G.R. No. L-439, November 11, 1901
GERMANN & CO., plaintiff-appellee, vs. DONALDSON, SIM & CO., defendants-appellants.

FACTS:
The plaintiff, Germann & Co., filed an action to recover a sum for freight under a charter party. The suit was initiated by an attorney acting under a power of substitution executed in Manila on October 27, 1900, by Fernando Kammerzell. This substituted power was based on an original power of attorney executed in Berlin, Germany, on February 5, 1900, by Max Leonard Tornow, the sole owner of Germann & Co. The original power was not authenticated as a public instrument under Philippine law but was executed with the formalities required by German law. Both Tornow and Kammerzell are German citizens. The defendants challenged the legal personality of the plaintiff’s attorney, arguing that the original power was invalid for not being in a public instrument as required by the Civil Code and that it did not expressly authorize Kammerzell to institute lawsuits.

ISSUE:
1. Whether the original power of attorney executed in Germany must comply with the formalities of a public instrument under Philippine law to be valid.
2. Whether the terms of the original power of attorney granted Kammerzell the express authority to institute the present lawsuit for collection.

RULING:
1. On the formal validity of the power: The Court held that the formal validity of a contract, including a power of attorney, is governed by the laws of the country where it is executed, pursuant to Article 11 of the Civil Code. Since the original power was executed in Germany in accordance with German law, its formal validity was upheld. The requirement for a public instrument under Article 1280(5) of the Civil Code was not applicable to an instrument executed abroad.
2. On the scope of authority granted: The Court ruled that the original power of attorney expressly authorized the institution of the lawsuit. The instrument appointed Kammerzell as manager of the Manila branch with broad powers to conduct the business, including the authority to “exact the payment [of sums of money] by legal means.” This clause was interpreted to mean the power to sue for the recovery of debts. Furthermore, the Court found that such a suit to collect a claim arising in the ordinary course of business was an act of administration, not a strict act of ownership requiring special express authority under Article 1713 of the Civil Code. Even assuming the applicability of that article, the express grant of power to use “legal means” for collection was sufficient.
The incident of want of personality was dismissed, and the authority of the plaintiff’s attorney was sustained.