Case Digest 1

Litunjua, Jr. v. Eternit Corporation, 490 SCRA 204 (2006)

FACTS:
The Eternit Corporation (EC) is a business legally formed and registered in the Philippines and
manufactures pipe products and roofing materials. Eight different parcels of land were used for its
manufacturing operations. Far East Bank & Trust Company served as trustee on the transfer certificates
of properties location in Mandaluyong City. Eteroutremer S.A. Corporation (ESAC), a business
established in accordance with Belgian legislation, held ninety percent (90%) of the shares of EC's stock.
Australian-born Jack Glanville is the company's general manager and president, and Claude Frederick
Delsaux is the ESAC's regional director for Asia.
The administration of ESAC worried about the political climate of the Philippines in 1986 and
wanted to halt its operation inside the country. The Committee for Asia of ESAC instructed Michael
Adams, a member of EC’s Board of Directors, to dispose of the eight parcels of land. Adams engaged the
services of realtor/broker Lauro G. Marquez, Glanville later showed the properties to him. Marquez
declared to Eduardo B. Litonjua Jr., he was authorized to sell the properties for P27,000,000.00, but the
Litonjua siblings offered to buy the property for P20,000,000.00 cash. Marquez apprised Glanville of the
Litonjua siblings’ offer and relayed the same to Delsaux in Belgium, but the latter did not respond. It was
only on February 12, 1987 that Delsaux sent a telex to Glanville stating that, based on the “Belgian/Swiss
decision,” the final offer was “US$1,000,000.00 and P2,500,000.00 to cover all existing obligations prior
to final liquidation.”. The Litonjua brothers deposited the the final offer and drafted an Escrow
Agreement to expedite the sale. Meanwhile, the political situation in the Philippines had improved.
Marquez received a call from Glanville, advising that the sale would no longer proceed. When apprised of
this development, the Litonjuas, through counsel, wrote EC, demanding payment for damages they had
suffered on account of the aborted sale.

ISSUE:
The court of appeals erred in holding that there was no perfected contract of sale, committed
grave error of law in holding that Marquez needed a written authority from respondent, erred in not
holding that Glanville and Delsaux have the necessary authority to sell the subject properties or at the
very least, were knowingly permitted by respondent Eternit to do acts within the scope of an apparent
authority, and thus held them out to.

DECISION:
The petition has no merit.

A corporation is a juridical person separate and distinct from its members or stockholders and is
not affected by the personal rights, obligations and transactions of the latter. It may act only through its
board of directors 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 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. Absent such valid delegation/authorization, the declarations of an individual director relating to
the affairs of the corporation are not binding on the corporation.

In this case, the petitioners as plaintiffs below, failed to adduce in evidence any resolution of the
Board of Directors of respondent EC 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 EC including
the improvements thereon.
 Case Digest 2

Eurotech Industrial Technologies, Inc. v. Cuizon, GR 167552, April 23, 2007

FACTS:
From January to April 1995, petitioner sold to Impact Systems various products allegedly
amounting to P91,338.00 pesos. Subsequently, respondents sought to buy from petitioner one unit of
sludge pump valued at P250,000.00 with respondents making a down payment of P50,000.00.  When the
sludge pump arrived from the United Kingdom, petitioner refused to deliver the same to respondents
without their having fully settled their indebtedness to petitioner. Thus, on 28 June 1995, respondent
EDWIN and Alberto de Jesus, general manager of petitioner, executed a Deed of Assignment of
receivables in favor of petitioner. Impact systems is owed by ERWIN Cuizon.

Despite the existence of the Deed of Assignment, respondents proceeded to collect from Toledo
Power Company the amount of P365,135.29.  Alarmed by this development, petitioner made several
demands upon respondents to pay their obligations. As a result, respondents were able to make partial
payments to petitioner. On 7 October 1996, petitioner's counsel sent respondents a final demand letter
wherein it was stated that as of 11 June 1996, respondents' total obligations stood at P295,000.00
excluding interests and attorney's fees.  Because of respondents' failure to abide by said final demand
letter, petitioner instituted a complaint for sum of money, damages, with application for preliminary
attachment against herein respondents. By way of special and affirmative defenses, respondent EDWIN
alleged that he is not a real party in interest in this case. According to him, he was acting as mere agent of
his principal, which was the Impact Systems, in his transaction with petitioner and the latter was very
much aware of this fact.

ISSUE:
Whether the act of Edwin in signing the Deed of Assignment binds his principal Impact Systems

DECISION:
Agree, the act of Edwin in signing the Deed of Assignment binds Impact Systems

The Supreme Court held that in a contract of agency, a person binds himself to render some
service or to do something in representation or on behalf of another with the latter's consent. Its purpose is
to extend the personality of the principal or the party for whom another acts and from whom he or she
derives the authority to act. It is said that the basis of agency is representation, that is, the agent acts for
and on behalf of the principal on matters within the scope of his authority and said acts have the same
legal effect as if they were personally executed by the principal.

In this case at hand, the parties do not dispute the existence of the agency relationship between
respondents ERWIN as principal and EDWIN as agent.