THE BANK OF THE PHILIPPINE ISLANDS, plaintiff-appellee, vs.

GABRIELA ANDRES DE COSTER Y ROXAS ET AL,

defendants, LA ORDEN DE DOMINICOS or PP. PREDICADORES DE LA PROVINCIA DEL SANTISIMO ROSARIO,
defendants and appellees; GABRIELA ANDRE DE COSTER Y ROXAS, defendant-appellant
BPI v. De Coster / 47 Phil 594 (March 16, 1925)
Johns, J. / kam

SUBJECT MATTER: Classifications of agency contracts > Mortgage

CASE SUMMARY: While the wife (Gabriela de Coster) is residing in Paris, France, her husband (Jean Poizat) executed a
promissory note for a loan and a real mortgage on her behalf, making her liable jointly and severally along with her husband
and his firm, by virtue of a power of attorney that she left with her husband. This note and mortgage are in favor of BPI and the
lower court ruled that the defendants are liable to BPI. Wife returned to the Philippines to question the validity of the service of
the summons (since she has been residing in Paris for 16 years now), the validity of the promissory note, and the validity of the
real mortgage. The lower court denied the wifes motion to reopen the case.

The note which binds the wife and upon which the mortgage was executed was found to be for a preexisting debt of the
husband and of his firm. The wife was not a party to this original debt and the power of attorney does not authorize the
husband to make the wife liable as a surety to the debt of a third person. The note was found by the Court to be void as to the
wife. The mortgage that was given for the sole purpose of securing that note follows the note, and was found to be void as well,
as to the wife. The case was REMANDED to the lower court for further proceedings.

DOCTRINES:
o It is a 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. (In relation to the power of attorney of executed by Gabriela)
o The fact that an agent 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, provided that the application for such a relief
is duly and properly made under the provisions of section 113 (Code of Civil Procedure).
o (Ako lang nag-infer nito) When the note which a real mortgage is supposed to secure is found to be VOID as to the
principal (meaning the agent had no power to execute the note on the principals behalf), then it follows that the
mortgage is also VOID as to the principal.

FACTS:
Jean M. Poizat and wife Gabriela (with Jean acting as her agent) borrowed P292,000 from BPI, payable one year after
date of borrowing (Dec 29, 1921) with 9 percent interest per annum.
A promissory note1 was made for this loan, indicating that the defendants are liable jointly and severally and that in
the event of a suit or action, defendants shall pay an additional P10,000 as attorneys fees.
To secure payment thereof:
1. A chattel mortgage was executed by defendants Jean M. Poizat & J.M. Poizat & Co. (a partnership) on the
steamers Roger Poizat and Gabrielle Poizat (these belong to Poizat Vegetable Oil Mills)
2. Gabriela (w/ consent & permission of husband and her husband acting as her agent IMPT!) delivered to BPI
a mortgage on certain real property in the City of Manila (same property was subject to a prior mortgage in favor
of La Orden de Dominicos hence it is made a party defendant)
CFI: The note being long past due and owing, plaintiff brought an action against defendants and CFI ruled against
Gabriela, her husband Jean Poizat, and J.M. Poizat & Co., who are jointly and severally liable to BPI for P292,000 w/
interest, P10,000 attorneys fees, and P2,500 for insurance of steamer Gabrielle Poizat w/ interest on that amount from
Feb 9, 1924.
o Defendants have not paid the judgment or any part thereof.
o BPI prayed for the sheriff to possess and sell the steamers and asked the court for the real property to be sold
according to law; the proceeds of both be applied to the sum owed to BPI.
o The religious corporation La Orden de Dominicos then appeared in the suit and filed a plea for the credit
(P125,000 principal + P27,954.34 interest) to them against the spouses De Coster & Poizat be taken into
account when the second mortgage is closed.
May 3, 1924 - Upon plaintiffs motion, Gabriela, Jean Poizat, and J.M. Poizat & Co. were declared in default for
failure to appear or answer.
June 4, 1924 W/o giving notice to defendants, the lower court ruled in favor of BPI and La Orden de Dominicos and
ordered the sale of the properties.

1
The promissory note was said to be made by Gabriela with the consent of her husband (and said husband acting as Gabrielas agent). No mention of the
partnership J.M. Poizat & Co. at this part of the case yet.
 August 26, 1924 Gabriela filed a motion stating that she has been residing in Paris from 1908 to April 30, 1924
(#ItsAWow); that she was absent from the Philippines when the summons was served to her husband and through her
husbands malicious negligence, default was taken against her. She had no idea about the facts until the judgment
against her was published in the local newspapers in July 1924. She was unable to obtain rendition of the facts
because her husband had gone to Hongkong and had left Hongkong for Singapore under a false name and she is now
clueless about her husbands whereabouts.
o She came into possession of documents showing the illegality of the notes and the mortgage.
o Mortgage with Dominican Fathers Mortgage for debt of third person made without the marital consent of
the wife; husband did not have the authority to make her liable for a surety on the debt of a third person.
o Notes to BPI:
1. It does not represent any money paid to the defendant by the bank.
2. It is exclusively the personal debt of Jean Poizat and J.M. Poizat & Co.
3. It was executed by her husband because the bank asked for more security on the debt.
4. It was executed by her husband in excess of the powers given to him under his power of attorney.
5. It was the result of a collusion between BPI and Jean Poizat for the purpose of making her liable for the
obligation of a third person.
o Mortgage with BPI:
1. It was executed to secure a void obligation.
2. Does not guarantee any loan made to Gabriela.
3. Executed without the express marital consent which the law requires.
4. Executed through collusion.
Gabriela prayed for the annulment of the judgment and for the case to be reopened so she can file her answer. She
prayed for the case to be tried on its merit and that a final judgment absolving her from all liability be rendered.
Motion by Gabriela was DENIED. MR was DENIED as well. Hence, this petition.

ISSUES (HOLDING):
1. WON the summons for Gabriela served to her husband was valid? (NO)
2. WON the husband was authorized (by virtue of his POA) and empowered to sign the bank note for and on behalf of
his wife? (NO because wife was not a party to the preexisting debt of husband to BPI)
3. WON the husband was authorized to sign the mortgage with BPI for and on behalf of his wife? (NO because the
note upon which the mortgage was supposed to secure is VOID as to the wife; making the mortgage void as well.)

RATIO DECIDENDI:
1. Paragraph 6 of Section 396 of the Code of Civil Procedure provides:
In all other cases, to the defendant personally, or by leaving a copy at his usual place of residence, in the hands of
some person resident therein of sufficient discretion to receive the same. xxx

The sheriff admitted that the summons for Gabriela was given to her husband, Mr. J. M. Poizat, at her usual place of
residence in the City of Manila on March 13, 1924. If this were the case of the wife being in Paris on a pleasure or a
business trip, then her residence would have continued to be that of her husband. This is not the case here.

Upon the admitted facts, the Court is clearly of the opinion that the residence of the husband was not the usual place
of residence of the wife. Giving full force and effect to the legal presumption that the usual place of residence of the
wife is that of her husband, that presumption is overcome by the admitted fact that the wife was "residing in the City
of Paris, France, since the year 1908 up to April 30, 1924." Without placing a limitation upon the length of time
sufficient to overcome the legal presumption, suffice it to say that sixteen years is amply sufficient.

It follows that the substituted service (of summons) attempted to be made is NULL and VOID and by such service, the
court never acquired jurisdiction of the person of the defendant wife.

(AGENCY-RELATED) The plaintiff contends that under his power of attorney, the husband was the general agent of
the wife with authority to accept service of process for her and in her name, and that by reason of the fact that the
husband was duly served and he neglected to appear or reply, his actions and conduct were binding on the defendant
wife. But there is nothing in the record tending to show that the husband accepted service of any process for or on
account of his wife or as her agent, or that he was acting on her behalf in his failure and neglect to appear or answer.

2. On August 25, 1903, Gabriela gave her husband a power of attorney, which gives him the following powers:
5. Loan or borrow any sums of money or fungible things xxxx and making all these transactions with or without
mortgages, pledges or personal guaranty.
 Jean Poizat did sign a promissory note on behalf of his wife in Dec 1921 and a real mortgage afterward, also as his
wifes attorney in fact. But facts show that Jean owed BPI P290,050.02 prior to July 1921 and thereafter his debt to
BPI was converted into 6 promissory notes aggregating to P308,458.58 of which P16,180 were paid; thus the balance
of P292,278.58. What happened in Dec 1921 is that these 6 promissory notes were cancelled and substituted by a joint
and several note signed by Jean in his personal capacity, as an agent of his wife, and as a member of the firm J.M.
Poizat & Co.

Under the power of attorney, the husband had no authority for and on behalf of the wife to execute a joint and several
note or to make her liable as an accommodation maker. The debt in question was a preexisting debt of her husband
and of the firm of which she was not a party and she was not obliged to pay. No new or additional money was lent
when the note (of which wife is already a party) was signed in Dec 1921. (It would be a different story had it been an
actual loan and not a preexisting debt at the time that the note was executed in Dec 1921.) There is nothing in the
power of attorney which gives the husband the authority to make his wife liable as a surety for the payment of the
preexisting debt of a third person.

3. The real mortgage to the bank was given to secure the note in question and was not given for any other purpose. The
note being void as to the wife, it follows that as to her the real mortgage to the bank is also void for want of power to
execute it.

Before the motion was filed, there were certain negotiations done between the wifes camp (and her lawyer) and BPI. BPI now
claims that the wife is estopped to deny her liability due to some evidence and admissions on the part of her attorney during
such negotiations. It was found by the court that the wife and her lawyer did not have the complete information at the time of
the negotiations and such negotiations were in the nature of a compromise which was rejected by the bank already.

It was also found by the Court that there is no claim that the debt in question was on account of the usual daily expenses of the
family as provided for Art. 1362 of the CC. Neither is there any evidence to show that the wife was legally liable to pay for
the original debt evidenced by the note in question.

This decision as to the bank on this motion is based on the assumption that the facts are true as set forth and alleged in the
petition to set aside and vacate the judgment as to the wife, but the Court is not making any finding as to the actual truth of
such facts. That remains for the defendant wife to prove such alleged facts when the case is tried on its merits.

DISPOSITIVE:
1. Lower courts opinion in refusing to set aside and vacate the judgment for BPI against Gabriela is REVERSED; such
judgment is set aside and REMANDED to the lower court for further proceedings.
2. Judgment of lower court in favor of La Orden de Dominicos is REVERSED, without prejudice to its right to file an
original suit to foreclose its mortgage or to file a good and sufficient plea as intervenor in the instant suit.

Villamor, J., concurring and dissenting:

- He agrees that the lower courts judgment should be set aside so that Gabriela would be given the opportunity to
appear and to defend herself.
- But he does not agree with the attempts of the majority to decide on certain features of the case raised by defendant-
appellant (Gabriela), without waiting for the outcome of the new trial wherein the other parties will have the
opportunity to present their defenses against the facts alleged by appellant. (TAMA TO DAMING SINABI NG
COURT EH)
- The merits of the question should not now be discussed without giving the trial court an opportunity to pass upon the
allegations and evidence of the parties.