PAHUD v.

CA (2009)
Topic: Kinds of Agency

PARTIES:
 Petitioner: Purita Pahud, Soledad Pahud and Ian Lee
 Respondent: CA, Sps. Isagani Belarmino, et. al.

FACTS:
 During their lifetime, Sps. Pedro San Agustin and Agatona Genil were able to acquire a 246sqm
parcel of land in Los Banos. Both died intestate, survived by their 8 children (respondents).
 Sometime in 1992, Eufemia, Ferdinand and Raul executed a Deed of Absolute Sale of Undivided
Shares conveying in favor of petitioners Sps. Pahud, their respective shares from the lot they
inherited from their deceased parents for P525K. Eufemia also signed the deed on behalf of her 4
other co-heirs, namely Isabelita on the basis of an SPA and also for Milagros, Minerva and
Zenaida but without their apparent written authority. The Deed of Sale was also not notarized.
 The Sps. Pahud paid P35K to Los Banos Rural Bank where the subject property was mortgaged.
The bank issued a release of mortgage and turned over the OCT to the Pahuds.
 Over the following months, the Pahuds made more payments to Eufemia and her siblings
totaling to P350K.
 When Eufemia and her co-heirs drafted an extra-judicial settlement of estate to facilitate the
transfer of the title to the Pahuds, Virgilio refused to sign it.
 Virgilio’s co-heirs filed a complaint for judicial partition of the subject property before the RTC
Calamaba. In the course of the proceedings, a Compromise Agreement was signed with 7 of the
co-heirs agreeing to sell their undivided shares to Virgilio for P700K. The compromise agreement
was, however, not approved by the trial court because Eufemia’s attorney refused to sign the
agreement because he knew of the previous sale made to the Pahuds.
 Eufemia acknowledged having received P700K from Virgilio. Virgilio then sold the entire property
to the Belarmino spouses sometime in 1994. The Belarminos immediately constructed a building
on the subject property.
 Alarmed about the ongoing construction on the lot they purchased, the Pahuds immediately
confronted Eufemia who confirmed to them that Virgilio had sold the property to the
Belarminos. The Pahuds filed a complaint for intervention in the pending case for judicial
partition.
 The RTC upheld the validity of the sale to the Pahuds. The respondents appealed to the CA,
arguing, that the sale made by Eufemia for and on behalf of her other co-heirs to the Pahuds
should have been declared void and inexistent for want of a written authority from her co-heirs.
The CA rendered a decision in favor of the respondents.

ISSUES/HELD:
 W/N the sale of the subject property by Eufemia and her co-heirs to the Pahuds is valid.
o YES. Art. 1874 of the CC provides: “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.”
o Also, under Art. 1878, an SPA 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.
o In several cases, it has been repeatedly held that the absence of a written authority to
sell a pice of land is, ipso jure, void, precisely to protect the interest of an unsuspecting
owner from being prejudiced by the unwarranted act of another.
o The sale made by Eufemia, Isabelita and her two brothers to the Pahuds sometime in
1992 should be valid only with respect to the 4/8 portion of the subject property. The
sale with respect to the 3/8 portion representing the shares of Zenaida, Milagros and
 Minerva is void because Eufemia could not dispose of the interest of her co-heirs in the
said lot absent any written authority from the latter, as explicitly required by law.
o Still, the Pahuds argue that the sale with respect to the 3/8 portion of the land should
have been deemed ratified when Milagros, Minerva and Zenaida executed their
respective SPA’s authorizing Eufemia to represent them in the sale of their shares in the
subject property.
o 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 estoppel.
o Art. 1431 provides that: “Through estoppel an admission or representation is rendered
conclusive upon the person making it, and cannot be denied or disproved as against the
person relying thereon.”
o At the time of the sale to the Pahuds, Eufemia was not armed with the requisite SPA to
dispose of the 3/8 portion of the property. Eufemia and her other co-heirs denied having
sold their shares to the Pahuds. During the pre-trial conference, however, they admitted
that they had indeed sold 7/8 of the property to the Pahuds sometime in 1992. Thus, the
previous denial was superseded, if not accordingly amended, by their subsequent
admission.
o Moreover, in their Comment, the said co-heirs again admitted the sale made to the
Pahuds.
o 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 Virgilio, who is not privy to the transaction.
o 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.
o 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. They are not estopped from impugning the validity of the sale.
o Accordingly, the subsequent sale made by the 7 co-hers of Virgilio is void because they
no longer had any interest over the subject property. However, Virgilio could still
alienate his 1/8 undivided share to the Belarminos.

DOCTRINE:
 “[T]he authority of an agent to execute a contract [of] sale of real estate must be conferred in
writing and must give him specific authority, either to conduct the general business of the
principal or to execute a binding contract containing terms and conditions which are in the
contract he did execute. 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. The express mandate required by law to enable an appointee of an
agency (couched) in general terms to sell must be one that expressly mentions a sale or that
includes a sale as a necessary ingredient of the act mentioned. For the principal to confer the
right upon an agent to sell real estate, a power of attorney must so express the powers of the
agent in clear and unmistakable language. When there is any reasonable doubt that the language
so used conveys such power, no such construction shall be given the document.” (Cosmic
Lumber Corp. v. CA)

JUDGMENT: Decision of the CA is REVERSED and SET ASIDE.