1 .Litonjua v.

Fernandez · Litonjuas and Fernandez agreed that the petitioners would buy the property
G.R. No. 148116 consisting of 36,742 square meters, for the price of P150 per square meter, or the total
April 14, 2001 sum of P5,098,500.
By: Yen · It was also agreed that the owners would shoulder the registration fees and other
Topic: Art. 1878 expenses. And the said date, respondent Fernandez would present a special power of
Petitioners: ANTONIO K. LITONJUA and AURELIO K. LITONJUA, JR. attorney executed by the owners of the property, authorizing her to sell the property
Respondents: MARY ANN GRACE FERNANDEZ, HEIRS OF PAZ TICZON ELEOSIDA, for and in their behalf, and to execute a deed of absolute sale thereon.
represented by GREGORIO T. ELEOSIDA, HEIRS OF DOMINGO B. TICZON, represented by · The petitioners would also remit the purchase price to the owners, through
MARY MEDIATRIX T. FERNANDEZ, CRISTETA TICZON, EVANGELINE JILL R. TICZON, ERLINDA respondent Fernandez.
T. BENITEZ, DOMINIC TICZON, JOSEFINA LUISA PIAMONTE, JOHN DOES and JANE DOES · However, only Agapito Fisico attended the meeting. He informed the Litonjuas that
Ponente: Callejo, Sr., J. 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
SUMMARY: Litonjua wanted to buy land and through a broker found the land of
demanding that their transaction be finalized by January 30, 1996.
Fernandez and others. Fernandez met with Litonjua and talked about a sale. On
· There was no response so he wrote another letter asking for the Deed of Absolute
a said meeting date to perfect a Deed of Absolute Sale, Fernandez did not appear
Sale. Demanding turnover and in 15 days of receipt of letter they would go through
so the Litonjuas wrote demand letters. Fernandez answered that they were no
legal means.
longer selling lands due to tenant problems and “change of mind”. Litonjuas filed
· Fernandez then answered this letter saying that she did not agree to
for Specific performance wherein the RTC sided with them. CA reversed saying
o 1.) Shoulder the registration fees and other miscellaneous expenses.
that there was no perfected contract to sell. SC agreed with CA and held that
o 2.) She did not agree to meet on Dec. 8, 1995 to sign the Deed of
Fernandez did not have the authority to sell the lands of the other owners.
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.
DOCTRINE: Any sale of real property by one purporting to be the agent of the registered
· RTC: Ordered Fernandez to execute the obligation to sell as agreed upon.
owner without any authority therefor in writing from the said owner is null and void.
· Fernandez answered the complaint that she did not accept the offer thus there
Fernandez was not an agent to the other owners so she could not, even if agreed upon,
was no perfected verbal contract to sell. She also maintained that even assuming
perfect a contract to sell and Deed of Absolute Sale.
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
FACTS:
consideration distinct and separate from the price.
· Mrs. Lourdes Alimario and Agapito Fisico (Brokers) offered to sell to Fernandez’s
· RTC: In favor of Litonjuas.
parcels of land.
· CA: Reversed
· Litonjuas were shown a locator plan and copies of the titles of Fernandez and
Eleosida.
ISSUE:
· The brokers told the Litonjuas that they were authorized to offer the property for
(1) WON Fernandez had the authority to sell or act as agent for other respondents
sale. The Litonjuas made and ocular and saw some people gathering coconuts in the
properties?
said lands.
· The Litonjuas were met by Fernandez and the two brokers at their office in
HELD/RATIO:
Mandaluyong.
(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.
 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
2.) Velasco vs. CA of action against her. In seeking for the declaration of nullity of the documents, the
GR NO. 102737 real party in interest was Irma Veloso, the wife of the plaintiff. She should have been
August 21, 1996
 impleaded in the case. In fact, Plaintiffs cause of action should have been against his couched in general terms, there can not be any doubt that the
wife, Irma. Consequently, defendant Escario prayed for the dismissal of the complaint attorney in fact may execute a valid sale. An instrument may be
and the payment to her of damages. captioned as special power of attorney but if the powers granted
· Defendant Aglaloma Escaro was adjudged the lawful owner of the property as she are couched in general terms without mentioning any specific
was deemed an innocent purchaser for value by the trial court.. The assailed general power to sell or mortgage or to do other specific acts of strict
power of attorney was held to be valid and sufficient for the purpose. The trial court dominion, then in that case only acts of administration may be
ruled that there was no need for a special power of attorney when the special power deemed conferred.
was already mentioned in the general one. It also declared that plaintiff failed to
substantiate his allegation of fraud. · Petitioner contends that his signature on the power of attorney was falsified.
· CA affirmed the decision of the lower court He also alleges that the same was not duly notarized for as testified by Atty.
ISSUE Tubig himself, he did not sign thereon nor was it ever recorded in his notarial
· Whether the assailed power of attorney was valid and regular on its face. register. To bolster his argument, petitioner had presented checks, marriage
HELD/RATIO certificate and his residence certificate to prove his alleged genuine
Yes signature which when compared to the signature in the power of attorney,
· An examination of the records showed that the assailed power of attorney showed some difference.
was valid and regular on its face. It was notarized and as such, it carries the · We found, however, that the basis presented by the petitioner was
evidentiary weight conferred upon it with respect to its due execution. While inadequate to sustain his allegation of forgery. Mere variance of the
it is true that it was denominated as a general power of attorney, a perusal signatures cannot be considered as conclusive proof that the same were
thereof revealed that it stated an authority to sell, to wit: forged. Forgery cannot be presumed. Petitioner, however, failed to prove his
o To buy or sell, hire or lease, mortgage or otherwise hypothecate allegation and simply relied on the apparent difference of the signatures. His
lands, tenements and hereditaments or other forms of real denial had not established that the signature on the power of attorney was
property, more specifically TCT No. 49138, upon such terms and not his.
conditions and under such covenants as my said attorney shall
deem fit and proper. · We agree with the conclusion of the lower court that private respondent was
an innocent purchaser for value. Respondent Aglaloma relied on the power
· Thus, there was no need to execute a separate and special power of of attorney presented by petitioners wife, Irma. Being the wife of the owner
attorney since the general power of attorney had expressly authorized the and having with her the title of the property, there was no reason for the
agent or attorney in fact the power to sell the subject property. The special private respondent not to believe in her authority. Moreover, the power of
power of attorney can be included in the general power when it is specified attorney was notarized and as such, carried with it the presumption of its
therein the act or transaction for which the special power is required. due execution. Thus, having had no inkling on any irregularity and having no
· The general power of attorney was accepted by the Register of Deeds when participation thereof, private respondent was a buyer in good faith. It has
the title to the subject property was canceled and transferred in the name been consistently held that a purchaser in good faith is one who buys
of private respondent. In LRC Consulta No. 123, Register of Deeds of Albay, property of another, without notice that some other person has a right to,
Nov. 10, 1956, it stated that: 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
o Whether the instrument be denominated as general power of some other person in the property.
attorney or special power of attorney, what matters is the extent
· Documents acknowledged before a notary public have the evidentiary weight
of the power or powers contemplated upon the agent or attorney
with respect to their due execution. The questioned power of attorney and
in fact. If the power is couched in general terms, then such power
deed of sale, were notarized and therefore, presumed to be valid and duly
cannot go beyond acts of administration. However, where the
executed. Atty. Tubig denied having notarized the said documents and
power to sell is specific, it not being merely implied, much less
 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 judicial administrator, before entering into his duties, is required to file a bond.
Ponente: Paredes These circumstances are not true in case of an agent.
● The agent is only answerable to his principal. The protection which the law gives
DOCTRINE: The provisions of the New Civil Code on agency does not apply to judicial the principal, in limiting the powers and rights of an agent, stems from the fact
administrators regardless of their similarities. 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
FACTS: the appointing court.
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 WHEREFORE, the decision appealed from should be, as it is hereby affirmed, in all respects,
yearly rental of P3,000 to expire on May 1, 1968. Such transaction was done with costs against petitioner Moises San Diego, Sr.
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
 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,"
4 Lilia Barrera vs Hon. Militante o because "the secretary of the law office did not arrive early in the
GR # L-54681 said office where counsel could pick up the records of the case on
Date: May 31, 1982 his way to Court"
By: Julpha · 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
Topic: Section 23, Rule 138 of the ROC executed a special power of attorney in favor of either her attorney- in-fact Miguel R.
Plaintiffs-Appellees: Lilia Barrera, represented by Miguel Logarta Logarta or her counsel of record to serve as the written authority to represent her in
Defendants-Appellants: CA and Carmen Belleza, Eleuteria Cabrera, Baldomero said pre-trial conferences, with power to compromise the case
Hernani, Benjamin Sevilla, Lucas de la Calzada · Thus, the motion of reconsideration was denied
Ponente: De Castro, J. · Hence this petition

Summary: ISSUE: Whether an SPA to appear at the pre-trial and to enter into a compromise has to
Petitioner filed a complaint against private respondents for recovery of ownership and proven
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 RATIO/ HELD: YES!
reconsider said dismissal on the grounds that on the scheduled pre-trial conference, her · The record does not show that petitioner had executed a special power of attorney
counsel, who was allegedly armed with “a special power of attorney to appear at the pre- in favor of either her attorney-in-fact or her counsel of record
trial and to enter into a compromise was a little late. Private respondents contends that in · The court is, thus, left without any idea as to the nature and extent of said alleged
all the pre-trial conferences scheduled by the lower court, petitioner has never appeared authority, which have to be proven, because Section 23, Rule 138 of the Rules of Court
nor does the record show that she had executed a special power of attorney in favor of requires, for attorneys to compromise the litigation of their clients, a "special
either her attorney- in-fact Miguel R. Logarta or her counsel of record to serve as the written authority” is required.
authority to represent her in said pre-trial conferences, with power to compromise the · And while the same does not state that the special authority be in writing, the
case. Motion to reconsider dismissed. SC held that authority to compromise cannot rightly court has every reason to expect that, if not in writing, the same be duly established
be presumed. The record does not show that petitioner had executed a special power of by evidence other than the self-serving assertion of counsel himself that such authority
attorney in favor of either her attorney-in-fact or her counsel of record. was given him
DOCTRINE: · The respondent Judge, therefore, did not act erroneously, much less abuse his
Section 23, Rule 138 of the Rules of Court requires, for attorneys to compromise the discretion gravely, in denying the motion for reconsideration in spite of such
litigation of their clients, a "special authority” is required. manifestation of petitioner's counsel because the authority to compromise cannot
The authority to compromise cannot rightly be presumed rightly be presumed
ABAD SANTOS, CONCURRING: Petitioner can file a new complaint provided that her action
has not yet prescribed.
 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
5. ACENAS V. SISON been given sufficient time to settle the case.
8 SCRA 711 o When the court indicated to the defendant’s counsel that they have no
AUGUST 30, 1963 defense, and that it would be for their best interest to terminate the case
By: JUSTINE LIMJOCO by way of judgment on the pleadings or confession of judgment, counsel for
defendants offered no objection.
Petitioners: EMMA S. ACENAS AND ALBERTO E. ACENAS o Counsel for defendants asked that the confession of judgment by the
Respondents: ANGELA SISON AND TEOFILO SISON defendants be entered in this case providing that the corresponding writ of
Ponente: REGALA, J. 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.
#6 NPC v. Vine Development Corporation
ISSUE: Whether or not Atty. Sison’s confession of judgment without his client’s special G.R. No. 137785
authority may be set aside Sep 04, 2000
By: Joshua
HELD/RATIO: YES. Topic: Limitation of agent’s authority
Petitioners: National Power Corporation (actually OSG)
The Court held that it was the error of the trial court to accept confession made by counsel Respondents: Vine Development Corporation, Represented By Vicente C. Ponce; And
without ascertaining his authority. Romonafe Corporation, Represented By Oscar F. Tirona
Ponente: Panganiban, J.
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
RECIT-READY/SUMMARY:
agreement to permit judgment to be entered against his client be authorized except with
NPC was expropriating land owned by Vine and Ramonafe. RTC rendered a
the knowledge and at the instance of the latter. Such judgment may be set aside or
decision giving authority to NPC to enter and take possession of the land. The
reopened.
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
In the present case, the attorney of the defendant was not requesting to collect or enforce
valuing the parcels of land @ PhP 3,500/sqm, NPC appealed to the CA via Rule 41
his client's claim, but was resisting a suit or claim against his client and consented to the
(ROC). Meanwhile, NPC and Ramonafe enetered into a compromise agreement
credit in favor of the latter.
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
In contrast, Section 21 of Rule 1271 expressly requires that attorneys have special authority
appeal. The OSG gave a manifestation asking for the disapproval of the
not only to receive anything in discharge of a client's claim but the full amount in cash but
compromise agreement as this was violative of the authority it gave to NPC
also to compromise their client's litigation.
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,
] The current provision in the Rules of Court:
SC said that the NPC lawyers were correct in their filing of appeal following Rule
Rules of Court, Rule 138, Sec. 23
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: 10. CA then dismissed the whole appeal believing that the OSG manifested for the whole
Agents must act within the scope of their authority. But if the acts of the agent are appeal to be dismissed - after which the NPC immediately filed an MR which was
conducive to the accomplishment of the purpose of agency and that it is advantageous to eventually denied
the principal, then the agent does not exceed its authority. - 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
FACTS
1. NPC instituted a complaint for expropriation of several parcels of land owned by Vine ISSUE
Dev’t Corp. (Vine) and Ramonafe Corp. (Ramonafe), (raffled to) in RTC of Imus, Cavite 1. Whether lawyers of NPC (deputized by the OSG) had the authority to file an appeal in
2. RTC ruled in favor of NPC and authorized them to enter and take possession of the the Court of Appeals
properties after depositing the assessed value of the property for tax purposes 2. Whether lawyers of NPC (deputized by the OSG) had the authority to enter into a
3. RTC also ordered for the determination of the just compensation for the properties - compromise agreement
the property was inspected on Jan 1997
- in Oct 1995, the properties were valued at PhP 1,500 and PhP 2,000/sqm, HELD/RATIO
respectively 1. Yes. NPC lawyers (deputized by the OSG) have the authority to file and appeal in the
- after reconsideration, the properties were valued at PhP 3,500 CA since:
4. The determination of the value of the properties was still pending when negotiations - pursuant to Rule 41, Sec 2 of the ROC, the notice of appeal is filed in the very same
for an additional sqms of Ramonafe’s properties were initiated court which rendered the assailed decision - which the layers of NPC followed and
5. RTC rendered a decision ordering NPC to pay for the properties @ Php 3,500/sqm + did so within the reglementary period
6% int starting from the time NPC took possession of the properties until they are fully - even if they did not have the authority, the appeal is presumed to be beneficial to
paid the gov’t hence it would be allowed (NCC Art 1882)
6. NPC appealed the decision directly to the Court of Appeals - even if they did not have the authority, this defect was cured anyway when OSG
7. While the appeal was still pending in the CA, NPC and Ramonfe entered into a filed its manifestation - specifying that NPC lawyers deputized by the OSG have the
Compromise agreement authority to file notices of appeal in cases which they are handling and further
- that NPC would acquire 75,397 sqm (48,103.12 sqm of which was part of the subject specifying that this authority does not include, execution of a compromise
of the appeal still pending) - so they additionally acquired around 27,000~ sqm from agreement
Ramonfe - @ PhP 3,500 2. No. It is clear that the lawyers of NPC, even if they were deputized by the OSG, had
- in effect NPC would get a discount from the total purchase of the land (around Php no authority to execute a compromise agreement
6.5M yung discount) - NCC Art 1878 (3) states provides that a SPA from the principal is necessary for an
8. CA gave the OSG 10 days to comment, to which the OSG prayed for compromise agent to execute a compromise. In this case the principal is the gov’t (OSG) and the
agreement to be disapproved and the appeal to be decided on its merits agents are the NPC lawyers.
9. OSG did not like the compromise agreement as it was disadvantageous to the gov’t - OSG’s deputizing of NPC lawyers clearly excluded the authority to execute a
and the lack of authority of lawyers of NPC to enter into a compromise agreement as compromise
this violated the terms of their deputization (given by the OSG) - ROC Rule 138, Sec 23: attorneys cannot, without special authority, compromise
- “OSG[-]deputized counsel of the National Power Corporation (NAPOCOR) have the their client’s litigation
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 WHEREFORE, the Petition is GRANTED and the appealed Decision REVERSED and SET ASIDE.
to withdrawal of said appeal, execution of compromise agreements and ling of The case is hereby REMANDED to the Court of Appeals for disposition on the merits as
pleadings before the appellate courts without the review and approval of the prayed for by the Office of the Solicitor General. No costs.
Solicitor General.”
 ● 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
7.) DUNGO v. LOPENA court for approval. It was signed by Lopena and Ramos on one hand, and Gonzales, on
GR No. L-18377 the other.
DECEMBER 29, 1962 ● Gonzales represented that his signature was for both himself and Dungo. Moreover,
By: RONNEL DEINLA 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
Topic: CONTRACTS; UNENFORCEABLE CONTRACTS compromise agreement and this counsel affixed his signature thereto.
Petitioners: ANASTACIO G. DUÑGO ● Subsequently, a so-called Tri-Party Agreement was drawn. The signatories to it were
Respondents: ADRIANO LOPENA, ROSA RAMOS and HON. ANDRES REYES, Judge of the Duñgo and Gonzales as debtors, Lopena and Ramos as creditors, and, one Emma
Court of First Instance of Rizal Santos as payor.
Ponente: REGALA, J. ● 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
SUMMARY: Petitioner seeks to nullify a compromise agreement he did not sign on. It was was filed ex parte, Duñgo and Gonzales were notified of it by the lower court. Neither
his counsel who signed such document. The SC held that such contract is not void, but of them filed any opposition.
merely unenforceable, therefore it can be ratified. By his acts, petitioner cannot repudiate ● The 3 parcels of land were sold by the Sheriff at a public auction where petitioners,
now the compromise agreement. 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
DOCTRINE: should also made of record that before confirming the sale, the lower court gave due
Although the Civil Code expressly requires a special power of attorney in order that one may notice of the motion for the confirmation to the herein petitioner who filed no
compromise an interest of another, it is neither accurate nor correct to conclude that its opposition.
absence renders the compromise agreement void. The compromise is merely unenforceable. ● Duñgo filed a motion to set aside all the proceedings claiming the compromise
This results from its nature as a contract. It must be governed by the rules and the law on agreement was void with respect to him because he did not sign the same.
contracts. Consequently, he argued, all subsequent proceedings were void as regards him.

FACTS: ISSUE: Whether the compromise agreement and all the proceedings subsequent thereto,
● Anastacio Duñgo and one Rodrigo S. Gonzales purchased 3 parcels of land from void insofar as the petitioner is concerned. NO.
Adriano Lopena and Rosa Ramos. A down payment was given and the balance would
be paid in 6 monthly installments. HELD/RATIO:
● To secure the payment of the balance, Duñgo and Gonzales, executed over the same ● ART. 2028. A compromise is a contract whereby the parties, by making reciprocal
parcels of land Deed of Real Estate Mortgage in favor of Lopena and Ramos. Failure to concessions, avoid a litigation or put an end to one already commenced.
pay any of the installments on their maturity dates shall cause the entire unpaid ● ART. 1878. Special powers of attorney are necessary in the following cases:
balance to become due and demandable. ○ 3) To compromise, to submit questions to arbitration, to renounce the right to
● The vendees defaulted on the first installment. Lopena and Ramos filed a foreclosure appeal from a judgment, to waive objections to the venue of an action or to
of the real estate mortgage with the CFI where Hon. Judge Andres Reyes presided. 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 defendant's counsel assured the Court that he was authorized by her mother to enter into
no authority or legal representation, or who has acted beyond his powers; such a compromise agreement. The Court thus rendered judgment on the basis of the said
● The ratification of the compromise agreement was conclusively established by the Tri- agreement. Later, however, the defendant moved for a reconsideration of the decision on
Party Agreement. the ground that she never authorized her son nor her counsel to enter into such agreement
● When it appears that the client, on becoming aware the compromise and the judgment and that had she been present when said agreement was prepared, she would not have
thereon, fails to repudiate promptly the action of his attorney, he will not afterwards acceded thereto. The trial Court denied reconsideration and granted plaintiff's motion for
be heard to contest its validity (Rivero vs. Rivero, 59 Phil. 15). 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
NOTES: special authority in Rule 138 of the Rules of Court are met if there is a clear mandate from
● This Court has not overlooked the fact that Duñgo was not a signatory to the the principal, whether oral or written, expressly authorizing a compromise of the case; that
compromise agreement. The principal provision of the said instrument was for his if the authority is oral, the same must be established by evidence; and, that consequently,
benefit. respondent Judge committed no grave abuse of discretion when he allowed petitioner's
● Originally, Duñgo's obligation matured and became demandable on October 10, 1959. son to execute the compromise agreement in behalf of his mother because he had taken
However, the compromise agreement extended the date of maturity to June 30, 1960. the necessary precautionary measures and acted on the basis of satisfactory evidence
If only for this reason, this Court believes that the herein petitioner should not be showing that petitioner had authorized her son to so compromise the case.
heard to repudiate the said agreement. DOCTRINE: A special power of attorney is necessary to compromise, to submit questions to
● The compromise agreement stated "that, should the defendants fail to pay the said arbitration, to renounce the right to appeal from a judgment, to waive objections to the
mortgage indebtedness, judgment of foreclosure shall thereafter be entered against venue of an action or to abandon a prescription already acquired.
the said defendants:" Beyond doubt, this was ratified by the Tri-Party Agreement when The authority to compromise a litigation is not mandatorily required to be in writing. The
it covenanted that — vital thing is that the authority was made expressly. The authority to compromise if not in
○ If the MAYOR defaults or fails to pay anyone of the installments in the manner writing may be established by evidence.
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 FACTS:
oppositions to the propriety of the public auction sale and to the confirmation of ● Sps. Conchita Liao Tian and Tan Cho Hua filed an unlawful detainer case against
the sale to be made by the Court. Lim Pin
8. Lim Pin vs Liao Tian ● They alleged that they are owners of a parcel of land and they had leased a
GR NO. L-47740 portion of it to Lim Pin but the latter had not paid the agreed rental stipulated for
July 20, 1982 April 1977 and the succeeding months thereafter.
By: HAPPY ● Lim Pin denied the allegations
Topic: Article 1878 ● Initial hearing was reset upon the motion of the parties who were trying to work
Petitioners: Lim Pin out a possible amicable settlement
Respondents: Sps. Conchita Liao Tan, and Tan Cho Hua, and Honorable Cancio C. Garcia, ● Upon failure of the parties to reach an amicable settlement, hearing proceeded.
Presiding Judge of Branch I, City Court of Caloocan City ● On the schedule hearing, Lim Pin was absent. Her son, George Hung, who
Ponente: Gutierrez, Jr., J. attending with his mother all the previous hearings, was present together with
RECIT-READY: In a civil case for unlawful detainer, the defendant during the hearings, their counsel
repeatedly asked the respondent Judge to approve her proposals for the monthly increase ● A subject compromise agreement was formulated and executed
in rentals which the plaintiff then did not find acceptable. During the October 19, 1977 ● The compromise agreement was the subject of a MR filed by Lim Pin on the ff.
hearing, however, the plaintiff finally expressed her willingness to accommodate the grounds:
proposals originating from the defendant. Thereupon, a compromise agreement was signed o She never authorized her son nor her counsel on record, Atty. Pastor
between the plaintiff and the defendant, then represented by her son, who, together with Mamaril, to enter into such compromise agreement
 o Had she been present when said agreement was prepared, she would ● We are satisfied from the records of this case that respondent Judge took the
not have acceded thereto necessary precautionary measures and acted on the basis of satisfactory evidence
● In the meantime, Sps. Conchita filed an Urgent Motion for Immediate Execution when he allowed the compromise agreement to be executed by George Hung.
of Judgment o The court asked George Hung whether he was willing to enter into the
● All the motions were resolved by the court compromise agreement and whether he had the authority of his
o MR is denied. George Hung is declared in direct contempt of court. mother to enter into such a compromise agreement;
o Ordered issuance of writ of execution. o The defendant's counsel confirmed in open court the assurance of
● Writ of execution was issued on the same date. Sheriff served a Notice of George Hung that he had the full authority of his mother to enter into
Ejectment and Notice of Levy to plaintiff. a compromise agreement;
● Hence, this petition. o After the formulation of the compromise agreement the Judge
● Lim Pin argues that the respondent Judge should not have allowed her son George explained in Tagalog to both parties, including George Hung its terms
Hung and her then counsel, Atty. Pastor Mamaril in her absence to enter into the and conditions after which the same was reduced into writing;
compromise agreement with the private respondent Conchita Liao Tan assisted o George Hung willingly signed the compromise agreement, the terms
by her counsel. and conditions of which were those originally proposed by the
● Court issued a TRO enjoining respondent judge from enforcing execution of petitioner herself. Hung was all the while assisted by their counsel.
judgment ● The court itself observed during the earlier hearings and it is not disputed that
ISSUE: defendant Lim Pin could not decide on anything without first consulting her son.
● W/N respondent judge committed grave abuse of discretion in allowing the George Hung's later denial that he never manifested his authority to represent
compromise agreement in the absence of the petitioner his mother was rejected by the court. As a matter of fact, this sudden turnabout
HELD/RATIO: of George Hung led the court to cite him for contempt.
● NO. ● Even assuming that George Hung and the petitioner's counsel acted without
● Article 1878 states that a special power of attorney is necessary to compromise, authority, the compromise agreement itself was not null and void. It would be
to submit questions to arbitration, to renounce the right to appeal from a merely unenforceable, capable of being ratified.
judgment, to waive objections to the venue of an action or to abandon a
prescription already acquired. WHEREFORE, the instant petition is hereby DISMISSED for lack of merit. The temporary
● Section 23 of Rule 138 governs the authority of attorneys to bind their clients and restraining order issued by this Court dated February 8, 1978 is LIFTED. The judgment
provides that "Attorneys have authority to bind their clients in any case by any appealed from is AFFIRMED with costs against the petitioner.
agreement in relation thereto made in writing, and in taking appeal, and in all
matters of ordinary Judicial Procedure, but they cannot, without special Notes:
authority, compromise their clients' litigation or receive anything in discharge of Compromise Agreement:
their clients' claims but the full amount in cash." 1. The parties admit that the stipulated rental for the leased premises is as follows:
● The requirements of a special power of attorney in Article 1878 of the Civil Code ● For the months of April and May, 1977, at P1,500.00 a month; thereafter a
and of a special authority in Rule 138 of the Rules of Court refer to the nature of monthly increase of P500,00 until the rental reaches to P5,000.00 by December,
the authorization and not its form. 1977,
● The requirements are met if there is a clear mandate from the principal 2. That defendant admits having been in arrears in the payment of her rental obligation
specifically authorizing the performance of the act. since April, 1977 and that as of October, 1977, her total accrued rentals already amounted
● This Court stated that such a mandate may be either oral or written, the one vital to P18,000.00, broken down as follows:
thing being that it shall be express. And more recently, We stated that, if the ● April, 1977
May, 1977
June, 1977
July, 1977
August, 1977 September, 1977
special authority is not written, then it must be duly established by evidence October, 1977
TOTAL P18,000.00
● P1,500.00 1,500.00
 ● 2,000.00 2,500.00
● 3,000.00 3,500.00
● 4,000.00
3.
P18,000.00 and attorney's fee of P2,000.00, not later than October 31, 1977.
● That defendant binds herself to pay in full said accrued rentals of
4. That the rental for November, 1977, shall be P4,500.00 a month while the rentals for
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.
5. That the Plaintiff hereby agrees to allow the defendant to remain in the leased premises
at the rental herein agreed upon.
6. That should defendant fails to pay her accrued rental of P18,000.00, plus attorney's fee
of P2,000.00 by October 31, 1977, Plaintiff shall be entitled to an immediate writ of
execution to enforce defendant's ejectment from the leased premises and the collection of
all rental in arrears;
7. Defendant's representative, George Hung, affirmed before this court and the same is
confirmed by defendant's counsel, that he (George Hung) has the full authority of her
mother, the herein defendant, to act for her and to sign for and in behalf this amicable
settlement.

(ASSIGNED CASE #9) PNB v. Sta. Maria

GR NO. L-24765
August 29, 1969
By: Madrid

Topic: SPA
Petitioners: PNB
Respondents: Sta. Maria (Brothers and Sisters)
Ponente:

RECIT-READY/SUMMARY: No need.

DOCTRINE: “A special power of attorney to mortgage real estate is limited to such authority
to mortgage and does not bind the grantor personally to other obligations contracted by
the grantee.”

FACTS
- Respondent Maximo Sta. Maria has been granted by his co-respondents, which are his 6 authority to incur such loans. She and Maximo are held to be jointly liable to PNB for the
brothers and sisters, an SPA to mortgage a 16 hectare land which is owned equally by all of payment of loans.
them.
- In addition, Valeriana Sta. Maria alone, Maximo’s sister, also executed an SPA to borrow
money and to mortgage any real estate owned by her.
- By virtue of the powers, Maximo applied for 2 separate crop loans with the PNB.
- As security for these loans, Maximo included the parcel of land jointly owned by his
brothers and sisters.
- The loan matured; PNB filed an action against the respondents (Maximo w/ his bros and
sis) for the collection of certain amounts which represented the unpaid balances on the 2
crop loans.
- RTC held in favor of PNB.
- The brothers and sisters of Maximo contend that the SPA only gave Maximo the power to
mortgage the real estate owned by them, and not the authority to borrow.
- Respondents further contended that they did not benefit whatsoever from the loans, and
that the plaintiff bank's only recourse against them is to foreclose on the property which
they had authorized Maximo to mortgage.

ISSUE
WON the brothers and sisters of Maximo can be held liable for the loan executed by
Maximo.

HELD/RATIO
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 10. COMMERCIAL BANK & TRUST COMPANY v. REPUBLIC ARMORED CAR SERVICE
not merely on the mortgage of her share in the property, but also for the loans which CORPORATION
Maximo had obtained from plaintiff bank, since she had expressly granted Maximo the
 GR NO. L-18223 & L-18224 written agreement contains no limitation to RACS’ & Perez’s liability.
September 30, 1963 o Furthermore, under general rules and principles of law the mismanagement of
By: BEATRIZ A. NICOR the business of a party by his agents does not relieve said party from the
Topic: ATP – NATURE, FORM, AND KINDS OF AGENCY responsibility that he had contracted to third persons, especially in the case
Petitioners: COMMERCIAL BANK & TRUST COMPANY OF THE PHILIPPINES at bar where the written agreement contains no limitation to defendants-
Respondents: REPUBLIC ARMORED CAR SERVICE CORPORATION and DAMASO PEREZ, ET appellants' liability.
AL. o The written agreement for credit in current account contains no limitation
Ponente: LABRADOR, J about the liability of the defendants-appellants, nor an express agreement
DOCTRINE: In an action upon a promissory note against the maker, the mismanagement of that the responsibility of the defendants-appellants, should be conditioned
the business of the maker by his agents does not relieve said maker from the responsibility upon the lawful management of the business of the defendant corporation
that he had contracted to third persons, especially where the written agreement contains · NOW THE CASE BEFORE US:
no limitations to defendant-appellant's liability. · 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
FACTS: power of attorney that Ramon Racellis used, allegedly signed by Perez, to secure
· G.R. No. L-18223 and G.R. No. L-18224 are appeals from judgments rendered by the loans for Republic Armored Car Service and Republic Credit Corporation.
CFI. Basically, the same facts only the sum of money was different. · A photostatic copy of the power of attorney was claimed to be included in the
· BACKGROUND - The Supreme Court, in its June 29, 1963 decision, held the motion but it was not submitted to the court, so they could not rule on his
following: contention that Racellis had no authority to bind him as surety for the loans
o Commercial Bank granted credit accommodations to Republic Armored Car obtained from Commercial Bank.
Service in the form of an overdraft line. When payment was due, they made · The MR, however, contains a copy of power of attorney.
repeated demands but was ignored by RACS. Commercial Bank now file a
complaint against the latter. ISSUE:
o RACS, under the management of Damaso Perez and Attorney-in-Fact Ramon (1) WON Racellis had authority to bind him as surety for the loans obtained as
Racelis, argue that they have not ignored the demands for the payment. They evidenced by the power of attorney
allege that the former officers and directors of the corporation had
deliberately defrauded and mismanaged the corporation, as a part of their HELD/RATIO:
scheme to wrest control of various corporations owned by Perez, from the (1) YES. In accordance with the document, Racellis was authorized to negotiate for a
latter and as a result of said frauds or mismanagements the defendants have loan with other banking corporations. This general power of attorney to secure loans
instituted actions for damages for breach of trust and that the amounts drawn from any banking institute was sufficient authority for Racellis to obtain the credits
on the credit line subject of the complaint were received and used by the subject of the present suits.
former directors and officers of the defendant corporations and constitute · Racellis, as agent of Perez, executed the documents evidencing the loans signing
part of the funds misapplied by them. “Damaso Perez by Ramon Racellis” and that Perez agreed solidarily to be
o SC held that the alleged fact that its officers misappropriated the money responsible for the loans so there is no merit that Perez was only being held as
borrowed from Commercial Bank is no defense against RACS & Perez to guarantor.
Commercial Bank. And that the amount demanded was not qualified as there · There were promissory notes attached to the complaint. If Perez claims that
was no statement that the responsibility of them for the amount taken on Racellis had no authority to execute the promissory notes, the authenticity of the
overdraft would cease upon misappropriations on mismanagement of funds documents should have been specifically denied under oath in his answers in the
of the corporation by directors and employees. THUS, the mismanagement of lower court.
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 Motion for new trial is denied.
 did not depend on the authorization in the mortgage deed. Such right existed independently
of said stipulation.

FACTS:
• Juan de Jesus owned a land in Naga. He executed aa Special Power of Attorney (SPA) in
his son’s favor, Jose, “to negotiate, mortgage my real property in any either private or public
bank preferably in the Bicol Savings Bank, in any amount that may be agreed upon between
the bank and my atty-in-fact”.
• Jose obtained a PhP20k loan from Bicol Savings. To secure payment, Jose executed a deed
of mortgage on real property referred in the SPA. It had the ff. stipulation:
o If at any time the Mortgagor shall refuse to pay the obligations herein secured,
or any of the amortizations of such indebtedness when due, or to comply with any of the
conditions and stipulations herein agreed .... then all the obligations of the Mortgagor
secured by this Mortgage, all the amortizations thereof shall immediately become due,
payable and defaulted and the Mortgagee may immediately foreclose this mortgage in
accordance with the Rules of Court, or extrajudicially in accordance with Act No. 3135, as
11. BICOL SAVINGS AND LOAN ASSOC. VS. CA, JOSE DE JESUS AND HIS CO-HEIRS amended, or Act No. 1508. For the purpose of extrajudicial foreclosure, the Mortgagor
GR NO. 85302 hereby appoints the Mortgagee his attorney-in-fact to sell the property mortgaged. . . .
MARCH 31, 1990 • Juan died. Because Juan failed to pay his loan when he was alive, Bicol Savings foreclosed
BY: Ryan the property and was auctioned off to the highest bidder to whom a Provisional Cert. of
_________________________________________________________________________ Sale was issued.
__ • Jose and his co-heirs failed to redeem the property within 1 year of the said issuance
TOPIC: NATURE, FORM, KINDS OF AGENCY; SPECIAL POWER OF ATTORNEY hence a Definite Cert. of Sale was issued in favor of the bank.
PETITIONERS: BICOL SAVINGS AND LOAN ASSOC. • Jose still negotiated with the bank to repurchase the property. Offers and counter-offers
RESPONDENTS: CA, JOSE DE JESUS AND HIS CO-HEIRS were made but nothing was agreed upon. As a result, the bank sold the property instead to
PONENTE: MELENCIO-HERRERA, J. other parties in installments. Conditional deeds of sales were made between the bank and
_________________________________________________________________________ said parties. A writ of possession was granted by the RTC.
___ • Jose filed a case with CFI Naga to annul the foreclosure or repurchase of the property. The
SUMMARY: Juan issued an SPA to his son Jose to mortgage his land to Bicol Savings. Jose CFI, noting that the action was to annul the definite deed of sale issued to Bicol Savings,
got a P20k loan and executed a mortgaged on said land. Juan died and left his loan unpaid dismissed the case. It held that the title of the bank over the subject property had become
hence the land was auctioned off. Jose tried to buy back the land but was sold to other absolute upon issuance of the deed and that Jose was guilty of laches.
parties. Jose wanted to annul the foreclosure but failed. SC held that NCC 1879 was • The CA reversed the RTC ruling. The CA applied NCC 1879. It held that since the SPA
inapplicable as it a voluntary/independent contract. The stipulation which granted power excluded the power to sell, the RTC erred in not declaring the foreclosure and auction as
to foreclose is ancillary in nature and is an essential part of the agreement. Even if the void as the SPA explicitly stated that Jose was only to mortgage the property, and not
mortgagor died, the power to foreclose remains for the mortgagee’s protection. Bicol foreclose and sell the property. To add, Bicol Savings should have resorted to judicial
Savings had the right to foreclose as it was independent on the authorization in the foreclosure. Ultimately, the CA annulled the foreclosure, deeds of sale, registration and writ
mortgage deed. of possession issued to Bicol Savings.

DOCTRINE: The power to foreclose is an ordinary agency. It is primarily an authority ISSUE: WON the foreclosure was valid in view of that Jose lacked/exceeded his authority as
conferred upon the mortgagee for its own protection. The power survives the mortgagor’s stated in the SPA
death. The right of mortgagee bank to extrajudicially foreclose after the morgtgagor’s death
HELD/RATIO: YES.
•NCC 1879 is inapplicable in this case. The sale proscribed by special power in NCC 1879 is
a 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. The stipulation which granted authority to extrajudicially foreclose a
mortgage is an ancillary stipulation supported by the same cause/consideration for the
mortgage and forms an essential part of the agreement.
•The power to foreclose is an ordinary agency. It is primarily an authority conferred upon
the 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
authorization in the mortgage deed. Such right existed independently of said stipulation
o In Sec. 7, Rule 86, RoC, which grants to a mortgagee 3 remedies when a mortgagor dies:
1) to waive the mortgage and claim the whole debt from the mortgagor’s estate as an
ordinary claim; 2) to foreclose the mortgage judicially and prove any deficiency as an
ordinary claim; 3) to rely on the mortgage exclusively, foreclosing the same at any time
before prescription.
•Bicol Savings had the right of extrajudicial foreclosure and was availed of. It matters that
the authority to extrajudically foreclose was granted by an atty-in-fact and not by the
mortgagor personally. The stipulation forms an essential part of the mortgage contract
and is inseparable. No creditor will agree to enter into a mortgage contract without a
stipulation to protect itself. Hence, Bicol Savings, in effecting the extrajudicial foreclosure,
merely availed of the right conferred by law. The auction that followed was a result of it

DISPOSITIVE PORTION: WHEREFORE, the Decision of respondent Court of Appeals in CA-

G.R. CV No. 02213 is SET ASIDE, and the extrajudicial foreclosure of the subject mortgaged
property, as well as the Deeds of Sale, the registration thereof, and the Writ of Possession
in petitioner bank's favor, are hereby declared VALID and EFFECTIVE.

WINNER: BICOL SAVINGS

LOSER: JUAN AND JOSE