Can a Company President Sign a Contract Without Board Approval? (Philippine Corporate Law)

Updated for the Revised Corporation Code of the Philippines (RCC, R.A. 11232). This overview is practical guidance, not legal advice.

TL;DR

General rule: A corporation acts through its Board of Directors/Trustees. The president can sign only if he/she has authority—express, implied, or apparent.
When board approval is typically required: “extraordinary” or material transactions (e.g., real property deals, bank loans, major acquisitions, contracts outside the ordinary course), and any act that the law or the bylaws reserve to the board or stockholders.
Counterparty safety check: Ask for a Secretary’s Certificate (board resolution), review the bylaws, and confirm the president’s actual authority.
If the president signed without authority: The corporation may reject or ratify the contract. Third parties in good faith may still be protected by apparent authority/estoppel depending on facts.

1) The Legal Starting Point: Who May Bind the Corporation?

1.1 Corporate powers lie in the Board

Under the RCC, corporate powers are exercised by the Board of Directors (or trustees, for non-stock), except to the extent delegated or authorized. Officers—including the president—are agents of the corporation. Their authority is not inherent; it must come from the bylaws, a board resolution, or long-standing corporate practice that implies authority.

1.2 The president’s default role

The president is typically the chief operating officer. Filipino jurisprudence generally recognizes that a president has implied authority to carry out acts within the ordinary course of business (e.g., routine sales, standard service agreements, day-to-day supplier contracts) if consistent with the company’s primary purpose and internal practice. But for extraordinary or material transactions, you should assume board approval is required unless there is clear prior delegation.

2) Types of Authority the President Might Rely On

Express (Actual) Authority
- Conferred by bylaws or a board resolution (general or specific).
- Example: “The President is authorized to enter into and sign all distribution agreements up to ₱50 million.”
Implied Authority
- Arises from the president’s position and course of dealing: what is necessary, usual, and proper to run the business day-to-day.
- Scope turns on the corporation’s primary purpose, size, and past practices.
Apparent Authority (Estoppel)
- Protects third parties in good faith who rely on the corporation’s manifestations that the president is authorized.
- Built from outward signs: the officer’s title, how the company allowed the officer to transact historically, who negotiated, company letterhead/email, the presence of other officers, etc.
- Limits: Apparent authority won’t validate acts clearly outside the company’s business, patently disadvantageous transactions, or those where the counterparty knew (or should have known) the lack of authority.
Ratification
- Even if initially unauthorized, the board may expressly (via resolution) or impliedly (by accepting benefits or performing the contract) ratify, retroactively binding the corporation.
- Ratification cures lack of authority unless the law requires a specific approval formality that was never obtained.

3) When Board (or Stockholder) Approval Is Usually Needed

Treat these as red flags that the president should not sign alone absent clear written delegation:

Real property transactions (sale, purchase, lease, mortgage), especially if material to operations.
Incurring corporate debt (bank loans, credit facilities), security or guarantees—bank practice nearly always requires a board resolution.
Disposition or encumbrance of all or substantially all corporate assets – requires board approval and typically stockholder approval by at least two-thirds (2/3).
Investments in another corporation or business not aligned with the primary purpose – generally needs board and 2/3 stockholder approval.
Related-party/self-dealing transactions involving directors/officers or their affiliates – subject to disinterested board approval and fairness tests; some companies adopt RPT policies requiring board/committee clearance.
Mergers, consolidations, increases/decreases of capital, amendments of articles/bylaws – statutory board and stockholder approvals are mandatory.
Long-term, high-value, or transformative contracts (e.g., exclusive distribution for the Philippines, build-operate-transfer arrangements, technology licenses central to operations).
Acts restricted by the bylaws to the board or a specific officer/committee.

Practice tip: Many bylaws or board manuals set monetary thresholds (e.g., president up to ₱X; beyond that needs the board). Counterparties should ask for—and file—these delegations.

4) The Secretary’s Certificate: Market Standard Proof of Authority

A Secretary’s Certificate (signed by the Corporate Secretary and often notarized) typically states:

That a board meeting was duly called and held (or written consent obtained);
The specific resolution(s) authorizing the contract and naming the signatory;
Any limits/conditions (amount cap, counterparty, expiration).

Banks, large suppliers, and real estate registries commonly require this. It is the cleanest way to establish actual authority and reduce litigation risk.

5) What If the President Signed Without Authority?

5.1 As to the corporation

The corporation may repudiate the contract (no authority = no consent).
Or it may ratify (expressly or impliedly). Acceptance of benefits, continued performance, or silence in the face of knowledge may support implied ratification.

5.2 As to the counterparty

If the counterparty reasonably relied on apparent authority and acted in good faith, courts may still hold the corporation bound.
If red flags existed (e.g., unusual transaction, inconsistent with corporate purpose, prior refusals, no secretary’s certificate despite request), the counterparty’s reliance may be deemed unreasonable.

5.3 As to the president personally

Under agency principles, an officer who warrants authority may face personal liability if the corporation disowns the act and there is no ratification, particularly where the third party suffers loss because of the misrepresentation of authority.
Internal discipline/remedies may also apply (breach of duty to the corporation).

6) Special Entity Types

6.1 Close corporations

The RCC allows stockholder management and relaxed formalities.
If the articles/bylaws vest management in the stockholders or in fewer directors, the president’s scope may be broader if expressly delegated. Still, get written authority for material transactions.

6.2 One Person Corporation (OPC)

The single stockholder is also the sole director and typically the president.
In practice, the same person’s signature often suffices, but formality still matters: keep written consents/resolutions (even if signed by the single stockholder) and observe RPT/self-dealing safeguards.

7) Practical Checklists

7.1 For counterparties (vendor, bank, buyer)

Ask early for a Secretary’s Certificate and bylaw extracts on signing authority.
Match names & titles precisely across all documents.
Check purpose fit: Is the contract aligned with the company’s primary purpose and ordinary business?
Watch thresholds: Value, term, security interests, real property—all trigger board approval in practice.
RPT screen: Are officers/directors (or their companies) involved? Get board/committee approval evidence.
Conditions precedent: Include delivery of a Secretary’s Certificate and, if needed, stockholder approval.
No-authority clause: State that failure to provide required approvals allows you to terminate without liability.

7.2 For corporate officers/in-house counsel

Maintain a matrix of authorities (who can sign what, up to how much).
Use standing delegations with sensible caps; refresh annually.
For sensitive deals, pass a specific board resolution naming the contract, counterparties, cap, and signatories.
Keep a board manual and RPT policy in sync with the RCC and SEC guidelines.
Train the commercial team on when to escalate to the board.

8) Drafting Clauses That Help

Authority Representation: “Each party represents that the undersigned officer is duly authorized to execute and deliver this Agreement.”
Condition Precedent: “Effectiveness is conditioned on receipt of a Secretary’s Certificate evidencing board approval authorizing the signatory.”
No Reliance on Internal Limits: “Internal signing limits not disclosed to the other party shall not affect the validity of this Agreement.” (Note: enforceability depends on facts; not a cure-all.)
Ratification Window: “If any required approval is lacking, the parties shall cooperate in good faith to obtain ratification within ___ days, failing which either party may rescind without penalty.”

9) Common Myths, Clarified

“The president can always bind the corporation.” ❌ Not true. Authority must exist. Title alone is not enough for extraordinary deals.
“Bylaws filed with the SEC automatically bind third parties.” ⚠️ Third parties may not be bound by internal limitations unless they know of them; but public filings (and deal context) can affect a good-faith/apparent-authority analysis.
“Apparent authority cures any defect.” ❌ It’s a fact-intensive doctrine and won’t save plainly ultra vires, illegal, or obviously unusual transactions where reliance wasn’t reasonable.

10) Decision Tree (Quick Use)

Is the contract within the ordinary course and within typical value ranges? → Yes: The president may have implied authority. Still, safer to obtain a Secretary’s Certificate. → No: Board resolution (and sometimes stockholder approval) is prudent or required.
Does the bylaws or a standing delegation cover this contract type/value? → Yes: File the delegation and proceed. → No: Get specific board approval.
Is there any red flag (real property, debt, security, RPT, “substantially all assets”, transformative deal)? → Yes: Board (and possibly stockholders) must act.

11) Key Takeaways

Board supremacy + principled delegation is the backbone of corporate authority.
The president’s signing power is strong for routine matters, limited for extraordinary ones.
Paper the file: Secretary’s Certificates and resolution extracts are low-cost risk controls.
Third-party good faith matters, but don’t rely on it—verify authority on the front end.

Final Note

Because the authority analysis is fact-specific (industry custom, past dealings, bylaw text, approvals actually obtained), high-value or unusual transactions deserve a short, targeted legal review before signing.