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SONZA, Richelle May S.

G.R. No. 111924 Lustan vs. CA


Lustan was the registered owner of land located in Iloilo. Lustan then leased the property to spouses Parangan for a ter of ten !"#$ years and an annual rent of One %housand !P",###.##$ Pesos. &uring the period of lease, Parangan was regularly e'tending loans in s all a ounts to petitioner to defray her daily e'penses and to finance her daughter(s education. On )uly *+, "+,#, petitioner e'ecuted a Special Power of Attorney in fa-or of Parangan to secure an agricultural loan fro pri-ate respondent Philippine National .an/ !PN.$ with the aforesaid lot as collateral. On 0e1ruary "2, "+,*, a second Special Power of Attorney was e'ecuted 1y petitioner, 1y -irtue of which, Parangan was a1le to secure four !3$ additional loans.%he last three loans were without the /nowledge of herein petitioner and all the proceeds therefro were used 1y Parangan for his own 1enefit. 4pon disco-ery of the said loan, Lustan argues that the last three ortgages were -oid for lac/ of authority.

ISSUE: !"$ 5ON the loans 1inding with PN..

ade 1y Parangan without /nowledge of Lustan is

!*$ 5ON Lustan is lia1le for the actions of Parangan under the SPO.


She totally failed to consider that said Special Powers of Attorney are a continuing one and a1sent a -alid re-ocation duly furnished to the ortgagee, the sa e continues to ha-e force and effect as against third persons who had no /nowledge of such lac/ of authority. Article "+*" of the 6i-il 6ode pro-ides7

8Art. "+*". If the agency has 1een entrusted for the purpose of contracting with specified persons, its re-ocation shall not pre9udice the latter if they were not gi-en notice thereof.:

%he Special Power of Attorney e'ecuted 1y petitioner in fa-or of Parangan duly authori;ed the latter to represent and act on 1ehalf of the for er. <a-ing done so, petitioner clothed Parangan with authority to deal with PN. on her 1ehalf and in the a1sence of any proof that the 1an/ had /nowledge that the last three loans were without the e'press authority of petitioner, it cannot 1e pre9udiced there1y. As far as third persons are concerned, an act is dee ed to ha-e 1een perfor ed within the scope of the agent(s authority if such is within the ter s of the power of attorney as written e-en if the agent has in fact e'ceeded the li its of his authority according to the understanding 1etween the principal and the agent. 22 %he Special Power of Attorney particularly pro-ides that the sa e is good not only for the principal loan 1ut also for su1se=uent co ercial, industrial, agricultural loan or credit acco odation that the attorney>in>fact ay o1tain and until the power of attorney is re-o/ed in a pu1lic instru ent and a copy of which is furnished to PN.. 23 ?-en when the agent has e'ceeded his authority, the principal is solidarily lia1le with the agent if the for er allowed the latter to act as though he had full powers !Article "+"", 6i-il 6ode$.