Eduardo V. Litonjua, Jr. and Antonio K. Litonjua vs.

Eternit Corporation (Now Eterton Multi-Resources

Corporation), Eteroutremer, S.A. and Far East Bank & Trust Company (8 June 2006)

Principal: Eternit Corporation

Agents: Delsaux & Glanville
Third Party: Litonjua siblings

FACTS:
 The Eternit Corporation (EC) is engaged in the manufacture of roofing materials and pipe products
with its operations conducting in 8 parcels of land.
 The properties are under the name of Far Eastern Bank & Trust Company, as trustee.
 90% of the shares of stocks of EC were owned by Eteroutremer S.A. Corporation (ESAC).
 The committee of ESAC instructed Michael Adams, member of EC’s Board of Directors, to dispose the
8 parcels of land due to their concern in the political situation of the Philippines.
 Adams engaged the services of realtor/broker Lauro Marquez.
 Glanville, General Manager and President of EC, showed the properties to Marquez.
 In a letter, Marquez declared that he was authorized to sell the properties for P27,000,000.00 and that
the terms of the sale were subject to negotiation.
 Marquez showed the property to Eduardo and Antonio Litonjua.
 The siblings offered to buy the property for P20,000,000.00 cash.
 Delsaux, Regional Director for Asia of ESAC, sent a telex to Glanville stating that based on the
Belgian/Swiss decision, the final offer was “$1,000,000.00 and P2,500,000.00.”
 In a letter, Marquez confirmed that the Litonjua siblings had accepted the counterproposal.
 The Litonjua siblings deposited $1,000,000.00 with the Security Bank & Trust Company and drafted
an Escrow Agreement to expedite the case.
 With the assumption of Corazon Aquino as President of the Philippines, the political situation in the
Philippines had improved. Marquez received a telephone call from Glanville – that the sale would
no longer proceed; followed by a letter by Glanville confirming such; and a letter from Delsaux
himself to the same extent.
 When appraised of the development, the Litonjua siblings wrote EC, demanding payment for damages.
EC rejected their demand.
 The Litonjua siblings filed a case for specific performance and damages against EC. The trial court
dismissed the complaint. The CA affirmed the lower court’s decision.
o One of allegations of petitioners was that an agency by estoppel was created when the
corporation clothed Marquez with apparent authority to negotiate for the sale of the
properties.

ISSUE: Whether there is an agency of estoppel with EC as principal and Glanville or Delsaux.
HELD: None. The petition is DENIED. This issue is resolved on the basis of the evidence on record. Such proof
is lacking in this case. In their communications to petitioners, Glanville and Delsaux positively and
unequivocally declared that they were acting for and in behalf of respondent ESAC (NOT EC).
For an agency by estoppel to exist, the following must be established:
1) The principal manifested a representation of the agent’s authority or knowingly
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.