A.

Nature of Agency: General and Special

1. Distinguishing General Agency and Agency Couched in General Terms

AS TO AUTHORITY CONFERRED:
(a) COUCHED IN GENERAL TERMS. — one which is created in general terms and is deemed to
comprise only acts of administration (Art. 1877.); or

(b) COUCHED IN SPECIFI C TERMS. — one authorizing only the performance of a specific act or
acts. (see Art. 1878.)

AS TO EXTENT OF BUSINESS COVERED:

(a) GENERAL. — one which comprises all the business of the principal (Art. 1876.); or
(b) SPECIAL. — one which comprises one or more specific transactions. (Ibid.)

a. As to Scope: General Agency

Art. 1876. An agency is either general or special.

The former comprises all the business of the principal. The latter, one or more specific transactions. (1712)

Presumption of agency.
(1) General rule. — Agency is generally not presumed. The relation between principal and agent must exist as a fact.
Thus, it is held that where the relation of agency is dependent upon the acts of the parties, the law makes no presumption
of agency, and it is always a fact to be proved, with the burden of proof resting upon the person alleging the agency to
show, not only the fact of its existence, but also its nature and extent. (Antonio vs. Enriquez, [C.A.] 51 O.G. 3536; Lopez
vs. Tan Tioco, 8 Phil. 693 [1907]; Harry E. Keller Elec. Co. vs. Rodriguez, 44 Phil. 19 [1922].)

It is a rule that whatever statements or communications made by the parties (supposed principal and agent) between
them, if anything thereto appears contrary to their intention, the latter will always prevail. (3 C.J.S. 252.)

(2) Exceptions. — A presumption of agency may arise, however, in those few cases where an agency may arise by
operation of law27 (3 Am. Jur. 706.) or to prevent unjust enrichment. Thus, it has been held that a shipper may be held
liable for freightage on bills of ladings signed by another person where the shipper appears as shipper or consignee, on
bills of lading where other persons appear as shippers, and on unsigned bills of lading, where the evidence shows that the
goods shipped actually belong to such shipper. (Compania Maritima vs. Limson, 141 SCRA 407 [1986].)

Dominion Insurance v. CA, G.R. No. 129919, February 6, 2002.

FACTS:
Rodolfo Guevarra (Guevarra) filed a civil case for sum of money against Dominion Insurance Corp. (Dominion) for the
amount advanced by Guevarra in his capacity as manager of defendant to satisfy certain claims filed by defendant’s
client.

The pre-trial was always postponed, and during one of the pre-trial conference dominion failed to arrive therefore the court
declared them to be in default. Dominion filed several Motions to Lift Order of Default but was always denied by the court.
The RTC rendered its decision making Dominion liable to repay Guevarra for the sum advanced and other damages and
fees. Dominion appealed but CA affirmed the decision of RTC and denied the appeal of Dominion.

ISSUE:
(a) W/N Guevarra acted within his authority as agent of petitioner.
(b) W/N Guevarra must be reimbursed for the amount advanced.
HELD:
(a) NO. Even though the contact entered into by Guevarra and Dominion was with the word “special” the contents of the
document was actually a general agency. A general power permits the agent to do all acts for which the law does not
require a special power and the contents in the document did not require a special power of attorney.

Art 1878 of the civil code provides instances when a special power of attorney is required.:
1) To make such payment as are not usually considered as acts of administration.
15) any other act of dominion

The payment of claims is not an act of administration which requires a special power of attorney before Guevarra could
settle the insurance claims of the insured.

Also Guevarra was instructed that the payment for the insured must come from the revolving fund or collection in his
possession, Gueverra should not have paid the insured through his own capacity. Under 1918 of civil code an agent who
acted in contravention of the principal’s instruction the principal will not be liable for the expenses incurred by the agent.

(b) YES. Even if the law on agency prohibits Gueverra from obtaining reimbursement his right to recover may be justified
under the article 1236 of the civil code.[1] Thus Guevarra must be reimbursed but only to the extent that Dominion has
benefited without interest or demand for damages.

b. As to Authority: Agency Couched in General Terms

Article 1877
An agency couched in general terms comprises only acts of administration, even if the principal should state that he
withholds no power or that the agent may execute such acts as he may consider appropriate, or even though the agency
should authorize a general and unlimited management. (n)

2. Distinguishing Special Agency and Agency Couched in Specific Terms

a. As to Scope: Special Agency

Article 1876 An agency is either general or special.

The former comprises all the business of the principal. The latter, one or more specific transactions.

b. As to Authority: Special Power of Attorney

i. Transactions Covered
Article 1878

Art. 1878. Special powers of attorney are necessary in the following cases:

(1) To make such payments as are not usually considered as acts of administration;

(2) To effect novations which put an end to obligations already in existence at the time the agency was constituted;

(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;

(4) To waive any obligation gratuitously;

(5) To enter into any contract by which the ownership of an immovable is transmitted or acquired either gratuitously or for
a valuable consideration;
(6) To make gifts, except customary ones for charity or those made to employees in the business managed by the agent;

(7) To loan or borrow money, unless the latter act be urgent and indispensable for the preservation of the things which are
under administration;

(8) To lease any real property to another person for more than one year;

(9) To bind the principal to render some service without compensation;

(10) To bind the principal in a contract of partnership;

(11) To obligate the principal as a guarantor or surety;

(12) To create or convey real rights over immovable property;

(13) To accept or repudiate an inheritance;

(14) To ratify or recognize obligations contracted before the agency;

(15) Any other act of strict dominion. (n)

Veloso v. CA, G.R. No. 102737, August 21, 1996.

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. "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 cannot 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."

FACTS:
Petitioner Francisco Veloso owns a parcel of land in Tondo, Manila covered by a TCT issued by the Registry of Deeds-
Manila. He acquired the subject property before he got married from Philippine Building Corporation. Hence, the property
did not belong to the conjugal partnership. The said title was subsequently cancelled and a new one was issued in the
name of Aglaloma B. Escario.

Subsequently, petitioner filed an action for annulment of documents, reconveyance of property with damages and
preliminary injunction alleging that he was the absolute owner of the subject property and he never authorized anybody to
sell it. He alleged that when his wife left for abroad, he found out that his copy was missing.

The transfer of property was supported by a General Power of Attorney and Deed of Absolute Sale, executed by
IrmaVeloso, wife of the petitioner.

Petitioner denied executing the power of attorney and alleged that his signature was falsified. He also denied having
known the supposed witnesses in the execution of the power of attorney. Thus, he contended that the sale of the
property, and the subsequent transfer were null and void.

Defendant Aglaloma Escario 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 which was sufficient in form and substance and was duly
notarized.

Witness for the plaintiff Atty. Julian G. Tubig denied any participation in the execution of the general power of attorney,
and attested that he did not sign.

RTC ruled in favor of Escaro as the lawful owner of the property as she was deemed an innocent purchaser for value. The
trial court ruledthat there was no need for a special power of attorney when the special power was already mentioned in
the general one.
CA affirmed in toto the findings of the trial court.

ISSUE:
Was the General Power of Attorney valid?

HELD:
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, aperusal thereof revealed that it stated an authority to sell.

"2. To buy or sell, hire or lease, mortgage or otherwise hypothecate lands, tenements and hereditaments …."

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 general power of attorney
was accepted by the Register of Deeds when the title to the subject property was cancelled and transferred in the name of
private Respondent.

RE FALSIFIED SIGNATURE:

SC found 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.

RE INNOCENT PURCHASER FOR VALUE:

SC agrees 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.

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. 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. 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.
Even granting for the sake of argument, that the petitioners signature was falsified and consequently, the power of
attorney and the deed of sale were null and void, such fact would not revoke the title subsequently issued in favor of
private respondent.

The right of an innocent purchaser for value must be respected and protected, even if the seller obtained his title through
fraud. The REMEDY of the person prejudiced is to bring an action for damages against those who caused or employed
the fraud,and if the latter are insolvent, an action against the Treasurer of the Philippines may be filed for recovery of
damages against the Assurance Fund.

RE ESTOPPEL:

The trial court did not err in applying equitable estoppel in this case. The principle of equitable estoppel states that where
one or two innocent persons must suffer a loss, he who by his conduct made the loss possible must bear it. From the
evidence adduced, it should be the petitioner who should bear the loss.

The fact remains that the Certificate of Title, as well as other documents necessary for the transfer of title were in the
possession of Irma, consequently leaving no doubt or any suspicion on the part of the defendant as to her authority.
Under Section 55 of Act 496 ,Irma’s possession and production of the TCT to defendant operated as conclusive authority
from the plaintiff to the Register of Deeds to enter a new certificate.

ACCORDINGLY, the petition for review is hereby DENIED for lack of merit.
Lim Pin v. Liao Tan, G.R. No. L-47740, July 20, 1982.

Article 1878 is found in Title X of the Civil Code on Agency. It 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.

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. As early as 1906, this Court in
Strong v. Gutierrez-Repide (6 Phil. 680) 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:

... the Rules require, for attorneys to compromise the litigation of their clients, a special authority. 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 verbally
given him. (Home Insurance Company vs. United States lines Company, et al., 21 SCRA 863; 866: Vicente vs. Geraldez,
52 SCRA 210; 225).

ii. Effect of Absence of Specific Authorization

Authority of attorney outside of court. — The relation of attorney and client is, in many respects, one of
agency and the ordinary rules of agency apply to such relation. The extent of authority of a lawyer, when acting
on behalf of his client outside of court is measured by the same test as that which is applied to an ordinary
agent. Thus, in a case, the respondent lawyer who actively participated in representing complainant and his
co-heirs in a pending homestead patent application, could himself acquire the certificates of title and other
documents without need of a special power of attorney from them. (Uytengsu II vs. Baduel, 477 SCRA 621
[2005].)
But a lawyer (counsel) acts beyond the scope of his authority in questioning the compromise agreement
entered into by his client for a client has the right to compromise a suit without the intervention of his lawyer the
only qualification being that if such compromise is entered into with the intent of defrauding the lawyer of the
fees justly due him, in which case the compromise must be subject to such fees. (J. Phil. Maine, Inc.
vs. National Labor Relations Commission, 561 SCRA 675 [2008].)

Duñgo v. Lopena, G.R. No. L-18377, December 29, 1962.

DOCTRINE:
A compromise is a contract in itself. Under Art 1878, a third person cannot bind another to a compromise agreement
unless he, the third person, has obtained a special power of attorney for that purpose from the party intended to be bound.

When it appears that the client, on becoming aware of 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.

FACTS:
(Sept 10, 1959) Petitioner Dungo and one Rodrigo Gonzales purchased 3 parcels of land from respondents. Out of the
total price, downpayment was made with the agreement that the balance would be paid in 6 monthly installments.

To secure the payment of the balance, Dungo and Gonzales executed over the same 3 parcels of land Deed of Real
Estate Mortgage in favor of Lopena and Ramos.
 Duly registered with the Office of the Register of Deeds with the condition that failure of the vendees to pay any of
the installments on their maturity dates shall automatically cause the entire unpaid balance to become due and
demandable.

Vendees defaulted on the first installment which prompted respondents to file a complaint for the foreclosure of the
mortgage.
Before trial, a compromise agreement was submitted to the lower court for approval.
 Signed by respondent Lopena and Rosa Ramos and Gonzales.
 It was not signed by herein petitioner but Gonzales represented that his signature was both for himself and for
Dungo.
 Dungo’s counsel of record was present at the preparation of the compromise agreement and affixed his own
signature.

Compromise agreement states should the defendants fail to pay the mortgage indebtedness on the specified date,
judgments of foreclosure shall be entered. Period of redemption is waived.

Subsequently, a Tri-Party Agreement was drawn. Signatories were Dungo and Gonzales as debtors, Lopena and Ramos
as creditors and one Emma Santos as payor.

When Dungo and Gonzales failed to pay the balance of their indebtedness, Lopena and Ramos filed a Motion for the Sale
of Mortgaged Property. Lower court granted the motion and ordered the sale.

The 3 parcels of land were sold at a public auction. The sheriff’s sale was later confirmed by the lower court (Aug 30,
1960). Petitioner did not file any opposition.

(Aug 31) Dungo filed a motion to set aside all the proceedings on the ground that the compromise agreement was void
since he did not sign it. TC denied.

Dungo filed a notice of appeal from the approval of the foreclosure sale. Respondents opposed, saying that the judgment
was not appealable because It was rendered by virtue of the compromise agreement.

ISSUE: W/N the compromise agreement and all the proceedings subsequent thereto void insofar as the petitioner is
concerned – NO

RATIO:

A compromise in itself is a contract.1 Under Art 1878, a third person cannot bind another to a compromise agreement
unless the third person has obtained a special power of attorney for that purpose from the party intended to be bound.

However, although the Civil Code expressly requires a special power of attorney so that one may compromise an interest
of another, it is incorrect to conclude that its absence renders the compromise agreement void. It is merely unenforceable.
Resulting from its nature as a contract.

Dungo had already ratified the compromise agreement as established by the Tri-Party Agreement where it was stipulated
that the PAYOR submits and binds himself to the force and effect of the order of CFI. When it appears that the client, on
becoming aware of the compromise and judgment thereon, fails to repudiate promptly the action of his attorney, he will
not be heard to contest its validity.

Although Dungo was not a signatory, the compromise agreement benefited him in that the agreement extended the date
of maturity.

Petitioner argues that the compromise agreement could not be enforced because it had been novated by the Tri-Party
Agreement. Petitioner was mistaken. Novation by presumption has never been favored. It needs to be established that the
old and new contracts are incompatible in all points or that the will to novate is expressly stated.

The Tri-Party Agreement was an instrument intended to render effective the compromise agreement. It merely
complemented and ratified the same. Compromise agreement was valid and enforceable.

Petition for certiorari and mandamus filed by petitioner is dismissed.

Vicente v. Geraldez, G.R. No. L-32473, July 31, 1973.

In 1967, HI Cement Corporation was granted authority to operate mining facilities in Bulacan. However, the areas allowed
for it to explore cover areas which were also being explored by Ignacio Vicente, Juan Bernabe, and Moises Angeles. And
so a dispute arose between the three and HI Cement as neither side wanted to give up their mining claims over the
disputed areas. Eventually, HI Cement filed a civil case against the three. During pre-trial, the possibility of an amicable
settlement was explored where HI Cement offered to purchase the areas of claims of Vicente et al at the rate of P0.90 per
square meter. Vicente et al however wanted P10.00 per square meter.
In 1969, the lawyers of HI Cement agreed to enter into a compromise agreement with the three whereby commissioners
shall be assigned by the court for the purpose of assessing the value of the disputed areas of claim. An assessment was
subsequently made pursuant to the compromise agreement and the commissioners recommended a price rate of P15.00
per square meter.
One of the lawyers of HI Cement, Atty. Francisco Ventura, then notified the Board of Directors of HI Cement for the
approval of the compromise agreement. But the Board disapproved the compromise agreement hence Atty. Ventura filed
a motion with the court to disregard the compromise agreement. Vicente et al naturally assailed the motion. Vicente et al
insisted that the compromise agreement is binding because prior to entering into the compromise agreement, the three
lawyers of HI Cement declared in open court that they are authorized to enter into a compromise agreement for HI
Cement; that one of the lawyers of HI Cement, Atty. Florentino Cardenas, is an executive official of HI Cement; that
Cardenas even nominated one of the commissioners; that such act ratified the compromise agreement even if it was not
approved by the Board. HI Cement, in its defense, averred that the lawyers were not authorized and that in fact there was
no special power of attorney executed in their favor for the purpose of entering into a compromise agreement. Judge
Ambrosio Geraldez ruled in favor of HI Cement.
ISSUE: Whether or not a compromise agreement entered into by a lawyer purportedly in behalf of the corporation is valid
without a written authority.
HELD: No. Corporations may compromise only in the form and with the requisites which may be necessary to alienate
their property. Under the corporation law the power to compromise or settle claims in favor of or against the corporation is
ordinarily and primarily committed to the Board of Directors but such power may be delegated. The delegation must be
clearly shown for as a general rule an officer or agent of the corporation has no power to compromise or settle a claim by
or against the corporation, except to the extent that such power is given to him either expressly or by reasonable
implication from the circumstances. In the case at bar, there was no special power of attorney authorizing the three
lawyers to enter into a compromise agreement. This is even if the lawyers declared in open court that they are authorized
to do so by the corporation (in this case, the transcript of stenographic notes does not show that the lawyers indeed
declare such in open court).
The fact that Cardenas, an officer of HI Cement, acted in effecting the compromise agreement, i.e. nominating a
commissioner, does not ratify the compromise agreement. There is no showing that Cardenas’ act binds HI Cement; no
proof that he is authorized by the Board; no proof that there is a provision in the articles of incorporation of HI Cement that
he can bind the corporation.

Cosmic Lumber v. CA, G.R. No. 114311, November 29, 1996.

FACTS:
Cosmic Corporation, through its General Manager executed a Special Power of Attorney appointing Paz G. Villamil-
Estrada as attorney in fact to initiate, institute and file any court action for the ejectment of third persons and for squatters
of the entire lot 9127 and 443 for the said squatters to remove their houses and vacate the premises in order that the
corporation may take material possession of the entire lot. Villamil Estrada then instituted an action for the ejectment of
private respondent Isidro Perez and recover the possession of a portion of lot 443 before the RTC.

Subsequently, Estrada entered into a Compromise Agreement with Perez, the terms and conditions such as: “in order for
Perez to buy the said lot he is presently occupying, he has to pay to plaintiff through Estada the sum of P26,640
computed at P80/square meter and that Cosmic Lumber recognizes ownership and possession of Perez by virtue of this
compromise agreement over said portion of 333 sqm of lot 443 and whatever expenses of subdivision, registration and
other incidental expenses shall be shouldered by Perez. Although the agreement was approved by the trial court and the
decision became final and executory it was not executed within the 9 year period from date of its finality allegedly due to
the failure of Cosmic Lumber to produce the owner’s duplicate copy of 1itle 37649 needed to segregate from lot No. 443
which is the portion sold by Estrada, to private respondent under the compromise agreement. Upon learning of the
fraudulent transaction, petitioner sought annulment of the decision of the trial court before respondent Court of Appeals on
the ground tha the compromise agreement was void.
ISSUE: WON the acts of Paz Estrada are binding to Cosmic Lumber.
Held: The authority granted Villamil-Estrada under the special power of attorney was explicit and exclusionary: for her to
institute any action in court to eject all persons found on Lots Nos. 9127 and 443 so that petitioner could take material
possession thereof, and for this purpose, to appear at the pre-trial and enter into any stipulation of facts and/or
compromise agreement but only insofar as this was protective of the rights and interests of petitioner in the
property. Nowhere in this authorization was Villamil-Estrada granted expressly or impliedly any power to sell the subject
property nor a portion thereof. Neither can a conferment of the power to sell be validly inferred from the specific
authority to enter into a compromise agreement because of the explicit limitation fixed by the grantor that the compromise
entered into shall only be so far as it shall protect the rights and interest of the corporation in the aforementioned lots. In
the context of the specific investiture of powers to Villamil-Estrada, alienation by sale of an immovable certainly cannot be
deemed protective of the right of petitioner to physically possess the same, more so when the land was being sold for a
price of P80.00 per square meter, very much less than its assessed value of P250.00 per square meter, and considering
further that petitioner never received the proceeds of the sale.
When the sale of a piece of land or any interest thereon is through an agent, the authority of the latter shall be in writing;
otherwise, the sale shall be void.[9] Thus the authority of an agent to execute a contract for the sale of real estate must be
conferred in writing and must give him specific authority, either to conduct the general business of the principal or to
execute a binding contract containing terms and conditions which are in the contract he did execute.[10] 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.[11] The express mandate required by law to enable an appointee of an agency
(couched) in general terms to sell must be one that expressly mentions a sale or that includes a sale as a necessary
ingredient of the act mentioned.[12] For the principal to confer the right upon an agent to sell real estate, a power of
attorney must so express the powers of the agent in clear and unmistakable language. When there is any reasonable
doubt that the language so used conveys such power, no such construction shall be given the document.[13]
It is therefore clear that by selling to respondent Perez a portion of petitioners land through a compromise agreement,
Villamil-Estrada acted without or in obvious authority. The sale ipso jure is consequently void.

Mercado v. Allied Banking Corporation, G.R. No. 171460, July 27, 2007.

Facts:
Perla executed a Special Power of Attorney (SPA) in favor of her husband, JulianD. Mercado (Julian) over several pieces
of real property registered under her name, authorizing the latter to perform the following acts: 1. To act in my behalf, to
sell, alienate, mortgage, lease and deal otherwise over the different parcels of land described hereinafter x x x 2. To sign
for and in my behalf any act of strict dominion or ownership any sale, disposition, mortgage, lease or any other
transactions including quit-claims, waiver and relinquishment of rights x x x 3. To exercise any or all acts of strict dominion
or ownership over the above-mentioned properties, rights and interest therein.

On the strength of the aforesaid SPA, Julian obtained a loan from the respondent. Still using the subject property as
security, Julian obtained an additional loan from the respondent. It appears, however, that there was no property identified
in the SPA and registered with the Registry of Deeds. What was identified in the SPA instead was the property different
from the one used as security for loan.

Julian defaulted on the payment of his loan obligations. Thus, respondent initiated extra- judicial foreclosure proceedings
over the subject property which was subsequently sold at publicauction wherein the respondent was declared as the
highest bidder. Petitioners initiated an actionfor the annulment of REM constituted over the subject property on the ground
that the same wasnot covered by the SPA and that the said SPA, at the time the loan obligations were contracted, no
longer had force and effect since it was previously revoked by Perla. In the absence of authority to do so, the REM
constituted by Julian over the subject property was null and void; thus, petitioners likewise prayed that the subsequent
extra-judicial foreclosure proceedings and the auction sale of the subject property be also nullified.

Issues:
(1) Whether or not there was a valid mortgage constituted over subject property.
(2) Whether or not there was a valid revovation of SPA.
(3) Construction of powers of attorney.

Rulings:
(1) In the case at bar, it was Julian who obtained the loan obligations from respondent which he secured with the
mortgage of the subject property. The property mortgaged was owned by his wife, Perla, considered a third party to the
loan obligations between Julian and respondent. It was, thus, a situation recognized by the last paragraph of Article 2085
of the Civil Code that third persons who are not parties to the principal obligation may secure the latter by pledging or
mortgaging their own property. There is no question therefore that Julian was vested with the power to mortgage the
pieces of property identified in the SPA, however, the subject property was not among those enumerated therein. Julian
was not conferred by Perla with the authority to mortgage the subject property under the terms of the SPA, the real estate
mortgages Julian executed over the said property are therefore unenforceable.

(2) The said SPA was revoked by virtue of a public instrument executed by Perla. To
address respondent’s assertion that the said revocation was unenforceable against it as a third party to the SPA and as
one who relied on the same in good faith, the rule is that an agency is extinguished, among others, by its revocation
(Article 1999, New Civil Code of the Philippines). The principal may revoke the agency at will, and compel the agent to
return the document evidencing the agency. Such revocation may be express or implied (Article 1920, supra).

(3) Rule of strict construction- where the terms of the contract are clear as to leave no
room for interpretation, resort to circumstantial evidence to ascertain the true intent of the parties, is not countenanced.
The law is that if the terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the
literal meaning of its stipulation shall control. The clear terms of the contract should never be the subject matter of
interpretation. Equally relevant is the rule that a power of attorney must be strictly construed and pursued. The instrument
will be held to grant only those powers which are specified therein, and the agent may neither go beyond nor deviate from
the power of attorney. Where powers and duties are specified and defined in an instrument, all such powers and duties
are limited and are confined to those which are specified and defined, and all other powers and duties are excluded.

Qualification of the rule- this is but in accord with the disinclination of courts to enlarge
the authority granted beyond the powers expressly given and those which incidentally flow or derive therefrom as being
usual and reasonably necessary and proper for the performance of such, express powers.

iii. Effect of Specific Authorization

BPI v. De Coster, G.R. No. 23181, March 16, 1925.

Fact: On Dec. 29. 1921. Gabriela Andrea de Coster y Roxas and her hubby playing as her agent. made to the BPI a
certain promissory note for P292. 000. collectible one twelvemonth after day of the month. with involvement of 9 per cent
per annum and collectible monthly. In order to procure the payment thereof. Jean M. Poizat and J. M. Poizat and Co.
executed a movable mortgage in favour of the complainant on the soft-shell clams Roger Poizat and Gabrielle Poizat
including the machinery and stuffs belonging to the Poizat Vegetable Oil Mills. Gabriela Andreade Coster y Roxas and her
hubby acknowledged and delivered to the complainant a mortgage on certain existent belongings prevarication and being
situated in the City of Manila. The existent belongings was capable to a anterior mortgage in favour of La Orden de
Dominicos or PP. Predicadores de la Provinciadel Santisimo Rosario. hence it is made a party suspect. The promissory is
long yesteryear due which compel the complainant to register an action against the suspects.
The lower tribunal rendered judgement against the suspects GabrielaAndrea de Coster y Roxas. Jean M. Poizat and J. M.
Poizat andCo. and made them apt. jointly and independently. for the payment of P292. 000. with involvement at the rate
of 9 per cent per annum get downing from the 31st of August. 1923. They are besides order to pay P10. 000 as attorney’s
fees and P2. 500 for the insurance upon the soft-shell clam Gabrielle Poizat. with involvement on that sum get downing
from February 9. 1924. at the rate of 9 per cent per annum. and costs.
Then the complainant files a request to the tribunal for a writ of executing. On May 3. 1924. the complainant files a
gesture to declare the suspects in default due to their failure to look or reply. The tribunal rendered determination in favour
of the complainants. On Aug. 26. 1924. Gabriela Andrea de Coster y Roxas. claimed that she had been shacking in Paris.
France from 1908 until April 30. 1924 and that she merely found out about the instance from the newspapers. She farther
claims that she was ne’er given any biddings by the sheriff and that her hubby exceeded his authorization as her agent.
She prayed that the judgement to be annulled and set aside. She besides prayed that the instance be reopened and she
be permitted to register an reply so that the instance can be tried harmonizing to its virtues.
Issue:
• Whether or non proper biddings were served.
• Whether or non Jean M. Poizat. hubby of the suspect exceeded his authorization as an agent of his married woman.
• Whether or non the instance should be remanded to the lower tribunal.
HELD: With respects to the first issue. the Court held that the biddings has non been decently served. In the ordinary
class of things when the married woman is absent from the abode of hubby by ground of pleasance or concern. the abode
of the married woman would go on and stay to be that of the hubby. In the instant instance. the fortunes warrant
otherwise. For 15 old ages the abode of the hubby was in the City of Manila. and the abode of the married woman was in
the City of Paris prior to the filing of the ailment and issue of biddings. . There have been no personal service of summon
on the suspect as required by the Rules of Court because the publication demand for functioning of biddings to individuals
made party to a instance who are shacking abroad has non been satisfied.
With respects to the 2nd issue. the Court held that Jean M. Poizat has exceeded his authorization as the agent of his
married woman. It will be noted that there is no proviso in power of lawyer granted to the hubby of the suspect which
authorizes or empowers him to subscribe anything or to make anything which would do his married woman apt as a
surety for a preexistent debt. It is cardinal regulation of building that in an instrument where powers and responsibilities
are specified and defined. all of such powers and responsibilities are limited and confined to those expressly mentioned
therein and all other powers and responsibilities are excluded. It is really evident from the face of the instrument that the
intent of the power of lawyer was to authorise and authorise the hubby to look after and protect the involvements of his
married woman. But nowhere does it supply or authorise him to do her apt as a surety for the payment of the preexistent
debt of a 3rd individual.
Therefore. it follows that the hubby was non authorized or empowered to subscribe the note in inquiry for and on behalf of
his married woman. Therefore. the note is null for privation of power of the hubby to put to death it. The same thing is true
as to the existent mortgage to the bank. It was given to procure the note in inquiry and was non given for any other intent.
The existent belongings described in the mortgage was the belongings of the married woman. The note being null as far
the married woman is concern. it follows that the existent mortgage to the bank is besides null for privation of power to put
to death it.
On the last issue. the Court held that the instance should be remanded to the lower tribunal to give the married woman
chance to register an reply to plaintiff’s cause of action so that the instance can be tried harmonizing to its virtues.

PNB v. Sta. Maria, G.R. No. L-24765, August 29, 1969.

Concept:

Art. 1207. The concurrence of two or more creditors or of two or more debtors in one and the same obligation does not
imply that each one of the former has a right to demand, or that each one of the latter is bound to render, entire
compliance with the prestation. There is a solidary liability only when the obligation expressly so states, or when the law or
the nature of the obligation requires solidarity

Facts:
· Special power of the attorney to mortgage real estate is limited to such authority and does not bind the
grantor personally to other obligations contracted by the grantee
· The sugar crop loans were obtained by Maximo from the plaintiff bank under the power of the attorney, executed in
his favor by his brothers and sisters to mortgage a 16-odd hectare parcel of land, jointly owned by all of them
· Valeriana the sister of Maximo, 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.
· Maximo applied for two separate crop loans with the PNB, one in the amount of P15,000 but only P13,216.11 was
extended by the PNB and the other for P23,000 but only P12,427.57 was extended by the PNB
· As security for the two loans, Maximo executed it in his own name in favor of PNB two chattel mortgages,
guaranteed by the surety bonds for the full authorized amounts of loans executed by the Associated Insurance & Surety
Co., Inc.
· Plaintiff Bank filed the case on February 10,1961 against Defendant Maximo Sta. Maria and his six brothers and
sisters and the Associated Insurancs & Suret Co., Inc. for the collection of unpaid balances of two sugar crop loans
· The Trial Court rendered judgement in favor of the PNB
· Maximo did not appeal but his siblings appealed and contended that they had given their brother Maximo the
authority to borrow money but only to mortgage the real estate jointly owned by them and that if they are liable, the liability
should not go beyond the value of the property which9 they had authorized to be given as security of the loans obtained
by Maximo. They further contended that they did not benefit whatsoever from the loans.

Issue: W/N the siblings are only liable for the value of the land?

Held:
· Yes, except for Valeriana who issued a separate Special Power of Attorney authorizing Maximo to borrow money.
· In Bank of P. I. v. De Coster, "where in an instrument powers and duties are specified and defined, that all of such
powers and duties are limited and confined to those which are specified and defined, and all other powers and duties are
excluded.”
· In De Villa vs. Fabricante, where the power of attorney given to the husband by the wife was limited to a grant of
authority to mortgage a parcel of land titled in the wife'sname, the wife may not be held liable for the payment of the
mortgage debt contracted by the husband, as the authority to mortgage does not carry with it the authority to contract
obligation.
· Maximo and Valeriana are the only ones liable for the loans and that the other siblings’ liability only correspond to
real estate mortgage and the foreclosure and sale of mortgage.
· Maximo’s argument that "a mortgage is simply an accessory contract, and that to effect the mortgage, a loan has to
be secured" falls, far short of the mark. Maximo had indeed, secured the loan on his own account and the defendants-
appellants had authorized him to mortgage their respective undivided shares of the real property jointly owned by them as
security for the loan. But that was the extent of their authority land consequent liability, to have the real property answer
for the loan in case of non-payment.
· 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 so as to put them in estoppel.
· Under the Art. 1207, Valeriana is only jointly liable with Maximo

Insular Drug v. PNB, G.R. No. 38816, November 3, 1933.

FACTS:
 Foerster formerly a salesman and collector of Insular Drug Co., Inc (Insular) for the Islands of Panay and
Negros instructed to take the checks which came to his hands to the Iloilo branch of the Chartered Bank of India, Australia
and China and deposit the amounts to the credit of the Insular.

 Instead, placed the checks in his personal account

 Some of the checks were drawn against the Bank of Philippine National Bank.

 After the indorsement on the checks was written "Received payment prior indorsement guaranteed by Philippine
National bank, Iloilo Branch, Angel Padilla, Manager."

 Insular Manila office discovered the anomalies and Foerster committed suicide

 Insular filed against the bank for total of 132 checks amounting to P18,285.92

ISSUE: W/N Insular can file against the bank

HELD: YES. bank will have to stand the loss occasioned by the negligence of its agent
 the bank permitted Foerster, Foerster's wife and clerk to indorse checks and then place them to his personal
account

 The right of an agent to indorse commercial paper is a very responsible power and will not be lightly
inferred.

 A salesman with authority to collect money belonging to his principal does not have the implied
authority to indorse checks received in payment.

Hodges v. Salas, G.R. No. L-42958, October 21, 1936.

AGENCY; POWERS OF THE AGENT; LIMITATIONS. — The pertinent clauses of the power of attorney from which may
be determined the intention of the principals in authorizing their agent to obtain a loan, securing it with their real property,
were quoted at the beginning of the decision. The terms thereof are limited; the agent was thereby authorized only to
borrow any amount of money which he deemed necessary. There is nothing, however, to indicate that the defendants had
likewise authorized him to convert the money obtained by him to his personal use. With respect to a power of attorney of
special character, it cannot be interpreted as also authorizing the agent to use the money as he pleased, particularly when
it does not appear that such was the intention of the principals, and in applying part of the funds to pay his personal
obligations, he exceeded his authority (art. 1714, Civil Code; Bank of the Philippine Islands v. De Coster, 47 Phil., 594 and
49 Phil., 574). In cases like the present one, it should be understood that the agent was obliged to turn over the money to
the principals or, at least, place it at their disposal.
Facts:On September 2, 1923, the defendants executed a power of attorney in favor of their brother-in-law Felix S. Yulo to
enable him to obtain a loan and secure it with a mortgage on the real property described in transfer certificate of title No.
3335. The power of attorney was registered in the registry of deeds of the Province of Occidental Negros. Acting under
said power of attorney, Felix S. Yulo, on March 27,1926, obtained a loan of P28,000 from the plaintiff, binding his
principals jointly and severally, to pay it within ten (10) years, together with interest thereon at 12 per cent per annum
payable annually in advance, to which effect he signed a promissory note for said amount and executed a deed of
mortgage of the real property. It was stated in the deed that in case the defendants failed to pay the stipulated interest and
the taxes on the real property mortgaged and if the plaintiff were compelled to bring an action to recover his credit, said
defendants would be obliged to pay 10 per cent more on the unpaid capital, as fees for the plaintiff's attorneys. The
mortgage so constituted was registered in the registry of deeds of the Province of Occidental Negros and noted on the
back of the transfer certificate of title. The defendants failed to pay at maturity the interest stipulated which should have
been paid one year in advance. Plaintiff therefore brought an action for foreclosure of the mortgage. The trial court
ordered in favor of the defendants and held that the loan and the mortgage were illegal.

Issue: Whether or not the loan obtained and the mortgage executed by Yulo was valid and therefore defendants are
bound to pay?

Ruling: Yes. The loan obtained and the mortgage executed by Yulo was valid and therefore defendants are bound to pay
for it. By virtue of the authority conferred by the defendants by executing a power of attorney, agent Yulo was authorized
to borrow money and invest it as he wished, without being obliged to apply it necessarily for the benefit of his principals.

Veloso v. CA, G.R. No. 102737, August 21, 1996. …see case above

Bravo-Guerrero v. Bravo, G.R. No. 152658, July 29, 2005.

Summary: Simona Bravo executed a GPA authorizing her husband, Mauricio, to mortgage or otherwise sell or dispose of
her property. Mauricio sold 2 parcels of land to their son and grandchildren. SC held that the deed of sale was valid.
Art.1878 refers to the nature of the authorization, not to its form. Even if a document is titled as a GPA, the requirement of
a SPA is met if there is a clear mandate from the principal specifically authorizing the performance of the act. In this case,
the GPA executed authorized Mauricio to “sell, assign and dispose” of Simona’s property.

facts of the case:

Sps. Mauricio Bravo and Simona Bravo owned 2 parcels of land. In 1966, Simona executed a GPA appointing Mauricio as
her attorney-in-fact. In the GPA, Simona authorized Mauricio to “mortgage or otherwise hypothecate, sell, assign and
dispose of any and all of my property, real, personal or mixed, of any kind whatsoever and wheresoever situated, or any
interest therein xxx.”Mauricio subsequently mortgaged the properties to PNB and DBP, then in 1970, sold the properties
for P1,000 to his children, Roland, Ofelia and Elizabeth. Part of the agreement was for the buyers to assume the
mortgage on the property. The Deed of Sale was not annotated on the TCTs nor presented to PNB and/or DBP. The
mortgage loans continued to be in Mauricio’s name even after his death in 1973. Simona died in 1977. In 1997, Edward
filed an action for judicial partition of the properties asserting his right as co-owner of the same. However, petitioners
refused to share with him possession and rental income of the properties. Edward later amended his complaint to include
a prayer to annul the Deed of Sale. He argued that it was VOID due to the ff:
1. Mauricio executed the Deed of Sale without Simona’s consent
2. Sale was merely simulated, as shown by the grossly inadequate consideration, to prejudice the other heirs issue
WON the sale of 2 parcels of land by Mauricio armed with a GPA valid? YES

ratio
1. Lack of wife’s consent does not render the sale void

Under the present CC, it is well-settled that contracts alienating conjugal real property without the wife’s consent are
merely voidable – that is, binding on the parties unless annulled by a competent court – and not void ab initio. Only the
wife can ask to annul a contract that disposes of conjugal real property without her consent. The wife must file the action
for annulment during the marriage and within ten years from the questioned transaction. If the wife fails to exercise this
right within the specified period, the wife or her heirs can only demand the value of the property provided they prove that
the husband fraudulently alienated the property.

As applied, the present action to annul the Deed of Sale was filed out of time. The marriage of Mauricio and Simona was
dissolved when Mauricio died in 1973. More than ten years have passed since the execution of the Deed of Sale. Also,
Simona never assailed the Deed of Sale until her death.
2. [IMPORTANT] GPA may contain a special power satisfying the requirement of Art. 1878

Art. 1878 requires a special power of attorney for an agent to execute a contract that transfers the ownership of an
immovable. However, the Court has clarified that Art. 1878 refers to the nature of the authorization, not to its form.
Even if a document is titled as a general power of attorney, the requirement of a special power of attorney is met if there is
a clear mandate from the principal specifically authorizing the performance of the act.

As in the case Veloso v. CA, 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.

AS APPLIED, Simona expressly authorized Mauricio in the GPA to “sell, assign and dispose of any and all of my property,
real, personal or mixed, of any kind whatsoever and wheresoever situated, or any interest therein xxx” as well as to “act
as my general representative and agent, with full authority to buy, sell, negotiate and contract for me and in my behalf.”
Taken together, these provisions constitute a clear and specific mandate to Mauricio to sell the properties. Even if it is
called a “general power of attorney,” the specific provisions in the GPA are sufficient for the purposes of Art. 1878. These
provisions in the GPA likewise indicate that Simona consented to the sale of the Properties.

3. Price was not grossly inadequate

Gross inadequacy of price by itself will not result in a void contract. Gross inadequacy of price does not even affect the
validity of a contract of sale, unless it signifies a defect in the consent or that the parties actually intended a donation or
some other contract. Inadequacy of cause will not invalidate a contract unless there has been fraud, mistake or undue
influence.

As applied, respondents have not proved any of the instances that would invalidate the Deed of Sale. While it was stated
to be for only P1,000, the assumption of P15,000 mortgage would make the sale for the total consideration of P16,000.
The sale was made in 1970 and considering its location in Makati, the sharp increase in the current FMV may not be
considered as shocking to the conscience as to justify the setting aside of the Deed of Sale.

4. Presumption of regularity
Both the GPA and Deed of Sale were notarized. They enjoy the presumption of regularity, which was not overcome in this
case.

3. Clarifying the Terms

Siasat v. IAC, G.R. No. L-67889, October 10, 1985.

PRIMITIVO SIASAT and MARCELINO SIASAT vs. IAC and TERESITA NACIANCENO
G.R. No. L-67889 October 10, 1985

DOCTRINE: The general doctrine holds the power of a principal to revoke the authority of his agent at will, in the absence
of a contract fixing the duration of the agency however, the principal cannot deprive his agent of the commission agreed
upon by canceling the agency and, thereafter, dealing directly with the buyer.

FACTS: Sometime in 1974, respondent Teresita Nacianceno succeeded in convincing officials of the then
Department of Education and Culture, to purchase without public bidding, one million pesos worth of national flags for the
use of public schools throughout the country. And for her service, she was entitled to a commission of thirty (30%)
percent.

On October 16, 1974, the first delivery of 7,933 flags was made by the United Flag Industry. The next day, on October 17,
1974, the respondent's authority to represent the United Flag Industry was revoked by petitioner Primitivo Siasat.

According to the findings of the courts below, Siasat, after receiving the payment of P469,980.00 on October 23, 1974 for
the first delivery, tendered the amount of P23,900.00 or five percent (5%) of the amount received, to the respondent as
payment of her commission. The latter allegedly protested. She refused to accept the said amount insisting on the 30%
commission agreed upon. The respondent was prevailed upon to accept the same because of the assurance of the
petitioners that they would pay the commission in full after they delivered the other half of the order. The respondent
states that she later on learned that petitioner Siasat had already received payment for the second delivery of 7,833 flags.
When she confronted the petitioners, they vehemently denied receipt of the payment, at the same time claiming that the
respondent had no participation whatsoever with regard to the second delivery of flags and that the agency had already
been revoked. She then filed a case in court.

The trial court decided in favor of the respondent.

In assailing the appellate court's decision, the petition tenders the following arguments: first, the authorization making the
respondent the petitioner's representative merely states that she could deal with any entity in connection with the
marketing of their products for a commission of 30%. There was no specific authorization for the sale of 15,666 Philippine
flags to the Department; second, there were two transactions involved evidenced by the separate purchase orders and
separate delivery receipts, The revocation of agency effected by the parties with mutual consent on October 17, 1974,
therefore, forecloses the respondent's claim of 30% commission on the second transaction; and last,regarding damages
and attorneys fees.

ISSUE: Whether or not respondent is an agent of petitioners.

HELD: YES, Respondent is indeed their agent. There are several kinds of agents. First, a universal agent – one who is
authorized to do all acts for his principal which can lawfully be delegated to an agent. Second, a general agent – one
authorized to do all acts pertaining to a business of a certain kind or at a particular place, or all acts pertaining to a business
of a particular class or series. And third, a special agent – one authorized to do some particular act or act upon some
particular occasion. He acts usually in accordance with specific instructions the respondent is upon close scrutiny be
classified as a general agent.

Indeed, it can easily be seen by the way general words were employed in the agreement that no restrictions were
intended as to the manner the agency was to be carried out or in the place where it was to be executed. The power
granted to the respondent was so broad that it practically covers the negotiations leading to, and the execution of, a
contract of sale of petitioners' merchandise with any entity or organization.

A cardinal rule of evidence embodied in Section 7 Rule 130 of our Revised Rules of Court states that "when the terms of
an agreement have been reduced to writing, it is to be considered as containing all such terms, and, therefore, there can
be between the parties and their successors-in-interest, no evidence of the terms of the agreement other than the
contents of the writing", except in cases specifically mentioned in the same rule. Petitioners have failed to show that their
agreement falls under any of these exceptions. The petitioners' evidence is overcome by other pieces of evidence proving
that there was only one transaction.

Since only one transaction was involved, we deny the petitioners' contention that respondent Nacianceno is not entitled to
the stipulated commission on the second delivery because of the revocation of the agency effected after the first delivery.
The revocation of agency could not prevent the respondent from earning her commission because as the trial court
opined, it came too late, the contract of sale having been already perfected and partly executed.

We do not mean to question the general doctrine as to the power of a principal to revoke the authority of his agent at will,
in the absence of a contract fixing the duration of the agency however, The principal cannot deprive his agent of the
commission agreed upon by canceling the agency and, thereafter, dealing directly with the buyer.

The petitioners are ordered to pay the respondent the amount of ONE HUNDRED FOURTY THOUSAND NINE
HUNDRED AND NINETY FOUR PESOS (P140,994.00) as her commission on the second delivery of flags with legal
interest from the date of the trial court's decision. No pronouncement as to costs.
SO ORDERED.