EN BANC

[G.R. No. 9608. August 7, 1915.]

DIEGO LIAN , plaintiff-appellee, vs . MARCOS P. PUNO ET AL. ,

defendants-appellants.

Mariano Esqueta for appellants.

S. Lopez Jesus for appellee.

SYLLABUS

1. PRINCIPAL AND AGENT; CONTRACTS; GENERAL RULES OF CONSTRUCTION.

Contracts of agency, as well as general powers of attorney, must be interpreted in
accordance with the language used by the parties. The real intention of the parties is
primarily to be determined from the language used. The intention is to be gathered
from the whole instrument. In case of doubt, resort must be had to the situation,
surroundings, and relations of the parties. Whenever it is possible, effect is to be given
to every word or clause used by the parties. It is to be presumed that the parties said
what they intended to say and that they used each word or clause with some purpose,
and that purpose is, if possible, to be ascertained and enforced. If the contract be open
to two constructions, one of which would uphold while the other would overthrow it, the
former is to be chosen. If by one construction the contract would be illegal, and by
another equally permissible construction it would be lawful, the latter must be adopted.
The acts of the parties will be presumed to be done in conformity with and not contrary
to the intent of the contract. The meaning of general words must be construed with
reference to the speci c object to be accomplished and limited by the recitals made in
reference to such object.
2. ID.; ACCEPTANCE OF BENEFITS BY PRINCIPAL. Where a principal has
acquiesced in the acts of his agent for a long period of time, and has received and
appropriated to his own use the bene ts resulting from the acts of his agent, courts
should be slow in declaring the acts of the agent null and void.
Per TRENT, J., dissenting:
3. PRINCIPAL AND AGENT; POWER TO SELL REAL ESTATE; CONSTRUCTION OF
INSTRUMENT. To confer the right upon an agent to sell real estate, a power of
attorney must so express his powers in clear and unmistakable language. When there is
any reasonable doubt that the language so used conveys such a power, no such
construction should be given the document.
4. ID.; ID.; ID.; GENERAL WORDS LIMITED BY SPECIFIC WORDS. When the
power to "buy, sell, or collect and pay in any way whatsoever" is, by the simple
grammatical construction of the document, subordinated to the clause "for the good
administration and furtherance of my said interests," such general words should be
restricted to the facts included in the governing clause.

DECISION

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 JOHNSON , J : p

The facts upon which the decision in this case depends are as follows:
(1) That the plaintiff, in the month of May, 1908, and for a long time prior thereto,
was the owner of a certain parcel of land particularly described in paragraph 2 of the
complaint.
(2) That on the 16th day of May, 1908, the plaintiff executed the following
document, which conferred upon 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 the present time temporarily residing in this
city of Tarlac, capital of the Province of Tarlac, P. I., set forth that I hereby confer
suf cient power, such as the law requires, upon Mr. Marcos P. Puno, likewise a
resident of this city of Tarlac, capital of the Province of Tarlac, in order that in my
name and representation he may administer the interest I possess within this
municipality of Tarlac, purchase, sell, collect and pay, as well as sue and be sued
before any authority, appear before the courts of justice and administrative
of cers in any proceeding or business concerning the good administration and
advancement of my said interests, and may, in necessary cases, appoint
attorneys at law or attorneys in fact to represent him."
The meaning, purport, and power conferred by this document constitute the very
gist of the present action.
(3) That in June, 1911, the defendant Puno, for the sum of P800, sold and
delivered said parcel of land to the other defendants.
The plaintiff alleges that the said document (Exhibit A) did not confer upon the
defendant Puno the power to sell the land and prayed that the sale be set aside; that
the land be returned to him, together with damages.
The defendants at rst presented a demurrer to the complaint, which was
overruled. To the order overruling the demurrer the defendants duly excepted. They
later answered. In their answer they rst denied generally and speci cally all of the
important facts stated in the complaint. In their special answer or defense they
admitted the sale of the land by Puno to the other defendants and alleged that the
same was a valid sale and prayed to be relieved from the liability under the complaint,
with their costs.
Upon the issue thus presented the lower court decided: (1) That the document
Exhibit A did not give Puno authority to sell the land; (2) That the sale was illegal and
void; (3) That defendants should return the land to the plaintiff; and (4) That the
defendants should pay to the plaintiff the sum of P1,000 as damages, P400 of which
the defendant Puno should alone be responsible for, and to pay the costs.
From that decision the defendants appealed to this court and made the following
assignments of error:
"I. The lower court erred in overruling the demurrer led by the appellants to
the complaint.
"II. The lower court erred in holding that the appellant Marcos P. Puno was
not authorized to sell the land in question and that the sale executed by the said
Marcos P. Puno to the other appellants, Enrique, Vicente, Aquilina and Remedios,
surnamed Maglanok, is null and void.
"III. The lower court erred in not ordering the appellee, Diego Lian, to return
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 to the appellants, Enrique, Vicente, Aquilina and Remedios Maglanok the sum of
P800, as the selling price of the land in question.
"IV. And, nally, the lower court erred in sentencing the appellants to pay to
the appellee the sum of P1,000, the value of the products collected, and to pay the
costs."
With reference to the rst assignment of error, we are of the opinion that the
facts stated in the opinion are sufficient to constitute a cause of action.
With reference to the second assignment of error, the plaintiff alleges that the
power of attorney, as contained in Exhibit A, did not authorize the defendant Puno to
sell the land. The defendants insist that Puno had full and complete power and authority
to do what he did. The lower court held that Exhibit A only gave Puno power and
authority to administer the land; that he was not authorized to sell it. Omitting the purely
explanatory parts of Exhibit A, it reads as follows: "I, Diego Lian, . . . set forth that I . . .
confer suf cient power, such as the law requires, upon Mr. Marcos P. Puno . . . in order
that in my name and representation he may administer . . . purchase, sell, collect and
pay . . . in any proceeding or business concerning the good administration and
advancement of my said interests, and may, in necessary cases, appoint attorneys at
law or attorneys in fact to represent him."
Contracts of agency as well as general powers of attorney must be interpreted in
accordance with the language used by the parties. The real intention of the parties is
primarily to be determined from the language used. The intention is to be gathered
from the whole instrument. In case of doubt resort must be had to the situation,
surroundings and relations of the parties. Whenever it is possible, effect is to be given
to every word and clause used by the parties. It is to be presumed that the parties said
what they intended to say and that they used each word or clause with some purpose
and that purpose is, if possible, to be ascertained and enforced. The intention of the
parties must be sustained rather than defeated. If the contract be open to two
constructions, one of which would uphold while the other would overthrow it, the
former is to be chosen. So, if by one construction the contract would be illegal, and by
another equally permissible construction it would be lawful, the latter must be adopted.
The acts of the parties in carrying out the contract will be presumed to be done in good
faith. The acts of the parties will be presumed to have been done in conformity with and
not contrary to the intent of the contract. The meaning of generals words must be
construed with reference to the speci c object to be accomplished and limited by the
recitals made in reference to such object.
With these general observations in mind, let us examine the terms of the power
conferred upon the defendant Puno (Exhibit A) and ascertain, if possible, what was the
real intent of the plaintiff. The lower court held that the "only power conferred was the
power to administer." Reading the contract we nd it says that the plaintiff "I confer . . .
power . . . that . . . he may administer . . . purchase, sell, collect and pay . . . in any
proceeding or business concerning the good administration and advancement of my
said interests." The words "administer, purchase, sell," etc., seem to be used
coordinately. Each has equal force with the other. There seems to be no good reason
for saying that Puno had authority to administer and not to sell when "to sell" was as
advantageous to the plaintiff in the administration of his affairs as "to administer." To
hold that the power was "to administer" only when the power "to sell" was equally
conferred would be to give effect to a portion of the contract only. That would give to
special words of the contract a special and limited meaning to the exclusion of other
general words of equal import.
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 The record contains no allegation or proof that Puno acted in bad faith or
fraudulently in selling the land. It will be presumed that he acted in good faith and in
accordance with his power as he understood it. That his interpretation of his power, as
gathered from the contract (Exhibit A), is tenable cannot, we believe, be successfully
denied. In view of that fact and in view of the fact that, so far as the record shows, the
other defendants acted in good faith, we are of the opinion that the contract, liberally
construed, as we think it should be, justi es the interpretation given it by Puno. In
reaching this conclusion, we have taken into account the fact that the plaintiff delayed
his action to annul said sale from the month of June, 1911, until the 15th of February,
1913. Neither have we overlooked the fact charged in the brief of the appellants that
the plaintiff has not returned, nor offered to return, nor indicated a willingness to return,
the purchase price. (Art. 1308 of the Civil Code; Manikis vs. Blas, No. 7585. 1 )

In view of all of the foregoing, we are of the opinion that the lower court
committed the error complained of in the second assignment, and, without discussing
the other assignment of error, we are of the opinion, and so hold, that the judgment of
the lower court should be and is hereby revoked and that the appellants should be
relieved from all liability under the complained. Without any nding as to costs, it is so
ordered.
Arellano, C.J., Torres, Carson and Araullo, JJ., concur.

Separate Opinions
TRENT , J., dissenting :

The power of attorney, the identity of the land sold, the fact of 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, the power of attorney) constitute the very gist of the present
action," and that the parties acted in good faith. But I cannot see how "the fact that the
plaintiff delayed his action to annul said sale from the month of June, 1911, to February
15, 1913," and the fact that the appellants have charged in their brief that the "plaintiff
has not returned, nor offered to return, nor indicated a willingness to return the
purchase price," can affect in any way the issues involved in this case. The record
shows that the land is situated in the Province of Tarlac and the plaintiff lives in the
Province of Ambos Camarines. The record fails to show whether or not the plaintiff has
returned, or offered to return, or is willing to return to the vendees the purchase price of
the land. The charge in appellants' brief that the plaintiff has not done these things is
not proof and should not be taken as establishing a fact or facts.
The controlling question is, Was Puno authorized under the power of attorney,
which is set out in full in the majority opinion, to sell the real estate of his principal? The
solution of this question must depend solely and exclusively upon the language used in
that power of attorney, Exhibit A. There is no claim that the plaintiff enlarged the
powers of his agent Puno after the execution of Exhibit A or that he rati ed 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.

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 "In order to compromise, alienate, mortgage, or to execute any other act of
a strict ownership an express commission is required.
"The power to compromise does not give authority to place the matter in
the hands of arbitrators or amicable compromisers.
The Director General de los Registros, in its resolution of November 20,1900 (90
Juris. Civ., 677), construed a power of attorney given by a father to his son, authorizing
the latter to administer the property of his principal, "to lease and to rent his principal's
realty to the persons and for the time, price and conditions he deems best, and also to
make ejectments, to sign documents, to make collections, to make changes in anything
belonging to his principal, and to compromise any questions that may arise." Under
color of this authority, the son leased for a period of twelve years several parcels of
land and charged several other parcels with pensiones de censos in favor of a third
person. I quote from the syllabus: "In the present case, the lessor was authorized by his
principal to lease and to rent the latter's realty to the persons and for the price, time and
conditions that seemed best to him, and such authorization must be understood to
have been granted for the simple contract of lease, which produces only personal
obligations, and consequently cannot be regarded as extended, without express
command, to the stipulation of such conditions as might alter the nature of the contract
by transforming it into a partial conveyance of ownership in the things leased, as
happens in said case, wherein the agent has thereby exceeded the limits of his agency."
A quite similar power of attorney was disposed of in the same manner in the
resolution of October 26, 1904 (99 Juris. Civ., 245) where an agent leased property for
thirty years under color of authority to lease the property "for the time, price, and
conditions" which he might think desirable.
In the Resolution of April 5, 1907 (Juris. Civ., 68), the facts were as follows: A
power of attorney executed by 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 husband entered into an agreement with several other adjoining
owners with reference to the irrigation of their respective properties by means of an
aqueduct. To insure the accomplishment of various stipulations inserted in this
contract the various parties thereto hypothecated their respective properties and
sought to have the same inscribed in the property registry. Registration was denied on
the ground, among others, that the power of attorney in question did not authorize the
husband to perform any act of strict ownership, but only those of administration.
In commenting upon article 1713, Manresa quotes approvingly from Goyena as
follows "As Garcia Goyena says, 'The law, which must look after the interests of all,
cannot permit a man to express himself in a vague and general way with reference to
the right he confers upon another for the purposes of alienation or hypothecation,
whereby he might easily be despoiled of all he possessed and be brought to ruin; such
excessive authority must be set down in the most formal and explicit terms; and when
this is not done, the law reasonably presumes that the principal did not mean to confer
it.' " (Vol. 11, p. 460.)
Bonel, in commenting upon the same article, says: "Our code, in looking after the
interests of all and thereby furnishing a proof of common sense, does not permit a
vague expression in a general and inde nite manner of the right one confers upon
another to make alienations and hypothecations, for in this way a man could with good
faith on his part be despoiled of all he possessed and be brought to ruin; hence it
provides that such excessive authority must be set down in the most favorable and
explicit terms; and when this is not done, reason and common sense induce the
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 presumption that the principal did not mean to confer it." (Vol. 4, p. 728.)
The supreme court of Louisiana, which also interprets the civil law, was
considering the following power of attorney in Lafourche Transportation Co. vs. Pugh
(52 La. Ann., 1517): "We . . . have appointed, . . . (defendant) our true and lawful agent
and attorney in fact, for us, and in our name, place and stead, to manage, control, take
charge of, compromise and do any and all things, necessary and requisite, touching and
concerning our interests in the succession of the late Robert Lawrence Pugh, and to
make any and all settlements for us, and in our behalf, with the legatees under the last
will and testament of the said R. L. Pugh, vesting our said attorney and agent with full
power and authority, to do any and all acts that we might do if personally present . . ."
The remarks of the court are brief and instructive: "It further appears that, neither
at the date of the execution of the note and act of mortgage sued on, nor at any other
time, has W. W. Pugh held any other procuration, the attempt to prove the contrary
having failed. There is no doubt that, at the time that the note and act or mortgage were
executed, he supposed that the power of attorney held by him conferred the authority
which he undertook to exercise, but the bare reading of it shows that it did not."
In Lord vs. Sherman (2 Cal., 498), a power of attorney authorized an agent to
"attend to all business affairs appertaining to real or personal estate, bank business, or
business at the customhouse, or insurance or law business, or the commencement,
settlement, or defending any suit or suits in law or equity. Also for me and in my name,
place, and stead, to sign, seal, execute, and deliver all and any instrument under seal that
he may think proper in and about my said business, either individually or as a member
of the rm of Shermans & Stork. Also to settle, compromise, and adjust, pay and
discharge all claims and demands, accounts due or owing to me, or from me, or in
which I am interested, and give all proper receipts or discharges therefor, whether
under seal or not; and to attend to all my business for me of any name or nature,
whether real or personal, that may arise during my absence, and whether relating to
instruments under seal or not 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, or promissory notes. Also to settle and adjust all claims, etc."
The court said: "The power of attorney contains no authority to convey real estate, eo
nomine. The power given 'to attend to all business affairs appertaining to real or
personal estate' is too inde nite to sustain a transfer of real estate, more particularly
that acquired long subsequent to its execution."
In Billings vs. Morrow (7 Cal., 171), a power of attorney was in question which
authorized the agent "for me and in my name to superintend my real and personal
estate, to make contracts, to settle outstanding debts, and generally to do all things
that concern my interest in any way, real or personal whatsoever, giving my said
attorney full power to use my name to release others or bind myself, as he may deem
proper and expedient; . . ." The court said: "It requires but a glance at this instrument to
perceive that no authority is contained in it to convey real estate. The power is limited
and special, and cannot be extended by implication to other acts more important in
their character than those expressly provided in the body of the instrument. The rule
may be thus stated; that where the authority to perform speci c acts is given in the
power, and general words are also employed, such words are limited to the particular
acts authorized."

In Clark & Skyles on Agency, section 213, it is said: "All powers conferred upon an
agent by a formal instrument are to receive a strict interpretation, and the authority is
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 never extended by intendment or construction beyond that which is given in terms or is
necessary for carrying the authority into effect, 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 are ordinarily subjected to a strict interpretation, and the
authority is never extended beyond that which is given in terms, or which is necessary
and proper for carrying the authority 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 strict
interpretation, and that the authority is never extended beyond that which is given in
terms, or which is necessary and proper for carrying the authority so given into full
effect; that language, however general in its form, when used in connection with a
particular subject matter, will be presumed to be used in subordination to that matter,
and therefore is to be construed and limited accordingly; that a general power to buy
property for the constituent, or to make any contracts, and do any other acts whatever,
which he could if personally present, must be construed to apply only to buying or
contracting connected with his ordinary business, and would not authorize any
contracts of an extraordinary character to be made."
In Clark & Skyles on Agency, section 227, it is said: "In order that an agent may
have authority to sell real estate it is necessary that such authority should be clearly and
distinctly given to him, in such a manner that a reasonably prudent person would have
no hesitancy in seeing that such a power was given. We have heretofore seen that all
written powers will be strictly construed and will not be extended beyond their obvious
purpose; and unless power to sell real estate is clearly given to him, the agent cannot
sell it."
In sections 261 to 265 of the same work, the general scope of powers delegated
by the authority to manage the business of the principal is discussed. It is there stated
that aside from the particular facts and circumstances surrounding the parties, it is a
general rule that an agency to manage implies authority to do with the property or in the
business what has previously been done by the principals, or by others with their
express or implied consent; or further to do what is necessary or usual and customary
to do with the property, or in business of the same kind in the same locality. But the
power to dispose of the business or embark on some unusual enterprise with the
principal's capital is not included in such an agency.
The rule that formal powers of attorney must be strictly construed and limited in
their scope to what is expressly stated and to such incidental powers as may be
necessary in the ful llment of the powers expressly given is well settled, both in Anglo-
American and in the civil law. The authorities supporting this doctrine are legion. So,
general expressions conferring power upon an agent, such as "to do any and every act,"
"do and transact all manner of business," to lease real property "for the time, price and
with the conditions which he deems desirable," "attend to all business affairs
appertaining to real or personal estate," "to my real and personal estate," "to
superintend my real and personal estate" are to be construed in subordination to the
express powers granted, and not to refer to other unusual or extraordinary powers of
which no mention is made in the instrument. In addition to the cases given above which
illustrate the rule, many others may be found in the books of the same character.
Likewise, it is a rule uniformly stated that the power to sell real estate must necessarily
be express, and cannot be implied from any general language used.
Let us now examine the power of attorney executed by the plaintiff and see if,
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 according to the rules stated, it can be held to include the power to sell real estate.
There is no description of the plaintiff's property in Tarlac. The document simply
designates his property as "interests." This, of course, would ordinarily be taken to
include every species of property, real or personal, owned by him in that municipality.
That the power to administer these "interests" is expressly delegated admits of no
denial, as well as the power to appear in court, the power to engage counsel, and to
appoint subagents. But we are interested in determining if the power is expressly
delegated (for that is the only manner in which it could have been given) to sell real
estate. The grammatical construction of the instrument admits of its division into two
portions, as follows: "(a) He may administer such interests as I possess within this
municipality of Tarlac; ( b ) And may buy, sell, collect, and pay, . . . in any way whatsoever
for the good administration and furtherance of my said interests."
Certainly, the power to sell real estate is not expressly delegated in the rst
division. True, in the second section are the words "buy," "sell," "in any way whatsoever,"
and which, standing alone, might easily refer to either real or personal property or both.
But these powers are restricted by the stated purpose for which the grant is given; that
is, "for the good administration and furtherance of my said interests." This qualifying
phrase brings these general words "buy" and "sell" "in any way whatsoever" down to the
level of administrative acts. The agent may buy or sell for the good administration and
furtherance of the principal's interests, but he may not sell those interests them- selves.
As a matter of fact, the second division is but little more than a repetition of the rst,
with the added feature that it enumerates a number of those powers customarily
incident to the management of a principal's business by his agent.
It develops that the plaintiff owned a parcel of agricultural land in the municipality
of Tarlac. This was one of the "interests" which the defendant Puno was to "administer."
Manifestly, the power to "buy" seed, farming implements, and material necessary for the
repair and preservation of that land, and the power to "sell" its products were incidental
powers of a general power of management of such an "interest." The full extent of the
plaintiff's business "interests" in the municipality of Tarlac is not disclosed by the
record. But it is clear that he was not engaged in the business of buying and selling real
estate. Assuming that his "interests" in the said municipality were of almost any other
description, it is evident that the sale of real estate by the defendant agent was an
extraordinary act, not capable of being classi ed as an act of administration. I am
unable to discover any express delegation of power to sell "real estate" in the document
in question. Not only is "real estate" not expressly mentioned, but the words "buy" and
"sell," which, it is argued, delegate that power, are, by the grammatical construction of
the document, subordinated to the "good administration and furtherance" of the
plaintiff's "interests."
For the foregoing reasons I do not agree to the disposition of this case.

Footnotes

1. Not reported.

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