RURAL BANK OF MILAOR v.

OCFEMIA

RURAL BANK OF MILAOR v. OCFEMIA

G.R. No. 137686; February 8, 2000

Ponente: J. Vitug

FACTS:

The evidence presented by the respondents through the testimony of Marife O. Niño, shows that she is
the daughter of Francisca Ocfemia and the late Renato Ocfemia who died on July 23, 1994. The parents
of her father, Renato Ocfemia, were Juanita Arellano Ocfemia and Felicisimo Ocfemia.

Marife O. Niño knows the five (5) parcels of land which are located in Bombon, Camarines Sur and that
they are the ones possessing them which were originally owned by her grandparents. During the lifetime
of her grandparents, respondents mortgaged the said five (5) parcels of land and two (2) others to the
Rural Bank of Milaor.

The spouses Felicisimo Ocfemia and Juanita Arellano Ocfemia were not able to redeem the mortgaged
properties consisting of 7 parcels of land and so the mortgage was foreclosed and thereafter ownership
thereof was transferred to the bank. Out of the 7 parcels that were foreclosed, 5 of them are in the
possession of the respondents because these 5 parcels of land were sold by the bank to the parents of
Marife O. Niño as evidenced by a Deed of Sale executed in January 1988.

The aforementioned 5 parcels of land subject of the deed of sale, have not been, however transferred in
the name of the parents of Merife O. Niño after they were sold to her parents by the bank because
according to the Assessor's Office the five (5) parcels of land, subject of the sale, cannot be transferred in
the name of the buyers as there is a need to have the document of sale registered with the Register of
Deeds of Camarines Sur.

In view of the foregoing, Marife O. Niño went to the Register of Deeds of Camarines Sur with the Deed of
Sale in order to have the same registered. The Register of Deeds, however, informed her that the
document of sale cannot be registered without a board resolution of the Bank. Marife Niño then went to
the bank, showed to it the Deed of Sale, the tax declaration and receipt of tax payments and requested
the bank for a board resolution so that the property can be transferred to the name of Renato Ocfemia
the husband of petitioner Francisca Ocfemia and the father of the other respondents having died
already.

Despite several requests, the bank refused her request for a board resolution and made many alibis. She
was told that the bank had a new manager and it had no record of the sale.

ISSUE:

Whether the board of directors of a rural banking corporation be compelled to confirm a deed of
absolute sale of real property which deed of sale was executed by the bank manager without prior
authority of the board of directors of the rural banking corporation

HELD:

Yes, the board of directors can be compelled to confirm a deed of absolute sale even though the bank
manager executed such deed without prior authority from the banking corporation.

The Supreme Court ruled that the bank acknowledged, by its own acts or failure to act, the authority of
the manager to enter into binding contracts. After the execution of the Deed of Sale, respondents
occupied the properties in dispute and paid the real estate taxes due thereon. If the bank management
believed that it had title to the property, it should have taken some measures to prevent the
infringement or invasion of its title thereto and possession thereof.

In this light, the bank is estopped from questioning the authority of the bank manager to enter into the
contract of sale. If a corporation knowingly permits one of its officers or any other agent to act within the
scope of an apparent authority, it holds the agent out to the public as possessing the power to do those
acts; thus, the corporation will, as against anyone who has in good faith dealt with it through such agent,
be estopped from denying the agent's authority.
Unquestionably, petitioner has authorized Tena to enter into the Deed of Sale. Accordingly, it has a clear
legal duty to issue the board resolution sought by respondents. Having authorized her to sell the
property, it behooves the bank to confirm the Deed of Sale so that the buyers may enjoy its full use.

CUISON vs. CA and Valiant

G.R. No. 88539

October 26, 1993

FACTS: Kue Cuison is a sole proprietorship engaged in the purchase and sale of newsprint, bond paper
and scrap.

Valiant Investment Associates delivered various kinds of paper products to a certain Tan. The deliveries
were made by Valiant pursuant to orders allegedly placed by Tiac who was then employed in the
Binondo office of petitioner. Upon delivery, Tan paid for the merchandise by issuing several checks
payable to cash at the specific request of Tiac. In turn, Tiac issued nine (9) postdated checks to Valiant as
payment for the paper products. Unfortunately, sad checks were later dishonored by the drawee bank.

Thereafter, Valiant made several demands upon petitioner to pay for the merchandise in question,
claiming that Tiac was duly authorized by petitioner as the manager of his Binondo office, to enter into
the questioned transactions with Valiant and Tan. Petitioner denied any involvement in the transaction
entered into by Tiac and refused to pay Valiant.

Left with no recourse, private respondent filed an action against petitioner for the collection of sum of
money 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 CA. CA ordered petitioner to pay Valiant with the sum plus
interest, AF and costs.
ISSUE: WON Tiac possessed the required authority from petitioner sufficient to hold the latter liable for
the disputed transaction

HELD:

YES

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

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. 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.”

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.
It is evident from the records that by his own acts and admission, petitioner held out Tiac to the public as
the manager of his store in Binondo. More particularly, petitioner explicitly introduced to Villanueva,
Valiant’s manager, as his (petitioner’s) branch manager as testified to by Villanueva. Secondly, Tan, who
has been doing business with petitioner for quite a while, also testified that she knew Tiac to be the
manager of the Binondo branch. Even petitioner admitted his close relationship with Tiu Huy Tiac when
he said that they are “like brothers” There was thus no reason for anybody especially those transacting
business with petitioner to even doubt the authority of Tiac as his manager in the Binondo branch.

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. Taken in this light,. petitioner is liable for the
transaction entered into by 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 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