Buying Property from the Wrong Seller

One of the most devastating property transactions is one where everything appears legitimate — the title looks clean, the price is fair, the documents are presented — but the seller does not actually have the authority to sell. These transactions are not rare in the Philippines, and the consequences for the buyer are severe: the sale is void, the money may be unrecoverable, and the property does not belong to them.

The Civil Code of the Philippines is clear on the effect of selling property one does not own: under Article 1459, the seller must have the right to transfer ownership at the time the sale is perfected. If they do not, the sale is void or at best voidable. This applies to situations where the seller's title has been cancelled, where the property has already been sold to another buyer, where the seller is acting under a Special Power of Attorney (SPA) that has been revoked or never actually existed, or where the title was fraudulently obtained.

The SPA problem deserves special attention. In Philippine property transactions, it is common for the seller to be represented by an attorney-in-fact acting under a notarized SPA. The issue is that buyers rarely verify the authenticity of the SPA. The Supreme Court has ruled that buyers dealing with agents must exercise heightened diligence — not just review the SPA, but independently verify its existence and the authority it grants, including whether it has been revoked.

Verification steps that buyers should always take include: confirming the registered owner directly from the Register of Deeds; checking with the Bureau of Internal Revenue and local assessor whether real property taxes and capital gains obligations are current; verifying the identity of the seller through government-issued ID and independent means; and if an SPA is involved, verifying directly with the principal that the authority has not been revoked.

The rule is simple but easily forgotten under the pressure of an attractive deal or a time-bound offer: always trace the authority to sell back to the registered owner. If that trace has any gap, step back. The cost of verification is nothing compared to the cost of a fraudulent transaction.