BPI v.

De Coster
G.R. No. L-23181 March 16, 1925 J. Johns
petitioners BPI
respondents Gabriela Andrea de Coster y Roxas and La Orden de Dominicos or PP. Predicadores de la
Provincia del Santisimo Rosario
summary Wife issued power of atty to husband. Husband then signed promissory note w/ bank and
executed chattel and real estate mortgages in banks favor. Note became due and unpaid so
bank filed action. CFI ruled in banks favor. Spouses did not pay judgment so bank went to
court again asking for foreclosure of property mortgaged and auction to settle debt. Wife
assailed that husband had no authority to make her liable as surety on the debt of a third
person and that debt was exclusively made by husband and his firm. SC agreed w/ wife. No
provision in the said doc which authorized or empowered husband to make his wife liable as a
surety for a preexisting debt. 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.

facts of the case

Gabriela issued a power of attorney in favor of husband Jean Poizat, authorizing him, in her behalf, to:
o loan or borrow any sums of money or fungible things, etc.(par.5);
o enter into any kind of contracts whether civil or mercantile, giving due form thereof either by private
documents or public deeds, etc." (par.6);
o draw, endorse, accept, issue and negotiate any drafts, bills of exchange, letters of credit, letters of payment,
bills, vales, promissory notes, etc." (par.7);
o institute, prosecute and defend all actions or proceedings in a court of justice, including "accepting notices and
summons" (par.8).
Using this power of attorney, Jean made to BPI a promissory note for P292K and to secure the payment thereof, he and
his company J. M. Poizat and Co. executed a chattel mortgage in the banks favor on the steamers Roger
Poizat and Gabrielle Poizat, with the machinery and materials belonging to the Poizat Vegetable Oil Mills and certain
merchandise, as well as real estate mortgage on certain property in Manila (Said real property, however, was subject to
a prior mortgage in favor of La Orden de Dominicos).
The note was long past due and remained unpaid, which led BPI to bring an action against the spouses and the
company w/ CFI Manila. CFI rendered judgment in favor of BPI, ordering spouses to pay debt due + attys fees +
insurance on steamer w/ interest.
Spouses have not paid the judgment or any part thereof. BPI plaintiff now prayed for court order to direct the sheriff to
take immediate possession of the property and sell the same according to the Chattel Mortgage Law.
La Orden de Dominicos appeared in the suit and also filed plea praying for the payment of spouses credit on the
subject real estate mortgage once the second mortgage (w/ BPI) is foreclosed (not so important)
On BPIs motion, for failure to appear or answer, spouses were declared in default.
CFI granted both BPIs and La Orden Dominicos prayers (foreclosure + auction and payment)
Gabriela filed a motion assailing the ff.: she had no knowledge of the facts of the case as she has been residing in Paris
for 16 years prior her return; the first mortgage w/ La Orden Dominicos was executed without her consent; Jean did not
have any authority to make her liable as surety on the debt of a third person; note due to BPI is exclusively the personal
debt of Jean and his company; note was executed by Jean in excess of the powers given to him under his power of
attorney. This motion and subsequent MR dismissed.

issue
(related to Agency topic) WoN husband Jean, as agent/attorney-in-fact armed with a power of attorney, was authorized to
make wife Gabriela liable as a surety for the preexisting debt of a third person - NO

ratio
Under the power of attorney, Jean had no authority for and on behalf of the wife, Gabriela, 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 J.M. Poizat and Co., to which she was not a party, and for which she was under no legal obligation to
pay. She never borrowed any money from the bank, and that previous to the signing of the note, she never had any

1
dealings with the bank and was not indebted to the bank in any amount. The old, original debts of her husband and J.M.
Poizat and Co. to the bank, to which she was not a party, were all taken up and merged in the new note in question.
The note and mortgage in question show upon their face that at the time they were executed, the 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.
It is very apparent from the face of the instrument that the whole purpose and intent of the power of attorney was to
empower and authorize the 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. It will be noted that there is no provision in the said document which authorizes or
empowers him to sign anything or to do anything which would make his wife liable as a surety for a preexisting debt.
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.
Hence, it follows that the husband was not authorized or empowered to sign the note in question 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.
The same thing is true as to the real mortgage to the bank. It was given to secure the note in question and was not
given for any other purpose. The real property described in the mortgage to the bank was and is the property of the wife.
The note being void as to her, it follows that as to her the real mortgage to the bank is also void for want of power to
execute it.