Colegio Medico Farmaceutico de Filipinas, Inc. vs. Lim

A corporate president 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 or her usual duties, including the issuance of demand letters for unpaid rentals and the signing of verifications and certifications of non-forum shopping in ejectment proceedings, notwithstanding the general rule that corporate officers require express board authorization to bind the corporation.

Colegio Medico Farmaceutico de Filipinas, Inc. (petitioner), the registered owner of a building in Sampaloc, Manila, entered into a lease agreement with St. John Berchman School of Manila Foundation, which was later assigned to Lily Lim (respondent). Following the expiration of the written contract and respondent's continued occupation of the premises without payment of rentals, the petitioner's president issued a demand letter requiring payment of arrears and vacation of the property. Respondent refused, claiming a valid 10-year lease extending until 2013 and citing the petitioner's failure to undertake necessary repairs as justification for withholding rent.

• The Lease Arrangements: Petitioner alleged that in June 2005, it entered into a one-year Contract of Lease with respondent for the period June 2005 to May 2006. After expiration, petitioner sent another contract for June 2006 to May 2007, which respondent failed to return despite follow-ups. Respondent countered that St. John Berchman School had originally entered into a 10-year lease in May 2003 (running until May 2013), and that the 2005 contract was executed merely to facilitate advance payment of rentals, without intention of amending or shortening the original 10-year term. Respondent further alleged that on May 3, 2005, the Board of Trustees of St. John assigned its rights and interests to her with petitioner's knowledge and approval.
• The Dispute: During a board meeting in December 2007, petitioner resolved not to renew the lease. On March 5, 2008, Dr. Virgilio C. Del Castillo, petitioner's president, wrote to respondent demanding payment of ₱604,936.35 in back rentals and utility bills and requiring vacation of the premises by March 16, 2008. Respondent refused to comply, asserting that the lease remained valid until 2013 and that she had suspended payments due to petitioner's refusal to repair the library, toilets, and basketball court despite repeated written requests.

• Authority to Sign Verification: Petitioner maintained that under prevailing jurisprudence, a corporate president may sign the verification and certification of non-forum shopping without a board resolution, as the president is presumed to have sufficient knowledge of corporate affairs to swear to the truth of the allegations.
• Validity of Demand Letter: The issuance of the March 5, 2008 demand letter constituted an act within the usual course of business and the scope of the president's duties under the corporate by-laws, which granted the president general supervision and control over business affairs and the power to execute contracts. Alternatively, any defect in authority was cured by the Board Resolution dated May 13, 2008, which ratified the demand letter and authorized the filing of the case.
• Nature of Action: Demand to vacate was unnecessary where the action for unlawful detainer was predicated on the expiration of the lease contract rather than non-payment of rent.
• Damages: The monthly rental awarded should be increased from ₱50,000.00 to ₱55,000.00 as stipulated in the Contract of Lease, and exemplary and moral damages should be awarded.

• Jurisdictional Defect: Respondent countered that the certification of non-forum shopping is a jurisdictional requirement; failure to attach the Board Resolution dated May 13, 2008 authorizing Del Castillo to sign on behalf of petitioner rendered the complaint fatally defective.
• Invalid Demand: The March 5, 2008 demand letter was premature and void, having been issued without express board authority. The president lacked inherent power to bind the corporation without specific authorization.
• Validity of Lease: The underlying lease contract was for a period of 10 years (2003-2013), not merely one year. The case was improperly filed against respondent individually rather than against St. John, the named lessee in the demand letter.

• Authority of Corporate President: Whether the president of a corporation may sign the verification and certification of non-forum shopping without a board resolution.
• Validity of Demand Letter: Whether the demand letter dated March 5, 2008 was validly issued by the corporate president.
• Requisites of Unlawful Detainer: Whether all the essential requisites for an action for unlawful detainer were present.

• Authority of Corporate President: A corporate president may sign the verification and certification of non-forum shopping even without a board resolution, as jurisprudence recognizes a presumption that the president possesses sufficient knowledge of corporate affairs to swear to the truth of the allegations in the complaint.
• Validity of Demand Letter: The demand letter was validly issued. In the absence of a charter or by-law provision to the contrary, the president 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 or her usual duties. The petitioner's by-laws expressly vested the president with general supervision and control over business affairs and the power to execute contracts. The collection of receivables and management of lease relationships fall within these usual duties. Even if the demand letter were initially unauthorized, the subsequent Board Resolution dated May 13, 2008 constituted ratification that cured any defect.
• Requisites of Unlawful Detainer: All essential requisites concur: (1) a lease contract existed; (2) respondent's right to possession expired or was terminated by non-payment of rent; (3) respondent withheld possession after such expiration/termination; (4) a written demand was made; and (5) the action was filed within one year from the last demand. The complaint was properly filed within one year of the March 5, 2008 demand.

• Presumed Authority of Corporate President: In the absence of a charter or by-law provision to the contrary, the president 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 or her usual duties. This includes the power to execute contracts and manage ordinary business affairs without express board resolution for each specific act.
• Apparent Authority: Apparent authority may be established by (1) the general manner in which the corporation holds out an officer as having the power to act, or (2) the acquiescence in his acts of a particular nature with actual or constructive knowledge thereof. It requires evidence of similar acts executed in the corporation's favor or in favor of other parties, vesting the officer with the power to bind the corporation.
• Ratification: A defect in the authority of a corporate officer to issue a demand letter or bind the corporation may be cured by subsequent ratification by the board of directors, manifested through a resolution expressly authorizing the action previously taken.

• "In the absence of a charter or by-law provision to the contrary, the president is presumed to have the authority to act within the domain of the general objectives of its business and within the scope of his or her usual duties."
• "Apparent authority is derived not merely from practice. Its existence may be ascertained through (1) the general manner in which the corporation holds out an officer or agent as having the power to act or, in other words, the apparent authority to act in general, with which it clothes him; or (2) the acquiescence in his acts of a particular nature, with actual or constructive knowledge thereof, whether within or beyond the scope of his ordinary powers."

• People's Aircargo and Warehousing Co., Inc. v. Court of Appeals, 357 Phil. 850 (1998) — Controlling precedent establishing that the president of a corporation possesses the power to enter into contracts and bind the corporation when acting within the scope of usual duties, and defining the parameters of apparent authority.
• Hutama-RSEA/Supermax Phils., J.V. v. KCD Builders Corporation, 628 Phil. 52 (2010) — Followed for the rule that a corporate president may sign the verification and certification of non-forum shopping without a board resolution.
• Manila Metal Container Corporation v. Philippine National Bank, 540 Phil. 451 (2006) — Cited for the general rule that corporate officers require board authorization to exercise corporate powers.
• Dela Cruz v. Court of Appeals, 539 Phil. 158 (2006) — Cited for the enumeration of essential requisites for unlawful detainer.
• Nacar v. Gallery Frames, 716 Phil. 267 (2013) — Applied for the computation of interest on monetary awards (12% per annum from extrajudicial demand to June 30, 2013; 6% per annum thereafter until full satisfaction).

• Section 23, Corporation Code of the Philippines — Vests corporate powers in the board of directors or trustees, but recognizes that the board may delegate functions to officers.
• Rule 45, Rules of Court — Governs the Petition for Review on Certiorari filed before the Supreme Court.

Associate Justice Teresita J. Leonardo-De Castro (on official leave), Associate Justice Francis H. Jardeleza, Associate Justice Noel Gimenez Tijam, and Associate Justice Alexander G. Gesmundo.