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    IV. LUSTAN Vs CA

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    phgmb
    This case involves a dispute over ownership of a parcel of land between Adoracion Lustan and Nicolas Parangan. Lustan leased the land to Parangan and later gave him special powers of attorney to take out loans using the land as collateral. Parangan took out additional loans beyond what was agreed, using the proceeds for himself. Lustan demanded return of the land title, but Parangan claimed ownership under a deed of definite sale. The court ruled that while the later loans were solely for Parangan's benefit, Lustan's property remained liable to the bank since she had given Parangan authority to take loans on her behalf through the special powers of attorney. The bank could not be prejudiced without proof

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    IV. LUSTAN Vs CA

    Uploaded by

    phgmb
    85 views1 page
    This case involves a dispute over ownership of a parcel of land between Adoracion Lustan and Nicolas Parangan. Lustan leased the land to Parangan and later gave him special powers of attorney to take out loans using the land as collateral. Parangan took out additional loans beyond what was agreed, using the proceeds for himself. Lustan demanded return of the land title, but Parangan claimed ownership under a deed of definite sale. The court ruled that while the later loans were solely for Parangan's benefit, Lustan's property remained liable to the bank since she had given Parangan authority to take loans on her behalf through the special powers of attorney. The bank could not be prejudiced without proof

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    IV. LUSTAN vs CA

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    This case involves a dispute over ownership of a parcel of land between Adoracion Lustan and Nicolas Parangan. Lustan leased the land to Parangan and later gave him special powers of attorney to take out loans using the land as collateral. Parangan took out additional loans beyond what was agreed, using the proceeds for himself. Lustan demanded return of the land title, but Parangan claimed ownership under a deed of definite sale. The court ruled that while the later loans were solely for Parangan's benefit, Lustan's property remained liable to the bank since she had given Parangan authority to take loans on her behalf through the special powers of attorney. The bank could not be prejudiced without proof

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    85 views1 page

    IV. LUSTAN Vs CA

    Uploaded by

    phgmb
    This case involves a dispute over ownership of a parcel of land between Adoracion Lustan and Nicolas Parangan. Lustan leased the land to Parangan and later gave him special powers of attorney to take out loans using the land as collateral. Parangan took out additional loans beyond what was agreed, using the proceeds for himself. Lustan demanded return of the land title, but Parangan claimed ownership under a deed of definite sale. The court ruled that while the later loans were solely for Parangan's benefit, Lustan's property remained liable to the bank since she had given Parangan authority to take loans on her behalf through the special powers of attorney. The bank could not be prejudiced without proof

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    LUSTAN vs CA

    Facts: Adoracion Lustan is the registered owner of a parcel of land otherwise known as Lot 8069 of the
    Cadastral Survey of Calinog, lloilo. Lustan leased the above described property to private respondent Nicolas
    Parangan for a term of 10 years and an annual rent of 1,000 Pesos. During the period of lease, Parangan was
    regularly extending loans in small amounts to Lustan to defray her daily expenses and to finance her
    daughter's education. Lustan 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. After some time, a second Special Power of Attorney was executed by Lustan, by virtue of which,
    Parangan was able to secure 4 additional loans, to wit: the sums of P24K, P38K, P38.6K and P25K
    respectively. The last three loans were without the knowledge of Lustan and all the proceeds therefrom
    were used by Parangan for his own benefit. These encumbrances were duly annotated on the
    certificate of title. Lustan signed a Deed of Pacto de Retro Sale in favor of Parangan which was
    superseded by the Deed of Definite Sale which Lustan 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, Lustan 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,
    Lustan conveyed the subject property and all the improvements thereon unto Parangan absolutely for and in
    consideration of the sum of P75K Pesos. Aggrieved, Lustan 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.

    Issue: Whether Lustan's property is liable to PNB for the loans contracted by Parangan by virtue of the SPA?

    Ruling: Yes. Third persons who are not parties to a loan may secure the latter by pledging or mortgaging their
    own property. So long as valid consent was given, the fact that the loans were solely for the benefit of
    Parangan would not invalidate the mortgage with respect to petitioner's property. In consenting thereto,
    even granting that petitioner may not be assuming personal liability for the debt, her property shall
    nevertheless secure and respond for the performance of the principal obligation.

    It is admitted that petitioner is the owner of the parcel of land mortgaged to PNB on five (5) occasions by
    virtue of the Special Powers of Attorney executed by petitioner in favor of Parangan. Petitioner argues that
    the last three mortgages were void for lack of authority. She totally failed to consider that said Special
    Powers of Attorney are a continuing one and absent a valid revocation duly furnished to the mortgagee, the
    same continues to have force and effect as against third persons who had no knowledge of such lack of
    authority. Article 1921 of the Civil Code provides:

    "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.

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