Facts:
Stefani Sano, private respondent, submitted proposals in October and December 1986 to
Peoples Aircargo and Warehousing Co., Inc., petitioner, a domestic corporation organized in mid‑1986 to operate a customs bonded warehouse at the old Manila International Airport in Pasay City. On October 17, 1986 Sano sent a letter‑proposal for a P350,000 feasibility study and received a letter from petitioner signed by its president,
Antonio Punsalan Jr., acknowledging the agreement and reciting a P100,000 downpayment which petitioner paid. On December 4, 1986 Sano sent a second letter‑proposal for a P400,000 “package” covering an operations manual and a seminar, which bore Punsalan’s conformity in signature and pencil notations reflecting approval and subsequent handling. Sano prepared the operations manual, delivered it to petitioner (receipt acknowledged by petitioner’s vice president), submitted the manual to the Bureau of Customs in support of petitioner’s license application, and conducted a three‑day training seminar for petitioner’s employees in January 1987; petitioner thereafter obtained a Bureau of Customs license in May 1987. Punsalan sold his shares and resigned in 1987; Sano entered government service in March 1987. Sano filed a collection suit against petitioner on February 9, 1988. The Regional Trial Court, Branch 110, Pasay City, found the December 4, 1986 agreement simulated or unenforceable but awarded Sano P60,000 under Article 2142 of the Civil Code for unjust enrichment; the Court of Appeals, Seventeenth Division, reversed on February 28, 1994 and ordered petitioner to pay P400,000, holding the letter‑agreement valid because the president had apparent authority and the corporation had ratified the transaction; reconsideration was denied October 28, 1994, and petitioner sought review before the Supreme Court, which rendered its decision on October 7, 1998.
Issues:
Did the president of
Peoples Aircargo and Warehousing Co., Inc. have apparent authority to bind the corporation to the December 4, 1986 letter‑agreement? Was the December 4, 1986 letter‑agreement a simulated instrument or a valid, enforceable contract?
Ruling:
Ratio:
Doctrine: