Co-Owner's Unauthorized Sale: When a Verbal Deal Binds Only the Seller's Share

The Supreme Court recently settled a property dispute that offers a crucial lesson for anyone buying real estate from a co-owner or through a representative. In Recio v. Heirs of the Spouses Aguedo and Maria Altamirano (G.R. No. 182349, July 24, 2013), the Court ruled on the limits of a co-owner's power to sell inherited property and the strict requirements for proving an agent's authority to sell land. The decision underscores a fundamental rule: a verbal sale of real property through an agent is void, and a co-owner can only dispose of his or her own undivided share.

The Dispute Over a Family Lot

The case began in the 1950s when Nena Recio leased a parcel of land in Lipa City from the Altamirano family. In 1988, the Altamiranos allegedly offered to sell the property to Nena for P500,000.00, but the sale did not push through. Years later, Nena's son, Reman Recio, renewed the option to buy. He negotiated with respondent Alejandro Altamirano, who introduced himself as representing the other heirs. Based on this verbal agreement, Recio made partial payments totaling P160,000.00, which Alejandro acknowledged through receipts.

However, Alejandro later avoided Recio's attempts to pay the remaining balance. Worse, Recio discovered that the Altamiranos had sold the same property to the Spouses Lajarca in February 1998. Recio filed a complaint for specific performance and sought to annul the subsequent sale.

The Trial Court and the Court of Appeals

The Regional Trial Court ruled in favor of Recio, declaring the sale to the Spouses Lajarca void and ordering the Altamiranos to execute a deed of sale in Recio's favor. On appeal, the Court of Appeals (CA) modified this ruling. The CA held that Alejandro's sale was valid only with respect to his own aliquot (undivided) share in the property. The sale to the other co-owners was void because Alejandro lacked a written special power of attorney (SPA) authorizing him to sell their shares. The CA also declared the sale to the Spouses Lajarca void only insofar as Alejandro's share was concerned, making Recio and the Lajarcas co-owners of the property.

The Supreme Court's Ruling

The Supreme Court affirmed the CA's decision, denying Recio's petition. The Court emphasized two key legal principles.

First, an agent must have written authority to sell land. Under Articles 1874 and 1878 of the Civil Code, a sale of real property through an agent requires written authority; otherwise, the sale is void. A special power of attorney is specifically necessary to enter into any contract transmitting ownership of an immovable. Since Alejandro had no SPA from his co-heirs, he could not bind them to the sale.

Second, a co-owner can dispose of only his or her own share. The Court cited the principle that a co-owner may freely sell and dispose of his or her undivided interest in the co-owned property. Thus, Alejandro's verbal contract with Recio was valid, but only to the extent of Alejandro's share. Recio's payments were applied to that share, and he became a co-owner with the Spouses Lajarca, who validly acquired the shares of the other Altamiranos.

The Court also rejected Recio's argument that Alejandro had "apparent authority" based on the other heirs' participation in the later sale to the Lajarcas. The Court stressed that apparent authority arises only from acts or conduct of the principal (the co-owners) known to and relied upon by the third party in good faith. Since the acts Recio relied on happened after his own sale, he could not invoke them. As the Court noted in Woodchild Holdings, Inc. v. Roxas Electric and Construction Company, Inc., persons dealing with an assumed agent are bound at their peril to ascertain not only the fact of agency but also the nature and extent of the authority.

Practical Takeaways

• Always demand a written special power of attorney when buying real property from someone who claims to represent the owner or co-owners. A verbal assurance is not enough.
• Verify the seller's authority before paying. If the seller is a co-owner, confirm whether he or she is selling only an undivided share or has written authority from the other co-owners.
• A co-owner's sale binds only that co-owner's share. Even if a sale to you is valid, you may only acquire a fractional interest, not the entire property, if the other co-owners did not consent.
• Do not rely on "apparent authority" based on later events. The principal's acts or conduct must have existed before the transaction and must have been known to you at that time.
• A notice of lis pendens is not a substitute for written authority. It may alert buyers to a pending case, but it does not cure the lack of an SPA.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.