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31. Philippine National Bank v Sta.

Maria 29 SCRA 303

G.R. No. L-24765 August 29, 1969

Defendant Maximo Sta. Maria from plaintiff bank under a special power of attorney,
executed in his favor by his six brothers and sisters, defendants-appellants herein, to
mortgage a 16-odd hectare parcel of land, jointly owned by all of them to obtain a sugar crop
loan from plaintiff bank. In addition, Valeriana Sta. Maria alone also executed in favor of
her brother, Maximo, a special power of attorney to borrow money and mortgage any real
estate owned by her.

By virtue of the two above powers, Maximo Sta. Maria applied for two separate crop
loans. As security for the two loans, Maximo Sta. Maria executed in his own name in favor of
plaintiff 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.

Plaintiff bank filed this action on February 10, 1961 against defendant Maximo Sta.
Maria and his six brothers and sisters, defendants-appellants, Valeriana, Emeteria, Teofilo,
Quintin, Rosario and Leonila, all surnamed Sta. Maria, and the Associated Insurance &
Surety Co., Inc. as surety, for the collection of certain amounts representing unpaid balances
on two agricultural sugar crop loans due allegedly from defendants.

Whether or not Maximo Sta. Maria has an authority to loan money from plaintiff
bank as an agent of his brothers and sisters by virtue of the Special Power of Attorney
executed by them.


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.

32. BA Finance Corp vs Court of Appeals, 211 SCRA 112

G.R. No. 94566 July 3, 1992

Renato Gaytano, doing business under the name Gebbs International, applied for
and was granted a loan with respondent Traders Royal Bank in the amount of P60,000.00.
As security for the payment of said loan, the Gaytano spouses executed a deed of suretyship
whereby they agreed to pay jointly and severally to respondent bank the amount of the loan
including interests, penalty and other bank charges. Philip Wong as credit administrator of
BA Finance Corporation for and in behalf of the latter, undertook to guarantee the loan of
the Gaytano spouses. Partial payments were made on the loan leaving an unpaid balance in
the amount of P85,807.25. Since the Gaytano spouses refused to pay their obligation,
respondent bank filed with the trial court complaint for sum of money against the Gaytano
spouses and petitioner corporation as alternative defendant. The Gaytano spouses did not
present evidence for their defense. Petitioner corporation, on the other hand, raised the
defense of lack of authority of its credit administrator to bind the corporation.
Whether or not the corporation is bound by the act of the credit administrator.


It is a settled rule that persons dealing with an assumed agent, whether the assumed
agency be a general or special one are bound at their peril, if they would hold the principal
liable, to ascertain not only the fact of agency but also the nature and extent of authority,
and in case either is controverted, the burden of proof is upon them to establish it (Harry
Keeler v. Rodriguez, 4 Phil. 19). Hence, the burden is on respondent bank to satisfactorily
prove that the credit administrator with whom they transacted acted within the authority
given to him by his principal, petitioner corporation.

Respondent bank had not shown any evidence aside from the testimony of the credit
administrator that the disputed transaction of guaranty was in fact entered into the official
records or files of petitioner corporation, which will show notice or knowledge on the latter's
part and its consequent ratification of the said transaction. In the absence of clear proof, it
would be unfair to hold petitioner corporation guilty of estoppel in allowing its credit
administrator to act as though the latter had power to guarantee.

Guaranty is not presumed, it must be expressed and cannot be extended beyond its
specified limits (Director v. Sing Juco, 53 Phil. 205).

33. Director of Public Works vs Sing Juco, 53 Phil 205

G.R. No. L-30181 July 12, 1929

Mariano de la Rama was transferred her interest in Torrens certificate of title No.
1359 relating to land in the municipality of Iloilo, to sale to Enrique Enchaus. Also, the
owners of the property covered by the said certificate conveyed it by way of a mortgage to
the Philippine National Bank for the purpose of securing a credit in current account in a
mount not in excess of P170,000, with interest at a rate of 12 percent per annum. A contract
was made between the Director of Public Works, representing the Government of the
Philippine Islands, and the four owners, M. de la Rama, Sing Juco, G. M. Tanboontien,
and Seng Bengco.

In connection with the making of the contract abovementioned, the, Director of

Public Works required a bond to be supplied by the owners in the penal amount of
P150,000. This bond was executed contemporaneously with the main contract; and in
connection therewith it should be noted that one of the names appearing upon said contract
was that of "Casa Viuda de Tan Toco," purporting to be signed by M. de la Rama. No such
payment was, however, made as a consequence this action was instituted by the Director of
Public Works for the purpose of recovering the amount due to the Government under the
contract from the original owners of the property from the sureties whose names were
signed to the contract of suretyship, and to enforce the obligation as a real lien upon the
property. PNB and Enchaus were made defendants.

Whether or not the powers of attorney conferred authority to M. de la Rama to bind
the widow of Tan Toco by the contract of suretyship.


Neither of the powers officially confers upon Mariano de la Rama the power to bind
a principal by a contract of suretyship. The clauses noted relate more specifically to the
execution of contracts relating to property; and the more general words at the close of the
quoted clauses should be interpreted, under the general rule ejusdem generis, as referring to
the contracts of like character. Power to execute a contract so exceptional a nature as a
contract of suretyship or guaranty cannot be inferred from the general words contained in
the powers.

In article 1827 of the Civil Code it is declared that guaranty shall not be presumed; it
must be expressed and cannot be extended beyond its specified limits. By analogy a power
of attorney to execute a contract of guaranty should not be inferred from vague or general
words, especially when such words have their origin and explanation in particular powers of
a wholly different nature. It results that the trial court was in error in giving personal
judgment against Tan Ong Sze upon the bond upon which she was sued in this case.

34. Philippine Sugar Estates Development Co. vs Poizat, 48 Phil 536

G.R. No. L-23352 December 31, 1925

Gabriela Andrea de Coster consent executed to and in favor of her husband, Juan M.
Poizat, a general power of attorney on August 25, 1905, which among other things,
authorized him to do in her name, place and stead, and making use of her rights and actions
to loan or borrow any amount in cash or fungible conditions he may deem convenient.
Poizat applied for and obtained from the plaintiff a credit for the sum of 10,000 Pounds
Sterling to be drawn on the" Banco Espanol del Rio de la Plata" in London not later than
January, 1913. Later, to secure the payment of the loan, he executed a mortgage upon the
real property of his wife on November 2, 1912. For failure to pay the loan, on November 12,
1923, the plaintiff brought an action against the defendants to foreclose the mortgage.

Whether or not the act of the agent, Poizat is binding with his wife, the principal, in
the credit transaction he obtained from plaintiff.


Under his power of attorney, Juan M. Poizat may have had authority to borrow
money and mortgage the real property of his wife, but the law specifies how and in what
manner it must be done, and the stubborn fact remains that, as to the transaction in
question, that power was never exercised. The mortgage in question was executed by him
and him only, and for such reason, it is not binding upon the wife, and as to her, it is null
and void.

It is a general rule in the law of agency that in order to bind the principal by a deed
executed by an agent, the deed must upon its grace purport to be made, signed and sealed in
the name of the principal. If, on the contrary, though the agent describes name, the words of
grant, covenant and the like, purport upon the face of the instrument to be his, and the seal
purports to be his seal, the deed will bind the agent if any one and not the principal.

35. Rural Bank of Bombon, Inc. vs Court of Appeals, 212 SCRA 25

G.R. No. 95703 August 3, 1992

Ederlinda M. Gallardo, married to Daniel Manzo, executed a special power of
attorney in favor of Rufina S. Aquino authorizing her to secure a loan from any bank or
lending institution for any amount or otherwise mortgage the property covered by Transfer
Certificate of Title No. S-79238 situated at Las Pias, Rizal, the same being Ederlindas
paraphernal property.
On August 26, 1981, a Deed of Real Estate Mortgage was executed by Rufino S.
Aquino in favor of the Rural Bank of Bombon (Camarines Sur), Inc. wherein the property
was being given as security for the payment of "certain loans, advances, or other
accommodations obtained by the mortgagor from the mortgagee in the total sum of Three
Hundred Fifty Thousand Pesos only (P350,000.00).

Whether or not the Deed of Real Estate Mortgage executed by Aquino, as attorney-
in-fact of Gallardo, in favor of the Rural Bank of Bombon (Cam. Sur), Inc is valid.


The Special Power of Attorney above quoted shows the extent of authority given by
the plaintiff to defendant Aquino. But defendant Aquino in executing the deed of Real
Estate Mortgage in favor of the rural bank over the three parcels of land covered by
Gallardo's title named himself as the mortgagor without stating that his signature on the
deed was for and in behalf of Ederlinda Gallardo in his capacity as her attorney-in-fact.

This case is governed by the general rule in the law of agency which this Court,
applied in "Philippine Sugar Estates Development Co. vs. Poizat," 48 Phil. 536, 538:

It is a general rule in the law of agency that, in order to bind the principal by a
mortgage on real property executed by an agent, it must upon its face purport
to be made, signed and sealed in the name 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
principal. Neither is it ordinarily sufficient that in the mortgage the agent
describes himself as acting by virtue of a power of attorney, if in fact the agent
has acted in his own name and has set his own hand and seal to the mortgage.

This is especially true where the agent himself is a party to the instrument.
However clearly the body of the mortgage may show and intend that it shall be the
act of the principal, yet, unless in fact it is executed by the agent for and on behalf of
his principal and as the act and deed of the principal, it is not valid as to the

36. Commercial Bank & Trust Co., of the Phil. vs Republic Armored Car Service Corp.
9 SCRA 142 G.R. Nos. L-18223 and L-18224 September 30, 1963

Damaso Perez claimed that he 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 his claim and
contention that Ramon Racelis had no authority to bind the him as surety for the loans
obtained from the Commercial Bank & Trust Company.

Whether or not Perez should be held liable as principal for the loans obtained by his
agent Racelis.


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.
It will be noted furthermore that Racelis, as agent Damaso Perez, executed the documents
evidencing the loans signing the same "Damaso Perez by Ramon Racelis," and in the said
contracts Damaso Perez agreed jointly and severally to be responsible for the loans. As the
document as signed makes Perez jointly and severally responsible, there is no merit in the
contention that Perez was only being held liable as a guarantor. Consequently Perez could
not and may not now claim that his agent did not have authority to execute the loan

37. Lim Tiu vs Ruiz y Rementeria 15 Phil. 635

G.R. No. L-5676 March 2, 1910

Plaintiffs commenced an action against the defendants in the Court of First Instance
of the city of Manila, alleging that upon the 26th day of May, 1908, the 5th day of June,
1908, and the 12th day of June, 1908, they sold to the defendant certain merchandise,
amounting to the sum of P1,043.57 which was unpaid. The lower court, found as a fact that
"the defendants purchased the merchandise in question from Domingo Tim Bun Liu and
paid the said Domingo Tim Bun Liu for the merchandise."

The plaintiffs appealed alleging that the lower court erred in holding that the
plaintiffs never notified the defendants, in any way, that their employee, Domingo Tim Bun
Liu, could sell their merchandise, but could not receive payment for it, and that the
defendants never had notice that their business transactions with Domingo Tim Bun Liu
were by him as agent or employee of the plaintiffs.

Whether or not Domingo Tim Bun Liu acted as agent of the plaintiff in the


It being established by a preponderance of the evidence that Domingo Tim Bun Liu
acted in his own name selling the merchandise to the defendants, and that the defendants
fully believed that they were dealing with the said Domingo Tim Bun Liu, without any
knowledge of the fact that he was the agent of the plaintiffs, and having paid him in full for
the merchandise purchased, they are not liable to the plaintiffs, for said merchandise, even
though it be admitted that Domingo Tim Bun Liu was in fact the agent of the plaintiffs in
selling the merchandise in question.

Article 1717 of the Civil Code provides: When an agent acts in his own name the
principal shall have no action against the persons with whom the agent has contracted, nor
the said persons against the principal. Consequently, article 246 of the Commercial Code
provides that: "When an agent transacts business in his own name, it shall not be necessary
for him to state who is the principal, and he shall be directly liable, as if the business were
for his own account, to the persons with whom he transacts the same, said persons not
having any right of action against the principal, nor the latter against the former, the
liabilities of the principal and the agent to each other reserved."

38. Philippine National Bank vs. Agudelo y Gonzaga 58 Phil. 635

G.R. No. L-39037 October 30, 1933

Paz Agudelo y Gonzaga executed in favor Mauro A. Garrucho, a special power of
attorney sufficiently broad in scope to enable him to sell, alienate and mortgage in the
manner and form he might deem convenient, all her real estate situated in the municipalities
of Murcia and Bacolod, Occidental Negros together with the improvement thereon.
Nothing in the aforesaid powers of attorney expressly authorized Mauro A. Garrucho to
contract any loan nor to constitute a mortgage on the properties belonging to the respective
principals, to secure his obligations.

Mauro executed in the favor of PNB a real estate mortgage constituting the property
covered by original certificates of title Nos. 2216 and 1148, respectively, issued in the name
of Paz Agudelo y Gonzaga to secure the payment of credits, loans, commercial overdrafts,

Whether or not the powers of attorney, issued in favor of Mauro A. Garrucho to
mortgage real estate, authorized him to obtain loans secured by mortgage in the properties
in question


Mauro A. Garrucho, appears to have acted in his personal capacity. He could not
delegate his power, in view of the legal principle of "delegata potestas delegare non potest" (a
delegated power cannot be delegated), inasmuch as there is nothing in the records to show
that he has been expressly authorized to do so.

ART. 1717. When an agent acts in his own name, the principal shall have no right of
action against the persons with whom the agent has contracted, or such persons against the
principal.In such case, the agent is directly liable to the person with whom he has
contracted, as if the transaction were his own.

When an agent negotiates a loan in his personal capacity and executes a promissory
note under his own signature, without express authority from his principal, giving as
security therefor real estate belonging to the letter, also in his own name and not in the
name and representation of the said principal, the obligation do constructed by him is
personal and does not bind his aforesaid principal.

39. Sy-Juco and Viardo vs. Sy-juco 40 Phil. 634

G.R. No. L-13471 January 12, 1920

Santiago Sy-Juco was appointed by the plaintiffs administrator of their property and
acted as such until June 30, 1916, when his authority was cancelled. The plaintiffs are
defendant's father and mother who allege that during his administration the defendant
acquired the property claimed in the complaint in his capacity as plaintiffs' administrator
with their money and for their benefit.

Whether or not Santiago can buy property in his own name as plaitiffs administrator
with their money and for their benefit.


From the rule established in article 1717 of the Civil Code that, when an agency acts
in his own name, the principal shall have no right of action against the person with whom
the agent has contracted, cases involving things belonging to the principal are excepted.
According to this exception (when things belonging to the principal are dealt with) the agent
is bound to the principal although he does not assume the character of such agent and appears acting in
his own name (Decision of the Supreme Court of Spain, May 1, 1900). This means that in the
case of this exception the agent's apparent representation yields to the principal's true
representation and that, in reality and in effect, the contract must be considered as entered
into between the principal and the third person; and, consequently, if the obligations belong
to the former, to him alone must also belong the rights arising from the contract.

40. National Food Authority vs Intermediate Appellate Court 184 SCRA 166
G.R. No. 75640 April 5, 1990

Gil Medalla, as commission agent of the plaintiff Superior Shipping Corporation,
entered into a contract for hire of ship known as "MV Sea Runner" with defendant National
Grains Authority (now NFA). Plaintiff wrote to NFA, specifically requesting that the
payment for freightage and other charges be made to it and not to defendant Medalla
because plaintiff was the owner of the vessel "MV Sea Runner".

NFA informed Superior Shipping Corp that it could not grant its request because the
contract to transport the rice was entered into by NFA and Medalla who did not disclose
that he was acting as a mere agent of plaintiff. Superior Shipping Corp wrote Medalla
demanding that he turn over to plaintiff the amount of P27,000.00 paid to him by NFA.
Medalla, however, "ignored the demand."

Whether or not NFA is jointly and severally liable with Gil Medalla for freightage.


It is an undisputed fact that Gil Medalla was a commission agent of respondent

Superior Shipping Corporation which owned the vessel "MV Sea Runner" that transported
the sacks of rice belonging to petitioner NFA. The context of the law is clear.

Art. 1883. If an agent acts in his own name, the principal has no right of action
against the persons with whom the agent has contracted; neither have such persons against
the principal. In such case the agent is the one directly bound in favor of the person with whom he has
contracted, as if the transaction were his own, except when the contract involves things belonging to the

Consequently, when things belonging to the principal (in this case, Superior Shipping
Corporation) are dealt with, the agent is bound to the principal although he does not assume
the character of such agent and appears acting in his own name. In other words, the agent's
apparent representation yields to the principal's true representation and that, in reality and
in effect, the contract must be considered as entered into between the principal and the third
person. Corollarily, if the principal can be obliged to perform his duties under the contract,
then it can also demand the enforcement of its rights arising from the contract.