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    Corporation Law Case

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    ChaDiaz
    This case involves a dispute over ownership of a 2,094 square meter parcel of land owned by Dieselman Freight Services Co. Manuel Cruz Jr., a board member of DFS, purported to authorize the sale of the land through several agents but had no actual authority from the board to do so. AF Realty & Development Co. believed it had entered a valid contract to purchase the land after making a P300,000 down payment, but the sale was void because Cruz Jr. was not authorized to sell the property. The court ruled in favor of DFS, finding that a void contract cannot be ratified and that AF Realty therefore had no claim to the land.

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    Corporation Law Case

    Uploaded by

    ChaDiaz
    90 views2 pages
    This case involves a dispute over ownership of a 2,094 square meter parcel of land owned by Dieselman Freight Services Co. Manuel Cruz Jr., a board member of DFS, purported to authorize the sale of the land through several agents but had no actual authority from the board to do so. AF Realty & Development Co. believed it had entered a valid contract to purchase the land after making a P300,000 down payment, but the sale was void because Cruz Jr. was not authorized to sell the property. The court ruled in favor of DFS, finding that a void contract cannot be ratified and that AF Realty therefore had no claim to the land.

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    This case involves a dispute over ownership of a 2,094 square meter parcel of land owned by Dieselman Freight Services Co. Manuel Cruz Jr., a board member of DFS, purported to authorize the sale of the land through several agents but had no actual authority from the board to do so. AF Realty & Development Co. believed it had entered a valid contract to purchase the land after making a P300,000 down payment, but the sale was void because Cruz Jr. was not authorized to sell the property. The court ruled in favor of DFS, finding that a void contract cannot be ratified and that AF Realty therefore had no claim to the land.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    90 views2 pages

    Corporation Law Case

    Uploaded by

    ChaDiaz
    This case involves a dispute over ownership of a 2,094 square meter parcel of land owned by Dieselman Freight Services Co. Manuel Cruz Jr., a board member of DFS, purported to authorize the sale of the land through several agents but had no actual authority from the board to do so. AF Realty & Development Co. believed it had entered a valid contract to purchase the land after making a P300,000 down payment, but the sale was void because Cruz Jr. was not authorized to sell the property. The court ruled in favor of DFS, finding that a void contract cannot be ratified and that AF Realty therefore had no claim to the land.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    SCRIBD:

    G.R. No. 111448. January 16, 2002AF REALTY & DEVELOPMENT, INC. vs.
    DIESELMAN FREIGHT SERVICES,CO.

    Facts:
    Dieselman Freight Service Co. is an owner of commercial lot consisting of 2,094 square
    meters, located at Pasig City. On May 10, 1988, Manuel C. Cruz, Jr.,a member of the
    board of directors of Dieselman, issued a letter authorizingCristeta N. Polintan "to look for
    a buyer and negotiate the sale" of the lot atP3,000.00 per square meter. Cruz, Jr. has no
    written authority from Dieselman tosell the lot. In turn, Polintan authorized Felicisima
    Noble to sell the same lot.Noble offered the property to AF Realty & Development, Inc. at
    P2,500.00 persquare meter. Zenaida Ranullo, board member and vice-president of AF
    Realty,accepted the offer and issued a check in the amount of
    P300,000.00. Ranulloasked Polintan for the board resolution of Dieselman authorizing
    the sale.However, Polintan could only give Ranullo the original copy of TCT No. 39849,
    thetax declaration and tax receipt for the lot, and a photocopy of the Articles
    of Incorporation of Dieselman. Cruz, Sr., president of Dieselman, acknowledgedreceipt
    of the said P300,000.00 as "earnest money" but required AF Realty tofinalize the sale at
    P4,000.00 per square meter. AF Realty replied that it is willingto pay the balance.
    However, Cruz, Sr. terminated the offer and demanded fromAF Realty the return of the
    title of the lot. Claiming that there was a perfectedcontract of sale, AF Realty filed a
    complaint for specific performance againstDieselman and Cruz, Jr.. The complaint prays
    that Dieselman be ordered toexecute and deliver a final deed of sale in favor of AF Realty.
    In its answer,Dieselman alleged that it did not authorize any person to enter into
    suchtransaction on its behalf. Meanwhile, on July 30, 1988, Dieselman and
    MidasDevelopment Corporation (Midas) executed a Deed of Absolute Sale of the
    sameproperty. The Court of Appeals held that Cruz, Jr. was not authorized in writing
    byDieselman to sell the property to AF Realty, the sale was not perfected; and thatthe
    Deed of Absolute Sale between Dieselman and Midas is valid, there being nobad faith on
    the part of the latter.

    Issue:
    Who between petitioner AF Realty and respondent Midas has a right overthe subject lot?

    Held:
    AF Realty maintains that the sale of land by an unauthorized agent may beratified where,
    in this case the receipt by Cruz, Jr. from AF Realty of theP300,000.00 as partial payment
    of the lot effectively binds Dieselman. We arenot persuaded. Involved in this case is
    a sale of land through an agent. The lawon agency under Art 1874 of the Civil Code
    provides “When a sale of piece of land or any interest therein is through an agent, the
    authority of the latter shallbe in writing; otherwise, the sale shall be void.” Considering
    that Cruz, Jr.,Polintan and Noble were not authorized by Dieselman to sell its lot, the
    supposedcontract is void. Being a void contract, it is not susceptible of ratification.On the
    other hand, the validity of the sale to Midas is unquestionable. As noted,the sale was
    authorized by a board resolution of respondent Dieselman datedMay 27, 1988
    OR

    Commercial Law – Corporation Law – Power of the Board – Ultra Vires Acts of Corporate
    Officers – Agency
    In 1988, Manuel Cruz, Jr., a board member of Dieselman Freight Services, Co. (DFS)
    authorized Cristeta Polintan to sell a 2,094 sq. m. parcel of land owned by DFS. Polintan in
    turn authorized Felicisima Noble to sell the same lot. Noble then offered AF Realty &
    Development, Co., represented by Zenaida Ranullo, the land at the rate of P2,500.00 per sq.
    m. AF Realty accepted the offer and issued a P300,000 check as downpayment.
    However, it appeared that DFS did not authorize Cruz, Jr. to sell the said land. Nevertheless,
    Manuel Cruz, Sr. (father) and president of DFS, accepted the check but modified the offer.
    He increased the selling price to P4,000.00 per sq. m. AF Realty, in its response, did not
    exactly agree nor disagree with the counter-offer but only said it is willing to pay the balance
    (but was not clear at what rate). Eventually, DFS sold the property to someone else.
    Now AF Realty is suing DFS for specific performance. It claims that DFS ratified the contract
    when it accepted the check and made a counter-offer.
    ISSUE: Whether or not the sale made through an agent was ratified.
    HELD: No. There was no valid agency created. The Board of Directors of DFS never
    authorized Cruz, Jr. to sell the land. Hence, the agreement between Cruz, Jr. and Polintan,
    as well as the subsequent agreement between Polintan and Noble, never bound the
    corporation. Therefore the sale transacted by Noble purportedly on behalf of Polintan and
    ultimately purportedly on behalf of DFS is void.
    Being a void sale, it cannot be ratified even if Cruz, Sr. accepted the check and made a
    counter-offer. (Cruz, Sr. returned the check anyway). Under Article 1409 of the Civil Code,
    void transactions can never be ratified because they were void from the very beginning.

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