City-Lite Realty Corp.

vs COURT OF APPEALS
[G.R. No. 138639, Feb. 10, 2000]

THESIS STATEMENT: City-Lite instituted a complaint for specific

CITY-LITE’S CONTENTION:
- Testimonies of 3 witnesses and admission of Roy and Metro Drug.
- The sales brochure specifying Roy as a contact person.
- The guard posted that the Metro Drug is an authorized agent.
- Common knowledge of brokers that Metro Drug through Roy was the authorized agent to sell property.
FACTS:
- F.P. Holdings and Realty Corp. was the registered owner of the parcel of land in dispute.This said land was offered
for sale to the general public though the circulation of sales brochure stating that the contact person is Meldin Roy.
- Because of this letter, City-Lite sent a letter to Roy conveying its interest to buy ½ of the front lot of the property.
- However, it would take some time to subdivide the lot and was not receptive to the purchase of only one half of
the front lot. Thus, Atty. Mamaril made a counter offer to Roy that he will purchase the entire front lot of the
subject property which Roy has accepted. However, F.P. Holdings refused to execute the corresponding deed of
sale in favor of the petitioner
- Due to this inaction, petitioner caused the registration of an adverse claim to the property.
- F.P. Holdings filed a petition for the cancellation of the adverse claim against the petition in the RTC of QC.
- With the filing of the petition, the petitioner caused the annotation of the first notice of lis pendens, which was
recorded in the title of the property.
- RTC dismissed F.P. Holding’s petition declaring that petitioner’s adverse claim had factual basis and was not sham
and frivolous.
In RTC:
- Petitioner instituted a complaint against respondent F.P. Holdings for specific performance and damages.
- It included Viewmaster as a necessary party in the case in view of the conveyance of the property to the latter.
- The court rendered its decision in favor of petitioner and ordered respondent F.P. Holdings to execute a deed of
Sale in favor of the petitioner.
- Viewmaster filed an MR but it was denied.
In CA:
- It reversed the ruling of RTC and denied the City-Lite’s MR.
- There is no contract of sale perfected between it and respondent F.P. Holdings because of lack of definite
agreement on the manner of paying the purchase price and that respondents Metro Drug and Roy were not
authorized to sell the property to City-Lite, and that the authority of Roy was only limited to that of a mere liaison
or contact person.

ISSUE: WON a contract of sale was perfected between the petitioner CITY-LITE and respondent F.P. Holdings
acting through its agent.

HELD: NO. The Supreme Court held that the Civil Code requires that an authority to sell a piece of land shall be in writing.
Mr. Roy and/or Metro Drug was only a contact person with no authority to conclude a sale of the property. Roy and/or
Metro Drug was only to assist F.P. Holdings in looking for buyers and referring to them possible prospect whom they
were supposed to endorse to F.P. HOLDINGS. The final evaluation, appraisal and acceptance of the transaction could be
made only by FP Holdings.
ART. 1874. When the sale of a piece of land or any interest therein is through an agent, the authority of the latter
shall be in writing, otherwise, the sale shall be void
 COSMIC LUMBER CORP. vs COURT OF APPEALS
[G.R. No. 114311, Nov. 29, 1996]

THESIS STATEMENT: City-Lite instituted a complaint for specific

COSMIC’S CONTENTION:
- The compromise agreement upon which it is based is void.
- Attorney in fact did not possess authority to sell.

FACTS:
- Cosmic executed a SPA appointing Paz Villamil-Estrada as an attorney-in-fact to file any court action for the
ejectment of 3rd persons or squatters on 2 lots for the said squatters to vacate the premises in order that the
corporation may take material possession of the entire lot, to appear at the pre-trial conf and enter into any
stipulation of facts and/or compromise agreement so far as it shall protect the rights and interests of the
corporation in the aforesaid lots.
- Thus, Estrada instituted an action for ejectment of private respondent Perez and to recover the lot before the RTC.
- Villamil-Estrada entered into compromise agreement with Perez wherein the respondent purchases the lot and the
plaintiff recognizes its ownership by virtue of the compromise agreement which was approved by the trial court.
- Respondent filed a complaint to revive judgment for the judgment has not yet been executed for failure of the
petitioner to produce the owner’s duplicate copy of title needed to segregate the portion sold.
- Cosmic only came to know of the compromise agreement entered by Estrada and Perez from the serving of
summons.
- Upon learning of the fraudulent transaction, they sought to annul the decision of the trial court on the ground that
the compromise agreement was void because:
o 1)the atty in fact did not have authority to dispose of, sell, encumber or divest of the plaintiff of its
ownership of its real property or any portion thereof;
o 2) the authority is limited only to the filing of an ejectment case against 3rd persons and to cause their
eviction;
o 3) compromise agreement may only be made in order that the corporation may take material possession
of the entire lot;
o 4) the amount was never received by the plaintiff;
o 5) private defendant acted in bad faith knowing fully well the want of authority of the atty-in-fact to sell,
encumber, or dispose of the real property of plaintiff.
o 6) the disposal of a corporate property indispensably requires Board Resolution of its directors.

- In RTC:
o It dismissed the complaint for it is not one of the grounds of annulment of judgment, namely, fraud,
illegality, and lack of jurisdiction, was shown to exist.
o The alleged nullity of the compromise judgment on the ground that petitioner’s atty-in-fact was not
authorized to sell the subject property may be raised as a defense in the execution of the compromise
judgment but not as a ground for annulment of judgment.

ISSUE: WON the sale of the property to Perez by the attorney-in-fact is valid.

HELD: NO. The SC held that nowhere in the authorization was Villamil-Estrada granted expressly or impliedly any power
to sell the subject property nor a portion thereof. Neither can a conferment of the power to sell be validly inferred from
the specific authority to enter into a compromise agreement because of the explicit limitation fixed by the grantor that
the compromise entered into shall only be “so far as it shall protect the rights and interest of the corporation in the
aforementioned lots.” Alienation by sale of an immovable certainly cannot be deemed protective of the right of petitioner
to physically possess the same, more so when the land was sold for a price of 80php per sq. m., very much less than its
assessed value of 250php per sq.m. and petitioner never received the proceed of the sale.

When the sale of a piece of land or any interest thereon is through an agent, the authority of the latter shall be in writing
otherwise the sale shall be void. A special power of attorney is enter into any contract by which the ownership of an
immovable is transmitted or acquired either gratuitously or for a valuable consideration. The express mandate required
by law to enable an appointee of an agency couched in general terms to sell must be on that expressly mentions a sale
or that includes a sale as a necessary ingredient of the act mentioned.

It is therefore clear that by selling to Perez a portion of petitioner’s land through a compromise agreement, Villamil-
Estrada acted without authority. The sale ipso jure is consequently void. So is the compromise agreement. This being the
case, the judgment based thereon is necessarily void.
 SAN JUAN STRUCTURAL AND STEEL FABRICATORS INC. vs COURT OF APPEALS
[G.R. No. 129459, Sept. 29, 1998]

THESIS STATEMENT: Petitioner instituted a complaint against

FACTS:
- Petitioner entered into an agreement with Motorich allegedly represented by its treasurer Nenita Lee Gruenberg
for the transfer of a parcel of land.
- When they were supposed to meet, Motorich and Lee Gruenberg did not appear.
- Petitioner sent repeated demands but they still refused to execute the Transfer of Rights/Deed of Assignment
which is necessary to transfer the certificate of title.
In RTC:
- Petitioner instituted a complaint against respondent for specific performance and damages.
- The complaint is dismissed for lack of merit
- No evidence was shown that Gruenberg is authorized by corporation to dispose such property.
- No votes 2/3 of the stockholders was obtained for the proposed sale
In CA:
- It affirmed the ruling of RTC and ordered Nenita to refund petitioner the downpayment.

ISSUE: WON a contract of sale was perfected between the petitioner and Motorich.

HELD: NO. The Supreme Court held that the corporation may act only through its board of directors or, when authorized
either by its laws or by its board resolution, through its officers or agents in the normal course of business.

In the case at bar, Respondent Motorich categorically denies that it ever authorized Nenita Gruenberg, its treasurer, to
sell the subject parcel of land. Consequently, petitioner had the burden of proving that Nenita Gruenberg was in fact
authorized to represent and bind Motorich in the transaction. Petitioner failed to discharge this burden. Its offer of
evidence before the trial court contained no proof of such authority. It has not shown any provision of said respondent's
articles of incorporation, by laws or board resolution to prove that Nenita Gruenberg possessed such power.

Petitioner further contends that Respondent Motorich has ratified said contract of sale because of its "acceptance of
benefits," as evidenced by the receipt issued by Respondent Gruenberg.

As a general rule, the acts of corporate officers within the scope of their authority are binding on the corporation. But
when these officers exceed their authority, their actions "cannot bind the corporation, unless it has ratified such acts or
is estopped from disclaiming them."
In this case, there is a clear absence of proof that Motorich ever authorized Nenita Gruenberg, or made it appear to any
third person that she had the authority, to sell its land or to receive the earnest money. Neither was there any proof that
Motorich ratified, expressly or impliedly, the contract. Petitioner rests its argument on the receipt which, however, does
not prove the fact of ratification. The document is a hand-written one, not a corporate receipt, and it bears only Nenita
Gruenberg's signature. Certainly, this document alone does not prove that her acts were authorized or ratified by
Motorich. As found by the trial court and affirmed by the Court of Appeals, there is no evidence that Gruenberg was
authorized to enter into the contract of sale, or that the said contract was ratified by Motorich. This factual finding of the
two courts is binding on this Court. As the consent of the seller was not obtained, no contract to bind the obligor was
perfected. Therefore, there can be no valid contract of sale between petitioner and Motorich. Being inexistent and void
from the beginning, said contract cannot be ratified
 Sps. Delos Reyes vs COURT OF APPEALS
[G.R. No. 111448, Jan. 16, 2002]

THESIS STATEMENT: Sps. Delos Reyes filed a petition for specific

FACTS:
- Private respondent Daluyong owned the subject parcel of land and has upon his instruction, Renato took over the
administration of the said land.
- Renato entered into a 6 yr contract of lease with petitioners. During its effectivity, an oral contract of sale was
entered into by Renato w/ sps. For 300m portion of the lot for 90k php. Then, they have started construction on
the said lot.
- Daluyong demanded the petitioners to cease and desist from continuing their construction and immediately vacate
their premises, asserting that the construction was unauthorized and that their occupancy of the subject portion
was not covered by any lease agreement.
- Then, they have explain to Daluyong that they have entered into lease agreement and subsequent sale of subject
portion of land in good faith and upon assurance that Renato is the new administrator authorized to enter into
such agreements.
- Dissatisfied with the explanation, Daluyong commenced an action against petitioners for recovery of the subject
portion of land before the RTC.
In RTC:
- Daluyong maintained that Renato was never given the authority to lease nor sell any portion of his land as his
instruction was merely to collect rentals.
- Sps. Petitioner has filed a complaint against respondent for specific performance.
- RTC rendered in favor of Sps.
In CA:
- It reversed the ruling of RTC.
- CA gravely abused its discretion in the misapprehension and misappreciation of the facts of the case and in going
beyond the issues involved contrary to the admissions of both the appellants and appellees.

ISSUE: WON Renato is authorized to sell the lot of Daluyong, his father.

HELD: NO. The Supreme Court held that Renato was neither the owner of the subject property nor a duly designated
agent of the registered owner authorized to sell subject property in his behalf, and there was no sufficient evidence
adduced to show that Daluyong Gabriel subsequently ratified Renato’s act. The Court pointed out Article 1874 of the Civil
Code, When the sale of a piece of land or any interest therein is through an agent, the authority of the latter shall be in
writing, otherwise, the sale shall be void. For want of capacity on the part of Renato Gabriel, the oral contract of sale
lacks one of the essential requisites for its validity and is therefore null and void ab initio. Moreover, the records show
that on Oct 1, 1990, Daluyong donated the entire lot covered to his daughter