Yao Ka Sin Trading vs.

CA (1992)

 1973, the president (Constancio Maglana) of Prime White Cement Corporation,

sent an offer letter to Yao Ka Sin Trading.
o that Prime White is willing to sell 45,000 bags of cement at P24.30/ bag.
 The offer letter was received by Yao Ka Sin’s manager (Henry Yao)
o Yao sent a check in the amount of P243K worth of 10,000 bags of cement.

 However, the BOD of Prime White rejected the offer letter sent by Maglana
 but it considered Yao’s acceptance letter as a new contract offer
o Hence the Board sent a letter to Yao telling him that they will sell only 10,000 bags
to Yao Ka Sin
o and that he has 10 days to reply;
 that if no reply they will consider it as an acceptance
 and Prime White shall deposit the P243k check in its account
 then deliver the cements to Yao Ka Sin. Henry Yao never replied.

 Later, Yao Ka Sin sued Prime White

to compel the latter to comply with what Yao Ka Sin considered as the original contract

 Prime White defense:

although Maglana is empowered to sign contracts in behalf of Prime White,
such contracts are still subject to approval by Prime White’s Board,
and it requires approval by the National Investment and Development Corporation (NIDC),
(a government owned and controlled corporation)
because Prime White is a subsidiary of NIDC.

 Yao asserts:
that the letter from Maglana is a binding contract
because it was made under the apparent authority of Maglana.

TC: ruled in favor of Yao Ka Sin.

Also, the subsequent letter by
CA: reversed the trial court.
Prime White to Yao Ka Sin is
binding because Yao Ka Sin’s
failure to respond constitutes
ISSUE:
an acceptance, per stated in
WON the president of a corporation is clothed with apparent authority the letter itself – which was
to enter into binding contracts with 3P? (w/o the authority of the Board) – NO. not contested by Henry Yao
during trial.

HELD: No.

As a rule, apparent authority may result from

(1) the manner, by which the corporation holds out an officer or agent
as having power to act (the apparent authority with which it clothes him to act in general)
(2) acquiescence in his acts of a particular nature, with actual or constructive knowledge
thereof, whether within or without the scope of his ordinary powers.
These are not present in this case.
The president may only enter into contracts upon authority of the Board.
Hence, any agreement signed by the president is subject to approval by the Board.

Unlike a general manager (like the case of Francisco vs GSIS),

the president has no apparent authority to enter into binding contracts with 3P.

If the by-laws of Prime White did provide Maglana with apparent authority, this was not proven
by Yao Ka Si