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FACTS: Revelen, who is respondents daughter and of legal age, is the owner
of an unregistered land with an area of 1,939 square meters located in
Cardona, Rizal. Sometime in March 1984, respondent accepted the offer of
petitioners to purchase a 200-square meter portion of Revelens lot (lot) at P200 per
square meter. Petitioners paid P3,000 as downpayment and the balance was
payable on installment. Petitioners constructed their houses in 1985. In 1986,
with respondents consent, petitioners occupied an additional 150 square meters
of the lot. By 1987, petitioners had already paid P17,5005 before petitioners
defaulted on their installment payments. On 11 May 1994, respondent, acting
as administrator and attorney-in-fact of Revelen, filed a complaint for recovery
of possession with damages and prayer for preliminary injunction against
petitioners with the RTC. The RTC stated that based on the evidence presented,
Revelen owns the lot and respondent was verbally authorized to sell 200 square
meters to petitioners. The RTC ruled that since respondents authority to sell the
land was not in writing, the sale was void under Article 18746 of the Civil Code.7
The RTC ruled that rescission is the proper remedy.
The appellate court also held that respondent, as Revelens agent, did not have a
written authority to enter into such contract of sale; hence, the contract entered
into between petitioners and respondent is void. A void contract creates no
rights or obligations or any juridical relations. Therefore, the void contract
cannot be the subject of rescission.14 Aggrieved by the appellate courts Decision,
petitioners elevated the case before this Court. Issues Petitioners raise the following
arguments: 1. The appellate court gravely erred in ruling that the contract entered
into by respondent, in representation of her daughter, and former defendant
Eduardo Rubi (deceased), is void; and 2. The appellate court erred in not ruling
that the petitioners are entitled to their counterclaims, particularly specific
performance.15 Ruling of the Court We deny the petition. Petitioners submit that the
sale of land by an agent who has no written authority is not void but merely
voidable given the spirit and intent of the law. Being only voidable, the
contract may be ratified, expressly or impliedly. Petitioners argue that since the
contract to sell was sufficiently established through respondents admission
during the pre-trial conference, the appellate court should have ruled on the matter
of the counterclaim for specific performance.
RULING: Agency; When the sale of a piece of land or any interest thereon
is through an agent; the authority of the latter shall be in writing; otherwise, the
sale shall be void. Thus the authority of an agent to execute a contract for the sale
of real estate must be conferred in writing and must give him specific authority,
either to conduct the general business of the principal or to execute a binding
contract containing terms and conditions which are in the contract he did execute. 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 express mandate required by law to enable an
appointee of an agency (couched) in general terms to sell must be one that
expressly mentions a sale or that includes a sale as a necessary ingredient of the
act mentioned. For the principal to confer the right upon an agent to sell real estate,
a power of attorney must so express the powers of the agent in clear and
unmistakable language. When there is any reasonable doubt that the language so
used conveys such power, no such construction shall be given the document.
Sale of Land through an Agent Articles 1874 and 1878 of the Civil Code provide:
Art. 1874. When a 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. Art. 1878. Special powers of attorney are necessary in the following cases: x
x x (5) To enter into any contract by which the ownership of an immovable is
transmitted or acquired either gratuitously or for a valuable consideration; x x x
Article 1874 of the Civil Code explicitly requires a written authority before an
agent can sell an immovable property. Based on a review of the records,
there is absolutely no proof of respondents written authority to sell the lot to
petitioners. In fact, during the pre-trial conference, petitioners admitted that at
the time of the negotiation for the sale of the lot, petitioners were of the belief
that respondent was the owner of lot.19 Petitioners only knew that Revelen
was the owner of the lot during the hearing of this case. Consequently, the sale
of the lot by respondent who did not have a written authority from Revelen is void.
A void contract produces no effect either against or in favor of anyone and cannot
be ratified.20 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 an authority in writing, respondent
cannot validly sell the lot to petitioners. Hence, any sale in favor of the
petitioners is void. Ou
2. SPOUSES CARMEN S. TONGSON and JOSE C. TONGSON, Petitioners, versus EMERGENCY PAWNSHOP BULA, Respondent, G.R. No. 167874 s.
January 15, 2010
Facts: In May 1992, Napala offered to purchase from the Spouses Tongson their
364-square meter parcel of land, situated in Davao City and covered by Transfer
Certificate of Title (TCT) No. 143020, for P3,000,000. Finding the offer acceptable,
the Spouses Tongson executed with Napala a Memorandum of Agreement[4] dated
8 May 1992.
To conform with the consideration stated in the Deed of Absolute Sale, the parties
executed another Memorandum of Agreement, which allegedly replaced the first
Memorandum of Agreement,[7] showing that the selling price of the land was only
P400,000.[8]
Upon signing the Deed of Absolute Sale, Napala paid P200,000 in cash to the
Spouses Tongson and issued a postdated Philippine National Bank (PNB) check in
the amount of P2,800,000,[9] representing the remaining balance of the purchase
price of the subject property. Thereafter, TCT No. 143020 was cancelled and TCT No.
T-186128 was issued in the name of EPBI.[10]
When presented for payment, the PNB check was dishonored for the reason Drawn
Against Insufficient Funds. Despite the Spouses Tongson's repeated demands to
either pay the full value of the check or to return the subject parcel of land, Napala
failed to do either. Left with no other recourse, the Spouses Tongson filed with the
Regional Trial Court, Branch 16, Davao City a Complaint for Annulment of Contract
and Damages with a Prayer for the Issuance of a Temporary Restraining Order and a
Writ of Preliminary Injunction.[11]
In their Answer, respondents countered that Napala had already delivered to the
Spouses Tongson the amount of P2,800,000 representing the face value of the PNB
check, as evidenced by a receipt issued by the Spouses Tongson. Respondents
pointed out that the Spouses Tongson never returned the PNB check claiming that it
was misplaced. Respondents asserted that the payment they made rendered the
filing of the complaint baseless.[12]
At the pre-trial, Napala admitted, among others, issuing the postdated PNB check in
the sum of P2,800,000.[13] The Spouses Tongson, on the other hand, admitted
issuing a receipt which showed that they received the PNB check from Napala.
Thereafter, trial ensued.
Manifest intention of the Parties in the Contract of Sale; A trust is the legal
relationship between one person having an equitable ownership of property and
another person owning the legal title to such property, the equitable ownership of
the former entitling him to the performance of certain duties and the exercise of
certain powers by the latter. Trusts are either express or implied. Express or direct
trusts are created by the direct and positive acts of the parties, by some writing or
deed, or will, or by oral declaration in words evincing an intention to create a trust.
Implied trusts also called trusts by operation of law, indirect trusts and involuntary
trusts arise by legal implication based on the presumed intention of the parties or
on equitable principles independent of the particular intention of the parties. They
are those which, without being expressed, are deducible from the nature of the
transaction as matters of intent or, independently of the particular intention of the
parties, as being inferred from the transaction by operation of law basically by
reason of equity.
Registration of the Deed of Sale; Section 50 of Act No. 496 (now Sec. 51 of P.D.
1529), provides that the registration of the deed is the operative act to bind or
affect the land insofar as third persons are concerned. But where the party has
knowledge of a prior existing interest which is unregistered at the time he acquired
a right to the same land, his knowledge of that prior unregistered interest has the
effect of registration as to him. The Torrens system cannot be used as a shield for
the commission of fraud
6. Sally Yoshizaki v. Joy Training Center of Aurora, Inc., G.R. No. 174978,
July 31, 2013.
8. Dr. Lorna C. Formaran v. Dr. Glenda B. Ong and Solomon S. Ong, G.R. No.
186264, July 8, 2013.
Contract; absolutely simulated contracts; void from the beginning. The Court is
in accord with the observation and findings of the (RTC, Kalibo, Aklan) thus: The
amplitude of foregoing undisputed facts and circumstances clearly shows that the
sale of the land in question was purely simulated. It is void from the very beginning
(Article 1346, New Civil Code). If the sale was legitimate, defendant Glenda should
have immediately taken possession of the land, declared in her name for taxation
purposes, registered the sale, paid realty taxes, introduced improvements therein
and should not have allowed plaintiff to mortgage the land. These omissions
properly militated against defendant Glendas submission that the sale was
legitimate and the consideration was paid.
10. Sps. Nameal and Lourdes Bonrostro v. Sps. Juan and Constacia Luna,
G.R. No.172346, July 24, 2013.
accordance with the terms of the contract was a substantial breach warranting
rescission therefore loses significance. The spouses Bonrostros reliance on the
said factual finding is thus misplaced. They cannot invoke their readiness and
willingness to pay their obligation on November 24, 1993 as an excuse from being
made liable for interest beyond the said date.
Mortgage; mortgagee in good faith; right to have mortgage lien carried over
and annotated on the new certificate of title. The protection afforded to PNB as a
mortgagee in good faith refers to the right to have its mortgage lien carried over
and annotated on the new certificate of title issued to Spouses Maraon as so
adjudged by the RTC. Thereafter, to enforce such lien thru foreclosure proceedings
in case of non- payment of the secured debt, as PNB did so pursue. The principle,
however, is not the singular rule that governs real estate mortgages and
foreclosures attended by fraudulent transfers to the mortgagor.
12. Carlos Lim, et al. v. Development Bank of the Philippines, G.R. No.
177050, July 1, 2013.
Act No. 3135; foreclosure sale; personal notice to the mortgagor in extrajudicial
foreclosure proceedings is necessary where there is a stipulation to this effect, and
failure to comply with the stipulated notice requirement is a contractual breach
sufficient to render the foreclosure sale null and void. It has been consistently held
that unless the parties stipulate, personal notice to the mortgagor in extrajudicial
foreclosure proceedings is not necessary because Section 3117 of Act 3135 only
requires the posting of the notice of sale in three public places and the publication
of that notice in a newspaper of general circulation.
13. Reman Recio v. Heirs of Spouses Aguego and Maria Altamirano, G.R.
No.182349, July 24, 2013.
14. Sps. Bernadette and Rodulfo Vilbar v. Angelito L. Opinion, G.R. No.
176043. January 15, 2014.
Contracts; buyer in good faith. It is settled that a party dealing with a registered
land does not have to inquire beyond the Certificate of Title in determining the true
owner thereof, and in guarding or protecting his interest, for all that he has to look
into and rely on are the entries in the Certificate of Title.
Inarguably, Opinion acted in good faith in dealing with the registered owners of the
properties. He relied on the titles presented to him, which were confirmed by the
Registry of Deeds to be authentic, issued in accordance with the law, and without
any liens or encumbrances.
15. The Heirs of Victorino Sarili, namely, Isabel A. Sarili, et al. v. Pedro F.
Lagrosa, represented in this act by his Attorney-in-Fact, Lourdes Labios
Mojica, G.R. No. 193517, January 15, 2014.
be flaws in its notarial acknowledgment, mere inspection of the document will not
do; the buyer must show that his investigation went beyond the document and into
the circumstances of its execution.
17. The Heirs of Victorino Sarili, namely, Isabel A. Sarili, et al. v. Pedro F.
Lagrosa, represented in this act by his Attorney-in-Fact, Lourdes Labios
Mojica, G.R. No. 193517, January 15, 2014.
Sales; sale of a piece of land or any interest therein is through an agent;
authority of the agent shall be in writing; otherwise, the sale shall be void. The due
execution and authenticity of the subject SPA are of great significance in
determining the validity of the sale entered into by Victorino and Ramon since the
latter only claims to be the agent of the purported seller (i.e., respondent). Article
1874 of the Civil Code provides that [w]hen a 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 other words, if the subject SPA was not proven to be duly
executed and authentic, then it cannot be said that the foregoing requirement had
been complied with; hence, the sale would be void.
18. Philippine National Bank v. Teresita Tan Dee, et al., G.R. No. 182128,
February 19, 2014.
19. Philippine National Bank v. Teresita Tan Dee, et al., G.R. No. 182128,
February 19, 2014.
Contract to sell; ownership; right to mortgage the property by the owner. Note
that at the time PEPI mortgaged the property to the petitioner, the prevailing
contract between respondents PEPI and Dee was still the Contract to Sell, as Dee
was yet to fully pay the purchase price of the property. On this point, PEPI was
acting fully well within its right when it mortgaged the property to the petitioner, for
in a contract to sell, ownership is retained by the seller and is not to pass until full
payment of the purchase price. In other words, at the time of the mortgage, PEPI
was still the owner of the property. Thus, in China Banking Corporation v. Spouses
Lozada the Court affirmed the right of the owner/developer to mortgage the
property subject of development, to wit: [P.D.] No. 957 cannot totally prevent the
owner or developer from mortgaging the subdivision lot or condominium unit when
the title thereto still resides in the owner or developer awaiting the full payment of
the purchase price by the installment buyer.
20. Bignay EX-IM Philippines, Inc. v. Union Bank of the Philippines / Union
Bank of the Philippines v. Bignay EX-IM Philippines, Inc., G.R. No. 171590 &
G.R. No. 171598, February 12, 2014.