Bisaya Land Transportation v.

Sanchez,
G.R. No. 74623 August 31, 1987,153
SCRA 532

 FACTS:

Bisaya Land Transportation Company, Inc. (BISTRANCO) has been

engaged in the shipping business and one of its ports of call is found
in Butuan City. When BISTRANCO was under receivership Mariano
Sanchez (Sanchez) was appointed by BISTRANCO as its acting
shipping agent for its vessels inButuan City by its receiver Atty. Adolfo
V. (Amor) pending the execution of the formal contract of the
agency
ThereafteraformalContractofAgencywasexecutedbetween
BISTRANCO,representedbyReceiverAtty.AmorandSanchez.
 Sanchezthen executed a Supplemental Shipping Agency
Contract after finding that a paragraph of the Contract of
Agency was quite prejudicial to him which was then signed
by both parties. However both the Contract of Agency and
the Supplemental Shipping
AgencyContract(Contracts)wereneversubmittedbyAtty.
Amortothe receivership court for its approval. By virtue
of theContracts, Sanchez performed his duties as shipping
agent ofBISTRANCO. Under Sanchezs endeavors, he had
managed to increase the volume of the shipping business
of BISTRANCO atButuan City and helped itflourished.
 Then
oneday,BISTRANCOwroteSanchezthattheywouldco
mmenceoperatingits branch office at Butuan City and
thereafter actually operated a branch office which in
effect repudiated theContracts. Under the rules of court
it is necessary that the acts of the receiver have the
approval or authorization of the court which appointed
him as a receiver. A court-appointed receiver cannot
validly enter into a contract without the approval of the
court.
 Issue:

Whether the status of the Contracts which Receiver Atty.

Amor entered into with Sanchez, without the approval of
the court which appointed him receiver is either void
orunenforceable.

 Held:

Unenforceable butratified. Contract is valid.

 Ratio:

The determination of whether the questioned contracts are void or merely

unenforceableisimportant,becauseofthesettleddistinctionthatavoidand
inexistentcontractcannotberatifiedandbecomeenforceable,whereasan
unenforceable contract maystill be ratifiedand, thereafter, enforced. Citing
Article 1409 (1), there is nothing in the cause, object, or purpose of the
Contracts which can be said as contrary to law, morals, good customs, public
order or public policy so as to render themvoid.On the other hand, Article
1403 (1) ofthe Civil Code provides that contracts "entered into in the name of
another person by one who has been given no authority or legal
representation, or who has acted beyond his powers" areunenforceable,
unless theyare ratified.