Primary Holding
The Supreme Court ruled that MEGAN is estopped from assailing both the authority of Atty. Sabig and the jurisdiction of the RTC due to its active participation in the proceedings, coupled with its failure to repudiate Atty. Sabig's authority despite multiple opportunities to do so.
Background
The case originated from a loan obtained by New Frontier Sugar Corporation (NFSC) from Equitable PCI Bank (EPCIB), secured by mortgages over NFSC's land and sugar mill. Due to liquidity problems, NFSC entered into agreements with various parties, leading to complex legal proceedings involving multiple corporations and their interests in the sugar mill operations.
History
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July 23, 1993: NFSC obtained a loan from EPCIB
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November 17, 2000: NFSC entered into MOA with CIMICO
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April 19, 2002: NFSC filed complaint against CIMICO
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May 10, 2002: EPCIB instituted extra-judicial foreclosure proceedings
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October 3, 2002: CIMICO and MEGAN entered into MOA
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January 16, 2003: RTC issued order for escrow placement
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March 5, 2003: MEGAN filed petition for certiorari before CA
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August 23, 2004: CA dismissed MEGAN's petition
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October 12, 2005: CA denied MEGAN's motion for reconsideration
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June 1, 2011: Supreme Court rendered final decision
Facts
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1.
NFSC obtained a loan from EPCIB secured by mortgages over land and sugar mill
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2.
NFSC entered into MOA with CIMICO for mill operation
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3.
CIMICO transferred rights to MEGAN through MOA
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4.
Atty. Sabig appeared in court for MEGAN without board resolution
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5.
MEGAN's officer Joey Concha accompanied Atty. Sabig during hearings
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6.
Multiple motions were filed by Atty. Sabig seeking affirmative relief
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7.
Court orders were sent to MEGAN's office and forwarded to Atty. Sabig
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8.
MEGAN never repudiated Atty. Sabig's authority during proceedings
Arguments of the Petitioners
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1.
Board of directors did not issue resolution authorizing Atty. Sabig
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2.
Atty. Sabig was an unauthorized agent
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3.
Other counsels were aware of Atty. Sabig's lack of authority
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4.
Voluntary appearance was limited to intervention hearing
Arguments of the Respondents
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1.
MEGAN is estopped from assailing Atty. Sabig's authority
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2.
Atty. Sabig actively participated in proceedings
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3.
MEGAN's director accompanied Atty. Sabig during hearings
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4.
MEGAN never repudiated Atty. Sabig's authority despite notices
Issues
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1.
Whether MEGAN is estopped from questioning the RTC orders due to Atty. Sabig's acts
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2.
Whether RTC had jurisdiction to issue the challenged orders
Ruling
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1.
Court ruled MEGAN is estopped from challenging both Atty. Sabig's authority and RTC's jurisdiction
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2.
Basis for ruling: (1) Active participation in proceedings (2) Presence of MEGAN's director during hearings (3) Forwarding of court documents to Atty. Sabig (4) Filing of motions seeking affirmative relief (5) Failure to repudiate Atty. Sabig's authority (6) Involvement of MEGAN's plant manager in court proceedings (7) Knowledge of ongoing litigation through MOA
Doctrines
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1.
Doctrine of Estoppel: Prevents one from speaking against their own acts or representations
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2.
Apparent Authority: Authority that principal has allowed agent to appear to possess
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3.
Active Participation Rule: Participation in proceedings bars subsequent jurisdiction challenge
Precedents Cited
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1.
Philippine National Bank v. Court of Appeals (183 Phil. 54): Applied doctrine of estoppel
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2.
Tijam v. Sibonghanoy: Established rule against questioning jurisdiction after seeking relief
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3.
Professional Services, Inc. v. Agana: Defined apparent authority doctrine
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4.
Woodchild Holdings, Inc. v. Roxas Electric: Discussed indicia of authority
Statutory and Constitutional Provisions
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1.
Section 13, Article VIII of the Constitution (re: consultation requirement)