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COLEGIO MEDICO-FARMACEUTICO DE FILIPINAS v. LILY LIM

FACTS:

The Colegio Medico Farmaceutico de Filipinas, Inc. (CMFF) filed a Complaint for Ejectment with Damages against Lily Lim, the President of St. John Berchman School of Manila Foundation (St. John). CMFF alleged that they had a Contract of Lease with Lim, which expired and was not renewed. CMFF demanded payment of back rentals and utility bills, as well as Lim's vacation of the leased property.

Lim claimed that she assumed the lease from St. John, with the knowledge and approval of CMFF, and that the lease was supposed to continue until 2013. However, the Metropolitan Trial Court (MeTC) dismissed the complaint for lack of a valid demand letter.

The Regional Trial Court (RTC) reversed the decision of the MeTC and ruled in favor of CMFF. The RTC ordered Lim to vacate the property, pay utilities, monthly rental, attorney's fees, and costs of suit.

The Court of Appeals (CA) later reversed the decision of the RTC, stating that the failure to attach a copy of the board resolution authorizing the complaint was a fatal defect.

CMFF filed a Petition for Review on Certiorari before the Supreme Court, arguing that the president of a corporation is authorized to sign the verification and certification of non-forum shopping without a board resolution. On the other hand, Lim argued that the failure to attach the board resolution was a fatal defect and that the demand letter was premature and without legal basis.

ISSUES:

  1. Whether the president of a corporation may sign the verification and certification of non-forum shopping without a board resolution.

  2. Whether there was a valid written demand upon the respondent to pay unpaid rentals and vacate the subject property.

  3. Whether or not the president of a corporation has the authority to act on behalf of the corporation without a board resolution explicitly authorizing him/her.

  4. Whether or not the issuance of a demand letter by the president of a corporation, even without a board resolution, is within the scope of the president's authority.

  5. Whether or not the subsequent issuance of a board resolution ratifies and cures any defect in the president's actions.

  6. Whether or not the award of actual damages should earn interest from the date of extrajudicial demand.

RULING:

  1. The president of a corporation is allowed to sign the verification and certification of non-forum shopping even without a board resolution, as said officer is presumed to have sufficient knowledge to swear to the truth of the allegations stated in the complaint or petition.

  2. The demand letter issued by the president of the corporation to the respondent, requiring payment of unpaid rentals and vacation of the subject property, was valid. The president of a corporation has the power to perform acts within the scope of their usual duties and may bind the corporation. The authority of the president to bind the corporation is derived from law, corporate by-laws, or authorization from the board, either expressly or impliedly by habit, custom, or acquiescence in the general course of business.

  3. Yes. The president of a corporation is presumed to have the authority to act within the general objectives of the corporation's business and within the scope of his/her usual duties. Apparent authority may be derived from the general manner in which the corporation holds out the president as having the power to act or the acquiescence in his/her acts of a particular nature, with actual or constructive knowledge thereof. The vesting of a corporate officer with the power to bind the corporation is what establishes apparent authority, not the quantity of similar acts (Board of Liquidators v. Kalaw).

  4. Yes. The president of a corporation, in the absence of a charter or by-law provision to the contrary, is presumed to have the authority to act within the ordinary course of business of the corporation. In this case, the issuance of a demand letter to collect unpaid rentals and demand vacation of the subject property was within the scope of the president's powers and duties as stated in the corporate by-laws.

  5. Yes. Even if the president acted beyond the scope of his/her authority, the subsequent issuance of a board resolution ratifying and consenting to the president's actions cures any defect that may have arisen. The board resolution serves as a clear indication that the board agreed to, acquiesced in, or ratified the president's actions.

  6. Yes, the award of actual damages shall earn interest at the rate of 12% per annum from the date of extrajudicial demand. From July 1, 2013 until full satisfaction of the monetary award, the rate of interest shall be six percent (6%) per annum.

PRINCIPLES:

  • Unless authorized by the board of directors or trustees, corporate officers and agents cannot exercise any corporate power pertaining to the corporation. A board resolution expressly authorizing the officers and agents is required.

  • The president of a corporation may sign the verification and certification of non-forum shopping even without a board resolution as said officer is presumed to have sufficient knowledge to swear to the truth of the allegations stated in the complaint or petition.

  • A corporation may act through its board of directors, which exercises almost all corporate powers, but can validly delegate some of its functions and powers to officers, committees, or agents.

  • A corporate officer or agent may represent and bind the corporation in transactions with third persons to the extent that authority has been conferred upon him, which may be derived from law, corporate by-laws, or authorization from the board, either expressly or impliedly by habit, custom, or acquiescence in the general course of business.

  • Apparent authority may be derived from the general manner in which the corporation holds out an officer or agent as having the power to act, or from the acquiescence in the officer's acts of a particular nature (Board of Liquidators v. Kalaw).

  • The president of a corporation, in the absence of a charter or by-law provision to the contrary, is presumed to have the authority to act within the domain of the general objectives of the corporation's business and within the scope of his/her usual duties.

  • A board resolution ratifying and consenting to the actions of an officer of a corporation cures any defect that may have arisen from the officer's actions.

  • Actual damages shall earn interest from the time they are demanded, either judicially or extrajudicially.

  • The rate of interest shall be 12% per annum from the time of demand until June 30, 2013, and six percent (6%) per annum from July 1, 2013, until full satisfaction of the monetary award.