KUE CUISON, DOING BUSINESS UNDER THE FIRM NAME AND STYLE “KUE CUISON PAPER SUPPLY,” PETITIONER, VS. THE COURT OF APPEALS, VALIANT INVESTMENT ASSOCIATES, RESPONDENTS.

This petition for review assails the decision of the respondent
Court of Appeals ordering petitioner to pay private respondent, among others,
the sum of P297,482.30 with interest. Said decision reversed the appealed decision of the trial court rendered
in favor of petitioner.

The case involves an action for a sum of money filed by respondent against petitioner
anchored on the following antecedent facts:

Petitioner Kue Cuison is a sole proprietorship engaged in the
purchase and sale of newsprint, bond paper and scrap, with places of business
at Baesa, Quezon City, and Sto. Cristo, Binondo, Manila. Private respondent Valiant Investment
Associates, on the other hand,
is a partnership duly organized and existing under the laws of the Philippines
with business address at Kalookan City.

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 by
respondent pursuant to orders allegedly placed by Tiu Huy Tiac who was then
employed in the Binondo Office of petitioner. It was likewise pursuant to Tiac’s instructions that the merchandise was
delivered to Lilian Tan. Upon delivery,
Lilian Tan paid for the merchandise by issuing several checks payable to cash
at the specific request of Tiu Huy Tiac. In turn, Tiac issued nine (9) postdated checks to private respondent as
payment for the paper products. Unfortunately, said checks were later dishonored by the drawee bank.

Thereafter, private respondent made several demands upon
petitioner to pay for the merchandise in question, claiming that Tiu Huy Tiac
was duly authorized by petitioner as the manager of his Binondo office, to
enter into the questioned transactions with private respondent and Lilian
Tan. Petitioner denied any involvement
in the transaction entered into by Tiu Huy Tiac and refused to pay private
respondent the amount corresponding to the selling price of the subject
merchandise.

Left with no recourse, private respondent filed an action against
petitioner for the collection of P297,487.30 representing the price of the merchandise. After due hearing, the trial court dismissed the complaint
against petitioner for lack of merit. On appeal, however, the decision of the trial court was modified, but
was in effect reversed by the Court of Appeals, the dispositive portion of
which reads:

“WHEREFORE, the decision appealed from is MODIFIED in that
defendant-appellant Kue Cuison is hereby ordered to pay plaintiff-appellant Valiant Investment Associates the sum of P297,487.30 with 12% interest from
the filing of the complaint until the amount is fully paid, plus the sum of 7%
of the total amount due as attorney’s fees, and to pay the costs. In all other respects, the decision appealed
from is affirmed.” (Rollo, p. 55)

In this petition,
petitioner contends that:

“THE HONORABLE COURT ERRED IN FINDING TIU HUY TIAC AGENT OF
DEFENDANT-APPELLANT CONTRARY TO THE UNDISPUTED/ESTABLISHED
FACTS AND CIRCUMSTANCES.

“THE HONORABLE COURT ERRED IN FINDING DEFENDANT-APPELLANT
LIABLE FOR AN OBLIGATION UNDISPUTEDLY BELONGING TO TIU HUY TIAC.

“THE HONORABLE COURT ERRED IN REVERSING THE WELL-FOUNDED
DECISION OF THE TRIAL COURT.” (ROLLO, P. 19)

The issue here is really
quite simple, and that is — whether or not Tiu Huy Tiac possessed the
required authority from petitioner sufficient to hold the latter liable for the
disputed transaction.

This petition ought to have been denied outright, for in the
final analysis, it raises a factual
issue. It is elementary that in
petitions for review under Rule 45, this Court only passes upon questions of
law. An exception thereto occurs where
the findings of fact of the Court of Appeals are at variance with the trial
court, in which case the Court reviews the evidence in order to arrive at the
correct findings based on the records.

As to the merits of the case, it is a well-established rule that
one who clothes another with apparent authority as his agent and holds him out to the public as such cannot be
permitted to 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 and in the honest belief that he is what he
appears to be (Macke, et al. v. Camps, 7 Phil. 553 [1907]; Philippine National
Bank v. Court of Appeals, 94 SCRA 357 [1979]). From the facts and the evidence on record, there is no doubt that this
rule obtains. The petition must
therefore fail.

It is evident from the records that by his own acts and
admission, petitioner held out Tiu Huy Tiac to the public as the manager of his
store in Sto. Cristo, Binondo, Manila. More particularly, petitioner explicitly introduced Tiu Huy Tiac to
Bernardino Villanueva, respondent’s manager, as his (petitioner’s) branch
manager as testified to by Bernardino Villanueva. Secondly, Lilian Tan, who has been doing business with petitioner
for quite a while,
also testified that she knew Tiu Huy Tiac to be the manager of petitioner’s
Sto. Cristo, Binondo branch. This
general perception of Tiu Huy Tiac as the manager of petitioner’s Sto. Cristo
store is even made manifest by the fact that Tiu Huy Tiac is known in the
community to be the “kinakapatid” (godbrother) of petitioner. In fact, even petitioner admitted his close
relationship with Tiu Huy Tiac
when he said in open court that they are “like brothers” (Rollo, p.
54). There was thus no reason for
anybody especially those transacting business with petitioner to even doubt the
authority of Tiu Huy Tiac as his manager in the Sto Cristo, Binondo branch.

In a futile attempt to discredit Villanueva, petitioner alleges
that the former’s testimony is clearly self-serving inasmuch as Villanueva
worked for private respondent as its manager.

We disagree. The argument
that Villanueva’s testimony is self-serving and therefore inadmissible on the
lame excuse of his employment with private respondent utterly misconstrues the
nature of “self-serving evidence” and the specific ground for its
exclusion. As pointed out by this Court
in Co v. Court of Appeals et al., (99 SCRA 321 [1980]):

“Self-serving evidence is evidence made by a party out of court at one time; it does not
include a party’s
testimony as a witness in court. It
is excluded on the same ground as any hearsay evidence, that is the lack of
opportunity for cross-examination by the adverse party, and on the
consideration that its admission would open the door to fraud and to
fabrication of testimony. On the other
hand, a party’s testimony in court is sworn and affords the other party the
opportunity for cross-examination” (underscoring supplied).

Petitioner cites Villanueva’s failure, despite his commitment to
do so on cross-examination, to produce the very first invoice of the
transaction between petitioner and private respondent as another ground to discredit
Villanueva’s testimony. Such failure,
petitioner argues, proves that Villanueva was not only bluffing when he
pretended that he can produce the invoice, but that Villanueva was likewise
prevaricating when he insisted that such prior transactions actually took
place. Petitioner is mistaken. In fact, it was petitioner’s counsel himself
who withdrew the reservation to have Villanueva produce the document in court. As aptly observed by the Court of Appeals in
its decision:

“xxx However, during the hearing on March 3, 1981, Villanueva
failed to present the document adverted to because defendant-appellant’s
counsel withdrew his reservation to have the former (Villanueva) produce the
document or invoice, thus prompting plaintiff?appellant to rest its case
that same day (t.s.n., pp. 39-40, Sess.
of March 3, 1981). Now,
defendant-appellant assails the credibility of Villanueva for having allegedly
failed to produce even one single document to show that plaintiff-appellant and
defendant-appellant have had transactions before, when in fact said failure of
Villanueva to produce said document is a direct off-shoot of the action of
defendant-appellant’s counsel who withdrew his reservation for the production
of the document or invoice and which led plaintiff-appellant to rest its case
that very day.” (Rollo, p. 52)

In the same manner, petitioner assails the credibility of Lilian
Tan by alleging that Tan was part of an intricate plot to defraud him. However, petitioner failed to substantiate
or prove that the subject transaction was designed to defraud him. Ironically, it was even the testimony of petitioner’s daughter and assistant
manager Imelda Kue Cuison which confirmed the credibility of Tan as a witness. On the witness stand, Imelda testified that
she knew for a fact that prior to the transaction in question, Tan regularly
transacted business with her father (petitioner herein), thereby corroborating
Tan’s testimony to the same effect. As
correctly found by the respondent court, there was no logical explanation for
Tan to impute liability upon petitioner. Rather, the testimony of Imelda Kue Cuison only served to add credence
to Tan’s testimony as regards the transaction, the liability for which
petitioner wishes to be absolved.

But of even greater weight than any of these testimonies, is
petitioner’s categorical admission on the witness stand that Tiu Huy Tiac was
the manager of his store in Sto. Cristo, Binondo, to wit:

“Court:

x      x        x

“Q    And
who was managing the store in Sto Cristo?

“A    At first it was Mr. Ang, then later Mr. Tiu
Huy Tiac but I cannot remember the exact year.

“Q    So, Mr. Tiu Huy Tiac took over the
management.

“A    Not that was because every afternoon, I was
there, sir.

“Q
   But in the morning, who takes charge?

“A Tiu Huy Tiac takes charge of management and if there (sic) orders for
newsprint or bond papers they are always referred to the compound in Baesa,
sir.” (t.s.n., p. 16, Session of January 20, 1981, CA decision, Rollo, p.
50, underscoring supplied).

Such admission, spontaneous no doubt, and standing alone, is
sufficient to negate all the denials made by petitioner regarding the capacity
of Tiu Huy Tiac to enter into the transaction in question. Furthermore, consistent with and as an
obvious indication of, the fact that Tiu Huy Tiac was the manager of the Sto.
Cristo branch, three (3) months after Tiu Huy Tiac left petitioner’s employ,
petitioner even sent communications to its customers notifying them that Tiu
Huy Tiac is no longer connected with petitioner’s business. Such undertaking spoke unmistakenly of Tiu
Huy Tiac’s valuable position as petitioner’s
manager than any uttered disclaimer. More than anything else, his act taken together with the declaration of petitioner
in open court amount to admissions under Rule 130 Section 22 of the Rules of
Court, to wit: “The act,
declaration or omission of a party as to a
relevant fact may be given in evidence against him.” For
well-settled is the rule that “a man’s acts, conduct and declaration,
wherever made, if voluntary, are admissible against him, for the reason that it
is fair to presume that they correspond with the truth, and it is his fault if
they do not. If a man’s extrajudicial
admissions are admissible against him, there seems to be no reason why his
admissions made in open court, under oath, should not be accepted against
him.” (U.S. vs. Ching Po, 23 Phil. 578, 583 [1912];).

Moreover, petitioner’s unexplained delay in disowning the
transactions entered into by Tiu-Huy Tiac despite several attempts made by
respondent to collect the amount from him, proved all the more that petitioner
was aware of the questioned transactions. Such omission was tantamount to an admission by silence under Rule 130
Section 23 of the Rules of Court, thus: “Any act or declaration made in the presence of and within the observation of a
party who does or says nothing when the act or declaration is such as naturally
to call for action or comment if not true, may be given in evidence against
him.”

All of these point to the fact that at the time of the
transaction, Tiu Huy Tiac was admittedly the manager of petitioner’s store in
Sto. Cristo, Binondo. Consequently, the
transaction in question as well as the
concomitant obligation is valid and binding upon petitioner.

By his representations, petitioner is now estopped from
disclaiming liability for the transaction entered into by Tiu Huy Tiac on his
behalf. It matters not whether the
representations are intentional or merely negligent so long as innocent third
persons relied upon such representations in good faith and for value. As held in the case of Manila Remnant Co.,
Inc. v. Court of Appeals, (191 SCRA 622 [1990]):

“More in point, we find that by the principle of estoppel,
Manila Remnant is deemed to have allowed its agent to act as though it had
plenary powers. Article 1911 of the
Civil Code provides:

‘Even when the agent has exceeded his authority, the principal is
solidarily liable with the agent if the former allowed the latter to act as
though he had full powers.’ (Italics supplied).

The above-quoted article is new. It is intended to protect the rights of innocent persons. In such a situation, both the principal and
the agent may be considered as joint tortfeasors whose liability is joint and
solidary.

Authority by estoppel has arisen in the instant case because by its
negligence, the principal, Manila Remnant, has permitted its agent, A.U.
Valencia and Co., to exercise powers not granted to it. That the principal might not have had actual
knowledge of the agent’s misdeed is of no moment.”

Tiu Huy Tiac, therefore, by petitioner’s own representations and
manifestations, became an agent of petitioner by estoppel. Under the doctrine of estoppel, an admission
or representation is rendered conclusive upon the person making it, and cannot
be denied or disproved as against the person relying thereon (Article 1431,
Civil Code of the Philippines). A party
cannot be allowed to go back on his own acts and representations to the prejudice of the other party who, in
good faith, relied upon them (Philippine National Bank v. Intermediate Appellate Court, et al., 189 SCRA 680 [1990]).

Taken
in this light, petitioner is
liable for the transaction entered into by Tiu Huy Tiac on his behalf. Thus, even when the agent has exceeded his
authority, the principal is solidarily liable with the agent if the former
allowed the latter to act as though he had full powers (Article 1911 Civil
Code), as in the case at bar.

Finally, although it may
appear that Tiu Huy Tiac defrauded his principal (petitioner) in not turning
over the proceeds of the transaction to the latter, such fact cannot in any way
relieve nor exonerate petitioner of his liability to private respondent. For it is an equitable maxim that as between
two innocent parties, the one
who made it possible for the wrong to be done should be the one to bear
the resulting loss (Francisco
vs. Government Service Insurance System, 7 SCRA 577 [1963]).

Inasmuch as the
fundamental issue of the capacity or incapacity of the purported agent Tiu Huy
Tiac, has already been resolved, the Court deems it unnecessary to resolve the
other peripheral issues raised by petitioner.

WHEREFORE, the instant petition is
hereby DENIED for lack of merit. Costs
against petitioner.

SO ORDERED.

Feliciano, (Chairman), Romero, Melo, and Vitug, JJ., concur.