Case Summary (G.R. No. 2549)
Petitioner
Megan Sugar Corporation, assignee of CIMICO’s rights and obligations under its Memorandum of Agreement with NFSC for crop years 2000–2003.
Respondents
- Regional Trial Court of Iloilo, Branch 68, Dumangas – issuances of Orders directing deposit of millers’ shares in escrow and granting execution
- New Frontier Sugar Corporation and Equitable PCI Bank – involved in foreclosure and interlocutory proceedings
Key Dates
– July 23, 1993: NFSC obtains loan from EPCIB, mortgaging land and mill
– Nov. 17, 2000: NFSC–CIMICO MOA for CIMICO’s mill operation
– Apr. 19, 2002: NFSC sues CIMICO for breach of MOA
– May 10, 2002: EPCIB conducts extrajudicial foreclosure; acquires NFSC land and mill
– Sept. 16, 2002: CIMICO’s amended complaint impleads EPCIB and PISA; RTC issues restraining order
– Oct. 3, 2002: MEGAN and CIMICO MOA; MEGAN begins mill operations Nov. 18, 2002
– Nov. 22 & Nov. 29, 2002: Passi Sugar intervenes; Atty. Sabig appears for MEGAN
– Jan. 16, 2003: RTC orders MEGAN to deposit millers’ share in escrow
– Feb. 19 & Feb. 28, 2003: RTC denies reconsideration and grants execution of escrow order
– Mar. 5, 2003: MEGAN files CA petition for certiorari under Rule 45
– Aug. 23, 2004 & Oct. 12, 2005: Court of Appeals denies petition and motion for reconsideration
– June 1, 2011: Supreme Court decision affirming CA
Applicable Law
– 1987 Philippine Constitution (post-1990 decisions)
– Rule 45, Rules of Court (certiorari jurisdiction)
– Doctrine of estoppel and ostensible authority in corporate representation
Procedural History
MEGAN, having assumed CIMICO’s rights, appeared before the RTC via Atty. Sabig on Passi Sugar’s intervention motion. Despite objections, RTC allowed his participation. Subsequent interlocutory orders directed MEGAN to escrow millers’ share and granted execution. MEGAN challenged RTC jurisdiction in the Court of Appeals by arguing that Atty. Sabig lacked corporate authority and that the RTC had no jurisdiction over a non-party. The CA dismissed the petition on estoppel grounds. MEGAN elevated the matter to the Supreme Court.
Issues Presented
- Whether MEGAN is estopped from questioning RTC orders because of Atty. Sabig’s acts
- Whether the RTC had jurisdiction to issue the interlocutory orders dated January 16, February 19, and February 28, 2003
Analysis
– The Supreme Court upheld the CA’s application of estoppel by conduct and ostensible authority. MEGAN knowingly clothed Atty. Sabig with authority by permitting him to appear, by forwarding court papers to him at MEGAN’s operations site, and by inaction to repudiate his status.
– Concha’s presence in court, repeated participation in hearings, and MEGAN’s board composition evidenced MEGAN’s awareness of and acquiescence to Atty. Sabig’s representation.
– MEGAN never timely disavowed S
Case Syllabus (G.R. No. 2549)
Facts of the Case
- On July 23, 1993, New Frontier Sugar Corporation (NFSC) obtained a loan from Equitable PCI Bank (EPCIB), secured by a real estate mortgage on 92 hectares in Passi City and a chattel mortgage on its sugar mill.
- Facing liquidity problems, NFSC on November 17, 2000 entered into a three-year Memorandum of Agreement (MOA) with Central Iloilo Milling Corporation (CIMICO) to operate and manage its raw sugar factory for crop years 2000–2003.
- On April 19, 2002, NFSC sued CIMICO for specific performance and collection under the MOA; CIMICO countered with Civil Case No. 02-243 for sum of money/breach of contract.
- Because NFSC defaulted, EPCIB on May 10, 2002 foreclosed extra-judicially on the mortgaged land and mill, was sole bidder at public auction and consolidated title in its name. EPCIB employed PISA to secure the property.
- CIMICO amended its complaint on September 16, 2002, impleading EPCIB and PISA; on September 25, the RTC issued a restraining order barring EPCIB/PISA from possession, allowing CIMICO’s continued occupation.
- On October 3, 2002, CIMICO and Megan Sugar Corporation (MEGAN) executed an MOA by which MEGAN assumed CIMICO’s rights and obligations; MEGAN began mill operations on November 18, 2002.
- On November 22, 2002, Passi Iloilo Sugar Central, Inc. (Passi Sugar) moved to intervene as EPCIB’s alleged vendee, claiming a Contract to Sell with EPCIB after foreclosure.
- During the November 29, 2002 hearing, Atty. Reuben Mikhail Sabig appeared for MEGAN despite objections; he stated he was “in the process of taking over the case” and that his statements would bind MEGAN.
Procedural History
- December 2002: EPCIB, Passi Sugar, and NFSC filed separate motions to deposit the miller’s share or sugar quedans in escrow.
- January 16, 2003: RTC ordered MEGAN (through its General Manager Joey Concha) to deposit sugar quedans representing the miller’s share within five days and every Friday thereafter.
- January 29, 2003: Atty. Sabi