Laureano T. Angeles vs. Philippine National Railways (PNR) and Rodolfo Flores,August 31, 2006 G.R.

No. 150128
Facts:
Respondent Philippine National Railways (PNR) informed a certain Gaudencio
Romualdez( R o m u a l d e z , h e r e i n a f t e r ) t h a t i t h a s a c c e p t e d t h e
l a t t e r ’ s o f f e r t o b u y t h e P N R ’ s scrap/unserviceable rails located in Del Carmen and
Lubao, Pampanga at P1,300.00 andP2,100.00 per metric ton, respectively, for the total amount of
P96,600.00. Romualdez paid the purchase price and addressed a letter to Atty. Cipriano Dizon, PNR’s
Acting Purchasing Agent. The letter authorized LIZETTE R. WIJANCO to be his (Romualdez) lawful
representative in the withdrawal of the scrap/unserviceable rails awarded to him. Furthermore, the
original copy of the award which indicates the waiver of rights, interest and participation in favor of
Lizetter R. Wijanco was also given. T h e L i z e t t e R . W i j a n c o w a s p e t i t i o n e r ' s n o w d e c e a s e d
wife. That very same day, Lizette r e q u e s t e d t h e P N R t o t r a n s f e r t h e
l o c a t i o n o f w i t h d r a w a l f o r t h e r e a s o n t h a t t h e scrap/unserviceable rails
located in Del Carmen and Lubao, Pampanga were not ready for hauling. The PNR granted said request and
allowed Lizette to withdraw scrap/unserviceable rails in Murcia, Capas and San Miguel, Tarlac instead. However,
PNR subsequently suspended the withdrawal in view of what it considered as documentary discrepancies
coupled by reported pilferages of over P500,000.00 worth of PNR scrap properties in Tarlac.
Consequently, the spouses Angeles demanded the refund of the amount of P96,000.00. The PNR,
however, refused to pay, alleging that as per delivery receipt duly signed by Lizette, 54.658 metric tons of unserviceable
rails had already been withdrawn. The spouses Angeles filed suit against the PNR for specific
performance and damages before the Regional Trial Court. Lizette W. Angeles passed away and was
substituted by her heirs, among whom is her husband, herein petitioner Laureno T. Angeles. The trial court,
on the postulate that the spouses Angeles are not the real parties-in-interest, rendered judgment dismissing
their complaint for lack of cause of action. As held by the court, Lizette was merely a representative of
Romualdez in the withdrawal of scrap or unserviceable r a i l s a w a r d e d t o h i m a n d n o t a n
a s s i g n e e t o t h e l a t t e r ' s r i g h t s w i t h r e s p e c t t o t h e a w a r d . Petitioner appealed with the
Court of Appeals which dismissed the appeal and affirmed that of the trial court.
Issue:
Whether or not the CA erred in affirming the trial court's holding that petitioner and his spouse, as
plaintiffs
a quo, had no cause of action as they were not the real parties-in-interest in this case.
Held:
No. The CA’s conclusion, affirmatory of that of the trial court, is that Lizette was not an assignee, but merely an agent
whose authority was limited to the withdrawal of the scrap rails, hence, without personality to sue. Where
agency exists, the third party's (in this case, PNR's) liability on a contract is to the principal and not to the agent and
the relationship of the third party to the principal is the same as that in a contract in which there is no
agent. Normally, the agent has neither rights nor liabilities as against the third party. He cannot thus sue
or be sued on the contract. Since a contract may be violated only by the parties thereto as against each other, the real party-
in-interest, either as plaintiff or defendant in an action upon that contract must, generally, be a contracting
party. The legal situation is, however, different where an agent is constituted as an assignee. In such a case, the agent may, in his
own behalf, sue on a contract made for his principal, as an assignee of such contract. The rule requiring every action
to be prosecuted in the name of the real party-in-interest recognizes the assignment of rights of action and
also recognizes that when one has a right assigned to him, he is then the real party-in-interest and may
maintain an action upon such claim or right.
WHEREFORE , the petition is DENIED and the assailed decision of the CA is AFFIRMED. Costs against the
petitioner.
Jimenez v Rabot, 38 Phil 378 (1918)
Part II / Essential Elements of a Contract of Agency; Form
Nature of the Action:
Appeal from judgment of the CFI of Pangasinan
Street, J.
Facts:
1. This action was instituted by Gregorio Jimenez to recover from the defendant, Pedro Rabot, a parcel of
land. The parcel of land together with two other parcels originally belonged to plaintiff Jimenez. While
Gregorio was staying at Vigan in 1911, the subject property was confided by him to the care of his elder
sister Nicolasa Jimenez.2. On February 7, 1911, he wrote his sister a letter from Vigan informing her that
he was pressed for money and requested her to sell one of his parcels of land. This letter contains no
description as to which land is to be sold other
than the indicated words “one of my parcels of land”. Acting upon this letter, Nicolasa approached
defendant Rabot and the latter agreed to buy the parcel.3. A year later, Jimenez demanded that his sister
return the subject parcel to him. Nicolasa refused. Gregorio, together with his other siblings, then filed
action for the recovery of their land. The action was decided in favor of the plaintiffs.4. Meanwhile,
Nicolasa executed and delivered to defendant Rabot a deed purporting to convey to him the subject parcel
of land. Defendant went into possession and the property was found in his hands at the time when the
final judgment was entered in favor of plaintiffs.
Issue:
Whether the authority conferred on Nicolasa by Gregorio’s letter sufficient to enable her to bind her
brother
Ruling: YES.
The principle embodied xxx is not, in our opinion, applicable to the present case, which relates to the
sufficiency of the authorization, not to the sufficiency of the contract or conveyance. There is ample
authority to the effect that a person may by a general power of attorney authorize an agent to sell “all” the
land possessed by the principal, or all that he possesses in a particular city, county or state.In present case,
the agent was given the power to sell either of the parcels of land belonging to the plaintiff. We can see no
reason why the performance of an act within the scope of this authority should not bind the plaintiff to the
same extent as if he had given the agent authority to sell “any or all” and she had conveyed only one.
Judgment reversed.
City Lite CA Digest
G.R. No. 138639 February 10, 2000
CITY-LITE REALTY CORPORATION, petitioner,
vs.
COURT OF APPEALS and F.P. HOLDINGS & REALTY CORP., METRO DRUG INC., MELDIN AL
G. ROY, VIEWMASTER CONSTRUCTION CORP., and the REGISTER OF DEEDS OF QUEZON
CITY, respondent.
BELLOSILLO, J.:
This is a petition for review on certiorari filed by CITY-LITE REALTY CORPORATION (CITY-LITE)
seeking to annul the 20 October 1998 Decision of the Court of Appeals1 which reversed the Decision of
the Regional Trial Court of Quezon City in its Civil Case No. Q-92-11068 declaring that a contract of sale
over the subject property was perfected and that Metro Drug Inc. and Meldin Al G. Roy had the authority
to sell the property.2
Private respondent F. P. HOLDINGS AND REALTY CORPORATION (F.P. HOLDINGS), formerly the
Sparta Holdings (Inc., was the registered owner of a parcel of land situated along E. Rodriguez Avenue,
Quezon City, also known as the "Violago Property" or the "San Lorenzo Ruiz Commercial Center," with
an area of 71,754 square meters, more or less, and covered by Transfer Certificate of Title No. T-19599.
The property was offered for sale to the general public through the circulation of a sales brochure
containing the following information:
A parcel of land including buildings and other improvements thereon located along E. Rodriguez Avenue,
Quezon City, with a total lot area of 71,754 square meters — 9,192 square meters in front, 23,332 square
meters in the middle, and 39,230 square meters at the back. But the total area for sale excludes 5,000
square meters covering the existing chapel and adjoining areas which be donated to the Archdiocese of
Manila thus reducing the total saleable area to 66,754 square meters. Asking price was P6,250.00/square
meter with terms of payment negotiable. Broker's commission was 2.0% of selling price, net of
withholding taxes and other charges. As advertised, contact person was Meldin Al G. Roy, Metro Drug
Inc., with address at 5/F Metro House, 345 Sen. Gil Puyat Avenue, Makati City.
The front portion consisting of 9,192 square meters is the subject of this litigation.
On 22 August 1991 respondent Meldin Al G. Roy sent a sales brochure, together with the location plan
and copy of the Transfer Certificate of Title No. T-19599 of the Register of Deeds of Quezon City, to
Atty. Gelacio Mamaril, a practicing lawyer and a licensed real estate broker. Atty. Mamaril in turn passed
on these documents to Antonio Teng, Executive Vice-President, and Atty. Victor P. Villanueva, Legal
Counsel, of CITY-LITE.
In a letter dated 19 September 1991 sent to Metro Drug (ATTN: MELDIN AL ROY) after an initial
meeting with Meldin Al Roy that day, CITY-LITE conveyed its interest to purchase a portion or one-half
(1/2) of the front lot of the "Violago Property. Apparently, Roy subsequently informed CITY-LITE's
representative that it would take time to subdivide the lot and respondent F.P. HOLDINGS was not
receptive to the purchase of only half of the front lot. After a few days, Atty. Mamaril wrote Metro Drug
(ATTN: MELDIN AL ROY) expressing CITY-LITE's desire to buy the entire front lot of the subject
property instead of only half thereof provided the asking price of P6,250.00/square meter was reduced
and that payment be in installment for a certain period. Roy made a counter offer dated 25 September
1991 as follows:
Dear Atty. Mamaril,
This has reference to your letter dated September 24, 1991 in connection with the interest of your clients,
Mr. Antonio Teng/City-Lite Realty Corporation and/or any of their subsidiaries to buy a portion of the
Violago Property fronting E. Rodriguez Sr. Avenue with an area of 9,192 square meters.
We are pleased to inform you that we are prepared to consider the above offer subject to the following
major terms and conditions: 1. The price shall be P6,250.00/square meter or a total of P57,450,000.00; 2.
The above purchase price shall be paid to the owner as follows: (a) P15.0 Million downpayment; (b)
balance payable within six (6) months from date of downpayment without interest. Should your client
find the above major terms and conditions acceptable, please advise us in writing by tomorrow,
September 26, 1991, so that we can start formal discussions on the matter . . . .

Very truly yours,

MELDIN AL G. ROY

On 26 September 1991 CITY-LITE's officers and Atty. Mamaril met with Roy at the Manila Mandarin
Hotel in Makati to consummate the transaction. After some discussions, the parties finally reached an
agreement and Roy agreed to sell the property to CITY-LITE provided only that the latter submit its
acceptance in writing to the terms and conditions of the sale as contained in his letter of 25 September
1991. Later that afternoon after meeting with Roy at the Manila Mandarin Hotel, Atty. Mamaril and
Antonio Teng of CITY-LITE conveyed their formal acceptance of the terms and conditions set forth by
Roy in separate letters both dated 26 September 1991.
However, for some reason or another and despite demand, respondent F.P. HOLDINGS refused to
execute the corresponding deed of sale in favor of CITY-LITE of the front lot of the property. Upon its
claim of protecting its interest as vendee of the property in suit, CITY-LITE registered an adverse claim
to the title of the property with the Register of Deeds of Quezon City which was annotated in the
Memorandum of Encumbrance of Transfer Certificate of Title No. T-19599 under Entry No. PE-1001
dated 27 September 1991.
On 30 September 1991 CITY-LITE's counsel demanded in writing that Metro Drug (ATTN: MELDIN
AL G. ROY) comply with its commitment to CITY-LITE by executing the proper deed of conveyance of
the property under pain of court action. On 4 October 1991 F.P. HOLDINGS filed a petition for the
cancellation of the adverse claim against CITY-LITE with the Regional Trial Court of Quezon City,
docketed as LRC Case No. 91-10257, which was raffled to Br. 84.
On 8 October 1991 Edwin Fernandez, President of F.P. HOLDINGS, in a move to amicably settle with
CITY-LITE, met with the latter's officers during which he offered properties located in Caloocan City and
in Quezon Boulevard, Quezon City, as substitute for the property, but CITY-LITE refused the offer
because "it did not suit its business needs." With the filing of the petition of F.P. HOLDINGS for the
cancellation of the adverse claim, CITY-LITE caused the annotation of the first notice of lis pendens
which was recorded in the title of the property under Entry No. 4605.
On 2 December 1991 the RTC-Br. 84 of Quezon City dismissed F.P. HOLDINGS' petition declaring that
CITY-LITE's adverse claim had factual basis and was not "sham and frivolous." Meanwhile, F.P.
HOLDINGS caused the resurvey and segregation of the property and asked the Register of Deeds of
Quezon City to issue separate titles which the latter did on 17 January 1992 by issuing Transfer
Certificate of Title No. T-51671.
Following the dismissal of F.P. HOLDINGS' petition for the cancellation of the adverse claim, CITY-
LITE instituted a complaint against F.P. HOLDINGS originally for specific performance and damages
and caused the annotation of the second notice of lis pendens on the new certificate of title. After the
annotation of the second lis pendens, the property was transfered to defendant VIEWMASTER
CONSTRUCTION CORP. (VIEWMASTER) for which Transfer Certificate of Title No. T-52398 was
issued. However the notice of lis pendens was carried over and annotated on the new certificate of title.
In view of the conveyance during the pendency of the suit, the original complaint for specific
performance and damages was amended with leave of court to implead VIEWMASTER as a necessary
party and the Register of Deeds of Quezon City as nominal defendant with the additional prayer for the
cancellation of VIEWMASTER's certificate of title. The case was thereafter raffled to Br. 85 of the
Regional Trial Court of Quezon City.
On 4 October 1995 the court a quo rendered its decision in favor of CITY-LITE ordering F.P.
HOLDINGS to execute a deed of sale of the property in favor of CITY-LITE for the total consideration of
P55,056,250.00 payable as follows: P15 Million as downpayment to be payable immediately upon
execution of the deed of sale and the balance within six (6) months from downpayment, without interest.
The court also directed the Register of Deeds of of Quezon City to cancel Transfer Certificate of Title No.
T-52398 or any subsequent title it had issued affecting the subject property, and to issue a new one in the
name of CITY-LITE upon the presentation of the deed of sale and other requirements for the transfer. It
likewise ordered the defendants, except VIEWMASTER and the Register of Deeds of Quezon City, to
pay CITY-LITE jointly and severally P800,000.00 by way of nominal damage, P250,000.00 for attorney's
fees, and to pay the costs.
On 30 October 1995 VIEWMASTER filed a motion for reconsideration of the decision of the lower court
questioning its ruling that a perfected contract of sale existed between CITY-LITE and F.P. HOLDINGS
as there was no definite agreement over the manner of payment of the purchase price, citing in support
thereof Toyota Shaw Inc. v. Court of Appeals.3 However the motion for reconsideration was denied.
In the challenged Decision of 20 October 1998 the Court of Appeals reversed and set aside the judgment
of the Regional Trial Court of Quezon City. On 10 May 1999 the Court of Appeals denied CITY-LITE's
motion to reconsider its decision.
Petitioner CITY-LITE is now before us assailing the Court of Appeals for declaring that no contract of
sale was perfected between it and respondent F.P. HOLDINGS because of lack of a definite agreement on
the manner of paying the purchase price and that respondents Metro Drug and Meldin Al G. 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.
We cannot sustain petitioner. On the issue of whether a contract of sale was perfected between petitioner
CITY-LITE and respondent F.P. HOLDINGS acting through its agent Meldin Al G. Roy of Metro Drug,
Art. 1874 of the Civil Code provides: "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." Petitioner
anchors the authority of Metro Drug and Meldin Al G. Roy on (a) the testimonies of petitioner's three (3)
witnesses and the admissions of Roy and the lawyer of Metro Drug; (b) the sales brochure specifying
Meldin Al G. Roy as a contact person; (c) the guard posted at the property saying that Metro Drug was
the authorized agent; and, (d) the common knowledge among brokers that Metro Drug through Meldin Al
G. Roy was the authorized agent of F.P. HOLDINGS to sell the property. However, and more
importantly, the Civil Code requires that an authority to sell a piece of land shall be in writing. The
absence of authority to sell can be determined from the written memorandum issued by respondent F.P.
HOLDINGS' President requesting Metro Drug's assistance in finding buyers for the property. The
memorandum in part stated: "We will appreciate Metro Drug's assistance in referring to us buyers for the
property. Please proceed to hold preliminary negotiations with interested buyers and endorse formal
offers to us for our final evaluation and appraisal." This obviously meant that Meldin Al G. Roy and/or
Metro Drug was only to assist F.P. HOLDINGS in looking for buyers and referring to them possible
prospects whom they were supposed to endorse to F.P. HOLDINGS. But the final evaluation, appraisal
and acceptance of the transaction could be made only by F.P. HOLDINGS. In other words, Meldin Al G.
Roy and/or Metro Drug was only a contact person with no authority to conclude a sale of the property. In
fact, a witness for petitioner even admitted that Roy and/or Metro Drug was a mere broker,4 and Roy's
only job was to bring the parties together for a possible transaction.5 Consequently, we hold that for lack
of a written authority to sell the "Violago Property" on the part of Meldin Al G. Roy and/or Metro Drug,
the sale should be as it is declared null and void. Therefore the sale could not produce any legal effect as
to transfer the subject property from its lawful owner, F.P. HOLDINGS, to any interested party including
petitioner CITY-LITE.
WHEREFORE, the appealed Decision of the Court of Appeals being in accord with law and the evidence
is AFFIRMED. Costs against petitioner CITY-LITE REALTY CORPORATION.1âwphi1.nêt
SO ORDERED.

COSMIC LUMBER CORPORATION vs.CA and PEREZ, G.R. No. 114311 November

29, 1996
FACTS:
Cosmic Lumber Corporation through its General Manager executed on 28 January1985 a Special Power of Attorney
appointing Paz G. Villamil-Estrada as attorney-in-fact among others to initiate, institute and file any court action for the
ejectment of third persons and/or squatters of the entire lot 9127 and 443 and covered by TCT Nos. 37648 and 37649, for the
said squatters to remove their houses and vacate the premises in order that the corporation may take material possession
of the entire lot, and for this purpose, to appear at the pre-trial conference and enter into any stipulation of facts and
or compromise agreement so far as itshall protect the rights and interest of the corporation in the aforementioned lots. On 11
March 1985 Paz G. Villamil-Estrada, by virtue of her power of attorney, instituted an action for the ejectment of private
respondent Isidro Perez and recover the possession of a portion of Lot No. 443. On November 25, 1985 Villamil-Estrada
entered into a Compromise Agreement with respondent Perez and on November 27, 1985 the "Compromise
Agreement" was approved by the trial court and judgment was rendered in accordance the terms. Although the decision
became final and executor, it was not executed within the 5-year period from dateof its finality allegedly due to the failure of
petitioner to produce the owner's duplicate copy of Title No. 37649 needed to segregate from Lot No. 443 which is the portion
sold by the attorney-in-fact, Paz G. Villamil-Estrada, to private respondent under the compromise agreement. Thus on January
25, 1993 respondent filed a complaint to revive the judgment, docketed as Civil Case No. D-10459Petitioner asserts that it was
only when the summons in Civil Case No. D-10459 for the revivalof judgment was served upon it that it came to know of the
compromise agreement entered intobetween Paz G. Villamil-Estrada and respondent Isidro Perez upon which the trial court
basedits decision of 26 July 1993 in Civil Case No. D-7750. Forthwith, upon learning of the fraudulenttransaction, petitioner
sought annulment of the decision of the trial court before respondentCourt of Appeals on the ground that the compromise
agreement was void.
ISSUE:
Whether Villamil-Estrada exceeded her authority as specified in the SPA.
DECISION:
The authority granted Villamil-Estrada under the special power of attorney wasexplicit and exclusionary. The alienation by sale
of an immovable certainly cannot be deemedprotective of the right of petitioner more so when the land was being sold for a
price of P80.00per square meter, much less than its assessed value of P250.00 per square meter, which wasnot even received
by the corporation.When the sale of a piece of land or any interest thereon is through an agent, the authority of thelatter shall be
in writing; otherwise, the sale shall be void. Thus the authority of an agent toexecute a contract for the sale of real estate must be
conferred in writing and must give himspecific authority. A special power of attorney is necessary to enter into any contract by
whichthe ownership of an immovable is transmitted or acquired either gratuitously or for a valuableconsideration. The express
mandate required by law to enable an appointee of an agency(couched) in general terms to sell must be one that
expressly mentions a sale or that includes asale as a necessary ingredient of the act mentioned. For the principal to
confer the right upon anagent to sell real estate, a power of attorney must so express the powers of the agent in clear and
unmistakable language. When there is any reasonable doubt that the language so usedconveys such power, no such
construction shall be given the document. It is therefore clear thatby selling to respondent Perez a portion of petitioner's land
through a compromise agreement,Villamil-Estrada acted without or in obvious authority. The sale
ipso jure
is consequently void.So is the compromise agreement. This being the case, the judgment based thereon isnecessarily void.
Antipodal to the opinion expressed by respondent court in resolvingpetitioner's motion for reconsideration, the nullity of the
settlement between Villamil-Estrada andPerez impaired the jurisdiction of the trial court to render its decision based on the
compromiseagreement. In
Alviar v. Court of First Instance of La Union,
the Court held “As the judgment in question is null and void ab initio, it is evident that the court acquired no
jurisdiction to render it, much less to order the execution thereof . . .” Verily, when an agent is engaged in the perpetration of a
fraud upon his principal for his own exclusive benefit, he is not really acting for the principal but is really acting
for himself, entirely outside the scope of his agency. Indeed, the basic tenets of agency rest on the highest considerations of
justice, equity and fair play, and an agent will not be permitted to pervert his authority to his own personal advantage, and his act
in secret hostility to the interests of his principal transcends the power afforded him. WHEREFORE, the petition is
GRANTED.
Case Digest on San Juan Structural and Steel Fabricators vs.CA
July 27, 2010San Juan Structural and Steel Fabricators Inc. vs. CA [296SCRA 631 (Sept 29 1998)]Effect
of Unauthorized Acts of Corporate Officer Sufficiency of Proof to Pierce Veil of Corporate Fiction
Facts: San Juan Structural and Steel Fabricators entered into an agreement with Motorich Sales
Corporation through Nenita Gruenberg, corporate treasurer of Motorich, for the transfer to the former a
parcel of land upon a P100,000earnest money, balance to be payable within March 2, 1989.Upon payment
of the earnest money, and on March 1, 1989,San Juan allegedly asked to be submitted a computation
of the balance due to Motorich. The latter, despite repeated demands, refused to execute the Deed of
Assignment of the land. San Juan discovered that Motorich entered into a Deed of Absolute Sale of the
land to ACL Development Corporation. Hence, San Juan filed a complaint with the RTC. On the other
hand, Motorich contends that since Nenita Gruenberg was only the treasurer of said corporation, and that
its president, Reynaldo Gruenberg, did not sign the agreement entered into by San Juan and Motorich, the
treasurer’s signature was inadequate to bind Motorich to theagreement. Furthermore, Nenita contended
that since San Juan was not able to pay within the stipulated period, no deed of assignment could be
made. The deed was agreed to be executed only after receipt of the cash payment, and since according to
Nenita, no cash payment was made on the due date, no deed could have been executed. RTC dismissed
the case holding that Nenita Gruenberg was not authorized by Motorich to enter into said contract with
San Juan, and that a majority vote of the BoD was necessary to sell assets of the corporation in
accordance with Sec. 40 of the Corporation Code. CA affirmed this decision. Hence, thispetition with SC.
Issues: (1) Whether or not there was a valid contract existingbetween San Juan and Motorich.
(2) Whether or not the veil of corporate fiction could be pierced.
Held: (1) No. The contract entered into between Nenita and San Juan cannot bind Motorich, because the
latter never authorized nor ratified such sale. A corporation is a juridical person separate and distinct from
its stockholders or members. Accordingly, the property of the corporation is not the property of its
stockholders and may not be sold by them without express authorization from the corporation’s BoD.
This is in accordance with Sec. 23 of the Corporation Code. Indubitably, a corporation can only act
through its BoD or, when authorized either by its by laws or by its board resolution, through its officers or
agents in the normal course of business. The general principles of agency govern the relation between the
corporation and its officers or agents,subject to the AoI, by laws, or relevant provisions of law. A
corporate officer or agent may represent and bind the corporation in transactions with 3rd persons to the
extentthat the authority to do so has been conferred upon him, and this includes powers which have been
intentionallyconferred, and also such powers as, in the usual course of the particular business, are
incidental to, or may be implied from, the powers intentionally conferred, powers added by custom and
usage, as usually pertaining to the particular officer or agent, and such apparent powers as the corporation
has caused persons dealing with the officer or agent to believe that it has conferred. Furthermore, persons
dealing with an assumed agent, whether the assumed agency be a general or special one, are bound at
their peril, if they would hold the principal liable, to ascertain not only the fact of agency but also the
nature and extent of authority, and in case either is controverted, the burden of proof is upon them to
establish it. Unless duly authorized, a treasurer, whose powers are limited, cannot bind the corporation in
a sale of its assets. In the case at bar, San Juan had the responsibility of ascertaining the extent of Nenita’s
authority to represent the corporation. Selling is obviously foreign to a corporate treasurer’s function.
Neither was real estate sale shown to be a normal business activity of Motorich. The primary purpose of
said corporation is marketing, distribution, import and export relating to a general merchandising
business. Unmistakably, its treasurer is not cloaked with actual or apparent authority to buy or sell real
property, an activity which falls way beyond the scope of her general authority. 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.(2) No. San Juan argues that the veil of corporate fiction should be pierced because the
spouses Reynaldo and Nenita Gruenberg own 99.96% of the subscribed capital stock, they needed no
authorization from the BoD to enter into the said contract. The veil can only be disregarded when it is
utilized as a shield to commit fraud, illegality or inequity, defeat public convenience, confuse legitimate
issues, or serve as a mere alter ego or business conduit of a person or an instrumentality, agency or
adjunct of another corporation. Hence, the question of piercing the veil becomes a matter of proof. In the
case at bar, SC found no reason to pierce the veil. San Juan failed to establish that said corporation was
formed for the purpose of shielding any fraudulent act of its officers and stockholders.
Delos Reyes v CA, 313 SCRA 632
(lacking digest)
AF Realty & Development Inc. vs. Dieselman Freight Services Co. Case Digest
GR 111448, 16 January 2002

Facts: On 10 May 1988, Manuel C. Cruz, Jr., a member of the board of directors of Dieselman Freight
Services Co., issued a letter denominated as "Authority To Sell Real Estate" to Cristeta N. Polintan, a real
estate broker of the CNP Real Estate Brokerage. Cruz, Jr. authorized Polintan "to look for a buyer/buyers
and negotiate the sale" of the lot at P3,000.00 per square meter, or a total of P6,282,000.00. Cruz, Jr. has
no written authority from Dieselman to sell the lot. In turn, Cristeta Polintan, through a letter dated 19
May 1988, authorized Felicisima ("Mimi") Noble to sell the same lot. Felicisima Noble then offered for
sale the property to AF Realty & Development, Inc. (AF Realty) at P2,500.00 per square 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 payable to the order of Dieselman. Polintan received the check and signed an
"Acknowledgment Receipt" indicating that the amount of P300,000.00 represents the partial payment of
the property but refundable within two weeks should AF Realty disapprove Ranullo's action on the
matter. On 29 June 1988, AF Realty confirmed its intention to buy the lot. Hence, Ranullo asked Polintan
for the board resolution of Dieselman authorizing the sale of the property. However, Polintan could only
give Ranullo the original copy of TCT 39849, the tax declaration and tax receipt for the lot, and a
photocopy of the Articles of Incorporation of Dieselman.

On 2 August 1988, Manuel F. Cruz, Sr., president of Dieselman, acknowledged receipt of the said
P300,000.00 as "earnest money" but required AF Realty to finalize the sale at P4,000.00 per square meter.
AF Realty replied that it has paid an initial down payment of P300,000.00 and is willing to pay the
balance. However, on 13 August 1988, Mr. Cruz, Sr. terminated the offer and demanded from AF Realty
the return of the title of the lot earlier delivered by Polintan. Claiming that there was a perfected contract
of sale between them, AF Realty filed with the Regional Trial Court, Branch 160, Pasig City a complaint
for specific performance (Civil Case 56278) against Dieselman and Cruz, Jr.. The complaint prayed that
Dieselman be ordered to execute and deliver a final deed of sale in favor of AF Realty." In its amended
complaint, AF Realty asked for payment of P1,500,000.00 as compensatory damages; P400,000.00 as
attorney's fees; and P500,000.00 as exemplary damages. In its answer, Dieselman alleged that there was
no meeting of the minds between the parties in the sale of the property and that it did not authorize any
person to enter into such transaction on its behalf. Meanwhile, on 30 July 1988, Dieselman and Midas
Development Corporation (Midas) executed a Deed of Absolute Sale of the same property. The agreed
price was P2,800.00 per square meter. Midas delivered to Dieselman P500,000.00 as down payment and
deposited the balance of P5,300,000.00 in escrow account with the PCIBank. Constrained to protect its
interest in the property, Midas filed on 3 April 1989 a Motion for Leave to Intervene in Civil Case 56278.
Midas alleged that it has purchased the property and took possession thereof, hence Dieselman cannot be
compelled to sell and convey it to AF Realty.

The trial court granted Midas' motion. After trial, the lower court rendered the Decision holding that the
acts of Cruz, Jr. bound Dieselman in the sale of the lot to AF Realty. Consequently, the perfected contract
of sale between Dieselman and AF Realty bars Midas' intervention. The trial court also held that Midas
acted in bad faith when it initially paid Dieselman P500,000.00 even without seeing the latter's title to the
property. Moreover, the notarial report of the sale was not submitted to the Clerk of Court of the Quezon
City RTC and the balance of P5,300,000.00 purportedly deposited in escrow by Midas with a bank was
not established. Dieselman was ordered to execute and deliver to AF Realty the final deed of sale of the
property covered by TCT 39849 of the Registry of Deed of Rizal, Metro Manila District II, including the
improvements thereon, and ordering Dieselman to pay AF Realty attorney's fees in the amount of
P50,000.00 and to pay the costs. Dissatisfied, all the parties appealed to the Court of Appeals. In its
Decision dated 10 December 1992, the Court of Appeals reversed the judgment of the trial court holding
that since Cruz, Jr. was not authorized in writing by Dieselman to sell the subject property to AF Realty,
the sale was not perfected; and that the Deed of Absolute Sale between Dieselman and Midas is valid,
there being no bad faith on the part of the latter. The Court of Appeals then declared Dieselman and Cruz,
Jr. jointly and severally liable to AF Realty for P100,000.00 as moral damages; P100,000.00 as
exemplary damages; and P100,000.00 as attorney's fees. On 5 August 1993, the Court of Appeals, upon
motions for reconsideration filed by the parties, promulgated an Amending Decision, in the sense that
only Cruz, should be made liable to pay AF Realty the damages and attorney's fees awarded therein, plus
the amount of P300,000.00 unless, in the case of the said P300,000.00, the same is still deposited with the
Court which should be restituted to AF Realty. AF Realty filed the petition for review on certiorari.

Issue: Whether there was a perfected contract of sale involving the Dieselman real property in favor of
AF Realty.

Held: Section 23 of the Corporation Code expressly provides that the corporate powers of all corporations
shall be exercised by the board of directors. Just as a natural person may authorize another to do certain
acts in his behalf, so may the board of directors of a corporation validly delegate some of its functions to
individual officers or agents appointed by it. Thus, 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
delegation/authorization, the rule is that the declarations of an individual director relating to the affairs of
the corporation, but not in the course of, or connected with, the performance of authorized duties of such
director, are held not binding on the corporation. Herein, Cruz has no written authority from the board of
directors of Dieselman to sell or to negotiate the sale of the lot, much less to appoint other persons for the
same purpose. Cruz's lack of such authority precludes him from conferring any authority to Polintan
involving the subject realty. Necessarily, neither could Polintan authorize Felicisima Noble. Clearly, the
collective acts of Cruz, Polintan and Noble cannot bind Dieselman in the purported contract of sale.