Facts:

The case involves Cebu Mactan Members Center, Inc. (CMMCI) as the petitioner and Masahiro Tsukahara as the respondent. In February 1994, CMMCI, represented by its President and Chairman of the Board, Mitsumasa Sugimoto, secured a loan of P6,500,000 from Tsukahara. To facilitate this loan, CMMCI issued seven postdated checks totaling the loan amount, with specific dates and amounts for each check. Subsequently, on April 13, 1994, CMMCI obtained an additional loan of P10,000,000 from Tsukahara, for which Sugimoto signed a promissory note both in his capacity as CMMCI's President and personally. The promissory note stipulated that the amount was to be paid by August 30, 1996, with an interest rate of 18% per annum. Upon the maturity of the checks, they were presented for payment but were dishonored by the drawee bank, PNB. After multiple unsuccessful attempts to collect the total loan amount of P16,500,000, Tsukahara initiated a case for the collection of the sum against bot...

Facts:

Loan Transactions and Issuance of Checks

In February 1994, petitioner Cebu Mactan Members Center, Inc. (CMMCI), through its President and Chairman of the Board of Directors, Mitsumasa Sugimoto, obtained a loan of P6,500,000 from respondent Masahiro Tsukahara. As payment, CMMCI issued seven postdated checks payable to Tsukahara, totaling P6,500,000. The checks were dated from May 6, 1994, to December 25, 1995.

Second Loan and Promissory Note

On April 13, 1994, CMMCI, again through Sugimoto, obtained another loan of P10,000,000 from Tsukahara. Sugimoto executed a promissory note in his capacity as CMMCI President and Chairman, as well as in his personal capacity. The promissory note stipulated repayment by August 30, 1996, with an 18% annual interest rate.

Dishonored Checks and Filing of the Case

Upon maturity, the checks were presented for payment but were dishonored by the drawee bank, PNB. Tsukahara filed a case for collection of sum of money against CMMCI and Sugimoto, alleging that the loans were used for CMMCI's beach resort improvements, including the construction of a wave fence, purchase of air conditioners, and payment of employee salaries.

CMMCI's Defense

CMMCI denied borrowing the money, claiming the loans were personal to Sugimoto. It argued that if the loans were corporate, they should have been supported by resolutions from the Board of Directors.

RTC and Court of Appeals Decisions

The Regional Trial Court (RTC) ruled in favor of Tsukahara, holding CMMCI and Sugimoto jointly and severally liable for the loans. The Court of Appeals affirmed the RTC's decision.

Issue:

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Ruling:

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Ratio:

1. Corporate Authority and Delegation of Powers: Under Section 23 of the Corporation Code, corporate powers are exercised by the board of directors. However, the board may delegate certain powers to officers, committees, or agents. The authority of corporate officers to bind the corporation may be derived from law, corporate by-laws, or implied by custom or acquiescence.

2. Express Powers Under By-Laws: The CMMCI by-laws expressly granted the President the power to borrow money, execute contracts, and sign checks and promissory notes on behalf of the corporation. Therefore, Sugimoto, as President, had the authority to enter into loan transactions without needing a board resolution.

3. Estoppel and Corporate Liability: CMMCI is estopped from denying the authority of its President to bind the corporation. The by-laws, as the corporation's self-imposed rules, have the force of law within the corporation. The corporation and its officers are bound by them.

4. Validity of Loans: The loans obtained by Sugimoto on behalf of CMMCI are valid and binding against the corporation. CMMCI is liable to pay the loans, including the stipulated interest and attorney's fees.

Conclusion:

The Supreme Court upheld the lower courts' rulings, emphasizing that the President's express authority under the corporate by-laws rendered a board resolution unnecessary. CMMCI is liable for the loans contracted by its President, Sugimoto, and must pay the amounts owed to Tsukahara.