GR 11897; (September, 1918) (Digest)
G.R. No. 11897 ; September 24, 1918
J. F. RAMIREZ, plaintiff-appellee, vs. THE ORIENTALIST CO., and RAMON J. FERNANDEZ, defendants-appellants.
FACTS:
The Orientalist Company, a corporation operating a theater in Manila, negotiated through its treasurer, Ramon J. Fernandez, with Jose Ramirez (agent of his father, J.F. Ramirez, a film supplier based in Paris) for the exclusive agency of Eclair and Milano films. On July 30 and August 5, 1913, Fernandez signed two letters accepting Ramirez’s offer dated July 4, 1913. The letters were signed in a dual manner: first, “THE ORIENTALIST COMPANY, By R. J. FERNANDEZ, Treasurer,” and below and to the left, “R. J. FERNANDEZ” in his personal capacity. The company later failed to pay for several film shipments, and the drafts drawn against it were dishonored. J.F. Ramirez sued both the Orientalist Company and Fernandez. The trial court held the company liable as principal debtor and Fernandez subsidiarily as guarantor. Both defendants appealed, each arguing the other should be solely liable.
ISSUE:
1. Whether the Orientalist Company is bound by the contract executed by its treasurer, Ramon J. Fernandez.
2. Whether Ramon J. Fernandez is liable as a principal obligor or merely as a guarantor.
RULING:
1. Yes, the Orientalist Company is bound by the contract. The corporation is liable because Fernandez, as treasurer, acted within the scope of his apparent authority. The board of directors had informally approved the contract, and the company, through its directing power, permitted Fernandez to hold himself out as having authority to bind the corporation. The corporation is estopped from denying his authority, as third parties like Ramirez relied on these external manifestations of corporate consent.
2. Ramon J. Fernandez is liable only as a guarantor, not as a principal obligor. The form of his signatureset apart from the corporate signatureand parol evidence indicate the parties intended Fernandez to guarantee the performance of the contract, not to assume primary liability. The ambiguity in the signature allows for extrinsic evidence to clarify the intention, which was to make Fernandez a guarantor.
The judgment of the trial court was affirmed, holding the Orientalist Company primarily liable and Fernandez subsidiarily liable as guarantor. Costs were imposed equally on both appellants.