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Unformatted text preview: previous transaction between
Safic and IVO where IVO was represented by Monteverde. This is because the 1985 contract and
the 1986 contracts are very different. The 1985 contract is not speculative while the 1986 contracts
are speculative hence, Safic should have secured the confirmation by IVO’s Board that Monteverde
is indeed authorized to enter into such agreements. Further, Monteverde did not even present the
said 1986 agreements before the Board of Directors so there was, in fact, no occasion at all for
ratification. The contracts were not even reported in IVO’s export sales book and turnout book.
Neither were they reflected in other books and records of the corporation. It must be pointed out that
the Board of Directors, not Monteverde, exercises corporate power. Clearly, Monteverde’s
speculative contracts with Safic never bound IVO and Safic cannot therefore enforce those contracts
against IVO. SC: Petition denied. Borja v. Sulyap, 399 SCRA 601 (2003) GATCHALIAN
DOCTRINE: Even if a party’s counsel exceeded his authority in inserting the penalty clause, the status of
the said clause is not void but merely voidable, i.e., capable of being ratified.
Petitioner Basilio Borja, Sr., as lessor, and private respondent Sulyap Inc., as lessee, entered into a
contract of lease involving a onestorey office building owned by the petitioner located at Quezon City.
Pursuant to the lease, private respondent paid, among others, advance rentals, association dues and 57 deposit for electrical and telephone expenses. Upon the expiration of their lease contract, private respondent
demanded the return of the said advance rentals, dues and deposit but the petitioner refused to do so.,
Thus, Private Respondent filed with the RTC Quezon a complaint for sum of money against the petitioner.3
Subsequently, the parties entered into and submitted to the trial court a "Compromise Agreement" which
Below is the penalty clause of the Compromise Agreement:
7. That it is expressly agreed that the parties shall comply in good faith to the terms of the herein
compromise agreement and that any amount due not paid within the period stated in this agreement
shall earn 2% interest per month until fully paid plus twenty five 25% attorney’s fees of the amount
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This document was uploaded on 03/11/2014.
- Fall '14