G.R. No. 154291 , November 12, 2014
LOPEZ REALTY, INC. and ASUNCION LOPEZ-GONZALES, Petitioners, vs. SPOUSES REYNALDO TANJANGCO and MARIA LUISA ARGUELLES-TANJANGCO, Respondents.

FACTS

Lopez Realty, Inc. (LRI) and Dr. Jose Tanjangco were co-owners of three parcels of land and the Trade Center Building. Jose’s share was later transferred to his son and daughter-in-law, the spouses Reynaldo and Maria Luisa Tanjangco. LRI’s stockholders included Asuncion Lopez-Gonzales (Corporate Secretary), Arturo F. Lopez, Teresita Lopez-Marquez, and others. In a special stockholders’ meeting on July 27, 1981, the sale of LRI’s one-half share was discussed. The Tanjangcos offered ₱3.6 million plus 50% of receivables. Asuncion countered with ₱5 million. The body agreed that Asuncion be given a 10-day priority to match the Tanjangco offer; failure to act would mean acceptance of the offer. Asuncion failed to exercise her option. On August 17, 1981, while Asuncion was abroad, the remaining directors passed a resolution authorizing Arturo to negotiate and finalize the sale with the Tanjangcos based on the July 27 terms. On August 25, 1981, Arturo executed a Deed of Sale in favor of Jose Tanjangco for ₱3.6 million. Asuncion sent cablegrams requesting not to proceed. On September 1, 1981, the Board resolved to postpone final action. On October 5, 1981, Arturo executed another Deed of Sale in favor of the spouses Tanjangco. The spouses paid ₱1.8 million, registered the sale, and titles were issued in their names. LRI and Asuncion filed a complaint for annulment of sale, alleging the August 17 Board Resolution was invalid for lack of notice to Asuncion and that it had been revoked. On July 30, 1982, LRI stockholders ratified and confirmed the sale. The trial court dismissed the complaint, upholding the validity of the sale and its ratification. The Court of Appeals reversed, declaring the sale void for lack of authority and notice. The Supreme Court granted the petition for review.

ISSUE

Whether the sale of LRI’s one-half interest in the subject properties to the spouses Tanjangco is valid and binding.

RULING

The Supreme Court ruled that the sale is valid and binding. The Court held that the August 17, 1981 Board Resolution authorizing Arturo to sell was valid. Notice to Asuncion was not required as the meeting was properly called, and her absence did not invalidate the resolution. The Court further held that the subsequent ratification by the stockholders on July 30, 1982, cured any alleged defect in Arturo’s authority. Ratification is the adoption or confirmation by a corporation of an act performed in its behalf without authority, and it operates to cure the defect in the agent’s authority. The stockholders, representing the majority of shares, expressly ratified the sale, thereby binding the corporation. The Court also found that the spouses Tanjangco were buyers in good faith and for value. The petition was denied, and the Decision of the Court of Appeals was reversed, reinstating the trial court’s dismissal of the complaint.