GR 111448; (January, 2002) (Digest)
G.R. No. 111448 ; January 16, 2002
AF REALTY & DEVELOPMENT, INC. and ZENAIDA R. RANULLO, petitioners, vs. DIESELMAN FREIGHT SERVICES, CO., MANUEL C. CRUZ, JR. and MIDAS DEVELOPMENT CORPORATION, respondents.
FACTS
Dieselman Freight Service Co. owned a commercial lot in Pasig. Its director, Manuel C. Cruz, Jr., without written corporate authority, issued a letter authorizing a broker to sell the property. The broker subsequently authorized another agent, Felicisima Noble, who offered the lot to AF Realty & Development, Inc. at a discounted price. Zenaida Ranullo, AF Realty’s vice-president, accepted and issued a P300,000.00 check payable to Dieselman, received by the broker as a refundable partial payment. AF Realty later confirmed its intent to buy but asked for Dieselman’s board resolution authorizing the sale, which was never produced. Dieselman’s president later acknowledged the P300,000.00 as “earnest money” but demanded a higher price, then terminated the offer.
Meanwhile, Dieselman, through a proper board resolution, executed a Deed of Absolute Sale over the same property to Midas Development Corporation. AF Realty filed a complaint for specific performance against Dieselman and Cruz, Jr., claiming a perfected contract of sale. Midas intervened to protect its interest. The trial court ruled in favor of AF Realty, holding Cruz, Jr.’s acts bound Dieselman and that the perfected sale barred Midas’s intervention. The Court of Appeals reversed, holding no valid sale was perfected with AF Realty due to lack of written authority, and upheld the sale to Midas.
ISSUE
Whether a contract of sale was perfected between Dieselman and AF Realty, thereby entitling AF Realty to specific performance.
RULING
No. The Supreme Court affirmed the Court of Appeals with modification. For a sale of corporate real property to be valid and binding on the corporation, the officer acting on its behalf must have been authorized in writing by the board of directors, as required by the Corporation Code. Here, Cruz, Jr. had no such written authority from Dieselman. Consequently, his unauthorized acts did not and could not bind the corporation. The supposed contract was void from the beginning under Article 1409 of the Civil Code and is not susceptible to ratification.
The Court found that Ranullo, an experienced corporate officer, was aware of the necessity of a board resolution to bind Dieselman but proceeded with the partial payment despite the absence of such authority. Thus, no perfected contract of sale existed between Dieselman and AF Realty. The subsequent sale to Midas, which was duly authorized by a board resolution, was declared valid. The award of damages and attorney’s fees against Cruz, Jr. was deleted, but Dieselman was ordered to return the P300,000.00 partial payment to AF Realty.