G.R. No. 3186

Parties:

Plaintiff-Appellee: The Great Council of the United States of the Improved Order of Red Men
Defendant-Appellant: The Veteran Army of the Philippines

FACTS:

The Great Council of the United States of the Improved Order of Red Men (hereinafter referred to as the plaintiff) leased portions of a building in Manila to the General Henry W. Lawton Post, No. 1 (hereinafter referred to as Lawton Post), a constituent part of the Veteran Army of the Philippines (hereinafter referred to as the defendant). The lease was signed by representatives of the Apache Tribe, No. 1, Improved Order of Red Men, as lessors, and Albert E. McCabe, acting for Lawton Post, as lessee. The lease was for a term of two years, commencing February 1, 1903, and ending February 28, 1905. Lawton Post occupied the premises for thirteen months and paid rent for that period, but then abandoned the premises. The plaintiff initiated an action to recover rent for the unexpired term of the lease. The court below rendered judgment against the Veteran Army of the Philippines for P1,738.50 and costs, while acquitting Albert E. McCabe. The defendant, Veteran Army of the Philippines, appealed.

ISSUE:

Can the Veteran Army of the Philippines be held liable for the lease agreement entered into by one of its constituent posts, Lawton Post, when the constitution and by-laws of the Veteran Army of the Philippines do not expressly grant any officer the power to enter into such contracts, and the contract was not authorized by the department as a whole?

RULING:

The Supreme Court reversed the judgment against the Veteran Army of the Philippines. The Court noted that the constitution of the Veteran Army of the Philippines, while not explicitly stating who has the power to contract, outlines the duties of its officers. It was deduced from these provisions that the power to make contracts not expressly covered by the officers’ duties was reserved to the department as a whole, requiring authorization at a meeting of the department. Since no evidence was presented to show that the department had authorized the lease agreement, and the transaction was found to be solely between the Apache Tribe and Lawton Post without any indication of the department’s involvement or knowledge, the Veteran Army of the Philippines was not bound by the contract. The Court held that a contract of such nature is only binding on the Veteran Army of the Philippines if it was authorized at a meeting of the department. Therefore, the Veteran Army of the Philippines was acquitted of the complaint.