Agency and Partnership | Hernandez

RAMON RALLOS v. FELIX GO CHAN AND SONS REALTY CORPORATION (1978)

J. Muñoz Palma

Under what topic: Death; agency coupled with an interest

Petitioner: Ramon Rallos, administrator of the estate of Concepcion Rallos

Respondent: Felix Go Chan and Sons Realty Corporation and CA

Synopsis: This is a case of an attorney-in-fact, Simeon Rallos, who after of the death of his principal,
Concepcion Rallos, sold the latter's undivided share in a parcel of land pursuant to a power of
attorney which the principal had executed in his favor. The administrator of the estate of Concepcion
went to court to have the sale declared unenforceable and to recover the disposed share. The trial
court granted the relief prayed for, and nullified the sale with respect to the ½ pro indiviso share of
Concepcion; but upon appeal the Court of Appeals upheld the validity of the sale. SC reversed the CA
ruling and reinstated the trial court decision. The agency was extinguished by operation of law
because of the death of the principal and this case does not fall under any of the exceptions.

Doctrine:
General Rule: Agency is extinguished by the death of the principal
Exceptions:
ART. 1930. The agency shall remain in full force and effect even after the death of the principal,
if it has been constituted in the common interest of the latter and of the agent, or in the interest
of a third person who has accepted the stipulation in his favor.

ART. 1931. Anything done by the agent, without knowledge of the death of the principal or of
any other cause which extinguishes the agency, is valid and shall be fully effective with respect
to third persons who may have contracted with him in good faith.
Requisites: (1) that the agent acted without knowledge of the death of the principal and
(2) that the third person who contracted with the agent himself acted in good faith.

Good faith here means that the third person was not aware of the death of the principal
at the time he contracted with said agent. These two requisites must concur the absence
of one will render the act of the agent invalid and unenforceable.

 Petitioner Ramon Rallos,

Facts:
 Concepcion and Gerundia Rallos
were sisters and co-owners of a parcel
of land in Cebu.
 On April 1954, the sisters executed a
special power of attorney (SPA) in
favor of their brother Simeon,
authorizing him to sell for and in their
behalf said lot. On March 1955,
Concepcion died.
 Simeon sold the undivided shares of
the sisters in the lot to Respondent
Felix Go Chan and Sons Realty
Corporation (FGC) for ₱ 10 686.90.
theadministrator of Concepcion’s
intestate estate, filed a complaint
before CFI Cebu, praying that:
1.) the sale of Concepcion’s undivided
share be declared unenforceable and
that the same be reconveyed to her
estate;
2.) the TCT issued in favor of FGC be
cancelled and new one be issued in the
names of the corporation (FGC) and the
“Intestate Estate of Concepcion Rallos”
in equal undivided shares; and
3.) he be indemnified by way of
attorney’s fees and payment of costs.
 The CFI ruled in favor of Ramon
and ordered FGC to deliver the
possession of the undivided one-half
share of the lot to the former.

 CA granted FGC’s appeal, sustaining
the validity of the sale in question. MR
was denied. Hence, this Petition for
Review on certiorari.
Issue-Holding:
WON the sale conducted after Concepcion’s
death was valid. NO. CA REVERSED.
Ratio:
Extinguishment of agency by cause of death
General Rule
NCC 1919. Agency is extinguished xxx (3) By the
death, civil interdiction, insanity or insolvency
of the principal or agent; xxx
 By the very nature of the relationship
between the principal and the agent,
agency is extinguished by the death of
either one of them
Manresa: the juridical basis of agency
is representation, there being an
integration of the personality of the
principal into that of the agent.
Therefore, it is impossible for
representation to continue to exist
once the death of either is established
Exceptions
 NCC 19301 and 19312 provide for the
exceptions.
 Under NCC 1931, an act done by the agent
after the principal’s death is valid if: 1) the
agent acted without knowledge of the
1 Art. 1930. The agency shall remain in full force
and effect even after the death of the principal, if it
has been constituted in the common interest of the
latter and of the agent, or in the interest of a third
person who has accepted the stipulation in his
favor.
Agency and Partnership | Hernandez
death of the principal; and 2) the third
person who contracted with the agent
acted in good faith (third person not aware
of the principal’s death at the time he
contracted with the agent)
Application to the case
 The SC found that Simeon was aware of
Concepcion’s death when he sold the lot,
o This can be inferred from the
pleadings he filed before the CFI.
o This is also a finding of fact made
by the CFI and the CA.
 Thus, NCC 1931 is inapplicable to this
case. The law expressly requires for its
application lack of knowledge on the
part of the agent of the death of his
principal; it is not enough that the third
person acted in good faith
 The general rule is that the death of the
principal extinguishes the agency. Thus,
any act of an agent after the death of the
principal is void ab initio unless the same
falls under the exceptions provided for
under NCC 1930 and 1931. Being an
exception to the general rule, NCC
1931must be strictly construed
Good faith of the vendee
 The CA upheld the sale because it
found that FGC acted in good faith,
relying on:
1) the power of attorney which was
duly registered on the original
certificate of title; and
2) the absence of notice of death on the
certificate of title
 The SC held that revocation by an act of
the principal as a mode of
terminating an agency must be
distinguished from revocation by
operation of law, such as death.
2 Art. 1931. Anything done by the agent, without
the knowledge of the death of the principal or of
any other cause which extinguishes the agency, is
valid and shall be fully effective with respect to
third person who may have contracted with him in
good faith.
 Agency and Partnership | Hernandez

o Although a revocation of a
power of attorney to be effective
must be communicated to the
parties concerned, a revocation
by operation of law (ipso jure),
such as the death of the
principal, is, as a rule,
instantaneously effective
inasmuch as “by legal fiction
the agent’s exercise of authority
is regarded as an execution of
the principal’s continuing will.”

 The NCC does not impose a duty on

the heirs to notify the agent of the death
of the principal
o NCC 1932 only requires the
agent’s heirs to notify the
principal of the agent’s death.
o Thus, the fact that no notice
of death of the
principal was registered on
the certificate of title in the
Office of the Register of Deeds
is not fatal to the Petitioner’s
cause.

Dispositive:
CA decision dismissed; CFI decision reinstated