Megan Sugar Corporation vs. Regional Trial Court of Iloilo

G.R. No. 170352, June 1, 2011; per Peralta, J.

Facts

On July 23, 1993, respondent New Frontier Sugar Corporation (NFSC) obtained a loan from respondent Equitable PCI Bank (EPCIB) secured by a real estate mortgage over NFSC’s (92) hectare land located in Passi City, Iloilo, and a chattel mortgage over NFSC’s sugar mill. Later on a MOA with Central Iloilo Milling Corporation (CIMICO) was entered, whereby the latter agreed to take-over the operation and management of the NFSC raw sugar factory and facilities for the period covering crop years 2000 to 2003 due to liquidity problems.

On April 19, 2002, NFSC filed a compliant for specific performance and collection against CIMICO for the latter’s failure to pay its obligations under the MOA while CIMICO filed with the Regional Trial Court (RTC) of Dumangas, Iloilo, Branch 68, a case against NFSC for sum of money and/or breach of contract subsequently EPCIB instituted extra-judicial foreclosure proceedings over NFSC’s land and sugar mill. During public auction, EPCIB was the sole bidder and was thus able to buy the entire property and consolidate the titles in its name. EPCIB then employed the services of Philippine Industrial Security Agency (PISA) to help it in its effort to secure the land and the sugar mill.

Issue

Whether Atty. Sabig is the agent of MEGAN and is thus estopped from assailing the jurisdiction of the RTC.

Ruling

The Supreme Court ruled that MEGAN is already estopped from assailing the jurisdiction of the RTC. The doctrine of estoppel is based upon the grounds of public policy, fair dealing, good faith and justice, and its purpose is to forbid one to speak against his own act, representations, or commitments to the injury of one to whom they were directed and who reasonably relied thereon.The doctrine of estoppel springs from equitable principles and the equities in the case. It is designed to aid the law in the administration of justice where without its aid injustice might result. It has been applied by this Court wherever and whenever special circumstances of a case so demand.

One of the instances of estoppel is when the principal has clothed the agent with indicia of authority as to lead a reasonably prudent person to believe that the agent actually has such authority. With the case of MEGAN, it had all the opportunity to repudiate the authority of Atty. Sabig since all motions, pleadings and court orders were sent to MEGAN office. However, MEGAN never questioned the acts of Atty. Sabig and even took time and effort to forward all the court documents to him. To this Court mind, MEGAN cannot feign knowledge of the acts of Atty. Sabig, as MEGAN was aware from the very beginning that CIMICO was involved in an on-going litigation.