Agency and Partnership | Amorin

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

J. Muoz Palma
Under what topic: Agency I. C. Must the parties be capacitated?
Petitioner: Ramon Rallos, administrator of the estate of Concepcion Rallos
Respondent: Felix Go Chan and Sons Realty Corporation and CA
Synopsis: The sisters Concepcion and Gerundia Rallos executed a special power of attorney (SPA)
in favor of their brother Simeon, authorizing him to sell a parcel of land in Cebu. Simeon sold the
land to Felix Go Chan and Sons (FGC) after Concepcion died. Ramon Rallos, the administrator of
Concepcions intestate estate, filed a complaint before CFI Cebu for the reconveyance of the
decedents undivided one-half share in the lot to her estate. The CFI ruled in his favor. On appeal,
however, the CA sustained the sale. The SC held that the sale was invalid as it was done after the
principals death.
Doctrine: 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.
Facts:
- Concepcion and Gerundia Rallos were
sisters and co-owners of a parcel of land in
Cebu (Lot 5983).
- On 21 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 3 March 1955, Concepcion died.
- On 12 September 1955, 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.
- On 18 May, 1956, Petitioner Ramon Rallos,
the administrator of Concepcions
intestate estate, filed a complaint before
CFI Cebu, praying that: 1) the sale of
Concepcions 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 attorneys 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.

On 20 November 1964, the CA granted

FGCs appeal, sustaining the validity of the
sale in question.
On 4 March 1965, Ramons MR was
denied; hence, this Petition for Review on
certiorari.

Issue-Holding:
Whether or not the sale conducted after
Concepcions death was valid (NO)
Ratio:
Restatement of certain principles of law
relevant to the case
- No one may contract in the name of
another without being authorized by the
latter, or unless he has by law a right to
represent him (NCC 1317)
- Contracts entered into in the name of
another person by one who has been given
no authority or legal representation or
who has acted beyond his powers are
unenforceable (1403(1))
- Out of the foregoing principles, sprung the
creation and acceptance of the
relationship of agency whereby one party,
called
the
principal
(mandante),
authorizes another, called the agent
(mandatorio), to act for and in his behalf in
transactions with third persons
Essential elements of agency

Agency and Partnership | Amorin

1) There is consent, express or implied, of the
parties to establish the relationship
2) The object is the execution of a juridical act
in relation to a third person
3) The agent acts as a representative and not
for himself
4) The agent acts within the scope of his
authority
Nature of agency
- It is basically personal, representative, and
derivative in nature
- The authority of the agent to act emanates
from the powers granted by the principal
o His act is the act of the principal if
done within the scope of authority
- Qui facit per alium facit per se: he who acts
through another acts himself
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
o Therefore, it is impossible for
representation to continue to exist
once the death of either is
established
Exceptions to the general rule
- NCC 19301 and 19312 provide the
exceptions
- Under NCC 1931, an act done by the agent
after the principals death is valid if: 1) the
agent acted without knowledge of the
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.
1

death of the principal; and 2) the third

person who contracted with the agent
acted in good faith (third person not aware
of the principals death at the time he
contracted with the agent)
Application of the foregoing discussions to the
case
- The SC found that Simeon was aware of
Concepcions 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
o 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
o 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 1931
must be strictly construed
Regarding 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
o It made reference to Manresas
commentaries: copy from the
case
- The SC held that revocation by an act of the
principal as a mode of terminating an
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.
2

Agency and Partnership | Amorin

agency must be distinguished from

revocation by operation of law, such as
death
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
agents exercise of authority is
regarded as an execution of the
principals 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 agents
heirs to notify the principal of the
agents 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
Petitioners cause

Dispositive:
CA decision dismissed; CFI decision reinstated