LITONJUA v.

FERNANDEZ – “no perfected contract of sale/ no barangay

clearance” Sometime in September 1995, the brokers Alimario and Fisico offered to sell
a parcel of land to the spouses Litonjua. They were shown copies of the titles indicating
that the owners of the property were represented by Fernandez and as such, the
spouses arranged for a meeting with her. During the meeting in November, the parties
“agreed” that for the property to be sold for P150 per square meter. They agreed to meet
again in December to finalize the sale, where Fernandez would present a special power
of attorney authorizing her to sell in behalf of the owners. However, only Fisico met the
spouses when they convened. He informed the spouses of certain problems Fernandez
was encountering with the tenants and was trying to settle it. Come January, the
spouses wrote a letter to Fernandez, demanding that the sale be finalized by the end of
the month. Fernandez then wrote the spouses in February, informing them that she had
changed her mind, and the sale would no longer push through until all problems are
settled. Consequently, the spouses sued for specific performance to compel Fernandez
to sell the property. They relied on Fernandez’s letter to prove the perfection of a
contract of sale. During the trial however, Fernandez testified that: 1) she was only
authorized to hear offers and could not bind the owners as she had no written authority
to do so, 2) she could not secure a barangay clearance stating that the property was free
of tenants, 3) one of the co-owners was not agreeable to the price of P150 per square
meter, and 4) she immediately asked Alimario to apprise the petitioners of the foregoing
developments. While the trial court found the existence of a perfected contract of sale,
the CA held otherwise. The SC holds that there was no perfected contract of sale as
there was no meeting of the minds.

A special power of attorney is necessary to enter into any contract by which the
ownership of an immovable is transmitted or acquired gratuitiously or for a
valuable consideration, or to create or convey real rights over immovable
property, or for any other act of strict dominion. The declarations of the agent
alone are generally insufficient to establish the fact or extent of her authority. In
this case, the only evidence adduced by Litonjuas was Antonio’s testimony that
Fernandez openly represented herself to be the representative of the owners and that
she promised to present to the petitioners the written authority to sell the properties.
However, Fernandez testified that she was only authorized to hear offers, and did not
have the authority to bind the owners to the sale of their land. The letter Fernandez
signed by her alone, without any authority from the other owners. As such, they could
not be bound by it.

Litonjua v. Fernandez (2004) (best offer v. perfected contract of

sale) Doctrines

 Art 1878 of the Civil Code provides that a special power of

attorney is necessary to enter into any contract by which the
ownership of an immovable is transmitted or acquired either
gratuitously or for a valuable consideration, or to create or
convey real rights over immovable property or for any other act
of strict dominion. Any sale of real property by one purporting to
be the agent of the registered owner without any authority
 therefore in writing from the said owner is null and void. The
declarations of the agent alone are generally insufficient to
establish the fact or extent of her authority. 

 The settled rule is that persons dealing with an assumed agent are
bound at their peril and if they would hold the principal liable, to
ascertain not only the fact of the agency but also the nature and
extent of authority, and in case either is controverted, the burden
of proof is upon them to prove it. Facts: Alimario and Fisico
were brokers who offered to sell to Litonjua and Litonjua Jr. 2
parcels of land. Brokers told them that they are authorized by
respondent Fernandez to offer the property for sale. The
Litonjua’s met with Fernandez and the 2 brokers at the Litonjua’s
office and both petitioner and respondent agreed to buy the
property at P150/sq m and that the owners would be the one to
shoulder the capital gains tax, transfer tax and expenses for
documentation of the sale. They agreed to meet on Dec 8 1995 to
finalize the sale and agreed that Fernandez would present a
Special power of attorney executed by the owners of the property
authorizing her to sell the properties for and in their behalf and to
execute an absolute deed of sale thereon. However, only Fisico
attended the meeting and told the petitioners that Fernandez was
working out a settlement with the tenants on the said property.
After weeks of waiting and 2 letters asking that a deed of
absolute sale be executed in accordance with their verbal
agreement, Fernandez wrote the Litonjuas saying that: 

It is not true that she agreed to shoulder registrations fees nor

was it discussed

That the Dec 8 meeting was in order to sign the absolute deed
of sale, that it was only the status of the property that was
discussed and whether or not there are really no tenants.
Unfortunately, “alleged tenants” appeared so she and her
cousin are no longer pushing through with the sale.

Although petitioners offered to buy the property, she did

not accept, no verbal contract perfected.
 Contract of sale unenforceable for failure to comply with
the statute of frauds.

No earnest money demanded nor received; no obligations exist.

 Fernandez version: [note: Fernandez isn’t the owner of the

property, relative lang siya ng owners na abroad] Fernandez
requested Alimario to look for buyers of the properties on a best
offer basis. That during the Dec 8 meeting, she only attended to
hear the petitioners’ offer and that she could not bind the owners
of the properties because she had no written authority to sell the
same. After the meeting, she asked Marquez to secure a barangay
clearance that the property has no tenants but couldn’t ‘cause
apparently there are tenants. Her cousin told her that he was not
selling his property for P150/ sqm. Trial court’s decision was in
favor of petitioners, ordering Fernandez to execute a contract of
sale. Court of appeals reversed stating that petitioners failed to
prove that a sale or a contract to sell over the property had been
perfected between petitioners and private respondent. 

Issues:
1. W/N there was a perfected contract of sale between the parties

Held/Ratio:
No. Text of Fernandez’ letter states that: “My cousin and I have
thereby changed our mind and that the sale will no longer push
through. .... In view thereof, I regret to formally inform you that we are
no longer selling the property until the problems are fully settled.”

The letter can hardly be constituted as a note or memorandum
evidencing the agreement of the parties to enter into a contract of sale
as it is very clear that the seller DID NOT ACCEPT the condition that
she will be the one to pay the reg fees and denied that she committed to
execute a deed of sale. When Fernandez used the words “changed our
mind”, she was referring to the decision to sell the property at all and
NOT IN SELLING THE PROPERTY TO LITONJUAS as Fernandez
has not yet made the final decision to sell the property to the Litonjuas.

Art 1878 of the Civil Code provides that a special power of attorney
is necessary to enter into any contract by which the ownership of an
immovable is transmitted or acquired either gratuitously or for a
valuable consideration, or to create or convey real rights over
immovable property or for any other act of strict dominion. Any sale of
real property by one purporting to be the agent of the registered owner
without any authority therefore in writing from the said owner is null
and void. The declarations of the agent alone are generally insufficient
to establish the fact or extent of her authority. The settled rule is that
persons dealing with an assumed agent are bound at their peril and if
they would hold the principal liable, to ascertain not only the fact of the
agency but also the nature and extent of authority, and in case either is
controverted, the burden of proof is upon them to prove it. The letter
sent by Fernandez was signed by her alone, without authority nor
ratification from the owners and so said letter is not binding on the
owners. Therefore, there is no perfected contract of sale.

Spouses Aggabao, v. Dionisio Parulan Jr. and Ma. Elena

Parulan (2010) (Void SPA/Sale + Conjugal Property)
Doctrines:
Art. 1877: General Power of Attorney
a. Agency couched in general terms comprises only acts of
administration

The power of Administration does not include acts of disposition

or encumbrance, which are acts of strict ownership. As such, authority
to dispose cannot proceed from an authority to administer, and vice
versa, for the two powers may only be exercised by an agent by
following the provisions on agency of the Civil Code (Arts 1876-1878).
Facts:
Spouses Parulan, who are separated-in-fact, owned 2 parcels of land in
BF Homes, Paranaque, registered under TCT 63376 to 77. On Jan.
1991, Atanacio, a real estate broker, caused Elena Parulan, the wife, to
meet with petitioners, Spouses Aggabao regarding the sale of the lands.
During the meeting Elena showed them a copy of a special power of
attorney executed by Dionisio (husband) on Jan 1991, authorizing
Elena to sell the property. After the meeting, they paid 20k as earnest
money and arranged the terms of payment.
The Aggabaos then went to the Register of Deeds of Paranaque to
inquire about the lots. They found out that the land under 63377 is
subject of an existing mortgage in favor of Los Banos Rural Bank,
attached is a court order authorizing Elena to mortgage the said land.
The mortgage was effected through a special power of attorney
executed by Dionisio. They inquired with the Los Banos Rural Bank
regarding the mortgage of the second land and the latter told them that
the bank asked for a court order because the land was part of the
spouses’ conjugal properties.
Following such verification, the Aggabaos complied with the terms of
payment (they paid the mortgage with Los Banos Rural Bank) and paid
the final amount of 700k. However Elena only executed a deed of
absolute sale and failed to deliver the owner’s duplicate of the TCT
63376, alleging that it was in the hands of a relative in Hong Kong.
She promised that it would be delivered in a week. The second TCT
(63377) however was cancelled and a new one was issued in the name
of the Aggabaos. Elena failed to deliver as promised.
Petitioners found out that the TCT was with Atty. Parulan, the
brother of Dionisio, who also had a SPA executed by Dionisio,
authorizing him to sell both lands. Atty. Parulan asked for 800k from
the Aggabaos in exchange for TCT 63376. He gave the petitioners a
moratorium for their decision. However, petitioners did not respond.
Atty. Parulan found out that the Aggabaos already paid in full to Elena.
Atty. Parulan then sued them (the Aggabaos + Elena) and asked the
court for the nullification of the deed of absolute sale and cancellation
of titles issued under it. Petitioners on the other hand sued for specific
performance against respondents. The cases were consolidated.
The RTC nullified the deed on the ground that the SPA held by
Elena is a forgery. CA affirmed. They also rejected the contention of
the Aggabaos that they were buyers in good faith, because according to
them (the courts) the Aggabaos did not exercise ordinary prudence in
buying said lots. Thus this petition.
Petitioners contend that because the spouses were married prior to the
Family Code, the provisions regarding Conjugal Partnership under the
Civil Code should apply. According to the CC, the husband is the
administrator of the Conjugal Properties. The remedy of the wife in
case the husband disposes of any property is to ask for annulment of the
contracts (Art173). Therefore, according to them, the contract was
merely voidable and maybe subject to ratification. And such
ratification, according to them, happened when Atty. Parulan made an
offer to give the TCT for 800k.

Issues:
1. W/N the sale is merely voidable under Art 173.

2. W/N petitioners were buyers in good faith.

3. W/N the Veloso doctrine applies.

Held/Ratio:
1. NO. The sale is VOID. Art 173 has been expressly repealed by
the Family Code. Secondly, the sale was made in 1991, years
after the Family Code was promulgated. Therefore, the
provisions of the Family Code should apply. Moreover the
Family Code states that it may be applied retroactively. In which
case, under the Family Code provisions on the CPG, both spouses
are administrators of the property. The sale is VOID pursuant to
art 124 par 2 of the Family Code: 
In the event that one
spouse is incapacitated or otherwise unable to participate in
the administration of the conjugal properties, the other
spouse may assume sole powers of administration. These
powers do not include disposition or encumbrance without
authority of the court or the written consent of the other
spouse. In the absence of such authority or consent, the
disposition or encumbrance shall be void. 
Nonetheless, the
SC explained that even if the power of administration is with
 Dionisio, pursuant to the repealed provisions, and he conferred a
SPA to his brother for the sale of the lands, the brother still has
no power of administration -- he may not ratify the contract.
“The power of administration does not include acts of disposition
or encumbrance, which are acts of strict ownership. As such, an
authority to dispose cannot proceed from an authority to
administer, and vice versa, for the two powers may only be
exercised by an agent by following the provisions on agency
of the Civil Code (from Article 1876 to Article 1878)
Specifically, the apparent authority of Atty. Parulan, being a
special agency, was limited to the sale of the property in
question, and did not include or extend to the power to
administer the property.”

2. NO. They failed to exercise due diligence in inquiring whether or

not Elena had the power to alienate such properties especially
when they were made aware by the Los Banos Bank that the
lands were part of the Conjugal Partnership. They should have
inquired about the authenticity of the SPA, and not merely on the
liens and encumbrances on the subject lands.

3. NO. In Veloso, the land was not part of the conjugal property. It
was part of the exclusive properties of one of the parties.
Therefore even if the petitioners therein failed to inquire about
the authenticity of the SPA, Art 124 would not apply.
Fourthly, the petitioners failed to substantiate their contention that Dionisio, while holding the
administration over the property, had delegated to his brother, Atty. Parulan, the
administration of the property, considering that they did not present in court the SPA granting
to Atty. Parulan the authority for the administration.

Nonetheless, we stress that the power of administration does not include acts of disposition
or encumbrance, which are acts of strict ownership. As such, an authority to dispose cannot
proceed from an authority to administer, and vice versa, for the two powers may only be
exercised by an agent by following the provisions on agency of the Civil Code (from Article
1876 to Article 1878). Specifically, the apparent authority of Atty. Parulan, being a special
agency, was limited to the sale of the property in question, and did not include or extend to
the power to administer the property.31