Cloie Anne C.

Sulla

1. SPOUSES MAY S. VILLALUZ and JOHNNY VILLALUZ, JR. vs. LAND BANK OF THE PHILIPPINES and the REGISTER OF
DEEDS FOR DAVAO CITY

G.R. No. 192602. January 18, 2017.

Facts: Paula Agbisit (Agbisit), mother of petitioner May S. Villaluz (May), requested the letter to provide her with
collateral for a loan. At the time, Agbisit was the chairperson of Milflores Cooperative and she needed money for the
expansion of her backyard cut flowers business. May convinced her husband, Johnny Villaluz (collectively, the Spouses
Villaluz), to allow Agbisit to use their land as collateral. The Spouses Villaluz executed a Special Power of Attorney in
favor of Agbisit authorizing her to, among others, "negotiate for the sale mortgage or other forms of disposition a parcel
of land covered by Transfer Certificate of Title No. T-202276" and "sign in our behalf all documents relating to the sale,
loan or mortgage, or other disposition of the aforementioned property." The one-page power of attorney neither
specified the conditions under which the special powers may be exercised nor stated the amounts for which the subject
land may be sold or mortgaged. Agbisit executed her own Special Power of Attorney, appointing Milflores Cooperative
as attorney-infact in obtaining a loan from and executing a real mortgage in favor of Land Bank of the Philippines (Land
Bank). Milflores Cooperative, in a representative capacity, executed a Real Estate Mortgage in favor of Land Bank in
consideration of the loan to be extended by the latter. Milflores Cooperative also executed a Deed of Assignment of the
Produce an Inventory as additional collateral for the loan. Milflores Cooperative was unable to pay its obligations to
Land Bank. Thus, Land Bank filed a petition for extrajudicial foreclosure sale. The Spouses Villaluz filed a complaint with
the Regional Trial Court (RTC) of Davao City seeking the annulment of the foreclosure sale.

Issue: Whether or not additional security on the same loan extinguished the agency because the Deed of Assignment
served as payment of the loan of the [Milflores] Cooperative.

Held: No, the assignment was not intended to substitute the payment of sums of money. It is the delivery of cash
proceeds, not the execution of the Deed of Assignment that is considered as payment. The assignment, being intended
to be a mere security rather than a satisfaction of indebtedness, is not elation in payment under Article 1245 and did not
extinguish the loan obligation. "Dation in payment extinguishes the obligation to the extent of the value of the thing
delivered, either as agreed upon by the parties or as may be proved, unless the parties by agreement-express or implied,
or by their silence consider the thing as equivalent to the obligation, in which case the obligation is totally extinguished."
As stated in the second condition of the Deed of Assignment, the "Assignment shall in no way release the ASSIGNOR
from liability to pay the Line a Loan and other obligations, except only up to the extent of any amount actually collected
and paid to ASSIGNEE by virtue of or under this Assignment." Clerly, the assignment was not intended to substitute the
payment of sums of money. It is the delivery of cash proceeds, not the execution of the Deed of Assignment, that is
considered as payment. Absent any proof of delivery of such proceeds to Land Bank, the Spouses Villaluz' s claim of
payment is without basis. Neither could the assignment have constituted payment by cession under Article 1255 for the
plain and simple reason that there was only one creditor, Land Bank. Article 1255 contemplates the existence of two or
more creditors and involves the assignment of all the debtor's property. The Spouses Villaluz understandably feel
shorthanded because their property was foreclosed by reason of another person's inability to pay. However, they were
not coerced to grant a special power of attorney in favor of Agbisit. Nor were they prohibited from prescribing
conditions on how such power may be exercised. Absent such express limitations, the law recognizes Land Bank's right
to rely on the terms of the power of attorney as written. "Courts cannot follow one every step of his life and extricate
him from bad bargains, protect him from unwise investments, relieve him from one-sided contracts, or annul the effects
of [unwise] acts." The remedy afforded by the Civil Code to the Spouses Villaluz is to proceed against the agent and the
substitute in accordance with Articles 1892 and 1893.
2. MANILA MEMORIAL PARK CEMETERY, INC vs. PEDRO L. LINSANGAN

G.R. No. 151319 November 22, 2004

FACTS:

Florencia Baluyot offered Atty. Pedro L. Linsangan a lot called Garden State at the Holy Cross Memorial Park owned by
petitioner (MMPCI). According to Baluyot, a former owner of a memorial lot under Contract No. 25012 was no longer
interested in acquiring the lot and had opted to sell his rights subject to reimbursement of the amounts he already paid.
The contract was for P95,000.00. Baluyot reassured Atty. Linsangan that once reimbursement is made to the former
buyer, the contract would be transferred to him. Atty. Linsangan agreed and gave Baluyot P35,295.00 representing the
amount to be reimbursed to the original buyer and to complete the down payment to MMPCI. Baluyot issued
handwritten and typewritten receipts for these payments. Baluyot verbally advised Atty. Linsangan that Contract No.
28660 was cancelled for reasons the latter could not explain, and presented to him another proposal for the purchase of
an equivalent property. He refused the new proposal and insisted that Baluyot and MMPCI honor their undertaking. For
the alleged failure of MMPCI and Baluyot to conform to their agreement, Atty. Linsangan filed a Complaint for Breach of
Contract and Damages against the former. For its part, MMPCI alleged that Contract No. 28660 was cancelled
conformably with the terms of the contract because of non-payment of arrearages. MMPCI stated that Baluyot was not
an agent but an independent contractor, and as such was not authorized to represent MMPCI or to use its name except
as to the extent expressly stated in the Agency Manager Agreement.

ISSUE: Whether or not a contract of agency exists between Baluyot and MMPCI.

RULING: NO. The acts of an agent beyond the scope of his authority do not bind the principal, unless he ratifies them,
expressly or impliedly. Only the principal can ratify; the agent cannot ratify his own unauthorized acts. Moreover, the
principal must have knowledge of the acts he is to ratify. No ratification can be implied in the instant case. Atty.
Linsangan failed to show that MMPCI had knowledge of the arrangement. As far as MMPCI is concerned, the contract
price was P132,250.00, as stated in the Offer to Purchase signed by Atty. Linsangan and MMPCI's authorized officer.
Likewise, this Court does not find favor in the Court of Appeals' findings that "the authority of defendant Baluyot may
not have been expressly conferred upon her; however, the same may have been derived impliedly by habit or custom
which may have been an accepted practice in their company in a long period of time." A perusal of the records of the
case fails to show any indication that there was such a habit or custom in MMPCI that allows its agents to enter into
agreements for lower prices of its interment spaces, nor to assume a portion of the purchase price of the interment
spaces sold at such lower price. No evidence was ever presented to this effect.