G.R. No. 153839; June 29, 2007
Isaac Villegas, petitioner, vs. Victor Lingan and Atty. Ernesto Carreon, respondent.

FACTS

Petitioner Isaac Villegas was the registered owner of a parcel of land mortgaged to the Development Bank of the Philippines (DBP), later transferred to the Home Mutual Development Fund (HMDF). Due to loan default, the mortgage was foreclosed, and the property was sold at public auction to HMDF. Subsequently, the property was redeemed by Gloria Roa Catral, the petitioner’s mother-in-law, by virtue of a General Power of Attorney executed in her favor by the petitioner’s wife, Marilou Catral-Villegas. Using the same power of attorney, Catral then executed a Deed of Absolute Sale over the property in favor of respondent Victor Lingan.
Petitioner filed a Complaint for Annulment of Title and Instrument with Damages, arguing that Catral had no authority, especially a special power of attorney, to sell the property. The Regional Trial Court (RTC), in a summary judgment, dismissed the complaint, ruling the power of attorney was broad enough to confer such authority. The Court of Appeals affirmed the RTC decision but on a different ground, holding that the petitioner was no longer the owner of the property at the time of the sale, having lost it upon foreclosure and its subsequent redemption by his wife.

ISSUE

Whether the petitioner has a valid cause of action to challenge the Deed of Absolute Sale executed by his wife’s agent.

RULING

The Supreme Court denied the petition and affirmed the Court of Appeals. The core legal logic rests on the principle of real party in interest under Section 2, Rule 3 of the Rules of Court. A cause of action requires a right belonging to the plaintiff that was violated by the defendant. Upon the foreclosure and sale of the property to HMDF, the petitioner lost his ownership. The subsequent redemption by Catral, using funds and under the authority of the petitioner’s wife, vested ownership in the wife, not in the petitioner. Consequently, at the time of the disputed sale to respondent Lingan, the petitioner had no more proprietary or possessory right over the property.
Being divested of all interest, the petitioner ceased to be the real party in interest entitled to question the validity of the sale. The issue of whether the power of attorney granted to Catral was general or special, and whether it authorized the sale, is a matter that can only be raised by the principal (the wife) or the parties to that agency contract. Since the petitioner is not a party to that contract and no longer owns the property, he has no legal standing to assail the agent’s authority. The Court also noted that the claim for damages was waived when the parties, during pre-trial, limited the issues solely to the legal question of the agent’s authority.