G.R. No. L-13414; February 4, 1919
JUAN GARCIA Y PALICIO, plaintiff-appellee, vs. JOSEFA DE MANZANO, as administratrix of the estate of her husband Narciso Lopez Manzano, defendant-appellant.

FACTS:
Narciso Lopez Manzano, a merchant, died in Spain in 1913. Before his departure, he executed a general power of attorney in favor of his son, Angel L. Manzano. Narciso owned a half-interest in the steamer San Nicolas, with the other half owned by Ocejo, Perez & Co. After a partnership dispute, Juan Garcia purchased Ocejo, Perez & Co.’s half-interest in 1910. Later, in July 1911, Angel L. Manzano, acting under the power of attorney, sold his father’s remaining half-interest to Garcia. Due to Garcia’s Spanish nationality, the boat was registered in the name of his minor son, Agustin Garcia, who later died, leaving his parents as heirs.

On July 23, 1912, Angel L. Manzano, again acting under the power of attorney, executed a contract (Exhibit A) wherein Juan Garcia extended a P12,000 credit to Narciso L. Manzano, secured by a mortgage on three parcels of land. This mortgage was not registered. Narciso’s estate was settled, and the properties were partitioned among his heirs, including his widow Josefa de Manzano (the administratrix) and their children.

Garcia filed an action to foreclose the mortgage. The defendants (the heirs) filed an answer and a counterclaim, alleging that Angel L. Manzano had no authority to sell the half-interest in the steamer and seeking to recover half of the steamer’s profits. The trial court held there was no valid mortgage but rendered judgment against Josefa de Manzano individually for the admitted debt of P12,752.85, dismissing the counterclaim. Josefa de Manzano appealed.

ISSUE:
1. Whether the trial court exceeded its jurisdiction by rendering judgment against the heirs individually when the original action was against the administratrix.
2. Whether the trial court erred in finding a novation of the debt.
3. Whether Angel L. Manzano had authority under the power of attorney to sell the half-interest in the steamer San Nicolas.

RULING:
The Supreme Court modified the trial court’s decision.

1. On Jurisdiction and Parties: The trial court did not err in rendering judgment against the heirs individually. The procedural record showed that the defendants, through their pleadings, requested that the heirs be substituted as defendants in place of the administratrix after the estate’s partition. The amended complaint named the heirs individually, and they answered as such. The proceedings were conducted on the theory that the heirs were the proper parties, and thus the court had jurisdiction to rule against them individually.

2. On Novation and the Nature of the Debt: The Supreme Court found that the trial court erred in its application of the law regarding novation and the liability for the conjugal partnership debt. The Court held that the debt was an obligation of the conjugal partnership of Narciso L. Manzano and Josefa de Manzano. Upon Narciso’s death and the liquidation and partition of the conjugal property, the surviving spouse (Josefa) became liable for one-half of the conjugal debt out of her share of the partnership assets. The trial court’s judgment holding Josefa liable for the entire debt was incorrect.

3. On the Authority to Sell the Steamer: The general power of attorney granted to Angel L. Manzano was full and complete, authorizing him to sell real property, borrow money, and conduct business. The Supreme Court held that such a comprehensive power necessarily included the authority to sell a half-interest in a steamer, especially since the sale was necessary to obtain credit to continue the business for the principal’s benefit. Therefore, the sale was valid, and the counterclaim for recovery of the steamer or its profits was properly dismissed.

DISPOSITIVE PORTION:
The part of the trial court’s judgment ordering defendant Josefa Samson de Manzano to pay the plaintiff P12,752.85 was REVERSED and SET ASIDE. In line with the dissenting opinion (concurred with by the Court on this point), Josefa de Manzano was held liable to pay only one-half of the debt (P6,376.425) with legal interest from the filing of the amended complaint. The dismissal of the defendants’ counterclaim was AFFIRMED. No costs were awarded.