**Kue Cuison v. Court of Appeals and Valiant Investment Associates**
### Facts:
– **Parties Involved**:
– Petitioner: Kue Cuison, sole proprietor of “Kue Cuison Paper Supply”
– Respondent: Valiant Investment Associates, a partnership
– **Timeline of Events**:
– **December 4, 1979 to February 15, 1980**: Valiant Investment Associates (VIA) delivered various kinds of paper products amounting to PHP 297,487.30 to Lilian Tan of LT Trading.
– **Orders and Deliveries**: Orders allegedly placed by Tiu Huy Tiac, who was an employee in Kue Cuison’s Binondo office.
– **Payments**: Lilian Tan issued several checks payable to cash as instructed by Tiu.
– **Tiu Huy Tiac’s Payment**: Tiu issued nine postdated checks to VIA, which were dishonored by the drawee bank.
– **Demands for Payment**: VIA made several demands to Kue Cuison, asserting that Tiu was authorized by Cuison.
– **Denial of Involvement**: Kue Cuison denied involvement and refused to pay.
– **Procedural History**:
– VIA filed an action for collection:
– **Trial Court**: Dismissed the complaint for lack of merit.
– **Court of Appeals**: Reversed the trial court’s decision, holding Kue Cuison liable to pay PHP 297,487.30 with 12% interest, 7% attorney’s fees, and costs.
### Issues:
1. **Agency Question**: Whether Tiu Huy Tiac had the authority from Kue Cuison sufficient to hold the latter liable for the transactions.
2. **Factual Issues**: Whether the findings of the appellate court were correct in holding Kue Cuison liable.
### Court’s Decision:
– **Factual Inquiry**: The Supreme Court recognized the factual nature of the issue but accepted the petition for review due to the conflicting findings of the lower courts.
– **Agency Relationship**:
– **Apparent Authority**: The court stated that one who holds another out to the public as having authority cannot later deny such authority.
– **Evidence**: Several testimonies and conduct confirmed Tiu Huy Tiac’s role as manager:
– Petitioner introduced Tiu to respondent’s manager as branch manager.
– Regular business transactions involved Tiu.
– Petitioner’s delayed disavowal showed acceptance of Tiu’s deals.
– **Estoppel**:
– **Compound Responsibility**: Petitioner’s actions held Tiu out as making transactions on his behalf, thus legally and morally responsible.
– **Article 1911, Civil Code**: Made clear that even when an agent acts beyond authority apparent authority was sufficiently established.
### Doctrine:
– **Apparent Authority and Estoppel**:
– Principles of agency by estoppel hold that representations of authority by the principal bind the principal to the third party.
– **Civil Code Article 1911**: Principal is liable for agent’s unauthorized acts if the principal created an appearance of authority.
### Class Notes:
1. **Agency by Estoppel**:
– **Apparent Authority**: Principal cannot deny agency if he created an apparent authority for an agent.
– **Supporting Legal Entity**: Article 1911, Civil Code of the Philippines.
2. **Estoppel in Agency**:
– A principal encouraging reliance by third parties on apparent authority leads to liability—even for unauthorized acts.
– **Relevant Cases / Sections**:
– Philippine National Bank v. CA
– U.S. vs. Ching Po
3. **Principal’s Liability**:
– **Article 1431, Civil Code**: Actions and omissions taken by an individual are presumed near true reflections and bind the individual legally.
### Historical Background:
– The decision emphasizes the importance of commercial transparency and accountability in the mid-20th century Philippine business landscape.
– Reflects the judicial approach towards business disputes involving agency and the extended responsibility of business owners in contracts and delegations.
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