HEIRS OF ANTONIO PAEL and ANDREA ALCANTARA and CRISANTO PAEL v

COURT OF APPEALS, JORGE H. CHIN and RENATO B. MALLARI

G.R. No. 133547 February 10, 2000

YNARES-SANTIAGO, J.:

FACTS:

Pedro Destura, had filed a substantially similar complaint against Chin and Mallari. The
complaint against Jorge H. Chin and Renato B. Mallari, for annulment of title, reconveyance and
specific performance, damages and nullification of the Memorandum of Agreement. In the
Memorandum of Agreement (MOA), the parties agreed to sell the property subject of this petition
to an interested buyer and to share in the proceeds, with Lumasag acting as broker of the sale.
However, the prospective buyer of Lumasag backed out and the sale did not materialize. However,
this case was dismissed. Maria Destura filed a similar action one month after the decision. In an
obvious attempt to avoid application of res judicata or litis pendentia doctrine, Maria impleaded
her own husband as a defendant. Significantly, after the complaint was filed, Maria dropped Pedro
Destura as a party-defendant, alleging that the two had amicably settled their differences.

In her complaint, Maria Destura averred that she and Pedro purchased from Crisanto Pael,
through attorney-in-fact Lutgarda Marilao, a tract of land in the name of "Antonio Pael y Andria
Alcantara, conyuges, y Crisanto Pael, hijo.". Thereafter, with the intention of disposing of the
property, Pedro allegedly executed a special power of attorney to sell in favor of Renato Mallari
and Jorge Chin. The latter failed to sell the property, whereupon Pedro executed a deed of
conditional sale in favor of Chin, but the sale was allegedly not consummated due to Chin's non-
compliance with certain conditions. Pedro thereafter went to Canada and, when he returned, he
allegedly discovered that the title to the property had been transferred in the names of Chin and
Mallari. This case was decided in favour of Maria Destura.

While the petition for annulment of judgment was pending before the Court of Appeals,
PFINA Properties, Inc. (PFINA, for brevity) filed a motion for leave of court to intervene and to
admit petition-in-intervention. It alleged that PFINA acquired the property subject of the litigation
for substantial and valuable consideration from Roberto A. Pael and the Heirs of Antonio Pael,
Andrea Alcantara and Crisanto Pael, by virtue of a deed of assignment, and that the title was issued
in its name. This motion was opposed by private respondents. They cite the fact that the alleged
acquisition of the property by PFINA supposedly occurred as early as January 25, 1983, and for
fifteen (15) years, inspite of numerous proceedings before different courts and agencies involving
the disputed property, both the Paels and PFINA were silent about the alleged change of
ownership. No steps to register the sale or secure transfer titles were undertaken during this period.

Private respondents filed an Omnibus Motion for the cancellation and declaration as null
and void of the title illegally obtained by PFINA in its name and to hold the officials of PFINA,
their counsel, and the Register of Deeds of Quezon City in contempt of court. The Court of Appeals
cited badges or indicia of fraud in the alleged acquisition of the property by PFINA as well as the
cancellation of the title of the Paels and issuance of a new title in favor of PFINA. The appellate
court rendered judgment in favor of private respondents.

ISSUE:

Does PFINA has a right over the property subject of dispute in this case?

RULING:

No. The Paels, having no longer any right over the subject property, had nothing to sell to
PFINA. Therefore, the title obtained by PFINA allegedly by virtue of the deed of assignment
executed by the Paels in its favor is a nullity. Worse, the Register of Deeds of Quezon City
connived and conspired with PFINA when the former registered the deed of assignment on the
basis of fake and spurious documents.

The Court of Appeals also found it unbelievable for PFINA to acquire extremely valuable
real estate in Quezon City for only P30.00 per square meter. In 1983, PFINA Mining and
Exploration, Inc. was a mining company. It changed its corporate name to PFINA Properties, Inc.,
only on January 22, 1998, six (6) days before filing its petition-in-intervention with the Court of
Appeals. In its petition, PFINA claimed to have bought urban real estate in 1983, notwithstanding
that at the time it was still a mining company which had no business dabbling in the highly
speculative urban real estate trade.
 ASSOCIATED BANK (now UNITED OVERSEAS BANK [PHILS.]) v. SPOUSES
RAFAEL and MONALIZA PRONSTROLLER

G.R. No. 148444 July 14, 2008

NACHURA, J.:

FACTS:

Associated Bank foreclosed the property of the spouses Vaca subject of a Real Estate
Mortgage. Associated Bankadvertised the subject property for sale to interested
buyers. Respondents Rafael and Monaliza Pronstroller offered to purchase the property. Said offer
was made through Atty. Jose Soluta, petitioner’s Vice-President, Corporate Secretary and a
member of its Board of Directors. Petitioner accepted respondents’ offer, consequently,
respondents paid petitioner ₱750,000.00, or 10% of the purchase price, as down payment.

On March 18, 1993, petitioner, through Atty. Soluta, and respondents, executed a Letter-
Agreement stating the manner of payment which is through escrow. Prior to the expiration of the
90-day period within which to make the escrow deposit, in view of the pendency of the case
between the spouses Vaca and petitioner involving the subject property, respondents requested
that the balance of the purchase price be made payable only upon service on them of a final
decision or resolution of this Court affirming petitioner’s right to possess the subject property.
Atty. Soluta referred respondents’ proposal to petitioner’s Asset Recovery and Remedial
Management Committee (ARRMC) but the latter deferred action thereon.

A month after they made the request and after the payment deadline had lapsed,
respondents and Atty. Soluta, acting for the petitioner, executed another Letter-Agreement
allowing the former to pay the balance of the purchase price upon receipt of a final order from this
Court (in the Vaca case) and/or the delivery of the property to them free from occupants.

Associated Bank reorganized its management. Atty. Braulio Dayday became it’s Assistant
Vice-President and Head of the Documentation Section, while Atty. Soluta was relieved of his
responsibilities. Atty. Dayday reviewed petitioner’s records of its outstanding accounts and
discovered that respondents failed to deposit the balance of the purchase price of the subject
property. He, likewise, found that respondents requested for an extension of time within which to
pay which Atty. Soluta agreed. The request for extension was then resubmitted to the ARRMC
and it was disapproved. Atty. Dayday informed respondents of the disapproval and rescission and
forfeiture of the deposit. Respondents went to the petitioner’s office, talked to Atty. Dayday and
gave him the Letter-Agreement of July 14, 1993 to show that they were granted an extension.
However, Atty. Dayday claimed that the letter was a mistake and that Atty. Soluta was not
authorized to give such extension.

For failure of the parties to reach an agreement, respondents, through their counsel,
informed petitioner that they would be enforcing their agreement dated July 14, 1993.20 Petitioner
countered that it was not aware of the existence of the July 14 agreement and that Atty. Soluta was
not authorized to sign for and on behalf of the bank. It, likewise, reiterated the rescission of their
previous agreement because of the breach committed by respondents.

Meawhile, in the Vaca case, the Supreme Court upheld petitioner’s right to possess the
subject property. Thereafter, the respondents commenced the instant suit by filing a Complaint for
Specific Performance. The Court finds defendant’s rescission of the Agreement to Sell to be null
and void for being contrary to law and public policy.

ISSUE:

Is there an apparent authority given to Atty. Soluta?

RULING:

Yes. The general rule is that, in the absence of authority from the board of directors, no
person, not even its officers, can validly bind a corporation. The power and responsibility to decide
whether the corporation should enter into a contract that will bind the corporation is lodged in the
board of directors. However, just as a natural person may authorize another to do certain acts for
and on his behalf, the board may validly delegate some of its functions and powers to officers,
committees and agents. The authority of such individuals to bind the corporation is generally
derived from law, corporate bylaws or authorization from the board, either expressly or impliedly,
by habit, custom, or acquiescence, in the general course of business.

The authority of a corporate officer or agent in dealing with third persons may be actual or
apparent. The doctrine of "apparent authority," with special reference to banks, had long been
recognized in this jurisdiction. Apparent authority is derived not merely from practice. Its
existence may be ascertained through 1) the general manner in which the corporation holds out an
officer or agent as having the power to act, or in other words, the apparent authority to act in
general, with which it clothes him; or 2) the acquiescence in his acts of a particular nature, with
actual or constructive knowledge thereof, within or beyond the scope of his ordinary powers.

Accordingly, the authority to act for and to bind a corporation may be presumed from acts
of recognition in other instances, wherein the power was exercised without any objection from its
board or shareholders. Undoubtedly, petitioner had previously allowed Atty. Soluta to enter into
the first agreement without a board resolution expressly authorizing him; thus, it had clothed him
with apparent authority to modify the same via the second letter-agreement. It is not the quantity
of similar acts which establishes apparent authority, but the vesting of a corporate officer with the
power to bind the corporation.

Naturally, the third person has little or no information as to what occurs in corporate
meetings; and he must necessarily rely upon the external manifestations of corporate consent. The
integrity of commercial transactions can only be maintained by holding the corporation strictly to
the liability fixed upon it by its agents in accordance with law. What transpires in the corporate
board room is entirely an internal matter. Hence, petitioner may not impute negligence on the part
of the respondents in failing to find out the scope of Atty. Soluta’s authority. Indeed, the public
has the right to rely on the trustworthiness of bank officers and their acts.