G.R. No. 53820. June 15, 1992
Art. 1317 – No one
may contract in the name of another without authority.
Facts:
·
Constancio
B. Maglana, President and Chairman of the Board of PWCC, submitted a
letter-offer to YKS, to wit:
(a)
To
deliver 45,000 bags of white cement;
(b)
At
YKS option: a) P24.30 per 94 Ibs. bag net, FOB Cebu City; and b) P23.30 per 94
Ibs. bag net, FOB Asturias Cebu;
(c)
With
downpayment of P243k, et al.
·
But
23 days after the signing of the confirmation of the said letter, PWCC Board
disapproved the same as evidenced on the minutes of their meeting.
·
PWCC
informed YKS of the disapproval of the letter-offer. But it issued the
corresponding Delivery Order of 10,000 bags of cement at P24.30, and Official
Receipt for the payment of the same in the amount of P243,000.00, which YKS
accepted without protest.
·
Then,
a series of correspondence ensued between the parties: YKS demanding the
delivery of the balance 35,000 bags of cement as per letter-offer; while PWCC
insisting on the full compliance with the terms thereof and informing the
latter that it is exercising the option therein stipulated.
·
YKS
filed a complaint against PWCC, on the basis of the aforesaid letter-offer, as accepted
by YKS, as a contract that binds the PWCC.
·
The
CFI Leyte ruled in favor of YKS, but reversed by the CA on the ground that the
said letter-offer is not binding upon it because Mr. Maglana was not authorized
to make the offer and sign the contract in behalf of the corporation as the
Board rejected the same.
Issue:
WoN Mr. Maglana, the PWCC President
and Chairman, was empowered to execute the contract for the corporation as
implied from its By-Laws.
Held:
No, the
Court holds that Mr. Maglana was not so authorized under the By-Laws of PWCC to
enter into contracts for the corporation independently of the Board of
Directors.
"ARTICLE
1317. No one may contract in the name of another without being authorized by
the latter, or unless he has by law a right to represent him. A contract
entered into in the name of another by one who has no authority or legal
representation, or who has acted beyond his powers, shall be unenforceable,
unless it is ratified, expressly or impliedly, by the person on whose behalf it
has been executed, before it is revoked by the other contracting party."
In the
case at bar, the letter-offer was effectively disapproved and rejected by the
Board of Directors which, at the same time, considered the amount of
P243,000.00 received by Maglana as payment for 10,000 bags of white cement,
treated as an entirely different contract, and forthwith notified YKS its
decision to accept the new transaction involving only 10,000 bags of white
cement within 10 days, otherwise it will return the latter’s payment in check
of P243k.
Thus, judgment appealed is AFFIRMED.
