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FARIDA YAP BITTE v. SPS. FRED

FACTS:

Rosa Elsa Serrano Jonas executed a Special Power of Attorney (SPA) in favor of her mother, Andrea Serrano, authorizing her to sell the property. However, Rosa Elsa later revoked the SPA and instructed Andrea to stop offering the property for sale. Despite the revocation, Andrea sold the property to Spouses Benjamin Bitte and Farida Yap Bitte through a Deed of Absolute Sale.

Spouses Jonas filed a complaint to annul the Deed of Absolute Sale and reconvey the property. RTC-Branch 9 issued a temporary restraining order (TRO) and a writ of preliminary injunction (WPI) preventing Spouses Bitte from disposing of the property. Spouses Jonas sought to amend their complaint to include Spouses Yap, who held the title to the property.

RTC-Branch 13 initially dismissed Spouses Bitte's complaint and allowed the reception of Rosa Elsa's counterclaim. However, RTC-Branch 13 later canceled the reception of Rosa Elsa's evidence.

RTC-Branch 13 reconsidered its ruling and ordered the consolidation of Civil Case No. 27,667-99 with Civil Case No. 24,771-99, which was pending before RTC-Branch 9. Spouses Bitte were declared in default twice and were directed to pay Spouses Jonas the balance of the sale.

Spouses Jonas appealed to the Court of Appeals (CA), which reversed RTC-Branch 13's decision. The CA declared the Deed of Absolute Sale executed by Andrea on behalf of Rosa Elsa as void and unenforceable due to the revocation of the SPA.

ISSUES:

  1. Whether or not the revocation of the Special Power of Attorney (SPA) was validly registered.

  2. Whether or not the deed of absolute sale executed by Andrea in favor of Spouses Bitte was valid.

  3. Whether or not the auction sale and redemption made by Spouses Bitte were valid.

  4. Whether or not Ganzon is a purchaser in good faith.

  5. Whether or not Spouses Bitte have the right to file a petition despite being declared in default.

  6. Whether or not the questions raised in the petition are appropriate for review.

  7. Whether the deed of sale is a public document.

  8. Whether the genuineness and due execution of the deed of sale in favor of Spouses Bitte have been proven.

  9. Whether the principal's direct negotiation with a third person after the agent has already negotiated with the third person constitutes implied notice of the revocation of the agency.

  10. Whether a contract entered into by an agent whose authority has been revoked is enforceable against the principal.

  11. Whether or not the spouses Yap were purchasers in good faith and for value.

  12. Whether or not the transfer to the spouses Yap was valid.

RULING:

  1. The Court denies the petition.

  2. The deed of sale is not a public document as it was not properly and validly notarized. However, even though it is not considered a public document, it is still valid and binding among the parties as a verbal contract of sale produces legal effects between the parties.

  3. The genuineness and due execution of the deed of sale have not been established. The burden of proving its authenticity and due execution falls on the party invoking its validity. Since Spouses Bitte failed to discharge this burden due to their default, the deed of sale between them and Spouses Jonas cannot be considered and is thus non-existent.

  4. Yes, the principal's direct negotiation with a third person after the agent has already negotiated with the third person constitutes implied notice of the revocation of the agency. When a principal directly deals with a third person in an incompatible or exclusionary manner, the third person is deemed to have knowledge of the revocation of the agency.

  5. No, a contract entered into by an agent whose authority has been revoked is unenforceable against the principal. Article 1317 and Article 1403(1) of the Civil Code state that a contract entered into by one who has no authority or legal representation, or who has acted beyond his powers, shall be unenforceable, unless it is ratified by the person on whose behalf it has been executed before the other contracting party revokes it.

  6. The burden of proving the status of a purchaser in good faith and for value lies upon one who asserts that status. Spouses Yap failed to prove their ignorance of the true situation and the records are bereft of any proof that they showed eagerness to air their side despite being impleaded. As such, Spouses Yap were not purchasers in good faith and for value.

  7. The transfer to the spouses Yap was null and void as Spouses Bitte had nothing to sell or transfer to them.

PRINCIPLES:

  • The right to appeal from a judgment by default is not lost and can be done on grounds that the amount of the judgment is excessive, different in kind from that prayed for, or that the plaintiff failed to prove the material allegations of the complaint, or that the decision is contrary to law.

  • The Supreme Court is not a trier of facts and must give credence to the findings of the Court of Appeals unless exceptions enumerated in Development Bank of the Philippines v. Traders Royal Bank are invoked or cited in the petition.

  • A notarized document has the presumption of regularity, but it can be impugned by strong, complete, and conclusive proof of its falsity or nullity on account of some flaws or defects in the document.

  • Article 1358 of the New Civil Code requires the form of a contract transmitting or extinguishing real rights over immovable property to be in a public document.

  • There are two types of documents - public and private. Public documents are written official acts or records of official acts of the sovereign authority, official bodies, and public officers, while all other writings are private.

  • The failure to observe the proper form does not render a transaction invalid.

  • A sale of real property, even if not in a public instrument or formal writing, is still valid and binding among the parties.

  • The genuineness and due execution of a private document must be proved through the testimony of someone who saw the document executed or written or through evidence of the genuineness of the signature or handwriting of the maker.

  • The presumption of regularity that attaches to duly notarized documents does not apply to private documents.

  • Third parties dealing with an agent have the burden of ascertaining the fact, nature, and extent of the agent's authority.

  • Apparent authority ends when it is no longer reasonable for the third party to believe that the agent continues to act with actual authority.

  • Implied notice of the revocation of an agency can be attributed to third persons through the registration of the termination in the Registry of Deeds.

  • When a principal directly negotiates with a third person after the agent has already negotiated with the third person, the third person is deemed to have knowledge of the revocation of the agency.

  • A contract entered into by an agent whose authority has been revoked is unenforceable, unless it is ratified by the person on whose behalf it was executed before being revoked by the other contracting party.

  • Only persons authorized by statute can redeem from an execution sale.

  • The burden of proving the status of a purchaser in good faith and for value lies upon one who asserts that status.

  • A person who buys from one who is not the registered owner is expected to examine not only the certificate of title but all factual circumstances necessary to determine if there are any flaws in the title of the transferor or their capacity to transfer the land.

  • A purchaser cannot close their eyes to facts which should put a reasonable person upon their guard and then claim that they acted in good faith.