Case Summary (G.R. No. 144805)
Key Dates and Procedural History
• 1986–1987: Negotiations between petitioners and respondents for sale of land
• July 3, 1995: RTC, Pasig City dismissed petitioners’ complaint for specific performance and damages for lack of valid sale and authority
• June 16, 2000: Court of Appeals affirmed RTC decision, denying reconsideration
• June 8, 2006: Supreme Court resolution on petition for review on certiorari
Applicable Law
• 1987 Philippine Constitution (article on property and corporations)
• Corporation Code (Batas Pambansa Blg. 68) – Sec. 23 (corporate powers exercised by the board), Sec. 36 (power to convey real property)
• New Civil Code on Agency (Arts. 1868–1878) – special authority requirement for sale of immovable property, agency by estoppel principles
Factual Background of the Negotiations
ESAC, concerned over political unrest, instructed disposal of Eternit’s land. Broker Marquez, authorized to offer at ₱27 million, canvassed buyers. The Litonjuas offered ₱20 million cash. After extended negotiations, ESAC’s Asia committee counter-offered US$1 million plus ₱2.5 million. Petitioners accepted, deposited US$1 million in escrow, and prepared sale documents. Before closing, improved political conditions led ESAC to withdraw its offer in May 1987.
Issues on Appeal
- Whether a perfected contract of sale arose upon acceptance of ESAC’s counter-offer.
- Whether broker Marquez and corporate officers (Glanville, Delsaux) had authority—actual or apparent—to bind Eternit Corp. to the sale.
Trial Court Findings
The RTC held the purported sale void for lack of written authority from Eternit Corp.’s board, as required by Article 1874 of the Civil Code for immovable property. No board resolution empowered Marquez or ESAC representatives to sell substantially all corporate assets.
Court of Appeals Ruling
The CA affirmed, classifying Marquez as a special agent requiring board‐issued written authority under Section 23 of the Corporation Code. It found no evidence of ratification or agency by estoppel, and concluded that neither Glanville nor Delsaux could validly bind Eternit Corp.
Supreme Court Analysis
• Factual questions (existence and scope of agency) are for trial and appellate courts; SC defers absent exceptional grounds.
• Corporation acts only through board‐authorized officers or agents. Under Sec. 23, board resolution is indispensable to sell real property.
• Civil Code Article 1874 mandates written authority for agent’s sale of land; absence renders sale void, not merely unenforceable.
• No evidence of written delegation to Marquez, Glanville, or Delsaux. Communications consistently indic
Case Syllabus (G.R. No. 144805)
Facts
- Eternit Corporation (“EC”) was organized in 1950 to manufacture roofing materials and pipe products on eight parcels of land (47,233 sqm) in Mandaluyong City, held in trust by Far East Bank & Trust Company.
- Ninety percent of EC’s shares were owned by Eteroutremer S.A. Corporation (“ESAC”) of Belgium. Jack Glanville (President and GM of EC) and Claude Frederick Delsaux (Asia Regional Director of ESAC) directed operations from Belgium.
- In 1986 ESAC’s management sought to dispose of EC’s property due to political unrest. Michael Adams (EC board member) engaged realtor Lauro G. Marquez to market the land.
- Marquez offered the properties to Eduardo and Antonio Litonjua. The siblings initially offered ₱20 million cash; ESAC’s counter-offer (telex of February 12, 1987) fixed the price at US$1 million plus ₱2.5 million for obligations.
- Litonjua, Jr. accepted the counter-offer; deposited US$1 million in escrow; and drafted an escrow agreement. Prolonged inaction raised concerns over bank fees.
- After President Aquino’s succession, ESAC withdrew the sale instruction: Glanville’s May 7, 1987 letter and Delsaux’s May 22, 1987 letter confirmed the Board’s decision to retain operations.
- Litonjuas demanded damages; EC rejected. They sued for specific performance and damages in RTC Pasig (Civil Case No. 54887), later amending to implead ESAC, Far East Bank, and subsequent controlling EC shareholders.
Procedural History
- RTC Pasig (Branch 165) dismissed the amended complaint, ruling no valid sale or agency authorization.
- Litonjuas appealed to the Court of Appeals (CA-G.R. CV No. 51022); CA affirmed RTC decision and denied motion for reconsideration.
- Litonjuas f