Citibank NA. Vs. Chua.doc

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Citibank, N. A. vs. Chua
Facts:
Petitioner is a foreign commercial banking corporation duly licensed to do business in the
Philippines. Private respondents, spouses Cresencio and Zenaida Velez, were good clients of
petitioner bank's branch in Cebu until arch !", !#$% when they filed a complaint for specific
performance and damages against it in Civil Case &o. C'()"*+! before the ,egional -rial Court of
Cebu, (ranch !..
Petitioner bank filed a criminal complaint against private respondents for violation of (atas
Pambansa (lg. // 0(ouncing Checks 1aw2 and estafa 0si3 counts2 under 4rticle 5!+ par. /0d2 of the
,evised Penal Code.
6n arch 5., !##., the date of the pre)trial conference, counsel for petitioner bank
appeared, presenting a special power of attorney e3ecuted by Citibank officer 7lorencia -arriela in
favor of petitioner bank's counsel, the 8.P. 9arcia : 4ssociates, to represent and bind petitioner
bank at the pre)trial conference of the case at bar.
;n spite of this special power of attorney, counsel for private respondents orally moved to
declare petitioner bank as in default on the ground that the special power of attorney was not
e3ecuted by the (oard of <irectors of Citibank.
;n compliance with the above promise, petitioner bank filed a manifestation, dated ay /5,
!##., attaching therewith a special power of attorney e3ecuted by =illiam =. 7erguson in favor of
Citibank employees to represent and bind Citibank on the pre)trial conference of the case at bar.
6n 8une /%, !##!, the Court of 4ppeals dismissed the petition on the following grounds>
?. . . ;n the first place, petitioner admitted that it did not and could not present a (oard
resolution from the bank's (oard of <irectors appointing its counsel, 4tty. 8ulius Z. &eri, as its
attorney)in)fact to represent and bind it during the pre)trial conference of this case. -his admission is
contained on pages !/ and !5 of the instant petition.
;n the second place, the ?(y)1aws? of petitioner which on its face authorizes 0sic2 the
appointment of an attorney)in)fact to represent it in any litigation, has not been approved by the
@ecurities and '3change Commission, as reAuired by @ection "% of the Corporation Code of the
Philippines. 4pparently, the ?(y)1aws? in Auestion was 0sic2 approved under the laws of the Bnited
@tates, but there is no showing that the same was given the reAuired imprimatur by the @ecurities
and '3change Commission. @ince petitioner is a foreign corporation doing business in the
Philippines, it is bound by all laws, rules and regulations applicable to domestic corporations [email protected]
!/#, Corporation Code2.
;n the third place, no special power of attorney was presented authorizing petitioner's
counsel of record, 4tty. 8ulius &eri andCor 8.P. 9arcia 4ssociates, to appear for and in behalf of
petitioner during the pre)trial.
Issue:
1. =hether a resolution of the board of directors of a corporation is always necessary for
granting authority to an agent to represent the corporation in court cases. NO
/. =hether the by)laws of the petitioner foreign corporation which has previously been granted
a license to do business in the Philippines, are effective in this Durisdiction. YES
Ruling:
1. ;n the corporate hierarchy, there are three levels of control> 0!2 the board of directors,
which is responsible for corporate policies and the general management of the business affairs of
the corporationE 0/2 the officers, who in theory e3ecute the policies laid down by the board, but in
practice often have wide latitude in determining the course of business operationsE and 052 the
stockholders who have the residual power over fundamental corporate changes, like amendments of
the articles of incorporation. Fowever, Dust as a natural person may authorize another to do certain
acts in his behalf, so may the board of directors of a corporation validly delegate some of its
functions to individual officers or agents appointed by it.
;t is clear that corporate powers may be directly conferred upon corporate officers or agents
by statute, the articles of incorporation, the by)laws or by resolution or other act of the board of
directors. ;n addition, an officer who is not a director may also appoint other agents when so
authorized by the by)laws or by the board of directors. @uch are referred to as e3press powers. #
-here are also powers incidental to e3press powers conferred. ;t is a fundamental principle in the
law of agency that every delegation of authority, whether general or special, carries with it, unless
the contrary be e3pressed, implied authority to do all of those acts, naturally and ordinarily done in
such cases, which are reasonably necessary and proper to be done in order to carry into effect the
main authority conferred.
@ince the by)laws are a source of authority for corporate officers and agents of the
corporation, a resolution of the (oard of <irectors of Citibank appointing an attorney in fact to
represent and bind it during the pre)trial conference of the case at bar is not necessary because its
by)laws allow its officers, the '3ecuting 6fficer and the @ecretary Pro)-em, GG to e3ecute a power of
attorney to a designated bank officer, =illiam =. 7erguson in this case, clothing him with authority to
direct and manage corporate affairs.
@ince paragraph HH; above specifically allows 7erguson to delegate his powers in whole or
in part, there can be no doubt that the special power of attorney in favor, first, of 8.P. 9arcia :
4ssociates and later, of the bank's employees, constitutes a valid delegation of 7erguson's e3press
power 0under paragraph HV;; above2 to represent petitioner bank in the pre)trial conference in the
lower court.
2.By)laws may be adopted and filed prior to incorporationE in such case, such by)laws shall be
approved and signed by all the incorporators and submitted to the @ecurities and '3change
Commission, together with the articles of incorporation. ;n all cases, by)laws shall be effective only
upon the issuance by the @ecurities and '3change Commission of a certification that the by)laws are
not inconsistent with this Code
4 corporation can submit its by)laws, prior to incorporation, or within one month after receipt
of official notice of the issuance of its certificate of incorporation by the @'C.
@ince the @'C will grant a license only when the foreign corporation has complied with all
the reAuirements of law, it follows that when it decides to issue such license, it is satisfied that the
applicant's by)laws, among the other documents, meet the legal reAuirements. -his, in effect, is an
approval of the foreign corporations by)laws. ;t may not have been made in e3press terms, still it is
clearly an approval. -herefore, petitioner bank's by)laws, though originating from a foreign
Durisdiction, are valid and effective in the Philippines.
-he petition is hereby GRANTED.

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