J.F. Ramirez v.

The Orientalist Corporation

G.R. No. 11897 September 24, 1918

FACTS:

The Orientalist Company is a corporation, duly organized under the laws of the
Philippine Islands. It is engaged in the business of maintaining and conducting a theatre
in the city of Manila for the exhibition of cinematographic films.

The plaintiff J. F. Ramirez was, a resident of the city of Paris, France, and was
engaged in the business of marketing films for manufacturers, there engaged in the
production or distribution of cinematographic material.

Certain of the directors of the Orientalist Company became apprised of the fact
that the plaintiff in Paris had control of the agencies for two different marks of films,
namely, the "Eclair Films" and the "Milano Films;" and negotiations were begun with
said officials of the Orientalist Company by Jose Ramirez, as agent of the plaintiff, for
the purpose of placing the exclusive agency of these films in the hands of the Orientalist
Company. The defendant Ramon J. Fernandez, one of the directors of the Orientalist
Company and also its treasure, was chiefly active in this matter.
Jose Ramirez, as representative of his father, placed in the hands of Ramon J.
Fernandez an offer stating detail the terms upon which the plaintiff would undertake to
supply from Paris the aforesaid films. Accordingly, Ramon J. Fernandez had an informal
conference with all the members of the company's board of directors except one, and
with approval of those with whom he had communicated, addressed a letter to Jose
Ramirez accepting the offer contained in the memorandum for the exclusive agency of
the Eclair films. A few days later, he addressed another letter couched in the same
terms, likewise accepting the office of the exclusive agency for the Milano Films.
These communications were signed in which it will be noted the separate
signature of R. J. Fernandez, as an individual, is placed somewhat below and to the left
of the signature of the Orientalist Company as singed by R. J. Fernandez, in the capacity
of treasurer.
However, when the films arrived, Orientalist was without fund to pay the cost
and expenses incident to each shipment. In effect the company‘s president B. Hernandez
paid said obligations and treated the films by him as his own property; and they in fact
never came into the actual possession of the Orientalist Company as owner at all,
though it is true Hernandez rented the films to the Orientalist Company and they were
exhibited by it in the Oriental Theatre under an arrangement which was made between
him and the theatre’s manager. However, subsequent deliveries were no longer paid by
any of the concerned party.

Thereupon this action was instituted by the plaintiff against the Orientalist
Company, and Ramon J. Fernandez. As the films which accompanied the dishonored
were liable to deteriorate, the court, upon application of the plaintiff, and apparently
without opposition on the part of the defendants, appointed a receiver who took charge
of the films and sold them. The amount of P6018.93 was realized from this sale and was
applied to the satisfaction of the plaintiff's claim and was accordingly delivered to him
in part payment thereof.
ISSUES:
a. Is Orientalist Co. liable for the acts of Ramon Fernandez, its treasurer?
b. Whether Jose Ramirez is considered a guarantor
RULING:

a. Yes. Section 28 of the Corporation Law provides that the corporate power shall
be exercised by the board of directors including the power to make contracts. However,
Section 103 of the Code of Civil Procedures provides that if the foundation of the suit is
a written instrument and it is not denied upon oath, it shall be deemed to be admitted.
It requires that the Answer setting up the defense of lack of authority of an officer of a
corporation to bind it by a contract should be verified and the denial contemplated must
be specific.
In this case, the failure of the defendant corporation to make any issue in its
answer with regard to the authority of Ramon J. Fernandez to bind it, and particularly
its failure to deny specifically under oath the genuineness and due execution of the
contracts sued upon, have the effect of eliminating the question of his authority from
the case.
Moreover, if a corporation knowingly permits one of its officers, or any other
agent, to do acts within the scope of an apparent authority and thus holds him out to
the public as possessing power to do those acts, the corporation will, as against anyone
who has in good faith dealt with the corporation through such agent, be estopped from
denying his authority. In this case, it will be observed that Ramon J. Fernandez was the
particular officer and member of the board of directors who was most active in the effort
to secure the films for the corporation. The negotiations were conducted by him with
the knowledge and consent of other members of the board; and the contract was made
with their prior approval. As appears from the papers in this record, Fernandez was the
person to who keeping was confided the printed stationery bearing the official style of
the corporation, as well as rubber stencil with which the name of the corporation could
be signed to documents bearing its name.

b. Yes. As appears upon the face of the contracts, the signature of Fernandez, in his
individual capacity, is not in line with the signature of the Orientalist Company, but is
set off to the left of the company's signature and somewhat who sign contracts in some
capacity other than that of principal obligor to place their signature alone would justify
a court in holding that Fernandez here took upon himself the responsibility of a
guarantor rather than that of a principal obligor.