Ayala Land, Inc. vs. Asb Realty Corporation G.R. No. 210043, September 26, 2018 Topic

AYALA LAND, INC. VS.
ASB REALTY CORPORATION

G.R. No. 210043, September 26, 2018
TOPIC:
Agent’s lack of authority from the Principal Doctrine of Apparent Authority not
applicable.
FACTS:
Ayala Land, Inc. (ALI) and ASB Realty Corporation (ASBRC) are domestic corporations
engaged in real estate development. On the other hand, E.M. Ramos and Sons (EMRASON) is a
domestic corporation principally organized to manage a 372-hectare property located in
Dasmariñas, Cavite.
VERSION OF ALI VERSION OF ASBRC

Sometime in August 1992, EMRASON's Respondents averred that ALI submitted to
brokers sent a proposal for a joint venture EMRASON and Ramos, Sr. its proposal to
agreement (JVA) between ALI and purchase the Dasmariñas Property which
EMRASON for the development of proposal was however rejected.
EMRASON's Dasmariñas Property
ALI initially declined but eventually On May 17, 1994, EMRASON, through
negotiated with Ramos, Jr., Antonio B. Ramos Ramos, Sr., informed ALI that it had decided
(Antonio), and Januario to discuss the terms of to accept the proposal of ASBRC because the
the JVA.9 According to ALI, EMRASON latter's terms were more beneficial and
made it appear that Ramos, Jr., Antonio, and advantageous to EMRASON.
Januario had full authority to act on As a result, ASBRC and EMRASON
EMRASON's behalf in relation to the JVA. entered into a Letter-Agreement on May 21,
ALI alleged that Emerita Ramos, Sr. 1994. The following day, or on May 22, 1994,
(Ramos, Sr.), then EMRASON's President and EMRASON executed a Real Estate Mortgage
Chairman, wrote to ALI and therein in compliance with its obligations under the
acknowledged that Ramos, Jr. and Antonio said Letter- Agreement
were fully authorized to represent EMRASON
in the JVA, as shown in Ramos, Sr.'s letter
dated August 3, 1993.
ALI and the Ramos children subsequently Prior to the execution of the Letter-
entered into a Contract to Sell dated May 18, Agreement, a special stockholders' meeting
1994, under which ALI agreed to purchase the was held on May 17, 1994 during which
Dasmariñas Property. EMRASON's stockholders "authorized,
approved, confirmed and ratified” the
Resolution of EMRASON's Board of
Directors (Board Resolution).
The Board Resolution, which approved the
Letter- Agreement and authorized Ramos, Sr.
and Antonio to sign the same, was in tum
likewise approved by EMRASON 's
stockholders on the same date, May 17, 1994.
ALI alleged that it came to know that a Letter- After ASBRC learned about the Contract to
Agreement12 dated May 21, 1994 (Letter- Sell executed between ALI and the Ramos
children and the annotation of the Contract to
Agreement) and a Real Estate Mortgage13
Sell on the transfer certificates of title (TCTs)
respecting the Dasmariñas Property14 had been
covering the Dasmariñas Property, ASBRC
executed by Ramos, Sr. and Antonio for and in and EMRASON filed a Complaint24 for the
behalf of EMRASON, on one hand, and nullification of Contract to sell and the
ASBRC on the other. It also alleged that the cancellation of the annotations on the TCTs
Ramos children15 wrote to Luke C. Roxas, over the Dasmariñas Property.
ASBRC's President, informing the latter of the
Contract to Sell between ALI and
EMRASON.
On June 29, 2010, the RTC declared the Contract to Sell between ALI and the Ramos
children void because of the latter’s lack of authority to sign the Contract to Sell on behalf of
EMRASON.
On appeal, the CA reiterated the RTC's pronouncement that the Ramos children failed to
prove their authority to enter into a Contract to Sell on behalf of EMRASON. Citing ALI's
letters addressed to Ramos, Sr. and the latter's uncontroverted deposition "that he is the
corporation's sole and exclusive authorized representative in the sale of the Dasmariñas
Property" vis-a-vis the Ramos children's limited authority to negotiate for the best terms of a
sale, the CA then declared that ALI knew or was aware of the Ramos children's lack of
authority.
ISSUES:
1. Whether or not the contract of sale between ALI and the Ramos children is void?
2. Whether or not the RAMOS children had the authority to enter into contract of sale
with ALI?
3. Whether or not ALI was aware of the Ramos children’s lack of authority?
(Focus lang sa 2 or 3)
RULING:
1. YES. The contract is void for lack of consent. For juridical entities, consent is given
through its board of directors.
- A juridical entity, like EMRASON, "cannot act except through its board of directors
as a collective body, which is vested with the power and responsibility to decide
whether the corporation should enter in a contract that will bind the corporation,
subject to the article’s incorporation, by-laws, or relevant provisions of law.
"Although the general rule is that "no person, not even its officers, can validly bind
a corporation "48 without the authority of the corporation's board of directors, this
Court has recognized instances where third persons' actions bound a corporation
under the doctrine of apparent authority or ostensible agency.
- The doctrine of apparent authority is a species of the doctrine of estoppel.
Article 1431 of the Civil Code provides that '[t]hrough estoppel, an
admission or representation is rendered conclusive upon the person making
it, and cannot be denied or disproved as against the person relying thereon.'
Estoppel rests on this rule: 'Whenever a party has, by his own declaration,
act, or omission, intentionally and deliberately led another to believe a
particular thing true, and to act upon such belief, he cannot, in any litigation
arising out of such declaration, act or omission, be permitted to falsify it.'
2. A perusal of the August 3, 1993 letter shows that EMRASON, through Ramos, Sr.
authorized Ramos, Jr. and Antonio merely to "collaborate and continue negotiating and
discussing with [ALI] terms and conditions that are mutually beneficial" to the parties
therein. Nothing more, nothing less. To construe the letter as a virtual carte blanche for the
Ramos children to enter into a Contract to Sell regarding the Dasmariñas Property would
be unduly stretching one's imagination. "[A]cts done by [the] corporate officers beyond
the scope of their authority cannot bind the corporation unless it has ratified such acts
expressly or is estopped from denying them." What is clear from the letter is that
EMRASON authorized the Ramos children only to negotiate the terms of a potential sale
over the Dasmariñas Property, and
not to sell the property in an absolute way or act as signatories in the contract.
- It is a settled rule that persons dealing with an agent are bound at their peril, if
they would hold the principal liable, to ascertain not only the fact of agency but
also the nature and extent of the agent's authority, and in case either is
controverted, the burden of proof is upon them to establish it.
3. YES. The SC found the following facts showing that ALI was aware of the Ramos children’s
absence of authority:
A. Oddly, the first page of the contract failed to include the names of the duly
authorized representative/s of EMRASON as the space specifically provided
therefor was left in blank. In contrast, the duly appointed [a]ttorneys-in-fact of ALI
are clearly named therein and designated as such.
B. Similarly, page eighteen (18) of the said contract merely provided blank spaces to
be filled up by the signatories of EMRASON vis-a-vis that of defendant ALI
where the names of the [a]ttorney's-in-[f]act of defendant ALI are typewritten.
Even in the acknowledgment page, only the names of the representatives of ALI
were included. Interestingly, the acknowledgment failed to mention the names of
signatories of EMRASON and their respective Community Tax Certificate
Numbers.
- Considering that the subject contract involves a multi- million transaction, the Court
finds it absolutely incredible that the parties thereto would fail to include the names of
the signatories, their respective positions and/or authorities to enter into the said
contract
JUDGMENT:
Against this backdrop, this Court must uphold, as it hereby upholds, the validity of the
Letter-Agreement entered into by and between EMRASON and ASBRC. Under the same
parity of reasoning, this Court must affirm, as it hereby affirms, the RTC and CA's
declaration of the invalidity or nullity of the Contract to Sell entered into by and between ALI
and the Ramos children.
WHEREFORE, the instant Petition is DENIED. The April 30, 2013 Decision and
November 7, 2013 Resolution of the Court of Appeals in CA-G.R. CV No. 97198 are
AFFIRMED.

Ayala Land, Inc. vs. Asb Realty Corporation G.R. No. 210043, September 26, 2018 Topic

Uploaded by

Copyright:

Available Formats

Ayala Land, Inc. vs. Asb Realty Corporation G.R. No. 210043, September 26, 2018 Topic

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Ayala Land, Inc. vs. Asb Realty Corporation G.R. No. 210043, September 26, 2018 Topic

Uploaded by

Copyright:

Available Formats

AYALA LAND, INC. VS.

ASB REALTY CORPORATION

VERSION OF ALI VERSION OF ASBRC

You might also like