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[BANK OF PHILIPPINE ISLANDS v. GABRIELA ANDREA DE COSTER Y ROXAS ET AL.](https://lawyerly.ph/juris/view/c131f?user=fbGU2WFpmaitMVEVGZ2lBVW5xZ2RVdz09)
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49 Phil. 574

[ G.R. Nos. 25642 and 25643, November 12, 1926 ]

THE BANK OF THE PHILIPPINE ISLANDS, PLAINTIFF AND APPELLANT, VS. GABRIELA ANDREA DE COSTER Y ROXAS ET AL., DEFENDANTS. GABRIELA ANDREA DE COSTER Y ROXAS, APPELLEE.

D E C I S I O N

JOHNS, J.:

STATEMENT

The original complaint in  this case was filed on March 10,  1924,  to recover P292,000 evidenced by  a promissory note dated December 29, 1921, payable one year after date, with  interest  at 9 per  cent  per annum.  The note  was secured by a chattel mortgage on the steamers Roger Poizat and Gabrielle Poizat, with the machinery and materials and certain merchandise belonging to the Poizat Vegetable Oil Mills.  Also a certain real  mortgage on property in the City of Manila then subject to a  prior mortgage in favor of the Dominican Fathers, which was  made a party defendant.  The mortgages in question  were executed and acknowledged  on the  date of the note.

April  24, 1924, the  Dominican Fathers  appeared and asked to have it mortgage foreclose.   In that action Gabriela Andrea de Coster y Roxas and her husband, J. M. Poizat,  were made defendants, and  on  May 3, 1924, they were  declared in default,  and  judgment  was  rendered against them for want of an answer.

For the first time,  and on August  26, 1924, Gabriela Andrea de Coster y Roxas, to whom we will hereafter refer as the appellee, personally appeared and filed a motion, setting  out  certain alleged facts in which  she  asked to have  the default and judgment against her  set aside and vacated, with a right to appear and defend the cause of action alleged in the complaint  on  the merits.  Her motion was denied by the  lower court, and on appeal,  this court reversed that decision, with leave for her to file an answer, and to have the case tried on  its merits, and for such and further proceedings as are not inconsistent with the opinion of this court.   On that appeal, the  case  was known here as G. R. No.  23181,  and the decision,  which was the majority  opinion,  was promulgated on March 16, 1925.[1]

Upon the return  of  the case to the lower court, the appellee here then filed her answer, to  which the plaintiff filed a further and separate  defense,  in which it was alleged that the appellee and  her attorney, Mr.  Antonio M.  Opisso, ratified and confirmed the execution  by J. M. Poizat, as the  agent of the  appellee in the execution,  of the note and mortgages sued on in this case, and that they recognized  the obligations  arising therefrom, and  that  said ratification, confirmation and acknowledgment were made by  the appellee and her attorney with  full  and accurate knowledge of the facts which gave rise  to the execution of the note and mortgages and the rendition of the judgment. To  such allegations, the  appellee made  a general and  specific denial.

A trial was then had in  the lower court based  upon the issues  made in the original and  amended complaint, the answer filed by the appellee, and plaintiff's  further  and separate  defense to such answer,  and the  appellee's reply thereto, and the lower court rendered  judgment in favor of the appellee, and absolved her from  all  liability arising from, or  growing out of, the note and mortgages  in question.

From that decision, the plaintiff made and perfected its appeal, and assigns the following  errors:
"I. The trial court erred in declaring that the defendant and  her  counsel,  Antonio  M.  Opisso,  did not have  full knowledge  of  facts when they ratified and confirmed the promissory note and mortgage here involved.

"II The trial court erred in declaring that the promissory note here involved does  not evidence a loan to the defendant.

"III. The trial  court  erred in declaring  that the power of attorney, Exhibit D, does  not authorize the  agent to lend his  principal's credit to a  partnership  wherein  both principal and  agent are equally interested.

"IV. The trial  court erred  in declaring null  and  void as to the defendant Gabriela  Andrea de Coster y Roxas the promissory note and mortgage executed in  favor of the plaintiff bank"

JOHNS, J.:

After  plaintiff's appeal was perfected,  and on August 31, 1926, the  plaintiff,  as appellant,  filed  a motion for a new trial in this court upon the ground of  newly discovered evidence based upon a written instrument executed and acknowledge on May  27,  1924, by Jean M. Poizat and Gabriela Andrea de Coster y Roxas, and acknowledged before A, M. Opisso, notary public, a copy of which is attached to, and made a part of, the motion.   To the granting of this motion,  objection was made by the appellee, because it  does not comply with the provisions of section 497 of the Code  of Civil  Procedure, first;  second, because the  evidence  offered is  not  newly  discovered  evidence; third, the  document is inadmissible under section 346 of the Code of Civil Procedure,  (a)  Because it clearly shows upon its face that it is an offer of compromise, and (&) That the document was made at the instance of the then president of the  bank as a condition precedent to the  negotiations of the  compromise,  and (c) For the reason that the  compromise  offer  was not  accepted.  Any admission made therein could not be used  to  the prejudice of  the appellee, and (d) That at the  time of  its execution,  the appellee  was misled and  deceived as to conditions  existing, and did  not have any knowledge of the actual facts; and, fourth, that she did not have any knowledge of the "facts and circumstances  under which the mortgages and note were executed."

We  will decide  this motion  first.

It appears  upon  the face of her original petition filed in the lower court on August 26, 1924, by the appellee, that she prayed for  leave to vacate the judgment and to appear and defend upon the alleged ground that she was not legally liable for either  the note or the mortgages given to secure it, and that she was not bound by the acts of her husband  in the making of the note or the execution  of the mortgages,  and that it was not her act and deed.

It will be noted  that the original complaint was filed on March 10, 1924; that the instrument in which the plaintiff now relies for a new trial was executed on May 27,  1924; that the petition for leave to appear and answer was filed on August 26, 1924; and that the present motion was filed in this court  on August 31, 1926.  The  note for P292,000 and the chattel  and real mortgages to secure it were executed on December 29, 1921, payable one year after date.

It appears  from  plaintiff's petition that on August 26, 1924, Mr. Nolting  was the Manager of the Bank, and he continued in that position until he left the Islands on the 22nd day of February, 1925, just about six months after appellee filed her motion to set aside the judgment and for leave to appear and defend.

A corporation acts and speaks through its officers and agents, and is  bound by them upon the same  legal principle and in the same manner that a person  or individual is bound.  That is  to say, that the Bank at least, through the personal  knowledge of Mr.  Nolting, as  its General Manager,  had  both  legal  and  constructive  notice of the contents  and allegations which were made  in  appellee's petition to set aside and vacate the judgment in  favor of the bank, and for leave to defend upon the merits.

It also  appears from appellant's petition:

"That the said deed of trust attached hereto was only a few days ago discovered by Rafael Moreno,  Vice-President of the Bank of the Philippine Islands, while he was examining one of the many folders of the Poizat people, and more particularly the folder in which the said deed of trust was kept, mixed with a big bundle of document and letters of the Poizat people.
"That the Bank of the Philippine Islands did not, however,  accept the terms of the aforementioned deed of trust hereto attached."
That  is to say, that it appears  from the record that the instrument now in question was executed on  May 27, 1924; that it  was delivered to the  bank about the time of its execution; and  that  ever since it has been  and is now in the actual and  physical  possession of  the  document.  It also appears from  the record  that  after  its execution, numerous conferences were had and held between the officers of the bank and the appellee and her Attorney Opisso, and that Mr. Nolting appointed a committee to investigate the matter, and to examine the properties and their value, to ascertain whether or  not it was prudent and feasible for the  bank to accept the trust  deed upon its terms and conditions, and  for  the purposes therein specified.  That finally, and on August 20, 1924, after a conference between the parties in interest, the bank declined to accept the offer or the trust.  But the instrument in question was never returned, and was kept by the bank among what  is known as the "Poizat  papers."  It also  appears  from the record that after the receipt of the notice from the bank that it declined to accept the trust,  and on  August 21,  1924, Opisso  first obtained ;the  knowledge and then came into possession of the six  notes which were cancelled at the time the P292,000 note now in question  was  executed, and it was upon that date that the appellee and  her attorney for the first time  obtained any  knowledge or  knew of  the actual consideration  for the note.  This information was promptly  followed by  filing  the  motion to set aside and vacate the judgment, and for leave to defend on the merits. In that motion, which appellee filed on August 26, 1924, the question  was squarely presented  that  the  only  consideration for the P292,000 note was a preexisting debt, and that for such reason she  was not liable.   That is to say, on August 26, 1924,  the bank  had  personal and legal knowledge of the nature and character of appellee's defense in the action which was then pending, and from that date to  August 31, 1926, it had the instrument in its own possession, and remained  silent.

The case was tried  in  the lower court  upon appellee's motion  to set aside and  vacate the judgment,  in which a decision was rendered against the appellee,  and  from which she appealed to this court where the decision of that court was  reversed, and the case remanded to the lower  court, with leave to the appellee to appear, file her answer and defend  on the merits.  After both parties had filed their respective pleadings, a trial was  had in that court on the merits,  and a decision was rendered in favor of the  appellee.  From that  decision, the plaintiff appealed to this court.   After the appeal was perfected and briefs were filed by respective counsel, and the case was ready to  be heard in this court in its  merits,  the plaintiff, and for the first time, on August 31,  1926, filed its motion for  a new trial in this  Court upon  the ground of newly discovered evidence.

Under all of the authorities, the instrument  in question is not newly discovered evidence. At all times it was in the personal possession  of  the bank  among the "Poizat papers."

If at  any time after  the filing of appellee's original petition in  the lower court on August 26, 1924, any officer or agent of the bank had looked over or examined  the "Poizat papers," they would have seen and found the  instrument in question, and brought  it to the attention of the court, if they had seen fit to do so.  The stubborn fact remains that for more than two years after the filing of the appellee's motion in the lower court, the bank had the personal, physical possession of the instrument in  question,  and that no effort whatever was made to find or produce it.

Legally speaking, the very most that can be  claimed for it is that it is "forgotten evidence," which was in the actual possession  of the plaintiff for more than two years before it was called to the attention of the court.

Section 497 of  the  Code of  Civil Procedure,  upon which the plaintiff  relies, provides:   *  *   *
  "(2)  If before the  final determination of an action pending in the Supreme  Court on bill of exceptions, new and material evidence be discovered  by  either party, which could not  have been discovered before the trial  in the court below, by the  exercise  of due  diligence, and which is  of such a character as probably to change the result, the Supreme Court may receive and  consider  such a  new evidence, together with  that  adduced on the  trial below, and may grant or refuse a new trial, or render such other judgment as ought, in view of the whole case, to  be rendered, upon such terms as  it may deem just.  *   *  *"
Section 145 provides:
"New Trial Within thirty days after notice of a decision rendered by a  Court of First  Instance, the judge thereof may at the  petition of the party  aggrieved, and after due notice  to the adverse party, set aside  the judgment and grant a new trial, provided  the petition is based on  any of the following causes  materially affecting the legitimate  rights of the petitioner:

"1. Accident or surprise which  ordinary prudence could not have  guarded against and by reason  of which the party applying has probably been impaired in his rights.

"2. Newly  discovered  evidence, material to the party making the application, which he could not, with reasonable diligence, have discovered and produced as the trial."
*           *             *              *             *          *               *

Upon the undisputed facts, if at any time on and after August  26, 1924, any officer or agent  of  the  Bank  had gone through or examined what is  known  as the "Poizat papers," it would have found the instrument in question among its own files.   Much importance  is attached  to the fact that Nolting left the bank  and the Philippines without disclosing the existence of the document to any officer of the bank.  But it appears from the record that he continued as  Manager of the  Bank until  he did leave the Philippines on February 22, 1925, nearly six months after the appellee had filed her motion to set  aside and vacate the judgment.

The record  is conclusive that the negligence, if any, of Mr. Nolting on behalf of the bank continued to exist until the instrument in question was found by an examination of the "Poizat papers,"

There is  no rule of law by which a litigant, who has had the personal, physical possession of a written instrument, which was among the papers of the "Poizat people" in which for two years no search was made among the papers involved in the litigation, or any attempt to find the instrument, can two years later made a search and find the instrument among those  papers, and then obtain  a new trial upon  the ground of newly  discovered  evidence.

When the plaintiff was served with  appellee's  motion to set aside and vacate the judgment on August 26, 1924, together with the copy of the tendered answer, it was the legal duty  of the plaintiff to prepare its defense to that motion, and offer any evidence which it  might have to defeat it, and, in particular,  any evidence which it had in its own personal possession among  the  papers  of the "Poizat people."  If it had done so, the instrument now in question would have been found two years ago, and offered  in  evidence at the original trial, and the appellee could then have offered any evidence which she might have to overcome it. There is no claim or pretense that during all of that time any search was made by the plaintiff among the papers of the "Poizat people" which were in its own  possession.  It appears from the plaintiff's own showing that the instrument now in question "was only a few days ago discovered by Rafael Moreno, Vice-President of the Bank of the Philippine  Islands, while he was examining one of the many folders of the Poizat people."  This examination and discovery could have been made at any time after August 26, 1924, when  the  appellee filed her motion to vacate  the judgment.

Section 497 of  the Code of Civil Procedure provides that a new trial may be  granted in  this court for "new and material evidence be discovered  by either party,  which could not have been discovered before the trial in the court below, by the exercise of due diligence."

The  instrument in question  is not new evidence within the meaning of that  section.

On the former appeal,  this case was given careful and exhaustive consideration,  and the majority  opinion covers twenty-two  typewritten  pages, and  the important  question involved was the legal liability of the appellee arising from, and growing out of, the power of attorney which she gave her husband, and the question was then raised and presented that she was estopped by her own conduct to deny her liability, and upon  the record then before us, it was held that she was not.

Section 497 of  the  Code of Civil Procedure upon  which plaintiff relies provides that a new trial may be granted if, before  the case is finally decided in the Supreme Court, "new and material evidence be discovered by either party, which could  not  have been discovered  before the trial in the court below, by the exercise of due diligence."  Under this law, it is not sufficient that the evidence is material, it must also be new evidence,  and it must "be discovered by either party."

Assuming that  in the instant case the evidence is "material," it  is  not "new" evidence,  neither was  it  "discovered" evidence within the meaning  of the law.  It  was old evidence  in the possession of the plaintiff which was overlooked and "forgotten" at the time of the trial.

Among the numerous authorities on that question, see the cases of Hendy vs. Desmond  (62 Cal., 260); Bond vs. Cutler (7 Mass., 205); Gregory vs. Gregory  (129 111.  App., 96);  Gaulden vs. Lawrence (33  Ga.,  159);  Shields vs. State (45 Conn., 266); and Rand vs. Kipp (27 Mont., 138).

That section also provides that such new and material evidence  could not  have been discovered before the trial "by the exercise of  due  diligence."

In the  instant case, no diligence whatever was exercised by  the  bank,  and  it appears  that the  finding of  the instrument now in  question  two years  later was more or less of an accident, and that, if the bank had  exercised even  ordinary  diligence, it would have found  the instrument now in  question two years ago.   It also appears from the showing made  that the instrument in  question was executed  at the  suggestion of the bank and  for certain specific purposes, for which the bank was made the trustee, and that  after negotiations between all of the parties in interest,  including the bank, covering  a  period  of  about three months, it  declined to accept the  trust.

We are clearly of the opinion that there is no merit in the motion for a new trial upon the ground of newly  discovered evidence, and the motion is  denied.

OPINION ON THE MERITS

There  are two cases  involved on this  appeal, one of which, known  here as  G.  R. No. 25643, is  an action by the plaintiff  against the defendants, Jean M.  Poizat,  Gabriela Andrea de  Coster y Roxas, his  wife, and J. M. Poizat & Company, to recover judgment against them, jointly and severally, for P292,000, with interest thereon  at the rate of 9 per  cent per annum,  on an alleged promissory note dated at Manila on December  29,  1921, and  the further sum of P10,000 as  attorney's fees and costs, in  which a true and correct copy of  the note is attached  to the complaint, marked Exhibit A.   The other is  known here as case G. R. No. 25642  in which the same allegations are made as to the note for P292,000, and  it is further alleged that at the time of its execution, the note  was secured by a real mortgage executed to, and in favor  of, the bank by Jean  M.  Poizat and Gabriela Andrea  de Coster y Roxas, his wife, and the bank prays for a decree for the amount of the note and the foreclosure of the mortgage given to secure its  payment, and the sale  of  the  property  mortgaged to satisfy the decree.

In each complaint, it is alleged that Jean M. Poizat and Gabriela Andrea de Coster y Roxas are husband and wife, and "that the  defendant J. M. Poizat & Company was and is a duly registered partnership having its principal office and place of business in the City of Manila."

Upon the former appeal in which the case was  reversed and remanded, this court held in legal  effect that the facts alleged in  the answer of the appellee stated a good and meritorious defense to both of plaintiff's causes of action.

Upon a trial in the lower court founded upon the majority opinion of this  court, and upon the new and amended pleadings, both parties introduced evidence to sustain their respective pleas.

In  a well-written  and  exhaustive  opinion,  the  lower court rendered judgment for the appellee in both cases, and absolved her from all  liability.

In  its  first assignment of error, the appellant contends that the trial  court erred in declaring that defendant and her counsel did not have full knowledge of all the facts when they ratified and confirmed the promissory note and mortgage here involved.

Upon that question  the trial court says:
"For the purpose of proving the admission and ratification alleged by the plaintiff bank, plaintiff's counsel  presented the deposition of its Vice-President, Mr. J. F. Marias,  and  Exhibit  A  thereof, which  is a letter written by Mr.  Opisso to the President of  the Bank, Mr. Nolting, proposing a settlement of the case.   From this declaration, which has been contradicted in detail by Mr. Opisso and by the defendant  Gabriela Andrea  de  Coster,  the  court cannot draw the conclusion that there has ever been any admission or ratification of the act of Mr. Poizat, whether express or implied.

"It  is not enough  to prove  that  a void obligation was considered valid, but it is necessary to prove first conclusively that at the time of admitting the same as valid or ratifying it, the principals have full knowledge  of all the circumstances which had  surrounded the act performed by the agent  in  excess  of his powers.  And  this conclusive evidence does not exist in the record, on the contrary all the facts tend to corroborate  the proposition that it did not exist.

"Exhibit A of the deposition  of Mr.  Marias does not prove  anything.  It is  a  letter wherein  the attorney for the defendant Gabriela Poizat proposes a settlement, and there is nothing in it from which  it may de deduced or inferred that the defendant Gabriela Poizat or her attorney had any knowledge of the facts which preceded the execution of the note in question.

"The court  is of the opinion,  and so holds, that  there is no evidence in the record of  any of the facts alleged by the plaintiff bank in the paragraphs of its counterclaim above-mentioned."
Although the evidence of Mr. Marias,  the Vice-President  of the plaintiff, might  be  construed as tending to show  that  Opisso,  as attorney for the appellee,  did have personal knowledge of the actual facts at and before the time that he wrote the letter of July 23, 1924,  his  testimony upon that point is flatly contradicted by Opisso, who testified that he first obtained  any knowledge of the true consideration for the note when  he received the six cancelled notes from Galang on August 21, 1924, and the record  shows  that upon the  receipt  of those  notes,  he promptly took action  to obtain relief.

We are clearly of the opinion that the evidence upon that point not only sustains the findings of the trial court, but that the preponderance  of the evidence is in favor of the defendant.

An extended analysis  of  the  evidence upon this  point would not serve any useful purpose.   Suffice it to say that it sustains the findings of the trial court, and  that even the weight of the evidence is with the appellee.

In  its second assignment  of  error, appellant  contends that the court erred "in  declaring that the promissory note here involved does not evidence a loan to the defendant."

That  is the real question in this case.

In the lower court, the parties entered  into a stipulation of facts from which it appears that on July  25, 1921, the plaintiff held a promissory note of Jean M. Poizat & Company for P25,000, known as Exhibit 3, one on the same date for P35,000, known as Exhibit  4, one  of that  date for P50,000, known as Exhibit 5, another for P50,000, known as Exhibit 6, and one for P50,000, known as Exhibit  7, and  another for  P98,458.58, known  as  Exhibit  8,  all  of date July 25,  1921.  No. 3  was  made  due  and  payable August  31, 1921, No. 4 September 30, 1921, No, 5 October 31, 1921, No. 6 November 30,  1921,  No. 7 December 29, 1921, and No. 8 January 31,  1922.  Under the head  of "remarks,"  it appears on each exhibit  that each  of the six promissory notes is  a  part of the  total amount  of P308,458.58 "to cancel the overdraft," and that each note is secured by steamers and merchandise as per deed dated July 25, 1921.  It also appears upon the  face of each note that all of them were "cancelled" by the  bank on January 14, 1922.  That is to say, on July 25, 1921, the bank held the six  notes of Jean M.  Poizat & Company for the total amount of P308,458.58  which were then secured by two steamers and merchandise,  and that  on  the  14th of January, 1922, all of those notes were "cancelled."  It also appears from the stipulation, and from what is known  in the record as Exhibit 9,  that on the 16th of November, 1921, P16,180 was paid on account of the overdraft, and the further  sum of P278.58 on December 29, 1921, thus leaving a balance on December 29, 1921, of P292,000, upon which date the note in question was executed and signed in the following manner;
"Per  pro. Gabriela Andrea de Coster y Roxas

(Sgd.)   "JEAN  M.  POIZAT
"JEAN M. POIZAT
"J. M. POIZAT & COMPANY
"By (Sgd.)   JEAN M. POIZAT
"Member of the Firm"
It is agreed that the power of attorney which the appellee gave her husband was then in full force and effect, and the question now involved is whether, under the existing facts, the making of the note was a valid exercise of the power conferred by the  wife upon  the husband.

The evidence is conclusive that the amounts of the original six notes of Jean M. Poizat & Company, and the notes themselves,  were merged in  the  note  for P292,000  of December 29, 1921.  Those  notes were the notes of Jean M.  Poizat & Company, and neither  of  them was signed by the appellee in any form,  or by her husband in any other way than as  Jean  M. Poizat & Company.  It also appears that each of the  six  original notes  was secured by chattel mortgage on the two steamers and merchandise executed  on  July 25, 1921,  the date of each note.  The evidence  is conclusive that the appellee was not a member of the partnership Jean M.  Poizat & Company; that  she was not a party to it in any manner, shape or form; and that she  never claimed any interest in the partnership, and that she was a complete stranger to all  the transactions between the bank and the partnership up to the time that her husband signed her name to the note in question.  The evidence  is conclusive that the only consideration for the note here in question was the amount of  the six original notes of Jean M. Poizat & Company which were surrendered and cancelled at the time of the execution of the note for P292,000.   That is to say, at the time of the execution of the note now in question, the bank never parted with or loaned a centavo to any one, and that the only consideration for  the note  was the preexisting debt of the registered partnership  Jean M. Poizat & Company,  evidenced by, and  substituted for, the  six cancelled notes  of that company.  Upon that  question the evidence is conclusive from the  stipulation of facts and the bank's own records.

On the former appeal, this court said:
"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.

"You will search the terms and  provisions of the power of attorney in vain to find any  authority for the husband to make his wife liable as a surety for the payment of the preexisting debt of a third person,"
After  analysing the terms and provisions of the power of attorney in question, the court further said:
"It will be noted that there is no provision in either of them 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.

"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. But nowhere does it provide or authorize him to make her liable as a surety for the payment  of the preexisting debt of a third person."
We also said that if the bank "had made an actual loan of P292,000  at the time the note was  executed, another and  a different question would  be presented."

There is no evidence that the  bank parted with  any money at the time of the execution of the note, or that  the appellee ever had or received any part of the consideration of the note.

In its third assignment of error, appellant contends that the court erred in declaring  that the power of attorney "does not authorize the agent to lend his principal's credit to a  partnership  wherein  both  principal and  agent  are equally interested."  If it be a fact that "both principal and agent are equally interested" in the  partnership, there might be some merit in that contention.  But, as stated, there is no evidence that the appellee ever had  or claimed to have any interest in the partnership of Jean M. Poizat & Company.  Neither  is there any evidence "that  Mrs. Poizat ever lent her credit to the business partnership of J. M. Poizat & Co."

Upon that  point, the trial court, in its opinion, says:
"An examination  of  the  fifth clause of the power conferred by the defendant in favor of her  husband, does  not show that there is anything in it by which  the latter is authorized to lend his  principal's  credit.  The court  understands that the one  who lends his credit  is but a guarantor,  and to constitute the principal into a guarantor, it is necessary that the agent be expressly empowered to do so."
On legal principle, all of the remaining questions were decided adversely  to  the appellant on the former appeal.

In  the trial  of  the case  on the merits, as  to  all legal questions involved, the court below followed  the  opinion of this court on the former appeal, and it found all of the material questions of fact in favor of the appellee, and all of its findings of fact are amply sustained by the evidence.

The judgment of the lower court is affirmed, with costs. So ordered.

Johnson, Malcolm, Ostrand, and Romualdez, JJ., concur.




STREET, J., with whom concur AVANCE√ĎA, C,  J.,  VILLAMOR and VILLA-REAL, JJ., dissenting;

On August  25, 1903, the appellee, Gabriela de Coster, wife of Jean M. Poizat, executed an unlimited general power of attorney in favor of her husband, Jean M. Poizat,  authorizing him to administer her property, real  and personal, and to  enter into any kind of contract, whether  civil or mercantile; and to borrow any sums of money or fungible things at the rate of interest and for the time and under the conditions which he might  deem  convenient.  Such is the import  of paragraphs 6 and 8 of the  power of attorney.  The eighth  paragraph authorizes Poizat to  draw, issue and  negotiate  any negotiable instruments,  promissory notes, and other documents of value.  In , the final clause  of  the  contract,  by  way  of summary, the  author of the power  confers on her attorney in fact ample and complete power, binding herself in the most  solemn manner to recognize  as  existing and valid all that might be done by virtue of the power.

Gabriela  de Coster, the  author of this power, thereafter absented herself from the Philippine Islands and removed to Paris, France, where she continued to live during most of the years that have since passed and where  she was living at the time of the transactions which gave rise to  this litigation.   During  all  these  years Poizat  has continued  in  the management of her  properties,  selling and mortgaging them as occasion has required; and only in 1924 was said power revoked.

Jean M. Poizat is  the  principal capitalist partner in the firm of J. M. Poizat &  Co., an  important mercantile entity doing business  in the Philippine Islands.  In the absence of any showing to the contrary, the legal presumption  must be  that Poizat's  interest in  this  firm pertains to the conjugal partnership.  His wife, Gabriela de Coster,  is  therefore entitled by law  to an  undivided half interest therein.  (Art. 1407, Civil Code.)

On December 29,  1921,  Jean M.  Poizat  executed the promissory note which constitutes the basis of the two actions with which we are here concerned, promising  therein to pay  at the end of one year to  the Bank of the Philippine Islands the sum of P292,000, with interest  at the rate of 9 per centum per annum, payable monthly.   To this note Poizat affixed,  first,  the name of his wife, Gabriela de Coster,  by himself as attorney in fact;  secondly, his own  name personally; and  thirdly,  the  name of  J. M. Poizat & Co.,  by himself  as manager.  Although bearing the date of December 29,  1921, this note was not negotiated at the Bank of the Philippine Islands  until January 14, 1922, when the  bank accepted the note  for discount and applied the proceeds to six other notes already owing to the bank bearing the names of the partnership J. M. Poizat & Co. and J.  M, Poizat.  Upon said  occasion said six notes were cancelled by the bank and surrendered to Poizat.   In the prevailing opinion emphasis is placed upon the fact that the bank parted with no money at the time of the execution of the note; but as  the six notes were surrendered, it is evident that  the  bank gave full value; and the circumstance that the proceeds of the note for P292,000 were  applied by the bank to the satisfaction of the older notes, in conformity with  the wishes of Poizat, and banking usage, is of no  importance.   In law the  result is precisely the same as if the cashier of the bank had  handed the money to Poizat and the latter had then applied it to the payment of the six notes.

The question of  importance  presented  for decision  in these cases is  whether the appellee, Gabriela de Coster, is obligated by the promissory note for P292,000 executed in the manner and under the, conditions above stated.  This question involves a most rudimentary problem and ought to be solved by the application of one of  the first rules ever formulated  by the incipient legal mind of rational man.  That principle is embodied in the maxim, Qui facit per apum facit per se, he who acts through another, acts by himself.  Applying this notion to the  cases  before us, we should say that, when the name of Gabriela de Coster was affixed by her attorney in fact to the promissory note before us, the legal consequences were in all respects  the same as if her name had been affixed by herself in person. It is as simple a case of the delegation of authority to make a contract as could  possibly  arise.

The solution of the  case of  course depends  principally upon the interpretation  to be placed by the court upon  the language used in the power of attorney.  Justly interpreted, does that instrument place any restriction upon the use of the power?   Is any limitation to be deduced therefrom to the effect that the powers therein granted  cannot be used except for the  direct benefit of the wife?  In considering this point it is of some assistance to know that the document was made by the wife upon the eve of her taking up a permanent residence abroad; and the power was made in favor of her husband, upon whom she relied for the permanent pension necessary to  sustain her  in her  future abode.  Moreover, her husband was then the capitalist partner and manager of J. M. Poizat & Co., a  business which pertained to both husband and wife  alike. Is anything more  natural than that the  parties should have contemplated that the credit of the  wife might be applied to  the needs of the husband and of the firm which he was managing? Such is the natural presumption  from the situation of the  parties.  But the case  does  not depend upon this, because it can be demonstrated with  the utmost certainty, from the language used in the power, that it was the intention of the appellee, as donor of the power, to authorize the use of her credit for other  purposes than to raise money directly for  herself.  In  this  connection  it will be observed that the  appellee is  not  a merchant  or banker herself, nor has she at any  time  owned any mercantile enterprise as separate property.  Nevertheless,  it is interesting to note, the power of attorney authorizes her attorney in fact to enter into  mercantile  contracts and to draw, indorse, accept, issue and negotiate any drafts,  bills of  exchange, letters  of credit, letters of payment,  bills, vales, promissory  notes and all kinds of  documents representative of value.  The exercise of these  powers clearly extends beyond the requirements of the management of the appellee's separate estate;  and the only rational interpretation to be placed upon the clauses mentioned  is that the appellee intended that the power might be  used in and about her husband's obligations and  business.

The prevailing opinion seems to be planted mainly upon the proposition that none of the proceeds of the note came to the appellee's hands or were applied to her  personal use.  Those proceeds, however, were used to take up notes which were valid  obligations  both  against Poizat and the firm of J. M. Poizat & Co. In view of this fact it is impossible to say  that  the money was not applied for her benefit.  Any obligation created  by the husband obligates the conjugal partnership;  and the  wife, as partner  with the husband and as participant in his business enterprises, is of course a legal beneficiary in  any fund that accrues to such  business.  It follows  without any  possibility of doubt that, when the  proceeds of the note in question were applied to  the  obligations, of Poizat and J. M. Poizat  & Co., they inured to the benefit of the wife.  Whether the creation of the obligation was wise and whether the benefit that was expected  to flow therefrom was commensurate with the value paid and the risk  involved is a matter with which the court is not concerned, having been confided by the appellee to  her husband as the sole judge thereof. It follows that the conclusion reached by the majority of the court is lacking in any just basis, even assuming that the power granted  could  only  be  legitimately used for  the appellee's direct benefit.   The case of Muth vs. Goddard (72 Pac, 621), decided in 1903  by the Supreme Court of Montana, involves a  question very similar to that now before us,  In that case an attorney in fact, who was authorized to sell, convey and mortgage the grantor's property, executed a trust deed conveying said  property as security for a debt due from a firm in which the grantor was a partner.   It was held  that the power was properly exercised.

We do not question the proposition that the relation between the attorney in fact and his principal is of a highly fiduciary  nature  and that the  attorney  is bound  to  use the power for the  purpose intended. But all  competent persons should be bound  by what they  have deliberately written; and when a wife confides all her legal  powers to the keeping of her husband by an  unqualified power of attorney such as existed here, she, should be  prepared to abide the consequences.  In the case before us  the plaintiff bank advanced its money,  or the equivalent of money, upon the faith  of such  a power, and the obligation should  be enforced although the consideration did not go directly to the principal  but to a business which  pertained  to  the conjugal partnership of which she was a member.

In  conclusion it should be pointed  out that this case is a sequel to Bank of the Philippine Islands vs. De Coster (47 Phil., 594), where  upon a  former  appeal  in  the same case the court ordered that the judgment previously entered in the court below should be opened in order that Gabriela de Coster  might be permitted to  come in and make defense.   The opinion in that  case,  written  by the member  of the court who is now author  of the  prevailing opinion,  states of course precisely the same doctrine as is now enunciated in the prevailing  opinion.  But an examination of the  votes of the members of the court who participated in  the earlier  decision  shows that three of the Justices did not commit themselves to the doctrine there stated.   It follows that said decision cannot be considered binding upon the court upon the  present appeal, even apart from the fact that  it  is vitiated,  in the opinion of the undersigned, by the errors already criticized in this opinion.

The judgment which is the subject of this appeal should, in our  opinion, be reversed.



[1] 147  Phil., 594.

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