1.Litonjua v. Fernandez · However, only Agapito Fisico attended the meeting.
He informed the Litonjuas that
G.R. No. 148116
April 14, 2001
By: Yen
Topic: Art. 1878
Petitioners: ANTONIO K. LITONJUA and AURELIO K. LITONJUA, JR.
Respondents: MARY ANN GRACE FERNANDEZ, HEIRS OF PAZ TICZON ELEOSIDA, represented
by GREGORIO T. ELEOSIDA, HEIRS OF DOMINGO B. TICZON, represented by MARY MEDIATRIX
T. FERNANDEZ, CRISTETA TICZON, EVANGELINE JILL R. TICZON, ERLINDA T. BENITEZ, DOMINIC
TICZON, JOSEFINA LUISA PIAMONTE, JOHN DOES and JANE DOES
Ponente: Callejo, Sr., J.
SUMMARY: Litonjua wanted to buy land and through a broker found the land of
Fernandez and others. Fernandez met with Litonjua and talked about a sale. On
a said meeting date to perfect a Deed of Absolute Sale, Fernandez did not
appear so the Litonjuas wrote demand letters. Fernandez answered that they
were no longer selling lands due to tenant problems and “change of mind”.
Litonjuas filed for Specific performance wherein the RTC sided with them. CA
reversed saying that there was no perfected contract to sell. SC agreed with CA
and held that Fernandez did not have the authority to sell the lands of the other
owners.
DOCTRINE: 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.
Fernandez was not an agent to the other owners so she could not, even if agreed upon,
perfect a contract to sell and Deed of Absolute Sale.
FACTS:
· Mrs. Lourdes Alimario and Agapito Fisico (Brokers) offered to sell to Fernandez’s
parcels of land.
· Litonjuas were shown a locator plan and copies of the titles of Fernandez and
Eleosida.
· The brokers told the Litonjuas that they were authorized to offer the property for
sale. The Litonjuas made and ocular and saw some people gathering coconuts in the said
lands.
· The Litonjuas were met by Fernandez and the two brokers at their office in
Mandaluyong.
· Litonjuas and 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.
· It was also agreed that the owners would shoulder the registration fees and other
expenses. And 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.
respondent Fernandez was encountering some problems with the tenants and was
trying to work out a settlement with them.
· After a few weeks of waiting, the petitioners wrote respondent Fernandez
demanding that their transaction be finalized by January 30, 1996.
· There was no response so he wrote another letter asking for the Deed of Absolute
Sale. Demanding turnover and in 15 days of receipt of letter they would go through legal
means.
· Fernandez then answered this letter saying that she did not agree to
o 1.) Shoulder the registration fees and other miscellaneous expenses.
o 2.) She did not agree to meet on Dec. 8, 1995 to sign the Deed of
Absolute Sale. She told the Litonjuas the problems she had with her
tenants and that they are no longer selling the properties and
already told the brokers about this.
· Litonjuas filed for specific performance.
· RTC: Ordered Fernandez to execute the obligation to sell as agreed upon.
· Fernandez answered the complaint that she did not accept the offer thus there was
no perfected verbal contract to sell. She also maintained that even assuming arguendo
that she had, indeed, made a commitment or promise to sell the property to the
petitioners, the same was not binding upon her in the absence of any consideration
distinct and separate from the price.
· RTC: In favor of Litonjuas.
· CA: Reversed
ISSUE:
(1) WON Fernandez had the authority to sell or act as agent for other respondents
properties?
HELD/RATIO:
(1) NO. There is no documentary evidence on record that the respondents-
owners specifically authorized respondent Fernandez to sell their properties
to another
· 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, or to create or convey
real rights over immovable property, or for any other act of strict
dominion.
· Any sale of real property by one purporting to be the agent of the
registered owner without any authority therefore in writing from
the said owner is null and void. The declarations of the agent alone
are generally insufficient to establish the fact or extent of her
authority.
· In this case, the only evidence adduced by the Litonjuas 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-owners, and that she promised to
present to the petitioners on December 8, 1996 the written
authority to sell the properties.
· The settled rule is that persons dealing with an assumed agent are
bound at their peril, and 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 prove it.
o In this case, respondent Fernandez specifically denied
that she was authorized by the respondents-owners to
sell the properties, both in her answer to the complaint
and when she testified.
2.) Velasco vs. CA
GR NO. 102737
August 21, 1996
Petitioner: Francisco Velasco
Respondent: COURT OF APPEALS, AGLALOMA B. ESCARIO, assisted by her husband
GREGORIO L. ESCARIO, the REGISTER OF DEEDS FOR THE CITY OF MANILA
By: Martin
· Doctrine: 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.
FACTS
· Petitioner Francisco Veloso was the owner of a parcel of land situated in the district
of Tondo, Manila, with an area of one hundred seventy seven (177) square meters and
covered by TCT No. 49138 issued by the Registry of Deeds of Manila.
· The said title was subsequently canceled and a new one, TCT No. 180685, was
issued in the name of Aglaloma B. Escario, married to Gregorio L. Escario, on May 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 and a Deed
of Absolute Sale, , 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. Petitioner Veloso, therefore, prayed that a temporary restraining
order be issued to prevent the transfer of the subject property; that the General Power
of Attorney, the Deed of Absolute Sale and the TCT No. 180685 be annulled; and the
subject property be conveyed to him.
· 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. She contended that plaintiff (herein petitioner), had no cause of
action against her. In seeking for the declaration of nullity of the documents, the real
party in interest was Irma Veloso, the wife of the plaintiff. She should have been
impleaded in the case. In fact, Plaintiffs cause of action should have been against his
wife, Irma. Consequently, defendant Escario prayed for the dismissal of the complaint
and the payment to her of damages.
· Defendant Aglaloma Escaro was adjudged the lawful owner of the property as she
was deemed an innocent purchaser for value by the trial court.. The assailed general
power of attorney was held to be valid and sufficient for the purpose. The trial court
ruled that there was no need for a special power of attorney when the special power
was already mentioned in the general one. It also declared that plaintiff failed to
substantiate his allegation of fraud.
· CA affirmed the decision of the lower court
ISSUE
· Whether the assailed power of attorney was valid and regular on its face.
HELD/RATIO
Yes
· 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:
o 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.
· 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 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.
· The general power of attorney was accepted by the Register of Deeds when
the title to the subject property was canceled and transferred in the name of
private respondent. In LRC Consulta No. 123, Register of Deeds of Albay, Nov.
10, 1956, it stated that:
o Whether the instrument be denominated as general power of
attorney or special power of attorney, what matters is the extent of
the power or powers contemplated upon the agent or attorney in
fact. If the power is couched in general terms, then such power
cannot go beyond acts of administration. However, where the
 power to sell is specific, it not being merely implied, much less
couched in general terms, there can not be any doubt that the
attorney in fact may execute a valid sale. An instrument may be
captioned as special power of attorney but if the powers granted are
couched in general terms without mentioning any specific power to
sell or mortgage or to do other specific acts of strict dominion, then
in that case only acts of administration may be deemed conferred.
· Petitioner contends that his signature on the power of attorney was falsified.
He also alleges that the same was not duly notarized for as testified by Atty.
Tubig himself, he did not sign thereon nor was it ever recorded in his notarial
register. To bolster his argument, petitioner had presented checks, marriage
certificate and his residence certificate to prove his alleged genuine signature
which when compared to the signature in the power of attorney, showed
some difference.
· We found, however, that the basis presented by the petitioner was
inadequate to sustain his allegation of forgery. Mere variance of the
signatures cannot be considered as conclusive proof that the same were
forged. Forgery cannot be presumed. Petitioner, however, failed to prove his
allegation and simply relied on the apparent difference of the signatures. His
denial had not established that the signature on the power of attorney was
not his.
· We agree with the conclusion of the lower court that private respondent was
an innocent purchaser for value. Respondent Aglaloma relied on the power of
attorney presented by petitioners 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. Moreover, the power of attorney
was notarized and as such, carried with it the presumption of its due
execution. 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.
· Documents acknowledged before a notary public have the evidentiary weight
with respect to their due execution. The questioned power of attorney and
deed of sale, were notarized and therefore, presumed to be valid and duly
executed. Atty. Tubig denied having notarized the said documents and alleged
that his signature had also been falsified. He presented samples of his
signature to prove his contention. Forgery should be proved by clear and
convincing evidence and whoever alleges it has the burden of proving the
same. Just like the petitioner, witness Atty. Tubig merely pointed out that his
signature was different from that in the power of attorney and deed of sale.
Disposition
ACCORDINGLY, the petition for review is hereby DENIED for lack of merit.
3. SAN DIEGO V. NOMBRE
G.R. No. L-19265
May 29, 1964
By: Lyka
Topic: Art. 1878
Petitioners: Moises San Diego, Sr.
Respondents: Adelo Nombre and Pedro Escanlar
Ponente: Paredes
DOCTRINE: The provisions of the New Civil Code on agency does not apply to judicial
administrators regardless of their similarities.
FACTS:
1. Nombre, in his capacity as a judicial administrator of an intestate estate, leased one
of the properties of the estate (a fishpond) to Escanlar for 3 years with a yearly
rental of P3,000 to expire on May 1, 1968. Such transaction was done without
previous authority or approval from the court.
2. Nombre was later on removed as judicial administrator and Campillanos was
appointed in his stead. Campillanos filed a motion asking for authority to execute a
lease contract of the same fishpond in favor of San Diego for 5 years from 1981 at a
yearly rental of P5,000. Nombre presented a written opposition to Campanillos’
motion pointing out that the fishpond had been leased by him to Escanlar and that
his lease has yet to expire.
3. Campanillos argues that the said contract is null and void for want of judicial
authority. They argue that Art. 1878 (8) is the limitation of the right of judicial
administrators to lease real property without prior court approval and that if it
exceeds one year. The leased contract being 3 years and without court approval is
considered void.
4. Nombre insists that the validity of the lease contract entered into by a judicial
administrator must be recognized, and that the Art. 1878 (8) does not apply in this
case.
ISSUE: Whether a judicial administrator can validly lease property of the estate without
judicial authority and approval.
HELD/RATIO: Yes.
● Sec. 3, Rule 5 of the Old Rules of Court provides: “An executor or administrator
shall have the right to the possession of the real as well as the personal estate of
the deceased so long as it is necessary for the payment of the debts and the
expenses of administration, and shall administer the estate of the deceased not
disposed of by his will.” Lease has been considered as an act of administration.
● While it may be admitted that the duties of a judicial administrator and an agent
are in some respects, identical, the provisions on agency 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. A judicial administrator,
 before entering into his duties, is required to file a bond. These circumstances are
not true in case of an agent.
● The agent is only answerable to his principal. The protection which the law gives
the principal, in limiting the powers and rights of an agent, stems from the fact that
control by the principal can only be through agreements, whereas the acts of a
judicial administrator are subject to specific provisions of law and orders of the
appointing court.
WHEREFORE, the decision appealed from should be, as it is hereby affirmed, in all respects,
with costs against petitioner Moises San Diego, Sr.
4 Lilia Barrera vs Hon. Militante
GR # L-54681
Date: May 31, 1982
By: Julpha
Topic: Section 23, Rule 138 of the ROC
Plaintiffs-Appellees: Lilia Barrera, represented by Miguel Logarta
Defendants-Appellants: CA and Carmen Belleza, Eleuteria Cabrera, Baldomero
Hernani, Benjamin Sevilla, Lucas de la Calzada
Ponente: De Castro, J.
Summary:
Petitioner filed a complaint against private respondents for recovery of ownership and
possession of a parcel of land. However, the petitioner or her counsel failed to appear at the
pre-trial conference. Thus, the case was dismissed. Petitioner filed a motion to reconsider
said dismissal on the grounds that on the scheduled pre-trial conference, her counsel, who
was allegedly armed with “a special power of attorney to appear at the pre-trial and to enter
into a compromise was a little late. Private respondents contends that in all the pre-trial
conferences scheduled by the lower court, petitioner has never appeared nor does the
record show that she had executed a special power of attorney in favor of either her
attorney- in-fact Miguel R. Logarta or her counsel of record to serve as the written authority
to represent her in said pre-trial conferences, with power to compromise the case. Motion
to reconsider dismissed. SC held that authority to compromise cannot rightly be presumed.
The record does not show that petitioner had executed a special power of attorney in favor
of either her attorney-in-fact or her counsel of record.
DOCTRINE:
Section 23, Rule 138 of the Rules of Court requires, for attorneys to compromise the litigation
of their clients, a "special authority” is required.
The authority to compromise cannot rightly be presumed
FACTS:
· December 13, 1978: Petitioner filed a complaint against private respondents for
recovery of ownership and possession of a parcel of land
· June 11, 1980: When the case was called for pre-trial conference neither petitioner
nor her counsel appeared
o Respondent Judge issued a dismissal order
· June 17, 1980: Petitioner then filed a motion to reconsider said dismissal order
stating that on the scheduled pre-trial conference, her counsel, who was allegedly
armed with “a special power of attorney to appear at the pre-trial and to enter into a
compromise was a little late,"
o because "the secretary of the law office did not arrive early in the
said office where counsel could pick up the records of the case on
his way to Court"
· Private respondent's contends that in all the pre-trial conferences scheduled by the
lower court, petitioner has never appeared nor does the record show that she had
executed a special power of attorney in favor of either her attorney- in-fact Miguel R.
Logarta or her counsel of record to serve as the written authority to represent her in
said pre-trial conferences, with power to compromise the case
· Thus, the motion of reconsideration was denied
· Hence this petition
ISSUE: Whether an SPA to appear at the pre-trial and to enter into a compromise has to
proven
RATIO/ HELD: YES!
· The record does not show that petitioner had executed a special power of attorney
in favor of either her attorney-in-fact or her counsel of record
· The court is, thus, left without any idea as to the nature and extent of said alleged
authority, which have to be proven, because Section 23, Rule 138 of the Rules of Court
requires, for attorneys to compromise the litigation of their clients, a "special authority”
is required.
· And while the same does not state that the special authority be in writing, the court
has every reason to expect that, if not in writing, the same be duly established by
evidence other than the self-serving assertion of counsel himself that such authority was
given him
· The respondent Judge, therefore, did not act erroneously, much less abuse his
discretion gravely, in denying the motion for reconsideration in spite of such
manifestation of petitioner's counsel because the authority to compromise cannot
rightly be presumed
ABAD SANTOS, CONCURRING: Petitioner can file a new complaint provided that her action
has not yet prescribed.
5. ACENAS V. SISON
8 SCRA 711
AUGUST 30, 1963
By: JUSTINE LIMJOCO
Petitioners: EMMA S. ACENAS AND ALBERTO E. ACENAS
Respondents: ANGELA SISON AND TEOFILO SISON
Ponente: REGALA, J.
RECIT-READY: Petitioner filed an action against respondent Angela Sison’s failure to pay

based on a promissory note she executed. Her husband joined in her suit. During the
hearing for the case, counsel for defendant asked that the confession of judgment be
entered even if he had no authority to do so. The Supreme Court held that the trial court
erred in accepting the confession made by the counsel without authority by his client.
DOCTRINE: A confession of judgment made by the attorney without the client’s special
authority may be set aside.
FACTS
· On September 1956, Angela Sison executed a promissory note, promising to pay
Emma 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, petitioners filed an action. Pursuant to Article
113 of the Old Civil Code, her husband, Teofilo Sison joined as defendant.
· In their answer, Mr. Sison denied liability on the ground that he had not signed the
promissory note.
· The case was set for hearing on March 7, 1960. The events for that day were as
follows:
o Counsel for defendants moved for the postponement of the hearing due to
the absence of his clients. He asked for more time in order to amicably settle
the case.
o Counsel for the plaintiffs objected on the ground that the defendants have
been given sufficient time to settle the case.
o When the court indicated to the defendant’s counsel that they have no
defense, and that it would be for their best interest to terminate the case by
way of judgment on the pleadings or confession of judgment, counsel for
defendants offered no objection.
o Counsel for defendants asked that the confession of judgment by the
defendants be entered in this case providing that the corresponding writ of
execution should not be issued until June 30, 1960. Counsel for plaintiffs
agreed.
o Therefore, the motion for confession of judgment was granted.
o Judgment was rendered ordering defendants, jointly and severally, to pay
the plaintiffs.
· Defendants then appealed directly to this Court.
· Teofilo Sison contends that his lawyer agreed to a judgment on the pleadings, but
not to a confession of judgment. He further states that he never authorized his
lawyer to confess judgment for him, and that he was not liable for the note of his
wife.
· The court then found that Atty. Nicanor Sison, counsel for the spouses Sison,
agreed to a judgment on confession against his clients, provided no writ of
execution was issued until June 30, 1960. But records show that he never had the
authority to confess judgment.
ISSUE: Whether or not Atty. Sison’s confession of judgment without his client’s special
authority may be set aside
HELD/RATIO: YES.
The Court held that it was the error of the trial court to accept confession made by counsel
without ascertaining his authority.
The Court held in Natividad v. Natividad that the compromise of causes and confession of
judgments may not be effected by counsel without special authority, and that no agreement
to permit judgment to be entered against his client be authorized except with the knowledge
and at the instance of the latter. Such judgment may be set aside or reopened.
In the present case, the attorney of the defendant was not requesting to collect or enforce
his client's claim, but was resisting a suit or claim against his client and consented to the
credit in favor of the latter.
In contrast, Section 21 of Rule 1271 expressly requires that attorneys have special authority
not only to receive anything in discharge of a client's claim but the full amount in cash but
also to compromise their client's litigation.
] The current provision in the Rules of Court:
Rules of Court, Rule 138, Sec. 23
#6 NPC v. Vine Development Corporation
G.R. No. 137785
Sep 04, 2000
By: Joshua
Topic: Limitation of agent’s authority
Petitioners: National Power Corporation (actually OSG)
Respondents: Vine Development Corporation, Represented By Vicente C. Ponce; And
Romonafe Corporation, Represented By Oscar F. Tirona
Ponente: Panganiban, J.
RECIT-READY/SUMMARY:
NPC was expropriating land owned by Vine and Ramonafe. RTC rendered a
decision giving authority to NPC to enter and take possession of the land. The
value of the land was still being determined when NPC again negotiated with
Ramonafe to expropriate more sqms of land. When the RTC rendered a decision
valuing the parcels of land @ PhP 3,500/sqm, NPC appealed to the CA via Rule
41 (ROC). Meanwhile, NPC and Ramonafe enetered into a compromise
agreement wherein NPC would get 75,000~ sqm of land @ PhP 3,500/sqm - this
already included an additional 27,000~ sqm and 48,000~ sqm which was part of
 the appeal. The OSG gave a manifestation asking for the disapproval of the
compromise agreement as this was violative of the authority it gave to NPC
lawyers. The CA dismissed the whole appeal even though the OSG was only
asking for the dismissal of the compromise agreement. SC summarized the
issues to be (1) whether the lawyers of NPC were authorized to file an appeal to
the CA and (2) if they were authorized to execute a compromise agreement. On
the 1st issue, SC said that the NPC lawyers were correct in their filing of appeal
following Rule 41 of (ROC). it also held that there was no violation of authority
as the appeal was presumed to be for the benefit of the gov’t (principal).
However, on the 2nd issue, the SC held that the NPC lawyers had no authority to
execute a compromise agreement w/o consulting the OSG as this was excluded
in the authority conferred to them by the OSG.
DOCTRINE:
Agents must act within the scope of their authority. But if the acts of the agent are conducive
to the accomplishment of the purpose of agency and that it is advantageous to the principal,
then the agent does not exceed its authority.
FACTS
1. NPC instituted a complaint for expropriation of several parcels of land owned by Vine
Dev’t Corp. (Vine) and Ramonafe Corp. (Ramonafe), (raffled to) in RTC of Imus, Cavite
2. RTC ruled in favor of NPC and authorized them to enter and take possession of the
properties after depositing the assessed value of the property for tax purposes
3. RTC also ordered for the determination of the just compensation for the properties -
the property was inspected on Jan 1997
- in Oct 1995, the properties were valued at PhP 1,500 and PhP 2,000/sqm,
respectively
- after reconsideration, the properties were valued at PhP 3,500
4. The determination of the value of the properties was still pending when negotiations
for an additional sqms of Ramonafe’s properties were initiated
5. RTC rendered a decision ordering NPC to pay for the properties @ Php 3,500/sqm + 6%
int starting from the time NPC took possession of the properties until they are fully paid
6. NPC appealed the decision directly to the Court of Appeals
7. While the appeal was still pending in the CA, NPC and Ramonfe entered into a
Compromise agreement
- that NPC would acquire 75,397 sqm (48,103.12 sqm of which was part of the subject
of the appeal still pending) - so they additionally acquired around 27,000~ sqm from
Ramonfe - @ PhP 3,500
- in effect NPC would get a discount from the total purchase of the land (around Php
6.5M yung discount)
8. CA gave the OSG 10 days to comment, to which the OSG prayed for compromise
agreement to be disapproved and the appeal to be decided on its merits
9. OSG did not like the compromise agreement as it was disadvantageous to the gov’t and
the lack of authority of lawyers of NPC to enter into a compromise agreement as this
violated the terms of their deputization (given by the OSG)
- “OSG[-]deputized counsel of the National Power Corporation (NAPOCOR) have the
authority to file notices of appeal in cases being handled by them such as the subject
case pursuant to their deputation letters. However, such authority does not extend to
withdrawal of said appeal, execution of compromise agreements and ling of
pleadings before the appellate courts without the review and approval of the
Solicitor General.”
10. CA then dismissed the whole appeal believing that the OSG manifested for the whole
appeal to be dismissed - after which the NPC immediately filed an MR which was
eventually denied
- NPC’s MR opined that OSG did not mean for the whole appeal to be dismissed and
that the appeal was wrongfully dismissed for lack of legal basis
ISSUE
1. Whether lawyers of NPC (deputized by the OSG) had the authority to file an appeal in
the Court of Appeals
2. Whether lawyers of NPC (deputized by the OSG) had the authority to enter into a
compromise agreement
HELD/RATIO
1. Yes. NPC lawyers (deputized by the OSG) have the authority to file and appeal in the CA
since:
- pursuant to Rule 41, Sec 2 of the ROC, the notice of appeal is filed in the very same
court which rendered the assailed decision - which the layers of NPC followed and did
so within the reglementary period
- even if they did not have the authority, the appeal is presumed to be beneficial to
the gov’t hence it would be allowed (NCC Art 1882)
- even if they did not have the authority, this defect was cured anyway when OSG filed
its manifestation - specifying that NPC lawyers deputized by the OSG have the
authority to file notices of appeal in cases which they are handling and further
specifying that this authority does not include, execution of a compromise agreement
2. No. It is clear that the lawyers of NPC, even if they were deputized by the OSG, had no
authority to execute a compromise agreement
- NCC Art 1878 (3) states provides that a SPA from the principal is necessary for an
agent to execute a compromise. In this case the principal is the gov’t (OSG) and the
agents are the NPC lawyers.
- OSG’s deputizing of NPC lawyers clearly excluded the authority to execute a
compromise
- ROC Rule 138, Sec 23: attorneys cannot, without special authority, compromise their
client’s litigation
WHEREFORE, the Petition is GRANTED and the appealed Decision REVERSED and SET ASIDE.
The case is hereby REMANDED to the Court of Appeals for disposition on the merits as
prayed for by the Office of the Solicitor General. No costs.
7.) DUNGO v. LOPENA
GR No. L-18377
DECEMBER 29, 1962
By: RONNEL DEINLA
Topic: CONTRACTS; UNENFORCEABLE CONTRACTS
Petitioners: ANASTACIO G. DUÑGO
Respondents: ADRIANO LOPENA, ROSA RAMOS and HON. ANDRES REYES, Judge of the Court
of First Instance of Rizal
Ponente: REGALA, J.
SUMMARY: Petitioner seeks to nullify a compromise agreement he did not sign on. It was his
counsel who signed such document. The SC held that such contract is not void, but merely
unenforceable, therefore it can be ratified. By his acts, petitioner cannot repudiate now the
compromise agreement.
DOCTRINE:
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. The compromise is merely unenforceable.
This results from its nature as a contract. It must be governed by the rules and the law on
contracts.
FACTS:
● Anastacio Duñgo and one Rodrigo S. Gonzales purchased 3 parcels of land from Adriano
Lopena and Rosa Ramos. A down payment was given and the balance would be paid in 6
monthly installments.
● To secure the payment of the balance, Duñgo and Gonzales, executed over the same
parcels of land Deed of Real Estate Mortgage in favor of Lopena and Ramos. Failure to
pay any of the installments on their maturity dates shall cause the entire unpaid balance
to become due and demandable.
● The vendees defaulted on the first installment. Lopena and Ramos filed a foreclosure of
the real estate mortgage with the CFI where Hon. Judge Andres Reyes presided.
● Meanwhile, there were 2 other civil cases filed in the same lower court against Duñgo
and Gonzales. All three cases arose out of one transaction, so they were consolidated by
the lower court into just one proceeding.
● This present decision refers solely to the interests and claim of Adriano Lopena against
Anastacio Duñgo alone.
● Before the cases could be tried, a compromise agreement was submitted to the lower
court for approval. It was signed by Lopena and Ramos on one hand, and Gonzales, on
the other.
● Gonzales represented that his signature was for both himself and Dungo. Moreover,
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.
● Subsequently, a so-called Tri-Party Agreement was drawn. The signatories to it were
Duñgo and Gonzales as debtors, Lopena and Ramos as creditors, and, one Emma Santos
as payor.
● When Duñgo and Gonzales failed to pay the balance of their indebtedness, Lopena and
Ramos filed a Motion for the Sale of Mortgaged Property. Although this last motion was
filed ex parte, Duñgo and Gonzales were notified of it by the lower court. Neither of
them filed any opposition.
● The 3 parcels of land were sold by the Sheriff at a public auction where 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. In this connection, it
should also made of record that before confirming the sale, the lower court gave due
notice of the motion for the confirmation to the herein petitioner who filed no
opposition.
● Duñgo filed a motion to set aside all the proceedings claiming the compromise
agreement was void with respect to him because he did not sign the same.
Consequently, he argued, all subsequent proceedings were void as regards him.
ISSUE: Whether the compromise agreement and all the proceedings subsequent thereto,
void insofar as the petitioner is concerned. NO.
HELD/RATIO:
● ART. 2028. A compromise is a contract whereby the parties, by making reciprocal
concessions, avoid a litigation or put an end to one already commenced.
● ART. 1878. Special powers of attorney are necessary in the following cases:
○ 3) 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;
● Doctrine.
● 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;
● The ratification of the compromise agreement was conclusively established by the Tri-
Party Agreement.
● When it appears that the client, on becoming aware the compromise and the judgment
thereon, fails to repudiate promptly the action of his attorney, he will not afterwards be
heard to contest its validity (Rivero vs. Rivero, 59 Phil. 15).
NOTES:
● This Court has not overlooked the fact that Duñgo was not a signatory to the
compromise agreement. The principal provision of the said instrument was for his
benefit.
● Originally, Duñgo's obligation matured and became demandable on October 10, 1959.
However, the compromise agreement extended the date of maturity to June 30, 1960. If
only for this reason, this Court believes that the herein petitioner should not be heard to
repudiate the said agreement.
● 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:" Beyond doubt, this was ratified by the Tri-Party Agreement when it
covenanted that —
○ If the MAYOR defaults or fails to pay anyone of the installments in the manner
stated above, the MAYOR and the DEBTOR hereby permit the CREDITOR to execute
the order of sale, and they hereby waive any and all objections or oppositions to
the propriety of the public auction sale and to the confirmation of the sale to be
made by the Court.
8. Lim Pin vs Liao Tian
GR NO. L-47740
 July 20, 1982
By: HAPPY
Topic: Article 1878
Petitioners: Lim Pin
Respondents: Sps. Conchita Liao Tan, and Tan Cho Hua, and Honorable Cancio C. Garcia,
Presiding Judge of Branch I, City Court of Caloocan City
Ponente: Gutierrez, Jr., J.
RECIT-READY: In a civil case for unlawful detainer, the defendant during the hearings,
repeatedly asked the respondent Judge to approve her proposals for the monthly increase in
rentals which the plaintiff then did not find acceptable. During the October 19, 1977 hearing,
however, the plaintiff finally expressed her willingness to accommodate the proposals
originating from the defendant. Thereupon, a compromise agreement was signed between
the plaintiff and the defendant, then represented by her son, who, together with defendant's
counsel assured the Court that he was authorized by her mother to enter into such a
compromise agreement. The Court thus rendered judgment on the basis of the said
agreement. Later, however, the defendant moved for a reconsideration of the decision on
the ground that she never authorized her son nor her counsel to enter into such agreement
and that had she been present when said agreement was prepared, she would not have
acceded thereto. The trial Court denied reconsideration and granted plaintiff's motion for
immediate execution of the judgment. Hence, this petition. The Supreme Court held that 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 are met if there is a clear mandate from the
principal, whether oral or written, expressly authorizing a compromise of the case; that if the
authority is oral, the same must be established by evidence; and, that consequently,
respondent Judge committed no grave abuse of discretion when he allowed petitioner's son
to execute the compromise agreement in behalf of his mother because he had taken the
necessary precautionary measures and acted on the basis of satisfactory evidence showing
that petitioner had authorized her son to so compromise the case.
DOCTRINE: 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.
The authority to compromise a litigation is not mandatorily required to be in writing. The vital
thing is that the authority was made expressly. The authority to compromise if not in writing
may be established by evidence.
FACTS:
● Sps. Conchita Liao Tian and Tan Cho Hua filed an unlawful detainer case against Lim
Pin
● They alleged that they are owners of a parcel of land and they had leased a portion
of it to Lim Pin but the latter had not paid the agreed rental stipulated for April
1977 and the succeeding months thereafter.
● Lim Pin denied the allegations
● Initial hearing was reset upon the motion of the parties who were trying to work
out a possible amicable settlement
● Upon failure of the parties to reach an amicable settlement, hearing proceeded.
● On the schedule hearing, Lim Pin was absent. Her son, George Hung, who attending
with his mother all the previous hearings, was present together with their counsel
● A subject compromise agreement was formulated and executed
● The compromise agreement was the subject of a MR filed by Lim Pin on the ff.
grounds:
o She never authorized her son nor her counsel on record, Atty. Pastor
Mamaril, to enter into such compromise agreement
o Had she been present when said agreement was prepared, she would not
have acceded thereto
● In the meantime, Sps. Conchita filed an Urgent Motion for Immediate Execution of
Judgment
● All the motions were resolved by the court
o MR is denied. George Hung is declared in direct contempt of court.
o Ordered issuance of writ of execution.
● Writ of execution was issued on the same date. Sheriff served a Notice of
Ejectment and Notice of Levy to plaintiff.
● Hence, this petition.
● Lim Pin 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
compromise agreement with the private respondent Conchita Liao Tan assisted by
her counsel.
● Court issued a TRO enjoining respondent judge from enforcing execution of
judgment
ISSUE:
● W/N respondent judge committed grave abuse of discretion in allowing the
compromise agreement in the absence of the petitioner
HELD/RATIO:
● NO.
● Article 1878 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 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 all
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.
● This Court stated that such a mandate may be either oral or written, the one vital
thing being that it shall be express. And more recently, We stated that, if the
special authority is not written, then it must be duly established by evidence
● We are satisfied from the records of this case that respondent Judge 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.
 o The court asked George Hung whether he was willing to enter into the to enforce defendant's ejectment from the leased premises and the collection of all rental in
compromise agreement and whether he had the authority of his mother arrears;
to enter into such a compromise agreement; 7. Defendant's representative, George Hung, affirmed before this court and the same is
o The defendant's counsel confirmed in open court the assurance of confirmed by defendant's counsel, that he (George Hung) has the full authority of her
George Hung that he had the full authority of his mother to enter into a mother, the herein defendant, to act for her and to sign for and in behalf this amicable
compromise agreement; settlement.
o After the formulation of the compromise agreement the Judge explained
in Tagalog to both parties, including George Hung its terms and (ASSIGNED CASE #9) PNB v. Sta. Maria
conditions after which the same was reduced into writing; GR NO. L-24765
o George Hung willingly signed the compromise agreement, the terms and August 29, 1969
conditions of which were those originally proposed by the petitioner By: Madrid
herself. Hung was all the while assisted by their counsel.
● The court itself observed during the earlier hearings and it is not disputed that Topic: SPA
defendant Lim Pin could not decide on anything without first consulting her son. Petitioners: PNB
George Hung's later denial that he never manifested his authority to represent his Respondents: Sta. Maria (Brothers and Sisters)
mother was rejected by the court. As a matter of fact, this sudden turnabout of Ponente:
George Hung led the court to cite him for contempt.
● Even assuming that George Hung and the petitioner's counsel acted without
authority, the compromise agreement itself was not null and void. It would be RECIT-READY/SUMMARY: No need.
merely unenforceable, capable of being ratified.
DOCTRINE: “A special power of attorney to mortgage real estate is limited to such authority
WHEREFORE, the instant petition is hereby DISMISSED for lack of merit. The temporary
to mortgage and does not bind the grantor personally to other obligations contracted by the
restraining order issued by this Court dated February 8, 1978 is LIFTED. The judgment
grantee.”
appealed from is AFFIRMED with costs against the petitioner.
FACTS
Notes:
- Respondent Maximo Sta. Maria has been granted by his co-respondents, which are his 6
Compromise Agreement:
brothers and sisters, an SPA to mortgage a 16 hectare land which is owned equally by all of
1. The parties admit that the stipulated rental for the leased premises is as follows:
them.
● For the months of April and May, 1977, at P1,500.00 a month; thereafter a monthly
- In addition, Valeriana Sta. Maria alone, Maximo’s sister, also executed an SPA to borrow
increase of P500,00 until the rental reaches to P5,000.00 by December, 1977,
money and to mortgage any real estate owned by her.
2. That defendant admits having been in arrears in the payment of her rental obligation since
- By virtue of the powers, Maximo applied for 2 separate crop loans with the PNB.
April, 1977 and that as of October, 1977, her total accrued rentals already amounted to
- As security for these loans, Maximo included the parcel of land jointly owned by his
P18,000.00, broken down as follows:
brothers and sisters.
● April, 1977May, 1977June, 1977July, 1977August, 1977 September, 1977 October,
- The loan matured; PNB filed an action against the respondents (Maximo w/ his bros and sis)
1977TOTAL P18,000.00
for the collection of certain amounts which represented the unpaid balances on the 2 crop
● P1,500.00 1,500.00
loans.
● 2,000.00 2,500.00
- RTC held in favor of PNB.
● 3,000.00 3,500.00
- The brothers and sisters of Maximo contend that the SPA only gave Maximo the power to
● 4,000.00
mortgage the real estate owned by them, and not the authority to borrow.
3.P18,000.00 and attorney's fee of P2,000.00, not later than October 31, 1977.
- Respondents further contended that they did not benefit whatsoever from the loans, and
● That defendant binds herself to pay in full said accrued rentals of
that the plaintiff bank's only recourse against them is to foreclose on the property which they
4. That the rental for November, 1977, shall be P4,500.00 a month while the rentals for
had authorized Maximo to mortgage.
December, 1977 and for the succeeding months thereafter shall be P5,000.00, payable at the
residence of plaintiff within five (5) days of the current month.
ISSUE
5. That the Plaintiff hereby agrees to allow the defendant to remain in the leased premises at
WON the brothers and sisters of Maximo can be held liable for the loan executed by Maximo.
the rental herein agreed upon.
6. That should defendant fails to pay her accrued rental of P18,000.00, plus attorney's fee of
HELD/RATIO
P2,000.00 by October 31, 1977, Plaintiff shall be entitled to an immediate writ of execution
NO (EXCLUDING VALERIANA STA. MARIA SINCE SHE EXECUTED ANOTHER SPA)
- Plaintiff bank has not made out a cause of action against defendants-appellants (except
Valeriana), so as to hold them liable for the unpaid balances of the loans obtained by Maximo
under the chattel mortgages executed by him in his own name alone.
- 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 outcome might be different if there had been an express ratification of the loans by
defendants-appellants or if it had been shown that they had been benefited by the crop
loans soas to put them in estoppel
- In the case of Valeriana Sta. Maria, since she executed another SPA, Valeriana stands liable
not merely on the mortgage of her share in the property, but also for the loans which
Maximo had obtained from plaintiff bank, since she had expressly granted Maximo the
authority to incur such loans. She and Maximo are held to be jointly liable to PNB for the
payment of loans.
10. COMMERCIAL BANK & TRUST COMPANY v. REPUBLIC ARMORED CAR SERVICE
CORPORATION
GR NO. L-18223 & L-18224
September 30, 1963
By: BEATRIZ A. NICOR
Topic: ATP – NATURE, FORM, AND KINDS OF AGENCY
Petitioners: COMMERCIAL BANK & TRUST COMPANY OF THE PHILIPPINES
Respondents: REPUBLIC ARMORED CAR SERVICE CORPORATION and DAMASO PEREZ, ET AL.
Ponente: LABRADOR, J
DOCTRINE: In an action upon a promissory note against the maker, the mismanagement of
the business of the maker by his agents does not relieve said maker from the responsibility
that he had contracted to third persons, especially where the written agreement contains no
limitations to defendant-appellant's liability.
FACTS:
· G.R. No. L-18223 and G.R. No. L-18224 are appeals from judgments rendered by
CFI. Basically, the same facts only the sum of money was different.
· BACKGROUND - The Supreme Court, in its June 29, 1963 decision, held the
following:
o Commercial Bank granted credit accommodations to Republic Armored Car
Service in the form of an overdraft line. When payment was due, they made
repeated demands but was ignored by RACS. Commercial Bank now file a
complaint against the latter.
o RACS, under the management of Damaso Perez and Attorney-in-Fact Ramon
Racelis, argue that they have not ignored the demands for the payment. They
allege that the former officers and directors of the corporation had deliberately
defrauded and mismanaged the corporation, as a part of their scheme to wrest
control of various corporations owned by Perez, from the latter and as a result
of said frauds or mismanagements the defendants have instituted actions for
damages for breach of trust and that the amounts drawn on the credit line
subject of the complaint were received and used by the former directors and
officers of the defendant corporations and constitute part of the funds
misapplied by them.
o SC held that the alleged fact that its officers misappropriated the money
borrowed from Commercial Bank is no defense against RACS & Perez to
Commercial Bank. And that the amount demanded was not qualified as there
was no statement that the responsibility of them for the amount taken on
overdraft would cease upon misappropriations on mismanagement of funds of
the corporation by directors and employees. THUS, the mismanagement of the
business of a party by his agents does not relieve said party from the
responsibility that he had contracted to third persons, especially where the
written agreement contains no limitation to RACS’ & Perez’s liability.
o Furthermore, under general rules and principles of law the mismanagement of
the business of a party by his agents does not relieve said party from the
responsibility that he had contracted to third persons, especially in the case at
bar where the written agreement contains no limitation to defendants-
appellants' liability.
o The written agreement for credit in current account contains no limitation about
the liability of the defendants-appellants, nor an express agreement that the
responsibility of the defendants-appellants, should be conditioned upon the
lawful management of the business of the defendant corporation
· NOW THE CASE BEFORE US:
· Damaso Perez presented a motion for new trial on the ground of newly discovered
evidence. He claimed that he was not aware of the nature of the power of
attorney that Ramon Racellis used, allegedly signed by Perez, to secure the loans
for Republic Armored Car Service and Republic Credit Corporation.
· A photostatic copy of the power of attorney was claimed to be included in the
motion but it was not submitted to the court, so they could not rule on his
contention that Racellis had no authority to bind him as surety for the loans
obtained from Commercial Bank.
· The MR, however, contains a copy of power of attorney.
ISSUE:
(1) WON Racellis had authority to bind him as surety for the loans obtained as
evidenced by the power of attorney
HELD/RATIO:
(1) YES. In accordance with the document, Racellis was authorized to negotiate for a
loan with other banking corporations. This general power of attorney to secure loans
from any banking institute was sufficient authority for Racellis to obtain the credits
subject of the present suits.
· Racellis, as agent of Perez, executed the documents evidencing the loans signing
“Damaso Perez by Ramon Racellis” and that Perez agreed solidarily to be
responsible for the loans so there is no merit that Perez was only being held as
guarantor.
· There were promissory notes attached to the complaint. If Perez claims that
 Racellis had no authority to execute the promissory notes, the authenticity of the was issued.
documents should have been specifically denied under oath in his answers in the • Jose and his co-heirs failed to redeem the property within 1 year of the said issuance hence
lower court. a Definite Cert. of Sale was issued in favor of the bank.
• Jose still negotiated with the bank to repurchase the property. Offers and counter-offers
Motion for new trial is denied. were made but nothing was agreed upon. As a result, the bank sold the property instead to
other parties in installments. Conditional deeds of sales were made between the bank and
11. BICOL SAVINGS AND LOAN ASSOC. VS. CA, JOSE DE JESUS AND HIS CO-HEIRS said parties. A writ of possession was granted by the RTC.
GR NO. 85302 • Jose filed a case with CFI Naga to annul the foreclosure or repurchase of the property. The
MARCH 31, 1990 CFI, noting that the action was to annul the definite deed of sale issued to Bicol Savings,
BY: Ryan dismissed the case. It held that the title of the bank over the subject property had become
___________________________________________________________________________ absolute upon issuance of the deed and that Jose was guilty of laches.
TOPIC: NATURE, FORM, KINDS OF AGENCY; SPECIAL POWER OF ATTORNEY • The CA reversed the RTC ruling. The CA applied NCC 1879. It held that since the SPA
PETITIONERS: BICOL SAVINGS AND LOAN ASSOC. excluded the power to sell, the RTC erred in not declaring the foreclosure and auction as void
RESPONDENTS: CA, JOSE DE JESUS AND HIS CO-HEIRS as the SPA explicitly stated that Jose was only to mortgage the property, and not foreclose
PONENTE: MELENCIO-HERRERA, J. and sell the property. To add, Bicol Savings should have resorted to judicial foreclosure.
____________________________________________________________________________ Ultimately, the CA annulled the foreclosure, deeds of sale, registration and writ of possession
SUMMARY: Juan issued an SPA to his son Jose to mortgage his land to Bicol Savings. Jose got issued to Bicol Savings.
a P20k loan and executed a mortgaged on said land. Juan died and left his loan unpaid hence
the land was auctioned off. Jose tried to buy back the land but was sold to other parties. Jose ISSUE: WON the foreclosure was valid in view of that Jose lacked/exceeded his authority as
wanted to annul the foreclosure but failed. SC held that NCC 1879 was inapplicable as it a stated in the SPA
voluntary/independent contract. The stipulation which granted power to foreclose is
ancillary in nature and is an essential part of the agreement. Even if the mortgagor died, the HELD/RATIO: YES.
power to foreclose remains for the mortgagee’s protection. Bicol Savings had the right to •NCC 1879 is inapplicable in this case. The sale proscribed by special power in NCC 1879 is a
foreclose as it was independent on the authorization in the mortgage deed. voluntary and independent contract and not an auction sale due to extrajudicial foreclosure
which was caused by the mortgagor’s default. Absent such default, no foreclosure results.
DOCTRINE: The power to foreclose is an ordinary agency. It is primarily an authority The stipulation which granted authority to extrajudicially foreclose a mortgage is an ancillary
conferred upon the mortgagee for its own protection. The power survives the mortgagor’s stipulation supported by the same cause/consideration for the mortgage and forms an
death. The right of mortgagee bank to extrajudicially foreclose after the morgtgagor’s death essential part of the agreement.
did not depend on the authorization in the mortgage deed. Such right existed independently •The power to foreclose is an ordinary agency. It is primarily an authority conferred upon the
of said stipulation. mortgagee for its own protection. The power survives the mortgagor’s death. The right of
mortgagee bank to extrajudicially foreclose after Juan’s death did not depend on the
FACTS: authorization in the mortgage deed. Such right existed independently of said stipulation
• Juan de Jesus owned a land in Naga. He executed aa Special Power of Attorney (SPA) in his o In Sec. 7, Rule 86, RoC, which grants to a mortgagee 3 remedies when a
son’s favor, Jose, “to negotiate, mortgage my real property in any either private or public mortgagor dies: 1) to waive the mortgage and claim the whole debt from the mortgagor’s
bank preferably in the Bicol Savings Bank, in any amount that may be agreed upon between estate as an ordinary claim; 2) to foreclose the mortgage judicially and prove any deficiency
the bank and my atty-in-fact”. as an ordinary claim; 3) to rely on the mortgage exclusively, foreclosing the same at any time
• Jose obtained a PhP20k loan from Bicol Savings. To secure payment, Jose executed a deed before prescription.
of mortgage on real property referred in the SPA. It had the ff. stipulation: •Bicol Savings had the right of extrajudicial foreclosure and was availed of. It matters that the
o If at any time the Mortgagor shall refuse to pay the obligations herein secured, or authority to extrajudically foreclose was granted by an atty-in-fact and not by the mortgagor
any of the amortizations of such indebtedness when due, or to comply with any of the personally. The stipulation forms an essential part of the mortgage contract and is
conditions and stipulations herein agreed .... then all the obligations of the Mortgagor inseparable. No creditor will agree to enter into a mortgage contract without a stipulation to
secured by this Mortgage, all the amortizations thereof shall immediately become due, protect itself. Hence, Bicol Savings, in effecting the extrajudicial foreclosure, merely availed
payable and defaulted and the Mortgagee may immediately foreclose this mortgage in of the right conferred by law. The auction that followed was a result of it
accordance with the Rules of Court, or extrajudicially in accordance with Act No. 3135, as
amended, or Act No. 1508. For the purpose of extrajudicial foreclosure, the Mortgagor DISPOSITIVE PORTION: WHEREFORE, the Decision of respondent Court of Appeals in CA-G.R.
hereby appoints the Mortgagee his attorney-in-fact to sell the property mortgaged. . . . CV No. 02213 is SET ASIDE, and the extrajudicial foreclosure of the subject mortgaged
• Juan died. Because Juan failed to pay his loan when he was alive, Bicol Savings foreclosed property, as well as the Deeds of Sale, the registration thereof, and the Writ of Possession in
the property and was auctioned off to the highest bidder to whom a Provisional Cert. of Sale petitioner bank's favor, are hereby declared VALID and EFFECTIVE.
WINNER: BICOL SAVINGS
LOSER: JUAN AND JOSE