BPI V. DE COSTER

BPI V. DE COSTER G.R. No. L-23181

March 16, 1925

Note: A power of attorney “to loan and borrow money” and to mortgage the principal’s property does NOT carry with it or imply that the agent has a legal right to make the principal liable for the personal debts of the agent. FACTS: Defendant Gabriela Andrea de Coster y Roxas executed a Special Power of Attorney in favor of her husband. This authority gave Jean M. Poizat (agenthusband) the power to loan and borrow money in her behalf. The agent was able to obtain a loan from BPI, secured by a chattel mortgage on the steamers of his company, Poizat Vegetable Oil Mills and a real mortgage over a property, which is also subject to another mortgage in favor of La Orden de Dominicos. Defendants defaulted on their obligations to BPI and La Orden de Dominicos. Thus, both creditors prayed for the forclosure of the mortgaged properties. RTC declared the defendants in default for their failure to appear and ruled in favor of he plaintiffs. De Coster alleges that she never had any knowledge of the actual facts until she read about her default in the newspapers, since she was not in the Philippines when the summons were served; that her husband fled the country; that the mortgages executed by her agent husband was without marital consent; and that he did not have any authority to make her liable as surety on the debt of a third person—it being a personal debt of her husband and his company. ISSUE: W/N the principal-wife, Gabriela De Coster y Roxas, is liable for the mortgage executed by her agent husband, Jean Poizat HELD: NO. The note and mortgage show upon their face that at the time they were executed, the agent-husband was attorney-in-fact for the defendant wife, and the bank knew or should have known the nature and extent of his authority and the limitations upon his power. Par. 5 of the Power of Attorney authorizes the agent husband for and in the name of his wife to “loan or borrow any sums of money or fungible things, etc.” This is taken to mean that he only had the power to loan his wife’s money and to borrow money for or on account of his wife as her agent and attorney-in-fact. It does not carry with it or imply that he had the legal right to make his wife liable as a surety for the preexisting debt of a third person.

It is fundamental rule of construction that where in an instrument powers and duties are specified and defined, that all of such powers and duties are limited and confined to those which are specified and defined, and that all other powers and duties are excluded. The fact that the agent-husband failed and neglected to perform his duties and to represent the interests of his principal is NOT a bar to the principal obtaining legal relief for the negligence of her agent. It is apparent from the face of the instrument that the whole purpose and intent of the power of attorney was to empower and authorize the agent-husband to look after and protect the interests of the wife and for her and in her name to transact any and all of her business. But nowhere does it provide or authorize him to make her liable as a surety for the payment of the preexisting debt of a third person. Thus, the agent-husband does not have the authority to sign the note and to execute the mortgage for and on behalf of the wife as her act and deed, and that as to her the note is void for want of power of her husband to execute it.