Monday, September 16, 2013

SALES: Special Power of Attorney required for agent to sell land

In the 1950s, a woman leased a parcel of land with improvements from the siblings, who inherited the said land from their deceased parents. In 1988, the siblings offered to sell the property to the woman for P500,000. Although the woman accepted the offer, the sale did not materialize due to the fault of the landowners. Nonetheless, the woman and her family continued to occupy and use the property with the consent of the siblings.

In 1994, the woman’s son desired to renew his mother’s option to purchase the subject property. After a series of negotiations with the eldest of the siblings who introduced himself as representing the other landowners, they entered into an oral contract of sale. A year after, he made partial payments amounting to P160,000, which the eldest sibling duly acknowledged and received. But despite his numerous attempts to pay the remaining balance, the son was unable to do so because the eldest sibling avoided him.
In 1997, the son demanded that the siblings execute a Deed of Absolute Sale in exchange for the full payment of the agreed price. Because his demand remained unheeded, he filed a complaint against them for specific performance with damages. He likewise sought to nullify the subsequent sale of said property when he discovered that it was sold to another buyer.

The Regional Trial Court upheld the validity of the oral contract of sale between the woman’s son and the eldest sibling. It ordered the siblings to execute a Deed of Absolute Sale in favor of the son upon payment of the balance and nullified the subsequent sale to the other buyer.

On appeal, the Court of Appeals (CA) modified the lower court’s decision. It upheld the validity of the oral contract of sale between the son and the eldest sibling only insofar as the share of latter in the property is concerned. Based on its findings, it was only the eldest sibling who consented to the sale. For want of authority to sell the other portions of the land belonging to his siblings, the eldest sibling is deemed to have only sold his aliquot share in the property.

In affirming the ruling of the CA, the Supreme Court emphasized the requirement of a Special Power of Attorney (SPA) before an agent may sell immovable property. Article 1878 of the Civil Code requires the execution of a SPA for an agent “to enter into any contract by which the ownership of an immovable is transmitted or acquired either gratuitously or for a valuable consideration.” Likewise, Article 1874 of the same Code states that “when the sale of a piece of land or any interest therein is through an agent, the authority of the latter shall be in writing; otherwise, the sale shall be void.

In this case, the eldest sibling had no SPA or written authority from his siblings, his co-owners, to sell the subject property. Hence, the sale of the portions of the property belonging to the other siblings is invalid. When the woman’s son relied on the words of the eldest sibling without first securing a copy of the SPA in favor of the latter, he did so at his own risk and must, therefore, be bound by it. Regarding this matter, the High Court has held - Persons dealing with an assumed agency, whether [it] be a general or special one, are bound at their peril, if they would hold the principal liable, to ascertain not only the fact of agency but also the nature and extent of authority, and in case either is controverted, the burden of proof is upon them to establish it (Recio v. Heirs of Altamirano, G.R. No. 182349, 24 July 2013, J. Reyes).

source: Manila Times' Column of Benchpress

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