Professional Documents
Culture Documents
GERALDEZ,
as Judge of the Court of First Instance of Bulacan, Branch V (Sta. Maria), and HI
CEMENT CORPORATION.
ANTONIO, J.:
FACTS:
Hi Cement Corporation had acquired Placer Lease Contract No. V-90 under a
deed of sale and transfer. However, the plaintiff had requested the defendants to allow
its workers to enter the area in question for exploration and development purposes as
well as for the extraction of minerals therefrom but the defendants refused to allow entry
of the plaintiff's representatives. The plaintiff prayed the court to issue preliminary writs
of mandatory injunction. Meanwhile, the respective counsels of the parties then
conferred among themselves on the possibility of terminating the case by compromise,
the defendants having previously signified their willingness to sell to the plaintiff their
respective properties at reasonable prices. Compromise Agreement was approved by
the trial court. However, the plaintiff filed an opposition to the motions for execution of
judgment, on the grounds that a compromise agreement executed by the plaintiff's
lawyers who had no special power of attorney. Hence, these petitions.
ISSUE:
Whether a compromise agreement entered into by a lawyer without a written
authority is binding upon the corporation.
RULING:
No. Under the corporation law the power to compromise or settle claims in favor
of or against the corporation is ordinarily and primarily committed to the Board of
Directors. The right of the Directors "to compromise a disputed claim against the
corporation rests upon their right to manage the affairs of the corporation according to
their honest and informed judgment and discretion as to what is for the best interests of
the corporation." This power may however be delegated either expressly or impliedly to
other corporate officials or agents. Petitioners claim that private respondent's attorneys
admitted twice in open court that they were authorized to compromise their client's case,
which according to them, was never denied by the said lawyers in any of the pleadings
filed by them in the case. The claim is unsupported by evidence. In any event, assuming
arguendo that they did, such a self-serving assertion cannot properly be the basis for
the conclusion that the respondent corporation had in fact authorized its lawyers to
compromise the litigation.
ADJUDICATION:
WHEREFORE, the petitions are hereby dismissed.
case, it is quite clear that he was guilty of disloyalty to the corporation; he was
attempting in effect, to enrich himself at the expense of the corporation. There is no
showing that the stockholders ratified the "dealership agreement" or that they were fully
aware of its provisions. The contract was therefore not valid and this Court cannot allow
him to reap the fruits of his disloyalty.
ADJUDICATION:
In view of the foregoing, the Decision and Resolution of the Intermediate
Appellate Court are hereby SET ASIDE.
While there can be no question that Mr. Maglana was an officer the President
and Chairman of private respondent corporation at the time he signed Exhibit "A", the
above provisions of said private respondent's By-Laws do not in any way confer upon
the President the authority to enter into contracts for the corporation independently, of
the Board of Directors. That power is exclusively lodged in the latter. Nevertheless, to
expedite or facilitate the execution of the contract, only the President and not all the
members of the Board, or so much thereof as are required for the act shall sign it for
the corporation. This is the import of the words through the president in Exhibit "8-A"
and the clear intent of the power of the chairman "to execute and sign for and in behalf
of the corporation all contracts and agreements which the corporation may enter into" in
Exhibit "I-1". Both powers presuppose a prior act of the corporation exercised through
the Board of Directors. No greater power can be implied from such express, but limited,
delegated authority. Neither can it be logically claimed that any power greater than that
expressly conferred is inherent in Mr. Maglana's position as president and chairman of
the corporation.
Although there is authority "that if the president is given general control and
supervision over the affairs of the corporation, it will be presumed that he has authority
to make contract and do acts within the course of its ordinary business," 53 We find such
inapplicable in this case. We note that the private corporation has a general
manager who, under its By-Laws has, inter alia, the following powers: "(a) to have the
active and direct management of the business and operation of the corporation,
conducting the same accordingly to the order, directives or resolutions of the Board of
Directors or of the president." It goes without saying then that Mr. Maglana did not have
a direct and active and in the management of the business and operations of the
corporation. Besides, no evidence was adduced to show that Mr. Maglana had, in the
past, entered into contracts similar to that of Exhibit "A" either with the petitioner or with
other parties.
Petitioner's last refuge then is his alternative proposition, namely, that private
respondent had clothed Mr. Maglana with the apparent power to act for it and had
caused persons dealing with it to believe that he was conferred with such power. The
rule is of course settled that "[a]lthough an officer or agent acts without, or in excess of,
his actual authority if he acts within the scope of an apparent authority with which the
corporation has clothed him by holding him out or permitting him to appear as having
such authority, the corporation is bound thereby in favor of a person who deals with him
in good faith in reliance on such apparent authority, as where an officer is allowed to
exercise a particular authority with respect to the business, or a particular branch of it,
continuously and publicly, for a considerable time." 54 Also, "if a private corporation
intentionally or negligently clothes its officers or agents with apparent power to perform
acts for it, the corporation will be estopped to deny that such apparent authority in real,
as to innocent third persons dealing in good faith with such officers or agents." 55 This
"apparent authority may result from (1) the general manner, by which the corporation
holds out an officer or agent as having power to act or, in other words, the apparent
authority with which it clothes him to act in general or (2) acquiescence in his acts of a
particular nature, with actual or constructive knowledge thereof, whether within or
without the scope of his ordinary powers. 56
It was incumbent upon the petitioner to prove that indeed the private respondent
had clothed Mr. Maglana with the apparent power to execute Exhibit "A" or any similar
contract. This could have been easily done by evidence of similar acts executed either
in its favor or in favor of other parties. Petitioner miserably failed to do that. Upon the
other hand, private respondent's evidence overwhelmingly shows that no contract can
be signed by the president without first being approved by the Board of Directors; such
approval may only be given after the contract passes through, at least, the comptroller,
who is the NIDC representative, and the legal counsel.
The inevitable conclusion then is that Exhibit "A" is an unenforceable contract
under Article 1317 of the Civil Code which provides as follows:
Art. 1317. No one may contract in the name of another without being
authorized by the latter, or unless he has by law a right to represent him.
A contract entered into in the name of another by one who has no authority or
legal representation, or who has acted beyond his powers, shall be unenforceable,
unless it is ratified, expressly or impliedly, by the person on whose behalf it, has been
execrated, before it is revoked by the other contracting party.
ADJUDICATION:
WHEREFORE, judgment is hereby rendered AFFIRMING the decision of
respondent Court of Appeals in C.A. G.R. No. 61072-R promulgated on 21 December
1979.
board of directors of the bank or non-bank financial intermediary performing quasibanking functions, any provision of law to the contrary notwithstanding, and such other
powers as the Monetary Board shall deem necessary.
In the first place, this issue of the Conservators alleged authority to revoke or
repudiate the perfected contract of sale was raised for the first time in this Petition - as
this was not litigated in the trial court or Court of Appeals. As already stated earlier,
issues not raised and/or ventilated in the trial court, let alone in the Court of Appeals,
cannot be raised for the first time on appeal as it would be offensive to the basic rules of
fair play, justice and due process.[43]
In the second place, there is absolutely no evidence that the Conservator, at the
time the contract was perfected, actually repudiated or overruled said contract of sale.
The Banks acting conservator at the time, Rodolfo Romey, never objected to the sale of
the property to Demetria and Janolo. What petitioners are really referring to is the letter
of Conservator Encarnacion, who took over from Romey after the sale was perfected
on September 30, 1987 (Annex V, petition) which unilaterally repudiated - not the
contract - but the authority of Rivera to make a binding offer - and which unarguably
came months after the perfection of the contract.
In the third place, while admittedly, the Central Bank law gives vast and farreaching powers to the conservator of a bank, it must be pointed out that such powers
must be related to the (preservation of) the assets of the bank, (the reorganization of)
the management thereof and (the restoration of) its viability. Such powers, enormous
and extensive as they are, cannot extend to the post-facto repudiation of perfected
transactions, otherwise they would infringe against the non-impairment clause of the
Constitution.[44] If the legislature itself cannot revoke an existing valid contract, how can
it delegate such non-existent powers to the conservator under Section 28-A of said law?
Obviously, therefore, Section 28-A merely gives the conservator power to revoke
contracts that are, under existing law, deemed to be defective - i.e., void, voidable,
unenforceable or rescissible. Hence, the conservator merely takes the place of a banks
board of directors. What the said board cannot do - such as repudiating a contract
validly entered into under the doctrine of implied authority - the conservator cannot do
either. Ineluctably, his power is not unilateral and he cannot simply repudiate valid
obligations of the Bank. His authority would be only to bring court actions to assail such
contracts - as he has already done so in the instant case. A contrary understanding of
the law would simply notbe permitted by the Constitution. Neither by common sense. To
rule otherwise would be to enable a failing bank to become solvent, at the expense of
third parties, by simply getting the conservator to unilaterally revoke all previous
dealings which had one way or another come to be considered unfavorable to the Bank,
yielding nothing to perfected contractual rights nor vested interests of the third parties
who had dealt with the Bank.
ADJUDICATION:
WHEREFORE, finding no reversible error in the questioned Decision and
Resolution, the Court hereby DENIES the petition. The assailed Decision is AFFIRMED.
Moreover, petitioner Bank is REPRIMANDED for engaging in forum-shopping and
WARNED that a repetition of the same or similar acts will be dealt with more severely.
Costs against petitioners.