Case Summary (G.R. No. 192602)
Facts of Powers of Attorney and Mortgage Loan
In March 1996, the Spouses Villaluz granted Paula Agbisit a special power of attorney (SPA) to negotiate and sign documents for sale or mortgage of their land. Agbisit, without restrictions on delegation, appointed Milflores Cooperative by SPA in June 1996 to secure a P3 million loan from Land Bank. On June 21, 1996, the cooperative executed a real estate mortgage. The loan proceeds were partly released on June 25 and October 4, 1996. When the cooperative defaulted, Land Bank foreclosed extrajudicially; the property was auctioned on October 2, 2003.
Validity of Sub-Agent Appointment
Both the Regional Trial Court and the Court of Appeals held that, under Article 1892, Agbisit validly appointed Milflores Cooperative because the original SPA contained no prohibition against delegation. The Supreme Court affirmed that absence of restrictive language on substitution renders the appointment lawful and binds the principal to the sub-agent’s acts, subject to agent liability for any misconduct.
Timing and Consideration of the Mortgage
The petitioners argued the mortgage was void for lack of existing consideration, as it preceded loan release. The Court reconciled Articles 1347, 1461–1462 (permitting future things as contract objects) with Article 1409(3) by interpreting “did not exist” to mean “impossible of existence.” The real estate mortgage, conditioned upon loan release, secured a perfected loan; the suspensive condition was fulfilled when Land Bank disbursed the first tranche, validating the mortgage despite its earlier execution.
Effect of Deed of Assignment on Agency and Loan Obligation
The Spouses contended that the cooperative’s deed of assignment of produce extinguished the SPA and loan. The Court held the assignment was a mere accessory security, not a dation in payment under Article 1245 nor a cession under Article 1255, and therefore did not sub
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Facts of the Case
- In 1996, Paula Agbisit (mother of petitioner May S. Villaluz) sought P600,000–P650,000 to expand her cut-flower business and requested her daughter’s assistance for collateral.
- The Spouses Villaluz owned a parcel of land in Calinan, Davao City, covered by TCT No. T-202276, which they agreed to use as security.
- On March 25, 1996, the Spouses executed a one-page Special Power of Attorney in favor of Agbisit, authorizing her to negotiate and sign documents for the sale, mortgage, or disposition of the land, without specifying conditions or amounts.
- On June 19, 1996, Agbisit appointed Milflores Cooperative as her attorney-in-fact to obtain a loan and execute a mortgage in favor of Land Bank of the Philippines.
- On June 21, 1996, Milflores Cooperative executed a Real Estate Mortgage over the Villaluz land to secure a P3,000,000 loan; on June 24, 1996, it also executed a Deed of Assignment of produce/inventory as additional collateral.
- Land Bank released P995,500 on June 25, 1996, and the balance of P2,000,500 on October 4, 1996.
- Due to default, Land Bank foreclosed extrajudicially; the property was auctioned on October 2, 2003, with Land Bank as the sole bidder.
- The Spouses Villaluz filed a complaint in the RTC of Davao City seeking annulment of the foreclosure sale, contending that Agbisit could not validly appoint a substitute and that the mortgage lacked valid consideration or was extinguished by the assignment.
Procedural History
- RTC (Davao City): Held that under Civil Code Article 1892, Agbisit was not prohibited from appointing a sub-agent; complaint dismissed.
- CA (Sept. 22, 2009 Decision; May 26, 2010 Resolution): Affirmed the RTC, applying Article 1892’s presumption in favor of sub-agent appointment; denied motion for reconsidera