Art. 1878
B.H. Macke, et al. v. Camps
FACTS: Camps, the owner of the Washington
Café, left Mr. Flores in charge as managing agent
of the Café. Asmanager, Flores purchased goods
for the Café from Macke, et al. Is Camps liable for
the purchase price of the goods.
HELD: Yes. Flores, as managing agent of the
Washington Café, had authority to buy such
reasonable quantities of supplies as might from
time to time be necessary in carrying on the
business of the Café. Scope of Authority to
Purchase:
Where an agent’s power to purchase is general
and unrestricted, he has implied authority to do
whatever is usual and necessary in the exercise
of such power. He may determine the usual and
necessary details of the contract, agree upon the
price, modify or rescind the contract of
purchase, accept delivery for his principal, give
directions for the delivery of the property
purchased, and may borrow money to pay for
the care and preservation of the property
purchased (Art. 1878, par. 7); but he has NO
special power to settle a contest between his
principal and a third person as to the ownership
of the goods purchased, or to agree to an
account stated, or to do anything not usual and
necessary to the exercise of such authority.
Where the agency is a special one, or is restricted
to purchases upon certain terms and conditions,
the agent has no authority to purchase upon
different terms and conditions from those
authorized or to modify or rescind a contract of
purchase made by the principal.
Director of Public Works v. Sing Juco, et al.
53 Phil. 205
FACTS: Tan Ong Sze gave a power of attorney to
Mariano de la Rama to sell or to lease her
property and generally “to perform and execute
all and every lawful and reasonable act as fully
and effectually as I might or could do if
personally present.” With the authorization,
Rama signed in behalf of his principal a security
bond in favor of the government in connection
with the purchase of certain materials dredged
from a fish pond. When the buyer failed to pay
suit was instituted against Tan Ong Sze on the
strength of the contract of suretyship (security
bond). Tan contended that she was NOT bound
by such contract.
HELD: Tan is NOT bound, for the power of
attorney given De la Rama did not authorize him
to create an obligation in the nature of surety
binding on his principal. The power to execute a
contract of so exceptional a nature as a contract
of suretyship or guaranty cannot be inferred
from the general words contained in Rama’s
power of attorney.
Bank of the Phil. Islands v. De Coster
FACTS: A businesswoman authorized her
husband to “loan or borrow any sum of money
or fungible things at the rate of interest and for
the time and under the conditions which he
might deem convenient.” Later the husband
mortgaged his wife’s property as security for HIS
own personal debt. Was he authorized to do so?
HELD: No, for it is evident from the face of the
instrument that the whole purpose of the power
of attorney was to authorize the husband to look
after the interest of his wife and the business,
and not for his own interest.
Art. 1879 agree to enter into a mortgage contract without
that stipulation intended for its protection.
Bicol Savings and Loan Association v. CA, et al.

GR 85302, Mar. 31, 1989

The pivotal issue is the validity of the

extrajudicial foreclosure sale of the mortgaged
property instituted by petitioner bank which, in
turn, hinges on whether or not the agent-son
exceeded the scope of his authority in agreeing
to a stipulation in the mortgage deed that
petitioner bank could extrajudicially foreclose
the mortgaged property.

The sale proscribed by a special power to

mortgage under Art. 1879 is a voluntary and
independent contract, and not an auction sale
resulting from extrajudicial foreclosure, which is
precipitated by the default of a mortgagor.
Absent that default, no foreclosure results. The
stipulation granting an authority to
extrajudicially foreclose a mortgage is an
ancillary stipulation supported by the same
cause or consideration for the mortgage and
forms an essential or inseparable part of that
bilateral agreement. The power to foreclose is
not an ordinary agency that contemplates
exclusively the representation of the principal by
the agent but is primarily an authority conferred
upon the mortgagee for the latter’s own
protection. That power survives the death of the
mortgagor. In fact, the right of the mortgagee
bank to extrajudicially foreclose the mortgage
after the death of the mortgagor, acting through
his attorney-in-fact, did not depend on the
authorization in the deed of mortgage executed
by the latter.

It matters not that the authority to extrajudicially

foreclose was granted by an attorney-in-fact and
not by the mortgagor personally.

The stipulation in that regard, although ancillary,

forms an essential part of the mortgage contract
and is inseparable therefrom. No creditor will