Philippine National Bank v. Estanislao Palma Gil

Summary

The Philippine National Bank sued to recover P26,760 from a promissory note and foreclose mortgages. The Supreme Court established important precedent on agency law and property rights, holding that contracts executed by agents within their authority bind the principal under Article 1727 of the Civil Code. While affirming liability for the promissory note and two properly executed mortgages where the agent clearly indicated his representative capacity, the Court invalidated a third mortgage executed by the agent in his personal capacity without proper authority indicators. The decision clarified that mere possession of property by an agent does not validate unauthorized personal contracts affecting the principal's property, and that formal requirements for agency representation in property transactions must be strictly observed.