30. Lustan vs.
CA
G.R. No. 111924. January 27, 1997
FRANCISCO, J.:
Facts: Petitioner Adoracion Lustan is the registered owner of a parcel of land. He leased the above
described property to private respondent Nicolas Parangan for a term of ten (10) years and an annual
rent of One Thousand (P1,000.00) Pesos. Petitioner executed a Special Power of Attorney in favor of
Parangan to secure an agricultural loan from private respondent Philippine National Bank (PNB) with the
aforesaid lot as collateral. He was able to secure additional loans, the last three of which were
knowledge of herein petitioner and all the proceeds therefrom were used by Parangan for his own
benefit. These encumbrances were duly annotated on the certificate of title. On April 16, 1973,
petitioner signed a Deed of Pacto de Retro Sale in favor of Parangan which was superseded by the Deed
of Definite Sale which petitioner signed upon Parangan's representation that the same merely evidences
the loans extended by him unto the former.
For fear that her property might be prejudiced by the continued borrowing of Parangan, petitioner
demanded the return of her certificate of title. Instead of complying with the request, Parangan
asserted his rights over the property which allegedly had become his by virtue of the aforementioned
Deed of Definite Sale. Under said document, petitioner conveyed the subject property and all the
improvements thereon unto Parangan absolutely for and in consideration of the sum of Seventy Five
Thousand (P75,000.00) Pesos. Aggrieved, petitioner filed an action for cancellation of liens, quieting of
title, recovery of possession and damages against Parangan and PNB in the Regional Trial Court of Iloilo
City. Petitioner argues that the last three mortgages were void for lack of authority.
Issue: WON Parangan has acted beyond the authority given by the petitioner.
Held: Yes. "Art. 1921. If the agency has been entrusted for the purpose of contracting with specified
persons, its revocation shall not prejudice the latter if they were not given notice thereof."
The Special Power of Attorney executed by petitioner in favor of Parangan duly authorized the latter to
represent and act on behalf of the former. Having done so, petitioner clothed Parangan with authority
to deal with PNB on her behalf and in the absence of any proof that the bank had knowledge that the
last three loans were without the express authority of petitioner, it cannot be prejudiced thereby. As far
as third persons are concerned, an act is deemed to have been performed within the scope of the
agent's authority if such is within the terms of the power of attorney as written even if the agent has in
fact exceeded the limits of his authority according to the understanding between the principal and the
agent. The Special Power of Attorney particularly provides that the same is good not only for the
principal loan but also for subsequent commercial, industrial, agricultural loan or credit accommodation
that the attorney-in-fact may obtain and until the power of attorney is revoked in a public instrument
and a copy of which is furnished to PNB. Even when the agent has exceeded his authority, the principal
is solidarily liable with the agent if the former allowed the latter to act as though he had full powers
(Article 1911, Civil Code).
