HYDRO RESOURCES CONTRACTORS VS NATIONAL IRRIGATION ADMINISTRATION

(GR No 160251, Nov 10, 2005, Santiago)

FACTS:

A contract was entered into between Hydro and NIA for the project of the latter. The contract price
is to be payable partly in Philippine peso and US dollars. Once the project was being executed, there
was depreciation in value of Peso resulting to price differential. In order to resolve the issue, the
administrator of NIA, Mr Tek, and Hydro made a joint computation of the amount corresponding to
the foreign currency differential. The computation showed that NIA owed Hydro for the differential.
When a demand was made by Hydro against NIA, NIA refused to pay contending that Mr Tek has no
authority to participate into a joint computation of the foreign currency differential and that Mr Tek
has no authority to bind NIA.

ISSUE:
Whether or not Mr Tek has the authority to bind NIA in the joint computation of the foreign
currency differential.

HELD:
The SC found out that in the course of the project, Hydro has been dealing with NIA represented by
Mr. Tek. And applying the doctrine of apparent authority, if a corporation knowingly permits one of
its officers to act within the scope of an apparent authority, it holds him out to the public possessing
the power to do those acts; and thus, the corporation will, as against anyone who has in good faith
dealt with it through such agent, be stopped from denying the agent’s authority.