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Agency and Partnership Digests #2

Agency and Partnership Digests #2

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Published by Janz Serrano
under Prof. Dionne Sanchez, 2nd semester AY 2010-2011

credits go to the persons cited in the document
under Prof. Dionne Sanchez, 2nd semester AY 2010-2011

credits go to the persons cited in the document

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Published by: Janz Serrano on Oct 26, 2012
Copyright:Attribution Non-commercial


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A&P Compiled Digests No. 2
 29 SCRA 303
[6 brothers and sisters executed PA in favor of Maximo Sta. Maria; power to mortgage does not include power toloan]Disinclination of courts to enlarge an authority granted beyond thepowers expressly given and those incidentally flowing therefrom asbeing usual or reasonably necessary and proper for theperformance of such express powers. The authority granted bydefendants-appellants (except Valeriana) unto their brother,Maximo, was merely to mortgage the property jointly owned bythem, not to contract for any loans in their names and behalf.Maximo alone, with Valeriana who authorized him to borrowmoney, must answer for them; other defendants-appellants' onlyliability is that the real estate authorized by them to be mortgagedwould be subject to foreclosure and sale to respond for theobligations contracted by Maximo. But they cannot be heldpersonally liable.
The said sugar crop loans were obtained by defendant MaximoSta. Maria from plaintiff bank under a special power of attorney, executed in his favor by his six brothers and sisters,defendants-appellants herein,
to mortgage
a 16-odd hectareparcel of land, jointly owned by all of them
In addition, Valeriana Sta. Maria alone also executed in favor of her brother, Maximo, a special power of attorney
to borrow money and mortgage
any real estate owned by her
Maximo Sta. Maria applied for two separate crop loans, for the1952-1953 and 1953-1954 crop years, with plaintiff bank, onein the amount of P15,000.00, of which only the sum of P13,216.11 was actually extended by plaintiff, and the other inthe amount of P23,000.00, of which only the sum of P12,427.57 was actually extended by plaintiff.
As security for the two loans, Maximo Sta. Maria executed
inhis own name
in favor of plaintiff bank two chattel mortgageson the standing crops, guaranteed by surety bonds for the fullauthorized amounts of the loans executed by the AssociatedInsurance & Surety Co., Inc. as surety with Maximo Sta. Mariaas principal.
a special power of attorney to mortgage real estate is limitedto such authority to mortgage and does not bind the grantorpersonally to other obligations contracted by the grantee, in theabsence of any ratification or other similar act that would estop thegrantor from questioning or disowning such other obligationscontracted by the grantee.
Plaintiff bank has not made out a cause of action against defendants-appellants (except Valeriana), so as to hold themliable for the unpaid balances of the loans obtained by Maximounder the chattel mortgages executed by him in his own namealone.
This is but in accord with the disinclination of courts toenlarge an authority granted beyond the powersexpressly given and those which incidentally flow orderive therefrom as being usual or reasonably necessaryand proper for the performance of such express powers.2.
The authority granted by defendants-appellants (except Valeriana) unto their brother, Maximo, was merely tomortgage the property jointly owned by them. They did not grant Maximo any authority to contract for any loans in theirnames and behalf. Maximo alone, with Valeriana whoauthorized him to borrow money, must answer for said loansand the other defendants-appellants' only liability is that thereal estate authorized by them to be mortgaged would besubject to foreclosure and sale to respond for the obligationscontracted by Maximo. But they cannot be held personallyliable for the payment of such obligations, as erroneously heldby the trial court.3.
The fact that Maximo presented to the plaintiff bank Valeriana's additional special power of attorney expresslyauthorizing him to borrow money, Exh. E-1, aside from theauthority to mortgage executed by Valeriana together with theother defendants-appellants also in Maximo's favor, lendssupport to our view that the bank was not satisfied with theauthority to mortgage alone.4.
The outcome might be different if there had been an expressratification of the loans by defendants-appellants or if it hadbeen shown that they had been benefited by the crop loans soas to put them in estoppel.5.
Valeriana's liability for the loans secured by Maximo is not 
  joint and several 
as adjudged by the trial court, but only
, pursuant to the provisions of Article 1207 of theCivil Code that "the concurrence ... of two or more debtors inone and the same obligation does not imply that ... each one of the (debtors) is bound to render entire compliance with theprestation.
47 PHIL 594
That on Dec. 29, 1921, for value, the defendant GabrielaAndrea de Coster y Roxas, having the consent and permissionof her husband, and he acting as her agent, said defendantsmade to the plaintiff a certain promissory note for P292,000,payable one year after date, with interest of 9 per cent perannum, payable monthly.
that to secure the payment thereof, the defendants Jean M.Poizat and J. M. Poizat and Co. executed a chattel mortgage tothe plaintiff on the steamers
Roger Poizat 
Gabrielle Poizat 
,with the machinery and materials belonging to the Poizat Vegetable Oil Mills and certain merchandise; that at the sametime and for the same purpose, the defendant Gabriela Andreade Coster y Roxas, having the consent and permission of herhusband, and he acting as her agent, they acknowledged anddelivered to this plaintiff a mortgage on certain real propertylying and being situated in the City of Manila.
that the real property was subject to a prior mortgage in favorof La Orden de Dominicos or PP. Predicadores de la Provinciadel Santisimo Rosario, hence it is made a party defendant 
That the promissory not in question is long past due andowing, thus the plaintiff brought action against the defendants.
the court rendered judgment against the defendants GabrielaAndrea de Coster y Roxas, Jean M. Poizat and J. M. Poizat andCo. jointly and severally for P292,000, with interest at the rateof 9 per cent per annum from the 31st of August, 1923,P10,000 as attorney's fees, and P2,500 for and in account of insurance upon the steamer
Gabrielle Poizat 
, with interest onthat amount from February 9, 1924, at the rate of 9 per cent per annum, and costs;
Wherefore, plaintiff prays for an order of the court to direct the sheriff of the City of Manila to take immediate possessionof the property described in the chattel mortgage and sell thesame according to the Chattel Mortgage Law; that the propertydescribed in the real mortgage or so much thereof as may berequired to pay the amount due the plaintiff be sold accordingto law; that out of such sales plaintiff shall be paid the amount due and owing it; and that such defendants be adjudged to payany remaining deficiency.
May 3, 1924, on motion by the plaintiff, for failure to appear oranswer, the defendants Gabriela Andrea de Coster y Roxas andJean M. Poizat and J.M. Poizat & Co. were declared in default.
The court rendered decision in favor of the plaintiffs
On Aug. 26, 1924, Gabriela Andrea de Coster y Roxas, claimedthat she had been residing in Paris, France from 1908 untilApril 30, 1924 and that sheonly found out about the case fromthe newspapers.
She claims that she was never given any summons by thesheriff and that her husband exceeded his authority under thepowers given to him under his power of attorney.
She prayed that the judgement be annulled and set aside andthe case be reopend and that she be permitted to file ananswer, and that the case be tried on its merits, and that a finaljudgement be rendered, absolving her from all liability.
WON proper summons were made2.
WON Jean M. Poizat, husband of the defendant exceeded hisauthority as an agent of his wife
A&P Compiled Digests No. 2
WON the case should be remanded
No, In the ordinary course of business the wife is absent fromthe residence of husband on a pleasure trip or for businessreasons or to visit friends or relatives that, in the nature of such things, the residence of the wife would continue andremain to be that of the husband. That is not this case. Forsixteen years the residence of the husband was in the City of Manila, and the residence of the wife was in the City of Paris.2.
Yes, The following the specific powers of attorney that the wifegave her husband
Paragraph 5 of the power of attorney authorizes the husbandfor in the name of his wife to "loan or borrow any sums of money or fungible things, etc." This should be construed tomean that the husband had power only to loan his wife'smoney and to borrow money for or on account of his wife asher agent and attorney in fact. That does not carry with it orimply that he had the legal right to make his wife liable as asurety for the preexisting debt of a third person.
Paragraph 6 authorizes him to "enter into any kind of contracts whether civil or mercantile, giving due form thereof either by private documents or public deeds, etc."
Paragraph 7 authorizes him to "draw, endorse, accept, issueand negotiate any drafts, bills of exchange, letters of credit,letters of payment, bills, vales, promissory notes, etc."
The foregoing are the clauses in the power of attorney uponwhich the bank relies for the authority of the husband toexecute promissory notes for and on behalf of his wife and asher agent.
It will be noted that there is no provision in either of themwhich authorizes or empowers him to sign anything or to doanything which would make his wife liable as a surety for apre-existing debt.
It is fundamental rule of construction that where in aninstrument powers and duties are specified and defined,that all of such powers and duties are limited and confinedto those which are specified and defined, and that all otherpowers and duties are excluded.
It is very apparent from the face of the instrument that thewhole purpose and intent of the power of attorney was toempower and authorize the husband to look after and protect the interests of the wife and for her and in her name totransact any and all of her business. But nowhere does it provide or authorize him to make her liable as a surety for thepayment of the pre-existing debt of a third person.
Hence, it follows that the husband was not authorized orempowered 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 voidfor 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 describedin the mortgage to the bank was and is the property of thewife. The note being void as to her, it follows that as to herthe real mortgage to the bank is also void for want of power to execute it.
Yes, the case is remanded to the lower court, with leave for thewife to file an answer to plaintiff's cause of action, and to havethe case tried on its merits and for any further proceedings not inconsistent with this opinion.
63 PHIL 567 
On September 2, 1923, the defendants executed a power of attorney in favor of their brother-in-law Felix S. Yulo to enablehim to obtain a loan and secure it with a mortgage on the realproperty described in transfer certificate of title No. 3335. Thepower of attorney was registered in the registry of deeds of the Province of Occidental Negros and the pertinent clausesthereof read as follows:
Acting under said power of attorney, Felix S. Yulo obtained aloan of P28,000 from the plaintiff, binding his principals jointlyand severally, to pay it within ten (10) years, together withinterest thereon at 12 per cent per annum payable annually inadvance, to which effect he signed a promissory note for saidamount and executed a deed of mortgage of the real propertydescribed in transfer certificate of title No. 3335 and theimprovements thereon consisting in concrete buildings. It wasstated in the deed that in case the defendants failed to pay thestipulated interest and the taxes on the real propertymortgaged and if the plaintiff were compelled to bring anaction to recover his credit, said defendants would be obligedto pay 10 per cent more on the unpaid capital, as fees for theplaintiff's attorneys. The mortgage so constituted wasregistered in the registry of deeds of the Province of OccidentalNegros and noted on the back of the transfer certificate of title.
The defendants failed to pay at maturity the interest stipulatedwhich should have been paid one year in advance. All the sumspaid by them on account of accrued interest up to March 27,1934, on which the complaint was filed.
Section 284 of the Code of Civil Procedure requires thecontents of a writing to be proven by the writing itself, except in cases therein specified. Section 313, No. 6, provides that official or public documents must be proven by presenting theoriginal or a copy certified by the legal keeper thereof.
According to this, the plaintiff was obliged to present theoriginal or a certified copy of the mortgage deed showing theregistration thereof, as well as the owner's transfer certificateof title. Both would have been the best evidence to prove theregistration of the mortgage and the notation thereof on theback of the title.
Had the defendants objected to the oral evidence offered, thereis no doubt that it would have been rejected as incompetent.But it is universally accepted that when secondary orincompetent evidence is presented and accepted without anyobjection on the part of the other party, the latter is boundthereby and the court is obliged to grant it, the probatoryvalue it deserves.
We have examined Exhibits 8 to 17 of the defendants, whichare the evidence offered to establish the fact that compoundinterest had been charged, and we have, without any difficulty,arrived at the conclusion that the plaintiff has really chargedsaid unauthorized and unstipulated interest.
If there is any doubt on this fact, it is dispelled by Exhibit 10, inthe handwriting of the plaintiff himself, wherein it appearsthat the sum of P33.60 was charged by him on account of interest on unpaid interest.
But the fact of charging illegal interest that may be charged,does not make the loan or the mortgage usurious because thetransactions took place subsequent to the execution of saidcontracts and the latter do not appear to be void ab initio Saidinterest should be applied first to the payment of thestipulated and unpaid interest and, later, to that of the capital.
Section 5 of Act No. 2655, as amended by section 3 of Act No.3291, expressly permit a creditor to charge in advance interest corresponding to not more than one year, whatever theduration of the loan. What is prohibited is the charging inadvance of interest for more than one year. Section 6reiterates said rule in exempting a creditor found guilty of usury from the obligation to return the interest andcommissions collected by him in advance, provided saidinterest and commissions are not for a period of more thanone year and the rate of interest does not exceed the maximumlimit fixed by law.
It is true that according to the evidence more than two yearshave already elapsed from the time the defendants paid andthe plaintiff received the usurious interest to the registrationof the cross-complaint, but the plaintiff cannot successfullyinvoke the defense of prescription because he failed to allege it in his reply to the cross-complaint.
A&P Compiled Digests No. 2
In order that prescription may constitute a valid defense and it may be considered on appeal, it must be specifically pleaded inthe answer and proven with the same degree of certainty withwhich an essential allegation in a civil action is established.Otherwise it will not be taken into consideration, much less if it is alleged for the first time on appeal.
- YES 
The plaintiff violated the Usury Law in charging compoundinterest notwithstanding the fact that it has not been sostipulated and that adding these sums to the stipulatedinterest the average exceeds the maximum rate of interest that may be charged for the loan which has been the subject matterof the transaction. This violation falls under the precept of section 6 of the Usury Law and the plaintiff is obliged to paythe fees of the attorney for the defendants.
The terms of the power of atty are limited; the agent wasthereby authorized only to borrow any amount of moneywhich he deemed necessary. There is nothing, however, toindicate that the defendants had likewise authorized him toconvert the money obtained by him to his personal use.
With respect to a power of attorney of special character, it cannot be interpreted as also authorizing the agent to disposeof the money as he pleased, particularly when it does not appear that such was the intention of the principals, and inapplying part of the funds to pay his personal obligations, heexceeded his authority (art. 1714, Civil Code; Bank of thePhilippine Islands vs. De Coster, 47 Phil., 594 and 49 Phil.,574).
In the case like the present one, it should be understood that the agent was obliged to turn over the money to the principalsor, at least, place it at their disposal.
The plaintiff contends that the agent's act of employing part of the loan to pay his personal debts was ratified by thedefendants in their letter to him dated August 21, 1927(Exhibit E). This court has carefully read the contents of saiddocument and has found nothing implying ratification orapproval of the agent's act. In it the defendants confinedthemselves to stating that they would notify their agent of thematurity of the obligation contracted by him. They saidnothing about whether or not their agent was authorized touse the funds obtained by him in the payment of his personalobligations.
Of the loan of P28,000, the agent applied the sum of P10,188.29 to the payment of his personal debt to the plaintiff.The balance of P17,811.71 constitutes the capital which thedefendants are obliged to pay by virtue of the power conferredupon their agent and the mortgage deed.
6 PHIL 680
Mrs. Strong owned 800 shares of the capital stock of PhilippineSugar Estates Development Co., Limited, an anonymous societyformed to hold the Dominican friar lands. Repide bought themthrough a broker who dealt with Mrs. Strong's agent, Jones,who was in possession of the script and who had made the salewithout Mrs. Strong's knowledge. Repide was a director, wasthe managing agent and was the majority stockholder of thesociety.
Plaintiffs brought this case to recover the 800 shares.
(Relevant) WON her agent had the power to sell or deliver thestocks. NO2.
WON its sale, through her agent, was procured by fraud on thepart of Repide. NO
Based on OCC 1712, an agency stated in general terms onlyincludes acts of administration. In order to compromise,alienate, mortgage, or to execute any, other act of strict ownership an express mandate is required. The expressmandate required by law to enable an appointee of an agencycouched in general terms to sell must be one that expresslymentions a sale or that includes a sale as a necessaryingredient of the act mentioned. The right to sell shall beexpress. Here, there was no proof of an effective power givenJones to dispose of this stock.
European civil law and American common law established that acts of agents, beyond the limitation of their power are nulland that third persons dealt with them at their peril and arebound to inquire as to the extent of the power of the agent with whom they contract and that where neither the actualpower not the appearance of it, for which the principal isresponsible, exists, a third party is not protected without suchinquiry. Here, Repide relied unquestioningly upon Jones'assumption of authority and took the risk.
The case also discussed that in a certain Dalloz' annotation,after laying down the admitted proposition of the acts of anagent beyond his limited powers are null, states 3qualifications whereby the principal is held bound:1)
where his acts have contributed to deceive a third personin good faith;2)
where the limitations upon the power created by himcould not have been known by a third person, and3)
where he has placed in the hands of the agent aninstrument signed by him in blank.2.
The defendant violated no duty in not communicating to theplaintiff his purpose in buying her shares and has been guiltyof no fraud. Managers are not given the duty to the members inrespect to their individual stock, which is fully recognized as aseparate property, whose character and transmission isprovided for in laws peculiar to it.
52 PHIL 622
Nov 9, 1921 - Po Tecsi executed a general power of attorney infavor of his brother Po Ejap, empowering and authorizing himto perform on his behalf and as his lawful agent the following:
“to buy, sell, or barter, assign or admit in acquittance an
instrument, or in any other manner to acquire or convey
all sorts of property, real and personal, usinesses and industries,credits, rights, and actions belonging to me,
for whatever pricesand under the conditions which he may stipulate, paying andreceiving payment in cash or in installments, and to executethe proper instruments with the formalities provided by the
On Dec 15, 1921, Po Tecsi acknowledged in an instrument anindebtedness to Po Ejap in the amount of P68,000 for theproperties Po Ejap had sold to him.
Mar 31, 1923
Po Ejap executed a second mortgage on hisown land in favor of Limjenco. This land, which is the subject of the case, was at that time, mortgaged to PNB to secure thepayment of the sum of P60,000 with 7% interest. He thereaftersold the land with all its improvements to Po Tecsi.
Nov 22, 1923
Acting on behalf of Po Tecsi and with thespecial power granted to him, he sold the subject land with allits improvements to Katigbak. The only mortgage mentionedin the instrument was the one executed with PNB.
He sold theland without recording his power of attorney or the sale in thetitle.
At the time of the sale, Po Tecsi was in possession of theland.
Oct 22, 1924
Po Tecsi leased a part of the land to Uy Chia fora period of 5 years.
Po Tecsi sent letters complaining of Po Ejap’s pressuring him
to pay the rent and also to call the attention of Po Ejap forleasing the land without consulting him.
In 1925, the second mortgage was cancelled.
Po Tecsi died, and his son Po Sun Suy sent a liquidation of accounts over the propert to Po Ejap. Po Sun Suy wasappointed administrator of 
Po Tecsi’s estate, and he includedthe land as one of hid dad’s properties.
In 1927, Po Ejap assigned all his rights and actions in the credit 
of P68,000 against Po Tecsi to Po Sun Boo (Po Ejap’s son) who
bought the land from Katigbak. This purchase was madeknown by Po Sun Boo to Po Sun Suy to deal with him regardingthe payment of the rent.

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