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AF Realty & Development, Inc. vs Dieselman Freight Services Services FACTS: FACTS: -
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Respondent Dieselman Freight Services is the owner of a lot with TCT No. 39849; Manuel Cruz Jr., a member of Dieselman board of directors issued an “Authority to Sell Real Estate” to Cristeta Polintan, authorizing her to look for buyers and negotiate the sale of the said property; Cruz Jr. had no written authority from Dieselman to sell the property; Polintan authorized Mimi Noble to sell the same property; Noble offered the sale of the lot to petitioners AF Realty. Zenaida Ranullo, vice president of AF Realty, accepted the offer and issued a check payable to the order of Dieselman; Polintan received the check and signed an Acknoledgment Receipt indication that the P300k represents the partial payment of the property; Manuel Cruz Sr., president of Dieselman, acknowledge the receipt of the of the said P 300k as earnest money but required AF Realty to finalize sale at P4,000/sqm.; The problem occurred when occurred when Mr. Cruz Sr. terminated the offer and demanded the return of the title. AF Realty then filed a complaint for specific performance because they claimed that there was already a perfected sale; Dieselman alleged that there was no meeting of the minds between the parties in the sale of the property and it did not authorize any person to enter into such transaction on its behalf; AF Realty said that the sale of land by an unauthorized agent was ratified when Dieselman president accepted the earnest money.
ISSUE: ISSUE: Whether the sale of land by an unauthorized agent may be ratified where there is acceptance of benefits involved RULING: RULING: No, it cannot be ratified. LEGAL BASIS: Art. 1874 – When a sale of piece of land is through an agent, the authority of the latter shall be in writing; otherwise, the sale shall be void; Art. 1409 – The following contracts are inexistent and void from the very beginning: (7) those expressly prohibited or declared void by law. APPLICATION TO FACTS: FACTS: Contracts or acts of a corporation must be made either by the board of directors or by a corporate agent duly authorized by the board. Absent such valid authorization, the rule is that the declarations of an individual director relating to the affairs of the corporation are not binding on the corporation. In this case, Cruz Jr. had no written authority authority from the Dieselman board of directors to sell or negotiate the sale of the land, much less to appoint other persons persons for the same purpose. Cruz Jr.’s lack of authority precludes him from conferring any authority to Polintan. Neither could Polintan authorize Noble (Art. 1874). Their acts cannot bind Dieselman in the contract of sale, thus the supposed contract is void from the beginning and not susceptible of ratification (Art. 1409).
