Ramirez VS. The Orientalist Co.

and Fernandez (2001)

Facts:
The Orientalist Company is a corporation, duly organized under the laws of the Phil. Islands, and
was engaged in business of maintaining and conducting a theatre in the City of Manila for the exhibition
of cinematographic films. The plaintiff J.F. Ramirez was engaged in the business of marketing films for a
manufacturer, and in the production of distribution of cinematographic material. Certain of the directors
of the Orientalist Company became apprised of the fact that the plaintiff had control of the agencies for
two different marks of films, namely the Éclair Films and the Milano Films. Negotiation have begun with
said officials of the company with Ramirez. The defendant, Fernandez, one of the board of directors, and
treasurer, was chiefly active on this matter, believing that the securing of said films was necessary to the
success of the corporation. Ramirez placed in the hands of Fernandez an offer in which the latter
accepted for the exclusive agencies of said two films. The communications indicating the acceptance
were signed by Ramirez as an individual and in his capacity of Treasurer of the Orientalist.

Issue:
W/N Fernandez, as treasurer, had authority to bind the company by signing it name to the
letters in question.

Ruling:
No.
A Director-Treasurer has no power to bind the company even in transactions that are pursuant
to the primary purpose of its corporation, especially when the by-laws specifically provided that the acts
entered into can only be done by the Board of Directors.
It is declared in Sec. 28 of the Corporation Law that corporate power shall be exercised, and all
corporate business conducted by the board of directors; and this principle is recognized in the by-laws of
the corporation in question which contain a provision declaring that the power to make contracts shall
be vested in the board of directors.