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PRUDENTIAL BANK, petitioner,

vs.
THE COURT OF APPEALS, AURORA CRUZ, respondents.

Monique Q. Ignacio for petitioner.

Eduardo C. Tutaan for private respondent.

CRUZ, J.:

We deal here with another controversy involving the integrity of a bank.

The complaint in this case arose when private respondent Aurora F.


Cruz, * with her sister as co-depositor, invested P200,000.00 in Central Bank bills with the Prudential Bank at its
branch in Quezon Avenue, Quezon City, on June 23, 1986. The placement was for 63 days at 13.75% annual
interest. For this purpose, the amount of P196,122.88 was withdrawn from the depositors' Savings Account No.
2546 and applied to the investment. The difference of P3,877.07 represented the pre-paid interest.

The transaction was evidenced by a Confirmation of Sale 1 delivered to Cruz two days later, together with a Debit
Memo 2 in the amount withdrawn and applied to the confirmed sale. These documents were issued by Susan Quimbo, the
employee of the bank to whom Cruz was referred and who was apparently in charge of such transactions. 3

Upon maturity of the placement on August 25, 1986, Cruz returned to the bank to "roll-over" or renew her
investment. Quimbo, who again attended to her, prepared a Credit Memo 4 crediting the amount of P200,000.00 in
Cruz's savings account passbook. She also prepared a Debit Memo for the amount of P196,122.88 to cover the re-
investment of P200,000.00 minus the prepaid interest of P3,877.02. 5

This time, Cruz was asked to sign a Withdrawal Slip 6 for P196,122.98, representing the amount to be re-invested after
deduction of the prepaid interest. Quimbo explained this was a new requirement of the bank. Several days later, Cruz
received another Confirmation of Sale 7 and a copy of the Debit Memo. 8

On October 27, 1986, Cruz returned to the bank and sought to withdraw her P200,000.00. After verification of her
records, however, she was informed that the investment appeared to have been already withdrawn by her on
August 25, 1986. There was no copy on file of the Confirmation of Sale and the Debit Memo allegedly issued to her
by Quimbo. Quimbo herself was not available for questioning as she had not been reporting for the past week.
Shocked by this information, Cruz became hysterical and burst into tears. The branch manager, Roman Santos,
assured her that he would look into the matter. 9

Every day thereafter, Cruz went to the bank to inquire about her request to withdraw her investment. She received
no definite answer, not even to the letter she wrote the bank which was received by Santos himself. 10Finally, Cruz
sent the bank a demand letter dated November 12, 1986 for the amount of P200,000.00 plus interest. 11 In a reply dated
November 20, 1986, the bank's Vice President Lauro J. Jocson said that there appeared to be an anomaly
and requested Cruz to defer court action as they hoped to settle the matter amicably. 12 Increasingly worried, Cruz sent
another letter reiterating her demand. 13 This time the reply of the bank was unequivocal and negative. She was told that
her request had to be denied because she had already withdrawn the amount she was claiming. 14

Cruz's reaction was to file a complaint for breach of contract against Prudential Bank in the Regional Trial Court of
Quezon City. She demanded the return of her money with interest, plus damages and attorney's fees. In its answer,
the bank denied liability, insisting that Cruz had withdrawn her investment. The bank also instituted a third-party
complaint against Quimbo, who did not file an answer and was declared in default. 15 The bank, however, did not
present any evidence against her.

After trial, Judge Rodolfo A. Ortiz rendered judgment in favor of the plaintiffs and disposed as follows:
ACCORDINGLY, judgment is hereby rendered ordering the defendant/third-party plaintiff to pay to
the plaintiffs the following amounts:

1. P200,000.00, plus interest thereon at the rate of 13.75% per annum from October 27, 1986, until
fully paid;

2. P30,000.00, as moral damages;

3. P20,000.00, as exemplary damages; and

4. P25,000.00, as reasonable attorney's fees.

The counterclaim and the third-party complaint of the defendant/third-party plaintiff are dismissed.

With costs against the defendant/third-party plaintiff.

The decision was affirmed in toto on appeal to the respondent court.

The judgment of the Court of Appeals 16 is now faulted in this petition, mainly on the ground that the bank should not
have been found liable for a quasi-delict when it was sued for breach of contract.

The petition shall fail. The petitioner is quibbling. It appears to be merely temporizing to delay enforcement of the
liability clearly established against it.

The basic issues are factual. The private respondent claims she has not yet collected her investment of
P200,000.00 and has submitted in proof of their contention the Confirmation of Sale and the Debit Memo issued to
her by Quimbo on the official forms of the bank. The petitioner denies her claim and points to the Withdrawal Slip,
which it says Cruz has not denied having signed. It also contends that the Confirmation of Sale and the Debit Memo
are fake and should not have been given credence by the lower courts.

The findings of the trial court on these issues have been affirmed by the respondent court and we see no reason to
disturb them. The petitioner has not shown that they have been reached arbitrarily or in disregard of the evidence of
record. On the contrary, we find substantial basis for the conclusion that the private respondents signed the
Withdrawal Slip only as part of the bank's new procedure of re-investment. She did not actually receive the amount
indicated therein, which she was made to understand was being re-invested in her name. The bank itself so assured
her in the Confirmation of Sale and the Debit Memo later issued to her by Quimbo.

Especially persuasive are the following observations of the trial court: 17

What is more, it could not be that plaintiff Aurora F. Cruz withdrew only the amount of P196,122.98
from their savings account, if her only intention was to make such a withdrawal. For, if, indeed, it was
the desire of the plaintiffs to withdraw their money from the defendant/third-party plaintiff, they could
have withdrawn an amount in round figures. Certainly, it is unbelievable that their withdrawal was in
the irregular amount of P196,122.98 if they really received it. On the contrary, this amount, which is
the price of the Central Bank bills rolled over, indicates that, as claimed by plaintiff Aurora F. Cruz,
she did not receive this money, but it was left by her with the defendant/third-party plaintiff in order to
buy Central Bank bills placement for another sixty-three (63) days, for which she signed a withdrawal
slip at the instance of third-party defendant Susan Quimbo who told her that it was a new bank
requirement for the roll-over of a matured placement which she trustingly believed.

Indeed, the bank has not explained the remarkable coincidence that the amount indicated in the withdrawal slip
is exactly the same amount Cruz was re-investing after deducting therefrom the pre-paid interest.

The bank has also not, succeeded in impugning the authenticity of the Confirmation of Sale and the Debit Memo
which were made on its official, forms. These are admittedly not available to the general public or even its
depositors and are handled only by its personnel. Even assuming that they were not signed by its authorized
officials, as it claims, there was no obligation on the part of Cruz to verify their authority because she had the right to
presume it. The documents had been issued in the office of the bank itself and by its own employees with whom she
had previously dealt. Such dealings had not been questioned before, much leas invalidated. There was absolutely
no reason why she should not have accepted their authority to act on behalf of their employer.

It is also worthy of note and wonder that although the bank impleaded Quimbo in a third-party complaint, it did
not pursue its suit even when she failed to answer and was declared in default. The bank did not introduce evidence
against her although it could have done so under the rules. No less remarkably, it did not call on her to testify on its
behalf, considering that under the circumstances claimed by it, she would have been the best witness to show that
Cruz had actually withdrawn her P200,000.00 placement. Instead, the bank chose to rely on its other employees
whose testimony was less direct and categorical than the testimony Quimbo could have given.

We do not find that the Court of Appeals held the bank liable on a quasi-delict. The argument of the petitioner on this
issue is pallid, to say the least, consisting as it does only of the observation that the article cited by the respondent
court on the agent's liability falls under the heading in the Civil Code on quasi-delicts. On the other hand, the
respondent court clearly declared that:

The defendant/third-party plaintiff being liable for the return of the P200,000.00 placement of the
plaintiffs, the extent of the liability of the defendant/third-party plaintiff for damages resultant
thereof, which is contractual, is for all damages which may be reasonably attributed to the non-
performance of the obligation, . . .

xxx xxx xxx

Because of the bad faith of the defendant/third-party plaintiff in its breach of its contract with the
plaintiffs, the latter are, therefore, entitled to an award of moral damages . . . (Emphasis supplied)

There is no question that the petitioner was made liable for its failure or refusal to deliver to Cruz the amount she
had deposited with it and which she had a right to withdraw upon its maturity. That investment was acknowledged
by its own employees, who had the apparent authority to do so and so could legally bind it by its acts vis-a-vis Cruz.
Whatever might have happened to the investment whether it was lost or stolen by whoever was not the
concern of the depositor. It was the concern of the bank.

As far as Cruz was concerned, she had the right to withdraw her P200,000.00 placement when it matured pursuant
to the terms of her investment as acknowledged and reflected in the Confirmation of Sale. The failure of the bank to
deliver the amount to her pursuant to the Confirmation of Sale constituted its breach of their contract, for which it
should be held liable.

The liability of the principal for the acts of the agent is not even debatable. Law and jurisprudence are clearly and
absolutely against the petitioner.

Such liability dates back to the Roman Law maxim, Qui per alium facit per seipsum facere videtur. "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. 18

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 but not for acts outside the scope of their authority.
(9 c.q.s. p. 417) A bank holding out its officers and agent as worthy of confidence will not be permitted to
profit by the frauds they may thus be enabled to perpetrate in the apparent scope of their employment;
nor will it be permitted to shirk its responsibility for such frauds, even though no benefit may accrue to the
bank therefrom (10 Am Jur 2d, p. 114). Accordingly, a banking corporation is liable to innocent third
persons where the representation is made in the course of its business by an agent acting within the
general scope of his authority even though, in the particular case, the agent is secretly abusing his
authority and attempting to perpetrate a fraud upon his principal or some other person, for his own
ultimate benefit (McIntosh v. Dakota Trust Co., 52 ND 752, 204 NW 818, 40 ALR 1021.)

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.

It would appear from the facts established in the case before us that the petitioner was less than eager to present
Quimbo at the trial or even to establish her liability although it made the initial effort which it did not pursue to
hold her answerable in the third-party complaint. What ever happened to her does not appear in the record. Her
absence from the proceedings feeds the suspicion of her possible misdeed, which the bank seems to have
studiously ignored by its insistence that the missing money had been actually withdrawn by Cruz. By such
insistence, the bank is absolving not only itself but also, in effect and by extension, the disappeared Quimbo who
apparently has much to explain.

We agree with the lower courts that the petitioner acted in bad faith in denying Cruz the obligation she was claiming
against it. It was obvious that an irregularity had been committed by the bank's personnel, but instead of repairing
the injury to Cruz by immediately restoring her money to her, it sought to gloss over the anomaly in its own
operations.

Cruz naturally suffered anxious moments and mental anguish over the loss of the investment. The amount of
P200,000.00 is not small even by present standards. By unjustly withholding it from her on the unproved defense
that she had already withdrawn it, the bank violated the trust she had reposed in it and thus subjected itself to
further liability for moral and exemplary damages.

If a person dealing with a bank does not read the fine print in the contract, it is because he trusts the bank and relies
on its integrity. The ordinary customer applying for a loan or even making a deposit (and so himself extending the
loan to the bank) does not bother with the red tape requirements and the finicky conditions in the documents he
signs. His feeling is that he does not have to be wary of the bank because it will deal with him fairly and there is no
reason to suspect its motives. This is an attitude the bank must justify.

While this is not to say that bank regulations are meaningless or have no binding effect, they should, however, not
be used for covering up the fault of bank employees when they blunder or, worse, intentionally cheat him. The
misdeeds of such employees must be readily acknowledged and rectified without delay. The bank must always act
in good faith. The ordinary customer does not feel the need for a lawyer by his side every time he deals with a bank
because he is certain that it is not a predator or a potential adversary. The bank should show that there is really no
reason for any apprehension because it truly deserves his faith in it.

WHEREFORE, the petition is DENIED and the appealed decision is AFFIRMED, with costs against the petitioner. It
is so ordered

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.

Leighton R. Siazon for petitioner.


Melanio L. Zoreta for private respondent.

BIDIN, J.:

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, sad
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 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, forin 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 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 theother hand, a
party's testimony in court is sworn and affords the other party the opportunity for cross-examination
(emphasis 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, 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:

. . . 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 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:

xxx xxx xxx

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, emphasis 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, this 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 commission 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 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 issolidarily liable with
the agent if the former allowed the latter to act as though he had full powers."
(Emphasis 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 theagent's misdeed is of no moment.

Tiu Huy Tiac, therefore, by petitioner's own representations and manifestations, became an agent of petitioner by
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 fact 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 in hereby DENIED for lack of merit. Costs against petitioner.

SO ORDERED.