AF REALTY CORP VS DIESELMAN FREIGHT SERVICES INC.

CASE DIGEST

In 1988, Manuel Cruz, Jr., a board member of Dieselman Freight

Services, Co. (DFS) authorized Cristeta Polintan to sell a 2,094 sq. m.
parcel of land owned by DFS. Polintan in turn authorized Felicisima
Noble to sell the same lot. Noble then offered AF Realty &
Development, Co., represented by Zenaida Ranullo, the land at the rate
of P2,500.00 per sq. m. AF Realty accepted the offer and issued a
P300,000 check as downpayment.
However, it appeared that DFS did not authorize Cruz, Jr. to sell the said
land. Nevertheless, Manuel Cruz, Sr. (father) and president of DFS,
accepted the check but modified the offer. He increased the selling
price to P4,000.00 per sq. m. AF Realty, in its response, did not exactly
agree nor disagree with the counter-offer but only said it is willing to
pay the balance (but was not clear at what rate). Eventually, DFS sold
the property to someone else.
Now AF Realty is suing DFS for specific performance. It claims that DFS
ratified the contract when it accepted the check and made a counteroffer.
ISSUE: Whether or not the sale made through an agent was ratified.
HELD: No. There was no valid agency created. The Board of Directors
of DFS never authorized Cruz, Jr. to sell the land. Hence, the agreement
between Cruz, Jr. and Polintan, as well as the subsequent agreement
between Polintan and Noble, never bound the corporation. Therefore
the sale transacted by Noble purportedly on behalf of Polintan and
ultimately purportedly on behalf of DFS is void.
Being a void sale, it cannot be ratified even if Cruz, Sr. accepted the
check and made a counter-offer. (Cruz, Sr. returned the check anyway).
Under Article 1409 of the Civil Code, void transactions can never be
ratified because they were void from the very beginning.

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