Rule: Art.

1869 - Agency may be express, or implied form the acts of the principal, from his
silence or lack of action or his failure to repudiate the agency, knowing that another person is
acting on his behalf without his authority.
DOMINGA CONDE vs THE HONORABLE COURT OF APPEALS
G.R. No. L-40242, December 15, 1982
Facts:
1. The heirs of Santiago Conde sold a parcel of land in Leyte to Casimira Pasagui and her Pio
Altera for P165.00 with the right of repurchase within 10 years from April 7, 1938.
2. So, the Cadastral Court adjudicated the said lot to the Alteras subject to Dominga Condes
repurchase.
3. On November 28, 1945, Pio Altera and Paciente Cordero, his son-in-law, executed a
memorandum of repurchase of the said land and stated that since it was time to repurchase the
lot, Altera allowed Eusebio Amarille, representative of the Santiago Conde heirs to repurchase
the lot. It also stated that they received P165.00 as payment thereof, and that the Conde siblings
will once again take possession of the lot.
4. However, the memorandum of repurchase did not contain the signatures of Pio Altera and
Casimira Pasagui. Only Paciente Cordero signed it, who according to Dominga Conde was the
only one who was able to do so since Piol Altera was seriously ill during that time and Casimira
Pasagui was in Manila.
5. However, after this document was executed, the original pact of repurchase was found.
6. On June 30, 1965, Pio Altera sold the lot to spouses Ramon Conde and Catalina Conde whose
relationship to Dominga Conde was not established. As result, Dominga filed a case in court
contending that she had validly repurchased the lot in question in 1945 as Paciente Cordero
signed the Memorandum of Repurchase in representation of his father-in-law Pio Altera, who
was seriously sick on that occasion, and of his mother-in-law who was in Manila at the time, and
that Cordero received the repurchase price of P165.00.
7. In response, Paciente Cordero signed the document of repurchase merely to show that he had
no objection to the repurchase; and that he did not receive the amount of P165.00 from Dominga
inasmuch as he had no authority from his parents-in-law.
8. However, the Alteras did not repudiate the deed that their son-in-law had signed.
Issue: Was a contract of agency created from the inaction of the Alteras in relation to their sonin-laws act of signing the memorandum of repurchase on their behalf?
Held: Yes, After Pio Altera had recovered from his illness, both him and his wife, did not
repudiate the deed that their son-in-law had signed. Thus, an implied agency must be held to
have been created from their silence or lack of action, or their failure to repudiate the
agency.
Rationale: Paciente Cordero must be held bound by the clear terms of the Memorandum of
Repurchase that he had signed wherein he acknowledged the receipt of P165.00 and assumed the
obligation to maintain the repurchasers in peaceful possession should they be "disturbed by other
persons". It was executed in the Visayan dialect which he understood. He cannot now be allowed
to dispute the same. "... If the contract is plain and unequivocal in its terms he is ordinarily
bound thereby. It is the duty of every contracting party to learn and know its contents before he
signs and delivers it."
There is nothing in the document of repurchase to show that Paciente Cordero had signed the
same merely to indicate that he had no objection to petitioner's right of repurchase. Besides, he
would have had no personality to object.
My Question: How can the court recognize the sale as valid when Paciente Cordero was never
given a written authority by Pio Altera or Casimira Pasagui to sell the lot. Art. 1874 specifically
states that when a sale of a piece of land or any interest therein is through an agent, the authority
of the latter shall be in writing; otherwise, the sale shall be void. It is futher supported by
jurisprudence, specifically the case of Fernandez vs Rabot, 4 CAR [2s] 221, where the court said
that the repurchase partakes of a nature of a sale, and that in order to effect a sale of land through
an agent, the agency should be in writing to be valid.

Rule: Art. 1881- The agent must act within the scope of his authority. He may do such acts as
may be conducive to the accomplishment of the purpose of the agency.
HARRY E. KEELER ELECTRIC CO., INC vs. DOMINGO RODRIGUEZ
G.R. No. L-19001, November 11, 1922
Facts:
1. A. C. Montelibano approached Harry E. Keller Electric Co., Inc. claiming that he was from
Iloilo lived with Governor Yulo; and that he could find a purchaser for the "Matthews" electric
plant.
2. Harry E. Keller Electric Co., Inc. told Montelibano that he would be paid a commission of 10
percent for any plant that he could sell, or any customer that he could find, if the sale was
consummated.
3. Montelibano interviews Domingo Rodriguez. Through Montelibanos efforts, one of the
"Matthews" plants was sold by Harry E. Keller Electric Co., Inc. to Domingo Rodriguez.
4. However, Rodriguez paid Motelibano without the knowledge of Harry E. Keller Electric Co.,
Inc., resulting in a case for collection of payment plus interest against Rodriguez.
5. Rodriguez denied the allegation of non-payment and stated that he paid the electric plant
through Montelibano.
6. RTC ruled in favor of Rodriguez who said that he paid Motelibano because he was the one
who sold, delivered, and installed the electrical plant, and he presented to me the account, and he
assured me that he was duly authorized to collect the value of the electrical plant. To support this
allegation, he presented a receipt signed by Montelibano as evidence of Montelibanos authority
to act in behalf of Harry E. Keller Electric Co., Inc.
7. As result, Harry E. Keller Electric Co., Inc. filed an appeal claiming that RTC erred in holding
that:
>the payment to A. C. Montelibano would discharge Rodriguezs debt;
>the bill was given to Montelibano for collection purposes;
>Montelibano is as an agent authorized to collect,
as Montelibano was never authorized by Harry E. Keller Electric Co., Inc. to receive money and
that his services were limited and confined to the finding of purchasers for the "Matthews"
electric plant to whom Harry E. Keller Electric Co., Inc. would later make and consummate the
sale.
8. Cenar, as a witness for Harry E. Keller Electric Co., Inc., testified that he went with shipment
of the plant from Manila to Iloilo, for the purpose of installing, testing it, and to see that
everything was satisfactory. That he was there about nine days, and that he installed the plant,
and that it was tested and approved by the defendant. He also says that he personally took with
him the statement of account of tHarry E. Keller Electric Co., Inc. against Domingo Rodriguez.
Cenar also said that he made no effort to collect the amount from him because Mr. Rodriguez
told him that he was going to pay for the plant here in Manila.
Issue: Was Rodriguez correct to assume that Montelibano was an agent of Harry E. Keller
Electric Co., Inc. authorized to collect payment in behalf of the company?
Held: No, There is nothing on the face of the receipt to show that Montelibano was the agent of,
or that he was acting for Harry E. Keller Electric Co., Inc. It was his own personal receipt and
his own personal signature. Outside of the fact that Montelibano received the money and signed
this receipt, there is no evidence that he had any authority, real or apparent, to receive or
issue receipt for the money. Neither is there any evidence that Harry E. Keller Electric Co.,
Inc. ever delivered the statement to Montelibano, or authorized anyone to deliver it to him ,
and it is very apparent that the statement in question is the one which was delivered by the Harry
E. Keller Electric Co., Inc. to Cenar, and is the one which Cenar delivered to the defendant at the
request of the defendant. The evidence of the defendant that Montelibano was the one who sold
him the plant is in direct conflict with his own pleadings and the receipt statement which he
offered in evidence, which shows a bill of P81.60 which must be for the expenses of Cenar in

going to Iloilo from Manila and return, to install the plant, and is strong evidence that it was
Cenar and not Montelibano who installed the plant.
Note: In this case Montelibanos authority is one of an expressed authority verbally given as
manifested by Harry E. Keller Electric Co., Inc.s statement that Montelibano would be paid a
commission of 10 percent for any plant that he could sell, or any customer that he could find, if
the sale was consummated. His authority was expressly limited through verbal agreement that he
is is to sell, but not collect any payment.
This case is an example of a possible irregularity in a contract of agency where the agent
has authority but has acted on behalf of himself. The effect to this is that generally, the agent
can have a recourse only against the third person and vice versa. Principal and the third person
have no recourse against each other. However this case falls under the exception to the general
rule where the principal can have a recourse against the third persons because the subject of the
transaction belongs to the principal. (Art. 1883 par. 2)

Rule: Art. 1876 - An agency is either general or special. The former (meaning general agency)
comprises all the business of the principal. The latter (meaning special agency), one or more
specific transactions.
Doctrine: One who clothes another apparent authority as his agent, and holds him out to the
public as such, can not be permitted to deny the authority of such person to act as his agent, to
the prejudice of innocent third parties dealing with such person in good faith.
B. H. MACKE, ET AL vs. JOSE CAMPS
G.R. No. 2962 , February 27, 1907
Facts:
1. Macke, Chandler & Company a partnership run by B. H. Macke and W. H. Chandler.
2. B. H. Macke testified that one Ricardo Flores placed orders from their company representing
himself to be an agent of Jose Camps. Inquiries were made to ascertain the authority of Flores to
act as Camps agent.
3. Upon satisfaction of certainty that Flores was indeed representing Camps, B. H. Macke
shipped the ordered goods at the Washington Cafe, the business owned by Camps. Flores
acknowledged the receipt of said goods and made various payments thereon amounting in all to
P174.00.
4. B. H. Macke demanded for the payment of the balance of P177.50, but Flores told him that he
did not have the necessary funds on hand, and that he would have to wait for the return of Jose
Camps.
5. Macke, Chandler & Company made demands for the payment of the balance, but Camps
refused to pay the said balance or any part of it on the ground that he did not receive said goods.
6. In the trial, A written contract was introduced in evidence where one Galmes subrented the
building where Camps business was conducted for a period of one year. This contract was
signed by Camps and the name of Ricardo Flores appears thereon as a witness. Attached to the
contract was an inventory of furniture and fittings which also is signed by Camps with the word
"sublessee" below his name, and at the foot of this inventory the word "received" followed by
the name "Ricardo Flores," with the words "managing agent" immediately following his name.
7. Galms was called to the stand and identified the described document as the contract and
inventory delivered to him by Camps, and further stated that he could not tell whether Flores
was working for himself or for some one else whether Flores was managing the business as
agent or sublessee.
Issue: Can the sublease contract sustain a finding that Flores was the agent of the Camps in the
management of the bar of the Washington Cafe with authority to bind Camps, his principal, for
the payment of the goods mentioned in the complaint?
Held: Yes, In the absence of proof of the contrary we think that this evidence is sufficient to
sustain a finding that Flores was the agent of the defendant in the management of the bar of the

Washington Cafe with authority to bind the defendant, his principal, for the payment of the
goods mentioned in the complaint.
Rationale:The contract introduced in evidence sufficiently establishes the fact that Camps was
the owner of business and of the bar, and the title of "managing agent" attached to the signature
of Flores which appears on that contract, together with the fact that, at the time the purchases in
question were made, Flores was apparently in charge of the business, performing the duties
usually entrusted to managing agent, leav ing little room for doubt that he was there as
authorized agent of the Camps. One who clothes another apparent authority as his agent, and
holds him out to the public as such, can not be permitted to deny the authority of such person to
act as his agent, to the prejudice of innocent third parties dealing with such person in good faith
and in the following preassumptions or deductions, which the law expressly directs to be made
from particular facts, are deemed conclusive:
(1) "Whenever a party has, by his own declaration, act, or omission, intentionally and
deliberately led another to believe a particular thing true, and to act upon such belief, he can not,
in any litigation arising out such declaration, act, or omission, be permitted to falsify it" (subsec.
1, sec. 333, Act no. 190); and unless the contrary appears, the authority of an agent must be
presumed to include all the necessary and usual means of carrying his agency into effect. (15
Conn., 347; 90 N. C. 101; 15 La. Ann, 247; 43 Mich., 364; 93 N. Y., 495; 87 Ind., 187.)
That Flores, as managing agent of the Washington Cafe, had authority to buy such reasonable
quantities of supplies as might from time to time be necessary in carrying on the business of
hotel bar may fairly be presumed from the nature of the business, especially in view of the fact
that his principal appears to have left him in charge during more or less prolonged periods of
absence; from an examination of the items of the account attached to the complaint, we are of
opinion that he was acting within the scope of his authority in ordering these goods are binding
on his principal, and in the absence of evidence to the contrary, furnish satisfactory proof of their
delivery as alleged in the complaint.
Rule: Art. 1875 - Agency is presumed to be for a compensation, unless there is proof to the
contrary.
Dcotrine Relative to Compensation: When there is a close, proximate and causal connection
between the agent's efforts and labor and the principal's sale of his property, the agent is
entitled to a commission. (Also stated in pag 277 of the book under the topic Labor of Agent,
when it is the proximate cause of the contract citing the case of Reyes vs Manaot.)
Rule: Art. 1869 - Agency may be express, or implied form the acts of the principal...
Dcotrine Relative to the Form of Agency: The authority of the agent may be in writing or
verbal. If in writing, it may be public or private. This is a case of express agency since Manotok
Brothers, Inc. cctually clothed Sarigumba with authority to negotiate and sell the property in
writing evidenced by the letters of authority.
MANOTOK BROTHERS, INC. vs THE COURT OF APPEALS
G.R. No. 94753 , April 7, 1993
Facts:
1. Manotok Brothers, Inc. is the owner of a parcel of land and building which were formerly
leased by the City of Manila and used by the Claro M. Recto High School.
2. By means of a letter, Manotok Brothers, Inc., authorized Salvador Saligumba to negotiate
with the City of Manila, the sale of said property for not less than P425,000.00. In the same
writing, Manotok Brothers, Inc. agreed to pay Sarigumb a 5% commission in the event the sale
is consummated and paid.
3. Manotok Brothers, Inc. executed 2 letters extending the authority of private respondent for
120 days. The first of this letter was dated on March 4, 1967 and the second, of this same
content, was issued on June 26, 1967.
4. On November 16, 1967, Rufino Manotok, president of Manotok Brothers, Inc. authorized
private respondent to finalize and consummate the sale of the property to the City of Manila for
not less than P410,000.00. With this letter came another extension of 180 days.
5. Eventually, the Municipal Board Manila passed an ordinance appropriating P410,816.00 for
the purchase of the property. However, the ordinance was signed by the Mayor of Manila 3 days
after the last letter of authorization expired.

6. The parties then signed the deed of sale of the subject property and an initial payment of
P200,000.00 was made, and eventually a 2nd payment, by a check in the amount of
P210,816.00, to fully pay the price of the lot was made.
7. However, Saligumba never received a commission which should have amounted to
P20,554.50, because Manotok Brothers, Inc. did not recognize his role as an agent in the
transaction.
8. Sarigumba filed a case against Manotok Brothers, Inc. claiming that it was his efforts that
consummated the sale of the property.
9. Manotok Brothers, Inc. responded by saying that Sarigumba was not responsible for the sale
since it was the PTA President of Claro Recto High School that helped negotiate and
consummate the sale.
Issue: Is Salvador Sarigumba still entitled to receive the 5% commission promised to him by
Manotok Brothers, Inc. when his authority to negotiate and sell on their behalf had already
expired when the sale was consummated?
Held: Yes, Sarigumba, despite the expiration of his authority, when a sale was finally
consummated, is still entitled to any commission promised to him since he was the efficient
procuring cause in bringing about the sale. For without his efforts, the municipality would not
have anything to pass and the Mayor would not have anything to approve.
Rationale: At first sight, it would seem that private respondent is not entitled to any commission
as he was not successful in consummating the sale between the parties, for the sole reason that
when the Deed of Sale was finally executed, his extended authority had already expired.
The City of Manila ultimately became the purchaser of Manotok Brothers, Inc.s property
mainly through the efforts of Sarigumba. Without discounting the fact that when the
ordinance was signed by the City Mayor, Sarigumba's authority had already expired, it is to be
noted that the ordinance was approved when Sarigumba's authorization was still in force.
Moreover, the approval by the City Mayor came only 3 days after the expiration of private
Sarigumba's authority. It is also worth emphasizing that from the records, the only party
given a written authority by Manotok Brothers, Inc. to negotiate the sale was Sarigumba.
While it may be true that Filomeno Huelgas followed up the matter with Councilor Magsalin,
the author of the ordinance and Mayor Villegas, his intervention regarding the purchase came
only after the ordinance had already been passed when the buyer had already agreed to the
purchase and to the price for said property. Without the efforts of Sarigumba then, Mayor
Villegas would have nothing to approve. It was actually Sarigumba's labor that had set in
motion the intervention of the third party that produced the sale, hence he should be
amply compensated.
Note: The Manotok Brothers, Inc. refused payment to Sarigumba based on the case Danon vs.
Brimo, but the Court said that the doctrine in that case did not apply here since the agent in that
case comprehended the possibility of losing his agents commission because another agent was
also negotiating the same sale he was working on and the one who closes the sale will receive
the commission. In this case Sarigumba was the sole agent, Huelgas was never authorized and
recognized as an agent of Manotok Brothers, Inc as testified by Fructuoso Ancheta and Atty.
Dominador Bisbal who confirmed Sarigumbas status as the agent in authority in the transaction.
Huelgas participation in the transaction was only known to Rufino Manotok.
Rule: Art. - Rule: Art. 1878 (11) - Special powers of attorney are necessary in the following
cases: To obligate the principal as a guarantor or surety.
Doctrine: An agent who exceeds his authority is personally liable for damages.
Persons dealing with an assumed agent, whether the assumed agency be a general or special
one are bound at their peril, 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 establish it.
BA FINANCE CORP. vs. HON. COURT OF APPEALS AND TRADERS ROYAL BANK
211 SCRA 112

Facts:
1. On December 17, 1980, Renato Gaytano, doing business under the name Gebbs International,
applied for and was granted a loan with Traders Royal Bank in the amount of P60,000.00.
2. As security for the payment of said loan, the Gaytano spouses executed a deed of suretyship
where they agreed to pay jointly and severally to Traders Royal Bank (TRB) the amount of the
loan plus interests, penalty and other bank charges.
3. In a letter addressed to TRB, Philip Wong, as credit administrator of BA Finance Corporation,
undertook to guarantee the loan of the Gaytano spouses for and in behalf of BA Finance Corp.
4. Partial payments were made on the loan leaving an unpaid balance in the amount of
P85,807.25.
5. Since the Gaytano spouses refused to pay the balance, Traders Royal Bank filed a complaint
with the RTC for sum of money against the Gaytano spouses with BA Finance Corp. as
alternative defendant.
6. BA Finance raised the defense of lack of authority of its credit administrator to bind the
corporation.
7. RTC decided in favor of Traders Royal Bank and dismissed the case against BA Finance
Corp.
8. Not satisfied with the decision, Traders Royal Bank appealed with the CA which modified the
RTCs decision and ordered the Gaytano spouses and BA Finance Corporation, jointly and
severally, liable to Traders Royal Bank. Hence, this petition by BA Finance Corp.
ISSUE #1: Is BA Finance Corp.s contention that its employee acted beyond the scope of his
authority when he issued the letter guaranty correct, since BA Finance Corp. Itself is not even
empowered to issue guaranties under its Articles of Incorporation and by-laws?
HELD: Yes, It is a settled rule that persons dealing with an assumed agent, whether the assumed
agency be a general or special one are bound at their peril, 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 establish it (Harry Keeler v.
Rodriguez, 4 Phil. 19).
Hence, the burden is on Traders Royal Bank to satisfactorily prove that the credit
administrator (Wong), with whom they transacted acted within the authority given to him
by his principal, BA Finance Corp. The only evidence presented by Traders Royal Bank
was the testimony of Philip Wong, credit administrator, who testified that he had authority
to issue guarantees as can be deduced from the wording of the memorandum given to him
by BA Finance Corp. on his lending authority. LETTER OF GUARANTY
Although Wong was clearly authorized to approve loans even up to P350,000.00 without
any security requirement, which is far above the amount subject of the guaranty in the amount of
P60,000.00, nothing in the said memorandum (Memorandum) expressly vests on the credit
administrator power to issue guarantees. The BA Finance Corp.s contends that the phrase
"contingent commitment" set forth in the memorandum, means guarantees.
It has been held that a power of attorney or authority of an agent should not be
inferred from the use of vague or general words. Guaranty is not presumed, it must be
expressed and cannot be extended beyond its specified limits . (Director v. Sing Juco, 53 Phi.
205).
The sole allegation of the credit administrator in the absence of any other proof that he is
authorized to bind petitioner in a contract of guaranty with third persons should not be given
weight.
The representation of one who acts as agent cannot by itself serve as proof of his
authority to act as agent or of the extent of his authority as agent (Velasco v. La Urbana, 58
Phil. 681). Wong's testimony that he had entered into similar transactions of guaranty in the past
for and in behalf of the petitioner, lacks credence due to his failure to show documents or
records of the alleged past transactions.
The rule is clear that an agent who exceeds his authority is personally liable for
damages (National Power Corporation v. National Merchandising Corporation, Nos. L-33819
and L-33897, October 23, 1982, 117 SCRA 789).
ISSUE #2: Is BA Finance Corp.s contention that it is not guilty of estoppel to make it liable
under the letter-guaranty because it had no knowledge or notice of such letter-guaranty correct?
HELD: The second issue has no basis in fact. TRB had not shown any evidence aside from the
testimony of the credit administrator that the disputed transaction of guaranty was in fact entered
into the official records or files of petitioner, which will show notice or knowledge on the latter's

part and its consequent ratification of the said transaction. In the absence of clear proof, it would
be unfair to hold petitioner guilty of estoppel in allowing its credit administrator to act as though
the latter had power to guarantee.
Rule: Art. 1878 (11) - Special powers of attorney are necessary in the following cases: To
obligate the principal as a guarantor or surety.
Note: Under this rule, CA said, and affirmed by SC that: In effect, with the execution of the
mortgage under the circumstances and assuming it to be valid but because the loan taken was
to be used exclusively for Aquino's business in the "bangus" and "sugpo" production,
Gallardo in effect becomes a surety who is made primarily answerable for loans taken by
Aquino in his personal capacity in the event Aquino defaults in such payment. Under Art.
1878 of the Civil Code, to obligate the principal as a guarantor or surety, a special power of
attorney is required. No such special power of attorney for Gallardo to be a surety of Aquino had
been executed.
Doctrine: It is a general rule in the law of agency that, in order to bind the principal by a
mortgage on real property executed by an agent, it must upon its face purport to be made,
signed and sealed in the name of the principal, otherwise, it will bind the agent only. It is not
enough merely that the agent was in fact authorized to make the mortgage, if he has not acted in
the name of the principal.
RURAL BANK OF BOMBON (CAMARINES SUR), INC., vs. HON. COURT OF
APPEALS, EDERLINDA M. GALLARDO, DANIEL MANZO and RUFINO S. AQUINO |
G.R. No. 95703, August 3, 1992
Facts:
1. Ederlinda M. Gallardo executed an SPA in favor of Rufino S. Aquino authorizing him to:
>secure a loan from any bank or lending institution for any amount or mortgage her paraphernal
(inheritance) property; to sign, or execute any deed of mortgage and sign other documents
necessary in securing the loan; to receive the proceeds thereof in cash or in check; to sign the
receipt therefor and thereafter endorse the check representing the proceeds of loan.
2. Gallardo then delivered to Aquino her SPA and her owners copy of her property title.
3. Aquino then executed a Deed of Real Estate Mortgage in favor of the Rural Bank of Bombon
(Camarines Sur), Inc. over the three parcels of land covered by Gallardos title.
4. The deed stated that the property was given as security for the payment of "certain loans,
advances, or other accommodations obtained by the mortgagor from the mortgagee in the total
sum P350,000.00, plus interest at 14% per annum.
5. In January 1984, Gallardo and her husband, Manzo, filed a case against Aquino and the Rural
Bank upon discovering that her property was mortgaged to pay Aquinos personal loans from the
Rural Bank.
6. Aquino responded by saying that Gallardo authorized him to mortgage her property to a bank
so that he could use the proceeds to pay her debt of P350,000 to him.
7. In lieu of this, RTC ordered a TRO on the foreclosure of Gallardos property.
8. In reponse to Gallardos complaint, Rural Bank moved to dismiss the complaint and filed a
crossclaim against Aquino for P350,000 plus interest, other bank charges and damages if the
mortgage is declared unauthorized.
9. The Bank also filed another complaint against Gallardo and Aquino for "Foreclosure of
Mortgage." The two cases were then consolidated upon its request.
10. RTC dismissed the complaint for annulment of mortgage and declared Rural Bank entitled to
damages to be determined in appropriate proceedings. RTC also lifted the TRO it previously
issued over the enforcement of the propertys foreclosure. However, it issued another order in
April 1986, to suspend the foreclosure proceedings until after the decision in the annulment of
the deed of mortgage shall have become final and executory.
11. In Sept. 1990, RTC, rendered a decision declaring the deed of real estate mortgage executed
between Aquino and the Rural Bank, unauthorized, void and unenforceable against Gallardo.
12. Rural Bank petitioned for review of RTCs decision contending that the real estate mortgage
executed by Aquino is valid because he was expressly authorized by Gallardo to mortgage her
property under the SPA she made in his favor which was registered and annotated on her title;
and since the SPA did not specify that the loan would be for Gallardo, then it could be for the use
and benefit of the attorney-in-fact, Aquino.
Issue: Is the contention of Rural Bank that the deed of mortgage executed by Aquino is valid in
lieu of the SPA issued by Gallardo expressly authorizing him to mortgage her property since it
lacked any precondition as to whom the loan would benefit?

Held: No, The Special Power of Attorney above quoted shows the extent of authority given by
the plaintiff to defendant Aquino. But defendant Aquino in executing the deed of Real Estate
Mortgage in favor of the rural bank over the three parcels of land covered by Gallardo's title
named himself as the mortgagor without stating that his signature on the deed was for and in
behalf of Ederlinda Gallardo in his capacity as her attorney-in-fact.
Rationale: It is a general rule in the law of agency that, in order to bind the principal by a
mortgage on real property executed by an agent, it must upon its face purport to be made,
signed and sealed in the name of the principal, otherwise, it will bind the agent only. It is
not enough merely that the agent was in fact authorized to make the mortgage, if he has
not acted in the name of the principal. Neither is it ordinarily sufficient that in the mortgage
the agent describes himself as acting by virtue of a power of attorney, if in fact the agent has
acted in his own name and has set his own hand and seal to the mortgage. This is especially true
where the agent himself is a party to the instrument. However clearly the body of the mortgage
may show and intend that it shall be the act of the principal, yet, unless in fact it is executed by
the agent for and on behalf of his principal and as the act and deed of the principal, it is
not valid as to the principal.
In view of this rule, Aquino's act of signing the Deed of Real Estate Mortgage in his name
alone as mortgagor, without any indication that he was signing for and in behalf of the property
owner, Ederlinda Gallardo, bound himself alone, in his personal capacity, as a debtor of the
petitioner Bank and not as the agent or attorney-in-fact of Gallardo.