The Supreme Court ruled that a sale of land by an agent without written authority from the owner is void. This means the buyer does not acquire any rights to the property, and the contract cannot be ratified. The decision underscores the importance of proper documentation in real estate transactions, protecting property owners from unauthorized sales and ensuring that buyers are dealing with duly authorized representatives.

The Unwritten Agreement: Can an Agent Sell Land Without Explicit Authority?

This case, Spouses Joselina Alcantara and Antonio Alcantara, and Spouses Josefino Rubi and Annie Distor-Rubi vs. Brigida L. Nido, revolves around a land sale gone awry due to the lack of a written agency agreement. In March 1984, Brigida L. Nido, acting as attorney-in-fact of her daughter Revelen N. Srivastava, offered to sell a portion of Revelen’s land to Spouses Alcantara and Spouses Rubi. The buyers made a down payment and constructed houses on the land. However, problems arose when the buyers defaulted on installment payments, and it was discovered that Brigida lacked a written authorization to sell the land on behalf of her daughter. This situation led to a legal battle over the validity of the sale and the rights of the parties involved.

The central legal question is whether a sale of land conducted by an agent without written authority from the principal (the landowner) is valid and enforceable under Philippine law. The Regional Trial Court (RTC) initially ruled the sale void, ordering mutual restitution. The Court of Appeals (CA) reversed this decision, emphasizing the lack of jurisdiction and the void nature of the contract. The Supreme Court ultimately sided with the Court of Appeals, reinforcing the necessity of a written mandate for agents selling real property.

The Supreme Court’s decision is firmly grounded in the provisions of the Civil Code that explicitly address agency in real estate transactions. Article 1874 states unequivocally:

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.

Building on this principle, Article 1878 further specifies the need for a special power of attorney in contracts involving the transfer of ownership of immovable property:

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

The absence of written authority is not a mere technicality; it strikes at the very heart of the contract’s validity. Without written authorization, the agent’s actions are considered unauthorized, and the sale is deemed void from the beginning. A void contract, in legal terms, is as if it never existed; it creates no rights or obligations and cannot be ratified or enforced. This is because consent, a crucial element for any valid contract under Article 1318 of the Civil Code, is lacking from the true owner of the property.

Moreover, the court addressed the issue of the General Power of Attorney presented by Brigida L. Nido. While she possessed a general power of attorney, it was executed and notarized in the United States. For such a document to be admissible in Philippine courts, it must comply with Section 25, Rule 132 of the Rules of Court, which requires certification by a Philippine foreign service officer stationed in the country of execution. Since the General Power of Attorney lacked this certification, it held no probative value and could not serve as valid written authorization.

The petitioners argued that the lack of written authority should render the contract merely voidable, not void, allowing for ratification. However, the Supreme Court firmly rejected this argument. A void contract is inherently flawed and cannot be cured by ratification, unlike a voidable contract where the defect can be waived by the party whose consent was vitiated. The court emphasized that the explicit requirement for written authority in land sales through an agent leaves no room for interpretation; non-compliance results in a void contract.

The Supreme Court also touched on the issue of jurisdiction. The Court of Appeals correctly pointed out that the Municipal Trial Court (MTC) had exclusive original jurisdiction over the case, not the Regional Trial Court (RTC). This is because the assessed value of the property, as indicated in the tax declaration, was below the jurisdictional threshold for RTCs as defined in Section 33 of Batas Pambansa Bilang 129, as amended by Republic Act No. 7691. This jurisdictional issue further invalidated the RTC’s initial ruling.

Finally, the court dismissed the petitioners’ counterclaim for specific performance, which would have compelled Revelen N. Srivastava to honor the sale. Given that the agency was not established by clear, certain, and specific proof as required, the claim for specific performance could not succeed. Without valid authorization, Brigida L. Nido’s actions could not bind Revelen, and the petitioners had no legal basis to demand the completion of the sale.

FAQs

What was the key issue in this case?	The central issue was whether a sale of land by an agent without written authorization from the landowner is valid under Philippine law. The Supreme Court ruled that such a sale is void.
What does Article 1874 of the Civil Code state?	Article 1874 of the Civil Code requires that when a sale of land is conducted through an agent, the agent’s authority must be in writing; otherwise, the sale is void.
What is the effect of a void contract?	A void contract is considered as if it never existed. It creates no rights or obligations and cannot be ratified or enforced by either party.
Why was the General Power of Attorney presented in this case not considered valid?	The General Power of Attorney was executed and notarized in the United States but lacked the required certification by a Philippine foreign service officer, making it inadmissible as evidence under the Rules of Court.
What is specific performance, and why was it not granted in this case?	Specific performance is a legal remedy that compels a party to fulfill the terms of a contract. It was not granted here because the agent lacked valid written authorization, making the contract unenforceable.
Which court had proper jurisdiction over this case?	Based on the assessed value of the property, the Municipal Trial Court (MTC) had exclusive original jurisdiction, not the Regional Trial Court (RTC).
Can a void contract be ratified?	No, a void contract cannot be ratified. It is inherently flawed and cannot be made valid through subsequent actions or agreements.
What is the significance of having a written authority for an agent selling land?	Written authority protects the landowner from unauthorized sales and ensures that the buyer is dealing with a legitimate representative, providing clarity and security in real estate transactions.

This case serves as a stern reminder of the importance of adhering to legal formalities in real estate transactions. The requirement for written authority when an agent sells land is not a mere procedural hurdle; it is a fundamental safeguard designed to protect property rights and prevent fraudulent or unauthorized deals. Both buyers and sellers must ensure strict compliance with this requirement to avoid potentially devastating legal consequences.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Spouses Joselina Alcantara and Antonio Alcantara, and Spouses Josefino Rubi and Annie Distor-Rubi, vs. Brigida L. Nido, G.R. No. 165133, April 19, 2010