BUSINESS ORGANIZATION II TOPIC: Limited Liability to investors as one of the four basic advantages of cor porate organization SAN

JUAN STRUCTURAL AND STEEL FABRICATORS, INC., petitioner, vs. COURT OF APPEALS, MOTORICH SALES CORPORATION, NENITA LEE GRUENBERG, ACL DEVELOPM ENT CORP. and JNM REALTY AND DEVELOPMENT CORP., respondents. [G.R. No. 129459. September 29, 1998] FACTS: Petitioner San Juan Structural & Steel Fabricator Inc., entered into an agreement with respondent Motorich Sales Corporation which was allegedly represe nted by its treasurer Nenita Lee Gruenberg. The agreement was to transfer a parc el of land located at Acropolis Green Subdivision Quezon City, owned by Motorich Corporation, to the herein petitioner. However, respondent Motorich refused to execute transfer of right/deed of assignment on the ground that the corporation did not sign the said agreement and that the signature of Mrs. Anita Gruenberg a s treasurer is inadequate to bind the Corporation. According to petitioner , whe n Nenita Gruenberg & Co. affixed their signature on the contract, they both cons ented to be bound by the terms thereof, hence, binding on them. It further argue d that Mrs. Gruenberg needed no authorization from the board to enter into the c ontract for the spouses owned almost all or 99.866 percent of the subscribed ca pital stock thus considered as close corporation. Therefore, the corporation can be bound by the acts of its principal stockholder who needs no specific authori ty. Hence, this petition. ISSUE: Whether or not Corporation Motorich is bound by the contract entered int o by its Corporate treasure. RULING: Petitioner's petition is devoid of merit. As a general rule, the acts of corporate officer within the scope of their authority are binding on the corpor ation. But when these officers exceed their authority, their actions cannot bind the corporation, unless it has ratified such acts or is estopped from disclaimi ng them. Even assuming that the corporation is a close corporation, it cannot be held liable because of an investor's liability is limited only to the amount of the investment. WHEREFORE, petition is DENIED and the assailed decision is affirmed.