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VELOSO v. CA, G.R. No.

102737; August 21, 1996

Petitioner Francisco Veloso was the owner of a parcel of land situated in the district
of Tondo, Manila, with an area of 177 square meters. The title was registered in the
name of Francisco A. Veloso. The said title was subsequently cancelled and a new
one issued in the name of Aglaloma B. Escario, married to Gregorio L. Escario, on
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 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.
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. Thus, he contended that the sale of the property, and the subsequent
transfer thereof, were null and void.
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.
ISSUE: Whether there was a valid sale of the subject property
HELD: Yes, the sale of the subject property is valid. The Supreme Court held that 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.

Respondent Aglaloma relied on the power of attorney presented by petitioner's

wife, Irma. Being the wife of the owner and having with her the title of the property,
there was no reason for the private respondent not to believe, in her authority. Thus,
having had no inkling on any irregularity and having no participation thereof, private
respondent was a buyer in good faith. It has been consistently held that a purchaser
in good faith is one who buys property of another, without notice that some other
person has a right to, or interest in such property and pays a full and fair price for
the same, at the time of such purchase, or before he has notice of the claim or
interest of some other person in the property.


.FACTS: In the local elections of 1995, respondent vied for the gubernatorial post in
Pampanga.Upon respondents request, petitioner, owner of JMG Publishing House, a
printing shop locatedin San Fernando, Pampanga, submitted to respondent draft
samples and price quotation of campaign materials.By petitioners claim,
respondents wife had told him that respondent already approved his pricequotation
and that he could start printing the campaign materials, hence, he did print
campaign materials like posters bearing respondents photograph, leaflets
containing the slate of partycandidates,sample ballots, poll watcher identification
cards, and stickers.Given the urgency and limited time to do the job order,
petitioner availed of the services andfacilities of Metro Angeles Printing and of St.
Joseph Printing Press, owned by his daughterJennifer Gozun and mother Epifania
Macalino Gozun, respectively.
Meanwhile, on March 31, 1995, respondents sister -in-law, Lilian Soriano (Lilian)
obtained frompetitioner "cash advance" of P253,000 allegedly for the allowances of
poll watchers who wereattending a seminar and for other related expenses. Lilian
acknowledged on petitioners 1995 diary receipt of the amount.
ISSUE: W/N Lilian R. Soriano was authorized by the respondent to receive the cash
advancefrom the petitioner in the amount of P253,000.00.
Held: By the contract of agency a person binds himself to render some service or to
dosomething in representation or on behalf of another, with the consent or authority
of the latter.
Contracts entered into in the name of another person by one who has been given no
authority orlegal representation or who has acted beyond his powers are classified
as unauthorized contractsand are declared unenforceable, unless they are ratified.
Generally, the agency may be oral, unless the law requires a specific form.

However, a specialpower of attorney is necessary for an agent to, as in this case,

borrow money, unless it be urgentand indispensable for the preservation of the
things which are under administration.
Since nothing in this case involves the preservation of things under administration,
a determination of whether Soriano had the special authority to borrow money on
behalf of respondent is in order.It is a general rule in the law of agency that, in order
to bind the principal by a mortgage on realproperty executed by an agent, it must
upon its face purport to be made, signed and sealed in thename of the principal,
otherwise, it will bind the agent only. It is not enough merely that the agent was in
fact authorized to make the mortgage, if he has not acted in the name of the
* When Corazon, the owner of the lots in dispute, was in Thailand, her stepmother
Purificacion executed an affidavit of loss alleging that the TCT could no longer be
found so that the new TCTs were issued under her name. * The stepmother sold it to
Catalina who later mortgaged the lots for 200,000 pesos. * When Corazon learned
of the foregoing, she filed a complaint for reconveyance and damages but she later
on agreed on outside court Compromise Agreement. Their final agreement was: *
The title to the lots shall be transferred direct to its interested buyer with Catalina
assuming and paying from the proceeds of the sale her mortgage obligation and all
expenses for segregation survey, re-titling, capital gains taxes and those connected
with the release of the said mortgage should be shouldered by Catalina. * The
agreement was approved by Judge Dayaw.
* Corazon, the owner, sold the subject lot5 to Laurelia by virtue of a deed entitle
Sale of Unsegregated Portion of Land * Controversy erupted when Catalina sold
same portion of land to petitioner Mariquita Macapagal claiming to be authorized
under the Compromise Agreement. * RTC QC favored Mariquita in nullifying the sale
executed by Corazon in favor of Laurelia. * CA reversed the decision of the trial
court. Hence, this petition of review.
* Corazon was the registered owner of the disputed lot at the time the two sales
were executed. * The owner has the right to enjoy and to dispose the property and
to exclude any person from such enjoyment and disposal. * The Compromise
Agreement is not a waiver of Corazons authority to sell because the agreement
merely provided that Catalina pay off her mortgage obligation and incidental
expenses from the proceeds of the sale. * It was not expressly stated that...

Bucton vs. Rural Bank of El Salvador Digest

G.R. No. 179625, February 24, 2014
Petitioner is the owner of a parcel of land located in Cagayan de Oro. Concepcion borrowed
the title of the land on the pretext that she is going to show it to an interested buyer.
Concepcion obtained a loan from respondent bank and as a security for the loan, Concepcion
mortgaged the property of petitioner using a SPA which was allegedly executed in favor of
Concepcion. When Concepcion failed to pay the loan, the house and lot of petitioner were
foreclosed. Petitioner insisted that she did not obtain any loan from the bank and that her
signature was forged by Concepcion that the loan was entered into by the latter in her own
personal capacity. The bank on the other hand maintains that it was not negligent in
inspecting the properties and relied on the presumption of regularity of the notarized SPA.
ISSUE: Whether or not the Real Estate Mortgage was entered into by Concepcion in her
personal capacity
CIVIL LAW: For the principal to be bound by a deed executed by an agent, the deed must be
signed by the agent for and in behalf of his principal.
As early as the case ofPhilippine Sugar Estates Development Co. v. Poizat,we already ruled
that in order to bind the principal by a deed executed by an agent, the deed must upon its
face purport to be made, signed and sealed in the name of the principal. In other words, the
mere fact that the agent was authorized to mortgage the property is not sufficient to bind
the principal, unless the deed was executed and signed by the agent for and on behalf of his
InPhilippine Sugar Estates Development Co.,the wife authorized her husband to obtain a
loan and to secure it with mortgage on her property. Unfortunately, although the real estate
mortgage stated that it was executed by the husband in his capacity as attorneyinfact of his
wife, the husband signed the contract in his own name without indicating that he also signed
it as the attorneyinfact of his wife.
InRural Bank of Bombon,the agent contracted a loan from the bank and executed a real
estate mortgage. However, he did not indicate that he was acting on behalf of his principal.
Similarly, in this case, the authorized agent failed to indicate in the mortgage that she was
acting for and on behalf of her principal. The Real Estate Mortgage, explicitly shows on its
face, that it was signed by Concepcion in her own name and in her own personal capacity. In
fact, there is nothing in the document to show that she was acting or signing as an agent of
petitioner. Thus, consistent with the law on agency and established jurisprudence, petitioner
cannot be bound by the acts of Concepcion.
In light of the foregoing, there is no need to delve on the issues of forgery of the SPA and the
nullity of the foreclosure sale. For even if the SPA was valid, the Real Estate Mortgage would
still not bind petitioner as it was signed by Concepcion in her personal capacity and not as
an agent of petitioner. Simply put, the Real Estate Mortgage is void and unenforceable

against petitioner.
Respondent bank has no one to blame but itself. Not only did it act with undue haste when it
granted and released the loan in less than three days, it also acted negligently in preparing
the Real Estate Mortgage as it failed to indicate that Concepcion was signing it for and on
behalf of petitioner. We need not belabor that the words as attorneyinfact of, as agent of, or
for and on behalf of, are vital in order for the principal to be bound by the acts of his agent.
Without these words, any mortgage, although signed by the agent, cannot bind the principal
as it is considered to have been signed by the agent in his personal capacity.

Bicol Savings and Loan Association vs. CA

Facts:Juan de Jesus was the owner of a parcel of land in Naga City. He executed a
Special Power of Attorney in favor of Jose de Jesus, his son, wherein the latter could
negotiate and mortgage the formers property in any bank preferably in the
Bicol Savings and Loan Association. By virtue of such document, Jose was able to
obtain P20,000 from Bicol Savings. To secure payment, he executed a deed
of mortgage wherein it was stipulated that upon the mortgagor s failure or refusal
to pay the obligation, the mortgageemay immediately foreclose the property. Juan
de Jesus died and the loan obligation was not paid. As aresult, Bicol Savings
extrajudicially foreclosed the mortgaged property. The bank won as the
highest bidder during the auction sale. Jose and the other heirs failed to redeem the
property. Thereafter, theytried to negotiate with Bicol Savings but the parties did
not come up to an agreement. Bicol Savings soldthe property to another person.
Hence, Jose filed for annulment of the foreclosure sale. The lower courtdismissed
the case. On appeal, the CA reversed RTCs decision. Hence, this appeal.
Issue:Whether or not the extrajudicial foreclosure sale of the property was
valid.Ruling.Yes. Art 1879 of the CC which states that special power to sell excludes
the power to mortgageand vice versa is inapplicable in the case. What it proscribes
is a voluntary and independent contract of sale and not an auction sale resulting
from extrajudicial foreclosure caused by the default of themortgagor. The power
to foreclose is not an ordinary agency but is primarily conferred upon themortgagee
for its protection. The right of the bank to foreclose is independent of the mortgage
contract asit is recognized by the Rules of Court
FACTS: On January 25, 1991, plaintiff Rodolfo S. Guevarra instituted a civil case for
collection of sum of money against defendant Dominion Insurance Corporation.
Plaintiff sought to recover the sum of P156,473.90 which he claimed to have
advanced in his capacity as manager of defendant to satisfy certain car insurance
claims filed by defendants clients. The CA affirmed trial courts decision for
Dominion to pay plaintiff Guevarra. Dominion filed a motion for reconsideration with
the Court of Appeals which was denied, hence, this appeal.

ISSUES: Dominion assails whether respondent Guevarra acted within his authority
as agent for petitioner, and whether respondent Guevarra is entitled to
reimbursement of amounts he paid out of his personal money in settling the claims
of several insured.

HELD: The petition is without merit. By the contract of agency, a person binds
himself to render some service or to do something in representation or on behalf of
another, with the consent or authority of the latter. The basis for agency is
representation. On the part of the principal, there must be an actual intention to
appoint or an intention naturally inferable from his words or actions; and on the part
of the agent, there must be an intention to accept the appointment and act on it,
and in the absence of such intent, there is generally no agency. A perusal of the
Special Power of Attorney would show that petitioner Dominion and respondent
Guevarra intended to enter into a principal-agent relationship. Despite the word
special in the title of the document, the contents reveal that what was constituted
was actually a general agency. The agency comprises all the business of the
principal, but, couched in general terms, it is limited only to acts of administration.
A general power permits the agent to do all acts for which the law does not require
a special power. Thus, the acts enumerated in or similar to those enumerated in the
Special Power of Attorney do not require a special power of attorney.
Article 1878, Civil Code, enumerates the instances when a special power of attorney
is required.
The payment of claims is not an act of administration. The settlement of claims is
not included among the acts enumerated in the Special Power of Attorney, neither is
it of a character similar to the acts enumerated therein. A special power of attorney
is required before respondent Guevarra could settle the insurance claims of the
insured. Nevertheless, Guevarras authority to settle claims is embodied in the
Memorandum of Management Agreement which enumerates the scope of
respondent Guevarras duties and responsibilities as agency manager for San
Fernando, Pampanga. In settling the claims mentioned, Guevarras authority is
further limited by the written standard authority to pay, which states that the
payment shall come from Guevarras revolving fund or collection. Therefore, the
instruction of Dominion as the principal could not be any clearer. Respondent
Guevarra was authorized to pay the claim of the insured, but the payment shall
come from the revolving fund or collection in his possession. Having deviated from
the instructions of the principal, the expenses that respondent Guevarra incurred in
the settlement of the claims of the insured may not be reimbursed from petitioner
Dominion. This conclusion is in accord with Article 1918, Civil Code, which states
that: The principal is not liable for the expenses incurred by the agent in the

following cases: (1) If the agent acted in contravention of the principals

instructions, unless the latter should wish to avail himself of the benefits derived
from the contract; However, while the law on agency prohibits respondent Guevarra
from obtaining reimbursement, his right to recover may still be justified under the
general law on obligations and contracts (on unjust enrichment). Thus, to the extent
that the obligation of the petitioner has been extinguished, respondent Guevarra
may demand for reimbursement from his principal. To rule otherwise would result in
unjust enrichment of petitioner.