DY, CZARA LORAINE F.

3B SEPTEMBER 7, 2017

ARTICLES 1910-1918

PHILIPPINE NATIONAL BANK, plaintiff-appellee, vs. ESTANISLAO PALMA GIL, ET

AL., defendants-appellants.

G.R. No. L-33796, February 17, 1931, MALCOLM, J.:

FACTS:

Estanislao Palma Gil is a proprietor who resides in Davao. He has a daughter named Leonila Palma
Gil, who married to Alejandro Iñigo. Estanislao executed a general power of attorney in favor of
his son-in-law, authorizing Alejandro, among others, to obtain loans upon the security of real or
personal property, with interest and under the terms and conditions which he thinks beneficial.

Alejandro was able to obtain credit for himself personally from the Philippine National Bank
(PNB) for a number of years. Also, two mortgages were executed on February 11, 1919, which
were noted as encumbrances affecting properties of the ownership of Estanislao, and signed
“Estanislao Palma Gil, By: A. Iñigo, as attorney, and also, as husband of the other debtor, Leonila
Palma Gil de Iñigo, Mortgage Debtors”. In these two mortgages Estanislao and Leonila were
named as mortgagors and PNB as mortgagee.

A third mortgage of property owned by Estanislao was executed, where the mortgagor was
Alejandro and the mortgagee was PNB. This time, there is no recital as to Alejandro’s capacity in
mortgaging. As before indicated, this last mortgage was signed " Estanislao Palma Gil, By: A.
Iñigo." This mortgage was not noted on the title of Estanislao Palma Gil.

On January 7, 1926, a renewal promissory note payable 30 days after date, calling for the amount
of P26,760, with interest at the rate of 12% per annum from date and with a 10% fee for collection
expenses, was taken by PNB. As before indicated, the note was signed "Estanislao Palma Gil, By:
A. Iñigo, A. Iñigo." Payments of the interest were made up to the 29th of November, 1926.

Now, PNB seeks to recover from Estanislao Palma Gil and Leonila Palma Gil the sum of P26,760,
with accumulated interest, and attorney's fees, evidenced by the promissory note, and in its default,
to foreclose the three mortgages. It prosecuted its action successfully in the Court of First Instance
of Davao. Hence, this appeal.

ISSUE:

Whether or not the Alejandro as an agent has bound Estanislao in mortgaging the latter’s
properties.

HELD:

The answer must be qualified. For the promissory note and the first two mortgages, these were
executed by Alejandro for Estanislao by virtue power of attorney authorizing Alejandro in such
business dealings. Such as the case, the principal must fulfill the obligations contracted by the
DY, CZARA LORAINE F. 3B SEPTEMBER 7, 2017

agent within the scope of his authority. This two mortgages contained descriptive recitals
indicative of the fact that Alejandro was acting in representation of Estanislao.

However, as to the third mortgage, it mortgage was executed by Alejandro personally. Besides,
while the property mortgaged was not the property of Alejandro, there was to be found in the
mortgage absolutely no descriptive recitals indicative of the fact that he was acting in
representation of Estanislao. Inasmuch as the mortgagor has no title at all to the property, the
mortgage is void and it neither bound the principal.

As to Leonila, she did not sign the promissory note, and while she did sign the two mortgages, this
seems to have been merely a precautionary measure, for the certificates of title to the property
mortgaged stand in the name of Estanislao.

Hence, the Court ordered the first two mortgages to be sold and defendants to pay PNB the sum
of P26,760, with accumulated interest, and attorney's fees.