• Contract sealed by agent beyond his power is void

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    Persida Acosta

    Persida Acosta

    Dear PAO,
    I authorized my cousin, Timothy, through a notarized Special Power of Attorney (SPA) to mortgage my two-hectare land located in our province because I needed the money for my medication. Last August, a relative of mine relayed to me that Timothy allegedly sold the land to Farah and the latter started to introduce improvements to the property. I immediately went home to our province and discovered a certain Deed of Absolute Sale executed by Timothy and Farah covering my property and attached to the document is the SPA I gave to Timothy. I already brought the matter before barangay authorities but nothing has happened yet. Can I still recover the property from Farah? What shall I do?
    Tino

    Dear Tino,
    It is very important in a contract of sale involving real property that the seller must be the absolute owner or, if not, the person dealing the property must be duly authorized to sell or dispose of the property. It is also a requirement under No. 5, Article 1878 of the New Civil Code of the Philippines that a Special Power of Attorney (SPA) is necessary in order to enter into any contract by which the ownership of an immovable is transmitted or acquired either gratuitously or for a valuable consideration.

    In your case, while it is true that you gave Timothy a Special Power of Attorney to mortgage your property, this power or authority does not include the power to sell or dispose of the same. The terms and conditions stated in the SPA in favor of Timothy must be construed in order to determine the scope of the authority given to him.
    Article 1879 of the same code, explicitly states:

    “A special power to sell excludes the power to mortgage; and a special power to mortgage does not include the power to sell.”

    Relative thereto, if the agent contracts in the name of the principal, exceeding the scope of his authority, and the principal does not ratify the contract, it shall be void if the party with whom the agent contracted is aware of the limits of the powers granted by the principal. In this case, however, the agent is liable if he undertook to secure the principal’s ratification. (Article 1898, Id.)

    Thus, the contract entered by Timothy and Farah involving the sale of your property is void, considering that the scope of the authority given to the former is only to mortgage the property. Timothy had no authority to sell the property and Farah should be diligent to ascertain the limitation or scope of Timothy’s authority. It is presumed that Farah had knowledge of the authority, also considering that the Special Power of Authority was attached to the Deed of Absolute Sale. The only instance where the contract could take effect is when you ratify the same. Your legal remedy is to initiate a civil action for the annulment/nullification of the Deed of Absolute Sale before the court of appropriate jurisdiction against Timothy and Farah in order to recover the land sold by Timothy.

    We hope that we have substantially answered your queries. The legal opinion was based on the facts narrated by the letter sender and our appreciation of the same. Opinions may vary if the facts are changed or elaborated.

    Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net

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