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Lups-San Juan Structural Vs CA
Lups-San Juan Structural Vs CA
FACTS: In 1989, San Juan Structural and Steel Fabricators, Inc. (San Juan) alleged that it entered into a
contract of sale with Motorich Sales Corporation (Motorich) through the latter’s treasurer, Nenita
Gruenberg. The subject of the sale was a parcel of land owned by Motorich. San Juan advanced P100k
to Nenita as earnest money.
On the day agreed upon on which Nenita was supposed to deliver the title of the land to Motorich, Nenita
did not show up. Nenita and Motorich did not heed the subsequent demand of San Juan to comply with
the contract hence San Juan sued Motorich. Motorich, in its defense, argued that it is not bound by the
acts of its treasurer, Nenita, since her act in contracting with San Juan was not authorized by the
corporate board.
San Juan raised the issue that Nenita was actually the wife of the President of Motorich; that Nenita and
her husband owns 98% of the corporation’s capital stocks; that as such, it is a close corporation and that
makes Nenita and the President as principal stockholders who do not need any authorization from the
corporate board; that in this case, the corporate veil may be properly pierced.
Issue:
Whether or not there was a valid contract of sale between petitioner and Motorich
Ruling: No.
True, Gruenberg and Co signed on the Agreement, according to which a lot owned by Motorich
Sales Corporation was purportedly sold. Such contract, however, cannot bind Motorich, because it
never authorized or ratified such sale.
A corporation is a juridical person separate and distinct from its stockholders or members.
Accordingly, the property of the corporation is not the property of its stockholders or members and
may not be sold by the stockholders or members without express authorization from the
corporation's board of directors. 10 Section 23 of BP 68, otherwise known as the Corporation Code of the
Philippines, provides;
Sec. 23. The Board of Directors or Trustees. — Unless otherwise provided in this Code, the
corporate powers of all corporations formed under this Code shall be exercised, all business
conducted and all property of such corporations controlled and held by the board of directors or
trustees to be elected from among the holders of stocks, or where there is no stock, from among the
members of the corporation, who shall hold office for one (1) year and until their successors are
elected and qualified.
Indubitably, a corporation may act only through its board of directors or, when authorized either by
its bylaws or by its board resolution, through its officers or agents in the normal course of business.
The general principles of agency govern the relation between the corporation and its officers or
agents, subject to the articles of incorporation, bylaws, or relevant provisions of law.
Thus, this Court has held that "a corporate officer or agent may represent and bind the corporation in
transactions with third persons to the extent that the authority to do so has been conferred upon him, and
this includes powers which have been intentionally conferred, and also such powers as, in the usual
course of the particular business, are incidental to, or may be implied from, the powers intentionally
conferred, powers added by custom and usage, as usually pertaining to the particular officer or agent,
and such apparent powers as the corporation has caused persons dealing with the officer or agent to
believe that it has conferred." 12