Recio vs. Heirs of Altamirano

A sale of immovable property through an agent is void unless the agent's authority is in writing, pursuant to Articles 1874 and 1878 of the Civil Code. Where a co-owner purports to sell the entire co-owned property without written authority from the other co-owners, the sale is null and void as to the shares of the non-consenting co-owners but remains valid as to the selling co-owner's own pro indiviso share, effectively making the buyer a co-owner with the other co-owners or their subsequent transferees.

In the 1950s, Nena Recio, mother of petitioner Reman Recio, leased from the Altamirano family a parcel of land with improvements at No. 39 10 de Julio Street (now Esteban Mayo Street), Lipa City, Batangas, measuring approximately 89.50 square meters. The Altamiranos inherited the property from their deceased parents, the spouses Aguedo Altamirano and Maria Valduvia. The property formed the northern portion of two parcels covered by TCT Nos. 66009 and 66010. Nena operated a grain retail store on the ground floor and used the upper floor as the family residence. In 1988, the Altamiranos offered to sell the property to Nena for ₱500,000.00 and waived rentals, but the sale did not materialize due to the Altamiranos' fault. Nena continued occupying the property with the Altamiranos' consent. The two parcels were eventually consolidated and subdivided into three lots; the subject property became Lot No. 3 under TCT No. T-102563.

• Parties and Subject Property: The respondents, heirs of the spouses Aguedo and Maria Altamirano — Alejandro, Adelaida, Catalina, Alfredo, Francisco, Violeta Altamirano Olfato, and Loreta Altamirano Vda. de Maralit — inherited two parcels of land in Lipa City covered by TCT Nos. 66009 and 66010. The subject property, Lot No. 3 of the consolidation-subdivision plan, is an 89.50-square-meter parcel located at No. 39 10 de Julio Street, subsequently covered by TCT No. T-102563. Petitioner Reman Recio is the son of Nena Recio, who had leased the property from the Altamiranos since the 1950s.

• Initial Offer to Nena Recio: In 1988, the Altamiranos offered to sell the subject property to Nena Recio for ₱500,000.00. Nena accepted, prompting the Altamiranos to waive rental payments. The sale did not materialize at that time due to the Altamiranos' fault, but Nena remained in possession with their consent.

• Negotiations and Oral Contract with Reman Recio: In the latter part of 1994, Reman Recio renewed his mother's option to purchase. He conducted negotiations with Alejandro Altamirano, who introduced himself as representing the other heirs. An oral contract of sale was concluded for the same price of ₱500,000.00. In January 1995, Recio made partial payments totaling ₱110,000.00, duly acknowledged by Alejandro in a receipt dated January 24, 1995. On April 14, 1995, Recio made an additional payment of ₱50,000.00, also receipted by Alejandro.

• Avoidance and Demand: Recio repeatedly offered to pay the remaining balance of ₱340,000.00, but Alejandro avoided him. Recio then demanded execution of a Deed of Absolute Sale upon full payment.

• Subsequent Sale to the Spouses Lajarca: On February 24, 1997, Recio filed his complaint for Specific Performance and caused annotation of a Notice of Lis Pendens on TCT No. T-102563 on March 14, 1997. On February 26, 1998, the Altamiranos executed a Deed of Absolute Sale in favor of the Spouses Lauro and Marcelina Lajarca, resulting in cancellation of TCT No. T-102563 and issuance of TCT No. 112727 in the Lajarcas' names. The Spouses Lajarca had knowledge of the prior sale and the annotated lis pendens.

• Procedural Posture at Trial: Alejandro testified briefly at Recio's instance but excused himself and never returned despite subpoenas. The Altamiranos manifested they would not present further witnesses. The Spouses Lajarca failed to appear on the date set for their evidence presentation and were deemed to have waived their right to present evidence. The trial court found in Recio's favor, voiding the subsequent sale and ordering specific performance against all Altamiranos.

• Authority of Alejandro: Petitioner argued that Alejandro's authority to represent his co-heirs in the contract of sale was adequately proven at trial. The other Altamiranos knew of the sale to Recio because they all participated, either personally or through authorized representatives, in the subsequent sale to the Spouses Lajarca involving the same TCT No. T-102563, which bore a notice of lis pendens.

• Majority Representation: Petitioner maintained that Alejandro represented a considerable majority of the co-owners, as evidenced by three Deeds of Sale executed in favor of the Spouses Lajarca and two other buyers of parcels co-owned by the Altamiranos. This track record should have been sufficient to establish his authority to bind the other co-heirs.

• Prayer for Relief: Petitioner sought reinstatement in full of the RTC decision, which had ordered all the Altamiranos to execute a Deed of Absolute Sale covering the entire property.

• Lack of Written Authority: The Court of Appeals, whose decision the respondents effectively defended, found that Alejandro's authority to represent his co-heirs was disputed for lack of a written special power of attorney (SPA). Summons upon Alejandro did not constitute summons upon the other Altamiranos, several of whom resided abroad with unknown addresses and required extraterritorial service under Section 15, Rule 14 of the Rules of Court.

• Nullity of Sale as to Non-Consenting Co-owners: Under Articles 1874 and 1878 of the Civil Code, any sale of immovable property through an agent without written authority is void. Alejandro's sale of the entire Lot No. 3 could not bind his co-owners absent their written consent.

• Validity as to Alejandro's Aliquot Share: Alejandro, as a co-owner, could validly dispose of his own undivided interest without the consent of the other co-owners. The contract was thus valid and enforceable only insofar as his pro indiviso share of the property.

• Authority to Sell: Whether Alejandro Altamirano had the requisite authority to sell the entire co-owned property on behalf of his co-heirs, absent a written special power of attorney.

• Validity of Oral Contract of Sale: Whether the oral contract of sale between Alejandro Altamirano and Reman Recio was valid and enforceable against all the co-owners.

• Apparent Authority: Whether the Altamirano co-heirs were estopped from denying Alejandro's authority based on apparent authority or subsequent acts.

• Co-ownership: Whether the correct legal consequence was to declare Recio a co-owner with the Spouses Lajarca rather than to order specific performance against all Altamiranos.

• Authority to Sell: The sale of the entire co-owned property by Alejandro was void as to the shares of the non-consenting co-heirs. Articles 1874 and 1878 of the Civil Code explicitly require that the authority of an agent to sell immovable property must be in writing; otherwise, the sale is void. No written SPA from the other Altamiranos was presented. The evidence on record showed that only Alejandro agreed to the sale with Recio.

• Validity of Oral Contract of Sale: The oral contract of sale was valid and contained all essential elements — meeting of minds to transfer ownership for a price, a determinate subject matter (Lot No. 3), and a price certain (₱500,000.00). However, it bound only Alejandro, not the other co-owners. Under the regime of co-ownership, a co-owner may freely dispose of his undivided interest without the consent of the others. The contract of sale was therefore valid only with respect to Alejandro's aliquot share.

• Apparent Authority: The doctrine of apparent authority did not apply. Apparent authority based on estoppel requires acts or conduct by the principal, known and relied upon in good faith and with reasonable prudence by a third person, resulting in a detrimental change of position. The sale to the Spouses Lajarca and other transactions where Alejandro represented the majority of co-owners all transpired after the sale to Recio. Recio could not rely on subsequent acts to establish Alejandro's authority at the time of their transaction. No evidence showed specific acts by the Altamiranos before the sale to Recio indicating knowledge of or consent to Alejandro's representation. Persons dealing with an assumed agent are bound at their peril to ascertain the fact, nature, and extent of the authority; Recio bore the burden of proof and failed to discharge it.

• Co-ownership: The Deed of Absolute Sale between the Altamiranos and the Spouses Lajarca was null and void only as to Alejandro's aliquot share, which had already been sold to Recio. The sale to the Lajarcas was valid as to the shares of the other Altamiranos. Consequently, Recio and the Spouses Lajarca became co-owners of the property. Since the balance of the purchase price remained unpaid, the amounts already paid by Recio were applied as payment for Alejandro's aliquot share.

• Requirement of Written Authority for Sale of Immovable Property (Articles 1874 and 1878, Civil Code): When a sale of land or any interest therein is made through an agent, the agent's authority must be in writing; otherwise, the sale is void. A special power of attorney is necessary to enter into any contract transmitting or acquiring ownership of immovable property, whether gratuitously or for valuable consideration. An oral grant of authority is legally insufficient, and a buyer who relies on an agent's bare representation without securing the written SPA bears the risk of the transaction being declared void.

• Disposition of Pro Indiviso Share by a Co-owner: Under a regime of co-ownership, a co-owner may validly sell, alienate, or dispose of his undivided interest in the co-owned property without the consent of the other co-owners. The transferee steps into the shoes of the selling co-owner and becomes a co-owner with the remaining co-owners or their successors-in-interest. The disposition affects only the selling co-owner's aliquot share and does not bind the shares of the non-consenting co-owners.

• Doctrine of Apparent Authority and Estoppel: Apparent authority arises from the principal's acts or conduct that knowingly permit an agent to hold himself out as possessing authority, or that clothe the agent with indicia of authority leading a reasonably prudent person to believe such authority exists. The claimant must prove (a) acts or conduct of the principal justifying belief in the agency, (b) knowledge of such acts or conduct by the principal, and (c) good-faith reliance by the third person, consistent with ordinary care and prudence, resulting in a detrimental change of position. Subsequent acts of the principal occurring after the transaction cannot retroactively establish apparent authority. Persons dealing with an assumed agent are bound at their peril to ascertain not only the fact of agency but also the nature and extent of the authority, and the burden of proof rests on the party asserting agency to establish it.

• "Persons dealing with an assumed agency, whether the assumed agency 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." — The Court's articulation of the buyer's duty to verify an agent's authority, drawn from Woodchild Holdings, Inc. v. Roxas Electric and Construction Company, Inc.

• "Apparent authority of an agent arises only from 'acts or conduct on the part of the principal and such acts or conduct of the principal must have been known and relied upon in good faith and as a result of the exercise of reasonable prudence by a third person as claimant and such must have produced a change of position to its detriment.'" — Defining the strict requirements for invoking estoppel-based apparent authority.

• "Being a co-owner, Alejandro can validly and legally dispose of his share even without the consent of all the other co-heirs." — Affirming the fundamental principle that a co-owner's undivided interest is freely alienable.

• Alcantara v. Nido, G.R. No. 165133, April 19, 2010, 618 SCRA 333 — Followed. The Court relied on this case for the proposition that a sale of immovable property through an agent who was only verbally authorized is null and void under Articles 1874 and 1878 of the Civil Code.

• Woodchild Holdings, Inc. v. Roxas Electric and Construction Company, Inc., 479 Phil. 896 (2004) — Followed. This case supplied the governing rules on the burden of proof in agency disputes and the requisites for establishing apparent authority through estoppel.

• Acabal v. Acabal, 494 Phil. 528 (2005) — Followed. Cited by the Court of Appeals for the principle that a co-owner can freely sell and dispose of his undivided interest in the co-owned property.

• Calma v. Santos, G.R. No. 161027, June 22, 2009, 590 SCRA 359 — Followed. Cited for the rule that a co-owner may validly and legally dispose of his share even without the consent of all other co-heirs.

• Litonjua v. Fernandez, 471 Phil. 440 (2004) — Cited for the standard of review under Rule 45, recognizing exceptions where factual findings of the CA and trial court conflict.

• Article 1874, New Civil Code — "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." Applied to invalidate Alejandro's sale of the entire property on behalf of his co-heirs, absent any written SPA. The oral grant of authority was legally insufficient to bind the other Altamiranos.

• Article 1878(5), New Civil Code — "Special powers of attorney are necessary in the following cases: … (5) To enter into any contract by which the ownership of an immovable is transmitted or acquired either gratuitously or for a valuable consideration." This provision reinforced the requirement that Alejandro needed a written SPA to validly convey the co-owners' shares in the immovable property.

• Section 15, Rule 14, Revised Rules of Court — Governs extraterritorial service of summons upon defendants not residing and not found in the Philippines in actions affecting property within the Philippines. The CA noted that summons to Alejandro was not summons to the non-resident Altamiranos; extraterritorial service was required but not effected, providing an additional ground for dismissing the complaint against them.

Chief Justice Maria Lourdes P. A. Sereno (Chairperson), Associate Justice Teresita J. Leonardo-De Castro, Associate Justice Lucas P. Bersamin, and Associate Justice Martin S. Villarama, Jr.

N/A — The decision was unanimous with no dissenting opinions recorded.