Plaintiff-Appelle DPWH began constructing harbor improvements near the mouth of the Iloilo River. The dredging operations meant that the earth removed from the river-bed had to be transferred to a nearby location. The DPWH and the defendants Mariano Tanboontien, Mariano dela Rama, Sing Juco and Sing Bengco agreed that the dredged materials would be placed in a nearby property subject to periodic flooding the four co-owned. In exchange for the expected improvements, the co-owners agreed to pay the DPWH for every cubic meter of landfill. The contract for improvement was subject to a bond signed by the co-owners but Mariano dela Rama also included a non-owner, Tan Ong Sze as “Casa de Viuda de Tan Toco”. Dela Rama included Tan Ong Sze by virtue of an assignment of a special power of attorney conferred upon him by one Tan Lieno Co, Tan Ong Sze’s uncle. Tan Lieno Co’s power of attorney stated among others that:
. . . and also for me and in my name to sign, seal and execute, and as my act and deed deliver, any lease or any other deed for the conveying any real or personal property or the other matter or thing wherein I am or may be personally interested or concerned. And I do hereby further authorize and empower my said attorney to substitute and point any other attorney or attorneys under him for the purposes aforesaid, and the same again and pleasure to revoke; and generally for me and in my name to do, perform, and execute all and any other lawful and reasonable acts and things whatsoever as fully and effectually as I, the said Tan Ong Sze might or could do if personally present.
After failing to pay for the subsequent improvements to their lot, the DPWH then collected the co-owners and Tan Ong Sze for expenses. The RTC adjuged Tan Ong Sze subsidiarily liable as surety on the basis of the SPA.
Issue on Agency: Whether or not the assignment of special powers of attorney specifically conferred on dela Rama the power to bind a principal by contract of suretyship?
Held: No, The clauses noted relate more specifically to the execution of contracts relating to property; and the more general words at the close of the quoted clauses should be interpreted, under the general rule ejusdem generis, as referring to the contracts of like character. Power to execute a contract so exceptional a nature as a contract of suretyship or guaranty cannot be inferred from the general words contained in these powers.
In article 1827 (now 2055) of the Civil Code it is declared that guaranty shall not be presumed; it must be expressed and cannot be extended beyond its specified limits. By analogy a power of attorney to execute a contract of guaranty should not be inferred from vague or general words, especially when such words have their origin and explanation in particular powers of a wholly different nature. It results that the trial court was in error in giving personal judgment against Tan Ong Sze upon the bond upon which she was sued in this case.