THE PHILIPPINE SUGAR ESTATES DEVELOPMENT CO., LTD., INC., PLAINTIFF AND APPELLEE, VS. JUAN M. POIZAT ET AL., DEFENDANTS. GABRIELA ANDREA DE COSTER, APPELLANT.

August
25, 1905, the appellant, with his consent, executed to and in favor of
her husband, Juan M. Poizat, a general power of attorney, which, among
other things, authorized him to do “in her name, place and stead, and
making use of her rights and actions,” the following things:

“To
loan or borrow any amount in cash or fungible things at the rate of
interest, for the time, and under the conditions he may deem
convenient, collecting or paying the principal or the interest, when
they respectively should become due; executing and signing the
corresponding public or private documents, and making these
transactions with or without mortgage, pledge or personal securities.”

November 2, 1912, Juan M. Poizat applied for and obtained from the
plaintiff a credit for the sum of 10,000 Pounds Sterling to be drawn on
the “Banco Español del Rio de la Plata” in London not later than
January, 1913. Later, to secure the payment of the loan, he executed a
mortgage upon the real property of his wife, the material portions of
which are as follows:

“This indenture
entered into in the City of Manila, P. I., by and between Juan M.
Poizat, merchant, of legal age, married and residing in the City of
Manila, in his own behalf and in his capacity also as attorney in fact
of his wife Doña Gabriela Andrea de Coster by virtue of the authority
vested in him by the power of attorney duly executed and acknowledged
in this City of Manila, etc.

“First. That in the name of
Doña Gabriela Andrea de Coster, wife of Don Juan M. Poizat, there is
registered on page 89 (back) of Book 3, temporary Binondo Section,
property No. 685, inscription No. 3, Urban Property consisting of a
house and six adjacent warehouses, all of strong material and
constructed upon her own land, said property being Nos. 5, 3, and 1 of
Calle Urbiztondo, and No. 13 of Calle Barraca in the District of
Binondo in the City of Manila, etc.

“Second. That the
marriage of Don Juan M. Poizat and Doña Gabriela Andrea de Coster being
subsisting and undissolved, and with the object of constructing a new
building over the land hereinabove described, the aforesaid house with
the; six warehouses thereon constructed were demolished and in their
stead a building was erected, by permission of the Department of
Engineering and Public Works of this City issued November 10, 1902,
said building being of strong material which, together with the land,
now forms only one piece of real estate, etc.; which property must be
the subject of a new description [registration] in which it must appear
that the land belongs in fee simple and in full ownership as
paraphernal property to the said Doña Gabriela Andrea de Coster and the
new building thereon constructed to the conjugal partnership of Don
Juan M. Poizat and the said Doña Gabriela Andrea de Coster, etc.

“Third.
That the Philippine Sugar Estates Development Company, Ltd., having
granted to Don Juan M. Poizat a credit of Ten Thousand Pounds Sterling
with a mortgage upon the real property above described, etc.

“(a)
That the Philippine Sugar Estates Development Company, Ltd., hereby
grants Don Juan M. Poizat a credit in the amount of Ten Thousand Pounds
Sterling which the said Mr. Poizat may use within the entire month of
January of the coming year, 1913, upon the bank established in the City
of London, England, known as ‘Banco Español del Rio de la Plata,’ which
shall be duly advised, so as to place upon the credit of Mr. Poizat the
said amount of Ten Thousand Pounds Sterling, after executing the
necessary receipt therefor.

“(c) That Don Juan M.
Poizat personally binds himself and also binds his principal Doña
Gabriela Andrea de Coster to pay the Philippine Sugar Estates
Development Company, Ltd., for the said amount of Ten Thousand Pounds
Sterling at the yearly interest of 9 per cent which shall be paid at
the end of each quarter, etc.

“(d) Don Juan M.
Poizat also binds himself personally and his principal Doña Gabriela
Andrea de Coster to return to the Philippine Sugar Estates Development
Company, Ltd., the amount of Ten Thousand Pounds Sterling within four
years from the date that the said Mr. Poizat shall receive the
aforesaid sum as evidenced by the receipt that he shall issue to the
‘Banco Español del Rio de la Plata.’

“(e) As
security for the payment of the said credit, in the case Mr. Poizat
should receive the money, together with its interest the said Mr.
Poizat in the dual capacity that he represents hereby constitutes a
voluntary especial mortgage upon the Philippine Sugar Estates
Development Company, Ltd., of the urban property above described, etc.

“(f)
Don Juan M. Poizat in the capacity above mentioned binds himself,
should he receive the amount of the credit, and while he may not return
the said amount of Ten Thousand Pounds Sterling to the Philippine Sugar
Estates Development Company, Ltd., to insure against fire the mortgaged
property in an amount not less than One Hundred Thousand Pesos, etc.

“Fourth.
Don Buenaventura Campa in the capacity that he holds hereby accepts
this indenture in the form, manner, and condition executed by Don Juan
M. Poizat by himself personally and in representation of his wife Doña
Gabriela Andrea de Coster, in favor of the Philippine Sugar Estates
Development Company, Ltd.

“In witness whereof, we have signed these presents in Manila, this November 2, 1912.

(Sgd.)		“JUAN M. POIZAT
		“THE PHILIPPINE SUGAR ESTATES
			DEVELOPMENT COMPANY, LTD.
				“The President
		“BUENAVENTURA CAMPA

“Signed in the presence of:

(Sgd.)		“MANUEL SAPSANO
		“JOSE SANTOS

“UNITED STATES OF AMERICA
“PHILIPPINE ISLANDS
“CITY OF MANILA

“In
the City of Manila P. I., this November 2, 1912, before me Enrique
Barrera y Caldes, a Notary Public for said city, personally appeared
before me Don Juan M. Poizat and Don Buenaventura Campa, whom I know to
be the persons who executed the foregoing document and acknowledged
same before me as an act of their free will and deed; the first
exhibited to me his certificate of registry No. 14237, issued in
Manila, February 6, 1912, the second did not exhibit any cedula, being
over sixty years old; this document bears No. 495, entered on page 80
of my Notarial registry.

		“Before me:
	(Sgd.) “Dr. ENRIQUE BARRERA Y CALDES
” [NOTARIAL SEAL]			“Notary Public
		“Up to the 31st of December, 1912”

For failure to pay the loan, on November 12, 1923, the plaintiff
brought an action against the defendants, to fore- close the mortgage.
In this action, the summons was served upon the defendant Juan M.
Poizat only, who employed the services of Antonio A. Sanz to represent
the defendants. The attorneys filed a general appearance for all of
them, and later an answer in the nature of a general denial.

February 18, 1924, when the case was called for trial, Jose Galan y
Blanco in open court admitted all of the allegations made in the
complaint, and consented that judgment should be rendered as prayed
for. Later, Juan M. Poizat personally, for himself and his
codefendants, filed an exception to the judgment, and moved for a new
trial, which was denied March 31, 1924.

August 22, 1924, execution was issued directing the sale of the mortgaged property to satisfy the judgment.

September 18, 1924, the property, which had an assessed value of
P342,685, was sold to the plaintiff for the sum of P100,000.

September 23, 1924, and for the first time, the appellant personally
appeared by her present attorney, and objected to the confirmation of
the sale, among other things, upon the following grounds: That the
mortgage in question was illegally executed, and is null and void,
because the agent of this defendant was not authorized to execute it.
That there was no consideration. That the plaintiff, with full
knowledge that J. M. Poizat was acting beyond the scope of his
authority, filed this action to subject the property of this defendant
to the payment of the debt which, as to appellant, was not a valid
contract. That the judgment was rendered by confession when the
plaintiff and J. M. Poizat knew that Poizat was not authorized to
confess judgment, and that the proceeding was a constructive fraud.
That at the time the action was filed and the judgment rendered, this
defendant was absent from the Philippine Islands, and had no knowledge
of the execution of the mortgage. That after the judgment of
foreclosure became final and the order of the sale of the property was
made, that this defendant for the first time learned that the mortgage
contract was tainted with fraud, and that she first knew and learned of
such things on the 11th of September, 1924. That J. M. Poizat was not
authorized to bind her property to secure the payment of his personal
debts. That the plaintiff knew that the agent of the defendant was not
authorized to bind her or her property. That the mortgage was executed
to secure a loan of 10,000 Pounds, which was not made to this defendant
or for her benefit, but was made to him personally and for the personal
use and benefit of J. M. Poizat.

Among other things, the mortgage in question, marked Exhibit B, was introduced in evidence, and made a part of the record.

All of such objections to the confirmation of the sale were overruled,
from which Gabriela Andrea de Coster appealed and assigns the following
errors:

“I. The lower court erred in
finding that Juan M. Poizat was, under the power of attorney which he
had from Gabriela Andrea de Coster, authorized to mortgage her
paraphernal property as security for a loan made to him personally by
the Philippine Sugar Estates Development Co., Ltd.;

“II.
The lower court erred in not finding that under the power of attorney,
Juan M. Poizat had no authority to make Gabriela Andrea de Coster
jointly liable with him for a loan of 10,000 Pounds made by the
Philippine Sugar Estates Development Co., Ltd., to him;

“III.
The lower court erred in not finding that the Philippine Sugar Estates
Development Co., Ltd., had knowledge and notice of the lack of
authority of Juan M. Poizat to execute the mortgage deed Exhibit A of
the plaintiff;

“IV. The lower court erred in holding that
Gabriela Andrea de Coster was duly summoned in this case; and in
holding that Attorney Jose Galan y Blanco could lawfully represent her
or could, without proof of express authority, confess judgment against
Gabriela Andrea de Coster;

”V. The court erred in holding that the judgment in this case has become final and res judicata;

“VI. The court erred in approving the judicial sale made by the sheriff at an inadequate price;

“VII. The lower court erred in not declaring these proceedings, the judgment and the sale null and void.

JOHNS, J.:

For the reasons stated in the decision of this court in the Bank of the Philippine Islands vs.
De Coster (47 Phil., 594), the alleged service of the summons in the
foreclosure suit upon the appellant was null and void. In fact, it was
made on J. M. Poizat only, and there is no claim or pretense that any
service of summons was ever made upon her. After service was made upon
him, the attorneys in question entered their appearance for all of the
defendants in the action, including the appellant upon whom no service
was ever made, and filed an answer for them. Later, in open court, it
was agreed that judgment should be entered for the plaintiff as prayed
for in its complaint.

The appellant contends that the
appearance made by the attorneys for her was collusive and fraudulent,
and that it was made without her authority, and there may be some truth
in that contention. It is very apparent that the attorneys made no
effort to protect or defend her legal rights, but under our view of the
case, that question is not material to this decision.

The
storm center of this case is the legal force and effect of the real
mortgage in question, by whom and for whom it was executed, and upon
whom is it binding, and whether or not it is null and void as to the
appellant.

It is admitted that the appellant gave her
husband, J. M. Poizat, the power of attorney in question, and that it
is in writing and speaks for itself. If the mortgage was legally
executed by her attorney in fact for her and in her name as her act and
deed, it would be legal and binding upon her and her property. If not
so executed, it is null and void.

It appears upon the face
of the instrument that J. M. Poizat, as the husband of the wife, was
personally a party to the mortgage, and that he was the only person who
signed the mortgage. It does not appear from his signature that he
signed it for his wife or as her agent or attorney in fact, and there
is nothing in his signature that would indicate that in the signing of
it by him, he intended that his signature should bind his wife. It also
appears from the acknowledgment of the instrument that he executed it
as his personal act and deed only, and there is nothing to show that he
acknowledged it as the agent or attorney in fact of his wife, or as her
act and deed.

The mortgage recites that it was entered into
by and between Juan M. Poizat in his own behalf and as attorney in fact
of his wife. That the record title of the mortgaged property is
registered in the name of his wife, Doña Gabriela Andrea de Coster.
That they were legally married, and that the marriage between them has
never been dissolved. That with the object of constructing a new
building on the land, the six warehouses thereon were demolished, and
that a new building was erected. That the property is the subject of a
new registration in which it must be made to appear that the land
belongs in fee simple and in full ownership as the paraphernal property
of the wife, and that the new building thereon is the property of the
conjugal partnership. “That the Philippine Sugar Estates Development
Company, Ltd., having granted to Don Juan M. Poizat a credit of 10,000
Pounds Sterling with the mortgage upon the real property above
described,” that the Development Company “hereby grants Don Juan M.
Poizat a Credit in the amount of 10,000 Pounds Sterling which the said
Mr. Poizat may use, etc.” That should he personally or on behalf of his
wife use the credit he acknowledges, that he and his principal are
indebted to the Development Company in the sum of 10,000 Pounds
Sterling which “they deem to have received as a loan from the said
commercial entity.” That he binds himself and his wife to pay that
amount with a yearly interest of 9 per cent, payable quarterly. That as
security for the payment of said credit in the case Mr. Poizat should
receive the money at any time, with its interest, “the said Mr. Poizat
in the dual capacity that he represents hereby constitutes a voluntary
especial mortgage.” That Don Juan M. Poizat “in the capacity above
mentioned binds himself, should he receive the amount of the credit.”

It thus appears that at the time the power of attorney and the mortgage
were executed, Don Juan M. Poizat and Gabriela Andrea de Coster were
husband and wife, and that the real property upon which the mortgage
was executed was her sole property before her marriage, and that it was
her paraphernal property at the time the mortgage was executed, and
that the new building constructed on the land was the property of the
conjugal partnership.

The instrument further recites that
the Development Company “hereby grants Don Juan M. Poizat a credit in
the amount of 10,000 Pounds Sterling which the said Mr. Poizat may use
within the entire month of January of the coming year, 1913.” In other
words, it appears upon the face of the mortgage that the loan was made
to the husband with authority to use the money for his sole use and
benefit. With or without a power of attorney, the signature of the
husband would be necessary to make the instrument a valid mortgage upon
the property of the wife, even though she personally signed the
mortgage.

It is contended that the instrument upon its face
shows that its. purpose and intent was to bind the wife. But it also
shows upon its face that the credit was granted to Don Juan M. Poizat
which he might use within the “entire month of January.”

Any authority which he had to bind his wife should be confined and limited to his power of attorney.

Giving to it the very broadest construction, he would not have any
authority to mortgage her property, unless the mortgage was executed
for her “and in her name, place or stead,” and as her act and deed. The
mortgage in question was not so executed. It was signed by Don Juan M.
Poizat in his own name, his own proper person, and by him only, and it
was acknowledged by him in his personal capacity, and there is nothing
in either the signature or acknowledgment which shows or tends to show
that it was executed for or on behalf of his wife or “in her name,
place or stead.”

It is contended that the instrument shows
upon its face that it was intended to make the wife liable for his
debt, and to mortgage her property to secure its payment, and that his
personal signature should legally be construed as the joint or dual
signature of both the husband and that of the wife as her agent. That
is to say, construing the recitals in the mortgage and the instrument
as a whole, his lone personal signature should be construed in a double
capacity and binding equally and alike both upon the husband and the
wife. No authority has been cited, and none will ever be found to
sustain such a construction.

As the husband of the wife, his
signature was necessary to make the mortgage valid. In other words, to
make it valid, it should have been signed by the husband in his own
proper person and by him as attorney in fact for his wife, and it
should have been executed by both husband and wife, and should have
been so acknowledged.

There is no principle of law by which
a person can become liable on a real mortgage which she never executed
either in person or by attorney in fact. It should be noted that this
is a mortgage upon real property, the title to which cannot be divested
except by sale on execution or the formalities of a will or deed. For
such reasons, the law requires that a power of attorney to mortgage or
sell real property should be executed with all of the formalities
required in a deed. For the same reason that the personal signature of
Poizat, standing alone, would not convey the title of his wife in her
own real property, such a signature would not bind her as a mortgagor
in real property, the title to which was in her name.

We
make this broad assertion that upon the facts shown in the record, no
authority will ever be found to hold the wife liable on a mortgage of
her real property which was executed in the form and manner in which
the mortgage in question was executed.

The real question involved is fully discussed in Mechem on Agency, volume 1, page 784, in which the author says:

“It
is to be observed that the question here is not how authority to
execute sealed instruments is to be conferred, but how such an
authority is to be executed. It is assumed that the agent was
authorized to bind his principal, but the question is, has he done so.”

That is the question here,

Upon that point, there is a full discussion in the following sections, and numerous authorities are cited:

“SEC. 1093. Deed by agent must purport to be made and sealed in the name of the principal.—It
is a general rule in the law of agency that in order to bind the
principal by a deed executed by an agent, the deed must upon its face
purport to be made, signed and sealed in the name of the principal. If,
on the contrary, though the agent describes himself as ‘agent,’ or
though he add the word ‘agent’ to his name, the words of grant,
covenant and the like, purport upon the face of the instrument to be
his, and the seal purports to be his seal, the deed will bind the agent
if any one and not the principal.

“SEC. 1101. Whose deed is a given deed—How question determined.—In determining whether a given deed is the deed of the principal, regard may be had, First, to the party named as grantor. Is the deed stated to be made by the principal or by some other person? Secondly, to the granting clause. Is the principal or the agent the person who purports to make the grant? Thirdly, to the covenants, if any. Are these the covenants of the principal? Fourthly,
to the testimonium clause. Who is it who is to set his name and seal in
testimony of the grant? Is it the principal or the agent? And Fifthly, to the signature and seal. Whose signature and seal are these? Are they those of the principal or of the agent?

“If
upon such an analysis the deed does not upon its face purport to be the
deed of the principal, made, signed, sealed and delivered in his name
and as his deed, it cannot take effect as such.

“Sec. 1102. Not enough to make deed the principal’s that the agent is described as such.—It
is not enough merely that the agent was in fact authorized to make the
deed, if he has not acted in the name of the principal. Nor is it
ordinarily sufficient that he describes himself in the deed as acting
by virtue of a power of attorney or otherwise, or for or in behalf, or
as attorney, of the principal, or as a committee, or as trustee of a
corporation, etc.; for these expressions are usually but descriptio personae,
and if, in fact, he has acted in his own name and set his own hand and
seal, the causes of action thereon accrue to and against him personally
and not to or against the principal, despite these recitals.

“Sec. 1103. Not principal’s deed, where agent appears as grantor and signer.—Neither
can the deed ordinarily be deemed to be the deed of the principal where
the agent is the one who is named as the grantor or maker, and he is
also the one who signs and seals it. * * *

“Sec. 1108. * *
* But however clearly the body of the deed may show an intent that it
shall be the act of the principal, yet unless it is executed by his
attorney for him, it is not his deed, but the deed of the attorney or
of no one. The most usual and approved form of executing a deed by
attorney is by his writing the name of the principal and adding ‘by A B
his attorney’ or ‘by his attorney A B.’ * * *”

That is good law. Applying it to the facts, under his power of
attorney, Don Juan M. Poizat may have had authority to borrow money and
mortgage the real property of his wife, but the law specifies how and
in what manner it must be done, and the stubborn fact remains that, as
to the transaction in question, that power was never exercised. The
mortgage in question was executed by him and him only, and for such
reason, it is not binding upon the wife, and as to her, it is null and
void.

It follows that the whole decree against her and her
paraphernal property and the sale of that property to satisfy the
mortgage are null and void, and that any title she may have had in or
to her paraphernal property remains and is now vested in the wife as
fully and as absolutely as if the mortgage had never been executed, the
decree rendered or the property sold. As to Don Juan M. Poizat, the
decree is valid and binding, and remains in full force and effect.

It is an undisputed fact, which appears in the mortgage itself, that
the land in question was the paraphernal property of the wife, but
after the marriage, the old buildings on the property were torn down
and a new building constructed and, in the absence of evidence to the
contrary, it must be presumed that the new building is conjugal
property of the husband and wife (Civil Code, art. 1404). As such, it
is subject to the debts of the conjugal partnership for the payment or
security of which the husband has the power to mortgage or otherwise
encumber the property (Civil Code, art. 1413).

It is very probable that this particular question was not fully presented to or considered by the lower court.

The mortgage as to the paraphernal property of the wife is declared null and void ab initio,
and as to her personally, the decree is declared null and void, and as
to her paraphernal property, the sale is set aside and vacated, and
held for naught, leaving it free and clear from the mortgage, decree
and sale, and in the same condition as if the mortgage had never been
executed, with costs in favor of the appellant. So ordered.

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

DISSENTING

STREET, J., with whom concur Avanceña, C. J., Villamor, and Villa-Real, JJ.:

In the year 1913 the plaintiff, the Philippine Sugar Estates
Development Co., Ltd., Inc., let J. M. Poizat have nearly P100,000 of
money on the supposed security of a mortgage on property belonging to
his wife, Gabriela Andrea de Coster, executed by Poizat under a power
of attorney from her. The plaintiff has now to learn that the security
on which it relied is worthless and that it did not even so much as
have Gabriela Andrea de Coster in court in the foreclosure proceeding.
In the decision so holding the undersigned are unable to concur.

To dispose first of the point as to the jurisdiction of the court over
the person and property of Gabriela Andrea de Coster, it is only
necessary to refer to the third paragraph from the end of the power of
attorney (Exhibit A to the opposition of Gabriela Andrea de Coster)
under which Poizat acted. To express, in a few words the substance of
this paragraph in the part relevant to the present discussion, Poizat
is given full authority to represent his wife in all judicial
proceedings in Philippine courts, including, among other things, the
making of appearances, submission of answers, receiving of service of
process, and to take in her behalf any procedural steps and measures
required by the law of procedure in order to make effective and bring
to termination the matters in which he, as attorney in fact, may be
concerned. If this power is not sufficient to authorize Poizat to
accept service and employ a lawyer to appear in court for the
principal, as was done in this case, it would seem to be useless for
lawyers to exercise their ingenuity in the attempt to draft such
authority.

But the disastrous feature of the decision is
found in the pronouncement that the mortgage on which the plaintiff’s
money was obtained is a nullity; and upon this point the court holds
that Gabriela Andrea de Coster was not bound because the contract is
signed “Juan M. Poizat,” instead of “Gabriela Andrea de Coster, by Juan
M. Poizat.” But the document expressly recites in its preamble that it
is executed by Juan M. Poizat, acting both in representation of himself
and in the character of attorney in fact of his wife, Gabriela Andrea
de Coster, in virtue of the authority conferred upon him in the power
of attorney already mentioned. Furthermore, throughout the body of the
document the idea is repeatedly expressed that J. M. Poizat obligates
both himself and his wife. We submit that under the doctrine informing
the Civil Code—which should control in this jurisdiction—the mortgage
instrument was lawfully executed and in a form sufficient to bind the
principal as well as the agent. Certainly it would never occur to a
civilian lawyer that the document in question is informally executed;
and the circumstance that a learned Spanish notary (Don Enrique Barrera
y Caldes) intervened in the execution of this instrument would alone
suffice to show that it is done in conformity with approved Spanish
models—a fact otherwise apparent.

Even in the United States
and Great Britain, where strict doctrines might be expected to prevail
in such matters, owing to the technical rules involving the law of real
property in those countries, ample authority is found to the effect
that the principal will be bound by a contract signed by the agent
only, when it appears from the face of the instrument that he is acting
in the character of agent. (2 C. J., 672.)

From the portentous way
in which the opinion of the court refers to the question of the
sufficiency of the signature to the mortgage as the “storm centre of
the case,” one would suppose that this question had been at least
raised by the litigants and had been the subject of discussion in the
lower court as well as in the briefs of the attorneys here. Nothing of
the sort is true, for this capital point, on which the case is made
principally to turn, has been jumped up exclusively in this court; and
the voluminous briefs will be searched in vain for the slightest
reference to the subject. In fact both parties appear to have assumed
that the mortgage was executed with all proper formality. Apart from
the fact that the question was not raised in the lower court, no
assignment of error in this court calls in question the sufficiency of
the mode of execution of the instrument. Under these circumstances this
court should have confined itself to the matters put in issue by the’
litigants; and it should not have gone out of its way to take, up a
point not discussed by the parties, and upon which in fact the losing
party has never been heard. It is a good rule of practice—sometimes
respected by us—that an appellate court will not permit an appellant to
raise a point upon appeal which was not put in issue in the court below
and upon which no assignment of error has been made. In our opinion the
order appealed from should be affirmed.

DECISION UPON PETITION FOR REHEARING

February 15, 1926

JOHNS, J.:

The
plaintiff has filed a very able, vigorous and exhaustive petition for a
rehearing, which we have given the careful consideration which the
importance of the questions deserve.

The first proposition
advanced is that the mortgage in question is valid not only as to the
buildings, but also as to the land on which they are constructed. The
previous decision of this court is to the effect that, the buildings
being conjugal property, the mortgage is valid as to the buildings, but
that it is not valid as to the land, which is the paraphernal property
of the wife.

Plaintiff contends that the land is conjugal
property under the provisions of article 1404 of the Civil Code. That
article does not apply to the instant case. It does not appear that the
buildings are of the nature therein specified. The commentator Manresa,
cited in the motion for reconsideration, rightly distinguishes those
buildings which, by reason of their importance, convert the land on
which they are built into an accessory, from those which, on account of
their small relative value, continue to remain as accessories to the
land on which they are constructed, and for such reason partake of the
land.

“The word building is a generic term
for all architectural work with roof built for the purpose of being
used as man’s dwelling, or for offices, clubs, theaters, etc. When the
structure does not constitute a building, then the rule must be
followed. The article cannot but be interpreted strictly. An inclosure
for cattle or a ‘tinada,’ a stone barn, etc., follow the soil as
accessories thereto.” (9 Manresa, 626, 1919 ed.)

It appears from the mortgage that the buildings in question to be
constructed are warehouses, and as the circumstances and details do not
appear in the record, such warehouses could not be construed as the
class of buildings mentioned in article 1404. Hence, the facts are not
sufficient to justify the court in holding that the exceptional
provision applies to this case in the sense of considering the soil as
an accessory to the building, contrary to the general rule contained in
the Civil Code (arts. 358-364 and 1368). But conceding that article
1404 does apply, yet, under the provisions of that article, the owner
of the land is entitled to an indemnity for its value. Since, according
to the spirit of the law contained in article 349 of the Civil Code, no
one can be deprived of his property without previous indemnity, and it
not appearing in the instant case that such indemnity was ever paid,
the land in question cannot now be considered as conjugal property. But
it further appears that the mortgage upon which plaintiff relies
contains the following recitals:

“* * * which property must be the subject of a new registration wherein it must be stated that
the lot forming a part thereof pertains to said Doña Gabriela Andrea de
Coster in full ownership and fee simple as paraphernal property,
and the building newly erected thereon to the conjugal partnership
between Don Juan M. Poizat and his wife, the aforesaid Doña Gabriela
Andrea de Coster * * *” (Italics ours.)

The
plaintiff, having taken and accepted the mortgage, is bound by those
recitals. It further appears that this property is registered under the
Torrens System, and that the title to the land is vested in the wife,
and is not conjugal property, and that the wife is at least the owner
of the land.

In a supplemental plea filed January 21, 1926, petitioner cites and relies on the case of the National Bank vs.
Quintos and Ansaldo (46 Phil., 370), in which article 1408 of the Civil
Code was construed and applied. It must be conceded that this article
applies only to those cases wherein there is a presumption that the
debt contracted by the husband is for the common benefit of both
spouses, but this presumption may be overcome by evidence to the
contrary.

“All debts and obligations contracted during the marriage by the husband, the legal representative of the partnership in the normal condition thereof, are deemed contracted by the partnership. The law presumes that they are contracted for the common benefit of both. However, this presumption may be overthrown by evidence to the contrary, as we shall see when we take up article 1413.” (9 Manresa, 648.)

For
this reason, where, as in the instant case, it appears that the loan
obtained by the husband was not only not obtained for the common
benefit of the conjugal partnership, but was obtained to the damage of
the wife, there is no such presumption, and that article does not
apply. It is further contended that the mortgage was executed with all
of the legal necessary formalities, and in accord with the established
practice and custom in the Philippine Islands, citing blank forms given
in section 127 of Act No. 496, from which plaintiff’s counsel contends
that it is not required that the attorney in fact, who executes a
document in his own name and that of his principal, must show in his
signature his double capacity by writing first his own signature and
then the name of his principal, and say “by” and thereafter his own
signature as attorney in fact.

The Act should be construed with reference to section 81 of Act No. 136, which says:

“After
the enactment of a new system of registration of land titles, the
notarial law of the Philippine Islands of February fifth, eighteen
hundred and eighty-nine, its regulations of April eleventh, eighteen
hundred and ninety, and the general instructions for drafting
instruments subject to record in the Philippine Islands, of October
third, eighteen hundred and eighty-nine, and the modifications thereof,
by General Order Number Forty, issued from the office of the United
States Military Governor, on September twenty-third, eighteen hundred
and ninety-nine, and by General Order Number Twenty, issued from the
office of the Military Governor on February third, nineteen hundred,
shall be repealed and shall be of no effect after the date of such
enactment, and thereafter appointments of notaries public and the
performance of official duties by them shall be regulated by the
subsequent provisions of this Act.”

The old
Spanish notarial law and system of conveyances was repealed in the
Philippines, and another and a different notarial law and system became
the law of the land with the enactment of Act No. 496. One of the
fundamental differences between the two systems consists in this. Under
the Spanish system, the documents were executed in the form of minutes,
wherein the notary was the one who spoke, and under Act No. 496, the
notary is not the one who speaks, and there is no record kept of the
minutes, and the intervention of a notary is limited to the
acknowledgment only of the document. Under the Spanish system, to
determine the capacity in which a person executed a document, it was
sufficient to look at the text of the document, because its whole text
was attended with the solemnity of the notary authorizing its
execution. Under the present system, it is necessary to resort to the
form in which the parties sign an instrument, because it is the
signature rather than the text which bears the stamp of authenticity.

Neither does section 127 of Act No. 496 bear the construction for which
the plaintiff contends. It provides in legal effect that where one or
more persons executed a conveyance, the instrument must be executed by
all of the parties to the conveyance, and that if there are two or more
persons, the instrument must not only be signed by all of the parties
to the conveyance, but it must be acknowledged by all of them. That
clearly appears from the certificate of acknowledgment in which it is
recited:

“* * * personally appeared………………………………….,

known to me to be the same person (or persons) who executed the
foregoing instrument, and acknowledged that the same is his (or their)
free act and deed.”

The construction for which plaintiff
contends would nullify the words “or persons” and the words “or their.”
The fact that those words are used in the manner in which they are used
in section 127, must mean that where two or more persons give a deed or
mortgage on real property, that all of them should not only sign the
mortgage, but that all of them should acknowledge it as “their free act
and deed.”

Again, in the instant case, the power of attorney
was given by the wife to the husband, and the husband himself was a
party to the mortgage, and the money was paid to him for and on his
personal account, and his signature was necessary to bind any interest
which he had in the land as the husband of the wife, and the signature
of the wife in some form was necessary to bind her interest in the
land. Here, you have the signature of the husband standing alone, and
there is nothing upon the face of it which shows that in the signing of
it, the husband ever intended to bind his wife. If Poizat had not been
the husband of his wife, and if he himself was not a party to the
instrument and did not have any interest in the land mortgaged, another
and a very different question would be presented, and his lone
signature might then bind the property of the wife.

With all
due respect to the learned counsel, no law, either Spanish or American,
has been cited or will ever be found which, upon the facts shown in the
record, will construe the lone unqualified signature of the husband as
the joint and dual signature of both the husband and the wife, so as to
make it binding upon the paraphernal property of the wife.

Although not cited in the petition during the discussion of this case
in conference, attention was called to article 1717 of the Civil Code
which provides as follows:

“When an agent
acts in his own name, the principal shall, have no right of action
against the persons with whom the agent has contracted, or such persons
against the principal.

“In such case, the agent is directly
liable to the person with whom he has contracted, as if the transaction
were his own. Cases involving things belonging to the principal are
excepted.

“The provisions of this article shall be understood to be without prejudice to actions between principal and agent.”

In the instant case, this section should be construed with article 1713, which among other things provides that:

“In order to compromise, alienate, mortgage, or to execute any other act of strict ownership, an express power is required.”

The mortgage in question was upon real property, and it was not a
“simple contract,” and where an agency is created by an express power,
it must be executed with the formalities of an express power.

Again, although the wife was a party to the body of the mortgage,
Poizat himself had an interest in the real property, and was a party to
the instrument, and his personal signature was necessary to the
mortgage to bind his own personal interest, and the interest of the
conjugal partnership. The power of attorney from the wife gave her
husband the express power defined in article 1713, and that power
should have been exercised, and the mortgage should have been executed
“in the name, place, and stead of the wife.” That was not done.

The authorities cited in the petition for a rehearing and in the
minority opinion are based upon, and refer to, the execution by the
agent of a “simple contract,” and for such reason are not in point.
There is a very marked legal distinction between the authority of an
agent to make a “simple contract,” and his authority to convey or
mortgage real property and the manner in which the power should be
executed.

It may be true that the decision of this court is
based upon questions that are not as fully discussed in the appellant’s
brief, as they should have been, but the fact remains that they were
pointed out, and attention was called to them in the argument in the
brief, and that they are expressly covered by the assignments of error.

Although ably presented, we are clearly of the opinion that the petition for a rehearing must be denied. So ordered.

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

DISSENTING

AVANCEÑA, C. J., STREET, VILLAMOR, and VILLA-REAL, JJ.:

We
insist in our dissenting opinion and reference is hereby made to what
we briefly said in our separate opinion. We wish, however, to emphasize
our point of view on the merits of the case with regard to appellant’s
liability.

The theory of the majority is contained in the following paragraph of its decision upon the motion for reconsideration:

“*
* * if Poizat had not been the husband of his wife, and if he himself
was not a party to the instrument and did not have any interest in the
land mortgaged, another and a very different question would be
presented, and his lone signature might then bind the property of the
wife.”

It follows from this that the power
given by the appellant to her husband Juan M. Poizat is held sufficient
to mortgage the land in question, that the contract entered into by him
with the plaintiff, mortgaging this land, is within the scope of this
power, and that the contract thus signed by Poizat might be sufficient
to bind the appellant. But it is said that it is not, by reason of the
fact that Poizat was also a party to the contract and has an interest
in the property mortgaged. We do not see the importance of this fact.
If Poizat were not a party to the contract and had no interest in the
property mortgaged, the document would, as it stands,—signed by him
alone,—be sufficient to bind the appellant, not by what his signature
says, since it says nothing, but because the document shows that he was
acting on behalf of the appellant. This being the case, we see no
reason why the document should not have full effect merely because it
states that Poizat was acting on his behalf and that of the appellant.
The most that can be said is that it was necessary that Poizat should
have signed twice, but again we do not see the necessity of this
duplicity. The signature serves only to authenticate the document,—and
for this purpose one is enough,—and not to express the nature and
extent of the obligation, which must be determined by the document
itself.

But whether this be the effect of the majority
opinion, or that it is necessary, in order to bind the appellant, that
Poizat should have signed the document twice, the first time on his own
behalf, and the second on that of the appellant, or should have signed
it only once, stating that he did so in his own behalf and that of the
appellant, with all due respect to the majority, we believe that the
decision rendered is erroneous.

The doctrine laid down by
the majority is openly repugnant to the spiritualistic conception which
informs article 1278 of the Civil Code, according to which contracts shall be binding whatever may be the form in which they may have been entered into, provided that the essential requisites for their validity are present.

In some contracts, a public document is required as a special form for
convenience of evidence (art. 1280, Civil Code), but not as an
essential requisite for its validity, but only for its efficaciousness
(art. 1279, Civil Code). In very few cases does the Civil Code require
a certain form for special reasons, as a requisite to the validity of
the contract as for instance in the donation, in which a public
document is required (art. 633, Civil Code), and in the mortgage, which
must be registered (art. 1875, Civil Code). But except in these cases,
and even in these cases, once the required special form is complied
with, the question as to form in the former, or the question as to
other formalities in the latter, falls under the broad rule established
in article 1278, and loses all its influence on the effects of the
contract, it being enough that the contract be proven. In this
connection, we are not unmindful of the amendments introduced by the
Code of Civil Procedure to the Civil Code as to the form of contracts
for their efficaciousness, but nevertheless we believe that the rule
provided by article 1278 of the Civil Code subsists.

In the
instant case, the power given by the appellant to Poizat, as well as
the mortgage executed by the latter in his own behalf and that of the
appellant with the plaintiff was executed in the form required by the
law, that is, in a public document registered in the registry of
property. Under such circumstances, it is not proper to destroy the
effects of these contracts and ignore the rights and obligations which
the parties thereby desired to acquire and assume, merely by reason of
a formality which no law requires, and does not seem to answer any
purpose. The theory of agency, according to the Civil Code, is based on
representation and its characteristic is the subrogation of the agent
in the place of his principal whom he substitutes, in matters
constituting the subject-matter of the agency. Thus, once it is stated
in the document that the agent acts by virtue of the agency, he absorbs
the personality of the principal, and by a legal fiction, he appears as
the principal himself, and whatever he does within the agency is
considered as done by the principal.

At any rate, even
supposing that Poizat acted in his own name in executing the contract
with the plaintiff, as he acted within the limits of the agency or
power granted him by the appellant and the contract relates to things
belonging to her, the plaintiff has an action against the appellant
under article 1717 of the Civil Code.