Case Summary (G.R. No. 210043)
Factual Background and Contentions of the Parties
ALI contended that EMRASON, through its officers Ramos, Jr., Antonio, and Januario, represented that these individuals had full authority to negotiate and enter into contracts concerning the Dasmariñas Property. ALI relied heavily on an August 3, 1993 letter by Emerito Ramos, Sr., EMRASON’s President and Chairman, which allegedly recognized the Ramos children’s authority to transact, resulting in the execution of the May 18, 1994 Contract to Sell. ALI only later discovered that EMRASON had executed, instead, a Letter-Agreement and a Real Estate Mortgage in favor of ASBRC dated May 21 and 22, 1994, respectively.
Respondents (EMRASON and ASBRC) argued, conversely, that ALI’s proposal was rejected. EMRASON accepted ASBRC’s proposal on May 17, 1994, supported by a Board Resolution and stockholders' ratification authorizing Ramos, Sr. and Antonio Ramos to execute the Letter-Agreement and related documents. Respondents challenged the authority of the Ramos children to enter into the Contract to Sell with ALI. They subsequently filed a complaint to nullify the Contract to Sell and cancel its annotations on titles, asserting the validity of the Letter-Agreement with ASBRC.
Regional Trial Court Findings and Ruling
The RTC declared the Contract to Sell between ALI and the Ramos children null and void due to the lack of proof of authority by the Ramos children to act on behalf of EMRASON. The court emphasized that the Ramos children failed to present any evidence—such as board resolutions, secretary’s certificates, or witnesses—validating their authority. The court also noted formal defects in the contract such as the absence of names and authority designations of EMRASON’s representatives, which contrasted with the clear identification of ALI’s representatives.
The RTC found evidence that ALI had acknowledged Emerito Ramos, Sr.'s authority as EMRASON’s President in correspondence and meetings, undermining ALI’s claim of good faith dealing with the Ramos children. The court applied the principle requiring parties to ascertain agency authority and held that ALI assumed the risk of dealing with persons lacking authority.
Concurrently, the RTC upheld the validity of the Letter-Agreement between EMRASON and ASBRC. It found that Ramos, Sr. was presumed to have authority to act within the corporation’s ordinary business, and even if initial authority was lacking, subsequent stockholders’ ratification cured any defect.
The RTC ordered cancellation of annotations of the invalid Contract to Sell on relevant Transfer Certificates of Title and directed payment of exemplary, temperate, nominal damages, attorney’s fees, and costs of suit.
Court of Appeals Decision
The Court of Appeals dismissed the appeal filed by ALI, Ramos, Jr., and Horacia. The appellate court affirmed the RTC’s findings regarding the absence of authority of the Ramos children, noting the uncontradicted testimony of Ramos, Sr. as the exclusive authorized representative to transact the sale of the property. It confirmed that ALI was aware of the Ramos children’s limited role, restricted to negotiation.
The CA also upheld the validity of the Letter-Agreement executed by Ramos, Sr. and ASBRC after the May 17, 1994 stockholders’ meeting that ratified and approved the transaction and authorization. The CA viewed EMRASON’s filing of the case for nullification and confirmation of the Letter-Agreement as implicit ratification of Ramos, Sr.'s acts. The CA’s dispositive ruling affirmed the RTC decision in full.
Issues Raised by Petitioner on Appeal to the Supreme Court
- Whether the CA gravely erred in annulling the Contract to Sell on the basis that the Ramos children lacked authority, despite what petitioner alleged was clear evidence of EMRASON’s confirmation of such authority.
- Whether the CA erred in upholding the Letter-Agreement between ASBRC and EMRASON even though the Contract to Sell pre-dated the Letter-Agreement and was allegedly unauthorized.
- Whether the CA erred in dismissing ALI’s counterclaim and cross-claim alleging bad faith by EMRASON due to the repudiation of the Ramos children’s authority.
Supreme Court’s Ruling and Legal Analysis
The Supreme Court denied the petition, emphasizing that the issues raised were factual in nature and that it is not the Court’s role to re-evaluate evidence already scrutinized by the lower courts. The Supreme Court adhered to established doctrine that issues of fact resolved by the RTC and affirmed by the CA are final barring exceptional circumstances not present here.
The Court reiterated fundamental principles: A corporation acts through its board of directors and officers empowered by the board; contracts require consent given through proper authority. Absent legal authorization, contracts are void. Apparent authority or ostensible agency may bind a corporation if the principal’s voluntary acts reasonably lead third persons to believe such authority exists (doctrine of estoppel).
ALI’s reliance on the August 3, 1993 letter by Ramos, Sr. was analyzed closely. The letter merely authorized Ramos, Jr. and Antonio Ramos to negotiate terms beneficial to both parties, not to enter into or sign contracts. The Court held that such limited authority to negotiate did not extend to absolute authority to bind EMRASON by selling the property. Hence, the doctrine of apparent authority was not satisfied.
The Court also rejected ALI’s argument that repeated dealings or representations indicated habitual authority on the part of the Ramos children. It underscored that the presumption of authority lies with the corporate president, not controlling shareholders or executives acting outside express
Case Syllabus (G.R. No. 210043)
Background and Procedural History
- Petitioner Ayala Land, Inc. (ALI) filed a petition for review on certiorari contesting the Court of Appeals (CA) Decision dated April 30, 2013, and Resolution dated November 7, 2013, which affirmed the June 29, 2010 Decision of the Regional Trial Court (RTC) of Imus, Cavite, Branch 20.
- The RTC decision declared null and void and unenforceable the May 18, 1994 Contract to Sell entered into between ALI and the Ramos children due to lack of authority of the latter to bind E.M. Ramos & Sons, Inc. (EMRASON).
- The RTC also upheld the validity, binding effect, and enforceability of the May 21, 1994 Letter-Agreement between EMRASON and ASB Realty Corporation (ASBRC).
- ALI, upon unfavorable rulings from the RTC and CA, elevated the case to the Supreme Court (SC) through a petition for review on certiorari.
Parties and Subject Matter
- ALI and ASBRC are domestic corporations engaged in real estate development.
- EMRASON is a domestic corporation organized primarily to manage a 372-hectare property in Dasmariñas, Cavite, known as the Dasmariñas Property.
- The dispute centers on conflicting agreements involving the sale/development of the Dasmariñas Property: the Contract to Sell with ALI signed by the Ramos children, and the Letter-Agreement with ASBRC signed by Ramos, Sr.
Factual Antecedents and Versions
Petitioner ALI’s Version:
- EMRASON's brokers initially sent a joint venture proposal to ALI around August 1992, which ALI initially declined but later negotiated.
- ALI claims EMRASON led it to believe Ramos, Jr., Antonio, and Januario had full authority to transact on EMRASON’s behalf.
- ALI relies on an August 3, 1993 letter from EMRASON’s President Emerito Ramos, Sr. acknowledging this authority.
- A Contract to Sell dated May 18, 1994, was entered into between ALI and EMRASON (represented by the Ramos children).
- ALI later discovered a letter-agreement between EMRASON and ASBRC, executed without their consent.
- The Ramos children informed ASBRC’s President about ALI's Contract to Sell, prompting legal actions.
Respondents’ Version:
- ALI’s purchase proposal was initially rejected by EMRASON.
- On May 17, 1994, EMRASON decided to accept ASBRC’s more advantageous offer.
- EMRASON’s Board of Directors and stockholders authorized the Letter-Agreement with ASBRC and empowered Ramos, Sr. and Antonio to execute it.
- The Letter-Agreement was executed on May 21, 1994, and a Real Estate Mortgage followed on May 22, 1994.
- ASBRC and EMRASON filed suit to nullify ALI’s Contract to Sell and cancel related land title annotations.
RTC’s Findings and Rationale
- The RTC ruled the Contract to Sell between ALI and the Ramos children void for lack of authority from EMRASON’s board.
- Ramos children failed to present any board resolutions, secretary’s certificates, or other written proof of authority.