G.R. No. L-28896 - Commissioner of Internal Revenue vs. Algue, Inc.

Petitioner: Kue Cuison, a sole proprietorship trading as “Kue Cuison Paper Supply,” engaged in the purchase and sale of newsprint, bond paper, and scrap with business locations in Baesa, Quezon City and Sto. Cristo, Binondo, Manila.
Respondent: Valiant Investment Associates, a partnership duly organized under Philippine laws with its business address in Kalookan City.

From December 4, 1979, to February 15, 1980, Valiant Investment Associates delivered various kinds of paper products amounting to P297,487.30 to Lilian Tan of LT Trading.
The deliveries were made based on orders allegedly placed by Tiu Huy Tiac, who was then employed at petitioner’s Binondo office.
Lilian Tan, on receiving the merchandise, made a payment by issuing checks payable to cash at the specific request of Tiu Huy Tiac.
Tiu Huy Tiac, in turn, issued nine postdated checks to the respondent as a promise of payment, which were subsequently dishonored by the drawee bank.

After the dishonor of the checks, Valiant Investment Associates made several demands upon petitioner for payment of the merchandise price, asserting that Tiu Huy Tiac was acting as petitioner’s authorized manager.
Petitioner denied any involvement in the transaction executed by Tiu Huy Tiac and refused to pay the disputed sum.
Private respondent initiated an action for the collection of P297,487.30, representing the sale price of the merchandise.
The trial court dismissed the complaint for lack of merit; however, on appeal, the decision was modified and subsequently reversed by the Court of Appeals ordering petitioner to pay the amount with interest, attorney’s fees, and costs.

Testimonies established that petitioner introduced Tiu Huy Tiac as the manager of the Sto. Cristo branch to Bernardino Villanueva, respondent’s manager.
Lilian Tan testified that she knew Tiu Huy Tiac was the manager of petitioner’s branch, a fact further corroborated by longstanding business relations with petitioner.

In open court, petitioner admitted that Tiu Huy Tiac was, in fact, managing his Sto. Cristo, Binondo branch at the time of the transaction.
Petitioner’s daughter, Imelda Kue Cuison, corroborated that Lilian Tan was a regular business associate of the petitioner, reinforcing the perception of Tiu Huy Tiac’s role as manager.

A reservation for the production of an invoice was initially made by petitioner’s counsel but later withdrawn, thereby bolstering the respondent’s presentation of its case.

Following Tiu Huy Tiac’s departure, petitioner even sent communications to customers notifying them that Tiu Huy Tiac was no longer associated with the business—a tacit acknowledgment of his previous role.

Whether Tiu Huy Tiac possessed the requisite authority from petitioner to bind him in the transaction with Valiant Investment Associates.
Whether petitioner’s representations, both through his actions and admissions, amounted to holding out Tiu Huy Tiac as an authorized agent, thereby estopping petitioner from denying such authority.

The admissibility and weight of the testimonies of Bernardino Villanueva and Lilian Tan in proving Tiu Huy Tiac’s status as manager, despite allegations of self-serving motives.
The impact of the withdrawal of the reservation to produce the transaction invoice on assessing the credibility and completeness of the evidence presented.