THIRD DIVISION

 

 

G.R. No. 160346           PURITA PAHUD, ET AL. versus  COURT OF APPEALS, ET AL. 

 

         

                                                                   Promulgated:                                                                                             
                                                                   August 25, 2009

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CONCURRING AND DISSENTING OPINION 

 

 

CARPIO MORALES, J.:

 

 

          The ponencia reinstates the trial court’s Decision of January 14, 1998 with the modification that “the sale made by respondent Virgilio San Agustin to respondent spouses Isagani Belarmino and Leticia Ocampo is valid only with respect to the 1/8 portion of the subject property.”[1]

 

          I submit that the validity of the sale to spouses Belarmino extends to 4/8 or one-half of the property, inclusive of the combined 3/8 share  of respondents-sisters Zenaida, Milagros and Minerva, all bearing the maiden surname of San Agustin, thus leaving only one-half of the property to petitioners Purita Pahud, et al. who earlier purchased from Eufemia San Agustin (Eufemia) the property including the 3/8 portion over which no written authority from the three sisters was secured.  The ponente, Justice Nachura, in fact, agrees to this proposition “in principle.”[2]  

 

          The ponencia even rejects petitioners’ contention that the special power of attorney subsequently executed by Zenaida, Milagros and Minerva in favor of Eufemia effectively ratified their earlier purchase of the property insofar as the 3/8 portion is concerned, for the established reason that void contracts or the illegal terms thereof[3] are not susceptible to ratification.  The subsequent execution by the three  sisters of the respective special powers of attorney only means that they considered the previous sale null and recognized the salability of their 3/8 portion, thus paving the way for its transfer to Virgilio San Agustin and its eventual sale to the spouses Belarmino.

 

          Indeed, as the ponencia elucidates, Articles 1874 and 1878 of the Civil Code clearly provide that a special power of attorney is necessary for an agent to “enter into any contract by which the ownership of an immovable is transmitted or acquired either gratuitously or for a valuable consideration” and that specifically in cases of sale of a piece of land or any interest therein through an agent, “the authority of the latter shall be in writing; otherwise the sale shall be void.”

 

          The ponencia takes one step further, however, in upholding the validity of the sale of the 3/8 portion belonging to the 3 sisters to petitioner notwithstanding the want of a written authority to sell, by applying the principle of estoppel.  It ratiocinates: 

 

          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 the common law principle of estoppel.

 

            Article 1431 of the Civil Code provides:

 

            Art. 1431.  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          

 

True, at the time of the sale to the Pahuds, Eufemia was not armed with the requisite special power of attorney to dispose of the 3/8 portion of the property.  Initially, in their answer to the complaint in intervention, 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.  Moreover, in their Comment, the said co-heirs again admitted the sale made to petitioners.

 

Interestingly, 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 their co-heir, Virgilio, who is not privy to the said transaction.  They cannot be allowed to rely on Eufemia, their attorney-in-fact, to impugn the validity of the first transaction because to allow them to do so would be tantamount to giving premium to their sister’s dishonest and fraudulent deed.  Undeniably, therefore, the silence and passivity of the three co-heirs on the issue bar them from making a contrary claim.

 

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.

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.  Clearly, the three co-heirs are now estopped from impugning the validity of the sale from assailing the authority of Eufemia to enter such transaction.[4] (Emphasis and underscoring supplied)   

 

 

          It is from this aspect of the ponencia that I respectfully dissent.

 

         

          Equity cannot supplant or contravene the law.[5]

 

          Article 1432 of the Civil Code expressly states that the principles of estoppel are adopted “insofar as they are not in conflict with the provisions of this Code,” among other laws.

 

           Indeed, estoppel, being a principle in equity, cannot be applied in the presence of a law clearly applicable to the case.  The Court is first and foremost a court of law.  While equity might tilt on the side of one party, the same cannot be enforced so as to overrule positive provisions of law in favor of the other.[6]

 

          Moreover, the evident purpose of the legal requirement of such written authority is not only to safeguard the interest of an unsuspecting owner from being prejudiced by the unauthorized act of another, but also to caution the buyer to assure himself of the specific authorization of the putative agent.  In other words, the drafters of the law already saw the risky predicament of selling lands through agents which, in the absence of a specific law, would otherwise ultimately depend on equity to resolve disputes such as the present case.  The law undoubtedly seeks to prevent the following confusion:   

 

            Case law tells us that the elements of estoppel are: "first, the actor who usually must have knowledge, notice or suspicion of the true facts, communicates something to another in a misleading way, either by words, conduct or silence; second, the other in fact relies, and relies reasonably or justifiably, upon that communication; third, the other would be harmed materially if the actor is later permitted to assert any claim inconsistent with his earlier conduct; and fourth, the actor knows, expects or foresees that the other would act upon the information given or that a reasonable person in the actor's position would expect or foresee such action."[7]

 

          The depicted scenario is precisely the misunderstanding between parties to such type of sale which the lawmakers sought to avoid in prescribing the conditions for the validity of such sale of land.  The present case is a classic example of a tedious litigation which had ensued as a result of such misunderstanding.  This is what the law endeavors to avert.[8]  It is not for the Court to suspend the application of the law and revert to equitable grounds in resolving the present dispute.

 

          Assuming arguendo that estoppel can contradict positive law, I submit that Article 1431 of the Civil Code does not apply since it speaks of one’s prior admission or representation, without which the other person could not have relied on it before acting accordingly. 

 

          The ponencia cites acts or omissions on the part of the three sisters which came after the fact such as their “admission” and “continued silence” which, however, could not retroact to the time of the previous sale as to consider petitioners to have accordingly relied on such admission or representation before buying the property from Eufemia.  The application of the principle of estoppel is proper and timely in heading off shrewd efforts at renouncing one’s previous acts to the prejudice of another who had dealt honestly and in good faith.[9]  It is thus erroneous to conclude that Zenaida, Milagros and Minerva have caused petitioners to believe that they have clothed Eufemia with the authority to transact on their behalf.

 

          Could the three sisters ratify the previous sale through their subsequent acts or omissions?  I opine they cannot.  The ponencia concedes that “the sale with respect to the 3/8 portion is void by express provision of law and not susceptible to ratification.” 

 

          The previous sale being violative of an express mandate of law, such cannot be ratified by estoppel.  Estoppel cannot give validity to an act that is prohibited by law or one that is against public policy.  Neither can the defense of illegality be waived.[10]  An action or defense for the declaration of the inexistence of a contract does not prescribe.[11]  Amid the confusion from

 

the double dealing made by their sibling Eufemia, the three sisters expectedly kept mum about it.  Succinctly, their “continued silence” cannot be taken against them.  Bargaining away a provision of law should not be countenanced.

         

          Neither can their “admission” to a question of law bind them.  The ponencia highlights the admission made by Eufemia and her co-heirs during the pre-trial conference before the trial court and in their Comment on the present petition that they had earlier sold 7/8 of the property to petitioners.  These statements could not mean, however, as an admission in petitioners’ favor that Zenaida, Milagros and Minerva validly sold their respective shares to petitioners.  They could only admit to the statement of fact[12] that the sale took place, but not to the conclusion of law that the sale was valid, precisely because the validity of the sales transaction is at issue as it was contested by the parties.

 

          Further, the textbook citation of the rule involving a principal’s responsibility for an agent’s misrepresentation within the scope of an agent’s authority as annotated by the cited author under Article 1900 of the Civil Code is inapplicable.  The qualifying phrase “in the course of his employment” presupposes that an agency relationship is existing.  The quoted rule clearly recites that a principal is held liable if the “deceitful representation” (not the agency relationship) is authorized either expressly, impliedly, or apparently.  In this case, there was no agency relationship to speak of.    

 

 

 

 

 

          I, therefore, vote to reinstate the trial court’s January 14, 1998 Decision with modification that the sale made by respondent Virgilio San Agustin to respondent spouses Isagani Belarmino and Leticia Ocampo is valid with respect to the 4/8 portion of the subject property.

 

 

 

                                                          CONCHITA CARPIO MORALES        

                                                                       Associate Justice

 

 


[1]               Ponencia, p. 12  (underscoring supplied).

[2]               Ponencia, p. 7.

[3]               Civil Code, Art. 1420 in relation to Art. 493.

[4]               Ponencia, pp. 8-10.

[5]               Valdevieso v. Damalerio, 492 Phil. 51, 59 (2005).

[6]               Vide id.  A waiver will be inoperative and void if it infringes on the rights of others (Ouano v. Court of Appeals, infra at 704).

[7]               Phil. Bank of Communications v. CA, 352 Phil. 1, 9 (1998). 

[8]               Cf. Powton Conglomerate, Inc. v. Agcolicol, 448 Phil. 643, 653 (2003) for analogy respecting the vital preconditions to the validity of a contract for additional works under Article 1724 of the Civil Code.

[9]               Vide Pureza v. CA, 352 Phil. 717, 722 (1998).

[10]             Vide Ouano v. Court of Appeals, 446 Phil. 690, 708 (2003).

[11]             Civil Code, Art. 1410.

[12]             Rules of Court, Rule 18, Sec. 2 (d). Pre-trial allows the parties to obtain stipulations or admissions of fact and of documents.