8/12/2019 Jurisprudence on Board of Directors and Agents

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Litonjua vs. EternitG.R. No. 144805June 8, 2006

Facts:The broker who sold the land to the petitioner was not granted the authority to do so by the Board of Directors.Thus, when the latter repudiated the Contract of Sale, the buyer cannot sue for specific performance and/ordamages since the contract was void, binding no one nor vesting anyone with any right.

Ratio: The general principles of agency govern the relation between the corporation and its officers or agents,subject to the articles of incorporation, by-laws, or relevant provisions of law. The property of acorporation is not the property of the stockholders or members, and as such, may not be sold withoutexpress authority from the board of directors. Physical acts like the offering of properties for sale, orthe acceptance of a counter-offer of prospective buyers can be performed ONLY by officers or agentsduly authorised by the board of directors. Absent such delegation, the rule is that the declarations of anindividual director or an agent, alone relating to the affairs of the corporation, but not in the course of,

or connected with, the performance of authorised duties of such director, are not binding on thecorporation.

San Juan Structural and Steel Fabricators, Inc. v. CAG.R. No. 129459September 29, 1998

Facts:Petitioner entered into an agreement with Motorich Sales Corporation (via its treasurer NenitaGruenberg) for the transfer to it of a lot in Quezon City (by way of Deed of Assignment). Petitioner paida downpayment of P100,000 with the balance to be paid on or before March 2, 1989; and was readywith the amount on March 2, 1989.

Nenita Lee Gruenberg did not appear in their supposed meeting. Motorich, despite repeated demandsof the petitioner, refused to execute the Transfer of Rights/Deed of Assignment to transfer the title overthe lot. In defense, Motorich alleged that the President and Chairman of Motorich did not actually signthe agreement with petitioner and that Nenitas Gruenbergs signature on the agreement is inadequateto bind Motorich (Reynaldo, as president and chairman, was the one required).

Ratio:Even though Nenita Gruenberg signed the agreement, it cannot bind Motorich because Nenita wasnever authorized nor did Motorich ratify the sale. A corporation is a juridical person separate and

distinct from its stockholders or members. The property of the corporation is not the property of i tsstockholders or members nor may it be sold by them without authorization from the Corporationsboard. A corporate officer/agent may represent/bind a corporation in transactions with third personsto the extent that the authority to do so has been conferred upon him. Petitioner had the burden ofproving that Nenita was authorized to represent Motorich in the transaction. Petitioner FAILED todischarge this burden.

8/12/2019 Jurisprudence on Board of Directors and Agents

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AF Realty v. DieselmanG.R. No. 111448January 16, 2002

Facts:Cruz, Jr., a member of the board of directors of Dieselman , issued an Authority to Sell Real Estate to areal estate broker named Polintan. The latter was to look for a buyer/buyers and negotiate the sale of acommercial lot owned by Dieselman. Cruz, Jr. had no written authority to sell. Polintan then authorizedNoble to sell the same lot. Noble then offered for sale the property to AF Realty & Development, whichaccepted it through Ranullo, AF Realtys VP. Ranullo issued the check in the amount of P300K payable toDieselman. Polintan received the check and signed an acknowledgement receipt. Ranullo then askedPolintan for the board resolution of Dieselman authorizing the sale of the property. However, Polintancould only give Ranullo the original copy of TCT No. 39849, the tax declaration and tax receipt for thelot, and a photocopy of the Articles of Incorporation of Dieselman.

Ratio:According to the Corporation Code, the board of directors of a corporation may validly delegate some of

its functions to individual officers or agents appointed by it. Thus, contracts or acts of a corporationmust be made either by the board of directors or by a corporate agent duly authorized by the board.Absent such valid delegation/authorization, the rule is that the declarations of an individual directorrelating to the affairs of the corporation, but not in the course of, or connected with, the performanceof authorized duties of such director, are held not binding on the corporation.

Vicente v. GeraldezG.R. No. L-32473July 31, 1973

Facts:Hi Cement Corp. acquired a Placer Lease Contract (mining claims). Vicente et, al claimed that some partsof the mining claims are theirs hence the suit. They decided to have a Compromise Agreement, howeverthe Corporations President refused to sign it.

Ratio:The law specifically requires that "juridical persons may compromise only in the form and with therequisites which may be necessary to alienate their property." As a general rule an officer or agent ofthe corporation has no power to compromise or settle a claim by or against the corporation, except tothe extent that such power is given to him either expressly or by reasonable implication from thecircumstances. Whatever authority the officers or agents of a corporation may have is derived from theboard of directors, or other governing body, unless conferred by the charter of the corporation. Acorporation officer's power as an agent of the corporation must therefore be sought from the statute,the charter, the by-laws, or in a delegation of authority to such officer, from the acts of board ofdirectors, formally expressed or implied from a habit or custom of doing business.