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People's Aircargo v. Court of Appeals

The case discusses whether the president of People's Aircargo had apparent authority to enter into a second contract with Stefano Sano for consultancy services without board approval. The court held that the president did have apparent authority since the corporation had previously allowed him to enter the first contract with Sano and accepted the benefits of the second contract.

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Junelyn T. Ella
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116 views2 pages

People's Aircargo v. Court of Appeals

The case discusses whether the president of People's Aircargo had apparent authority to enter into a second contract with Stefano Sano for consultancy services without board approval. The court held that the president did have apparent authority since the corporation had previously allowed him to enter the first contract with Sano and accepted the benefits of the second contract.

Uploaded by

Junelyn T. Ella
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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People’s Aircargo v.

Court of Appeals

People’s Aircargo is a domestic corporation, which was organized


in the middle of 1986 to operate a customs bonded warehouse. To
obtain a license for the corporation from the Bureau of Customs,
Antonio Punsalan Jr., the corporation president, solicited a proposal
from Stefano Sano (who was preferred because of his membership in
the task force supervising the transition of the bureau from the Marcos
to the Aquino Government) for a feasibility study. This constituted the
“First Contract” for which Sano was paid for. On December 1086, a
“Second Contract”, this time for consultancy services, was made upon
Punsalan’s request. The consultancy services included an Operations
Manual and Seminar/Workshop for the employees of People’s Aircargo
Sano was not paid for the 2nd contract so he filed a collection case. By this time,
Punsalan had sold his shares and resigned as president. People’s Aircargo denied
that Sano conducted Consultancy services. It alleged that the contract entered into
between Sano and Punsalan was without authority.

Issue:
W/N Punsalan, as president, has apparent authority to enter into the second contract
that could bind the corporation

Held:
YES. Since the corporation had previously allowed Punsalan to
enter into the first contract with Sano without a board resolution
expressly authorizing him, thus, it had clothed its president with
apparent authority to execute the Second Contract. Furthermore,
private respondent prepared an operations manual and conducted a
seminar for the employees of petitioner in accordance with their
contract. Petitioner accepted the operations manual, submitted it to the
Bureau of Customs and allowed the seminar for its employees. As a
result of this, petitioner was given by the Bureau of Customs a license to
operate a bonded warehouse. Even if the Second Contract was outside
the usual powers of the president, petitioner’s ratification of said
contract and acceptance of benefits have made it binding, nonetheless.

Doctrine: Contracts entered into by a corporate president without express prior


board approval bind the corporation, when such officer’s apparent authority is
established and when these contracts are ratified by the corporation.
• If a corporation knowingly permits one of its officers, or any
other agent, to act within the scope of an apparent authority, it
holds him out to the public as possessing the power to do those
acts, and thus, the corporation will, as against anyone who has in good faith dealt with
it through such agent, be estopped from denying the agent’s authority.

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