Kue Cuison v. Court of Appeals
REITERATIONFacts
1. The Antecedents: This case concerns a dispute over payment for paper products delivered by Valiant Investment Associates (private respondent) to Lilian Tan of LT Trading. The deliveries were made pursuant to orders allegedly placed by Tiu Huy Tiac, an employee in the Binondo office of Kue Cuison (petitioner). Tiac instructed that the merchandise be delivered to Tan, who paid with checks that were subsequently dishonored. Valiant Investment Associates demanded payment from Kue Cuison, asserting that Tiu Huy Tiac was authorized by petitioner to conduct these transactions. Petitioner denied any involvement and refused to pay. 2. Procedural History: Valiant Investment Associates filed an action against Kue Cuison for the collection of P297,487.30, the price of the merchandise. The trial court initially dismissed the complaint against petitioner for lack of merit. However, upon appeal, the Court of Appeals reversed the trial court's decision, ordering petitioner to pay private respondent the sum of P297,487.30 with interest and attorney's fees. 3. The Petition: Kue Cuison filed this petition for review under Rule 45 of the Rules of Court, assailing the decision of the Court of Appeals. Petitioner contends that the Court of Appeals erred in finding Tiu Huy Tiac to be an agent of the petitioner, in holding petitioner liable for an obligation that allegedly belonged to Tiac, and in reversing the trial court's decision. The core issue presented is whether Tiu Huy Tiac possessed the authority from petitioner to bind him to the disputed transaction.
Issue(s)
Whether Tiu Huy Tiac possessed the required authority from petitioner to bind him to the disputed transaction; and whether petitioner, by his actions and admissions, is estopped from denying Tiac's authority. Whether petitioner is liable for the obligation incurred by Tiu Huy Tiac, considering the principles of agency by estoppel and the provisions of Article 1911 of the Civil Code.
Ruling
The petition is DENIED for lack of merit. The Court of Appeals' decision is AFFIRMED, ordering petitioner Kue Cuison to pay private respondent Valiant Investment Associates the sum of P297,487.30 with 12% interest from the filing of the complaint until fully paid, plus 7% of the total amount due as attorney's fees, and costs.
Ratio Decidendi
On the Issue of Tiu Huy Tiac's Authority and Petitioner's Estoppel: The Court held that petitioner is liable for the transaction entered into by Tiu Huy Tiac based on the principle of agency by estoppel. One who clothes another with apparent authority as his agent and holds him out to the public as such cannot deny the authority of such person to act as his agent, to the prejudice of innocent third parties dealing with such person in good faith. Petitioner, by his own acts and admissions, held out Tiu Huy Tiac to the public as the manager of his store in Binondo, introducing Tiac to respondent's manager as his branch manager. Tiac was known in the community as petitioner's "kinakapatid" (godbrother). Petitioner admitted Tiac was the manager of his store in Sto. Cristo, Binondo, stating that Tiac "takes charge of management" in the mornings. Petitioner's act of sending communications to customers three months after Tiac left, notifying them of Tiac's departure, further indicated Tiac's significant position as manager. These actions constituted admissions under Rule 130, Section 22 of the Rules of Court. Petitioner's unexplained delay in disowning the transactions despite demands from respondent also amounted to an admission by silence under Rule 130, Section 23. Therefore, Tiu Huy Tiac was the manager of petitioner's store, and the transaction was valid and binding upon petitioner. By his representations, petitioner was estopped from disclaiming liability. On the Issue of Petitioner's Liability under Agency Principles: Even if Tiac exceeded his authority, petitioner is solidarily liable under Article 1911 of the Civil Code if he allowed Tiac to act as though he had full powers. As between two innocent parties, the one who made it possible for the wrong to be done should bear the loss.
Main Doctrine
A principal who clothes another with apparent authority as his agent and holds him out to the public as such cannot deny the agent's authority to the prejudice of innocent third parties dealing with such person in good faith and in the honest belief that he is what he appears to be. Furthermore, even when an agent exceeds his authority, the principal is solidarily liable if the former allowed the latter to act as though he had full powers.