Short answer. No. Unless notice has been given that the sale is subject to a right to bid on the seller's behalf, it is unlawful for the seller to bid himself or to plant others to bid for him. A sale that breaks this rule may be treated as fraudulent by the buyer.
What the law says
Where notice has not been given that a sale by auction is subject to a right to bid on behalf of the seller, it shall not be lawful for the seller to bid himself or to employ or induce any person to bid at such sale on his behalf
Civil Code, Article 1476 — Sale by Auction. Read the full provision →
Secret seller bidding is forbidden
Article 1476 governs sales by auction, and its fourth paragraph deals squarely with sham bidding. Where no notice has been given that the sale is subject to a right to bid for the seller, the law says it shall not be lawful for the seller to bid himself or to employ or induce any person to bid at such sale on his behalf. It goes on to forbid the auctioneer from taking such bids knowingly. The practice the question describes — quietly bidding up your own lot, or planting a friend to do it — is exactly what this rule outlaws. The bidders are entitled to a genuine contest, not an inflated one.
The exception: disclosed reserve bidding
The prohibition is not absolute. Paragraph 3 allows a right to bid to be reserved expressly by or on behalf of the seller, unless a law or stipulation says otherwise. The dividing line is disclosure. If the auction announces that the seller keeps the right to bid, buyers know the seller is in the room and can factor that in. What the law condemns is the secret version, where buyers think they are competing only against each other while the seller quietly drives the price. Openness makes seller participation lawful; concealment makes it fraudulent.
The buyer's remedy
The article gives the buyer a direct consequence: any sale contravening this rule may be treated as fraudulent by the buyer. That puts the choice in the buyer's hands. A buyer who discovers he was pushed up by concealed seller bids is not locked into the purchase at the manipulated price. Because the sale may be treated as fraudulent, the buyer can attack it rather than being held to a bargain that was rigged. The remedy exists precisely because the harm — paying more than an honest auction would have produced — falls on the buyer.
Proving it and protecting yourself
The difficulty is usually evidence: showing that a bidder was acting for the seller, or that the seller himself was bidding, when the whole point was to hide it. Records of who registered to bid, the relationship between bidders and the seller, and the bidding pattern can matter. If you ran the auction, the safe course is to disclose any reserved right to bid in the announced terms. If you suspect you were a victim of secret bidding, gather what you can about the other bidders before deciding how to proceed, since the case turns on connecting them to the seller.