Case Summary (G.R. No. 117847)
Petitioner
People’s Aircargo and Warehousing Co., Inc., through its president Antonio C. Punsalan Jr., who negotiated and executed two letter-agreements without express board approval.
Respondent
Stefani C. SaAo, who submitted proposals, prepared a feasibility study and operations manual, and conducted a seminar for petitioner’s employees.
Key Dates
• October 17, 1986 – First Contract proposal (P350,000) and confirmation.
• December 4, 1986 – Second Contract proposal (P400,000).
• January 10, 1987 – Delivery of operations manual.
• Third week of January 1987 – Employee seminar conducted.
• February 9, 1988 – Collection suit filed by SaAo.
• October 26, 1990 – Regional Trial Court decision.
• February 28, 1994 – Court of Appeals decision.
• October 7, 1998 – Supreme Court decision.
Applicable Law
1987 Philippine Constitution; Corporation Code (BP Blg. 68) Sections 2 and 23; Civil Code Articles 1144(1), 1355, 1345, 1371, 1403–1405; Rules of Court Rule 45; doctrine of apparent authority and estoppel.
Facts of the First and Second Contracts
SaAo’s October 17, 1986 proposal covered a market, technical and financial feasibility study for P350,000, duly confirmed by Punsalan and paid in installments. Petitioner used the study to secure its customs license and completed payment. On December 4, 1986, SaAo offered a P400,000 package—operations manual and seminar—payable in scheduled installments. Punsalan signed the “conforme,” SaAo delivered the manual on January 10, 1987, and conducted the seminar in mid-January. Petitioner submitted the manual to the Bureau of Customs and obtained its bonded-warehouse license.
Trial Court Findings
The RTC declared the Second Contract simulated and unenforceable for lack of board approval, absence of down payment, delayed demand, irregular pencil notations and misspellings. Despite this, it awarded SaAo ₱60,000 under unjust enrichment (Civil Code Article 2142), based on prevailing consultancy rates.
Court of Appeals Ruling
The CA found the Second Contract valid and binding for ₱400,000. It held that Punsalan possessed apparent authority by virtue of the unobjected First Contract and corporate practice of allowing the president to negotiate necessary contracts without prior board resolution. The CA refused reconsideration.
Issues on Review
- Whether the corporate president had apparent authority to bind petitioner to the Second Contract.
- Whether the Second Contract was genuine or simulated.
Supreme Court Ruling: Apparent Authority
Under Section 23 of the Corporation Code and established jurisprudence, a corporation may be bound by acts of an officer clothed with apparent authority through custom, acquiescence or prior similar transactions. The unchallenged negotiation, performance and payment of the First Contract vested Punsalan with apparent authority. SaAo, acting in good faith, relied on that authority. Petitioner’s acceptance and use of the manual, conduct of the seminar and ultimate licensing by the Bureau ratifie
...continue readingCase Syllabus (G.R. No. 117847)
Facts
- People’s Aircargo and Warehousing Co., Inc. (“petitioner”) organized in mid-1986 to operate a customs bonded warehouse at the old Manila International Airport.
- Antonio Punsalan Jr., president of petitioner, solicited Stefani SaAo’s professional services for a feasibility study to obtain a customs license.
- First Contract (Oct. 17, 1986): SaAo’s proposal to prepare market, technical, and financial studies plus documentation for a fee of ₱350,000, payable 50% upon confirmation, 25% after 15 days, and 25% upon submission; duly signed by both parties.
- Petitioner’s majority stockholder objected to the fee, but Punsalan preferred SaAo due to his connections; petitioner paid the contract price.
- Second Contract (Dec. 4, 1986): SaAo’s letter‐proposal for consultancy services at a package fee of ₱400,000, with a detailed schedule of downpayment and post-dated checks; “CONFORME” signed by Punsalan for petitioner.
- SaAo delivered the operations manual (Jan. 10, 1987) and conducted a three-day seminar in late January 1987; petitioner used the manual to secure its bonded warehouse license in May 1987.
- SaAo later joined the Bureau of Customs; Punsalan resigned and sold his shares in 1987.
- SaAo filed suit on Feb. 9, 1988, alleging non‐payment for services; petitioner denied authority and performance, claimed contract was collusive and unenforceable.
Procedural History
- RTC Pasay, Branch 110 (Oct. 26, 1990): Awarded SaAo ₱6