G.R. No. 210043 - Ayala Land, Inc. vs. ASB Realty Corp.

Petitioner Ayala Land, Inc. (ALI) and respondent ASB Realty Corporation (ASBRC) are domestic corporations engaged in real estate development.
Respondent E.M. Ramos & Sons, Inc. (EMRASON) is a corporation organized to manage a 372-hectare property in Dasmariñas, Cavite (Dasmariñas Property).

In August 1992, EMRASON’s brokers proposed a Joint Venture Agreement (JVA) for the development of the Dasmariñas Property.
ALI initially declined but eventually negotiated with Ramos, Jr., Antonio, and Januario Ramos, who appeared to represent EMRASON.
ALI alleged that Ramos, Jr., Antonio, and Januario were represented as having full authority to act for EMRASON.
ALI relied on a letter dated August 3, 1993 from Emerito Ramos, Sr. (EMRASON’s President and Chairman) acknowledging Ramos, Jr. and Antonio’s authority to represent EMRASON during negotiations.
ALI and the Ramos children entered into a Contract to Sell dated May 18, 1994 for the purchase of the Dasmariñas Property.
Subsequently, ALI discovered a Letter-Agreement dated May 21, 1994 and a Real Estate Mortgage executed by Ramos, Sr. and Antonio on behalf of EMRASON with ASBRC.
The Ramos children wrote to ASBRC’s President informing him of the Contract to Sell with ALI.

ALI’s proposal to purchase the Dasmariñas Property was rejected by EMRASON and Ramos, Sr.
On May 17, 1994, EMRASON through Ramos, Sr. informed ALI of its decision to accept ASBRC’s more advantageous proposal.
ASBRC and EMRASON executed a Letter-Agreement on May 21, 1994 and a Real Estate Mortgage on May 22, 1994.
A special stockholders’ meeting and board meeting were held on May 17, 1994, authorizing and ratifying the Letter-Agreement and the execution thereof by Ramos, Sr. and Antonio.
After learning of the Contract to Sell between ALI and the Ramos children and its annotation on the Transfer Certificates of Title (TCTs), ASBRC and EMRASON filed a complaint for nullification of the Contract to Sell and cancellation of annotations over the Dasmariñas Property.

Declared the Contract to Sell dated May 18, 1994 between ALI and the Ramos children null and void for lack of authority.
Found that the Ramos children failed to prove valid authority from EMRASON’s board of directors to enter into the contract.
Noted defects in the Contract to Sell (e.g., absence of EMRASON representatives’ names and signatures).
Declared valid and enforceable the Letter-Agreement dated May 21, 1994 between EMRASON and ASBRC.
Held that Ramos, Sr. as President was presumed to have authority within his usual duties and EMRASON’s ratification cured any defect.
Ordered cancellation of Contract to Sell annotations on TCTs and awarded damages and attorney’s fees to ASBRC and EMRASON.

Affirmed the RTC’s ruling nullifying the Contract to Sell.
Held that the Ramos children lacked authority to bind EMRASON.
Confirmed Ramos, Sr.’s authority to enter into the Letter-Agreement with ASBRC and the stockholders’ ratification.
Noted that EMRASON’s filing of the case against ALI for nullification of the Contract to Sell constituted ratification of Ramos, Sr.’s acts.
Denied ALI’s motion for reconsideration.

The Ramos children had authority and capacity to sell the property as confirmed by EMRASON.
The Contract to Sell predates the Letter-Agreement which lacked board authority.
EMRASON acted in bad faith in disavowing the Ramos children’s authority.

Whether the Court of Appeals erred in annulling the Contract to Sell between ALI and EMRASON despite alleged confirmation of the Ramos children’s authority.
Whether the Court of Appeals erred in upholding the validity of the Letter-Agreement between ASBRC and EMRASON despite evidence that it was made after the Contract to Sell and lacked board authority.
Whether the dismissal of ALI’s compulsory counterclaim and cross-claim regarding bad faith and damages by EMRASON was erroneous.