G.R. No. 190408, 20 July 2016

FACTS:

The Holy Trinity College Grand Chorale and Dance Company (the Group) was organized in 1987 by Sister Teresita Medalle (Sr. Medalle), the President of respondent Holy Trinity College in Puerto Princesa City. The Grand Chorale and Dance Company were two separate groups but for the purpose of performing locally or abroad, they were usually introduced as one entity. The Group was composed of students from Holy Trinity College.

In 2001, the Group was slated to perform in Greece, Italy, Spain and Germany. Edward Enriquez (Enriquez), who allegedly represented Sr. Medalle, contacted petitioner Benjie B. Georg to seek assistance for payment of the Group’s international airplane tickets. Petitioner is the Filipino wife of a German national Heinz Georg. She owns a German travel agency named DTravellers Reiseburo Georg. Petitioner, in turn, requested her brother, Atty. Benjamin Belarmino, Jr. (Atty. Belarmino), to represent her in the negotiation with Enriquez. Enriquez was referred to petitioner by Leonora Dietz (Dietz), another Filipino-German who has helped Philippine cultural groups obtain European engagements, including financial assistance.

A Memorandum of Agreement with Deed of Assignment (MOA) was executed between petitioner, as first party-assignee; the Group, as second-party assignor and S.C. Roque Group of Companies Holding Limited Corporation and S.C. Roque Foundation Incorporated, as foundation-grantor. Under the said Agreement, petitioner, through her travel agency, will advance the payment of international airplane tickets amounting to P4,624,705.00 in favor of the Group on the assurance of the Group represented by Sr. Medalle through Enriquez that there is a confirmed financial allocation of P4,624,705.00 from the foundation-grantor, S.C. Roque Foundation (the Foundation). The second-party assignor assigned said amount in favor of petitioner. Petitioner paid for the Group’s domestic and international airplane tickets.

Petitioner claimed that the second-party assignor/respondent and the foundation-grantor have not paid and refused to pay their obligation under the MOA. Petitioner prayed that they be ordered to solidarily pay the amount of P4,624,705.00 representing the principal amount mentioned in the Agreement, moral, exemplary, and actual damages, legal fees, and cost of suit.

In their Answer with Counterclaim, respondent argued that the MOA on which petitioner based its cause of action does not state that respondent is a party. Neither was respondent obligated to pay the amount of P4,624,705.00 for the European Tour of the Group nor did it consent to complying with the terms of the MOA. Respondent asserted that the thumbmark of Sr. Medalle was secured without her consent. Respondent maintained that since it was not a party to the MOA, it is not bound by the provisions stated therein. The RTC ruled in favor of petitioner. The Court of Appeals relieved respondent of any liability for petitioner’s monetary claims.

ISSUE:

Whether respondent is liable under the MOA.

RULING:

Between the two parties, we are inclined to give credence to petitioner.

Respondent claims that Sr. Medalle was not authorized by the corporation to enter into any loan agreement thus the MOA executed was null and void for being ultra vires. Petitioner invokes, as refutation, the doctrine of apparent authority.

Sr. Medalle, as President of Holy Trinity, is clothed with sufficient authority to enter into a loan agreement. As held by the trial court, the Holy Trinity College’s Board of Trustees never contested the standing of the Dance and Chorale Group and had in fact lent its support in the form of sponsoring uniforms or freely allowed the school premises to be used by the group for their practice sessions.

The doctrine of apparent authority provides that a corporation will be estopped from denying the agent’s authority if it knowingly permits one of its officers or any other agent to act within the scope of an apparent authority, and it holds him out to the public as possessing the power to do those acts.

The existence of apparent authority may be ascertained through (1) the general manner in which the corporation holds out an officer or agent as having the power to act or, in other words, the apparent authority to act in general, with which it clothes him; or (2) the acquiescence in his acts of a particular nature, with actual or constructive knowledge thereof, whether within or beyond the scope of his ordinary powers.

In this case, Sr. Medalle formed and organized the Group. She had been giving financial support to the Group, in her capacity as President of Holy Trinity College. Sr. Navarro admitted that the Board of Trustees never questioned the existence and activities of the Group. Thus, any agreement or contract entered into by Sr. Medalle as President of Holy Trinity College relating to the Group bears the consent and approval of respondent. It is through these dynamics that we cannot fault petitioner for relying on Sr. Medalle’s authority to transact with petitioner.

Finding that Sr. Medalle possessed full mental faculty in affixing her thumbmark in the MOA and that respondent is hereby bound by her actions, we reverse the ruling of the Court of Appeals.

*Case Digest by Legine S. Ramayla, JD-IV, Andres Bonifacio College, SY: 2019-2020