AGENCY

121. Prudential Bank vs CA (and Aurora Cruz)

[LOST MONEY PLACEMENT]
Private respondent Aurora Cruz invested P200,000 in Central Bank bills with
Prudential Bank for a period of 63 days with 13.75% annual interest. The transaction
was evidenced by a Confirmation of Sale and a Debit Memo issued to her by the
bank's employee Susan Quimbo.
When the placement matured, Cruz returned to the bank to reinvest her money
placement. Quimbo again attended to her and issued to her a Credit and Debit
Memo. Cruz was asked to sign a withdrawal slip for P196,122.98 (P200,000 less
prepaid interest), supposedly as the bank's new requirement.
Cruz returned to the bank later on to withdraw her P200,000, but the bank informed
her that she had already withdrawn her investment. Hysterical, she followed up the
bank everyday for its return, until the latter replied negatively.
She now files this complaint for breach of contract against petitioner to recover her
money plus damages. The bank denied liability, insisting that Cruz had withdrawn her
investment, while the bank also filed a third party complaint against Quimbo who
didn't answer.
ISSUE: WoN petitioner can be held liable for its employee's (Susan Quimbo) acts
HELD: YES.

""He who does a thing by an agent is considered as doing it himself." This rule is
affirmed by the Civil Code thus:

Art. 1910. The principal must comply with all the obligations which
the agent may have contracted within the scope of his authority.

Art. 1911. 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.

Conformably, we have declared in countless decisions that the principal is liable for
obligations contracted by the agent. The agent's apparent representation yields to the

principal's true representation and the contract is considered as entered into between
the principal and the third person.

A bank is liable for wrongful acts of its officers done in the interests of the bank or in
the course of dealings of the officers in their representative capacity... Application of
these principles in especially necessary because banks have a fiduciary relationship
with the public and their stability depends on the confidence of the people in their
honesty and efficiency. Such faith will be eroded where banks do not exercise strict
care in the selection and supervision of its employees, resulting in prejudice to their
depositors."

122. Cuison vs. Court of Appeals, 227 SCRA 391

Private respondent Valiant Investment Associates delivered various kinds of
paper products worth P297,487.30 to a certain Lilian Tan, upon the
instructions of Tiu Huy Tiac who was then employed as manager of
petitioner's Binondo Office. Petitioner is engaged in the purchase and sale of
newsprint, bond paper and scrap.
As payment to private respondent, Tiac issued 9 postdated checks which
were later dishonored by the drawee bank. PR thus made several demands
upon petitioner to pay for the merchandise, but petitioner denies any
involvement in Tiac's transaction.
ISSUE: whether or not Tiu Huy Tiac possessed the required authority from petitioner
sufficient to hold the latter liable for the disputed transaction.
HELD: YES. Tiac is the manager of petitioner's store due to petitioner's acts:
(1) held him out to the public as the business manager
(2) categorically stated that Tiac was the store's manager
(3) incurred delay in disowning TIac's instructions
(1) held him out to the public as the business manager
"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...

AGENCY
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:"
1.Petitioner explicitly introduced Tiu Huy Tiac to Bernardino Villanueva, respondent's
manager, as his (petitioner's) branch manager as testified to by Bernardino
Villanueva.
2. 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.

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.
(2) categorically stated that Tiac was the store's manager
Additionally, petitioner categorically admitted that "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."
(3) Petitioner also incurred delay in disowning Tiac's transactions.

General perception of Tiu Huy Tiac as the manager of petitioner's Sto. Cristo store,
Tiu Huy Tiac known in the community to be the "kinakapatid" (godbrother) of
petitioner, petitioner admitted his close relationship with Tiu Huy Tiac when he said
that they are "like brothers"