Eduardo Litonjua v.

Eternit Corporation
G.R. No. 144805 | June 8, 2016
CALLEJO, SR., J.

FACTS:
Eternit Corporation (Eternit) was a corporation engaged in the manufacture of roofing
materials and pipe products. Ninety (90%) percent of the shares of stocks of Eternit were
owned by Eteroutremer S.A. Corporation (ESAC), a corporation organized and registered
under the laws of Belgium.
Jack Glanville (Glanville), an Australian citizen, was the General Manager and President of
Eternit, while Claude Frederick Delsaux (Delsaux) was the Regional Director for Asia of
ESAC.
In 1986, due to the political uncertainty in the Philippines, ESAC wanted to stop its
operations in the country. Hence, the Committee for Asia of ESAC instructed Michael Adams
(Adams), a member of Eternit's Board of Directors, to dispose eight parcels of land owned
by Eternit. Adams engaged the services of realtor/broker Lauro G. Marquez (Marquez) so
that the properties could be offered for sale to prospective buyers.
Marquez thereafter offered the parcels of land and the improvements thereon to Eduardo B.
Litonjua, Jr. (Litonjua) of the Litonjua & Company, Inc. Marquez declared that he was
authorized to sell the properties for P27M. Litonjua made a counter-offer of P20M which
was communicated by Marquez to Glanville.
Glanville then informed Delsaux of the offer and the latter made a final offer, based on
Belgian/Swiss decision, of US$1M and P2.5M. Litonjua accepted the final offer and made
an initial payment amounting to US$1M.
However, because of the improving political situation in the Philippines in 1987, Glanville
advised Marquez that the sale would no longer proceed. Delsaux also sent a letter to
Marquez to confirm that the ESAC Regional Office had decided not to proceed with the sale
of the subject land.
Upon learning that the sale will not push through, Litonjua, through counsel, wrote Eternit,
demanding payment for damages they had suffered on account of the aborted sale. Eternit,
however, rejected the demand.
Litonjua then filed a complaint for specific performance and damages against Eternit and
ESAC in the RTC of Pasig City. The RTC declared that since the authority of the
agents/realtors was not in writing, the sale was void and not merely unenforceable, and as
such, could not have been ratified by the principal. In any event, such ratification cannot be
given any retroactive effect.
Litonjua appealed the decision to the CA but the latter rendered judgment af8rming the
decision of the RTC. Hence, the petition.

ISSUES:
Did Marquez need a written authority from Eternit before the sale can be perfected? YES
Was Eternit estopped from assailing the validity of Delsaux and Glanvilles authority to sell
the subject land? NO
HOLDING:

Litojua failed to prove that Marquez, Glanville and Delsaux were authorized by Eternit to sell the
property
Litonjua asserted that there was no need for a written authority from the Board of Directors
of EC for Marquez to validly act as broker/middleman/intermediary. As broker, Marquez
was not an ordinary agent because his authority was of a special and limited character in
most respects.
Litonjua also averred that what was important and decisive was that Marquez was able to
communicate both the offer and counter-offer and their acceptance of respondent EC's
counter-offer, resulting in a perfected contract of sale.
However, the SC ruled that it was the duty of Litonjua to prove that respondent Eternit had
decided to sell its properties and that it had empowered Adams, Glanville and Delsaux or
Marquez to offer the properties for sale to prospective buyers and to accept any counter-
offer.
The SC held that when a sale of a piece of land or any portion thereof is through an agent,
the authority of the latter shall be in writing, otherwise, the sale shall be void.
Litonjua failed to adduce in evidence any resolution of the Board of Directors of respondent
Eternit empowering Marquez, Glanville or Delsaux as its agents, to sell, let alone offer for
sale, for and in its behalf, the eight parcels of land owned by respondent Eternit including
the improvements thereon.

The individual acts of Glanville and Delsaux were not binding upon Eternit because they were not
authorized by the Board of Directors
The property of a corporation is not the property of the stockholders or members, and as
such, may not be sold without express authority from the board of directors. Physical acts,
like the offering of the properties of the corporation for sale, or the acceptance of a counter-
offer of prospective buyers of such properties and the execution of the deed of sale covering
such property, can be performed by the corporation only by officers or agents duly
authorized for the purpose by corporate bylaws or by specific acts of the board of directors.
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 not binding on the corporation.

Eternit was not estopped from denying the existence of a principal-agency relationship between it
and Glanville or Delsaux
For an agency by estoppel to exist, the following must be established:
1. The principal manifested a representation of the agent's authority or knowlingly
allowed the agent to assume such authority;
2. The third person, in good faith, relied upon such representation;
3. Relying upon such representation, such third person has changed his position to his
detriment.
 An agency by estoppel, which is similar to the doctrine of apparent authority, requires proof
of reliance upon the representations, and that, in turn, needs proof that the representations
predated the action taken in reliance.
Such proof is lacking in this case. In their communications to the petitioners, Glanville and
Delsaux positively and unequivocally declared that they were acting for and in behalf of
ESAC.