AGENCY

(II)

Dizon v. Court of Appeals

Citation: 396 SCRA 151 (2003)

DOCTRINE: When the sale of a piece of land or any interest thereon is through an agent, the
authority of the latter shall be in writing; otherwise, the sale shall be void. A special power of
attorney is necessary to enter into any contract by which the ownership of an immovable is
transmitted or acquired either gratuitously or for a valuable consideration. The express mandate
required by law to enable an appointee of an agency (couched) in general terms to sell must be
one that expressly mentions a sale or that includes a sale as a necessary ingredient of the act
mentioned. For the principal to confer the right upon an agent to sell real estate, a power of
attorney must so express the powers of the agent in clear and unmistakable language. When
there is any reasonable doubt that the language so used conveys such power, no such
construction shall be given the document.

Facts:

Overland Express Lines, Inc. entered into a Contract of Lease with Option to Buy with
petitioners involving a 1,755.80 square meter parcel of land situated at corner MacArthur
Highway and South “H” Street, Diliman, Quezon City. The term of the lease was for 1 year
commencing from May 16, 1974 up to May 15, 1975. During this period, Overland Express Lines
was granted an option to purchase for the amount of P3,000.00 per square meter. Thereafter,
the lease shall be on a per month basis with a monthly rental of P3,000.00.

For failure of Overland Express Lines to pay the increased rental of P8,000.00 per month
effective June 1976, petitioners filed an action for ejectment against it. The lower court
rendered judgment ordering Overland Express Lines to vacate the leased premises and to pay
the sum of P624,000.00 representing rentals in arrears and/or as damages in the form of
reasonable compensation for the use and occupation of the premises during the period of illegal
detainer from June 1976 to November 1982 at the monthly rental of P8,000.00, less payments
made, plus 12% interest per annum from November 18, 1976, the date of filing of the
complaint, until fully paid, the sum of P8,000.00 a month starting December 1982, until
Overland Express Lines fully vacates the premises, and to pay P20,000.00 as and by way of
attorney’s fees.

Lower court ordered the privae respondents to vacate the premises and pay the rental in
arrears and damages. On appeal, CA concluded that there was a perfected contract of sale
between the parties on the leased premises and that pursuant to the option to buy agreement,
private respondent had acquired the rights of a vendee in a contract of sale. It opined that the
payment by private respondent of P300,000.00 on June 20, 1975 as partial payment for the
leased property, which petitioners accepted (through Alice A. Dizon) and for which an official
receipt was issued, was the operative act that gave rise to a perfected contract of sale, and that
for failure of petitioners to deny receipt thereof, private respondent can therefore assume that
Alice A. Dizon, acting as agent of petitioners, was authorized by them to receive the money in
their behalf.

Issue: Whether or not the payment made by Overland Express Lines to Fidela Dizon, as
representative or agent of petitioners is a valid payment as option to buy

Held: No

When the sale of a piece of land or any interest thereon is through an agent, the authority of
the latter shall be in writing; otherwise, the sale shall be void. Thus the authority of an agent to
execute a contract for the sale of real estate must be conferred in writing and must give him
specific authority, either to conduct the general business of the principal or to execute a binding
contract containing terms and conditions which are in the contract he did execute. A special
power of attorney is necessary to enter into any contract by which the ownership of an
immovable is transmitted or acquired either gratuitously or for a valuable consideration. The
express mandate required by law to enable an appointee of an agency (couched) in general
terms to sell must be one that expressly mentions a sale or that includes a sale as a necessary
ingredient of the act mentioned. For the principal to confer the right upon an agent to sell real
estate, a power of attorney must so express the powers of the agent in clear and unmistakable
language. When there is any reasonable doubt that the language so used conveys such power,
no such construction shall be given the document.

The acceptance of the amount of P300,000.00, purportedly as partial payment of the purchase
price of the land, was an act integral to the sale of the land. As a matter of fact, private
respondent invokes such receipt of payment as giving rise to a perfected contract of sale. In
this connection, Article 1874 of the Civil Code is explicit that: When a sale of a piece of land or
any interest therein is through an agent, the authority of the latter shall be in writing;
otherwise, the sale shall be void.

It necessarily follows, therefore, that petitioners cannot be deemed to have received partial
payment of the supposed purchase price for the land through Alice Dizon. It cannot even be
said that Alice Dizons acceptance of the money bound at least the share of Fidela Dizon, in the
absence of a written power of attorney from the latter. It should be borne in mind that the
Receipt dated June 20, 1975, while made out in the name of Fidela Dizon, was signed by Alice
Dizon alone.

BAR QUESTION:
X entered into a Contract of Lease with Option to Buy with Y. The term of the lease was for 1
year commencing from May 16, 1974 up to May 15, 1975. During this period, X was granted an
option to purchase for the amount of P3,000.00 per square meter. As an exercise of this option,
X made a payment of P300,000 to a certain D, acting as unauthorized agent of Y who in return
issued them a receipt. Did X’s payment to D perfect the contract of sale between X and Y?

Suggested Answer:

No, there was no perfected contract of sale.

When the sale of a piece of land or any interest thereon is through an agent, the authority of
the latter shall be in writing; otherwise, the sale shall be void. Thus the authority of an agent to
execute a contract for the sale of real estate must be conferred in writing and must give him
specific authority, either to conduct the general business of the principal or to execute a binding
contract containing terms and conditions which are in the contract he did execute. A special
power of attorney is necessary to enter into any contract by which the ownership of an
immovable is transmitted or acquired either gratuitously or for a valuable consideration. The
express mandate required by law to enable an appointee of an agency (couched) in general
terms to sell must be one that expressly mentions a sale or that includes a sale as a necessary
ingredient of the act mentioned. For the principal to confer the right upon an agent to sell real
estate, a power of attorney must so express the powers of the agent in clear and unmistakable
language. When there is any reasonable doubt that the language so used conveys such power,
no such construction shall be given the document.

The acceptance of the amount of P300,000.00, purportedly as partial payment of the purchase
price of the land, was an act integral to the sale of the land. As a matter of fact, private
respondent invokes such receipt of payment as giving rise to a perfected contract of sale. In
this connection, Article 1874 of the Civil Code is explicit that: When a sale of a piece of land or
any interest therein is through an agent, the authority of the latter shall be in writing;
otherwise, the sale shall be void.