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21. ESTATE OF LINO OLAGUER V. ONGJOCO

G.R. NO. 173312 AUGUST 26, 2008

FACTS:

Defendant Eduardo and Olivia Olaguer, the 3rd wife of the deceased Lino Olaguer, were
appointed administrators of the latter’s estate. Authorized by the probate court to sell the
properties of the estate, 12 parcels of land were sold to Pastor Bacani for P25 000, but it was
sold back to the Olaguers the following day. Thereafter, the Olaguers sold 10 parcels of land to
Estanislao Olaguer. Olivia then executed a SPA notarized by Rodrigo Reantaso, authorizing Jose
Olaguer (now her husband) to sell, mortgage, assign, transfer, endorse and deliver the
properties. Estanislao Olaguer also executed a SPA authorizing Jose Olaguer, and the latter
mortgaged 3 lots of Estanislao to PNB as security for P10 000 loan. The lots were foreclosed,
auctioned and transferred to the State for agrarian reform purposes. Estanislao executed a
General Power of Attorney authorizing Jose to exercise general control and supervision over all
of his business and properties, and to sell or mortgage any of his properties, and the former sold
14 lots to Jose. Jose, as attorney-in-fact of Estanisalo, sold 4 of the lots of the latter to his son
Virgilio Olaguer (Jose’s son) and a Deed of Sale was executed in his favor. Virgilio then executed
a General Power of Attorney authorizing his father, Jose to control and supervise his properties
and to sell or mortgage the same. Jose then sold the 4 lots of his son Virgilio to Emiliano M.
Ongjoco. Meanwhile, Olivia and Eduardo Olaguer were removed as administrators of the estate
and Ma. Linda Olaguer Montayre was appointed in their place. Jose Olaguer died thereafter and
was survived by defendants. Olivia Olaguer also died and was survived by the plaintiffs. The
Estate of Lino Olaguer represented by the legitimate children of Lino and Olivia Olaguer filed an
action for the Annulment of Sales of Real Property and/or Cancellation of Titles in CFI-Albay. CFI
ruled that Defendant Jose A. Olaguer simulated the sales and that Emiliano M. Ongjoco is not an
innocent purchaser in good faith because he knew that Jose Olaguer was only an agent, so it is
only proper that Emiliano find out the extent of the authority of Jose as well as the title of the
owner of the property.CA however ruled that when the sale of real property is made through an
agent, the buyer need not investigate the principal's title. What the law merely requires for the
validity of the sale is that the agent's authority be in writing. Thus, the petition before SC

ISSUE:

Whether the Jose Olaguer has authority to sell the properties to Emiliano Ongjoco as an agent
by virtue of a SPA and GPA
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HELD:

When the sale of a piece of land or any interest therein is made through an agent, the authority of the
latter shall be in writing; Absent such requirement, the sale shall be void. According to the provisions of
Article 1874 of the Civil Code on Agency, when the sale of a piece of land or any interest therein is made
through an agent, the authority of the latter shall be in writing. Absent this requirement, the sale shall
be void. Also, under Article 1878, a special power of attorney is necessary in order for an agent to enter
into a contract by which the ownership of an immovable property is transmitted or acquired, either
gratuitously or for a valuable consideration.

Even if a document is designated as a general power of attorney, the requirement of a special power of
attorney is met if there is a clear mandate from the principal specifically authorizing the performance of
the act.—As regards Lots Nos. 76-D, 76-E, 76-F and 76-G, Ongjoco was able to present a general power
of attorney that was executed by Virgilio Olaguer. While the law requires a special power of attorney,
the general power of attorney was sufficient in this case, as Jose A. Olaguer was expressly empowered
to sell any of Virgilio’s properties; and to sign, execute, acknowledge and deliver any agreement
therefor. Even if a document is designated as a general power of attorney, the requirement of a special
power of attorney is met if there is a clear mandate from the principal specifically authorizing the
performance of the act. The special power of attorney can be included in the general power when the
act or transaction for which the special power is required is specified therein.

22 Dominion Insurance Corp. v. CA,

376 SCRA 239 (2002). GR No. 129919. February 6, 2002

FACTS:

This is an appeal via certiorari from the decision of the Court of Appeals affirming the decision of
the RTC of San Fernando, Pampanga. The court ordered Dominion Insurance Corporation to pay Rodolfo
Guevarra P156,473.90 representing the total amount advanced by Guevarra in the payment of the
claims of Dominion’s clients.

January 25, 1991 – Rodolfo Guevarra instituted a civil case for sum of money against Dominion
Insurance to recover P156,473.90 that he claimed to have advanced to satisfy certain claims filed by
Dominion’s clients. Guevarra advanced that amount in his capacity as manager of Dominion

Dominion denied liability to Guevarra and asserted a counterclaim for P249,672.53 for
premiums that Guevarra failed to remit to Dominion.

Dominion filed a 3rd party complant against Fernando Austria – Dominion’s regional manager
for Central Luzon

Pre-trial conference was set but were postponed upon joint requests of the parties.
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May 22, 1992 – case was again set for pre-trial but only Guevarra and his counsel were present.
Dominion and counsel did not appear but a messenger, Roy Gamboa submitted to the court a
handwritten note sent to him by Dominion’s counsel which instructed him to request for postponement.

Guevarra’s counsel objected and moved to have Dominion be declared in default which was
granted by the trial court. Guevarra was allowed to present his evidence.

June 26, 1992 – Guevarra presented evidence, followed by a written offer of documentary
exhibits and a supplemental offer of additional exhibits which were admitted in evidence. Motion was
opposed by Guevarra.

August 7, 1992 – Dominion filed a motion to lift order of default, alleging that counsel’s failure
to attend the pretrial conference was due to an unavoidable circumstance and that counsel had sent his
representative on the pretrial date to inform the court of his inability to appear.

August 25, 1992 – Trial court denied the motion because it was not verified nor supported by
an affidavit of merit and it failed to allege or specify the facts constituting his meritorious defense.
Motion for reconsideration was denied.

September 28, 1992 – Dominion moved for reconsideration. Counsel revealed for the first time
that his nonappearance at the pre-trial conference was due to his illness.

November 18, 1992 – the court rendered judgment ordering Dominion to pay Guevarra
P156,473.90 representing the total amount advanced by Guevarra in the payment of the claims of
defendant’s clients, P100,000 attorney’s fees, dismissal of the counterclaim and the 3rd party complaint
and to pay the costs of the suit. Dominion appealed the decision of the Court of Appeals.

July 19, 1996 – CA affirmed the decision of the trial court. Dominion moved for reconsideration
which was denied.

ISSUE(S): Whether or not Guevarra acted within his authority as agent for Dominion

Whether or not Guevarra is entitled to reimbursement of amounts he paid out of his personal
money in setting the claims of several insured

HELD :

The petition is without merit. But Dominion was ordered to reimburse Guevarra the amount of
P112,672.11. By the contract of agency, a person binds himself to render some service or to do
something in representation or on behalf of another, with the consent or authority of the latter. The
basis for agency is representation. On the part of the principal, there must be an actual intention to
appoint or an intention naturally inferrable from his words or actions; and on the part of the agent,
there must be an intention to accept the appointment and act on it, and in the absence of such intent,
there is generally no agency.
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A perusal of the Special Power of Attorney would show that Dominion (represented by Austria)
and Guevarra intended to enter into a principal-agent relationship. Despite the word “special” in the
title of the document, the contents reveal that what was constituted was actually a general agency. The
terms of the agreement stated the insurance company, represented by the regional manager appointed
RSG Guevarra Insurance Services represented by Guevarra to be the agency manager in San Fernando to
do and perform the following: 1. To conduct, sign, manage, carry on and transact Bonding and Insurance
business as usually pertain to an Agency Office, or FIRE, MARINE, MOTOR CAR, PERSONAL ACCIDENT,
and BONDING with the right, upon our prior written consent, to appoint agents and sub-agents. 2. To
accept, underwrite and subscribe cover notes or Policies of Insurance and Bonds for and on our behalf.
3. To demand, sue, for (sic) collect, deposit, enforce payment, deliver and transfer for and receive and
give effectual receipts and discharge for all money to which the FIRST CONTINENTAL ASSURANCE
COMPANY, INC., may hereafter become due, owing payable or transferable to said Corporation by
reason of or in connection with the above-mentioned appointment. 4. To receive notices, summons, and
legal processes for and in behalf of the FIRST CONTINENTAL ASSURANCE COMPANY, INC., in connection
with actions and all legal proceedings against the said Corporation. The agency comprises all the
business of the principal but, couched in general terms, it is limited only to acts of administration.

A general power permits the agent to do all acts for which the law does not require a special
power. Thus, the acts enumerated in or similar to those enumerated in the Special Power of Attorney do
not require a special power of attorney. Article 1878, Civil Code, enumerates the instances when a
special power of attorney is required. The pertinent portion that applies to this case provides that:
Special powers of attorney are necessary in the following cases: (1) To make such payments as are not
usually considered as acts of administration; (15) Any other act of strict dominion. The payment of
claims is not an act of administration. The settlement of claims is not included among the acts
enumerated in the Special Power of Attorney, neither is it of a character similar to the acts enumerated
therein. A special power of attorney is required before respondent Guevarra could settle the insurance
claims of the insured. Guevarra’s authority to settle claims is embodied in the Memorandum of
Management Agreement dated February 18, 1987 which enumerates the scope of respondent
Guevarra’s duties and responsibilities as agency manager for San Fernando are:

1. You are hereby given authority to settle and dispose of all motor car claims in the amount of
P5,000.00 with prior approval of the Regional Office.

2. Full authority is given you on TPPI claims settlement. In settling the claims Guevarra’s
authority is further limited by the written standard authority to pay, which states that the payment shall
come from his revolving fund or collection in his possession. Having deviated from the instructions of
the principal, the expenses that respondent Guevarra incurred in the settlement of the claims of the
insured may not be reimbursed from Dominion. This conclusion is in accord with Article 1918, Civil Code,
which states that: The principal is not liable for the expenses incurred by the agent in the following
cases: (1) If the agent acted in contravention of the principal’s instructions, unless the latter should wish
to avail himself of the benefits derived from the contract; The law on agency prohibits respondent
Guevarra from obtaining reimbursement but his right to recover may still be justified under the general
law on obligations and contracts. Article 1236, second paragraph, Civil Code, provides: “Whoever pays
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for another may demand from the debtor what he has paid, except that if he paid without the
knowledge or against the will of the debtor, he can recover only insofar as the payment has been
beneficial to the debtor.” In this case, when the risk insured against occurred, petitioner’s liability as
insurer arose. This obligation was extinguished when respondent Guevarra paid the claims and obtained
Release of Claim Loss and Subrogation Receipts from the insured who were paid. To the extent that the
obligation of Dominion has been extinguished, Guevarra may demand for reimbursement from his
principal. To rule otherwise would result in unjust enrichment of petitioner. The extent to which
Dominion was benefited by the settlement of the insurance claims amounted to P116,276.95. The
amount of the revolving fund/collection that was then in the possession of Guevarra was P3604.84,
which should be deducted from the amount settled by Guevarra. The amount that may be reimbursed
to Guevarra is P112,672.11

23. BICOL SAVINGS AND LOAN ASSOCIATION, vs. HON. COURT OF APPEALS, CORAZON DE
JESUS, LYDIA DE JESUS, NELIA DE JESUS, JOSE DE JESUS, AND PABLO DE JESUS,

G.R. No. 85302. March 31, 1989.

FACTS:

Juan de Jesus was the owner of a parcel of land, containing an area of 6,870 sq. ms., more or
less, situated in Naga City. On 31 March 1976, he executed a Special Power of Attorney in favor of his
son, Jose de Jesus, “To negotiate, mortgage my real property in any bank either private or public entity
preferably in the Bicol Savings Bank, Naga City, in any amount that may be agreed upon between the
bank and my attorney-in-fact.” By virtue thereof, Jose de Jesus obtained a loan of twenty thousand
pesos (P20,000.00) from petitioner bank on 13 April 1976. To secure payment, Jose de Jesus executed a
deed of mortgage on the real property referred to in the Special Power of Attorney, which mortgage
contract carried, inter alia, the following stipulation:

If at any time the Mortgagor shall refuse to pay the obligations herein secured, or any of the
amortizations of such indebtedness when due, or to comply with any of the conditions and stipulations
herein agreed . . then all the obligations of the Mortgagor secured by this Mortgage, all the
amortizations thereof shall immediately become due, payable and defaulted and the Mortgagee may
immediately foreclose this mortgage in accordance with the Rules of Court, or extrajudicially in
accordance with Act No. 3135, as amended, or Act No. 1508.

For the purpose of extrajudicial foreclosure, the Mortgagor hereby appoints the Mortgagee his
attorney-in-fact to sell the property mortgaged . . . .” Juan de Jesus died in the meantime on a date that
does not appear of record. By reason of his failure to pay the loan obligation even during his lifetime,
petitioner bank caused the mortgage to be extrajudicially foreclosed on 16 November 1978. In the
subsequent public auction, the mortgaged property was sold to the bank as the highest bidder to whom
a Provisional Certificate of Sale was issued. Private respondents herein, including Jose de Jesus, who are
all the heirs of the late Juan de Jesus, failed to redeem property within one year from the date of the
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registration of the Provisional Certificate of Sale on 21 November 1980. Hence, a Definite Certificate of
Sale was issued in favor of the bank on 7 September 1982. Notwithstanding, private respondents still
negotiated with the bank for the repurchase of the property. Offers and counter-offers were made, but
no agreement was reached, as a consequence of which, the bank sold the property instead to other
parties in installments. Conditional deeds of sale were executed between the bank and these parties. A
Writ of Possession prayed for by the bank was granted by the Regional Trial Court. On 31 January 1983
private respondents herein filed a Complaint with the then Court of First Instance of Naga City for the
annulment of the foreclosure sale or for the repurchase by them of the property. That Court, noting that
the action was principally for the annulment of the Definite Deed of Sale issued to petitioner bank,
dismissed the case, ruling that the title of the bank over the mortgaged property had become absolute
upon the issuance and registration of the said deed in its favor in September 1982. The Trial Court also
held that herein private respondents were guilty of laches by failing to act until 31 January 1983 when
they filed the instant Complaint. On appeal, the Trial Court was reversed by respondent Court of
Appeals. In so ruling, the Appellate Court applied Article 1879 of the Civil Code and stated that since the
special power to mortgage granted to Jose de Jesus did not include the power to sell, it was error for the
lower Court not to have declared the foreclosure proceedings and auction sale held in 1978 null and
void because the Special Power of Attorney given by Juan de Jesus to Jose de Jesus was merely to
mortgage his property, and not to extrajudicially foreclose the mortgage and sell the mortgaged
property in the said extrajudicial foreclosure. The Appellate Court was also of the opinion that petitioner
bank should have resorted to judicial foreclosure. A Decision was thus handed down annulling the
extrajudicial foreclosure sale, the Provisional and Definite Deeds of Sale, the registration thereof, and
the Writ of Possession issued to petitioner bank. From this ruling, the bank filed this petition to which
the Court gave due course. The pivotal issue is the validity of the extrajudicial foreclosure sale of the
mortgaged property instituted by petitioner bank which, in turn, hinges on whether or not the agent-
son exceeded the scope of his authority in agreeing to a stipulation in the mortgage deed that petitioner
bank could extrajudicially foreclose the mortgaged property. Article 1879 of the Civil Code, relied on by
the Appellate Court in ruling against the validity of the extrajudicial foreclosure sale, reads: “Art. 1879. A
special power to sell excludes the power to mortgage; and a special power to mortgage does not include
the power to sell.”

ISSUE: whether or not the agent-son exceeded the scope of his authority in agreeing to a stipulation in
the mortgage deed that petitioner bank could extrajudicially foreclose the mortgaged property.

HELD:

No. The sale proscribed by a special power to mortgage under Article 1879 is a voluntary and
independent contract, and not an auction sale resulting from extrajudicial foreclosure, which is
precipitated by the default of a mortgagor. Absent that default, no foreclosure results. The stipulation
granting an authority to extrajudicially foreclose a mortgage is an ancillary stipulation supported by the
same cause or consideration for the mortgage and forms an essential or inseparable part of that
bilateral agreement (Perez v. Philippine National Bank,). The power to foreclose is not an ordinary
agency that contemplates exclusively the representation of the principal by the agent but is primarily an
authority conferred upon the mortgagee for the latter’s own protection. That power survives the death
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of the mortgagor (Perez vs. PNB, supra). In fact, the right of the mortgagee bank to extrajudicially
foreclose the mortgage after the death of the mortgagor Juan de Jesus, acting through his attorney-in-
fact, Jose de Jesus, did not depend on the authorization in the deed of mortgage executed by the latter.
That right existed independently of said stipulation and is clearly recognized in Section 7, Rule 86 of the
Rules of Court, which grants to a mortgagee three remedies that can be alternatively pursued in case
the mortgagor dies, to wit: (1) to waive the mortgage and claim the entire debt from the estate of the
mortgagor as an ordinary claim; (2) to foreclose the mortgage judicially and prove any deficiency as an
ordinary claim; and (3) to rely on the mortgage exclusively, foreclosing the same at any time before it is
barred by prescription, without right to file a claim for any deficiency. It is this right of extrajudicial
foreclosure that petitioner bank had availed of, a right that was expressly upheld in the same case of
Perez v. Philippine National Bank (supra), which explicitly reversed the decision in Pasno v. Ravina (54
Phil. 382) requiring a judicial foreclosure in the same factual situation. The Court in the aforesaid PNB
case pointed out that the ruling in the Pasno case virtually wiped out the third alternative, which
precisely includes extrajudicial foreclosure, a result not warranted by the text of the Rule. It matters not
that the authority to extrajudicially foreclose was granted by an attorney-in-fact and not by the
mortgagor personally. The stipulation in that regard, although ancillary, forms an essential part of the
mortgage contract and is inseparable therefrom. No creditor will agree to enter into a mortgage
contract without that stipulation intended for its protection. Petitioner bank, therefore, in effecting the
extrajudicial foreclosure of the mortgaged property, merely availed of a right conferred by law. The
auction sale that followed in the wake of that foreclosure was but a consequence thereof. The
extrajudicial foreclosure of the subject mortgaged property, as well as the Deeds of Sale, the registration
thereof, and the Writ of Possession in petitioner bank’s favor, are hereby declared VALID and EFFECTIVE.

24. RODRIGUEZ vs CA BARBARA RODRIGUEZ, vs. HON. COURT OF APPEALS (Second Division,
composed of JUSTICES JUAN P. ENRIQUEZ, HERMOGENES CONCEPCION, JR. and EDILBERTO SORIANO),
ATANACIO VALENZUELA, MAXIMINA VICTORIO, LIBERATA SANTOS, NIEVES CRUZ, substituted by her
heirs, ARSENIO, JAYME, ANDRES, NELO and AMANDA, all surnamed NERY, and CARMEN and ARSENIA,
both surnamed MENDOZA,

G.R. No. L-29264 August 29, 1969

FACTS:

On December 31, 1958, a document denominated "Kasunduan" written in the vernacular and
ratified before Notary Public was executed between Nieves Cruz and spouses Atanacio Valenzuela, and
MaximinaVictorio and Liberate Santos authorizing the latter three (as agents) to sell a certain parcel of
land situated in Rizal. The price payable to Cruz for the land would be P1.60 per sq.meter and any
overprice would pertain to the agents; that Nieves Cruz would receive agents advance payments for the
purchase price by whomsoever may buy the land, in a first P10,000 and another P10,000 thereafter.
Should the agent find no buyer by the time that Torrens title is issued, Nieves Cruz reserved the right to
look for a buyer herself and all sums already received from the agents would be returned to them
without interest. Amounts received were evidenced by a receipt. Ad thereafter, Cruz and her children
collected various sums of money either thru Victorio or Salud de Leon (daughter of Santos) from 1969 to
1961 as additional payments for the land, all totaling P47, 198. Proceedings to place land under the
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Torrens System were initiatedand the registration court decreed in 1960 the land in the name of Cruz
and her brother, subject to the rights of Valenzuela, Victorio, and Santos over the ½ share of the land
which they partially paid for, as carried over the annotation in the Certificate of title. Then, on
September 15, 1961, Cruz sold the property in question to Barbara Lombos Rodriguez, her "balae, for
P77,216 and a TCT was issued in the name of Rodriguez which likewise carried over the annotation
pertaining to the ½ part. On the next day Cruz, thru counsel, gave notice to the three agents to rescind
their original agreement with a corresponding check in the amount of all their payments. Agents
returned the check, thus Cruz came before the Rizal Court for an action of rescission and cancellation of
annotation. Agents content that the agreement has been novated by a subsequent agreement
whereunder they were to buy the property directly and the annulment of the sale to Rodriguez. Pending
the case, Cruz died and substituted by her children.
Trial Court decision: In favor of Cruz and Rodriguez as against the defendants (agents)
Court of Appeals decision: Reversed decision of Trial Court ordering possession to be restored to the
agents and Rodriguez divested of title over the land.
Two cases over the same land was brought before the Supreme Court, one where Rodriguez and heirs of
Cruz filed a joint petition for certiorari but filed beyond the reglamentary period mentioned in Rule 45 of
Civil Procedure*. The action was denied. Another action (present action) was filed solely by Rodriguez
for mandamus and certiorari with new grounds, such as (1) land has a value in excess of P200,000 thus
CA has no jusrisdiction, and (2) grave abuse of discretion by CA in denying her motion for new trial.

ISSUE: Whether or not Cruz did agree to sell to the agents the land in question.

HELD:

A novatory oral contract existed between Cruz the agents. For several times in the past, as
affirmed by the son of Cruz, agents informed Cruz that Salud de Leon (daughter of Santos) is the buyer
of the land. Later, de Leon forgoes the purchase of land in favor of the agents. Another fact of the
existence of such novation is the significance of the notation in the certificate of title in favor of the
agents, to which Cruz and her children did not protest for over a year and continue to receive the 13
installment payments. SC, therefore, conclude that there is substantial evidence in record sustaining
that that parties to the agency agreement subsequently entered into a different contract, one that of
sale and the legion of receipts that come to support it. In the case of Rodriguez, being aware of the
annotations in the certificate, she cannot claim to be an innocent purchaser for value. As to the two
grounds she raised before SC, the first ground does not have any merit because the value of the land, as
evidenced by various sale transactions, could not have been beyond 200,000. She was also estopped
from raising jurisdiction against CA when in the first place, she has subjected herself under its
jurisdiction during the various hearings until the decision of the appealed case. An unfavorable judgment
and the goal to secure relief could not afford one to raise the issue of jurisdiction. As to the second
ground, certainly, the CA could not entertain her request for motion for new trail in application of
estoppel by laches. SC declared the estate of Cruz to be liable to Rodriguez for the sum she paid for the
land and affirmed findings of the CA.
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25. PAHUD VS. CA

GR. NO. 160346 AUGUST 25,2009

FACTS:

During their lifetime, spouses Pedro San Agustin and Agatona Genil were able to acquire a 246-
square meter parcel of land situated in Barangay Anos, Los Banos, Laguna and covered by Original
Certificate of Title (OCT) No. O - (1655) 0-15.
Agatona Genil died on September 13, 1990 while Pedro San Agustin died on September 14,
1991. Both died intestate, survived by their eight (8) children: respondents Eufemia, Raul, Ferdinand,
Zenaida, Milagros, Minerva, Isabelita and Virgilio. Sometime in 1992, Eufemia, Ferdinand and Raul
executed a Deed of Absolute Sale of Undivided Shares conveying in favor of petitioners (the Pahuds, for
brevity) their respective shares from the lot they inherited from their deceased parents for P525,000.00.
Eufemia also signed the deed on behalf of her four (4) other co-heirs, namely: Isabelita on the basis of a
special power of attorney executed on September 28, 1991, and also for Milagros, Minerva, and Zenaida
but without their apparent written authority. The deed of sale was also not notarized.
On July 21, 1992, the Pahuds paid P35,792.31 to the Los Banos Rural Bank where the subject
property was mortgaged. The bank issued a release of mortgage and turned over the owner's copy of
the OCT to the Pahuds.Over the following months, the Pahuds made more payments to Eufemia and her
siblings totaling to P350,000.00.12 They agreed to use the remaining P87,500.0013 to defray the
payment for taxes and the expenses in transferring the title of the property.When Eufemia and her co-
heirs drafted an extra-judicial settlement of estate to facilitate the transfer of the title to the Pahuds,
Virgilio refused to sign it.On July 8, 1993, Virgilio's co-heirs filed a complaint for judicial partition of the
subject property before the RTC of Calamba, Laguna. On November 28, 1994, in the course of the
proceedings for judicial partition, a Compromise Agreement was signed with seven (7) of the co-heirs
agreeing to sell their undivided shares to Virgilio for P700,000.00. The compromise agreement was,
however, not approved by the trial court because Atty. Dimetrio Hilbero, lawyer for Eufemia and her six
(6) co-heirs, refused to sign the agreement because he knew of the previous sale made to the Pahuds.
On December 1, 1994, Eufemia acknowledged having received P700,000.00 from Virgilio.Virgilio then
sold the entire property to spouses Isagani Belarmino and Leticia Ocampo (Belarminos) sometime in
1994. The Belarminos immediately constructed a building on the subject property. Alarmed and
bewildered by the ongoing construction on the lot they purchased, the Pahuds immediately confronted
Eufemia who confirmed to them that Virgilio had sold the property to the Belarminos. Aggrieved, the
Pahuds filed a complaint in intervention in the pending case for judicial partition· After trial, the RTC
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upheld the validity of the sale to petitioners respondents appealed the decision to the CA arguing, in the
main, that the sale made by Eufemia for and on behalf of her other co-heirs to the Pahuds should have
been declared void and inexistent for want of a written authority from her co-heirs. The CA yielded and
set aside the findings of the trial court.

ISSUES:

Whether or not the sale of the subject property by Eufemia and her co-heirs to the Pahuds valid and
enforceable.

HELD:
Yes. Article 1874 of the Civil Code plainly provides: “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.”
Such stringent statutory requirement has been explained in Cosmic Lumber Corporation v. Court
of Appeals: 26 “[T]he authority of an agent to execute a contract [of] 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 for an agent to enter into a contract by which the
ownership of an immovable property is transmitted or acquired, either gratuitously or for a valuable
consideration. Under Article 1878, a special power of attorney is necessary for an agent to enter into a
contract by which the ownership of an immovable property is transmitted or acquired, either
gratuitously or for a valuable consideration.
Absence of a written authority to sell a piece of land is, ipso jure, void, precisely to protect the
interest of an unsuspecting owner from being prejudiced by the unwarranted act of another.—We have
repeatedly held that the absence of a written authority to sell a piece of land is, ipso jure, void, precisely
to protect the interest of an unsuspecting owner from being prejudiced by the unwarranted act of
another. A purchaser of a real property is not required to make any further inquiry beyond what the
certificate of title indicates on its face. But the rule excludes those who purchase with knowledge of the
defect in the title of the vendor or of facts sufficient to induce a reasonable and prudent person to
inquire into the status of the property.
It is a basic rule in the law of agency that a principal is subject to liability for loss caused to
another by the latter’s reliance upon a deceitful representation by an agent in the course of his
employment (1) if the representation is authorized; (2) if it is within the implied authority of the agent to
make for the principal; or (3) if it is apparently authorized, regardless of whether the agent was
authorized by him or not to make the representation.
By their continued silence, Zenaida, Milagros and Minerva have caused the Pahuds to believe
that they have indeed clothed Eufemia with the authority to transact on their behalf. Clearly, the three
co-heirs are now estopped from impugning the validity of the sale from assailing the authority of
Eufemia to enter into such transaction. Accordingly, the subsequent sale made by the seven coheirs to
Virgilio was void because they no longer had any interest over the subject property which they could
alienate at the time of the second transaction.Nemo dat quod non habet. Virgilio, however, could still
alienate his 1/8 undivided share to the Belarminos.
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The Belarminos, for their part, cannot argue that they purchased the property from Virgilio in
good faith. As a general rule, a purchaser of a real property is not required to make any further inquiry
beyond what the certificate of title indicates on its face. But the rule excludes those who purchase with
knowledge of the defect in the title of the vendor or of facts sufficient to induce a reasonable and
prudent person to inquire into the status of the property. Such purchaser cannot close his eyes to facts
which should put a reasonable man on guard, and later claim that he acted in good faith on the belief
that there was no defect in the title of the vendor. His mere refusal to believe that such defect exists, or
his obvious neglect by closing his eyes to the possibility of the existence of a defect in the vendor’s title,
will not make him an innocent purchaser for value, if afterwards it turns out that the title was, in fact,
defective. In such a case, he is deemed to have bought the property at his own risk, and any injury or
prejudice occasioned by such transaction must be borne by him.