained in
a pleading are conclusive as against
the pleader is NOT ABSOLUTE
An admission in a pleading may be
contradicted by showing that it was
made by improvidence or mistake or
that no such admission was made
The CA committed an error in
appreciating the ANSWER filed by the
lawyer of intertrade.
There was neither express or implied
admission of corporate liability that
would make the general rule
applicable
NO admission was made at all
And Even if there was an admission, it
still has no effect
Because in the absence of ratification
or authority, such admission does not
bind the corp.
CA also based its decision on letters
emanating from the office of arrieta
CA said that the said letters were
considered as indicating the
corporate liability of the corporation
SC: Ratification can never be made on
the part of the corporation by the
same persons who wrongfully assume
the power to make the contract, but
the ratification must be by the officer
as governing body having authority to
make such contract
The unauthorized act of Arrieta can
only be ratified by the action of the
board of directors and/or petitioner
Aguenza jointly with private
respondent arrieta
Intertrade has a distinct personality
from its members
THE PN was signed by A&P without
stating as to what capacity are they
signing it
There was no BOARD OR SHs
resolution was presented
The respondents argue that the acts of
A&P was in accordance with the
ordinary course of business usages
and practices of Intertrade
But this argument is devoid of merit,
because the prevailing practice in
intertrade was to explicitly authorize
an officer to contract loans in behalf of
the corporation
 Thus, proceeding from the secured by the Arrieta and Perez
premise that the subject loan was promissory note, is not the
not the responsibility of obligation of the corporation and
Intertrade, it follows that the petitioner Aguenza, but the
undertaking of Arrieta and the individual and personal obligation
bookkeeper was not an of private respondents Arrieta and
undertaking covered by the Lilia Perez.
Continuing Suretyship
Agreement. The rule is that a WHEREFORE, the petition is
contract of surety is never GRANTED, and the questioned
presumed; it must be express and decision of the Court of
cannot extend to more than what Appeals[18] dated February 11,
is stipulated.[17] It is strictly 1986 is REVERSED and SET ASIDE.
construed against the creditor, The judgment of the trial court
every doubt being resolved dated February 29, 1984 is hereby
against enlarging the liability of REINSTATED.
the surety.

The present obligation incurred in

subject contract of loan, as