Case Summary (G.R. No. 140667)
Project Development and Lease Commitment
Wimbeco Builders quoted P8,649,000 to construct a warehouse on a 5,088 sqm portion, to start on October 1, 1991 and finish by February 29, 1992. Ponderosa Leather Goods Company confirmed a lease of 5,000 sqm at P65/sqm, contingent on readiness by April 1, 1992. Construction was postponed due to squatters; contract renegotiated in March 1992 at P11,804,160. Building permit was secured only on May 28, 1992, with occupancy certificate on March 21, 1993; lease commenced March 1, 1993.
Trial Court Proceedings and Relief Sought
WHI filed for specific performance of the easement and option to buy 500 sqm at P1,000/sqm, annotation on TCT No. 78085, actual damages (P3,560,000 construction overrun), unrealized rental income (P2,100,000), attorney’s fees (P100,000), and costs. The RTC held RECCI estopped from denying Roxas’s authority and granted all reliefs including sale of 500 sqm, annotation, P5,568,000 damages, and fees.
Court of Appeals Reversal
The CA found Roxas’s authority limited to selling Lot No. 491-A-3-B-2 and not to granting easements or options on the adjacent lot. It ruled the stipulations ultra vires, as RECCI’s board never authorized creation of any burden on Lot No. 491-A-3-B-1 in a public document, and held WHI responsible for construction delay due to late permit filing. The complaint was dismissed.
Supreme Court Issue Framing
- Enforceability of easement and option in the deed of absolute sale.
- RECCI’s alleged failure to eject squatters within two weeks.
- Liability for damages.
Agency Authority and Formality Requirements
Under BP 68 Sec. 23 and Civil Code Arts. 1878(12), 1358(1), a corporate officer may not create real rights over immovables without express board authorization in a public document or special power of attorney. Roxas was empowered only to sell Lot No. 491-A-3-B-2. No written resolution authorized easement or sale of any portion of Lot No. 491-A-3-B-1; such authority cannot be implied. Absent express or tacit ratification by RECCI, these stipulations are unenforceable (Art. 1910).
Apparent Authority and Ratification Analysis
Apparent authority requires principal’s knowing acquiescence or conduct leading a prudent third party to reasonably believe in the agent’s power, and detrimental reliance. No evidence shows RECCI knowledge or approval of Roxas’s easement and option stipulations. Retention of P5,000,000 purchase price for Lot No. 491-A-3-B-2 cannot constitute implied ratification of unauthorized acts. Ratification of acts requiring written authority must also be in writing.
Liability for Delay and Damages
RECCI admits it did n
...continue readingCase Syllabus (G.R. No. 140667)
Case Title and Citation
- G.R. No. 140667, August 12, 2004
- 479 Phil. 896 (Second Division)
- Petitioner: Woodchild Holdings, Inc. (WHI)
- Respondent: Roxas Electric and Construction Company, Inc. (RECCI)
- Ponimento, Puno, Austria-Martinez, Tinga, Chico-Nazario, JJ.
Antecedents
- RECCI owned two adjacent parcels in Antipolo, Rizal:
• Lot No. 491-A-3-B-1 (with dirt road access) – TCT No. 78085
• Lot No. 491-A-3-B-2 (7,213 sq. m.) – TCT No. 78086 - May 17, 1991: RECCI’s Board resolution authorized its President, Roberto B. Roxas, to sell Lot No. 491-A-3-B-2 under such terms as he deemed reasonable.
- June 21, 1991: WHI offered ₱1,000/sq. m. (₱7,213,000) for TCT No. 78086, requesting right-of-way and option to purchase additional area from the adjoining lot.
- July 1, 1991: Contract to sell executed for ₱7,213,000 covering TCT No. 78086.
- September 5, 1991: Deed of Absolute Sale executed at ₱5,000,000, containing stipulations on:
• Beneficial use/right-of-way (25 m and 25 m corner)
• Option to buy additional square meters if insufficient access
• Warranty of title, ejectment of squatters within two weeks, and 36% interest refund upon breach
Subsequent Developments
- WHI engaged Wimbeco Builders, Inc. (WBI) for warehouse construction:
• Initial quotation: ₱8,649,000 (start Oct 1, 1991; turnover Feb 29, 1992)
• Delay due to presence of squatters; renegotiation led to Letter-Contract (Mar 31, 1992) for ₱11,804,160 - WHI leased 5,000 sq. m. to Ponderosa Leather Goods Co., Inc. at ₱65/sq. m., needing occupancy by Apr 1, 1992
- Eviction of squatters completed only after April 15, 1992 demand
Procedural History
- June