Law Case Digest

Topics: Promissory note, Bond, Default Pages: 3 (997 words) Published: July 4, 2013
G.R. No. 126006               January 29, 2004
Respondents: COURT OF APPEALS (Seventeenth Division) and ALLIED BANKING CORP. Ponente: CALLEJO, SR., J

In 1977, four loans from Allied Banking Corporation which is enclosed by four promissory notes amounting P100, 000 each was acquired by Elias Q. Tan, then President of Lapu-lapu Foundation, Inc. The bank was inhibited to file with the Regional Trial Court of Cebu City, Branch 15, a protest in looking for payment by Tan and the foundation, jointly and solely, of the sum of P493, 566.61 representing their attorney’s fees and costs, loan obligation, penalty charges, exclusive of interests. For the reason that as of January 23, 1979, Tan and the foundation were not able to pay the whole obligation with a total of P493, 566.61 and regardless of the demands made on them by the Bank. The foundation denied of acquiring the indebtedness from the Bank as their answer to the complaint. They said that the loans were obtained by Tan in his personal capacity, for his own use and benefit and on the strength of the personal information he provided the Bank. The Foundation upheld that it never gave Tan authorization to co-sign in his place as its President any promissory note and that the Bank is fully aware that the loans contracted were made in Tan’s personal capacity and for his own personal use and benefit and that the Foundation never benefitted, directly or indirectly in any way or manner, thereof.

The Foundation then interjected a cross-claim against Tan declaring that he, going beyond his authority, should be solely liable for the said loans, and a counterclaim against the Bank for damages and attorney’s fees. For Tan’s part, he admitted that he committed the loans from the Bank in his personal capacity. The parties, however, agreed that the loans were to be paid from the proceeds of Tan’s shares of common stocks in the...
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