Spouses May S. Villaluz v. Land Bank of the Philippines

Summary

The Supreme Court upheld the validity of a real estate mortgage executed by a substitute agent. Spouses Villaluz granted a Special Power of Attorney to Paula Agbisit to mortgage their land as collateral. Agbisit then delegated this authority to Milflores Cooperative, which executed a P3,000,000 mortgage with Land Bank. When the cooperative defaulted and the property was foreclosed, the spouses challenged the validity of the delegation and mortgage. The Court applied the Civil Code presumption that agents may appoint substitutes unless prohibited, finding no such prohibition in the power of attorney. The Court rejected arguments that the mortgage lacked consideration, explaining that future loan proceeds can validly serve as consideration. The decision establishes important precedents on agency delegation and mortgage validity in Philippine civil law, emphasizing that principals must expressly prohibit sub-delegation to prevent it.