31 PHIL 259

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[No. 9608. August 7, 1915.]

DIEGO LIAN, plaintiff and appellee, vs. MARCOS P.PUNO ET AL., defendants and appellants.

PRINCIPAL AND AGENT CONTRACTS GENERALRULES OF CONSTRUCTION.Contracts of agency, aswell as general powers of attorney, must be interpreted inaccordance with the language used by the parties. Thereal intention of the parties is primarily to be determinedfrom the language used. The intention is to be gathered from the whole instrument. In case of doubt, resort must behad to the situation, surroundings, and relations of theparties. Whenever it is possible, effect is to be given toevery word or clause used by the parties. It is to bepresumed that the parties said what they intended to sayand that they used each word or clause with somepurpose, and that purpose is, if possible, to be ascertainedand enforced. If the contract be open to two constructions,one of which would uphold while the other wouldoverthrow it, the former is to be chosen. If by oneconstruction the contract would be illegal, and by anotherequally permissible construction it would be lawful, thelatter must be adopted. The acts of the parties will bepresumed to be done in conformity with and not contraryto the intent of the contract. The meaning of generalwords must be construed with reference to the specificobject to be accomplished and limited by the recitals madein reference to such object.

ID. ACCEPTANCE OF BENEFITS BY PRINCIPAL.Where a principal has acquiesced in the acts of hisagent for a long period of time, and has received andappropriated to his own use the benefits resulting fromthe acts of his agent, courts should be slow in declaringthe acts of the agent null and void.

Per TRENT, J., dissenting:



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(1)

(2)

PRINCIPAL AND AGENT POWER TO SELL REALESTATE CONSTRUCTION OF INSTRUMENT.Toconfer the right upon an agent to sell real estate, a powerof attorney must so express his powers

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260 PHILIPPINE REPORTS ANNOTATED

Lian vs. Puno.

in clear and unmistakable language. When there is anyreasonable doubt that the language so used conveys such apower, no such construction should be given the document.

ID. ID. ID. GENERAL WORDS LIMITED BY SPECIFICWORDS.When the power to "buy, sell, or collect and payin any way whatsoever" is, by the simple grammaticalconstruction of the document, subordinated to the clause"for the good administration and furtherance of my saidinterests," such general words should be restricted to thefacts included in the governing clause.

APPEAL from a judgment of the Court of First Instance ofTarlac. McMahon, J.

The facts are stated in the opinion of the court.Mariano Escueta for appellants.S. Lopez Jesus for appellee.

JOHNSON, J.:

The facts upon which the decision in this case depends areas follows:

That the plaintiff, in the month of May, 1908, andfor a long time prior thereto, was the owner of acertain parcel of land particularly described inparagraph 2 of the complaint.That on the 16th day of May, 1908, the plaintiffexecuted the following document, which conferredupon the defendant Marcos P. Puno the power,duties and obligations therein contained:

"I, Diego Lian, of age, married, a resident of Daet,Province of Ambos Camarines, Philippine Islands, and at



(3)

the present time temporarily residing in this city of Tarlac,capital of the Province of Tarlac, P. I., set forth that Ihereby confer sufficient power, such as the law requires,upon Mr. Marcos P. Puno, likewise a resident of this city ofTarlac, capital of the Province of Tarlac, in order that in myname and representation he may administer the interest Ipossess within this municipality of Tarlac, purchase, sell,collect and pay, as well as sue and be sued before anyauthority, appear before the courts of justice and ad

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VOL. 31, AUGUST 7, 1915. 261Lian vs. Puno.

ministrative officers in any proceeding or businessconcerning the good administration and advancement ofmy said interests, and may, in necessary cases, appointattorneys at law or attorneys in fact to represent him."

The meaning, purport, and power conferred by thisdocument constitute the very gist of the present action.

That in June, 1911, the defendant Puno, for thesum of P800, sold and delivered said parcel of landto the other defendants.

The plaintiff alleges that the said document (Exhibit A) didnot confer upon the defendant Puno the power to sell theland and prayed that the sale be set aside that the land bereturned to him, together with damages.

The defendants at first presented a demurrer to thecomplaint, which was overruled. To the order overrulingthe demurrer the defendants duly excepted. They lateranswered. In their answer they first denied generally andspecifically all of the important facts stated in thecomplaint In their special answer or defense they admittedthe sale of the land by Puno to the other defendants andalleged that the same was a valid sale and prayed to berelieved from the liability under the complaint, with theircosts.

Upon the issue thus presented the lower court decided:(1) That the document Exhibit A did not give Punoauthority to sell the land (2) That the sale was illegal andvoid (3) That defendants should return the land to theplaintiff and (4) That the defendants should pay to the



"I.

"II.

"III.

"IV.

plaintiff the sum of P1,000 as damages, P400 of which thedefendant Puno should alone be responsible for, and to paythe costs.

From that decision the defendants appealed to this courtand made the following assignments of error:

The lower court erred in overruling the demurrerfiled by the appellants to the complaint.The lower court erred in holding that the appellantMarcos P. Puno was not authorized to sell the landin ques

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262 PHILIPPINE REPORTS ANNOTATEDLian vs. Puno.

tion and that the sale executed by the said MarcosP. Puno to the other appellants, Enrique, Vicente,Aquilina and Remedios, surnamed Maglanok, isnull and void.The lower court erred in not ordering the appellee,Diego Lian, to return to the appellants, Enrique,Vicente, Aquilina and Remedios Maglanok the sumof P800, as the selling price of the land in question.And, finally, the lower court erred in sentencing theappellants to pay to the appellee the sum of P1,000,the value of the products collected, and to pay thecosts." With reference to the first assignment oferror, we are of the opinion that the facts stated inthe opinion are sufficient to constitute a cause ofaction.

With reference to the second assignment of error, theplaintiff alleges that the power of attorney, as contained inExhibit A, did not authorize the defendant Puno to sell theland. The defendants insist that Puno had full andcomplete power and authority to do what he did. The lowercourt held that Exhibit A only gave Puno power andauthority to administer the land that he was notauthorized to sell it. Omitting the purely explanatory partsof Exhibit A, it reads as follows: "I, Diego Lian, * * * setforth that I * * * confer sufficient power, such as the lawrequires, upon Mr. Marcos P. Puno * * * in order that in my



name and representation he may administer * * *purchase, sell, collect and pay * * * in any proceeding orbusiness concerning the good administration andadvancement of my said interests, and may, in necessarycases, appoint attorneys at law or attorneys in fact torepresent him."

Contracts of agency as well as general powers ofattorney must be interpreted in accordance with thelanguage used by the parties. The real intention of theparties is primarily to be determined from the languageused. The intention is to be gathered from the wholeinstrument. In case of doubt resort must be had to thesituation, surroundings and relations of the parties.Whenever it is possible, effect is to be given to every wordand clause used by the

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parties. It is to be presumed that the parties said what theyintended to say and that they used each word or clausewith some purpose and that purpose is, if possible, to beascertained and enforced. The intention of the parties mustbe sustained rather than defeated. If the contract be opento two constructions, one of which would uphold while theother would overthrow it, the former is to be chosen. So, ifby one construction the contract would be illegal, and byanother equally permissible construction it would belawful, the latter must be adopted. The acts of the partiesin carrying out the contract will be presumed to be done ingood faith. The acts of the parties will be presumed to havebeen done in conformity with and not contrary to the intentof the contract. The meaning of generals words must beconstrued with reference to the specific object to beaccomplished and limited by the recitals made in referenceto such object.

With these general observations in mind, let us examinethe terms of the power conferred upon the defendant Puno(Exhibit A) and ascertain, if possible, what was the realintent of the plaintiff. The lower court held that the "onlypower conferred was the power to administer." Reading thecontract we find it says that the plaintiff "I confer * * *power * * * that * * * he may administer * * * purchase,



sell, collect and pay * * * in any proceeding or businessconcerning the good administration and advancement ofmy said interests." The words "administer, purchase, sell,"etc., seem to be used coordinately. Each has equal forcewith the other. There seems to be no good reason for sayingthat Puno had authority to administer and not to sell when"to sell" was as advantageous to the plaintiff in theadministration of his affairs as "to administer." To holdthat the power was "to administer" only when the power "tosell" was equally conferred would be to give effect to aportion of the contract only. That would give to specialwords of the contract a special and limited meaning to theexclusion of other general words of equal import.

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The record contains no allegation or proof that Puno actedin bad faith or fraudulently in selling the land. It will bepresumed that he acted in good faith and in accordancewith his power as he understood it. That his interpretationof his power, as gathered from the contract (Exhibit A), istenable cannot, we believe, be successfully denied. In viewof that fact and in view of the fact that, so far as the recordshows, the other defendants acted in good faith, we are ofthe opinion that the contract, liberally construed, as wethink it should be, justifies the interpretation given it byPuno. In reaching this conclusion, we have taken intoaccount the fact that the plaintiff delayed his action toannul said sale from the month of June, 1911, until the15th of February, 1913. Neither have we overlooked thefact charged in the brief of the appellants that the plaintiffhas not returned, nor offered to return, nor indicated awillingness to return, the purchase price. (Art. 1308 of theCivil Code Manikis vs. Blas, No. 7585.

1)

In view of all of the foregoing, we are of the opinion thatthe lower court committed the error complained of in thesecond assignment, and, without discussing the otherassignments of error, we are of the opinion, and so hold,that the judgment of the lower court should be and ishereby revoked and that the appellants should be relievedfrom all liability under the complaint. Without any findingas to costs, it is so ordered.



Arellano, C. J., Torres, Carson, and Araullo, JJ.,concur.

TRENT, J., dissenting:

The power of attorney, the identity of the land sold, the factof sale, and the identity of the parties are admitted.

I agree with the majority that "the meaning, purport,and power conferred by this document (Exhibit A, thepower of attorney) constitute the very gist of the presentaction," and that the parties acted in good faith. But Icannot see how "the fact that the plaintiff delayed hisaction to annul said sale from the month of June, 1911, to

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1 Not reported.

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February 15, 1913," and the fact that the appellants havecharged in their brief that the "plaintiff has not returned,nor offered to return, nor indicated a willingness to returnthe purchase price," can affect in any way the issuesinvolved in this case. The record shows that the land issituated in the Province of Tarlac and the plaintiff lives inthe Province of Ambos Camarines. The record fails to showwhether or not the plaintiff has returned, or offered toreturn, or is willing to return to the vendees the purchaseprice of the land. The charge in appellants' brief that theplaintiff has not done these things is not proof and shouldnot be taken as establishing a fact or facts.

The controlling question is, Was Puno authorized underthe power of attorney, which is set out in full in themajority opinion, to sell the real estate of his principal? Thesolution of this question must depend solely and exclusivelyupon the language used in that power of attorney, ExhibitA. There is no claim that the plaintiff enlarged the powersof his agent Puno after the execution of Exhibit A or thathe ratified the sale in question after it had been made.

Article 1713 of the Civil Code reads:"An agency stated in general terms only includes acts of



administration."In order to compromise, alienate, mortgage, or to

execute any other act of a strict ownership an expresscommission is required.

"The power to compromise does not give authority toplace the matter in the hands of arbitrators or amicablecompr omisers.''

The Director General de los Registros, in its resolution ofNovember 20, 1900 (90 Juris. Civ., 677), construed a powerof attorney given by a father to his son, authorizing thelatter to administer the property of his principal, "to leaseand to rent his principal's realty to the persons and for thetime, price and conditions he deems best, and also to makeejectments, to sign documents, to make collections, to makechanges in anything belonging to his principal, and

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to compromise any questions that may arise." Under colorof this authority, the son leased for a period of twelve yearsseveral parcels of land and charged several other parcelswith pensiones de censos in favor of a third person. I quotefrom the syllabus: "In the present case, the lessor wasauthorized by his principal to lease and to rent the latter'srealty to the persons and for the price, time and conditionsthat seemed best to him, and such authorization must beunderstood to have been granted for the simple contract oflease, which produces only personal obligations, andconsequently cannot be regarded as extended, withoutexpress command, to the stipulation of such conditions asmight alter the nature of the contract by transforming itinto a partial conveyance of ownership in the things leased,as happens in said case, wherein the agent has therebyexceeded the limits of his agency."

A quite similar power of attorney was disposed of in thesame manner in the resolution of October 26, 1904 (99Juris. Civ., 245) where an agent leased property for thirtyyears under color of authority to lease the property "f or thetime, price, and conditions" which he might thinkdesirable. In the Resolution of April 5, 1907 (Juris. Civ.,68), the facts were as follows: A power of attorney executedby a wife authorized her husband to administer a vineyard



belonging to her as might be necessary for its preservation,improvement, and increase. Under this power the husbandentered into an agreement with several other adjoiningowners with reference to the irrigation of their respectiveproperties by means of an aqueduct. To insure theaccomplishment of various stipulations inserted in thiscontract, the various parties thereto hypothecated theirrespective properties and sought to have the sameinscribed in the property registry. Registration was deniedon the ground, among others, that the power of attorney inquestion did not authorize the husband to perform any actof strict ownership, but only those of administration.

In commenting upon article 1713, Manresa quotesapprovingly from Goyena as follows: "As Garcia Goyenasays,

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VOL, 31, AUGUST 7, 1915. 267Lian vs. Puno.

'The law, which must look after the interests of all, cannotpermit a man to express himself in a vague and generalway with reference to the right he confers upon another forthe purposes of alienation or hypothecation, whereby hemight easily be despoiled of all he possessed and bebrought to ruin such excessive authority must be set downin the most formal and explicit terms and when this is notdone, the law reasonably presumes that the principal didnot mean to confer it/ " (Vol. 11, p. 460.)

Bonel, in commenting upon the same article, says: "Ourcode, in looking after the interests of all and therebyfurnishing a proof of common sense, does not permit avague expression in a general and indefinite manner of theright one confers upon another to make alienations andhypothecations, for in this way a man could with good faithon his part be despoiled of all he possessed and be broughtto ruin hence it provides that such excessive authoritymust be set down in the most favorable and explicit termsand when this is not done, reason and common senseinduce the presumption that the principal did not mean toconf er it," (Vol. 4, p. 728.)

The supreme court of Louisiana, which also interpretsthe civil law, was considering the following power ofattorney in Lafourche Transportation Co. vs. Pugh (52 La.



Ann., 1517): "We * * * have appointed, * * * (defendant) ourtrue and lawful agent and attorney in fact, for us, and inour name, place and stead, to manage, control, take chargeof, compromise and do any and all things, necessary andrequisite, touching and concerning our interests in thesuccession of the late Robert Lawrence Pugh, and to makeany and all settlements for us, and in our behalf, with thelegatees under the last will and testament of the said R. L.Pugh, vesting our said attorney and agent with full powerand authority, to do any and all acts that we might do ifpersonally present * * *."

The remarks of the court are brief and instructive: "Itfurther appears that, neither at the date of the execution ofthe note and act of mortgage sued on, nor at any other

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time, has W. W. Pugh held any other procuration, theattempt to prove the contrary having failed. There is nodoubt that, at the time that the note and act or mortgagewere executed, he supposed that the power of attorney heldby him conferred the authority which he undertook toexercise, but the bare reading of it shows that it did not."

In Lord vs. Sherman (2 Cal., 498), a power of attorneyauthorized an agent to "attend to all business affairsappertaining to real or personal estate, bank business, orbusiness at the customhouse, or insurance or law business,or the commencement, settlement, or defending any suit orsuits in law or equity. Also for me and in my name, place,and stead, to sign, seal, execute, and deliver all and anyinstrument under seal that he may think proper in andabout my said business, either individually or as a memberof the firm of Shermans & Stork. Also to settle,compromise, and adjust, pay and discharge all claims anddemands, accounts due or owing to me, or from me, or inwhich I am interested, and give all proper receipts ordischarges therefor, whether under seal or not and toattend to all my business for me of any name or nature,whether real or personal, that may arise during myabsence, and whether relating to instruments under seal ornot under seal, and to use my name in and about the same,the same as I could do if personally present. Also to make,



indorse, or accept any drafts, bills of exchange, orpromissory notes. Also to settle and adjust all claims, etc."The court said: "The power of attorney contains noauthority to convey real estate, eo nomine. The power given'to attend to all business affairs appertaining to real orpersonal estate' is too indefinite to sustain a transfer of realestate, more particularly that acquired long subsequent toits execution."

In Billings vs. Morrow (7 Cal., 171), a power of attorneywas in question which authorized the agent "for me and inmy name to superintend my real and personal estate, tomake contracts, to settle outstanding debts, and generallyto do all things that concern my interest in any way, real orpersonal whatsoever, giving my said attorney full power

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to use my name to release others or bind myself, as he maydeem proper and expedient * * *" The court said: "Itrequires but a glance at this instrument to perceive that noauthority is contained in it to convey real estate. The poweris limited and special, and cannot be extended byimplication to other acts more important in their characterthan those expressly provided in the body of theinstrument. The rule may be thus stated that where theauthority to perform specific acts is given in the power, andgeneral words are also employed, such words are limited tothe particular acts authorized."

In Clark & Skyles on Agency, section 213, it is said: "Allpowers conferred upon an agent by a formal instrument areto receive a strict interpretation, and the authority is neverextended by intendment or construction beyond that whichis given in terms or is necessary for carrying the authorityinto eff ect, and that authority must be strictly pursued."

Upon the same point Story says in his work on Agency,section 68: "Indeed formal instruments of this sort areordinarily subjected to a strict interpretation, and theauthority is never extended beyond that which is given interms, or which is necessary and proper for carrying theauthority so given into full effect."

In Reynolds vs. Rowley (4 La. Ann., 396), it was said:"We take it for granted that, under the common law as with



us, powers of attorneys are subjected to a strictinterpretation, and that the authority is never extendedbeyond that which is given in terms, or which is necessaryand proper for carrying the authority so given into fulleffect that language, however general in its form, whenused in connection with a particular subject matter, will bepresumed to be used in subordination to that matter, andtherefore is to be construed and limited accordingly that ageneral power to buy property for the constituent, or tomake any contracts, and do any other acts whatever, whichhe could if personally present, must be construed to applyonly to buying or contracting connected with his ordinary

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business, and would not authorize any contracts of anextraordinary character to be made."

In Clark & Skyles on Agency, section 227, it is said: "Inorder that an agent may have authority to sell real estate itis necessary that such authority should be clearly anddistinctly given to him, in such a manner that a reasonablyprudent person would have no hesitancy in seeing thatsuch a power was given. We have heretofore seen that allwritten powers will be strictly construed and will not beextended beyond their obvious purpose and unless powerto sell real estate is clearly given to him, the agent cannotsell it."

In sections 261 to 265 of the same work, the generalscope of powers delegated by the authority to manage thebusiness of the principal is discussed. It is there stated thataside from the particular facts and circumstancessurrounding the parties, it is a general rule that an agencyto manage implies authority to do with the property or inthe business what has previously been done by theprincipals, or by others with their express or impliedconsent or further to do what is necessary or usual andcustomary to do with the property, or in business of thesame kind in the same locality. But the power to dispose ofthe business or embark on some unusual enterprise withthe principal's capital is not included in such an agency.

The rule that formal powers of attorney must be strictlyconstrued and limited in their scope to what is expressly



stated and to such incidental powers as may be necessaryin the fulfillment of the powers expressly given is wellsettled, both in AngloAmerican and in the civil law. Theauthorities supporting this doctrine are legion. So, generalexpressions conferring power upon an agent, such as "to doany and every act," "do and transact all manner ofbusiness," to lease real property "for the time, price andwith the conditions which he deems desirable," "attend toall business affairs appertaining to real or personal estate,""to my real and personal estate," "to superintend my realand personal estate" are to be construed in subordination

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to the express powers granted, and not to refer to otherunusual or extraordinary powers of which no mention ismade in the instrument. In addition to the cases givenabove which illustrate the rule, many others may be f oundin the books of the same character. Likewise, it is a ruleuniformly stated that the power to sell real estate mustnecessarily be express, and cannot be implied from anygeneral language used.

Let us now examine the power of attorney executed bythe plaintiff and see if, according to the rules stated, it canbe held to include the power to sell real estate. There is nodescription of the plaintiff's property in Tarlac. Thedocument simply designates his property as "interests."This, of course, would ordinarily be taken to include everyspecies of property, real or personal, owned by him in thatmunicipality. That the power to administer these"interests" is expressly delegated admits of no denial, aswell as the power to appear in court, the power to engagecounsel, and to appoint subagents. But we are interested indetermining if the power is expressly delegated (for that isthe only manner in which it could have been given) to sellreal estate. The grammatical construction of the instrumentadmits of its division into two portions, as follows: " (a) Hemay administer such interests as I possess within thismunicipality of Tarlac (b) And may buy, sell,. collect, andpay, * * * in any way whatsoever for the goodadministration and furtherance of my said interests."

Certainly, the power to sell real estate is not expressly



delegated in the first division. True, in the second sectionare the words "buy," "sell," "in any way whatsoever," andwhich, standing alone, might easily refer to either real orpersonal property or both. But these powers are restrictedby the stated purpose for which the grant is given that is,"for the good administration and furtherance of my saidinterests." This qualifying phrase brings these generalwords "buy" and "sell" "in any way whatsoever" down to thelevel of administrative acts. The agent may buy or sell forthe good administration and furtherance of the prin

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272 PHILIPPINE REPORTS ANNOTATEDRodriguez vs. Director of Lands.

cipal's interests, but he may not sell those intereststhemselves. As a matter of fact, the second division is butlittle more than a repetition of the first, with the addedfeature that it enumerates a number of those powerscustomarily incident to the management of a principal'sbusiness by his agent.

It develops that the plaintiff owned a parcel ofagricultural land in the municipality of Tarlac. This wasone of the "interests" which the defendant Puno was to"administer." Manifestly, the power to "buy" seed, farmingimplements, and material necessary for the repair andpreservation of that land, and the power to "sell" itsproducts were incidental powers of a general power ofmanagement of such an "interest." The full extent of theplaintiff's business "interests" in the municipality of Tarlacis not disclosed by the record. But it is clear that he wasnot engaged in the business of buying and selling realestate. Assuming that his "interests" in the saidmunicipality were of almost any other description, it isevident that the sale of real estate by the defendant agentwas an extraordinary act, not capable of being classified asan act of administration. I am unable to discover anyexpress delegation of power to sell "real estate" in thedocument in question. Not only is "real estate" notexpressly mentioned, but the words "buy" and "sell," which,it is argued, delegate that power, are, by the grammaticalconstruction of the document, subordinated to the "goodadministration and furtherance" of the plaintiff's"interests."



For the f oregoing reasons I do not agree to thedisposition of this case.

Judgment reversed.

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