G.R. No. 150350 - Yasuma vs. Heirs of De Villa

The case is a petition for review on certiorari, challenging the Court of Appeals’ decision in CA-G.R. CV No. 61755 dated October 18, 2001.
The petitioner is Koji Yasuma, and the respondents are the heirs of Cecilio S. de Villa and East Cordillera Mining Corporation.
The dispute centers on a series of loans and a corresponding mortgage involving Cecilio S. de Villa, who at the time served as president of East Cordillera Mining Corporation.

On September 15, 1988, October 21, 1988, and December 5, 1988, de Villa obtained loans from petitioner Koji Yasuma amounting to P1,100,000, P100,000, and P100,000, respectively, summing to a total of P1.3 million.
Three promissory notes were executed: the latter, for P1,300,000, served to cancel the two earlier notes.
The notes were signed solely by de Villa, with no indication that they were executed on behalf of East Cordillera Mining Corporation.

The loans were secured by real estate mortgages on a parcel of land identified by Transfer Certificate of Title No. 176575 in the name of East Cordillera Mining Corporation.
Separate mortgage deeds were executed on the dates corresponding to the loans, with de Villa signing as the president of the corporation.
A third mortgage deed later cancelled the first two, consolidating the security for the loan.

Petitioner filed a collection suit in the Regional Trial Court of Makati City, Branch 148, against de Villa and the respondent corporation after de Villa’s failure to pay.
RTC-Br. 148 initially declared the defendants in default and ruled in favor of the petitioner.
The judgment was annulled on appeal due to improper service of summons, leading to a retrial.

During the retrial in RTC-Br. 148, de Villa died and the petitioner amended the complaint to include de Villa’s heirs.
RTC of Makati City, Branch 139, rendered a judgment on November 13, 1998, in favor of the petitioner against respondent corporation, awarding P1.3 million plus legal interest, attorney’s fees, liquidated damages, and costs of suit, while dismissing the case against the respondent heirs.
The Court of Appeals reversed the RTC decision, holding that the loan was a personal obligation of de Villa and that the mortgage was null and void due to lack of corporate authority.

Holding that the corporation did not ratify de Villa’s act even though it admitted receiving the P1.3 million.
Ignoring the agreed facts and issues approved in the pre-trial by the trial court.
Setting aside the real estate mortgage and awards for attorney’s fees, liquidated damages, and costs.
Disregarding the award of interest in favor of the petitioner.

The petition raised two principal issues regarding the nature of the loan and the validity of the mortgage.

Whether the loans taken by de Villa were personal liabilities of de Villa or debts incurred by East Cordillera Mining Corporation.

Whether the real estate mortgage executed by de Villa as president of the corporation was valid, or if it was null and void due to lack of proper authority, specifically the absence of a special power of attorney.