G.R. No. 88539 October 26, 1993
KUE CUISON, doing business under the firm name and style “KUE CUISON PAPER SUPPLY,” petitioner, vs. THE COURT OF APPEALS, VALIANT INVESTMENT ASSOCIATES, respondents.

FACTS

Petitioner Kue Cuison is a sole proprietorship engaged in the purchase and sale of paper products. Private respondent Valiant Investment Associates is a partnership. From December 4, 1979 to February 15, 1980, private respondent delivered various kinds of paper products amounting to P297,487.30 to a certain Lilian Tan of LT Trading. The deliveries were made pursuant to orders placed by Tiu Huy Tiac, who was then employed in the Binondo office of petitioner, and it was pursuant to Tiac’s instructions that the merchandise was delivered to Lilian Tan. Lilian Tan paid for the merchandise by issuing several checks payable to cash at Tiac’s request. Tiac, in turn, issued nine postdated checks to private respondent as payment. These checks were later dishonored. Private respondent demanded payment from petitioner, claiming Tiu Huy Tiac was duly authorized as the manager of petitioner’s Binondo office to enter into the transactions. Petitioner denied involvement and refused to pay. The trial court dismissed the complaint. On appeal, the Court of Appeals reversed the trial court and ordered petitioner to pay private respondent the sum of P297,487.30 with interest and attorney’s fees.

ISSUE

Whether or not Tiu Huy Tiac possessed the required authority from petitioner sufficient to hold the latter liable for the disputed transaction.

RULING

Yes. The Supreme Court denied the petition and affirmed the decision of the Court of Appeals. The Court held that petitioner clothed Tiu Huy Tiac with apparent authority as his agent and held him out to the public as the manager of his Sto. Cristo, Binondo branch. Petitioner explicitly introduced Tiac to private respondent’s manager as his branch manager. Lilian Tan, a business associate of petitioner, also knew Tiac as the manager. Petitioner admitted in court that Tiac took charge of the management of the Sto. Cristo store. Furthermore, petitioner sent communications to customers after Tiac left, notifying them that Tiac was no longer connected with the business, which act confirmed Tiac’s valuable position. By these acts and representations, petitioner is estopped from denying Tiac’s authority. The principle of estoppel applies: one who clothes another with apparent authority and holds him out to the public as such cannot deny the authority to the prejudice of innocent third parties dealing with the agent in good faith. Under Article 1911 of the Civil Code, even when the agent has exceeded his authority, the principal is solidarily liable if the principal allowed the agent to act as though he had full powers. Petitioner is therefore liable for the transaction entered into by Tiu Huy Tiac.