G.R. Nos. 25642 and 25643, November 12, 1926
BANK OF THE PHILIPPINE ISLANDS, plaintiff-appellant, vs. GABRIELA ANDREA DE COSTER Y ROXAS ET AL., defendants. GABRIELA ANDREA DE COSTER Y ROXAS, appellee.

FACTS

The Bank of the Philippine Islands (BPI) filed a complaint to recover a loan of P292,000 evidenced by a promissory note executed by Jean M. Poizat (J. M. Poizat), the husband of defendant Gabriela Andrea de Coster y Roxas (De Coster). The note was secured by a chattel mortgage on certain steamers and a real mortgage on property owned by De Coster. Poizat signed the note and mortgages as the “attorney-in-fact” of De Coster, acting under a general power of attorney (Exhibit D) she had granted him. De Coster initially defaulted, and a judgment was rendered against her. Upon securing leave to file an answer, she defended on the ground that the power of attorney did not authorize her husband to borrow money or mortgage her property for the benefit of his own business (J. M. Poizat & Co., a partnership in which they were both partners), and that she received no direct benefit from the loan, the proceeds of which were used to pay the partnership’s debts. The trial court ruled in favor of De Coster, absolving her from liability. BPI appealed. During the appeal, BPI also filed a motion for new trial based on a newly discovered “deed of trust” executed by De Coster and her husband, which it claimed ratified the contested obligations.

ISSUES:
1. Whether the motion for new trial based on newly discovered evidence should be granted.
2. Whether the general power of attorney granted by De Coster to her husband authorized him to execute the promissory note and mortgages for the benefit of their partnership.
3. Whether De Coster is liable to BPI on the promissory note.

RULING

1. On the Motion for New Trial: DENIED. The Court denied BPI’s motion. The alleged newly discovered “deed of trust” was in the bank’s possession since 1924, before De Coster even filed her motion to set aside the default judgment. The bank’s failure to locate it earlier was due to its own negligence in record-keeping. Furthermore, the document appeared to be part of an unaccepted offer of compromise and was thus inadmissible as evidence.

2. On the Validity of the Acts under the Power of Attorney: The acts were UNAUTHORIZED and NULL as to De Coster. The Court, through the majority opinion, held that the general power of attorney (Exhibit D) did not grant Poizat the authority to borrow money or mortgage his wife’s property for the benefit of their partnership. The power must be strictly construed. The specific clauses relied upon by the bank (e.g., “to sign, indorse, and deliver checks, bills of exchange, promissory notes, and other obligations”) were intended for use in the ordinary course of managing her separate estate, not for creating new, substantial obligations for the benefit of the agent’s own commercial enterprise. An agent cannot use a general power to lend the principal’s credit to a partnership in which the agent is interested, unless such authority is expressly and clearly granted. Since the loan primarily benefited the partnership (J. M. Poizat & Co.), not De Coster individually, the act was beyond the scope of the power and void as to her.

3. On De Coster’s Liability: NONE. Consequently, since the execution of the note and mortgages was an unauthorized act not binding on De Coster, she incurred no liability to the bank. The trial court’s judgment absolving her was affirmed.

DISSENTING OPINION (by Justice Malcolm, joined by Justice Villamor):
The dissent argued that the general power of attorney was broad enough to cover the transaction. It emphasized that the partnership (J. M. Poizat & Co.) was a conjugal partnership venture, and therefore any benefit to it was a direct benefit to De Coster as a co-owner of the conjugal assets. The dissent viewed the bank as a creditor in good faith that advanced money relying on the power of attorney, and the principal (De Coster) should bear the consequences of granting such broad authority to her husband.