SECOND DIVISION
WOODCHILD
HOLDINGS,
INC.,
Petitioner,
G.R.
No.
140667
August 12, 2004
-versus-
ROXAS ELECTRIC
AND
CONSTRUCTION
COMPANY, INC.,
Respondent.
chanroblesvirtualawlibrary
D E C I S I O N
CALLEJO,
SR., J.:chanroblesvirtuallawlibrary
This is a Petition for
Review on
Certiorari of the
decision[1]
of the Court of Appeals in CA-G.R. CV No. 56125 reversing the decision[2]
of the Regional Trial Court of Makati, Branch 57, which ruled in favor
of the petitioner. The Antecedents
The respondent Roxas
Electric and Construction Company, Inc. (RECCI), formerly the Roxas
Electric
and Construction Company, was the owner of two parcels of land,
identified
as Lot No. 491-A-3-B-1 covered by Transfer Certificate of Title (TCT)
No.
78085 and Lot No. 491-A-3-B-2 covered by TCT No. 78086. A portion
of Lot No. 491-A-3-B-1 which abutted Lot No. 491-A-3-B-2 was a dirt
road
accessing to the Sumulong Highway, Antipolo, Rizal.cralaw:red
At a special meeting
on May 17, 1991, the respondent’s Board of Directors approved a
resolution
authorizing the corporation, through its president, Roberto B. Roxas,
to
sell Lot No. 491-A-3-B-2 covered by TCT No. 78086, with an area of
7,213
square meters, at a price and under such terms and conditions which he
deemed most reasonable and advantageous to the corporation; and to
execute,
sign and deliver the pertinent sales documents and receive the proceeds
of the sale for and on behalf of the company.[3]
Petitioner Woodchild
Holdings, Inc. (WHI) wanted to buy Lot No. 491-A-3-B-2 covered by TCT
No.
78086 on which it planned to construct its warehouse building, and a
portion
of the adjoining lot, Lot No. 491-A-3-B-1, so that its 45-foot
container
van would be able to readily enter or leave the property. In a
Letter
to Roxas dated June 21, 1991, WHI President Jonathan Y. Dy offered to
buy
Lot No. 491-A-3-B-2 under stated terms and conditions for P1,000 per
square
meter or at the price of P7,213,000.[4]
One of the terms incorporated in Dy’s offer was the following provision:
5.
This Offer to Purchase is made on the representation and warranty of
the
OWNER/SELLER, that he holds a good and registrable title to the
property,
which shall be conveyed CLEAR and FREE of all liens and encumbrances,
and
that the area of 7,213 square meters of the subject property already
includes
the area on which the right of way traverses from the main lot (area)
towards
the exit to the Sumulong Highway as shown in the location plan
furnished
by the Owner/Seller to the buyer. Furthermore, in the event that
the right of way is insufficient for the buyer’s purposes (example:
entry
of a 45-foot container), the seller agrees to sell additional square
meter
from his current adjacent property to allow the buyer to full access
and
full use of the property.[5]chanrobles virtual law library
Roxas indicated his
acceptance of the offer on page 2 of the deed. Less than a month
later or on July 1, 1991, Roxas, as President of RECCI, as vendor, and
Dy, as President of WHI, as vendee, executed a contract to sell in
which
RECCI bound and obliged itself to sell to Dy Lot No. 491-A-3-B-2
covered
by TCT No. 78086 for P7,213,000.[6]
On September 5, 1991, a Deed of Absolute Sale[7]
in favor of WHI was issued, under which Lot No. 491-A-3-B-2 covered by
TCT No. 78086 was sold for P5,000,000, receipt of which was
acknowledged
by Roxas under the following terms and conditions:
The Vendor agree (sic),
as it hereby agrees and binds itself to give Vendee the beneficial use
of and a right of way from Sumulong Highway to the property herein
conveyed
consists of 25 square meters wide to be used as the latter’s egress
from
and ingress to and an additional 25 square meters in the corner of Lot
No. 491-A-3-B-1, as turning and/or maneuvering area for Vendee’s
vehicles.chanrobles virtual law library
The Vendor agrees that
in the event that the right of way is insufficient for the Vendee’s use
(ex entry of a 45-foot container) the Vendor agrees to sell additional
square meters from its current adjacent property to allow the Vendee
full
access and full use of the property.cralaw:red
The Vendor hereby undertakes
and agrees, at its account, to defend the title of the Vendee to the
parcel
of land and improvements herein conveyed, against all claims of any and
all persons or entities, and that the Vendor hereby warrants the right
of the Vendee to possess and own the said parcel of land and
improvements
thereon and will defend the Vendee against all present and future
claims
and/or action in relation thereto, judicial and/or
administrative.
In particular, the Vendor shall eject all existing squatters and
occupants
of the premises within two (2) weeks from the signing hereof. In
case of failure on the part of the Vendor to eject all occupants and
squatters
within the two-week period or breach of any of the stipulations,
covenants
and terms and conditions herein provided and that of contract to sell
dated
1 July 1991, the Vendee shall have the right to cancel the sale and
demand
reimbursement for all payments made to the Vendor with interest thereon
at 36% per annum.[8]
On September 10, 1991,
the Wimbeco Builder’s, Inc. (WBI) submitted its quotation for
P8,649,000
to WHI for the construction of the warehouse building on a portion of
the
property with an area of 5,088 square meters.[9]
WBI proposed to start the project on October 1, 1991 and to turn over
the
building to WHI on February 29, 1992.[10]
In a Letter dated September
16, 1991, Ponderosa Leather Goods Company, Inc. confirmed its lease
agreement
with WHI of a 5,000-square-meter portion of the warehouse yet to be
constructed
at the rental rate of P65 per square meter. Ponderosa emphasized
the need for the warehouse to be ready for occupancy before April 1,
1992.[11]
WHI accepted the offer. However, WBI failed to commence the
construction
of the warehouse in October 1, 1991 as planned because of the presence
of squatters in the property and suggested a renegotiation of the
contract
after the squatters shall have been evicted.[12]
Subsequently, the squatters were evicted from the property.cralaw:red
On March 31, 1992, WHI
and WBI executed a Letter-Contract for the construction of the
warehouse
building for P11,804,160.[13]
The contractor started construction in April 1992 even before the
building
officials of Antipolo City issued a building permit on May 28,
1992.
After the warehouse was finished, WHI issued on March 21, 1993 a
certificate
of occupancy by the building official. Earlier, or on March 18,
1993,
WHI, as lessor, and Ponderosa, as lessee, executed a contract of lease
over a portion of the property for a monthly rental of P300,000 for a
period
of three years from March 1, 1993 up to February 28, 1996.[14]chanrobles virtual law library
In the meantime, WHI
complained to Roberto Roxas that the vehicles of RECCI were parked on a
portion of the property over which WHI had been granted a right of
way.
Roxas promised to look into the matter. Dy and Roxas discussed
the
need of the WHI to buy a 500-square-meter portion of Lot No.
491-A-3-B-1
covered by TCT No. 78085 as provided for in the deed of absolute
sale.
However, Roxas died soon thereafter. On April 15, 1992, the WHI
wrote
the RECCI, reiterating its verbal requests to purchase a portion of the
said lot as provided for in the deed of absolute sale, and complained
about
the latter’s failure to eject the squatters within the three-month
period
agreed upon in the said deed.chanrobles virtual law library
The WHI demanded that
the RECCI sell a portion of Lot No. 491-A-3-B-1 covered by TCT No.
78085
for its beneficial use within 72 hours from notice thereof, otherwise
the
appropriate action would be filed against it. RECCI rejected the
demand of WHI. WHI reiterated its demand in a Letter dated May
29,
1992. There was no response from RECCI.chanrobles virtual law library
On June 17, 1992, the
WHI filed a complaint against the RECCI with the Regional Trial Court
of
Makati, for specific performance and damages, and alleged, inter alia,
the following in its complaint:
5. The
“current
adjacent property” referred to in the aforequoted paragraph of the Deed
of Absolute Sale pertains to the property covered by Transfer
Certificate
of Title No. N-78085 of the Registry of Deeds of Antipolo, Rizal,
registered
in the name of herein defendant Roxas Electric.
6. Defendant Roxas
Electric
in patent violation of the express and valid terms of the Deed of
Absolute
Sale unjustifiably refused to deliver to Woodchild Holdings the
stipulated
beneficial use and right of way consisting of 25 square meters and 55
square
meters to the prejudice of the plaintiff.
7. Similarly, in
as
much as the 25 square meters and 55 square meters alloted to Woodchild
Holdings for its beneficial use is inadequate as turning and/or
maneuvering
area of its 45-foot container van, Woodchild Holdings manifested its
intention
pursuant to para. 5 of the Deed of Sale to purchase additional square
meters
from Roxas Electric to allow it full access and use of the purchased
property,
however, Roxas Electric refused and failed to merit Woodchild Holdings’
request contrary to defendant Roxas Electric’s obligation under the
Deed
of Absolute Sale (Annex “A”).
8. Moreover,
defendant,
likewise, failed to eject all existing squatters and occupants of the
premises
within the stipulated time frame and as a consequence thereof,
plaintiff’s
planned construction has been considerably delayed for seven (7) months
due to the squatters who continue to trespass and obstruct the subject
property, thereby Woodchild Holdings incurred substantial losses
amounting
to P3,560,000.00 occasioned by the increased cost of construction
materials
and labor.chanrobles virtual law library
9. Owing
further
to Roxas Electric’s deliberate refusal to comply with its obligation
under
Annex “A,” Woodchild Holdings suffered unrealized income of P300,000.00
a month or P2,100,000.00 supposed income from rentals of the subject
property
for seven (7) months.
10. On April 15,
1992,
Woodchild Holdings made a final demand to Roxas Electric to comply with
its obligations and warranties under the Deed of Absolute Sale but
notwithstanding
such demand, defendant Roxas Electric refused and failed and continue
to
refuse and fail to heed plaintiff’s demand for compliance.chanrobles virtual law library
Copy of the demand
letter
dated April 15, 1992 is hereto attached as Annex “B” and made an
integral
part hereof.
11. Finally, on 29
May
1991, Woodchild Holdings made a letter request addressed to Roxas
Electric
to particularly annotate on Transfer Certificate of Title No. N-78085
the
agreement under Annex “A” with respect to the beneficial use and right
of way, however, Roxas Electric unjustifiably ignored and disregarded
the
same.chanrobles virtual law library
Copy of the letter
request
dated 29 May 1992 is hereto attached as Annex “C” and made an integral
part hereof.
12. By reason of
Roxas
Electric’s continuous refusal and failure to comply with Woodchild
Holdings’
valid demand for compliance under Annex “A,” the latter was constrained
to litigate, thereby incurring damages as and by way of attorney’s fees
in the amount of P100,000.00 plus costs of suit and expenses of
litigation.[15]
The WHI prayed that,
after
due proceedings, judgment be rendered in its favor, thus:
WHEREFORE,
it is respectfully prayed that judgment be rendered in favor of
Woodchild
Holdings and ordering Roxas Electric the following:
(a)
to deliver to Woodchild Holdings the beneficial use of the stipulated
25
square meters and 55 square meters;
(b)
to sell to Woodchild Holdings additional 25 and 100 square meters to
allow
it full access and use of the purchased property pursuant to para. 5 of
the Deed of Absolute Sale;
(c)
to cause annotation on Transfer Certificate of Title No. N-78085 the
beneficial
use and right of way granted to Woodchild Holdings under the Deed of
Absolute
Sale;chanrobles virtual law library
(d)
to pay Woodchild Holdings the amount of P5,660,000.00, representing
actual
damages and unrealized income;chanrobles virtual law library
(e)
to pay attorney’s fees in the amount of P100,000.00; andchanrobles virtual law library
(f)
to pay the costs of suit.
Other reliefs just
and
equitable are prayed for.[16]
In its answer to the
complaint,
the RECCI alleged that it never authorized its former president,
Roberto
Roxas, to grant the beneficial use of any portion of Lot No.
491-A-3-B-1,
nor agreed to sell any portion thereof or create a lien or burden
thereon.
It alleged that, under the Resolution approved on May 17, 1991, it
merely
authorized Roxas to sell Lot No. 491-A-3-B-2 covered by TCT No.
78086.
As such, the grant of a right of way and the agreement to sell a
portion
of Lot No. 491-A-3-B-1 covered by TCT No. 78085 in the said deed are
ultra
vires. The RECCI further alleged that the provision therein that
it would sell a portion of Lot No. 491-A-3-B-1 to the WHI lacked the
essential
elements of a binding contract.[17]chanrobles virtual law library
In its amended answer
to the complaint, the RECCI alleged that the delay in the construction
of its warehouse building was due to the failure of the WHI’s
contractor
to secure a building permit thereon.[18]
During the trial, Dy
testified that he told Roxas that the petitioner was buying a portion
of
Lot No. 491-A-3-B-1 consisting of an area of 500 square meters, for the
price of P1,000 per square meter.cralaw:red
On November 11, 1996,
the trial court rendered judgment in favor of the WHI, the decretal
portion
of which reads:
WHEREFORE,
judgment is hereby rendered directing defendant:
(1)
To allow plaintiff the beneficial use of the existing right of way plus
the stipulated 25 sq. m. and 55 sq. m.;
(2)
To sell to plaintiff an additional area of 500 sq. m. priced at P1,000
per sq. m. to allow said plaintiff full access and use of the purchased
property pursuant to Par. 5 of their Deed of Absolute Sale;chanrobles virtual law library
(3)
To cause annotation on TCT No. N-78085 the beneficial use and right of
way granted by their Deed of Absolute Sale;chanrobles virtual law library
(4)
To pay plaintiff the amount of P5,568,000 representing actual damages
and
plaintiff’s unrealized income;chanrobles virtual law library
(5)
To pay plaintiff P100,000 representing attorney’s fees; andchanrobles virtual law library
To pay the costs
of
suit.
SO ORDERED.[19]
The trial court ruled
that
the RECCI was estopped from disowning the apparent authority of Roxas
under
the May 17, 1991 Resolution of its Board of Directors. The court
reasoned that to do so would prejudice the WHI which transacted with
Roxas
in good faith, believing that he had the authority to bind the WHI
relating
to the easement of right of way, as well as the right to purchase a
portion
of Lot No. 491-A-3-B-1 covered by TCT No. 78085.chanrobles virtual law library
The RECCI appealed the
decision to the CA, which rendered a decision on November 9, 1999
reversing
that of the trial court, and ordering the dismissal of the
complaint.
The CA ruled that, under the resolution of the Board of Directors of
the
RECCI, Roxas was merely authorized to sell Lot No. 491-A-3-B-2 covered
by TCT No. 78086, but not to grant right of way in favor of the WHI
over
a portion of Lot No. 491-A-3-B-1, or to grant an option to the
petitioner
to buy a portion thereof. The appellate court also ruled that the
grant of a right of way and an option to the respondent were so
lopsided
in favor of the respondent because the latter was authorized to fix the
location as well as the price of the portion of its property to be sold
to the respondent. Hence, such provisions contained in the deed
of
absolute sale were not binding on the RECCI. The appellate court
ruled that the delay in the construction of WHI’s warehouse was due to
its fault.
The Present
Petition
The petitioner now comes
to this Court asserting that:
I.
THE COURT OF APPEALS
ERRED IN HOLDING THAT THE DEED OF ABSOLUTE SALE (EXH. “C”) IS ULTRA
VIRES.
II.
THE COURT OF APPEALS
GRAVELY ERRED IN REVERSING THE RULING OF THE COURT A QUO ALLOWING THE
PLAINTIFF-APPELLEE
THE BENEFICIAL USE OF THE EXISTING RIGHT OF WAY PLUS THE STIPULATED 25
SQUARE METERS AND 55 SQUARE METERS BECAUSE THESE ARE VALID STIPULATIONS
AGREED BY BOTH PARTIES TO THE DEED OF ABSOLUTE SALE (EXH. “C”).
III.
THERE IS NO FACTUAL
PROOF OR EVIDENCE FOR THE COURT OF APPEALS TO RULE THAT THE
STIPULATIONS
OF THE DEED OF ABSOLUTE SALE (EXH. “C”) WERE DISADVANTAGEOUS TO THE
APPELLEE,
NOR WAS APPELLEE DEPRIVED OF ITS PROPERTY WITHOUT DUE PROCESS.
IV.
IN FACT, IT WAS
WOODCHILD
WHO WAS DEPRIVED OF PROPERTY WITHOUT DUE PROCESS BY THE ASSAILED
DECISION.
V.
THE DELAY IN THE
CONSTRUCTION
WAS DUE TO THE FAILURE OF THE APPELLANT TO EVICT THE SQUATTERS ON THE
LAND
AS AGREED IN THE DEED OF ABSOLUTE SALE (EXH. “C”).
VI.
THE COURT OF APPEALS
GRAVELY ERRED IN REVERSING THE RULING OF THE COURT A QUO DIRECTING THE
DEFENDANT TO PAY THE PLAINTIFF THE AMOUNT OF P5,568,000.00 REPRESENTING
ACTUAL DAMAGES AND PLAINTIFF’S UNREALIZED INCOME AS WELL AS ATTORNEY’S
FEES.[20]
The threshold issues
for resolution are the following: (a) whether the respondent is bound
by
the provisions in the deed of absolute sale granting to the petitioner
beneficial use and a right of way over a portion of Lot No. 491-A-3-B-1
accessing to the Sumulong Highway and granting the option to the
petitioner
to buy a portion thereof, and, if so, whether such agreement is
enforceable
against the respondent; (b) whether the respondent failed to eject the
squatters on its property within two weeks from the execution of the
deed
of absolute sale; and, (c) whether the respondent is liable to the
petitioner
for damages.chanrobles virtual law library
On the first issue,
the petitioner avers that, under its Resolution of May 17, 1991, the
respondent
authorized Roxas, then its president, to grant a right of way over a
portion
of Lot No. 491-A-3-B-1 in favor of the petitioner, and an option for
the
respondent to buy a portion of the said property. The petitioner
contends that when the respondent sold Lot No. 491-A-3-B-2 covered by
TCT
No. 78086, it (respondent) was well aware of its obligation to provide
the petitioner with a means of ingress to or egress from the property
to
the Sumulong Highway, since the latter had no adequate outlet to the
public
highway. The petitioner asserts that it agreed to buy the
property
covered by TCT No. 78085 because of the grant by the respondent of a
right
of way and an option in its favor to buy a portion of the property
covered
by TCT No. 78085. It contends that the respondent never objected
to Roxas’ acceptance of its offer to purchase the property and the
terms
and conditions therein; the respondent even allowed Roxas to execute
the
deed of absolute sale in its behalf. The petitioner asserts that
the respondent even received the purchase price of the property without
any objection to the terms and conditions of the said deed of
sale.
The petitioner claims that it acted in good faith, and contends that
after
having been benefited by the said sale, the respondent is estopped from
assailing its terms and conditions. The petitioner notes that the
respondent’s Board of Directors never approved any resolution rejecting
the deed of absolute sale executed by Roxas for and in its
behalf.
As such, the respondent is obliged to sell a portion of Lot No.
491-A-3-B-1
covered by TCT No. 78085 with an area of 500 square meters at the price
of P1,000 per square meter, based on its evidence and Articles 649 and
651 of the New Civil Code.chanrobles virtual law library
For its part, the respondent
posits that Roxas was not so authorized under the May 17, 1991
Resolution
of its Board of Directors to impose a burden or to grant a right of way
in favor of the petitioner on Lot No. 491-A-3-B-1, much less convey a
portion
thereof to the petitioner. Hence, the respondent was not bound by
such provisions contained in the deed of absolute sale. Besides,
the respondent contends, the petitioner cannot enforce its right to buy
a portion of the said property since there was no agreement in the deed
of absolute sale on the price thereof as well as the specific portion
and
area to be purchased by the petitioner.cralaw:red
We agree with the respondent.cralaw:red
In San Juan Structural
and Steel Fabricators, Inc. v. Court of Appeals,[21]
we held that:
A corporation is a juridical
person separate and distinct from its stockholders or members.
Accordingly,
the property of the corporation is not the property of its stockholders
or members and may not be sold by the stockholders or members without
express
authorization from the corporation’s board of directors. Section
23 of BP 68, otherwise known as the Corporation Code of the
Philippines,
provides:
“Sec.
23.
The Board of Directors or Trustees. – Unless otherwise provided in this
Code, the corporate powers of all corporations formed under this Code
shall
be exercised, all business conducted and all property of such
corporations
controlled and held by the board of directors or trustees to be elected
from among the holders of stocks, or where there is no stock, from
among
the members of the corporation, who shall hold office for one (1) year
and until their successors are elected and qualified.”chanrobles virtual law library
Indubitably, a
corporation
may act only through its board of directors or, when authorized either
by its by-laws or by its board resolution, through its officers or
agents
in the normal course of business. The general principles of
agency
govern the relation between the corporation and its officers or agents,
subject to the articles of incorporation, by-laws, or relevant
provisions
of law.[22]
Generally, the acts
of the corporate officers within the scope of their authority are
binding
on the corporation. However, under Article 1910 of the New Civil
Code, acts done by such officers beyond the scope of their authority
cannot
bind the corporation unless it has ratified such acts expressly or
tacitly,
or is estopped from denying them:
Art.
1910.
The principal must comply with all the obligations which the agent may
have contracted within the scope of his authority.
As for any obligation
wherein
the agent has exceeded his power, the principal is not bound except
when
he ratifies it expressly or tacitly.
Thus, contracts entered
into by corporate officers beyond the scope of authority are
unenforceable
against the corporation unless ratified by the corporation.[23]
In BA Finance Corporation
v. Court of Appeals,[24]
we also ruled that persons dealing with an assumed agency, whether the
assumed agency be a general or special one, are bound at their peril,
if
they would hold the principal liable, to ascertain not only the fact of
agency but also the nature and extent of authority, and in case either
is controverted, the burden of proof is upon them to establish it.chanrobles virtual law library
In this case, the respondent
denied authorizing its then president Roberto B. Roxas to sell a
portion
of Lot No. 491-A-3-B-1 covered by TCT No. 78085, and to create a lien
or
burden thereon. The petitioner was thus burdened to prove that
the
respondent so authorized Roxas to sell the same and to create a lien
thereon.cralaw:red
Central to the issue
at hand is the May 17, 1991 Resolution of the Board of Directors of the
respondent, which is worded as follows:
RESOLVED,
as
it is hereby resolved, that the corporation, thru the President, sell
to
any interested buyer, its 7,213-sq.-meter property at the Sumulong
Highway,
Antipolo, Rizal, covered by Transfer Certificate of Title No. N-78086,
at a price and on terms and conditions which he deems most reasonable
and
advantageous to the corporation;
FURTHER RESOLVED,
that
Mr. ROBERTO B. ROXAS, President of the corporation, be, as he is hereby
authorized to execute, sign and deliver the pertinent sales documents
and
receive the proceeds of sale for and on behalf of the company.[25]
Evidently, Roxas was
not
specifically authorized under the said resolution to grant a right of
way
in favor of the petitioner on a portion of Lot No. 491-A-3-B-1 or to
agree
to sell to the petitioner a portion thereof. The authority of
Roxas,
under the resolution, to sell Lot No. 491-A-3-B-2 covered by TCT No.
78086
did not include the authority to sell a portion of the adjacent lot,
Lot
No. 491-A-3-B-1, or to create or convey real rights thereon.
Neither
may such authority be implied from the authority granted to Roxas to
sell
Lot No. 491-A-3-B-2 to the petitioner “on such terms and conditions
which
he deems most reasonable and advantageous.” Under paragraph 12,
Article
1878 of the New Civil Code, a special power of attorney is required to
convey real rights over immovable property.[26]
Article 1358 of the New Civil Code requires that contracts which have
for
their object the creation of real rights over immovable property must
appear
in a public document.[27]
The petitioner cannot feign ignorance of the need for Roxas to have
been
specifically authorized in writing by the Board of Directors to be able
to validly grant a right of way and agree to sell a portion of Lot No.
491-A-3-B-1. The rule is that if the act of the agent is one
which
requires authority in writing, those dealing with him are charged with
notice of that fact.[28]chanrobles virtual law library
Powers of attorney are
generally construed strictly and courts will not infer or presume broad
powers from deeds which do not sufficiently include property or subject
under which the agent is to deal.[29]
The general rule is that the power of attorney must be pursued within
legal
strictures, and the agent can neither go beyond it; nor beside
it.
The act done must be legally identical with that authorized to be done.[30]
In sum, then, the consent of the respondent to the assailed provisions
in the deed of absolute sale was not obtained; hence, the assailed
provisions
are not binding on it.cralaw:red
We reject the petitioner’s
submission that, in allowing Roxas to execute the contract to sell and
the deed of absolute sale and failing to reject or disapprove the same,
the respondent thereby gave him apparent authority to grant a right of
way over Lot No. 491-A-3-B-1 and to grant an option for the respondent
to sell a portion thereof to the petitioner. Absent estoppel or
ratification,
apparent authority cannot remedy the lack of the written power required
under the statement of frauds.[31]
In addition, the petitioner’s fallacy is its wrong assumption of the
unproved
premise that the respondent had full knowledge of all the terms and
conditions
contained in the deed of absolute sale when Roxas executed it.cralaw:red
It bears stressing that
apparent authority is based on estoppel and can arise from two
instances:
first, the principal may knowingly permit the agent to so hold himself
out as having such authority, and in this way, the principal becomes
estopped
to claim that the agent does not have such authority; second, the
principal
may so clothe the agent with the indicia of authority as to lead a
reasonably
prudent person to believe that he actually has such authority.[32]
There can be no apparent authority of an agent without acts or conduct
on the part of the principal and such acts or conduct of the principal
must have been known and relied upon in good faith and as a result of
the
exercise of reasonable prudence by a third person as claimant and such
must have produced a change of position to its detriment. The
apparent
power of an agent is to be determined by the acts of the principal and
not by the acts of the agent.[33]chanrobles virtual law library
For the principle of
apparent authority to apply, the petitioner was burdened to prove the
following:
(a) the acts of the respondent justifying belief in the agency by the
petitioner;
(b) knowledge thereof by the respondent which is sought to be held;
and,
(c) reliance thereon by the petitioner consistent with ordinary care
and
prudence.[34]
In this case, there is no evidence on record of specific acts made by
the
respondent[35]
showing or indicating that it had full knowledge of any representations
made by Roxas to the petitioner that the respondent had authorized him
to grant to the respondent an option to buy a portion of Lot No.
491-A-3-B-1
covered by TCT No. 78085, or to create a burden or lien thereon, or
that
the respondent allowed him to do so.cralaw:red
The petitioner’s contention
that by receiving and retaining the P5,000,000 purchase price of Lot
No.
491-A-3-B-2, the respondent effectively and impliedly ratified the
grant
of a right of way on the adjacent lot, Lot No. 491-A-3-B-1, and to
grant
to the petitioner an option to sell a portion thereof, is barren of
merit.
It bears stressing that the respondent sold Lot No. 491-A-3-B-2 to the
petitioner, and the latter had taken possession of the property.
As such, the respondent had the right to retain the P5,000,000, the
purchase
price of the property it had sold to the petitioner. For an act
of
the principal to be considered as an implied ratification of an
unauthorized
act of an agent, such act must be inconsistent with any other
hypothesis
than that he approved and intended to adopt what had been done in his
name.[36]
Ratification is based on waiver – the intentional relinquishment
of a known right. Ratification cannot be inferred from acts that
a principal has a right to do independently of the unauthorized act of
the agent. Moreover, if a writing is required to grant an
authority
to do a particular act, ratification of that act must also be in
writing.[37]
Since the respondent had not ratified the unauthorized acts of Roxas,
the
same are unenforceable.[38]
Hence, by the respondent’s retention of the amount, it cannot thereby
be
implied that it had ratified the unauthorized acts of its agent,
Roberto
Roxas.chanrobles virtual law library
On the last issue, the
petitioner contends that the CA erred in dismissing its complaint for
damages
against the respondent on its finding that the delay in the
construction
of its warehouse was due to its (petitioner’s) fault. The
petitioner
asserts that the CA should have affirmed the ruling of the trial court
that the respondent failed to cause the eviction of the squatters from
the property on or before September 29, 1991; hence, was liable for
P5,660,000.
The respondent, for its part, asserts that the delay in the
construction
of the petitioner’s warehouse was due to its late filing of an
application
for a building permit, only on May 28, 1992.cralaw:red
The petitioner’s contention
is meritorious. The respondent does not deny that it failed to
cause
the eviction of the squatters on or before September 29, 1991.
Indeed,
the respondent does not deny the fact that when the petitioner wrote
the
respondent demanding that the latter cause the eviction of the
squatters
on April 15, 1992, the latter were still in the premises. It was
only after receiving the said letter in April 1992 that the respondent
caused the eviction of the squatters, which thus cleared the way for
the
petitioner’s contractor to commence the construction of its warehouse
and
secure the appropriate building permit therefor.cralaw:red
The petitioner could
not be expected to file its application for a building permit before
April
1992 because the squatters were still occupying the property.
Because
of the respondent’s failure to cause their eviction as agreed upon, the
petitioner’s contractor failed to commence the construction of the
warehouse
in October 1991 for the agreed price of P8,649,000. In the
meantime,
costs of construction materials spiraled. Under the construction
contract entered into between the petitioner and the contractor, the
petitioner
was obliged to pay P11,804,160,[39]
including the additional work costing P1,441,500, or a net increase of
P1,712,980.[40]
The respondent is liable for the difference between the original cost
of
construction and the increase thereon, conformably to Article 1170 of
the
New Civil Code, which reads:
Art.
1170.
Those who in the performance of their obligations are guilty of fraud,
negligence, or delay and those who in any manner contravene the tenor
thereof,
are liable for damages.
The petitioner,
likewise,
lost the amount of P3,900,000 by way of unearned income from the lease
of the property to the Ponderosa Leather Goods Company. The
respondent
is, thus, liable to the petitioner for the said amount, under Articles
2200 and 2201 of the New Civil Code:
Art.
2200.
Indemnification for damages shall comprehend not only the value of the
loss suffered, but also that of the profits which the obligee failed to
obtain.chanrobles virtual law library
Art. 2201.
In
contracts and quasi-contracts, the damages for which the obligor who
acted
in good faith is liable shall be those that are the natural and
probable
consequences of the breach of the obligation, and which the parties
have
foreseen or could have reasonably foreseen at the time the obligation
was
constituted.chanrobles virtual law library
In case of fraud,
bad
faith, malice or wanton attitude, the obligor shall be responsible for
all damages which may be reasonably attributed to the non-performance
of
the obligation.
In sum, we affirm the
trial
court’s award of damages and attorney’s fees to the petitioner.
IN LIGHT OF ALL THE
FOREGOING, judgment is hereby rendered AFFIRMING the assailed Decision
of the Court of Appeals WITH MODIFICATION. The respondent is
ordered
to pay to the petitioner the amount of P5,612,980 by way of actual
damages
and P100,000 by way of attorney’s fees. No costs.cralaw:red
SO ORDERED.cralaw:red
Puno, J., (Chairman),
Austria-Martinez, Tinga and Chico-Nazario, JJ., concur.
____________________________
Endnotes:
[1]
Penned by Associate Justice Salome A. Montoya, with Associate Justices
Conrado M. Vasquez, Jr. and Teodoro P. Regino, concurring.
[2]
Penned by Judge Francisco X. Velez.chanrobles virtual law library
[3]
Exhibit “L,” Records, p. 213.
[4]
Exhibit “M,” Id. at 214.
[5]
Ibid.chanrobles virtual law library
[6]
Exhibit “N,” Id. at 216.
[7]
Exhibit “C,” Id. at 192-195.
[8]
Id. at 193-194.chanrobles virtual law library
[9]
Exhibit “D,” Id. at 196.
[10]
Exhibit “D-1,” Id. at 197.
[11]
Exhibit “G,” Id. at 201.
[12]
Exhibit “E,” Id. at 198.
[13]
Exhibit “F,” Id. at 199.
[14]
Exhibit “H,” Id. at 202-206.
[15]
Records, pp. 2-4.
[16]
Id. at 4-5.chanrobles virtual law library
[17]
Id. at 24-25.
[18]
Id. at 247.
[19]
Id. at 482.
[20]
Rollo, pp. 22-23.
[21]
296 SCRA 631 (1998).
[22]
Id. at 644-645.chanrobles virtual law library
[23]
Art. 1403. The following contracts are unenforceable, unless they
are ratified:chanroblesvirtuallawlibrary
(1) Those 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.
[24]
211 SCRA 112 (1992).
[25]
Records, p. 213.
[26]
Art. 1878. Special powers of attorney are necessary in the
following
cases:chanroblesvirtuallawlibrary
x
x x
(5) To enter into any contract by which the ownership of an
immovable
is transmitted or acquired either gratuitously or for a valuable
consideration;
x
x xchanrobles virtual law library
(12) To create or convey real rights over immovable property;
x
x xchanrobles virtual law library
(14) To ratify or recognize obligations contracted before the agency;
(15) Any other act of strict dominion.chanrobles virtual law library
[27]
Art. 1358. The following must appear in a public document:chanroblesvirtuallawlibrary
(1) Acts and contracts which have for their object the creation,
transmission,
modification or extinguishment of real rights over immovable property;
sales of real property or of an interest therein are governed by
articles
1403, No. 2, and 1405;chanrobles virtual law library
x
x xchanrobles virtual law library
(3) The power to administer property, or any other power which
has
for its object an act appearing or which should appear in a public
document,
or should prejudice a third person;
(4) The cession of actions or rights proceeding from an act
appearing
in a public document.
[28]
State v. Sellers and Resolute Insurance Company, 258 N.W.2d 292 (1977).
[29]
Prior v. Hager, 440 S.W.2d 167 (1969).chanrobles virtual law library
[30]
Lang v. Bair, 36 Mo. 85, id.chanrobles virtual law library
[31]
Union Camp Corporation v. Dyal, Jr., 460 F.2d 678 (1972).
[32]
Banker’s Protective Life Insurance Co. v. Addison, 273 S.W.2d 694
(1951).
[33]
Id. at 696.chanrobles virtual law library
[34]
Residon v. Miller Distributors Co., Inc., 139 N.W.2d 12 (1966).
[35]
See Wells Fargo Business v. Kozoff, 695 F.2d 940 (1983).chanrobles virtual law library
[36]
The Board of Supervisors v. Schack, 18 L.E.2d 556 (1897); American Food
Corporation v. Central Carolina Bank & Trust Company, 291 S.W.2d
892.
[37]
Reuschlin and Gregory, The Law of Agency and Partnership, 2nd ed., p.
75.chanrobles virtual law library
[38]
Article 1403, New Civil Code (infra).chanrobles virtual law library
[39]
Exhibit “F,” Records, p. 199.chanrobles virtual law library
[40]
TSN, 30 September 1993, p. 13. |