G.R. No. 154685 - Metropolitan Bank and Trust Company vs. Court of Appeals

Parties and posture
Petitioner: J. Antonio Aguenza, President of Intertrade & Marketing Co., Inc. (Intertrade); respondents: Metropolitan Bank & Trust Company (Metrobank), Vitaliado P. Arrieta (Executive Vice‑President of Intertrade), Lilia P. Perez (bookkeeper), Patricio P. Perez (husband of Lilia Perez), and the Court of Appeals.
Metrobank sued Intertrade, Arrieta, Lilia Perez and Patricio Perez to collect a loan, interests, fees, penalties, exemplary damages and attorneys’ fees; petitioner Aguenza was later impleaded by amended complaint.

Transactions and documentary background
Board authorization (Feb 28, 1977): Intertrade’s Board of Directors passed a resolution authorizing and empowering petitioner Aguenza and Arrieta to jointly apply for and open credit lines with Metrobank.
Trust receipts (May–June 1977): Aguenza and Arrieta executed several trust receipts for Intertrade with aggregate value of P562,443.46; Metrobank’s debit memo dated Mar 22, 1978 showed full settlement of these letters of credit in that amount.
Continuing Suretyship Agreement (Mar 14, 1977): Aguenza and Arrieta executed a Continuing Suretyship Agreement binding themselves jointly and severally with Intertrade to pay Metrobank any obligation of Intertrade up to P750,000.00; the agreement was denominated “CONTINUING SURETYSHIP” and contained a clause that it remains in force until written revocation by the surety.
Loan and Promissory Note (Mar 21, 1978): Arrieta and Lilia Perez obtained a P500,000.00 loan from Metrobank and executed a promissory note in that amount, payable in 25 equal installments of P20,000.00 starting Apr 20, 1979, at 18.704% per annum interest and additional 8% per annum in case of default. Arrieta and Perez defaulted, accelerating the obligation.
Procedural history at trial and appellate levels

Trial court (Decision dated Feb 28, 1984): After trial, the RTC absolved Aguenza and Intertrade from liability and declared the promissory note the personal obligation only of Arrieta and Lilia Perez; ordered Arrieta and Perez to pay Metrobank P1,062,898.92 (as of Sept 15, 1982) plus interest, fees, penalties and attorney’s fees; dismissed claims against Intertrade and Aguenza.
Court of Appeals (Decision promulgated Feb 11, 1986): The CA set aside the RTC decision and held Intertrade and Aguenza jointly and severally liable to Metrobank for principal P440,000.00 plus interest at 18.704% from Apr 15, 1979, penalty of 8% on P440,000 from July 19, 1978, and P15,000 attorney’s fees; absolved Arrieta and the Perez spouses.
Supreme Court review: Aguenza filed a petition for review on certiorari contesting the CA’s conclusions that (a) the March 21, 1978 loan was a corporate liability of Intertrade and (b) the Continuing Suretyship Agreement of Mar 14, 1977 covered that loan.

Primary legal issues
Whether the promissory note dated March 21, 1978 signed by Arrieta and Lilia Perez constituted a corporate obligation of Intertrade such that Intertrade—and consequently Aguenza as surety under the Continuing Suretyship—could be held liable.
Whether the Continuing Suretyship Agreement of March 14, 1977 executed by Aguenza (and Arrieta) covered the March 21, 1978 loan to Arrieta and Lilia Perez.

Subsidiary evidentiary and legal questions
Whether alleged admissions in Intertrade’s Answer and letters from Arrieta constituted binding judicial admissions or ratification by the corporation of the loan.
Whether any corporate enabling act, board resolution or ratification existed empowering Arrieta (alone or with Lilia Perez) to contract the March 21, 1978 loan on behalf of Intertrade.
What legal principles govern interpretation of continuing suretyships and the extent of surety liability where authority to bind the corporation is disputed.