Case Summary (G.R. No. 214057)
Relevant Dates and Legal Instruments
- June 20, 1996: Petitioner executed a General Power of Attorney (GPA) in favor of Benjamin Bautista, authorizing him to administer her businesses and properties.
- August 13, 2004: Benjamin and NICORP entered into a contract to sell the subject property for ₱15,000,000.00 with payment terms and conditions, including the requirement that Benjamin submit a Special Power of Attorney (SPA) for the sale transaction.
- October 13, 2004: An Escrow Agreement was executed designating IE Bank as escrow agent for the title.
- January 24, 2005: Regional Trial Court (RTC) issued a preliminary injunction against NICORP regarding property development pending litigation.
Applicable Law
The applicable law is the 1987 Philippine Constitution, including Articles 1874 and 1878 of the Civil Code relating to the authority required for an agent to sell immovable property and the necessity of a special power of attorney for such transactions.
Dispute Summary
Petitioner alleges that Benjamin Bautista lacked authority to sell the subject property because the General Power of Attorney granted to him authorized only acts of administration over petitioner’s businesses and properties, not acts of disposition such as sale. Petitioner discovered the sale and immediately opposed it by sending demand letters to NICORP, Benjamin, and IE Bank. She filed suit for nullity of the contract, injunction, recovery of possession, and damages.
RTC Decision
The RTC ruled in favor of petitioner, declaring the contract to sell null and void on the basis that the General Power of Attorney did not authorize Benjamin to sell the property. It emphasized that NICORP knew of Benjamin’s lack of authority because the contract expressly required submission of an SPA to effectuate the sale, with penalties imposed for non-compliance. The RTC issued permanent injunctions, ordered the return of possession and the original title to petitioner, and awarded attorney’s fees and costs.
Court of Appeals Ruling and Reconsideration
The Court of Appeals (CA) reversed the RTC decision, holding that the General Power of Attorney granted Benjamin the authority to perform acts of dominion, including the power to sell the subject property. The CA rejected petitioner’s claim that Benjamin acted beyond his authority. Petitioner’s motion for reconsideration was denied.
Issues Presented to the Supreme Court
The Supreme Court was called to resolve whether Benjamin Bautista was authorized under the General Power of Attorney to enter into the contract to sell the real property, considering established jurisprudence on agency and powers of attorney concerning immovable property.
Legal Principles on Powers of Attorney and Authority to Sell Realty
- Article 1874 of the Civil Code requires that the authority of an agent to sell immovable property must be in writing; otherwise, the sale is void.
- Article 1878 enumerates that “special powers of attorney” are necessary to enter into contracts transferring ownership of immovable property.
- The authority to sell must be specifically and clearly conferred in writing; broad or general language does not suffice to authorize acts of strict dominion such as sale or disposition.
- Powers of attorney are to be strictly construed, and doubts are resolved against extending authority beyond that explicitly granted.
- Authority to administer does not include authority to dispose; these are distinct and require different legal instruments.
Analysis of the General Power of Attorney in this Case
The Court examined the General Power of Attorney dated June 20, 1996, and found it only granted Benjamin authority to administer and conduct petitioner’s business affairs, with broad powers to buy and sell in general, but without specific or clear authorization to sell the subject property. The language was deemed too broad and general, covering administration but not acts of disposition. Therefore, it did not constitute the special power of attorney required to validly authorize sale of the immovable property.
Good Faith of NICORP and Requirements for Buyer Prudence
The Court held NICORP could not be considered a bona fide purchaser without notice, as it was aware that a special power of attorney was required and that Benjamin had not secured it. The contract expressly required submission of an SPA within ninety days and imposed penalties for its failure, indicating NICORP’s recognition of Benjamin’s limited authority. As a real estate developer, NICORP was expected to exercise due diligence in ascertaining the selle
Case Syllabus (G.R. No. 214057)
Facts of the Case
- Petitioner Florentina Bautista-Spille is the registered owner of a parcel of land in Imus City, Cavite, covered by Transfer Certificate of Title (TCT) No. T-197, approximately 33,052 square meters.
- On June 20, 1996, petitioner and her spouse executed a General Power of Attorney (GPA) in favor of Benjamin G. Bautista (her brother), authorizing him to administer all her businesses and properties in the Philippines.
- This GPA was notarized before the Philippine Consulate General in New York.
- On August 13, 2004, Benjamin and Nicorp Management and Development Corporation (NICORP) entered into a contract to sell the subject property for PHP 15,000,000.00.
- The contract required NICORP to pay a 20% down payment and balance within 8 months, and stipulated that the TCT would be deposited with International Exchange Bank (IE Bank) as escrow until full payment was made.
- Benjamin was required to submit a Special Power of Attorney (SPA) for the sale; otherwise, payment of the balance would be suspended with a penalty of PHP 150,000 monthly.
- An Escrow Agreement was executed on October 13, 2004, designating IE Bank as escrow agent holding the TCT.
- NICORP issued a check representing the down payment; the TCT was deposited with IE Bank.
- Petitioner, upon discovering the sale, sent demand letters opposing the sale and asserting Benjamin's lack of authority, demanding return of the certificate of title, which was refused.
- Petitioner filed a complaint for nullity of the contract to sell, injunction, recovery of possession, damages, and requested temporary restraining order/preliminary injunction.
- The RTC issued preliminary injunction in favor of petitioner to restrain NICORP from developing or selling the property.
- NICORP denied the allegations, argued Benjamin had valid authority under the GPA, invoked the theory of agency coupled with interest due to partial payment, and requested case dismissal.
- IE Bank denied liability and asserted it acted under the escrow agreement and without a court order could not surrender the title.
- Benjamin failed to respond and was declared in default by the RTC.
- On May 24, 2010, the RTC declared the contract to sell null and void, ruling the GPA only covered administration and not sale authority.
- NICORP appealed, and the Court of Appeals (CA) reversed the RTC ruling, holding that the GPA conferred authority to sell.
- Petitioner moved for reconsideration, denied by the CA.
- Petitioner then filed a petition for review on certiorari before the Supreme Court.
Issues Presented
- Whether Benjamin Bautista was authorized under the General Power of Attorney to enter into a contract to sell the subject property.
- Whether NICORP was a buyer in good faith considering Benjamin’s authority.
- Whether the contract to sell is valid and enforceable despite the absence of a clear Special Power of Attorney authorizing sale.
- Whether the Court of Appeals erred in reversing the Regional Trial Court’s nullification of the contract to sell.
Petitioner’s Arguments
- The GPA did not explicitly grant Benjamin authority to