The president of a corporation is presumed to have the authority to act within the general objectives of the corporation's business and usual duties, without an express authorization from the board of directors. In this case, the Supreme Court ruled that the president of a corporation that owned a building had the authority to issue a demand letter to a tenant requesting payment of unpaid rent and vacating the property, as this was within the scope of the president's usual duties of managing the corporation's affairs. Even if the president acted beyond their authority, the board of directors later ratified the president's actions through a resolution, curing any defect.
The president of a corporation is presumed to have the authority to act within the general objectives of the corporation's business and usual duties, without an express authorization from the board of directors. In this case, the Supreme Court ruled that the president of a corporation that owned a building had the authority to issue a demand letter to a tenant requesting payment of unpaid rent and vacating the property, as this was within the scope of the president's usual duties of managing the corporation's affairs. Even if the president acted beyond their authority, the board of directors later ratified the president's actions through a resolution, curing any defect.
The president of a corporation is presumed to have the authority to act within the general objectives of the corporation's business and usual duties, without an express authorization from the board of directors. In this case, the Supreme Court ruled that the president of a corporation that owned a building had the authority to issue a demand letter to a tenant requesting payment of unpaid rent and vacating the property, as this was within the scope of the president's usual duties of managing the corporation's affairs. Even if the president acted beyond their authority, the board of directors later ratified the president's actions through a resolution, curing any defect.
The president of a corporation is presumed to have the authority to act within the general objectives of the corporation's business and usual duties, without an express authorization from the board of directors. In this case, the Supreme Court ruled that the president of a corporation that owned a building had the authority to issue a demand letter to a tenant requesting payment of unpaid rent and vacating the property, as this was within the scope of the president's usual duties of managing the corporation's affairs. Even if the president acted beyond their authority, the board of directors later ratified the president's actions through a resolution, curing any defect.
Download as DOCX, PDF, TXT or read online from Scribd
Download as docx, pdf, or txt
You are on page 1/ 2
IN THE ABSENCE OF A CHARTER OR BY-LAW PROVISION TO THE CONTRARY, THE PRESIDENT OF
A CORPORATION IS PRESUMED TO HAVE THE AUTHORITY TO ACT WITHIN THE DOMAIN OF THE GENERAL OBJECTIVES OF ITS BUSINESS AND WITHIN THE SCOPE OF HIS OR HER USUAL DUTIES
Colegio Medico-Farmaceutico de Filipinas, Inc. v. Lily Lim
G.R. No. 212034, July 2, 2018 Del Castillo, J.
FACTS: Petitioner Colegio Medico Farmaceutico de Filipinas, Inc. (petitioner) is the registered owner of a building located in Sampaloc, Manila. Petitioner filed before MeTC Manila a Complaint for Ejectment with Damages against respondent Lily Lim (respondent), the President/Officer-in-charge of St. John Berchman School of Manila Foundation (St. John). Petitioner alleged, that in June 2005, it entered into a Contract of Lease for the period June 2005 to May 2006 with respondent; that after expiration, petitioner, represented by its then President Dr. Del Castillo, sent respondent another Contract of Lease for the period June 2006 to May 2007 for her approval; that despite several follow-ups, respondent failed to return the Contract of Lease; that during a board meeting in December 2007, petitioner informed respondent of the decision of the Board of Directors (Board) not to renew the Contract of Lease; that on March 5, 2008, Del Castillo wrote a demand letter to respondent demanding the payment of her back rentals and utility bills in the total amount of P604,936.35, with a request to vacate the subject property on or before March 16, 2008; and that respondent refused to comply with the demand.
For her part, respondent alleged that St. John, represented by Jean Li Yao, entered into a 10-year Contract of Lease with petitioner; that on May 3, 2005, due to financial difficulties, the Board of Trustees of St. John assigned the rights and interest of the school in her favor; that the assignment of rights was with the knowledge and approval of petitioner; that to ensure advance payment of the rentals, petitioner persuaded her to execute a one-year Contract of Lease for the period of June 2005 to May 2006, with advance payment of rentals for the said period; that the said contract was executed with no intention of amending, repealing, or shortening the original 10-year lease; that she occupied the subject property even after May 2006 without any objection from petitioner because, as agreed by the parties, the term of the lease would continue until the year 2013; that she sent several letters to petitioner for the immediate repairs of the library, the toilets of the school building, and the basketball court; and that she suspended the payment of the rentals due to the refusal of petitioner to act on all her letters.
MeTC: Dismissed the Complaint for lack of a valid demand letter. The MeTC considered the demand letter dated March 5, 2008 as legally non-existent for failure of petitioner to show that Del Castillo was duly authorized by the Board to issue the same.
RTC: Reversed the MeTC Decision. The RTC ruled that the issuance of the demand letter was done by Del Castillo in the usual course of business and that the issuance of the same was ratified by petitioner when it passed the Board Resolution authorizing Del Castillo to file a case against respondent.
CA: Reversed the RTC Decision. Petitioner’s failure to attach the said Board Resolution to the Complaint was a fatal defect.
ISSUE: Does the president of a corporation have the authority to act for and to bind the said corporation?
HELD: Yes. the Court laid down an exception to the general rule that no person, not even its officers, can validly bind a corporation without an express authority from the board of directors. In that case, the Court sustained the authority of the president to bind the corporation for the reason that the president has the power to perform acts within the scope of his or her usual duties. The Court explained that: “Being a juridical entity, a corporation 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. Under Sec. 23 of the Corporation Code, the power and the responsibility to decide whether the corporation should enter into a contract that will bind the corporation is lodged in the board, subject to the articles of incorporation, by-laws, or relevant provisions of law. However, just as a natural person may authorize another to do certain acts for and on his behalf, the board of directors may validly delegate some of its functions and powers to officers, committees or agents. The authority of such individuals to bind the corporation is generally derived from law, corporate by laws or authorization from the board, either expressly or impliedly by habit, custom or acquiescence in the general course of business.
Accordingly, the appellate court ruled in this case that the authority to act for and to bind a corporation may be presumed from acts of recognition in other instances, wherein the power was in fact exercised without any objection from its board or shareholders. Apparent authority is derived not merely from practice. Its existence may be ascertained through (1) the general manner in which the corporation holds out an officer or agent as having the power to act or, in other words, the apparent authority to act in general, with which it clothes him; or (2) the acquiescence in his acts of a particular nature, with actual or constructive knowledge thereof, whether within or beyond the scope of his ordinary powers. It requires presentation of evidence of similar act(s) executed either in its favor or in favor of other parties. It is not the quantity of similar acts which establishes apparent authority, but the vesting of a corporate officer with the power to bind the corporation.
In this case, the issuance of the demand letter dated March 5, 2008 to collect the payment of unpaid rentals from respondent and to demand the latter to vacate the subject property was done in the ordinary course of business, and thus, within the scope of the powers of Del Castillo. In fact, it was his duty as President to manage the affairs of petitioner, which included the collection of receivables. Article IV, Section 2 of the By- laws of petitioner expressly states that the President has the power to exercise general supervision, control, and direction of the business affairs of the Colegio. In any case, even if, for the sake of argument, Del Castillo acted beyond the scope of his authority in issuing the demand letter dated March 5, 2008, the subsequent issuance of the Board Resolution dated May 13, 2008 cured any defect possibly arising therefrom as it was a clear indication that the Board agreed to, consented to, acquiesced in, or ratified the issuance of the said demand letter.
DIGEST - Y-I LEISURE PHILIPPINES, INC., YATS INTERNATIONAL LTD. AND Y-I CLUBS AND RESORTS, INC., Petitioners, v. JAMES YU, Respondent. G.R. No. 207161, September 08, 2015
