Commissioner of Internal Revenue vs

TAXATION

Commissioner of Internal Revenue vs. CAG.R. No. 108358 January 20, 1995Third Division

FACTSOn 1986, Executive Order No. 41 was promulgated declaring a one-time tax amnesty on unpaid income taxes, later to include estate and donor's taxes and taxes on business, for the taxable years 1981 to 1985.Availing of the amnesty, respondent R.O.H. Auto Products Philippines, Inc., filed its Tax Amnesty Return No. 34-F-00146-41 and Supplemental Tax Amnesty Return No. 34-F-00146-64-B, respectively, and paid the corresponding amnesty taxes due.Prior to this availment, petitioner Commissioner of Internal Revenue assessed the latter deficiency taxes in an aggregate amount of P1,410,157.71. The taxpayer wrote back to state that since it had been able to avail itself of the tax amnesty, the deficiency tax notice should forthwith be cancelled and withdrawn. The request was denied by the Commissioner on the ground that Revenue Memorandum Order No. 4-87, dated 09 February 1987, implementing Executive Order No. 41, had construed the amnesty coverage to include only assessments issued by the Bureau of Internal Revenue after the promulgation of the executive order on August 1986 and not to assessments theretofore made. The invoked provisions of the memorandum order read:xxx xxx xxx1.02.3. In appropriate cases, the cancellation/withdrawal of assessment notices and letters of demand issued after August 21, 1986 for the collection of income, business, estate or donor's taxes due during the same taxable years. (Emphasis supplied)

ISSUE/S1. Is Memorandum No. 4-87 promulgated to implement E.O. No. 41 is valid?2. Whether said deficiency assessments in question were extinguished by reason or private respondents availment of the E.O?

RULING1. YES. The authority of the Minister of Finance (now the Secretary of Finance), in conjunction with the Commissioner of Internal Revenue, to promulgate all needful rules and regulations for the effective enforcement of internal revenue laws cannot be controverted. Neither can it be disputed that such rules and regulations, as well as administrative opinions and rulings, ordinarily should deserve weight and respect by the courts. Much more fundamental than either of the above, however, is that all such issuances must not override, but must remain consistent and in harmony with, the law they seek to apply and implement. Administrative rules and regulations are intended to carry out, neither to supplant nor to modify, the law.

2. YES. We agree with both the court of Appeals and court of Tax Appeals that Executive Order No. 41 is quite explicit and requires hardly anything beyond a simple application of its provisions. It reads:Sec. 1. Scope of Amnesty. A one-time tax amnesty covering unpaid income taxes for the years 1981 to 1985 is hereby declared.Sec. 2. Conditions of the Amnesty. A taxpayer who wishes to avail himself of the tax amnesty shall, on or before October 31, 1986;a) file a sworn statement declaring his net worth as of December 31, 1985;b) file a certified true copy of his statement declaring his net worth as of December 31, 1980 on record with the Bureau of Internal Revenue, or if no such record exists, file a statement of said net worth therewith, subject to verification by the Bureau of Internal Revenue;c) file a return and pay a tax equivalent to ten per cent (10%) of the increase in net worth from December 31, 1980 to December 31, 1985: Provided, That in no case shall the tax be less than P5,000.00 for individuals and P10,000.00 for judicial persons.

If, as the Commissioner argues, Executive Order No. 41 had not been intended to include 1981-1985 tax liabilities already assessed (administratively) prior to 22 August 1986, the law could have simply so provided in its exclusionary clauses. It did not. The conclusion is unavoidable, and it is that the executive order has been designed to be in the nature of a general grant of tax amnesty subject only to the cases specifically excepted by it.

Moreover, we need only quote from Executive Order No. 41 itself; thus:Sec. 6. Immunities and Privileges. Upon full compliance with the conditions of the tax amnesty and the rules and regulations issued pursuant to this Executive order, the taxpayer shall enjoy the following immunities and privileges:a) The taxpayer shall be relieved of any income tax liability on any untaxed income from January 1, 1981 to December 31, 1985, including increments thereto and penalties on account of the non-payment of the said tax. Civil, criminal or administrative liability arising from the non-payment of the said tax, which are actionable under the National Internal Revenue Code, as amended, are likewise deemed extinguished.

Misamis Oriental Association of Coco Traders, Inc. vs. Department of Finance G.R. No. 108524 | November 10, 1994Third Division

FACTSThis is a petition for prohibition and injunction seeking to nullify Revenue Memorandum Circular No. 47-91 and enjoin the collection by respondent revenue officials of the Value Added Tax (VAT) on the sale of copra by members of petitioner organization. Petitioner Misamis Oriental Association of Coco Traders, Inc. is a domestic corporation whose members, individually or collectively, are engaged in the buying and selling of copra in Misamis Oriental. The petitioner alleges that prior to the issuance of Revenue Memorandum Circular 47-91 1991, which implemented VAT Ruling 190-90, copra was classified as agricultural food product under $ 103(b) of the National Internal Revenue Code and, therefore, exempt from VAT at all stages of production or distribution.Respondents represent departments of the executive branch of government charged with the generation of funds and the assessment, levy and collection of taxes and other imposts.The pertinent provision of the NIRC states:Sec. 103. Exempt Transactions. The following shall be exempt from the value-added tax:(a) Sale of nonfood agricultural, marine and forest products in their original state by the primary producer or the owner of the land where the same are produced;(b) Sale or importation in their original state of agricultural and marine food products, livestock and poultry of a kind generally used as, or yielding or producing foods for human consumption, and breeding stock and genetic material therefor;Under 103(a), as above quoted, the sale of agricultural non-food products in their original state is exempt from VAT only if the sale is made by the primary producer or owner of the land from which the same are produced. The sale made by any other person or entity, like a trader or dealer, is not exempt from the tax. On the other hand, under 103(b) the sale of agricultural food products in their original state is exempt from VAT at all stages of production or distribution regardless of who the seller is.

ISSUE/S1. Is the Bureau of Food and Drug of the Department of Health and not the BIR is the competent government agency to determine the proper classification of food products?2. Is RMC No. 47-91 is discriminatory and violative of the equal protection clause of the Constitution because while coconut farmers and copra producers are exempt, traders and dealers are not, although both sell copra in its original state. Petitioners add that oil millers do not enjoy tax credit out of the VAT payment of traders and dealers.

RULING1. YES. Petitioner cites the opinion of Dr. Quintin Kintanar of the Bureau of Food and Drug to the effect that copra should be considered "food" because it is produced from coconut which is food and 80% of coconut products are edible. On the other hand, the respondents argue that the opinion of the BIR, as the government agency charged with the implementation and interpretation of the tax laws, is entitled to great respect.We agree with respondents. In interpreting 103(a) and (b) of the NIRC, the Commissioner of Internal Revenue gave it a strict construction consistent with the rule that tax exemptions must be strictly construed against the taxpayer and liberally in favor of the state. Indeed, even Dr. Kintanar said that his classification of copra as food was based on "the broader definition of food which includes agricultural commodities and other components used in the manufacture/processing of food." Moreover, as the government agency charged with the enforcement of the law, the opinion of the Commissioner of Internal Revenue, in the absence of any showing that it is plainly wrong, is entitled to great weight. Indeed, the ruling was made by the Commissioner of Internal Revenue in the exercise of his power under 245 of the NIRC to "make rulings or opinions in connection with the implementation of the provisions of internal revenue laws, including rulings on the classification of articles for sales tax and similar purposes."

2. NO. The argument has no merit. There is a material or substantial difference between coconut farmers and copra producers, on the one hand, and copra traders and dealers, on the other. The former produce and sell copra, the latter merely sell copra. The Constitution does not forbid the differential treatment of persons so long as there is a reasonable basis for classifying them differently. It is not true that oil millers are exempt from VAT. Pursuant to 102 of the NIRC, they are subject to 10% VAT on the sale of services. Under 104 of the Tax Code, they are allowed to credit the input tax on the sale of copra by traders and dealers, but there is no tax credit if the sale is made directly by the copra producer as the sale is VAT exempt. In the same manner, copra traders and dealers are allowed to credit the input tax on the sale of copra by other traders and dealers, but there is no tax credit if the sale is made by the producer.

TRUST

17. Nazareno vs. CAG.R. No.140848.April 25, 2002Third Division

FACTSRespondents, who are surviving spouse and children of Honorio Ramos Sr., contend that Honorio Ramos Sr., co-owned the above-mentioned Lot 2961 with Ramon Ramos and that the sale (of Lot 2961 executed by Salud Abejuela in favor of Ramon Ramos married to Nena Villamil and resident of Cagayan de Oro City)was simulated and fictitious the purpose being only to enable said Ramon Ramos to use the land as collateral security for a loan as he did use it when he was granted a loan by the Philippine National Bank. And that the understanding and agreement with his parents Lucio and Salud Ramos was that, Ramon Ramos should hold said land in trust for his brother, Honorio and same should be divided between the two in equal shares. As proof that the sale was fictitious and simulated, it was still Lucio Ramos with whom Ramon Ramos live[d] with, who continued to harvest and enjoy the fruits of the coconut trees planted [o]n said Lot 2961 until he died on May 31, 1974.

ISSUE/SWhether the 1954 Deed of Sale executed by Salud in petitioners favor simulated? In other words, was a trust formed?

RULINGYES. Petitioner disputes the CA finding that the Deed of Absolute Sale between him and his mother, Salud, was simulated.He argues that it was executed with all the formalities and requirements of law; hence, the document is vested with the presumption of regularity and can be impugned only by strong, competent and conclusive proof.On the other hand, respondents maintain that the presumption of regularity was overturned by several circumstances that prove simulation, as follows: (1) the vendor and the vendee were mother and son, (2) the consideration ofP1000 for the lot was too low, and (3) petitioner did not have the means to pay for the supposed purchase price.We are not convinced that the Deed of Sale was simulated.The primary consideration in determining the true nature of a contract is the intention of the parties. Such intention is determined from the express terms of their agreement as well as from their contemporaneous and subsequent acts. When they have no intention to be bound at all, the purported contract is absolutely simulated and void. When they conceal their true agreement, it is not completely void and they are bound to their real agreement, provided it is not prejudicial to a third person and is not intended for any purpose that is contrary to law, morals, good customs, public order or public policy. A duly executed contract carries with it the presumption of validity.The party who impugns its regularity has the burden of proving its simulation.In the case at bar, we opine that respondents failed to show simulation.First,both the trial and the appellate courts agree that respondents failed to prove the existence of acontra documento.The evidentiary weight of Anastacio Gaylos testimony that thecontra documentowas shown to him by Salud herself is weak, considering that there was no explanation why parol evidence had been resorted to, when the best evidence would have been thecontra documentoitself.[19]Second,mere mother-son relationship between the vendor and the vendee does not prove their lack of intention to be bound by the 1954 Deed of Absolute Sale.Not all contracts between family members are fictitious because, by itself, consanguinity is not proof of simulation.In declaring the sale as fictitious, the CA relied onSuntay v. Court of Appeals,which ruled that [t]he father who promises to bring home a box of tools for his boy is not bound in contract x x x [because] the transaction was understood by the parties not to have jural effects.x x x.[This principle] has been judicially applied tox x xa writingrepresentingmerely a family understanding.InSuntay, the Court said that the relationship between the buyer and seller may be deemed a token of simulation because, among Filipinos, an uncle would almost naively lend his land title to his nephew and agree to its cancellation in favor of the latter, given the trust and intimacy between them.But this statement should be understood in the context of the said case that a Deed of Resale was presented, and that the vendee never exercised acts of ownership over the disputed land.Here, despite the relation, intimacy and trust between petitioner and his mother, such crucial factor as acontra documento was not proven.Moreover, petitioner exercised acts of dominion over the property that is the subject of the present controversy.

18. Heirs of Salud Dizon-Salamat vs. Natividad Dizon TamayoG.R. No. 110644 | October 30, 1998Third Division

FACTSThis is a petition for certiorari under Rule 45 of the Rules of Court seeking the reversal of the decision rendered by the Court of Appeals.Agustin Dizon died intestate on May 15, 1942 leaving behind his five children Eduardo, Gaudencio, Salud, Valenta and Natividad as surviving heirs. Among the properties left by the decedent was a parcel of land in Barrio San Nicolas, Hagonoy, Bulacan, with an area of 2,188 square meters covered by Original Certificate of Title No. 10384. On January 8, 1944, Eduardo sold his hereditary rights in the sum of P3,000 to his sister Salud Dizon Salamat. The sale was evidenced by a private document bearing the signatures of his sisters Valenta and Natividad as witnesses. On June 2, 1949, Gaudencio likewise sold his hereditary rights for the sum of P4,000 to his sister Salud. The sale was evidenced by a notarized document which bore the signature of Eduardo Dizon and a certain Angela Ramos as witnesses. Gaudencio died on May 30, 1951 leaving his daughters Priscila D. Rivera and Maria D. Jocson as heirs.Sometime in 1987, petitioners instituted an action for compulsory judicial partition of real properties registered in the name of Agustin Dizon with the RTC of Bulacan. The action was prompted by the refusal of herein respondent Natividad Dizon Tamayo to agree to the formal distribution of the properties of deceased Agustin Dizon among his heirs. Respondents refusal stemmed from her desire to keep for herself the parcel of land covered by OCT 10384 (and under Tax Declaration in the name of respondent) where she presently resides, claiming that her father donated it to her sometime in 1936 with the conformity of the other heirs. Petitioners contend that Lot 2557, Cad 304-D, described and covered by OCT 10384 in the name of the heirs of Agustin Dizon is part of the Dizon estate while respondent claims that her father donated it to her sometime in 1936 with the consent of her co-heirs. In support of her claim, respondent Natividad presented a private document of conformity which was allegedly signed and executed by her elder brother, Eduardo, in 1936.

ISSUEWas a trust formed?

RULINGNo. In any case, assuming that Agustin really made the donation to respondent, albeit orally, respondent cannot still claim ownership over the property. While it is true that a void donation may be the basis of ownership which may ripen into title by prescription, it is well settled that possession, to constitute the foundation of a prescriptive right, must be adverse and under a claim of title.Respondent was never in adverse and continuous possession of the property. It is undeniable that petitioners and respondent, being heirs of the deceased, are co-owners of the properties left by the latter. A co-ownership is a form of a trust, with each owner being a trustee for each other and possession of a co-owner shall not be regarded as adverse to other co-owners but in fact is beneficial to them. Mere actual possession by one will not give rise to the inference that the possession was adverse because a co-owner is, after all, entitled to possession of the property.In the case of Salvador v. Court of Appeals we had occasion to state that a mere silent possession by a co-owner, his receipt of rents, fruits or profits from the property, the erection of buildings and fences and the planting of trees thereon and the payment of land taxes, cannot serve as proof of exclusive ownership, if it is not borne out by clear and convincing evidence that he exercised acts of possession which unequivocably constituted an ouster or deprivation of the rights of the other co-owners.The elements in order that a co-owners possession may be deemed adverse to the cestui que trust or the co-owner are: (1) that he has performed unequivocal acts of repudiation amounting to ouster cestui que trust or other co-owners (2) that such positive acts or repudiation have been made known to the cestui que trust or other co-owners and (3) that the evidence thereon must be clear and convincing.Not one of the aforesaid requirements is present in the case at bar. There are two houses standing on the subject property. One is the house where respondent presently resides while the other is a house built by respondents sister Valenta. Records show that the house on Lot 227 where the respondent lives is actually the ancestral house of the Dizons although respondent has remodelled it, constructed a piggery and has planted trees thereon. It is obvious from the foregoing that since respondent never made unequivocal acts of repudiation, she cannot acquire ownership over said property through acquisitive prescription. The testimony of her son that she merely allowed her sister Valenta to build a house on the lot is pure hearsay as respondent herself could have testified on the matter but chose not to.

AGENCY

25. Doles vs. AngelesG.R. No. 149353 | June 26, 2006First Division

FACTSIn 1997, Ma. Aura Tina Angeles (respondent) filed with the RTC a complaint for Specific Performance with Damages against Jocelyn B. Doles (petitioner) alleging that petitioner was indebted to the former in the concept of a personal loan amounting toP405,430.00 representing the principal amount and interest. Petitioner, then respondent, while admitting some allegations in the Complaint, denied that she borrowed money from respondent, and averred that from June to September 1995, she referred her friends to respondent whom she knew to be engaged in the business of lending money in exchange for personal checks through her capitalist Arsenio Pua. She alleged that her friends borrowed money from respondent and issued personal checks in payment of the loan but the checks bounced. In order to collect money, the respondent then threatened to initiate a criminal case against her for violation ofBatas Pambansa Blg.22; that she was forced by respondent to execute an "Absolute Deed of Sale" over her property in Bacoor, Cavite, to avoid criminal prosecution; that the said deed had no valid consideration; that she did not appear before a notary public; that the Community Tax Certificate number on the deed was not hers and for which respondent may be prosecuted for falsification and perjury; and that she suffered damages and lost rental as a result.

ISSUEIs Doles (petitioner) merely an agent or representative of the alleged debtors, hence not a party to the loan?

RULINGNO. In view of the two agency relationships, petitioner and respondent are not privy to the contract of loan between their principals. Since the sale is predicated on that loan, then the sale is void for lack of consideration.Indeed, the Deed of Absolute Sale purports to be supported by a consideration in the form of a price certain in money and that this sum indisputably pertains to the debt in issue. This Court has consistently held that a contract of sale is null and void and produces no effect whatsoever where the same is without cause or consideration. The question that has to be resolved for the moment is whether this debt can be considered as a valid cause or consideration for the sale.To restate, the CA cited four instances in the record to support its holding that petitioner "re-lends" the amount borrowed from respondent to her friends: first, the friends of petitioner never presented themselves to respondent and that all transactions were made by and between petitioner and respondent; second; the money passed through the bank accounts of petitioner and respondent; third, petitioner herself admitted that she was "re-lending" the money loaned to other individuals for profit; and fourth, the documentary evidence shows that the actual borrowers, the friends of petitioner, consider her as their creditor and not the respondent.21On the first, third, and fourth points, the CA cites the testimony of the petitioner, then defendant, during her cross-examination: Respondent is estopped to deny that she herself acted as agent of a certain Arsenio Pua, her disclosed principal. She is also estopped to deny that petitioner acted as agent for the alleged debtors, the friends whom she (petitioner) referred.This Court has affirmed that, under Article 1868 of the Civil Code, the basis of agency is representation. The question of whether an agency has been created is ordinarily a question which may be established in the same way as any other fact, either by direct or circumstantial evidence. The question is ultimately one of intention. Agency may even be implied from the words and conduct of the parties and the circumstances of the particular case.Though the fact or extent of authority of the agents may not, as a general rule, be established from the declarations of the agents alone, if one professes to act as agent for another, she may be estopped to deny her agency both as against the asserted principal and the third persons interested in the transaction in which he or she is engaged. In this case, petitioner knew that the financier of respondent is Pua; and respondent knew that the borrowers are friends of petitioner.The CA is incorrect when it considered the fact that the "supposed friends of [petitioner], the actual borrowers, did not present themselves to [respondent]" as evidence that negates the agency relationshipit is sufficient that petitioner disclosed to respondent that the former was acting in behalf of her principals, her friends whom she referred to respondent. For an agency to arise, it is not necessary that the principal personally encounter the third person with whom the agent interacts. The law in fact contemplates, and to a great degree, impersonal dealings where the principal need not personally know or meet the third person with whom her agent transacts: precisely, the purpose of agency is to extend the personality of the principal through the facility of the agent.In the case at bar, both petitioner and respondent have undeniably disclosed to each other that they are representing someone else, and so both of them are estopped to deny the same. It is evident from the record that petitioner merely refers actual borrowers and then collects and disburses the amounts of the loan upon which she received a commission; and that respondent transacts on behalf of her "principal financier", a certain Arsenio Pua. If their respective principals do not actually and personally know each other, such ignorance does not affect their juridical standing as agents, especially since the very purpose of agency is to extend the personality of the principal through the facility of the agent.With respect to the admission of petitioner that she is "re-lending" the money loaned from respondent to other individuals for profit,it must be stressed that the manner in which the parties designate the relationship is not controlling. If an act done by one person in behalf of another is in its essential nature one of agency, the former is the agent of the latter notwithstanding he or she is not so called. The question is to be determined by the fact that one represents and is acting for another, and if relations exist which will constitute an agency,it will be an agency whether the parties understood the exact nature of the relation or not.That both parties acted as mere agents is shown by the undisputed fact that the friends of petitioner issued checks in payment of the loan in the name of Pua. If it is true that petitioner was "re-lending", then the checks should have been drawn in her name and not directly paid to Pua.With respect to the second point, particularly, the finding of the CA that the disbursements and payments for the loan were made through the bank accounts of petitioner and respondent,suffice it to say that in the normal course of commercial dealings and for reasons of convenience and practical utility it can be reasonably expected that the facilities of the agent, such as a bank account, may be employed, and that a sub-agent be appointed, such as the bank itself, to carry out the task, especially where there is no stipulation to the contrary.

26. Tan vs.GVTEngineeringG.R. No. 153057 | August 7, 2006First Division

FACTSOn October 18, 1989, the spouses George and Susan Tan (spouses Tan) entered into a contract with GVT Engineering Services through its owner/manager Gerino Tactaquin (Tactaquin) for the construction of their residential house. The contract price was P1.7M.Since the spouses Tan have no knowledge about building construction, they hired the services of Engineer Cadag to supervise the said construction. In the course of the construction, the spouses Tan caused several changes in the plans and specifications and ordered the deletion of some items in GVTs scope of work. This brought about differences between the spouses Tan and Cadag, on one hand, and Tactaquin, on the other. Subsequently, GVT stopped the construction of the subject house.GVT filed a complaint for specific performance and damages against the spouses Tan and Cadag with the RTC of Quezon City. It contends by reason of the changes in the plans and specifications, it was forced to borrow money from third persons at exorbitant interest. Several portions of their contract were deleted but only to be awarded later to other contractors. It avers that it suffered tremendous delay in the completion of the project brought about by the spouses Tans delay in the delivery of construction materials on the jobsite. It also prays for damages.

ISSUEIs Cadag an agent of the Tan Spouses and hence should not be held liable to G.V.T?

RULINGYES. Cadag was employed by the spouses Tan to supervise the construction of their house. Acting as such, his role is merely that of an agent.The essence of agency being the representation of another, it is evident that the obligations contracted are for and on behalf of the principal. A consequence of this representation is the liability of the principal for the acts of his agent performed within the limits of his authority that is equivalent to the performance by the principal himself who should answer therefore. In the present case, since there is neither allegation nor evidence that Cadag exceeded his authority, all his acts are considered as those of his principal, the spouses Tan, who are, therefore, the ones answerable for such acts.

27. Yasuma vs. Heirs of de VillaG.R. No. 150350 August 22, 2006Second Division

FACTSOn September 15, 1988, October 21, 1988 and December 5, 1988, Cecilio S. de Villa obtained loans from petitioner Koji Yasuma in the amounts ofP1,100,000,P100,000 andP100,000, respectively, for the total amount ofP1.3 million. These loans were evidenced by three promissory notes signed by de Villa as borrower. For failure of de Villa to pay, petitioner filed a collection suit in the Regional Trial Court of Makati City, Branch 148 (RTC-Br. 148) against de Villa and respondent corporation.The RTC-Br. 148 declared de Villa and respondent-corporation in default and resolved the case in favor of petitioner. On appeal, however, the judgment of RTC-Br. 148 was annulled on the ground of improper service of summons. Thus, the case was remanded for retrial. During the pendency of the case in the RTC-Br. 148, de Villa died. Petitioner consequently amended the complaint and impleaded the heirs of de Villa as defendants. After the case was re-heard, the RTC of Makati City, Branch 139 (RTC-Br. 139) rendered judgment on November 13, 1998 in favor of petitioner and against respondent-corporation. It ordered respondent corporation to pay petitionerP1.3 million plus legal interest, attorneys fees, liquidated damages and costs of suit. The complaint was dismissed against respondent heirs.

ISSUE/S1. Is the mortgage valid?2. Can the corporation be liable and act as his agent?

RULING

1. NO. Petitioner insists that the mortgage executed by de Villa, as president of the corporation, was ratified by the latter since the mortgage was an accessory contract of the loan. We disagree.A special power of attorney is necessary to create or convey real rights over immovable property. Furthermore, the special power of attorney must appear in a public document. In the absence of a special power of attorney in favor of de Villa as president of the corporation, no valid mortgage could have been executed by him.28Since the mortgage was void, it could not be ratified. Petitioner cannot blame anyone but himself. He did not check if the person he was dealing with had the authority to mortgage the property being offered as collateral

2. NO, they are personal loans of de Villa. The corporation can also act through its corporate officers who may be authorized either expressly by the by-laws or board resolutions or impliedly such as by general practice or policy or as are implied from express powers. The general principles of agency govern the relation between the corporation and its officers or agents. When authorized, their acts can bind the corporation. Conversely, when unauthorized, their acts cannot bind it.However, the corporation may ratify the unauthorized act of its corporate officer.Ratification means that the principal voluntarily adopts, confirms and gives sanction to some unauthorized act of its agent on its behalf. It is this voluntary choice, knowingly made, which amounts to a ratification of what was theretofore unauthorized and becomes the authorized act of the party so making the ratification. The substance of the doctrine is confirmation after conduct, amounting to a substitute for a prior authority.Ratification can be made either expressly or impliedly. Implied ratification may take various forms like silence or acquiescence, acts showing approval or adoption of the act, or acceptance and retention of benefits flowing therefrom.The power to borrow money is one of those cases where corporate officers as agents of the corporation need a special power of attorney. In the case at bar, no special power of attorney conferring authority on de Villa was ever presented. The promissory notes evidencing the loans were signed by de Villa (who was the president of respondent corporation) as borrower without indicating in what capacity he was signing them. In fact, there was no mention at all of respondent corporation. On their face, they appeared to be personal loans of de Villa.