No effect

When the sale of a piece of land or any interest thereon is through an agent, the authority of the latter must be specific and in writing, otherwise the sale shall be void. A special power of attorney is necessary to enter into any contract by which the ownership of an immovable is transmitted or acquired either gratuitously or for a valuable consideration. The power of attorney must so express the powers of the agent in clear and unmistakable language. This is illustrated in this case of the spouses Tony and Lina, and Pinong and Ana (the spouses).

The case involved a parcel of unregistered land with an area of 1,939 square meters belonging to Belen who was abroad. In March 1987, the spouses proposed to Belen’s mother, Nilda whom they believed to be its owner, to purchase a 200 square meter portion of the lot at P200 per square meter. Said offer was accepted by Nilda, so the spouses paid P3,000 down-payment with the balance payable in installment. In 1985, the spouses constructed their house thereon and in 1986, with Nilda’s consent, they also occupied an additional 150 square meters of the lot. But by the time that the spouses had already paid P17,500 in 1987, they defaulted in their installment payment.

So on May 11, 1994 Nilda, acting as administrator and attorney-in-fact of Belen filed with the Regional Trial Court (RTC) a complaint for recovery of possession with damages against the spouses. On June 17, 2002, the RTC ruled that since Nilda’s authority to sell the land was not in writing, the sale was void and unenforceable. Nevertheless it still rendered a decision in favor of Nilda by ordering a rescission of the sale and requiring the spouses to peacefully vacate the premises and surrender to Nilda the possession of said property and the latter to return the sum of P17,500 paid by the spouses. The RTC also ordered the spouses to pay Nilda P20,000 for attorney’s fees and P15,000 actual damages.

The spouses appealed this ruling to the Court of Appeals (CA) on January 5, 2004. And in a decision dated June 10, 2004, the CA reversed the RTC decision and dismissed Nilda’s complaint. The CA held that Nilda, as Belen’s agent did not have a written authority to enter into such contract of sale with the spouses; hence the said contract is void. And since a void contract creates no rights or obligations or juridical relations, it cannot be the subject of rescission. Was the CA correct?

Yes. Article 1874 of the Civil Code explicitly requires a written authority before an agent can sell an immovable property. In this case there is absolutely no proof of Nilda’s written authority to sell the lot to the spouses. In fact, the spouses admitted that at the time of the negotiation, they were of the belief that Nilda was the owner of the lot. They came to know that Belen was the owner only at the hearing of the case. Consequently the sale of the lot by Nilda who did not have a written authority from Belen is void. A void contract produces no effect either against or in favor of anyone and cannot be ratified.

A special power of attorney is also necessary to enter into any contract by which the ownership of an immovable is transmitted or acquired for a valuable consideration. Without any such authority in writing, Nilda cannot validly sell the lot to the spouses. Hence any sale in favor of the spouses is void.

Furthermore, for any contract to be valid there must be consent of the contracting parties, object certain which is the subject matter of the contract, and cause or consideration of the obligation established (Article 1318, Civil Code). In this case, Nilda had no written authority to enter into the contract to sell so there was in effect no consent from Belen the real owner of the property (Spouses Alcantara and Rubi vs. Nido as attorney-in-fact of Srivastava, G.R. 165133, April 19, 2010).

Note: Books containing compilation of my articles on Labor Law and Criminal Law (Vols. I and II) are now available. Call tel. 7249445.

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