**Facts:**
Advance Paper Corporation (Advance Paper), engaged in the production and sale of paper products, extended credit and loan facilities to Arma Traders Corporation (Arma Traders), a company dealing in school and office supplies. Between September to December 1994, Arma Traders purchased products worth P7,533,001.49 on credit and secured three loans totaling P7,788,796.76 from Advance Paper. These financial accommodations were represented by 82 postdated checks, which were later dishonored by the bank due to insufficiency of funds or closed accounts. Consequently, Advance Paper, spearheaded by its president, George Haw, filed a complaint for the collection of sum of money against Arma Traders and its officers, alleging fraudulent issuance of checks.
The Regional Trial Court (RTC) of Manila found in favor of Advance Paper, ordering Arma Traders to settle its debt along with attorney’s fees. However, this decision was overturned by the Court of Appeals (CA), which found insufficient evidence to hold Arma Traders liable for the transactions in question, particularly highlighting the lack of authorization for the officers to contract the loans on behalf of the corporation.
**Issues:**
1. Whether the failure to comply with A.M. No. 02-8-13-SC and the tardiness in filing the motion for reconsideration with the CA merits dismissal of the petition for review.
2. Whether Advance Paper Corporation proved Arma Traders Corporation’s liability for the purchases on credit and loans by preponderance of evidence.
3. Whether Arma Traders can be held liable for the loans despite the absence of a formal board resolution authorizing the transactions.
4. The applicability of the doctrine of apparent authority in the actions of Arma Traders’ officers.
**Court’s Decision:**
The Supreme Court granted the petition, reversing the CA’s decision and reinstating the RTC’s original ruling in favor of Advance Paper. The Court debunked procedural concerns over the petition’s filing, emphasizing the substantial justice over technicalities, particularly considering the significant amount involved in the dispute.
On substantial grounds, the Court confirmed the liability of Arma Traders based on the doctrine of apparent authority, ruling that due to the corporation’s actions over time, it had led Advance Paper to believe that the officers had the authority to transact loans on its behalf. Furthermore, despite the hearsay nature of certain evidence (sales invoices), the Court found enough corroborative evidence, such as the issuance of checks and admissions regarding their purposes, to support the obligation of Arma Traders to Advance Paper.
**Doctrine:**
The case establishes or reaffirms the doctrine of apparent authority in corporate transactions, signaling that a corporation may be bound by the acts of its officers if it, through its actions or inaction over time, has held out these officers as possessing the authority to act on its behalf.
**Class Notes:**
1. **Doctrine of Apparent Authority:** A corporation can be estopped from denying an officer’s authority if it knowingly permits the officer to act within such authority and holds him or her out to the public as possessing it.
2. **Preponderance of Evidence:** In civil cases, the burden of proof lies on the party who, based on the evidence presented, convinces the court of their assertions more than the other.
3. **Hearsay Evidence:** Generally not admissible unless it falls under exceptions; however, unobjected hearsay evidence becomes part of the case record and may be considered if corroborated by other evidence.
4. **Corporate Liability for Acts of Officers:** Corporations can be held liable for the actions of their officers if these actions are within the scope of apparent authority or if the corporation has led third parties to believe in the officers’ authority.
5. **Verification and Certification against Forum Shopping (A.M. No. 02-8-13-SC):** Compliance with rules for verification and certification against forum shopping is crucial but can be waived by the Court in the interest of justice.
**Historical Background:**
This case underscores the evolving jurisprudence regarding corporate authority and the responsibility of companies to monitor and regulate the actions of their officers. It reflects the balance between holding corporations accountable for the actions of those who lead them and ensuring fairness in transactions with third parties. The decision reiterates the importance of the doctrine of apparent authority in the realm of corporate transactions and the legal system’s adaptability to cases where strict adherence to procedural technicalities does not serve the ends of justice.
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