________________________________________________________________

AYALA LAND, INC., Petitioner, v. ASB REALTY CORPORATION AND E.M.

RAMOS & SONS, INC.,Respondents.
G.R. No. 210043, September 26, 2018
Ponente: DEL CASTILLO, J.:
________________________________________________________________

Nature of Action: A petition2 for review on certiorari to assail the Decision3 and
Resolution4 of the Court of Appeals. The assailed CA Decision and Resolution
affirmed the Decision5of the RTC of Imus, Cavite which (a) declared null and void
and unenforceable the Contract to Sell.

Facts: ALI and ASBRC are domestic corporations engaged in real estate
development.On the other hand, EMRASON is a domestic corporation principally
organized to manage property located in Dasmariñas, Cavite. ALI claimed that
EMRASON's brokers sent a proposal for a joint venture agreement (JVA)
between ALI and EMRASON for the development of EMRASON's Dasmariñas
Property. Then EMRASON's President and Chairman, wrote to ALI and therein
acknowledged that Ramos, Jr. and Antonio were fully authorized to represent
EMRASON in the JVA. ALI and the Ramos children subsequently entered into a
Contract to Sell under which ALI agreed to purchase the Dasmariñas Property.

ALI alleged that it came to know that a Letter-Agreement and a Real Estate
Mortgage respecting the Dasmariñas Property14 had been executed by Ramos,
Sr. and Antonio for and in behalf of EMRASON, on one hand, and ASBRC on the
other. It also alleged that the Ramos children15 wrote to Luke C. Roxas, ASBRC's
President, informing the latter of the Contract to Sell between ALI and
EMRASON. After ASBRC learned about the Contract to Sell executed between
ALI and the Ramos children and the annotation of the Contract to Sell on the
transfer certificates of title (TCTs) covering the Dasmariñas Property, 23 ASBRC
and EMRASON filed a Complaint24 for the nullification of Contract to sell and the
cancellation of the annotations on the TCTs over the Dasmariñas Property.

Issue: Whether or not the contract to Sell entered into by and between ALI and
Ramos children is valid.

Held: Negative. The Court held that a juridical entity, like EMRASON, "cannot act
except through its board of directors as a collective body, which is vested with
the power and responsibility to decide whether the corporation should enter in a
contract that will bind the corporation, subject to the articles incorporation, by-
laws, or relevant provisions of law."47Although the general rule is that "no person,
not even its officers, can validly bind a corporation "48without the authority of the
corporation's board of directors, this Court has recognized instances where third
persons' actions bound a corporation under the doctrine of apparent authority or
ostensible agency…The doctrine of apparent authority or ostensible agency,
which is actually a species of the doctrine of estoppel, thus – The doctrine of
apparent authority is a species of the doctrine of estoppel. Article 1431 of the
Civil Code provides that '[t]hrough estoppel, an admission or representation is
rendered conclusive upon the person making it, and cannot be denied or
disproved as against the person relying thereon.' Estoppel rests on this rule:
'Whenever a party has, by his own declaration, act, or omission, intentionally and
deliberately led another to believe a particular thing true, and to act upon such
belief, he cannot, in any litigation arising out of such declaration, act or omission,
be permitted to falsify it.'…"A contract is void if one of the essential requisites of
contracts under Article 1318 of the New Civil Code is lacking."