Cebu Mactan Members Center, Inc. vs.

Masahiro Tsukahara,
G.R. No. 159624, July 17, 2009

FACTS:
Cebu Mactan Members Center, Inc. (CMMCI) denied the borrowing obtain by its President and Chairman
of the Board (Mitsumasa Sugimoto) from Masahiro Tsukahara. CMMCI claimed that the loans obtained by
the CMMCI President were his personal loans. CMMCI also contended that if the loans were those of
CMMCI, the same should have been supported by resolutions issued by CMMCI’s board of directors.
It appears that on February 1994, the CMMCI President, purportedly on behalf of CMMCI, obtained a
loan amounting to P6,500,000 from Tsukahara. As payment for the loan, CMMCI issued seven postdated
checks of CMMCI payable to Tsukahara. On 13 April 1994, Sugimoto, again purportedly on behalf
of CMCI, obtained another loan amounting to P10,000,000 from Tsukahara. Sugimoto executed and
signed a promissory note in his capacity as CMMCI President and Chairman, as well as in his personal
capacity.
Upon maturity, the seven checks were presented for payment by Tsukahara, but the same were
dishonored by PNB, the drawee bank. After several failed attempts to collect the loan amount totaling
P16,500,000, Tsukahara filed a case for collection of sum of money against CMMCI and Sugimoto with
the Regional Trial Court.
Tsukahara alleged that the amount of P16,500,000 was used by CMMCI for the improvement of its beach
resort, which included the construction of a wave fence, the purchase of airconditioners and curtains, and
the provision of salaries of resort employees. He also asserted that Sugimoto, as the President
of CMMCI, “has the power to borrow money for said corporation by any legal means whatsoever and to
sign, endorse and deliver all checks and promissory notes on behalf of the corporation.”
The Regional Trial Court ruled in favor of Tsukahara. The Court of Appeals affirmed.

ISSUE: Whether the CMMCI President is given the power under CMMCI’s by-laws to borrow money,
execute contracts, and sign and indorse checks and promissory notes, in the name and on behalf
of CMMCI.

RULING:
A corporation, being a juridical entity, may act through its board of directors, which exercises almost all
corporate powers, lays down all corporate business policies and is responsible for the efficiency of
management. The general rule is that, in the absence of authority from the board of directors, no person,
not even its officers, can validly bind a corporation.
In this case, the corporate by-laws of CMMCI provide:
ARTICLE III
Officers
2. President. The President shall be elected by the Board of Directors from their own number. He shall
have the following powers and duties: x x x
c. Borrow money for the company by any legal means whatsoever, including the arrangement of letters of
credit and overdrafts with any and all banking institutions;
d. Execute on behalf of the company all contracts and agreements which the said company may enter
into;
e. Sign, indorse, and deliver all checks, drafts, bill of exchange, promissory notes and orders of payment
of sum of money in the name and on behalf of the corporation;
It is clear from the foregoing that the president of CMMCI is given the power to borrow money, execute
contracts, and sign and indorse checks and promissory notes, in the name and on behalf of CMMCI. With
such powers expressly conferred under the corporate by-laws, the CMMCI president, in exercising such
powers, need not secure a resolution from the company’s board of directors.