Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No.

140667 August 12, 2004

WOODCHILD HOLDINGS, INC., petitioner, vs. ROXAS ELECTRIC AND CONSTRUCTION COMPANY, INC., respondent.

DECISION

CALLEJO, SR., J.: This is a petition for review on certiorari of the Decision1 of the Court of Appeals in CA-G.R. CV No. 56125 reversing the Decision2 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-3B-2 was a dirt road accessing to the Sumulong Highway, Antipolo, Rizal. 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 45foot 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 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 P7,213,000.6On September 5, 1991, a Deed of Absolute Sale7 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. 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. 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. 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 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. 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. 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. 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. 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. 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; d) to pay Woodchild Holdings the amount of P5,660,000.00, representing actual damages and unrealized income; e) to pay attorney's fees in the amount of P100,000.00; and 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-A3-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. 491A-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 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. 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; (3) To cause annotation on TCT No. N-78085 the beneficial use and right of way granted by their Deed of Absolute Sale; (4) To pay plaintiff the amount of P5,568,000 representing actual damages and plaintiff's unrealized income; (5) To pay plaintiff P100,000 representing attorney's fees; and 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. 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. 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-B2 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. 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. We agree with the respondent. 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." 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. 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. 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 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. 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. 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 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 respondent35 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. 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. 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. 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. 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 P11,804,160,39including 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. 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. 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. SO ORDERED. Puno, J., Chairman, Austria-Martinez, Tinga, and Chico-Nazario, JJ., concur.

Footnotes
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. Exhibit "L," Records, p. 213. Exhibit "M," Id. at 214. Ibid.

Exhibit "N," Id. at 216. Exhibit "C," Id. at 192-195. Id. at 193-194. Exhibit "D," Id. at 196. Exhibit "D-1," Id. at 197. Exhibit "G," Id. at 201. Exhibit "E," Id. at 198. Exhibit "F," Id. at 199. Exhibit "H," Id. at 202-206. Records, pp. 2-4. Id. at 4-5. Id. at 24-25. Id. at 247. Id. at 482. Rollo, pp. 22-23. 296 SCRA 631 (1998). Id. at 644-645. Art. 1403. The following contracts are unenforceable, unless they are ratified:

10

11

12

13

14

15

16

17

18

19

20

21

22

23

(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). Records, p. 213. Art. 1878. Special powers of attorney are necessary in the following cases:

25

26

(5) To enter into any contract by which the ownership of an immovable is transmitted or acquired either gratuitously or for a valuable consideration; (12) To create or convey real rights over immovable property; (14) To ratify or recognize obligations contracted before the agency; (15) Any other act of strict dominion.
27

Art. 1358. The following must appear in a public document:

(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; (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). Lang v. Bair, 36 Mo. 85, id. Union Camp Corporation v. Dyal, Jr., 460 F.2d 678 (1972). Banker's Protective Life Insurance Co. v. Addison, 273 S.W.2d 694 (1951). Id. at 696. Residon v. Miller Distributors Co., Inc., 139 N.W.2d 12 (1966). See Wells Fargo Business v. Kozoff, 695 F.2d 940 (1983).

30

31

32

33

34

35

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. Article 1403, New Civil Code (infra). Exhibit "F," Records, p. 199. TSN, 30 September 1993, p. 13.

38

39

40

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 160215 November 10, 2004

HYDRO RESOURCES CONTRACTORS CORPORATION, petitioner, vs. NATIONAL IRRIGATION ADMINISTRATION, respondent.

DECISION

YNARES-SANTIAGO, J.: Challenged in this petition for review on certiorari under Rule 45 is the Decision of the Court of Appeals1 dated October 29, 2002 and its Resolution dated September 24, 20032 in CA-G.R. SP No. 44527,3 reversing the judgment of the Construction Industry Arbitration Commission (CIAC) dated June 10, 19974 in CIAC Case No. 14-98 in favor of petitioner Hydro Resources Contractors Corporation. The facts are undisputed and are matters of record. In a competitive bidding conducted by the National Irrigation Administration (NIA) sometime in August 1978, Hydro Resources Contractors Corporation (Hydro) was awarded Contract MPI-C-25 involving the main civil work of the Magat River Multi-Purpose Project. The contract price for the work was pegged at P1,489,146,473.72 with the peso component thereof amounting to P1,041,884,766.99 and the US$ component valued at $60,657,992.37 at the exchange rate of P7.3735 to the dollar or P447,361,706.73. On November 6, 1978, the parties signed Amendment No. 16 of the contract whereby NIA agreed to increase the foreign currency allocation for equipment financing from US$28,000,000.00 for the first and second years of the contract to US$38,000,000.00, to be made available in full during the first year of the contract to enable the contractor to purchase the needed equipment and spare parts, as approved by NIA, for the construction of the project. On April 9, 1980, the parties entered into a Memorandum of Agreement7 (MOA) whereby they agreed that Hydro may directly avail of the foreign currency component of the contract for the sole purpose of purchasing necessary spare parts and equipment for the project. This was made in order for the contractor to avoid further delays in the procurement of the said spare parts and equipment. A few months after the MOA was signed, NIA and Hydro entered into a Supplemental Memorandum of Agreement (Supplemental MOA) to include among the items to be financed out of the foreign currency portion of the Contract "construction materials, supplies and services as well as equipment and materials for incorporation in the permanent works of the Project."8 Work on the project progressed steadily until Hydro substantially completed the project in 1982 and the final acceptance was made by NIA on February 14, 1984.9 During the period of the execution of the contract, the foreign exchange value of the peso against the US dollar declined

and steadily deteriorated. Whenever Hydro's availment of the foreign currency component exceeded the amount of the foreign currency payable to Hydro for a particular period, NIA charged interest in dollars based on the prevailing exchange rate instead of the fixed exchange rate of P7.3735 to the dollar. Yet when Hydro received payments from NIA in Philippine Pesos, NIA made deductions from Hydro's foreign currency component at the fixed exchange rate of P7.3735 to US$1.00 instead of the prevailing exchange rate. Upon completion of the project, a final reconciliation of the total entitlement of Hydro to the foreign currency component of the contract was made. The result of this final reconciliation showed that the total entitlement of Hydro to the foreign currency component of the contract exceeded the amount of US dollars required by Hydro to repay the advances made by NIA for its account in the importation of new equipment, spare parts and tools. Hydro then requested a full and final payment due to the underpayment of the foreign exchange portion caused by price escalations and extra work orders. In 1983, NIA and Hydro prepared a joint computation denominated as the "MPI-C-2 Dollar Rate Differential on Foreign Component of Escalation."10 Based on said joint computation, Hydro was still entitled to a foreign exchange differential of US$1,353,771.79 equivalent to P10,898,391.17. Hydro then presented its claim for said foreign exchange differential to NIA on August 12, 198311 but the latter refused to honor the same. Hydro made several12 demands to recover its claim until the same was turned down with finality by then NIA Administrator Federico N. Alday, Jr. on January 6, 1987.13 On December 7, 1994, Hydro filed a request for arbitration with the Construction Industry Arbitration Commission (CIAC).14 In the said request, Hydro nominated six (6) arbitrators. The case was docketed as CIAC Case No. 18-94. NIA filed its Answer with Compulsory Counterclaim15 raising laches, estoppel and lack of jurisdiction by CIAC as its special defenses. NIA also submitted its six (6) nominees to the panel of arbitrators. After appointment of the arbitrators, both parties agreed on the Terms of Reference16 as well as the issues submitted for arbitration. On March 13, 1995, NIA filed a Motion to Dismiss17 questioning CIAC's jurisdiction to take cognizance of the case. The latter, however, deferred resolution of the motion and set the case for hearing for the reception of evidence.18NIA moved19 for reconsideration but the same was denied by CIAC in an Order dated April 25, 1995.20 Dissatisfied, NIA filed a petition for certiorari and prohibition with the Court of Appeals where the same was docketed as CA-G.R. SP No. 37180,21 which dismissed the petition in a Resolution dated June 28, 1996.22 NIA challenged the resolution of the Court of Appeals before this Court in a special civil action for certiorari, docketed as G.R. No. 129169.23 Meanwhile, on June 10, 1997, the CIAC promulgated a decision in favor of Hydro.24 NIA filed a Petition for Review on Appeal before the Court of Appeals, which was docketed as CA-G.R. SP No. 44527.25

During the pendency of CA-G.R. SP No. 44527 before the Court of Appeals, this Court dismissed special civil action for certiorari docketed as G.R. No. 129169 on the ground that CIAC had jurisdiction over the dispute and directed the Court of Appeals to proceed with reasonable dispatch in the disposition of CA-G.R. SP No. 44527. NIA did not move for reconsideration of the said decision, hence, the same became final and executory on December 15, 1999.26 Thereafter, the Court of Appeals rendered the challenged decision in CA-G.R. SP No. 44527, reversing the judgment of the CIAC on the grounds that: (1) Hydro's claim has prescribed; (2) assuming that Hydro was entitled to its claim, the rate of exchange should be based on a fixed rate; (3) Hydro's claim is contrary to R.A. No. 529;27 (4) NIA's Certification of NonForum-Shopping was proper even if the same was signed only by counsel and not by NIA's authorized representative; and (5) NIA did not engage in forum-shopping. Hydro's Motion for Reconsideration was denied in Resolution of September 24, 2003. Hence, this petition. Addressing first the issue of prescription, the Court of Appeals, in ruling that Hydro's claim had prescribed, reasoned thus: Nevertheless, We find good reason to apply the principle of prescription against HRCC. It is well to note that Section 25 of the General Conditions of the subject contract provides (CIAC Decision, p. 15, Rollo, p. 57): Any controversy or dispute arising out of or relating to this Contract which cannot be resolved by mutual agreement shall be decided by the Administrator within thirty (30) calendar days from receipt of a written notice from Contractor and who shall furnish Contractor a written copy of this decision. Such decision shall be final and conclusive unless within thirty (30) calendar days from the date of receipt thereof, Contractor shall deliver to NIA a written notice addressed to the Administrator that he desires that the dispute be submitted to arbitration. Pending decision from arbitration, Contractor shall proceed diligently with the performance of the Contract and in accordance with the decision of the Administrator. (Emphasis and Underscoring Ours) Both parties admit the existence of this provision in the Contract (Petition, p. 4; Comment, p. 16; Rollo, pp. 12 and 131). Apropos, the following matters are clear: (1) any controversy or dispute between the parties arising from the subject contract shall be governed by the provisions of the contract; (2) upon the failure to arrive at a mutual agreement, the contractor shall submit the dispute to the Administrator of NIA for determination; and (3) the decision of the Administrator shall become final and conclusive, unless within thirty (30) calendar days from the date of receipt thereof, the Contractor shall deliver to NIA a written notice addressed to the Administrator that he desires that the dispute be submitted for arbitration. Prescinding from the foregoing matters, We find that the CIAC erred in granting HRCC's claim considering that the latter's right to make such demand had clearly prescribed. To begin with, on January 7, 1986, Cesar L. Tech (NIA's Administrator at the time) informed HRCC in writing that after a review of the additional points raised by the latter, NIA confirms its

original recommendation not to allow the said claim (Annex "F"; Rollo, p. 81; CIAC Decision, p. 11; Rollo, p. 53). This should have propelled private respondent to notify and signify to NIA of intention to submit the dispute to arbitration pursuant to the provision of the contract. Yet, it did not. Instead it persisted to send several letters to NIA reiterating the reason for its rejected claim (CIAC Decision, p. 11; Rollo, p. 53).28 We disagree for the following reasons: First, the appellate court clearly overlooked the fact that NIA, through then Administrator Fedrico N. Alday, Jr., denied "with finality" Hydro's claim only on January 6, 1987 in a letter bearing the same date29 which reads: This refers to your letter dated November 7, 1986 requesting reconsideration on your claim for payment of the Dollar Rate Differential of Price Escalation in Contract No. MPI-C-2. We have reviewed the relevant facts and issues as presented and the additional points raised in the abovementioned letter in the context of the Contract Documents and we find no strong and valid reason to reverse the earlier decision of NIA's previous management denying your claim. Therefore, we regret that we have to reiterate the earlier official stand of NIA under its letter dated January 7, 1986, that confirms the original recommendation which had earlier been presented in our 4th Indorsement dated February 5, 1985 to your office. In view hereof, we regret to say with finality that the claim cannot be given favorable consideration. (Emphasis and italics supplied) Hydro received the above-mentioned letter on January 27, 1987.30 Pursuant to Section 25 of the Contract's General Conditions (GC-25), Hydro had thirty (30) days from receipt of said denial, or until February 26, 1987, within which to notify NIA of its desire to submit the dispute to arbitration. On February 18, 1987, Hydro sent a letter31 to NIA, addressed to then NIA Administrator Federico N. Alday, Jr., manifesting its desire to submit the dispute to arbitration. The letter was received by NIA on February 19, 1987, which was within the thirty-day prescriptive period. Moreover, a circumspect scrutiny of the wording of GC-25 with regard to the thirty-day prescriptive period shows that said proviso is intended to apply to disputes which arose during the actual construction of the project and not for controversies which occured after the project is completed. The rationale for such a stipulation was aptly explained thus by the CIAC in its Decision in CIAC Case No. 18-94: In construction contracts, there is invariably a provision for interim settlement of disputes. The right to settle disputes is given to the owner or his representative, either an architect or engineer, designated as "owner's representative," only for the purpose of avoiding delay in the completion of the project. In this particular contract, that right was reserved to the NIA Administrator. The types of disputes contemplated were those which may have otherwise affected the progress of the work.

It is very clear that this is the purpose of the limiting periods in this clause that the dispute shall be resolved by the Administrator within 30 days from receipt of a written notice from the Contractor and that the Contractor may submit to arbitration this dispute if it does not agree with the decision of the Administrator, and "Pending decision from arbitration, Contractor shall proceed diligently with the performance of the Contract and in accordance with the decision of the Administrator." In this case, the dispute had arisen after completion of the Project. The reason for the 30-day limitation no longer applies, and we find no legal basis for applying it. Moreover, in Exhibit "B," NIA Administrator Cesar L. Tech had, instead of rendering an adverse decision, by signing the document with HRCC's Onofre B. Banson, implicitly approved the payment of the foreign exchange differential, but this payment could not be made because of the opinion of Auditor Saldua and later of the Commission on Audit.32 Second, as early as April 1983, Hydro and NIA, through its Administrator Cesar L. Tech, prepared the Joint Computation which shows that Hydro is entitled to the foreign currency differential.33 As correctly found by the CIAC, this computation constitutes a written acknowledgment of the debt by the debtor under Article 1155 of the Civil Code, which states: ART. 1155. The prescription of actions is interrupted when they are filed before the court, when there is a written extrajudicial demand by the creditors, and when there is any written acknowledgment of the debt by the debtor. (Emphasis and italics supplied) Instead of upholding the CIAC's findings on this point, the Court of Appeals ruled that Cesar L. Tech's act of signing the Joint Computation was an ultra vires act. This again is patent error. It must be noted that the Administrator is the highest officer of the NIA. Furthermore, Hydro has been dealing with NIA through its Administrator in all of its transactions with respect to the contract and subsequently the foreign currency differential claim. The NIA Administrator is empowered by the Contract to grant or deny foreign currency differential claims. It would be preposterous for the NIA Administrator to have the power of granting claims without the authority to verify the computation of such claims. Finally, the records of the case will show that NIA itself never disputed its Administrator's capacity to sign the Joint Computation because it knew that the Administrator, in fact, had such capacity. Even assuming for the sake of argument that the Administrator had no authority to bind NIA, the latter is already estopped after repeatedly representing to Hydro that the Administrator had such authority. A corporation may be held in estoppel from denying as against third persons the authority of its officers or agents who have been clothed by it with ostensible or apparent authority.34 Indeed . . . The rule is of course settled that "[a]lthough an officer or agent acts without, or in excess of, his actual authority if he acts within the scope of an apparent authority with which the corporation has clothed him by holding him out or permitting him to appear as having such authority, the corporation is bound thereby in favor of a person who deals with him in good faith in reliance on such apparent authority, as where an officer is allowed to exercise a particular authority with respect to

the business, or a particular branch of it, continuously and publicly, for a considerable time.". . .35 Third, NIA has clearly waived the prescriptive period when it continued to entertain Hydro's claim regarding new matters raised by the latter in its letters to NIA and then issuing rulings thereon. In this regard, Article 1112 of the Civil Code provides that: ART. 1112. Persons with capacity to alienate property may renounce prescription already obtained, but not the right to prescribe in the future. Prescription is deemed to have been tacitly renounced when the renunciation results from acts which imply the abandonment of the right acquired. (Emphasis and italics supplied) Certainly, when a party has renounced a right acquired by prescription through its actions, it can no longer claim prescription as a defense.36 Fourth, even assuming that NIA did not waive the thirty-day prescriptive period, it clearly waived the effects of such period when it actively participated in arbitration proceedings through the following acts: a) On January 6, 1995, NIA voluntarily filed its written appearance, readily submitted its Answer and asserted its own Counterclaims; b) In the Compliance which accompanied the Answer, NIA also submitted its six nominees to the Arbitral Tribunal to be constituted, among of which one was eventually appointed to the tribunal; c) NIA also actively participated in the deliberations for and the formulation of the Terms of Reference during the preliminary conference set by CIAC; and d) For the purpose of obviating the introduction of testimonial evidence on the authenticity and due execution of its documentary evidence, NIA even had examined, upon prior request to Hydro, all of the documents which the latter intended to present as evidentiary exhibits for the said arbitration case. We now come to the issue of whether or not the provisions of R.A. No. 529, otherwise known as an Act To Assure Uniform Value to Philippine Coin And Currency, is applicable to Hydro's claim. The Contract between NIA and Hydro is an internationally tendered contract considering that it was funded by the International Bank for Reconstruction and Development (IBRD). As a contract funded by an international organization, particularly one recognized by the Philippines,37 the contract is exempt from the provisions of R.A. No. 529. R.A. No. 4100

amended the provisions of R.A. 529 thus: SECTION 1. Section one of Republic Act Numbered Five hundred and twenty-nine, entitled "An Act to Assure Uniform Value of Philippine Coin and Currency," is hereby amended to read as follows: Sec. 1. Every provision contained in, or made with respect to, any domestic obligation to wit, any obligation contracted in the Philippines which provisions purports to give the obligee the right to require payment in gold or in a particular kind of coin or currency other than Philippine currency or in an amount of money of the Philippines measured thereby, be as it is hereby declared against public policy, and null, void, and of no effect, and no such provision shall be contained in, or made with respect to, any obligation hereafter incurred. The above prohibition shall not apply to (a) transactions where the funds involved are the proceeds of loans or investments made directly or indirectly, through bona fide intermediaries or agents, by foreign governments, their agencies and instrumentalities, and international financial and banking institutions so long as the funds are identifiable, as having emanated from the sources enumerated above; (b) transactions affecting high-priority economic projects for agricultural, industrial and power development as may be determined by the National Economic Council which are financed by or through foreign funds; (c) forward exchange transaction entered into between banks or between banks and individuals or juridical persons; (d) import-export and other international banking, financial investment and industrial transactions. With the exception of the cases enumerated in items (a), (b), (c) and (d) in the foregoing provisions, in which bases the terms of the parties' agreement shall apply, every other domestic obligation heretofore or hereafter incurred, whether or not any such provision as to payment is contained therein or made with respect thereto, shall be discharged upon payment in any coin or currency which at the time of payment is legal tender for public and private debts: Provided, That if the obligation was incurred prior to the enactment of this Act and required payment in a particular kind of coin or currency other than Philippine currency, it shall be discharged in Philippine currency measured at the prevailing rates of exchange at the time the obligation was incurred, except in case of a loan made in a foreign currency stipulated to be payable in the same currency in which case the rate of exchange prevailing at the time of the stipulated date of payment shall prevail. All coin and currency, including Central Bank notes, heretofore and hereafter issued and declared by the Government of the Philippines shall be legal tender for all debts, public and private. SECTION 2. This Act shall take effect upon its approval. (Emphasis and italics supplied) Even assuming ex gratia argumenti that R.A. No. 529 is applicable, it is still erroneous for the Court of Appeals to deny Hydro's claim because Section 1 of R.A. No. 529 states that only the stipulation requiring payment in foreign currency is void, but not the obligation to make payment. This can be gleaned from the provision that "every other domestic obligation heretofore or hereafter incurred" shall be "discharged upon payment in any coin and currency which at the time is legal tender for public and private debts." In Republic Resources and Development Corporation v. Court of Appeals,38 it was held: . . . it is clear from Section 1 of R.A. No. 529 that what is declared null and void is the "provision contained in, or made with respect to, any domestic obligation to wit, any obligation contracted in the Philippines which provision purports to give the obligee the right to require payment in gold or in a particular kind of coin or currency other than Philippine

currency or in an amount of money of the Philippines measured thereby" and not the contract or agreement which contains such proscribed provision. (Emphasis supplied) More succinctly, we held in San Buenaventura v. Court of Appeals39 that It is to be noted under the foregoing provision that while an agreement to pay an obligation in a currency other than Philippine currency is null and void as contrary to public policy, what the law specifically prohibits is payment in currency other than legal tender but does not defeat a creditor's claim for payment. A contrary rule would allow a person to profit or enrich himself inequitably at another's expense. (Emphasis supplied) It is thus erroneous for the Court of Appeals to disallow petitioner's claim for foreign currency differential because NIA's obligation should be converted to Philippine Pesos which was legal tender at the time.40 The next issue to be resolved is whether or not Hydro's claim should be computed at the fixed rate of exchange. When the MOA41 and the Supplemental MOA42 were in effect, there were instances when the foreign currency availed of by Hydro exceeded the foreign currency payable to it for that particular Progress Payment. In instances like these, NIA actually charged Hydro interest in foreign currency computed at the prevailing exchange rate and not at the fixed rate. NIA now insists that the exchange rate should be computed according to the fixed rate and not the escalating rate it actually charged Hydro. Suffice it to state that this flip-flopping stance of NIA of adopting and discarding positions to suit its convenience cannot be countenanced. A person who, by his deed or conduct has induced another to act in a particular manner, is barred from adopting an inconsistent position, attitude or course of conduct that thereby causes loss or injury to another.43 Indeed, the application of the principle of estoppel is proper and timely in heading off NIA's efforts at renouncing its previous acts to the prejudice of Hydro which had dealt with it honestly and in good faith. . . . A principle of equity and natural justice, this is expressly adopted under Article 1431 of the Civil Code, and pronounced as one of the conclusive presumptions under Rule 131, Section 3(a) of the Rules of Court, as follows: Whenever a party has, by his own declaration, act or omission, intentionally and deliberately led another to believe a particular thing to be true, and to act upon such a belief he cannot, in any litigation arising out of such declaration, act or omission, be permitted to falsify it. Petitioner, having performed affirmative acts upon which the respondents based their subsequent actions, cannot thereafter refute his acts or renege on the effects of the same, to the prejudice of the latter. To allow him to do so would be tantamount to conferring upon him the liberty to limit his liability at his whim and caprice, which is against the very principles of

equity and natural justice44 NIA is, therefore, estopped from invoking the contractual stipulation providing for the fixed rate to justify a lower computation than that claimed by Hydro. It cannot be allowed to hide behind the very provision which it itself continuously violated.45 An admission or representation is rendered conclusive upon the person making it and cannot be denied or disproved as against the person relying thereon.46 A party may not go back on his own acts and representations to the prejudice of the other party who relied upon them.47 NIA was guilty of forum-shopping. Forum-shopping refers to the act of availing oneself of several judicial remedies in different courts, either simultaneously or successively, substantially founded on the same transaction and identical material facts and circumstances, raising basically the like issues either pending in, or already resolved by, some other court.48 It has been characterized as an act of malpractice that is prohibited and condemned as trifling with the courts and abusing their processes. It constitutes improper conduct which tends to degrade the administration of justice. It has also been described as deplorable because it adds to the congestion of the heavily burdened dockets of the courts.49 The test in determining the presence of this pernicious practice is whether in the two or more cases pending, there is identity of: (a) parties; (b) rights or causes of action; and (c) reliefs sought.50 Applying the foregoing yardstick to the instant case, it is clear that NIA violated the prohibition against forum-shopping. Besides filing CA-G.R. SP No. 44527 wherein the Court of Appeals' decision is the subject of appeal in this proceeding, NIA previously filed CA-G.R. SP No. 37180 and G.R. No. 129169 which is a special civil action for certiorari. In all three cases, the parties are invariably Hydro and NIA. In all three petitions, NIA raised practically the same issues51 and in all of them, NIA's prayer was the same: to nullify the proceedings commenced at the CIAC. It must be pointed out in this regard that the first two petitions namely, CA-G.R. SP No. 37180 and G.R. No. 129169 are both original actions. Since NIA failed to file a petition for review on certiorari under Rule 45 of the Rules of Court challenging the decision of the appellate court in CA-G.R. SP No. 37180 dismissing its petition, it opted to file an original action for certiorari under Rule 65 with this Court where the same was docketed as G.R. No. 129169. For its failure to appeal the judgments in CA-G.R. SP No. 37180 and G.R. No. 129169, NIA is necessarily bound by the effects of those decisions. The filing of CA-G.R. SP No. 44527, which raises the issues already passed upon in both cases is a clear case of forum-shopping which merits outright dismissal. The issue of whether or not the Certification of Non-Forum Shopping is valid despite that it was signed by NIA's counsel must be answered in the negative. Applicable is the ruling in Mariveles Shipyard Corp. v. Court of Appeals, et al.:52 It is settled that the requirement in the Rules that the certification of non-forum shopping should be executed and signed by the plaintiff or the principal means that counsel cannot sign said certification unless clothed with special authority to do so. The reason for this is that the plaintiff or principal knows better than anyone else whether a petition has previously been filed involving the same case or substantially the same issues. Hence, a certification signed by counsel alone is defective

and constitutes a valid cause for dismissal of the petition. In the case of natural persons, the Rule requires the parties themselves to sign the certificate of non-forum shopping. However, in the case of the corporations, the physical act of signing may be performed, on behalf of the corporate entity, only by specifically authorized individuals for the simple reason that corporations, as artificial persons, cannot personally do the task themselves. . . It cannot be gainsaid that obedience to the requirements of procedural rule[s] is needed if we are to expect fair results therefrom. Utter disregard of the rules cannot justly be rationalized by harking on the policy of liberal construction. (Emphasis and italics supplied) In this connection, the lawyer must be "specifically authorized" in order to validly sign the certification.53 In closing, we restate the rule that the courts will not interfere in matters which are addressed to the sound discretion of government agencies entrusted with the regulation of activities coming under the special technical knowledge and training of such agencies.54 An action by an administrative agency may be set aside by the judicial department only if there is an error of law, abuse of power, lack of jurisdiction or grave abuse of discretion clearly conflicting with the letter and spirit of the law.55 In the case at bar, there is no cogent reason to depart from the general rule because the action of the CIAC conforms rather than conflicts with the governing statutes and controlling case law on the matter. WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R. SP No. 44527 dated October 29, 2002 and the Resolution dated September 24, 2003 are REVERSED and SET ASIDE. The Decision of the Construction Industry Arbitration Commission dated June 10, 1997 in CIAC Case No. 18-94 is REINSTATED. SO ORDERED. Davide, Jr., C.J., (Chairman), Quisumbing, Carpio, and Azcuna, JJ., concur.

Footnotes
1

Rollo, pp. 71-90. Id., p. 92.

Entitled National Irrigation Administration v. Hydro Resources Contractors Corporation and Construction Industry Arbitration Commission.

Rollo, pp. 423-442. Id., p. 232. Id., p. 120. Id., p. 124. Id., p. 127. Id., p. 278. Id., p. 131. Id., p. 180. Id., pp. 207-231, 245, 252, 257, 264. Id., p. 269. Id., p. 279. Id., p. 282. Id., p. 307. Id., p. 316. Id., p. 333. Id., p. 338. Id., p. 345. Id., p. 347. Id., p. 368.

10

11

12

13

14

15

16

17

18

19

20

21

22

23

Id., p. 387. Id., p. 422. Id., p. 443. Id., p. 564. Entitled An Act to Assure Uniform Value to Philippine Coin and Currency. Rollo, pp. 80-82. Id., p. 269. Id. Id., p. 230. Id., p. 438; CIAC Decision, p. 16. Id., p. 131. Rural Bank of Milaor (Camarines Sur) v. Ocfemia, G.R. No. 137686, 8 February 2000, 325 SCRA 99. Yao Ka Sin Trading v. CA, G.R. No. 53820, 15 June 1992, 209 SCRA 763, 783.

24

25

26

27

28

29

30

31

32

33

34

35

36

Sambrano v. CTA, 101 Phil. 1 [1957]; Republic v. Arcache, 119 Phil. 604 [1964]; DBP v. Adil, G.R. No. L-48889, 11 May 1988, 161 SCRA 307.
37

See Articles of Agreement of the International Bank for Reconstruction and Development (Bretton Woods Agreement), 1 PTS 149. The Philippines was an original signatory to this Agreement. The membership of the Philippines to the Bank was authorized by C.A. 699, 20 November 1945. The treaty entered into force on 27 December 1945. It was proclaimed by the President through Proc. No. 27, s. 1945.
38

G.R. No. 33438, 28 October 1991, 203 SCRA 164, 168. G.R. No. 43830, 22 January 1990, 181 SCRA 197, 201.

39

40

Philippine Airlines v. Court of Appeals, G.R. No. 70491, 11 December 1992. Rollo, p. 124. Id., p. 127. Cruz v. Court of Appeals, G.R. No. 126713, 27 July 1998, 293 SCRA 239, citing 31 C.J.S. 288. Pureza v. Court of Appeals, G.R. No. 122053, 15 May 1998, 290 SCRA 110, 115. See Traders Royal Bank v. Court of Appeals, G.R. Nos. 114299 and 118862, 24 September 1999, 315 SCRA 190. Article 1431, Civil Code.

41

42

43

44

45

46

47

Ayala Corporation v. Ray Burton Development Corporation, G.R. No. 126699, 7 August 1998, 294 SCRA 48, citing Laureano Investment & Development Corporation v. Court of Appeals, G.R. No. 100468, 6 May 1997, 272 SCRA 253.
48

Landcar, Inc. v. Bachelor Express, Inc., et al., G.R. No. 154377, 8 December 2003, 417 SCRA 307, citingGatmaytan v. Court of Appeals, G.R. No. 123332, 3 February 1997, 267 SCRA 487; Tolentino v. Natanauan, et al., G.R. No. 135441, 20 November 2003, 416 SCRA 273; People v. Sandiganbayan, G.R. No. 149495, 21 August 2003, 409 SCRA 419.
49

Elcee Farms, Inc. v. Semillano, G.R. No. 150286, 17 October 2003, 413 SCRA 669, citing Tantoy, Sr. v. Court of Appeals, G.R. No. 141427, 20 April 2001, 357 SCRA 329, citing Gatmaytan v. Court of Appeals, supra.
50

MR Holdings, Ltd. v. Bajar, G.R. No. 138104, 11 April 2002, 380 SCRA 617, citing Employees' Compensation Commission v. Court of Appeals, G.R. No. 115858, 28 June 1996, 257 SCRA 717.
51

Rollo, pp. 58-60. G.R. No. 144134, 11 November 2003, 415 SCRA 573, 583-584. BPI Leasing Corporation v. Court of Appeals, G.R. No. 127624, 18 November 2003, 416 SCRA 4.

52

53

54

First Lepanto Ceramics, Inc. v. Court of Appeals, G.R. No. 117680, 9 February 1996, 253 SCRA 552, citingYsmael, Jr. & Co., Inc. v. Deputy Executive Secretary, G.R. No. 79538, 18 October 1990, 190 SCRA 673.

55

Id., citing Sagun v. PHHC, G.R. No. 44738, 22 June 1988, 162 SCRA 411.