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It had a president but had no business manager. T.C. Chen was thereafter appointed as manager of the corporation. Chen agreed to enter into a contract with plaintiff Yu Chuck for the printing of their materials. Chen was later replaced by Tan Tia Heng who dismissed plaintiff without explanation. As a result, plaintiff filed an action for specific performance with damages, claiming that in its contract with the corporation is for three (3) years and it was stated that in the event the contract with them is terminated before its expiration, they would be obliged to pay the unexpired portion of the contract even in the event of insolvency. Tan Tia Heng, on the other hand, claims that Chen had no authority top enter into that contract with plaintiff. The lower court ruled in favor of the plaintiff ruling that Chen had the authority to enter into the contract, taking into consideration a notice made by the president that it shall not recognize any receipt, letter or document if it is not signed by T.C. Chen. ISSUE: Whether or not Chen had the authority to bind the corporation in the contract it entered into with plaintiff HELD: No. The judgment is REVERSED. It was settled by the Court that as a rule, officers of the corporation have an implied authority to enter into contracts if such power is not expressly vested in a certain director or officer. However, the contract must be usual and reasonable. In the present case, the contract entered into cannot be considered reasonable and usual because its duration of three (3) years was unusual and unreasonable because it was so onerous for the corporation and even stated that the corporation is liable for the unexpired portion of the contract despite insolvency. Plaintiff had no right to presume that any employee of the corporation had an implied authority to enter into a contract of employment which would bring about its ruin. Moreover, the president of the corporation had no knowledge of the existence of the contract although he admittedly saw some printers working in the office. Lastly, such contract was not ratified by the board of directors. The defendant corporation is absolved from liability.
ISSUE: Whether or not the remaining directors of the VVCC board. as the case may be. VVCC’s claim that the board of directors have the power to fill in vacancies citing the El Hogar case. In the present case. 29 of the Corpo. Code in relation to Sec. there is no more unexpired portion to speak of. questioned the validity of Ramirez and Roxas’ appointment with the SEC and with the RTC through a nullification complaint alleging that it is in violation of Sec. The board of directors is the controlling body of the corporation. the vacancy must be filled by the stockholders in a regular or special meeting called for that purpose. 23. Dinglasan resigned in 1998 and the 9-member board filled in the vacancy electing Roxas as one of the members of the board. which means that the vacancy must be filled through election by the stockholders in a meeting called for that purpose. Makalintal also resigned and was replaced by Makalintal through election by the remaining board of directors. Dinglasan and other nine (9) members.Valle Verde vs. Term is defined as the time during which an officer may claim to hold the office as of right. so the directors elected in 1996 continued to serve as directors. A month later. The hold-over period is the lapse of time between the expiration of the term of office and the election of a new director. The RTC and the SEC ruled that the appointment is null and void. VVCC did not appeal. 23 of the Corporation Code provides that the term of the members of the board of directors shall only be for ONE (1) YEAR and after the expiration of their term. Once the term of office expires and the officer continues to serve his duties. The members failed to reach a quorum in the succeeding years. The shareholder vote is critical to the theory that legitimizes the exercise of powers of directors or officers over properties not owned by them. Therefore. the term of Makalintal has long expired before he resigned from his office. It is fixed by statute. weakens the stockholders’ power to participate in corporate governance by electing their representatives to the board of directors. It was settled by the court that Sec. Tenure is defined as the term during which an incumbent actually holds office and may be shorter or longer than the term of office. the board should exercise not only care and diligence but utmost good faith in the management of the corporate affairs. Among the members elected to the board were Makalintal. The members of the board of directors only have the right to fill in the vacancy be election of another director if the vacancy took place before the expiration of his term and such new member shall only hold office for the unexpired portion of his predecessor’s term. 1. can elect another director to fill in the vacancy caused by resignation of a hold-over director HELD: NO. Its creation and power is derived from the stockholders. . Africa FACTS: Valle Verde Country Club (VVCC) elected members of its board of directors at its annual stockholders’ meeting in 1996. Petition is DENIED. It is the underlying policy of the corporation code that the business and affairs of the corporation must be governed by a board of directors which are: a) actually elected b) by stockholders c) on an annual basis That way. 3. Africa. the accountability of directors to shareholders and legitimacy of their decisions binding stockholders can be assured. 2. a member of the VVCC. still constituting a quorum.
2. DELIVER the property and the documents. Corporate property may not be sold by its stockholders or members without express authorization from the board of directors. Roxas said he will look into it. Roxas was only authorized to SELL the land. 6. deliver the property and corresponding documents to the buyer and receive the proceeds of the sale. it advised Roxas that it needed a right of way since the vehicles used by RECCI were occupying the land that WHI wanted to have beneficial use of and that it be granted its option to purchase the other land owned by the corporation. and RECEIVE the proceeds of the sale. the corporation denied authorizing Roxas to sell a portion of the other lot owned by RECCI. ISSUE: Whether or not the corporation is bound by the deed of sale provision granting beneficial use and option to purchase the property owned by the corporation HELD: No. The board never authorized him to grant beneficial use of any portion of Lot No. It was ruled in the San Juan Structural vs. The Courts will not infer or presume broad powers from deeds which do not sufficiently include property under which the agent is to deal/ 1. If either is controverted. to sell a parcel of land owned by the corporation. that it would be granted an option to purchase the same. In the present case. In the 1991 board resolution of RECCI. WHI filed an action for specific performance against RECCI enforcing the contract.Woodchild Holdings vs. the burden of proof is on them to establish it. the Board of Directors of RECCI through a resolution. CA case that the property of the . 491-A-3-B-1 or to sell any portion thereof. authorized its president. but he died shortly thereafter. and if there are tenants in the property and are not evicted after three months from the sale. corporation is not the property of its stockholders. the creation of real rights over immovable property (such as grant of right of way) must appear in a public document. agreed to purchase the land on the condition that it would be granted a right of way or beneficial use of another parcel of land owned by the corporation. Woodchild Holdings. While WHI was constructing a warehouse on the lot purchased by them. The corporation may only act through its board of directors or its by-laws or through board resolution. Powers of attorney are construed strictly. Contracts which have for their object. Acts done by officers beyond their scope of authority cannot bind the corporation UNLESS the corporation ratified such acts expressly or tacitly or is estopped from denying them. CA that: Persons dealing with an assumed agency are bound at their peril if they would hold principal liable to ascertain the fact of agency and the nature and extent of authority. 4. an interested buyer. 5. they will be reimbursed of the amount they gave as payment. The lower court ruled in favor of WHI but this decision was reversed by the Court of Appeals which dismissed the complaint. It has been settled in the case of BA Finance Corp vs. Roberto Roxas. 3. The deed of sale is likewise ULTRA VIRES. WHI was burdened to prove that RECCI authorized Roxas to sell and create a lien over the same. Roxas agreed and the sale took place. The decision of the Court of Appeals is AFFIRMED with MODIFICATION. set the selling price deemed advantageous to the corporation. Court of Appeals and RECCI FACTS: In 1991.