The Bank of the Philippine Islands, petitioners, vs.

Gabriela Andrea De Coster

Y Roxas, et al, respondents.

47 Phil 594. March 26, 1925

A power of attorney to loan money does not authorize the agent to make the
principal liable as a surety for the payment of the debt of a third person.

Facts:

Defendant Gabriela Andrea de Coster y Roxas executed a Special Power of Attorney in

favor of her husband. This authority gave Jean M. Poizat (agent husband) the power to loan and
borrow money in her behalf. The agent was able to obtain a loan from BPI, secured by a chattel
mortgage on the steamers of his company. Poizat Vegetable Oil Mills and a real mortgage over a
property, which is also subject to another mortgage in favor of La Orden de Dominicos.

Defendants defaulted on their obligations to BPI and La Order de Dominicos. Thus, both
creditors prayed for the foreclosure of the mortgaged properties. Thus, both creditors prayed for
the foreclosure of the mortgaged properties.

RTC declared the defendants in default for their failure to appear and ruled in favor of the
plaintiffs. De Coster alleges that she never had any knowledge of the actual facts until she ready
about her default in the newspapers, since she was not in the Philippines when the summons was
served; that her husband fled the country; that the mortgages executed by her agent was without
marital consent; and that he did not have any authority to make her liable as surety on the debt of
a third person – it being a personal debt of her husband and his company.

Issue:

Whether or not the principal-wife, Gabriela De Coster y Roxas, is liable for the mortgage
executed by her agent husband, Jean Poizat

Held:
 NO. Jean Poizat, husband, acted outside the scope of his authority. The note and mortgage
show upon their face at the time they were executed, the agent-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. Paragraph 5 of the Power of Attorney authorizes the agent-
husband for and in the name of his wife to “loan and borrow any sums of money or fungible things,
etc.” This is taken to mean that he had only the power to loan his wife’s money and to borrow
money for or on account of his wife as her agent and attorney-in-fact. It does not carry with it or
imply that he had the legal right to make his wife liable as a surety for the preexisting debt of a
third person. The powers and duties of Jean Poizat as agent of Gabriela are confined and limited
to those which are specified and defined his written power of attorney, which limitation is a notice
to, and is binding upon, the person dealing with such agent.