Scribd Logo
Upload

Welcome to Scribd!

  • Lups-San Juan Structural Vs CA

    Uploaded by

    Allen
    33 views2 pages
    This case involves a dispute over a contract for the sale of land owned by Motorich Sales Corporation that was signed by Motorich's treasurer, Nenita Gruenberg, without authorization from Motorich's board of directors. San Juan Structural and Steel Fabricators, Inc. sued Motorich for breach of contract after Motorich failed to deliver title to the land. The court ruled that the contract was not valid and did not bind Motorich because the corporation's property cannot be sold by a shareholder or officer without express authorization from the board of directors, as required by law. A corporation can only act through its board of directors or authorized officers in the normal course of business.

    Original Description:

    47

    Original Title

    Lups-san Juan Structural vs CA

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document
    This case involves a dispute over a contract for the sale of land owned by Motorich Sales Corporation that was signed by Motorich's treasurer, Nenita Gruenberg, without authorization from Motorich's board of directors. San Juan Structural and Steel Fabricators, Inc. sued Motorich for breach of contract after Motorich failed to deliver title to the land. The court ruled that the contract was not valid and did not bind Motorich because the corporation's property cannot be sold by a shareholder or officer without express authorization from the board of directors, as required by law. A corporation can only act through its board of directors or authorized officers in the normal course of business.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    33 views2 pages

    Lups-San Juan Structural Vs CA

    Uploaded by

    Allen
    This case involves a dispute over a contract for the sale of land owned by Motorich Sales Corporation that was signed by Motorich's treasurer, Nenita Gruenberg, without authorization from Motorich's board of directors. San Juan Structural and Steel Fabricators, Inc. sued Motorich for breach of contract after Motorich failed to deliver title to the land. The court ruled that the contract was not valid and did not bind Motorich because the corporation's property cannot be sold by a shareholder or officer without express authorization from the board of directors, as required by law. A corporation can only act through its board of directors or authorized officers in the normal course of business.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    of 2

    SAN JUAN STRUCTURAL AND STEEL FABRICATORS, INC., petitioner, vs.

    COURT OF APPEALS, MOTORICH SALES CORPORATION, NENITA LEE GRUENBERG, ACL


    DEVELOPMENT CORP. and JNM REALTY AND DEVELOPMENT CORP., respondents.

    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

    You might also like