Pahud vs Court of Appeals

FACTS:

The (8) children : respondents Eufemia, Raul, Ferdinand, Zenaida, Milagros, Minerva, Isabelita and Virgilio, were left a 246-square meter parcel of land.

Sometime in 1992, Eufemia, Ferdinand and Raul executed a Deed of Absolute Sale of Undivided shares in favor of Pahuds for their respective shares from the lot they inherited from their deceased parents. 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  and also for Milagros, Minerva, and Zenaida but without their apparent written authority. The deed of sale was also not notarized.

In 1993, Virgilio filed for judicial partition of the subject property. A Compromise Agreement was signed with seven (7) of the co-heirs agreeing to sell their undivided shares to Virgilio for ₱700,000.00. The agreement was not approved by the trial court

Because of the previous sale made to the Pahuds. Eufemia acknowledged having received ₱700,000.00 from Virgilio.  Virgilio then sold the entire property to spouses Belarminos, in which  immediately constructed a building on the subject property.

Aggrieved, the Pahuds filed a complaint.

The CA ordered the return of the total amount received to Pahuds and that the sale to Belarminos as valid and binding;

ISSUE:

Whether or not the sale with respect to the 3/8 portion of the land should have been deemed ratified when the three co-heirs, namely: Milagros, Minerva, and Zenaida, executed their respective special power of attorneys authorizing Eufemia to represent them in the sale of their shares in the subject property.

HELD:

Yes. While the sale with respect to the 3/8 portion is void by express provision of law and not susceptible to ratification, we nevertheless uphold its validity on the basis of the common law principle of estoppel.

Under Article 1874 of the 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. Also, 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.

Interestingly, in no instance did the three (3) heirs concerned assail the validity of the transaction made by Eufemia to the Pahuds on the basis of want of written authority to sell. They could have easily filed a case for annulment of the sale of their respective shares against Eufemia and the Pahuds. Instead, they opted to remain silent and left the task of raising the validity of the sale as an issue to their co-heir, Virgilio, who is not privy to the said transaction. They cannot be allowed to rely on Eufemia, their attorney-in-fact, to impugn the validity of the first transaction because to allow them to do so would be tantamount to giving premium to their sister’s dishonest and fraudulent deed. Undeniably, therefore, the silence and passivity of the three co-heirs on the issue bar them from making a contrary claim.

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.