382 Villaluz v LandBank there ipso facto arises an agency relationship between the principal and the

G.R. No. 192602 substitute, i.e. the substitute becomes the agent of the principal. As a result, the
Jan. 18, 2017 principal is bound by the acts of the substitute as if these acts had been done by
TOPIC: Scope of Authority the principal’s appointed agent. In this case, the SPA executed by the Spouses in
PETITIONER: favor of Paula Agbisit contains no restrictive language indicative of an intention to
RESPONDENT: prohibit Paula Agbisit from appointing a substitute agent. Thus, Paula Agbisit’s
PONENTE: Jardeleza, J. appointment of Milflores as substitute agent was valid and consequently, the real
estate mortgage is considered validly executed.
DOCTRINE: The general rule is that an agent appointed in a Power of Attorney may
appoint a substitute.

Exception:  If the principal has not prohibited the agent  from doing so.

FACTS: In 1996, the Spouses May and Johnny Villauz (“Spouses”) executed an SPA
in favor of May Villauz’s mother. Paula Agbisit, which authorized the latter to “sign
in our behalf all documents relating the sale, mortgage, or other disposition’ of a
property owned by the Spouses located in Davao City. The property was to be used
as collateral for a loan to expand Paula Agbisit’s backyard cut flower business.

On June 19, 1996, Paula Agbisit executed her own SPA appointing (as her substitute
agent) Milflores Cooperative (of which she was the Chairperson) as attorney-in-fact
in obtaining a loan from and executing a real estate mortgage in favor of the Land
Bank of the Philippines. Milflores Cooperative also executed a Deed of Assignment
of Produce/ Inventory as additional collateral for the loan. Land Bank of the
Philippines approved a P3 million loan in favor of Milflores Cooperative and on June
25, 1996 made a partial release of P995, 500. On the same day, Paula Agbisit
borrowed the amount of P604, 750 from Milflores Cooperative. The trial court
dismissed the complaint and which dismissal was affirmed by the Court of Appeals.
Hence, this petition to the Supreme Court.

ISSUES: 1. Whether Paula Agbisit could further delegate her authority as attorney-
in-fact for the Spouses Villaluz? If not, was the mortgage in favor of Land Bank
executed by Milflores Cooperative void.

RULING: YES. The delegation of authority made by Paula Agbisit to Milflores

Cooperative is valid. Articles 1892 and 1893 of the Civil Code provide the rules
regarding the appointment of a substitute by an agent. The law created a
presumption that an agent has the power to appoint a substitute. The consequence
of the presumption is that, upon valid appointment of a substitute by the agent,