G.R. No. L-24765; August 29, 1969
PHILIPPINE NATIONAL BANK, plaintiff-appellee, vs. MAXIMO STA. MARIA, ET AL., defendant, VALERIANA, EMETERIA, TEOFILO, QUINTIN, ROSARIO and LEONILA, all surnamed STA. MARIA, defendants-appellants.

FACTS

The Philippine National Bank (PNB) filed an action for collection of unpaid balances on two agricultural sugar crop loans obtained by defendant Maximo Sta. Maria. Maximo applied for these loans using a special power of attorney (Exh. E) executed in his favor by his six siblings (Valeriana, Emeteria, Teofilo, Quintin, Rosario, and Leonila). This power authorized him “to mortgage, or convey as security” their undivided shares in a parcel of land they co-owned. Separately, Valeriana executed another special power of attorney (Exh. E-1) expressly authorizing Maximo “to borrow money and … execute … promissory notes.” As security for the loans, Maximo executed chattel mortgages on standing crops in his own name, backed by surety bonds. The trial court held Maximo, his six siblings, and the surety company jointly and severally liable for the loan balances. Maximo and the surety did not appeal. The six siblings appealed, contending that the special power of attorney (Exh. E) only authorized Maximo to mortgage their property, not to borrow money on their behalf, and thus their liability should not extend beyond the value of the mortgaged property.

ISSUE

Whether the defendants-appellants (except Valeriana), who granted a special power of attorney limited to mortgaging real estate, are personally liable for the loan obligations contracted by the attorney-in-fact (Maximo Sta. Maria).

RULING

No. The Supreme Court reversed the trial court’s judgment against appellants Emeteria, Teofilo, Quintin, Rosario, and Leonila. The special power of attorney (Exh. E) granted only the authority to mortgage their property. It did not grant authority to contract loans in their names. Following the rule that a specified power of attorney is confined to what is expressly stated, the Court held that an authority to mortgage does not include the authority to contract the principal obligation. Therefore, these appellants cannot be held personally liable for the loans. Their liability is limited to their shares in the mortgaged property, which may be foreclosed to answer for the debt. However, the Court modified the judgment against Valeriana. Since she executed a separate power (Exh. E-1) expressly authorizing Maximo to borrow money, she is personally liable for the loans, but her liability is joint, not solidary, with Maximo, as the obligation did not expressly stipulate solidarity. The award of attorney’s fees was also reduced.