Litonjua v.
Fernandez
Facts:
- Mrs. Lourdes Alimario and Agapito Fisico who worked as brokers, offered to sell to the
petitioners, Antonio K. Litonjua and Aurelio K. Litonjua, Jr., the parcels of land.
- the owners of the properties were represented by Mary Mediatrix Fernandez and Gregorio T.
Eleosida, respectively. The brokers told the petitioners that they were authorized by
respondent Fernandez to offer the property for sale.
- The petitioners and respondent Fernandez agreed that the petitioners would buy the property
consisting of 36,742 square meters, for the price of P150 per square meter, or the total sum of
P5,098,500. They also agreed that the owners would shoulder the capital gains tax, transfer
tax and the expenses for the documentation of the sale.
- The petitioners and respondent Fernandez also agreed to meet on December 8, 1995 to
finalize the sale. It was also agreed upon that on the said date, respondent Fernandez would
present a special power of attorney executed by the owners of the property, authorizing her to
sell the property for and in their behalf, and to execute a deed of absolute sale thereon. The
petitioners would also remit the purchase price to the owners, through respondent Fernandez.
However, only Agapito Fisico attended the meeting. He informed the petitioners that
respondent Fernandez was encountering some problems with the tenants and was trying to
work out a settlement with them.[7] After a few weeks of waiting, the petitioners wrote
respondent Fernandez on January 5, 1995, demanding that their transaction be finalized by
January 30, 1996.
- When the petitioners received no response from respondent Fernandez, the petitioners sent
her another Letter[9] dated February 1, 1996, asking that the Deed of Absolute Sale covering
the property be executed in accordance with their verbal agreement dated November 27,
1995. The petitioners also demanded the turnover of the subject properties to them within
fifteen days from receipt of the said letter; otherwise, they would have no option but to protect
their interest through legal means.
- Fernandez, however rejected the claims of the petitioner.
- On April 12, 1996, the petitioners filed the instant Complaint for specific performance with
damages[13] against respondent Fernandez and the registered owners of the property.
- After trial on the merits, the trial court rendered judgment in favor of the petitioners .
- the appellate court promulgated its decision reversing and setting aside the judgment of the
trial court and dismissing the petitioners’ complaint, as well as the respondents’ counterclaim.
Issue/s:
- WHETHER OR NOT THERE WAS A PERFECTED CONTRACT OF SALE BETWEEN THE
PARTIES.
- WHETHER OR NOT THE CONTRACT FALLS UNDER THE COVERAGE OF THE STATUTE
OF FRAUDS.
Held:
- the petitioners assert that there was a perfected contract of sale between the petitioners as
buyers and the respondents-owners, through respondent Fernandez, as sellers. The
petitioners contend that the perfection of the said contract is evidenced by the January 16,
1996 Letter of respondent Fernandez.
- The petitioners argue that the letter is a sufficient note or memorandum of the perfected
contract, thus, removing it from the coverage of the statute of frauds. The letter specifically
makes reference to a sale which respondent Fernandez agreed to initially, but which the latter
withdrew because of the emergence of some people who claimed to be tenants on both
parcels of land.
- The petitioners’ contention is bereft of merit. In its decision, the appellate court ruled that the
Letter of respondent Fernandez dated January 16, 1996 is hardly the note or memorandum
contemplated under Article 1403(2)(e) of the New Civil Code.
- In this case, we agree with the findings of the appellate court that there was no perfected
contract of sale between the respondents-owners, as sellers, and the petitioners, as buyers.
- There is no documentary evidence on record that the respondents-owners specifically
authorized respondent Fernandez to sell their properties to another, including the petitioners.
Article 1878 of the New Civil Code provides that a special power of attorney is necessary to
enter into any contract by which the ownership of an immovable is transmitted or acquired
either gratuitously or for a valuable consideration,[37] or to create or convey real rights over
immovable property,[38] or for any other act of strict dominion.[39] Any sale of real property by
one purporting to be the agent of the registered owner without any authority therefor in writing
from the said owner is null and void.[40] The declarations of the agent alone are generally
insufficient to establish the fact or extent of her authority.[41] In this case, the only evidence
adduced by the petitioners to prove that respondent Fernandez was authorized by the
respondents-owners is the testimony of petitioner Antonio Litonjua that respondent Fernandez
openly represented herself to be the representative of the respondents-owner.
Fallo:
- IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The decision of the appellate court
is AFFIRMED IN TOTO. Costs against the petitioners.
SO ORDERED.
Veloso v. CA
 - Thus, there was no need to execute a separate and special power of attorney since the
general power of attorney had expressly authorized the agent or attorney in fact the power to
Facts: sell the subject property. The special power of attorney can be included in the general power
when it is specified therein the act or transaction for which the special power is required.
- Petitioner Francisco Veloso was the owner of a parcel of land.
- The title was registered in the name of Francisco A. Veloso, single,[3] on October 4, 1957.[4] Fallo:
The said title was subsequently canceled and a new one, Transfer Certificate of Title No. - ACCORDINGLY, the petition for review is hereby DENIED for lack of merit.
180685, was issued in the name of Aglaloma B. Escario, married to Gregorio L. Escario, on SO ORDERED.
May 24, 1988.
- On August 24, 1988, petitioner Veloso filed an action for annulment of documents,
reconveyance of property with damages and preliminary injunction and/or restraining order.
- Petitioner alleged therein that he was the absolute owner of the subject property and he never
authorized anybody, not even his wife, to sell it. He alleged that he was in possession of the
title but when his wife, Irma, left for abroad, he found out that his copy was missing. He then
verified with the Registry of Deeds of Manila and there he discovered that his title was already
canceled in favor of defendant Aglaloma Escario. The transfer of property was supported by a
General Power of Attorney[6] dated November 29, 1985 and Deed of Absolute Sale, dated
November 2, 1987, executed by Irma Veloso, wife of the petitioner and appearing as his
attorney-in-fact, and defendant Aglaloma Escario.
- .[7] Petitioner Veloso, however, denied having executed the power of attorney and alleged that
his signature was falsified. He also denied having seen or even known Rosemarie Reyes and
Imelda Santos, the supposed witnesses in the execution of the power of attorney. He
vehemently denied having met or transacted with the defendant.
- Defendant Aglaloma Escario in her answer alleged that she was a buyer in good faith and
denied any knowledge of the alleged irregularity. She allegedly relied on the general power of
attorney of Irma Veloso which was sufficient in form and substance and was duly notarized.
- Francisco Veloso testified that he acquired the subject property from the Philippine Building
Corporation, as evidenced by a Deed of Sale dated October 1, 1957.[10] He married Irma
Lazatin on January 20, 1962.[11] Hence, the property did not belong to their conjugal
partnership.
- In the decision of the trial court dated March 9, 1990,[12] defendant Aglaloma Escaro was
adjudged the lawful owner of the property as she was deemed an innocent purchaser for value.
- Court of Appeals. The respondent court affirmed in toto the findings of the trial court.

Issue/s:

- whether or not there was a valid sale of the subject property.

Held:

- An examination of the records showed that the assailed power of attorney was valid and
regular on its face. It was notarized and as such, it carries the evidentiary weight conferred
upon it with respect to its due execution. While it is true that it was denominated as a general
power of attorney, a perusal thereof revealed that it stated an authority to sell, to wit: “2. To buy
or sell, hire or lease, mortgage or otherwise hypothecate lands, tenements and hereditaments
or other forms of real property, more specifically TCT No. 49138, upon such terms and
conditions and under such covenants as my said attorney shall deem fit and proper.”[16]
San Diego v. Nombre & Escanlar
Facts:
- On May 1, 1960, Nombre, in his capacity was judicial administrator of the intestate estate
subject of the Sp. Proc. stated above, leased one of the properties of the estate (a fishpond
identified as Lot No. 1617 of the cadastral survey of Kabankaban, Negros Occidental), to
Pedro Escanlar, the other respondent.
- The terms of the lease was for three (3) years, with a yearly rental of P3,000.00 to expire on
May 1, 1963, the transaction having been done, admittedly, without previous authority or
approval of the Court where the proceedings was pending.
- On January 17, 1961, Nombre was removed as administrator by Order of the court and one
Sofronio Campillanos was appointed in his stead. The appeal on the Order of Nombre's
removal is supposedly pending with the Court of Appeals.
- Respondent Escanlar was cited for contempt, allegedly for his refusal to surrender the fishpond
to the newly appointed administrator.
- On March 20, 1961, Campillanos filed a motion asking for authority to execute a lease contract
of the same fishpond, in favor of petitioner herein, Moises San Diego, Sr., for 5 years from
1961, at a yearly rental of P5,000.00. Escanlar was not notified of such motion.
- The opposition notwithstanding, the Court on April 8, 1961, in effect declared that the contract
in favor of Escanlar was null and void, for want of judicial authority and that unless he would
offer the same as or better conditions than the prospective lessee, San Diego, there was no
good reason why the motion for authority to lease the property to San Diego should not be
granted.
- The Civil Code, on lease, provides:
If a lease is to be recorded in the Registry of Property, the following persons cannot constitute
the same without proper authority, the husband with respect to the wife's paraphernal real
estate, the father or guardian as to the property of the minor or ward, and the manager without
special power. (Art. 1647).
- The same Code, on Agency, states:
Special powers of attorneys are necessary in the following cases:
(8) To lease any real property to another person for more than one year. (Art. 1878)
- We believe that the Court of Appeals was correct in sustaining the validity of the contract of
lease in favor of Escanlar, notwithstanding the lack of prior authority and approval. The law and
prevailing jurisprudence on the matter militates in favor of this view. While it may be admitted
that the duties of a judicial administrator and an agent (petitioner alleges that both act in
representative capacity), are in some respects, identical, the provisions on agency (Art. 1878,
C.C.), should not apply to a judicial administrator.
- A judicial administrator is appointed by the Court. He is not only the representative of said
Court, but also the heirs and creditors of the estate (Chua Tan v. Del Rosario, 57 Phil. 411). A
judicial administrator before entering into his duties, is required to file a bond. These
circumstances are not true in case of agency. The agent is only answerable to his principal.
Fallo:
- WHEREFORE, the decision appealed from should be, as it is hereby affirmed, in all respects, with
costs against petitioner Moises San Diego, Sr.

Issue/s:

- The controlling issue in this case is the legality of the contract of lease entered into by the
former administrator Nombre, and Pedro Escanlar on May 1, 1960.

- Whether a judicial administrator can validly lease property of the estate without prior judicial
authority and approval", and "whether the provisions of the New Civil Code on Agency should
apply to judicial administrators."

Held:

- . It has been held that even in the absence of such special powers, a contract or lease for more
than 6 years is not entirely invalid; it is invalid only in so far as it exceeds the six-year limit
(Enrique v. Watson Company, et al., 6 Phil. 84).
- No such limitation on the power of a judicial administrator to grant a lease of property placed
under his custody is provided for in the present law. Under Article 1647 of the present Civil
Code, it is only when the lease is to be recorded in the Registry of Property that it cannot be
instituted without special authority. Thus, regardless of the period of lease, there is no need of
special authority unless the contract is to be recorded in the Registry of Property. As to
whether the contract in favor of Escanlar is to be so recorded is not material to our inquiry.
Acenas v. Sison: Fallo:

- WHEREFORE, the decision dated March 7, 1960 of the lower court is modified in the sense that
defendant Teofilo Sison is not liable and that defendant Angela Sison alone is liable to the plaintiffs for
Facts: the amount adjudged in the decision. No costs.

- Angela Sison executed a promissory note, promising to pay Emma S. Acenas the sum of
P8,160 in 26 installments, the first falling due on November 30, 1956 and the last on November
30, 1960.

- The note provided that failure to pay two consecutive installments would make the balance due
and demandable.
- Mrs. Sison was able to pay up to August 31, 1957 only. Upon her failure to pay the balance of
the note, alleged to be in the sum of P8,391.60, she was sued. Her husband, Teofilo Sison,
was joined as a defendant pursuant to Article 113 of the Civil Code.
- In their answer, Mr. Sison denied liability on the ground that he had not signed the promissory
note.
- counsel for the defendants moved for the postponement of the hearing hereof in view of the
absence of his clients and that he needs time within which to confer with them for the purpose
of amicably settling this case.
- On the other hand, when the court indicated to the defendant's counsel that there seems to be
no defense on the part of the defendants in this case, and that it would be for the best interest
of the latter if the case is terminated by way of judgment on the pleadings or confession of
judgment, counsel for defendants offered no objection and asked that confession of judgment
by the defendants may be entered in this case provided that the corresponding writ of
execution thereof should not be issued until June 30, 1960, to which counsel for the plaintiffs
agreed.
- In view thereof, and upon motion of counsel for defendants
- The Trial Court Ruled in favor of Acenas.

- Their motion for reconsideration and new trial having been denied, defendants appealed
directly to this Court. Appellant Teofilo Sison contends that his lawyer agreed to a judgment on
the pleadings but not to a confession of judgment; that he never authorized his lawyer to
confess judgment for him and that at any rate he was not liable on the note of his wife.

Issue/s:

- Was the counsel for the Sisons authorized to enter a judgement of confession?

Held;

- We hold therefore that it was error for the trial court to accept the confession made by counsel
without ascertaining his authority to do so, at least with respect to Teofilo Sison. With respect
to Angela Sison, however, the judgment will be maintained, there being no claim in this appeal
that the confession of judgment made in her behalf was unauthorized. In fact her liability is
admitted here.
Dungo v. Lopena:
Facts:
- On September 10, 1959, herein petitioner Anastacio Duñgo and one Rodrigo S. Gonzales
purchased 3 parcel of land from the respondents Adriano Lopena and Rosa Ramos for the
total price of P269,804.00. Of this amount P28.000.00 was given as down payment with the
agreement that the balance of P241,804.00 would be paid in 6 monthly installments.
- To secure the payment of the balance Anastacio Duñgo and Rodrigo S. Gonzales, the
vendees, on September 11, 1958, executed over the same 3 parcels of land Deed of Real
Estate Mortgage in favor of the respondent Adriano Lopena and Rosa Ramos.
- The vendees defaulted on the first installment. It resulted then that on November 7, 1959, the
vendors, herein respondents Adriano Lopena and Rosa Ramos, filed a complaint for the
foreclosure of the aforementioned real estate mortgage.
- Before the cases could be tried, a compromise agreement dated January 15, 1960 was
submitted to the lower court for approval. It was signed by herein respondents Adriano Lopena
and Rosa Ramos on one hand, and Rodrigo S. Gonzales, on the other. It was not signed by
the herein petitioner. However, Rodrigo S. Gonzales represented that his signature was for
both himself and the herein petitioner. Moreover, Anastacio Duñgo's counsel of record, Atty.
Manuel O. Chan, the same lawyer who signed and submitted for him the answer to the
complaint, was present at the preparation of the compromise agreement and this counsel
affixed his signature thereto.
- When Anastacio Duñgo (herein petitioner) and Rodrigo S. Gonzales failed to pay the balance
of their indebtedness on June 30, 1960, herein respondents Lopena and Ramos filed on July 5,
1960, a Motion for the Sale of Mortgaged Property. Although this last motion was filed ex parte,
Anastacio Duñgo and Rodrigo S. Gonzales were notified of it by the lower court. Neither of
them, however, despite the notice, filed any opposition thereto. As a result, the lower court
granted the above motion on July 19, 1960, and ordered the sale of the mortgaged property.
- On August 25, 1960, the 3 parcels of land above-mentioned were sold by the Sheriff at a public
auction where at herein petitioners, together with the plaintiffs of the other two cases won as
the highest bidders. The said sheriff's sale was later confirmed by the lower court on August
30, 1960.
- On August 31, 1960, Anastacio Duñgo filed a motion to set aside all the proceedings on the
ground that the compromise agreement dated January 15, 1960 was void ab initio with respect
to him because he did not sign the same. Consequently, he argued, all subsequent
proceedings under and by virtue of the compromise agreement, including the foreclosure sale
of August 25, 1960, were void and null as regards him. This motion to set aside, however, was
denied by the lower court in its order of December 14, 1960.
Issue/s:
- Was the compromise agreement of January 15, 1960, the Order of the same date approving
the same, and, all the proceedings subsequent thereto, valid or void insofar as the petitioner
herein is concerned?
Held:
- Petitioner Anastacio Duñgo insists that the Compromise Agreement was void ab initio and
could have no effect whatsoever against him because he did not sign the same. Furthermore,
as it was void, all the proceedings subsequent to its execution, including the Order approving it,
were similarly void and could not result to anything adverse to his interest.
- However, although the Civil Code expressly requires a special power of attorney in order that
one may compromise an interest of another, it is neither accurate nor correct to conclude that
its absence renders the compromise agreement void. In such a case, the compromise is
merely unenforceable. This results from its nature is a contract. It must be governed by the
rules and the law on contracts.
- ART. 1403. The following contracts are unenforceable, unless they are ratified:
(1) Those entered into in the name of another person by one who has been given no authority
or legal representation, or who has acted beyond his powers;
- Logically, then, the next inquiry in this case should be whether the herein petitioner, Anastacio
Duñgo had or had not ratified the compromise agreement. If he had, then the compromise
agreement was legally enforced against him; otherwise, he should be sustained in his
contention that it never bound him, nor ever could it be made to bind him.
- The ratification of the compromise agreement was conclusively established by the Tri-Party
Agreement of May 1960. It is to be noted that the compromise agreement was submitted to
and approved by the lower court January 15, 1960.
- Besides, this Court has not overlooked the fact that which indeed Anastacio Duñgo was not a
signatory to the compromise agreement, the principal provision of the said instrument was for
his benefit. Originally, Anastacio Duñgo's obligation matured and became demandable on
October 10, 1959. However, the compromise agreement extended the date of maturity to June
30, 1960. More than anything, therefore, the compromise agreement operated to benefit the
herein petitioner because it afforded him more time and opportunity to fulfill his monetary
obligations under the contract. If only for this reason, this Court believes that the herein
petitioner should not be heard to repudiate the said agreement.
- Lastly, the compromise agreement stated "that, should the defendants fail to pay the said
mortgage indebtedness, judgment of foreclosure shall thereafter be entered against the said
defendants.
Fallo:
- WHEREFORE, the petition for certiorari and mandamus filed by the herein petitioner is hereby
dismissed. The order of the lower court dismissing the appeal is her by affirmed, with costs.
Lim Pin v. Liao Tan
Facts:
- subject matter of the petition, is a compromise agreement entered into between the petitioner,
represented by her son, George Hung and the private respondent Conchita Liao Tan both
parties assisted by their respective counsel, during the October 19, 1977 hearing of Civil Case
No. 11716 for unlawful detainer. The complaint for unlawful detainer was filed in the court a
quo on August 12, 1977 by the private respondents against the petitioner.
- Spouses Conchita Liao Tan and Tan Cho Hua alleged in their complaint for unlawful detainer
that the plaintiff Conchita Liao Tan, as owner of a parcel of registered land with improvements
located at Francisco Street, Caloocan City, had leased a portion of it, more particularly known
as 91 Francisco Street, Caloocan City to defendant Lim Pin on a month to month basis but that
the latter starting April, 1977 had not paid the agreed rental stipulated for such month and the
succeeding months thereafter
- despite demand, the defendant refused to vacate the leased premises.
- the defendant Lim Pin, filed her Answer denying the material allegations of the complaint and
protesting the alleged highly "unconscionable and unreasonable" increase of rental demanded
by plaintiffs.
- Through the initiative of the court a quo, the subject compromise agreement was formulated
and executed and it finally became the basis of the October 19, 1977 judgment in Civil Case
No. 11716.
- A writ of execution was issued by the respondent court on the same date. Pursuant to the writ
of execution, the City Sheriff of Caloocan City, Metro Manila served a "Notice of Ejectment"
and "Notice to Levy", both dated February 3, 1978, which were received by the plaintiff on
February 3, 1978. Hence, this petition.
- Article 1878 is found in Title X of the Civil Code on Agency. It states that a special power of
attorney is necessary to compromise, to submit questions to arbitration, to renounce the right
to appeal from a judgment, to waive objections to the venue of an action or to abandon a
prescription already acquired.
- Section 23 of Rule 138 on Attorneys and Admission to the Bar governs the authority of
attorneys to bind their clients and provides that "Attorneys have authority to bind their clients in
any case by any agreement in relation thereto made in writing, and in taking appeal, and in an
matters of ordinary Judicial Procedure, but they cannot, without special authority, compromise
their clients' litigation or receive anything in discharge of their clients' claims but the full amount
in cash."
- The requirements of a special power of attorney in Article 1878 of the Civil Code and of a
special authority in Rule 138 of the Rules of Court refer to the nature of the authorization and
not its form. The requirements are met if there is a clear mandate from the principal specifically
authorizing the performance of the act.
- We are satisfied from the records of this case that Judge Cancio C. Garcia took the necessary
precautionary measures and acted on the basis of satisfactory evidence when he allowed the
compromise agreement to be executed by George Hung the petitioner's son.
Fallo:
- WHEREFORE, the instant petition is hereby DISMISSED for lack of merit. The temporary restraining
order issued by this Court dated February 8, 1978 is LIFTED. The judgment appealed from is
AFFIRMED with costs against the petitioner.
SO ORDERED.

Issue/s:

- Was the representation by Hung and the Counsel in the compromise valid?

Held:

- the petitioner argues that the respondent Judge should not have allowed her son George Hung
and her then counsel, Atty. Pastor Mamaril in her absence to enter into the October 19, 1977
compromise agreement with the private respondent Conchita Liao Tan assisted by her
counsel. She further argues that "... considering that such compromise agreement would
impose onerous obligations upon Petitioner, such as a tremendous increase of rentals in the
premises being leased from Private Respondents from P1,500.00 a month to P5,000.00 a
month," and that said agreement contained admissions by petitioner, the respondent Judge
should have required a written authority and power of attorney from her son and counsel. Her
objections to the validity of the compromise agreement are premised on Article 1878 of the
Civil Code and Rule 138, Section 23 of the Rules of Court.
PNB v. Sta. Maria mortgage executed by Valeriana together with the other defendants-appellants also in
Maximo's favor, lends support to our view that the bank was not satisfied with the authority to
mortgage alone. For otherwise, such authority to borrow would have been deemed
Facts: unnecessary and a surplusage. And having failed to require that Maximo submit a similar
- Plaintiff bank filed this action on February 10, 1961 against defendant Maximo Sta. Maria and authority to borrow, from the other defendants-appellants, plaintiff, which apparently was
his six brothers and sisters, defendants-appellants, Valeriana, Emeteria, Teofilo, Quintin, satisfied with the surety bond for repayment put up by Maximo, cannot now seek to hold said
Rosario and Leonila, all surnamed Sta. Maria, and the Associated Insurance & Surety Co., Inc. defendants-appellants similarly liable for the unpaid loans.
as surety, for the collection of certain amounts representing unpaid balances on two
agricultural sugar crop loans due allegedly from defendants. Fallo:
- The said sugar crop loans were obtained by defendant Maximo Sta. Maria from plaintiff bank - WHEREFORE, the judgment of the trial court against defendants-appellants Emeteria, Teofilo,
under a special power of attorney, executed in his favor by his six brothers and sisters, Quintin, Rosario and Leonila, all surnamed Sta. Maria is hereby reversed and set aside, with costs in
defendants-appellants herein, to mortgage a 16-odd hectare parcel of land, jointly owned by all both instances against plaintiff. The judgment against defendant-appellant Valeriana Sta. Maria is
of them modified in that her liability is held to be joint and not solidary, and the award of attorney's fees is
- As security for the two loans, Maximo Sta. Maria executed in his own name in favor of plaintiff reduced as set forth in the preceding paragraph, without costs in this instance.
bank two chattel mortgages on the standing crops, guaranteed by surety bonds for the full
authorized amounts of the loans executed by the Associated Insurance & Surety Co., Inc. as
surety with Maximo Sta. Maria as principal.
- The records of the crop loan application further disclose that among the securities given by
Maximo for the loans were a "2nd mortgage on 25.3023 Has. of sugarland, including sugar
quota rights therein" including, the parcel of land jointly owned by Maximo and his six brothers
and sisters herein for the 1952-1953 crop loan, with the notation that the bank already held a
first mortgage on the same properties for the 1951-1952 crop loan of Maximo, 4 and a 3rd
mortgage on the same properties for the 1953-1954 crop loan. 5
- The trial court rendered judgment in favor of plaintiff and against defendants
- Defendant Maximo Sta. Maria and his surety, defendant Associated Insurance & Surety Co.,
Inc. who did not resist the action, did not appeal the judgment. This appeals been taken by his
six brothers and sisters, defendants-appellants who reiterate in their brief their main contention
in their answer to the complaint that under this special power of attorney, Exh. E, they had not
given their brother, Maximo, the authority to borrow money but only to mortgage the real estate
jointly owned by them; and that if they are liable at all, their liability should not go beyond the
value of the property which they had authorized to be given as security for the loans obtained
by Maximo.

Issue/s:
- Was there a valid authorization to Maximo to contract personal loans?

Held:
- The authority granted by defendants-appellants (except Valeriana) unto their brother, Maximo,
was merely to mortgage the property jointly owned by them. They did not grant Maximo any
authority to contract for any loans in their names and behalf.
- Maximo alone, with Valeriana who authorized him to borrow money, must answer for said
loans and the other defendants-appellants' only liability is that the real estate authorized by
them to be mortgaged would be subject to foreclosure and sale to respond for the obligations
contracted by Maximo. But they cannot be held personally liable for the payment of such
obligations, as erroneously held by the trial court.
- . The fact that Maximo presented to the plaintiff bank Valeriana's additional special power of
attorney expressly authorizing him to borrow money, Exh. E-1, aside from the authority to
Commercial Bank v. Republic Armored Car

Facts:
- Defendant-appellant Damaso Perez has presented a motion for new trial on the ground of
newly discovered evidence. It is claimed that movant was not aware of the nature of the power
of attorney that Ramon Racelis used, purportedly signed by him, to secure the loans for the
Republic Armored Car Service Corporation and the Republic Credit Corporation.
- It is not expressly mentioned that this is the precise power of attorney that Ramon Racelis
Utilized to secure the loans the collection of which is sought in these cases.
- But assuming, for the sake of argument, that the said power of attorney incorporated in the
motion for reconsideration was the one used to obtain the loans. We find that the movant's
contention has no merit. In accordance with the document, Racelis was authorized to negotiate
for a loan or various loans .. with other being institution, financing corporation, insurance
companies or investment corporations, in such sum or sums, aforesaid Attorney-in-fact Mr.
Ramon Racelis, may deem proper and convenient to my interests, ... and to execute any and
all documents he deems requisite and necessary in order to obtain such loans, always having
in mind best interest; ... We hold that this general power attorney to secure loans from any
banking institute was sufficient authority for Ramon Racelis to obtain the credits subject of the
present suits.
-
Bicol Savings v. CA precipitated by the default of a mortgagor. Absent that default, no foreclosure results. The
stipulation granting an authority to extrajudicially foreclose a mortgage is an ancillary stipulation
supported by the same cause or consideration for the mortgage and forms an essential or
Facts: inseparable part of that bilateral agreement.
- Juan de Jesus was the owner of a parcel of land, containing an area of 6,870 sq. ms., more or - The power to foreclose is not an ordinary agency that contemplates exclusively the
less, situated in Naga City. On 31 March 1976, he executed a Special Power of Attorney in representation of the principal by the agent but is primarily an authority conferred upon the
favor of his son, Jose de Jesus, "To negotiate, mortgage my real property in any bank either mortgagee for the latter's own protection.
private or public entity preferably in the Bicol Savings Bank, Naga City, in any amount that may - It matters not that the authority to extrajudicially foreclose was granted by an attorney-in-fact
be agreed upon between the bank and my attorney-in-fact." and not by the mortgagor personally. The stipulation in that regard, although ancillary, forms an
- By virtue thereof, Jose de Jesus obtained a loan of twenty thousand pesos (P20,000.00) from essential part of the mortgage contract and is inseparable therefrom.
petitioner bank on 13 April 1976. To secure payment, Jose de Jesus executed a deed of
mortgage on the real property referred to in the Special Power of Attorney Fallo:
- Juan de Jesus died in the meantime on a date that does not appear of record. - WHEREFORE, the Decision of respondent Court of Appeals in CA-G.R. CV No. 02213 is SET
- By reason of his failure to pay the loan obligation even during his lifetime, petitioner bank ASIDE, and the extrajudicial foreclosure of the subject mortgaged property, as well as the Deeds of
caused the mortgage to be extrajudicially foreclosed on 16 November 1978. In the subsequent Sale, the registration thereof, and the Writ of Possession in petitioner bank's favor, are hereby declared
public auction, the mortgaged property was sold to the bank as the highest bidder to whom a VALID and EFFECTIVE.
Provisional Certificate of Sale was issued.
- Private respondents herein, including Jose de Jesus, who are all the heirs of the late Juan de
Jesus, failed to redeem the property within one year from the date of the registration of the
Provisional Certificate of Sale on 21 November 1980. Hence, a Definite Certificate of Sale was
issued in favor of the bank on 7 September 1982.
- On 31 January 1983 private respondents herein filed a Complaint with the then Court of First
Instance of Naga City for the annulment of the foreclosure sale or for the repurchase by them
of the property. That Court, noting that the action was principally for the annulment of the
Definite Deed of Sale issued to petitioner bank, dismissed the case, ruling that the title of the
bank over the mortgaged property had become absolute upon the issuance and registration of
the said deed in its favor in September 1982. The Trial Court also held that herein private
respondents were guilty of laches by failing to act until 31 January 1983 when they filed the
instant Complaint.
- On appeal, the Trial Court was reversed by respondent Court of Appeals. In so ruling, the
Appellate Court applied Article 1879 of the Civil Code and stated that since the special power
to mortgage granted to Jose de Jesus did not include the power to sell, it was error for the
lower Court not to have declared the foreclosure proceedings -and auction sale held in 1978
null and void because the Special Power of Attorney given by Juan de Jesus to Jose de Jesus
was merely to mortgage his property, and not to extrajudicially foreclose the mortgage and sell
the mortgaged property in the said extrajudicial foreclosure. The Appellate Court was also of
the opinion that petitioner bank should have resorted to judicial foreclosure.

Issue:
- Is the power to extrajudically foreclose a property included in the power to mortgage?

Held:
- Article 1879 of the Civil Code, relied on by the Appellate Court in ruling against the validity of
the extrajudicial foreclosure sale, reads:
Art. 1879. A special power to sell excludes the power to mortgage; and a special power to
mortgage does not include the power to sell.
- We find the foregoing provision inapplicable herein.
- The sale proscribed by a special power to mortgage under Article 1879 is a voluntary and
independent contract, and not an auction sale resulting from extrajudicial foreclosure, which is