MWSS v. CA, G.R. No. 126000, 07 Oct.
1998
Facts:
• Petitioner MWSS (formerly NAWASA) leased a portion of its land to respondent CHGCCI for
25 years, with an option for a 15-year renewal and a right of first refusal, subject to presidential
approval for any sale. In accordance with a Letter of Instruction (LOI) issued by President
Marcos, MWSS sought to cancel the lease. Oscar Ilustre, then General Manager of MWSS,
informed CHGCCI of its right to purchase the property, which was being offered for sale.
• President Marcos approved the sale, and a resolution was passed by the board of trustees of
petitioner in favor of respondent SILHOUETTE. A sales agreement was finalized between
MWSS and SILHOUETTE, followed by a supplemental agreement to accurately identify the
subject property. SILHOUETTE then sold a portion of the land to respondent AYALA; AYALA
was to pay P25 million directly to MWSS for SILHOUETTE's account and P2 million directly to
SILHOUETTE.
• MWSS filed an action against respondents on the RTC, seeking to annul the MWSS-
SILHOUETTE sales agreement and all subsequent conveyances, and to recover the property
along with damages. The trial court dismissed MWSS’s complaint and denied its motion for
reconsideration. MWSS then sought relief from the Court of Appeals.
• Respondents filed individual motions, all of which were denied. They subsequently filed
special civil actions for certiorari, but the Court of Appeals dismissed their petitions and
affirmed the lower court’s dismissal of MWSS’s complaint.
• MWSS appealed to the Supreme Court, filing a petition for review. The Court consolidated the
cases upon MWSS’s motion.
Issue:
WON Mr. Ilustre has the authority to enter into the "initial agreement"
Ruling:
Yes, the perceived infirmity in the "initial agreement" can be cured by ratification. Ratification can be
made by the corporate board either expressly or impliedly. Implied ratification may take various forms
— like silence or acquiescence; by acts showing approval or adoption of the contract; or by
acceptance and retention of benefits flowing therefrom. Both modes of ratification have been
made in this case.
There was express ratification made by the Board of petitioner MWSS when it passed the resolution
approving the sale of the subject property to respondent SILHOUETTE and authorizing Mr. Ilustre,
as General Manager, "to sign for and on behalf of the MWSS the contract papers and other
pertinent documents relative thereto." Implied ratification by "silence or acquiescence" is revealed
from the acts of petitioner MWSS in (a) sending three (3) demand letters for the payment of the
purchase price, (b) accepting P25 Million as downpayment, and (c) accepting a letter of credit
for the balance, as hereinbefore mentioned. It may well be pointed out also that nowhere in
petitioner MWSS' complaint is it alleged that it returned the amounts, or any part thereof, covering the
purchase price to any of the respondents-vendees at any point in time. This is only indicative of
petitioner MWSS' acceptance and retention of benefits flowing from the sales transactions which is
another form of implied ratification.
WHEREFORE, in view of the foregoing, the consolidated petitions are hereby DENIED.
