Title
Litonjua Jr. vs. Eternit Corp.
Case
G.R. No. 144805
Decision Date
Jun 8, 2006
Eternit Corp. aborted land sale to Litonjuas; SC ruled no perfected contract due to agents' lack of written authority from EC's board.
sale of real property
agent without written authority
null and void
A

Case Summary (G.R. No. 257683)

Procedural History

Petitioners filed suit in the Regional Trial Court (Pasig City, Civil Case No. 54887). The RTC dismissed the complaint, finding no valid and binding sale (July 3, 1995). The Court of Appeals affirmed the dismissal (June 16, 2000) and denied motion for reconsideration. The petitioners elevated the case to the Supreme Court via a petition for review on certiorari; the Supreme Court denied the petition and affirmed the courts below (decision June 8, 2006).

Issues Presented on Appeal

Petitioners principally argued: (1) the Court of Appeals erred in finding there was no perfected contract of sale; (2) Marquez, as broker, did not need written authority from Eternit’s board to effectuate a sale; and (3) Glanville and Delsaux had actual or apparent authority to sell the subject properties, or Eternit was estopped from denying such authority.

Standard of Review and Factual Findings

The Supreme Court emphasized that the central questions—existence and scope of agency; whether agency by estoppel or apparent authority existed; and whether a binding sale was perfected—are essentially questions of fact. Under Rule 45 the Court will not reweigh evidence or reassess factual findings of the trial and appellate courts except under limited, well-established exceptions (e.g., findings grounded on conjecture, manifestly mistaken inferences, grave abuse of discretion, misapprehension of facts, conflicting findings, overlooking undisputed relevant facts, or findings premised on absence of evidence contrary to the record). The Court found none of these exceptions present and thus accorded conclusive effect to the RTC and CA findings.

Corporate Authority and Agency Principles Applied

The Court relied on settled corporate and agency rules set forth in the record: Section 23 of the Corporation Code vests corporate powers, control of property, and conduct of business in the board of directors (or trustees). Section 36 recognizes corporate power to deal in real property “subject to the limitations prescribed by law and the Constitution.” The Court reiterated that a corporation is distinct from its stockholders and may act only through its board or by officers/agents authorized by board resolution or by-laws. On agency law, while agency may in general be created orally or implied from conduct, to create or convey real rights over immovable property the authority of the agent must be in writing; otherwise a purported sale by an unauthorized agent is void. A real estate broker is typically a special agent whose ordinary role is to find a purchaser and bring parties together, not to execute a binding sale on behalf of the owner.

Analysis Regarding Absence of Board Authorization and Separate Corporate Personality

The Court concluded petitioners failed to prove that Eternit’s board ever adopted a resolution authorizing Marquez, Glanville, Delsaux, or Adams to offer or sell the corporate real property. Evidence showed the decision-making emanated from ESAC’s Committee for Asia and from the Belgian/Swiss management components of ESAC, not from Eternit’s board. Although ESAC owned 90% of Eternit’s shares, majority ownership alone does not obliterate corporate separateness nor substitute for a required corporate act (a board resolution) to bind Eternit in the sale of its real estate. The Court held that Glanville, Adams, and Delsaux acted primarily for ESAC, and that a board resolution of Eternit was a condition sine qua non to bind Eternit to any sale of the subject properties.

Analysis Regarding Perfection of Contract of Sale

Even accepting that ESAC (or its representatives) made a counter-offer and that petitioners accepted it and took preparatory steps (deposit, escrow agreement), the Court found that those acts did not bind Eternit because ESAC’s decision and its representatives’ communications were not the same as an authorized act of Eternit. The purported acceptance, being directed to ESAC’s offer, did not make Eternit a party to a perfected contract absent clear proof that Eternit had authorized these agents to bind it. The Court reiterated the necessity of “clear, certain and specific proof” when specific performance is sought on the basis of an agent’s acts.

Analysis Regarding Broker’s Authority and Need for Written Authority

The Court treated Marquez as a special agent/broker under Article 1874 (as cited), whose usual authority is limited to finding a purchaser and negotiating terms, not to execute binding agreements on behalf of the owner. For transactions involving immovable property, written authority is required to create or convey real rights. Because petitioners did not introduce a written board resolution or other written authority showing that Marquez or the named individuals had such authority to sell Eternit’s properties, the purported sale was void and not merely unenforceable; the declarations of the alleged agents alone were insufficient to establish authority.

Analysis Regarding Estoppel and Apparent Authority

Petitioners’ contention that Eternit was estopped from denying the agents’ authority (agency by estoppel/apparent author

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