Dear Atty. Gab,

Musta Atty! I’m Jose Garcia, and I’m writing to you because I find myself in a very confusing and distressing situation regarding a property purchase here in Batangas.

About a year ago, I agreed to buy a small residential lot inherited by the Santos siblings from their parents. I mainly dealt with the eldest, Kuya Tony, who lives nearby. He assured me multiple times that he had the blessing of all his siblings (some are working abroad) to sell the property for Php 800,000. We had a verbal agreement, and trusting him, I started making installment payments. I already paid him a total of Php 250,000, for which I have receipts signed by him.

Kuya Tony even allowed my family to start cleaning the lot and planning minor repairs, saying it was practically ours already. However, last month, I was shocked to find out that the Santos siblings had apparently sold the entire property to another buyer for a higher price! When I confronted Kuya Tony, he became evasive. Later, one of his sisters contacted me, saying Kuya Tony never had any written authority, like a Special Power of Attorney (SPA), from them to sell the whole property, only his own share perhaps. They are claiming my deal with Kuya Tony isn’t valid for the entire lot.

I feel cheated and confused. Was my verbal agreement with Kuya Tony, backed by partial payments, enough? Does his assurance that he represented his siblings hold any weight? What happens to the money I paid? Do I have any right to the property at all? I really thought the deal was finalized.

I hope you can shed some light on my situation, Atty. Gab.

Salamat po,
Jose Garcia

Dear Jose,

Thank you for reaching out. I understand your situation must be incredibly frustrating and concerning, especially after making significant payments and believing the property was secured.

Your predicament touches upon crucial aspects of Philippine property and contract law, specifically concerning sales involving co-owned properties and agency. While a verbal agreement to sell land can, in some circumstances, be recognized (especially with partial execution like your payments), the authority of one co-owner to sell the entire property on behalf of others requires specific, legally mandated formalities. Without the required written authorization from all co-owners, the sibling you dealt with, Kuya Tony, could generally only sell his own proportionate interest or ‘aliquot share’ in the property, not the whole thing. Your payments might secure that specific share, but not necessarily the shares belonging to the other siblings.

Navigating Co-Owned Property Sales: The Rule on Written Authority

When siblings inherit property together without physically dividing it yet, they become co-owners. This means each sibling owns an undivided interest in the whole property. While a co-owner has the absolute right to sell their own share, selling the entire property requires the consent of all co-owners.

Your agreement with Kuya Tony involves principles of agency. If Kuya Tony was acting as an agent for his siblings to sell their shares, the law is very clear on the requirements. The Civil Code specifically addresses the sale of land through an agent:

Art. 1874. 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.

This means that for Kuya Tony to validly sell his siblings’ shares in the property to you, he needed their authority formalized in writing. A verbal assurance, even if sincere, is legally insufficient. The law requires this formality to protect property owners from unauthorized dispositions of their real estate.

Furthermore, the power to sell immovable property is considered an act of strict dominion, which requires a Special Power of Attorney (SPA):

Art. 1878. Special powers of attorney are necessary in the following cases:
x x x x
(5) To enter into any contract by which the ownership of an immovable is transmitted or acquired either gratuitously or for a valuable consideration;

Without this written SPA from each sibling naming Kuya Tony as their authorized agent to sell their respective shares, the sale concerning those shares is considered void under Article 1874. It doesn’t matter if Kuya Tony genuinely believed he had their consent or if he assured you he did. The law demands written proof of authority for such transactions.

You might wonder about the concept of ‘apparent authority,’ where someone seems to have authority even if they don’t have it formally. However, the law places the responsibility on the person dealing with an agent (that’s you, in this case) to verify the agent’s authority, especially when dealing with real estate.

“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…”

Relying solely on Kuya Tony’s verbal assurances without asking for or verifying a written SPA carries significant risk. The law generally doesn’t protect buyers who fail to exercise reasonable prudence in verifying the agent’s authority for real estate sales.

So, what does this mean for your agreement and payments? The verbal contract of sale between you and Kuya Tony, evidenced by the receipts for your partial payments, likely remains valid, but potentially only with respect to Kuya Tony’s individual, undivided share of the property. As a co-owner, he is perfectly entitled to sell his own interest.

“Being a co-owner, Alejandro [the selling co-owner in the reference jurisprudence] can validly and legally dispose of his share even without the consent of all the other co-heirs.”

Your payments would likely be applied towards the purchase price of his specific aliquot share. The sale of the other siblings’ shares to you, through Kuya Tony acting without written authority, would be void. Consequently, the subsequent sale of those other shares (and possibly Kuya Tony’s share if he also participated in the second sale) to the new buyer might be valid concerning the shares of the siblings who properly consented to that sale. If Kuya Tony also sold his share to the second buyer after selling it to you, that introduces further complications possibly involving double sales, where factors like registration and good faith become critical.

Practical Advice for Your Situation

• Verify Authority First: Always demand a written Special Power of Attorney (SPA) duly signed by all co-owners before entering into a purchase agreement or making payments for co-owned real property. Verify its authenticity if possible.
• Document Everything: Keep meticulous records of all agreements, payments (with receipts clearly stating the purpose), and communications related to the transaction.
• Understand Aliquot Shares: Recognize that dealing with one co-owner without proof of authority from others likely only secures that single co-owner’s undivided share, not the entire property.
• Assess Your Rights to Kuya Tony’s Share: Your agreement and partial payments may give you a valid claim over Kuya Tony’s specific share of the property. The amount paid would be considered payment towards his portion.
• Consider Legal Action: You may need to file legal action to enforce the sale regarding Kuya Tony’s share or potentially recover the payments made if enforcing the sale of just his share is impractical or not desired.
• Investigate the Second Sale: Determine the circumstances of the sale to the other buyer. Were they aware of your prior transaction (buyers in good faith)? Was Kuya Tony’s share included in that second sale? This affects potential remedies.
• Seek Formal Legal Counsel: Given the complexities involving co-ownership, agency, and potentially a double sale, it is crucial to consult with a lawyer who can examine your documents and advise on the best course of action based on the specific facts.

I know this is not the straightforward situation you hoped for, Jose. The requirement for written authority in selling real property is strict to prevent precisely these kinds of disputes. Your next steps should involve clarifying the status of Kuya Tony’s share and deciding how to proceed, ideally with formal legal assistance.

Hope this helps!

Sincerely,
Atty. Gabriel Ablola

For more specific legal assistance related to your situation, please contact me through gaboogle.com or via email at connect@gaboogle.com.

Disclaimer: This correspondence is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please schedule a formal consultation.