Bautista-Spille v. NICORP Management and Development Corporation
REITERATIONFacts
The Antecedents: Florentina Bautista-Spille (petitioner) is the owner of a parcel of land. She executed a General Power of Attorney (GPA) in favor of her brother, Benjamin Bautista (Benjamin), authorizing him to administer her businesses and properties in the Philippines. Benjamin, acting under the GPA, entered into a Contract to Sell with NICORP Management and Development Corporation (NICORP) for the subject property for P15,000,000.00. The contract stipulated a down payment, deposit of the Transfer Certificate of Title (TCT) in escrow with International Exchange Bank (IE Bank), and required Benjamin to submit a Special Power of Attorney (SPA) covering the sale, with a penalty for non-compliance. NICORP issued the down payment, and the TCT was deposited in escrow. Petitioner, upon learning of the sale, sent demand letters opposing the sale and asserting Benjamin's lack of authority to sell, demanding the return of the TCT. NICORP, Benjamin, and IE Bank failed to return the title. Procedural History: Petitioner filed a complaint for declaration of nullity of the contract to sell, injunction, recovery of possession, and damages. The Regional Trial Court (RTC) issued a preliminary injunction. NICORP argued Benjamin was empowered by the GPA, and even if he exceeded his authority, the agency was "coupled with interest." IE Bank denied liability, stating it acted as a duty-bound escrow agent. Benjamin was declared in default. The RTC declared the Contract to Sell null and void, finding the GPA only granted administrative powers, not the power to sell, and that NICORP was aware of Benjamin's lack of authority due to the SPA requirement in the contract. The RTC made the injunction permanent and ordered the return of the property and title, plus attorney's fees. The Petition: NICORP appealed to the Court of Appeals (CA), which reversed the RTC decision, holding that the GPA authorized Benjamin to perform acts of dominion, including disposition of the property. Petitioner's motion for reconsideration was denied. Hence, this petition for review on certiorari.
Issue(s)
Whether the General Power of Attorney granted Benjamin Bautista the authority to enter into a contract to sell the subject property. Whether NICORP Management and Development Corporation was a purchaser in good faith.
Ruling
The petition is GRANTED. The Decision of the Court of Appeals is REVERSED and SET ASIDE. The Decision of the Regional Trial Court is REINSTATED, declaring the Contract to Sell null and void.
Ratio Decidendi
On the authority of Benjamin Bautista to sell the subject property: The Court held that the General Power of Attorney (GPA) executed by petitioner Florentina Bautista-Spille in favor of her brother, Benjamin Bautista, did not grant him the authority to sell the subject property. Article 1874 of the Civil Code explicitly states that when a sale of a piece of land or any interest therein is through an agent, the authority of the latter must be in writing; otherwise, the sale shall be void. Furthermore, Article 1878(5) of the Civil Code requires a special power of attorney for an agent to enter into any contract by which the ownership of an immovable is transmitted or acquired for a valuable consideration. The GPA in question was couched in general terms, authorizing Benjamin to "administer and conduct all my/our affairs" and to "buy, sell, negotiate and contract." However, the Court reiterated the principle that a power of attorney must be strictly construed, and broad powers will not be inferred from general language. Acts of administration do not include acts of strict dominion, such as selling real property. The authority to sell must be expressly stated or be a necessary ingredient of the act authorized. Since the GPA did not expressly grant Benjamin the power to sell the subject property, his act of entering into the contract to sell was void. On whether NICORP was a purchaser in good faith: The Court found that NICORP could not be considered a purchaser in good faith. The established rule is that a person dealing with an assumed agent is bound to ascertain not only the fact of agency but also the nature and extent of the agent's authority. NICORP, being a real estate company, is expected to exercise a higher degree of prudence and examine all factual circumstances necessary to determine the validity of the transaction and the agent's capacity to transfer the land. The contract to sell itself contained a stipulation requiring Benjamin to secure an SPA from petitioner within ninety (90) days and imposed a penalty of P150,000.00 per month for non-compliance, along with the suspension of payment of the balance. This requirement clearly indicated NICORP's awareness that Benjamin's authority under the GPA was insufficient for the sale of the property. The Court rejected NICORP's explanation that the SPA was merely for compliance with the Register of Deeds and Bureau of Internal Revenue requirements, as this was contrary to the explicit terms and penalties stipulated in the contract. Moreover, petitioner immediately opposed the sale upon learning of it, demonstrating a lack of ratification of Benjamin's act. Therefore, NICORP was negligent in its dealings and was not a buyer in good faith.
Main Doctrine
A general power of attorney, couched in broad terms, does not grant an agent the authority to sell real property. A special power of attorney, in writing and clearly stating the authority to sell, is required for such transactions. A buyer dealing with an agent is bound to ascertain the extent of the agent's authority, and failure to do so negates good faith.