Short answer. No. Under Article 1879 of the Civil Code, a special power to sell expressly excludes the power to mortgage. If your power of attorney authorizes only a sale, your agent cannot use that authority to mortgage the property. Any mortgage he makes without a specific mortgage power is unauthorized.
What the law says
A special power to sell excludes the power to mortgage;
Civil Code, Article 1879 — Sell vs. Mortgage. Read the full provision →
Selling and mortgaging are legally separate
Article 1879 of the Civil Code states clearly: a special power to sell excludes the power to mortgage. These are not two versions of the same act. A sale transfers ownership permanently — the seller walks away with the purchase price and the buyer takes the title. A mortgage is a security arrangement — the owner retains title and can redeem the property by paying the debt. Because they have fundamentally different legal and practical effects, the law treats authority over them as distinct. You cannot derive one from the other.
Why the law excludes mortgage from a power to sell
The Civil Code's rule reflects a policy of strict construction for agency powers over property. An agent is authorized to do precisely what the principal grants — nothing more. The law is especially strict with powers of disposition because the consequences for the principal can be severe and difficult to reverse. An owner who authorizes a sale did so for a specific purpose: to complete a transaction. If the agent could also mortgage the property on the side, the owner's property becomes collateral for debts the owner never agreed to create. Article 1879 prevents that by treating the sale power as exclusive of — and not inclusive of — mortgage authority.
What the agent can and cannot do
With a special power to sell, your agent can: negotiate the terms of a sale, receive the purchase price on your behalf, sign the deed of absolute sale, and deliver the property to the buyer — all within the scope of the authority you granted. Your agent cannot: mortgage the property to a bank or any other lender, pledge it as collateral, encumber it in any way not contemplated by the sale, or take any action that would create a lien or financial burden on the title. Any mortgage he creates without a specific power to do so is made without authority and does not bind you.
If your agent has already mortgaged the property
If you discover that your agent has mortgaged your property using only a power to sell, you have grounds to challenge the mortgage as unauthorized. An act done beyond the scope of an agent's authority generally does not bind the principal unless the principal ratifies it — expressly or by conduct. The lender who accepted the mortgage may bear some risk if they failed to verify the agent's authority to encumber the property. A lawyer can help you assess the options for having an unauthorized mortgage declared unenforceable and what steps are needed to clear the title.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- Luzviminda Palo vs. Spouses Rey C. Baquirquir, G.R. No. 228919, August 23, 2023 — read the decision on LawPhil →
- Spouses Benito Baysa and Victoria Baysa vs. Spouses Fidel Plantilla and Susan Plantilla, etc, G.R. No. 159271, July 13, 2015 — read the decision on LawPhil →