In Macapagal v. Remorin, the Supreme Court clarified that the registered owner of a property retains the authority to sell, even if a compromise agreement exists, unless there is a clear and unmistakable delegation of that authority. This means that individuals buying property should always verify ownership and ensure the seller is the registered owner or has explicit, documented authorization to sell. This ruling protects the rights of registered owners and reinforces the importance of due diligence in property transactions.

Navigating Real Estate Deals: Who Holds the Keys to Selling Property?

This case revolves around a disputed sale of land. Candido Caluza owned Lots 24 and 25, registered under TCT No. 160544. Upon his death, his daughter Corazon and second wife Purificacion executed a Deed of Extrajudicial Settlement, adjudicating the lots to Corazon. However, Corazon entrusted administration of the lots to Purificacion. Purificacion then fraudulently claimed the titles were lost, obtained new ones, and sold the lots to Catalina Remorin. Later, Corazon learned of this and filed a case for reconveyance. A series of agreements and sales ensued, ultimately leading to a dispute between Mariquita Macapagal, who bought the land from Catalina, and Laurelia Caluza-Valenciano, who bought it from Corazon, the registered owner. The central legal question is whether Catalina had the authority to sell the property under the existing compromise agreements.

The Supreme Court emphasized that Corazon, as the registered owner of Lot 5, possessed the right to enjoy and dispose of the property, and to exclude others from doing so. This right is enshrined in Articles 428 and 429 of the Civil Code. The Court also noted that a waiver of such a right cannot be lightly inferred. It must be explicit and clearly demonstrate an intent to relinquish the right. In this case, the Compromise Agreement of September 9, 1988, which stated that Catalina would pay off her mortgage obligation and related expenses from the proceeds of the sale, did not explicitly grant Catalina the authority to sell the property.

The Court reasoned that the agreement’s language did not necessarily imply that Catalina herself was to conduct the sale. The funds could have been provided to her for the purpose of settling the mortgage. The principle that any ambiguity in the language used to convey authority to sell should be construed against such authority was also highlighted. Authority to sell must be stated clearly and unequivocally. Given Catalina’s previous involvement in the fraudulent transfer of the property, it would be unlikely that Corazon intended to grant her the power of sale.

Furthermore, the court noted that even if the parties intended to give Catalina the authority to sell, they clearly intended for further documentation to be executed. Paragraph 3 of the agreement stated that the parties would “execute such other documents or papers as are necessary to implement the aforementioned Memorandum of Agreement of March 21, 1986.” Under Article 1878, paragraph 5 of the Civil Code, a special power of attorney is required for an agent to enter into a contract that transfers or acquires ownership of immovable property. Catalina did not possess such a document.

A special power of attorney is required for any act of strict dominion. In the absence of such a specific grant of authority, the sale executed by Catalina could not be considered valid. The court also addressed Macapagal’s claim that she was the “interested buyer” referred to in the Compromise Agreement, stating that as a third party to the agreement, she could not demand its enforcement. A compromise agreement binds only the parties involved. The court also considered Macapagal’s good faith in purchasing the property, finding that she could not be deemed a buyer in good faith because she bought the property from someone who was not the registered owner. The Court referred to existing jurisprudence for the legal principle involved. One who buys from a person who is not the registered owner is not a buyer in good faith.

In cases of double sale, the property goes to the buyer who, in good faith, first registers the sale. Laurelia registered her purchase first. While the deed of sale between Corazon and Laurelia did not fully reflect the true consideration, this discrepancy does not invalidate the contract. The Court explained that it constitutes relative simulation. A relatively simulated contract is valid and enforceable and can be subject to reformation. It does not fall under the category of an absolutely simulated contract, which is void. The actual intent of the parties still remained. The Supreme Court, finding in favor of the respondents, upheld the Court of Appeals’ decision, reinforcing the primacy of registered ownership and the necessity of clear authorization in property sales.

FAQs

What was the key issue in this case?	The central issue was whether Catalina Remorin had the legal authority to sell the disputed property, Lot 5, given the existing Compromise Agreement.
Who was the registered owner of the property at the time of the sales?	Corazon Caluza-Bamrungcheep was the registered owner of the property when both Catalina Remorin and later, she herself, sold the lot to different buyers.
What did the Compromise Agreement state regarding the sale?	The agreement stated that Catalina would pay off her mortgage obligation from the sale’s proceeds, but it did not explicitly authorize her to sell the property.
Why did the Court rule against the buyer who purchased from Catalina?	The Court ruled against Mariquita Macapagal because Catalina lacked explicit authority to sell the property, and Macapagal was not considered a buyer in good faith.
What is the significance of a “special power of attorney” in this case?	Under Article 1878 of the Civil Code, a special power of attorney is required for an agent to enter into contracts that transfer ownership of immovable property, which Catalina lacked.
Can a third party enforce a compromise agreement they are not a part of?	No, a compromise agreement only determines the rights and obligations of the parties involved, and cannot be enforced by or against third parties.
What is the effect of a double sale of real property?	In double sales, ownership passes to the vendee who, in good faith, first records the sale in the Registry of Property.
What is relative simulation in contract law?	Relative simulation occurs when parties intend to be bound by a contract, but it does not reflect the true consideration; the contract remains valid but is subject to reformation.

In conclusion, the Supreme Court’s decision underscores the importance of verifying ownership and authority in property transactions. Buyers must ensure that the seller is either the registered owner or has explicit authorization to sell the property. This ruling serves as a reminder of the legal protections afforded to registered owners and the need for due diligence in real estate dealings.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Mariquita Macapagal v. Catalina O. Remorin, G.R. No. 158380, May 16, 2005