Eduardo v. Litonjua, Jr.

Summary

The Litonjua brothers sought to purchase eight parcels of land from Eternit Corporation through negotiations with corporate officers and a real estate broker. Despite extensive negotiations, acceptance of counter-offers, and deposit of purchase money in escrow, the Supreme Court ruled no valid contract existed because the corporate agents lacked proper written authority from the Board of Directors as required by the Corporation Code. The Court emphasized that corporations can only act through duly authorized officers or agents, and persons dealing with assumed agents must verify their authority. The decision reinforces corporate governance principles requiring board authorization for significant transactions, particularly disposal of substantially all corporate assets. This case demonstrates the strict requirements for corporate agency and the protection of corporate property from unauthorized disposition.