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G.R. No.

L-24332 January 31, 1978


RAMON RALLOS, Administrator o t!" #stat" o $ON$#%$&ON RALLOS,
petitioner,
vs.
'#L&( GO $)AN * SONS R#AL+, $OR%ORA+&ON and $O-R+ O' A%%#ALS,
respondents.
Seno, Mendoza & Associates for petitioner.
Ramon Duterte for private respondent.

M-.O/ %ALMA, J.:
This is a case of an attorney-in-fact, Simeon Rallos, who after of his 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 favor. The
administrator of the estate of the went to court to have the sale declared uneanforceable
and to recover the disposed share. The trial court granted the relief prayed for, but upon
appeal the Court of ppeals uphold the validity of the sale and the complaint.
!ence, this "etition for Review on certiorari.
The following facts are not disputed. Concepcion and #erundia both surnamed Rallos
were sisters and registered co-owners of a parcel of land $nown as %ot &o. '()* of the
Cadastral Survey of Cebu covered by Transfer Certificate of Title &o. ++++, of the
Registry of Cebu. -n pril .+, +('/, the sisters executed a special power of attorney in
favor of their brother, Simeon Rallos, authori0ing him to sell for and in their behalf lot
'()*. -n 1arch *, +('', Concepcion Rallos died. -n September +., +('', Simeon
Rallos sold the undivided shares of his sisters Concepcion and #erundia in lot '()* to
2elix #o Chan 3 Sons Realty Corporation for the sum of "+4,,),.(4. The deed of sale
was registered in the Registry of 5eeds of Cebu, TCT &o. ++++) was cancelled, and a
new transfer certificate of Title &o. +.()( was issued in the named of the vendee.
-n 1ay +), +(', Ramon Rallos as administrator of the 6ntestate 7state of Concepcion
Rallos filed a complaint doc$eted as Civil Case &o. R-/'*4 of the Court of 2irst
6nstance of Cebu, praying 8+9 that the sale of the undivided share of the deceased
Concepcion Rallos in lot '()* be d unenforceable, and said share be reconveyed to her
estate: 8.9 that the Certificate of 'title issued in the name of 2elix #o Chan 3 Sons
Realty Corporation be cancelled and another title be issued in the names of the
corporation and the ;6ntestate estate of Concepcion Rallos; in e<ual undivided and 8*9
that plaintiff be indemnified by way of attorney's fees and payment of costs of suit.
&amed party defendants were 2elix #o Chan 3 Sons Realty Corporation, Simeon
Rallos, and the Register of 5eeds of Cebu, but subse<uently, the latter was dropped
from the complaint. The complaint was amended twice: defendant Corporation's nswer
contained a crossclaim against its co-defendant, Simon Rallos while the latter filed third-
party complaint against his sister, #erundia Rallos =hile the case was pending in the
trial court, both Simon and his sister #erundia died and they were substituted by the
respective administrators of their estates.
fter trial the court a quo rendered >udgment with the following dispositive portion?
. -n "laintiffs Complaint @
8+9 5eclaring the deed of sale, 7xh. ;C;, null and void insofar
as the one-half pro-indiviso share of Concepcion Rallos in
the property in <uestion, @ %ot '()* of the Cadastral Survey
of Cebu @ is concerned:
8.9 -rdering the Register of 5eeds of Cebu City to cancel
Transfer Certificate of Title &o. +.()( covering %ot '()* and
to issue in lieu thereof another in the names of 27%6A #-
C!& 3 S-&S R7%TB C-R"-RT6-& and the 7state of
Concepcion Rallos in the proportion of one-half 8+C.9 share
each pro-indiviso:
8*9 -rdering 2elix #o Chan 3 Sons Realty Corporation to
deliver the possession of an undivided one-half 8+C.9 share
of %ot '()* to the herein plaintiff:
8/9 Sentencing the defendant Duan T. Eorromeo,
administrator of the 7state of Simeon Rallos, to pay to
plaintiff in concept of reasonable attorney's fees the sum of
"+,444.44: and
8'9 -rdering both defendants to pay the costs >ointly and
severally.
E. -n #- C!&TS Cross-Claim?
8+9 Sentencing the co-defendant Duan T. Eorromeo,
administrator of the 7state of Simeon Rallos, to pay to
defendant 2elix Co Chan 3 Sons Realty Corporation the
sum of "',*/*./', representing the price of one-half 8+C.9
share of lot '()*:
8.9 -rdering co-defendant Duan T. Eorromeo, administrator
of the 7state of Simeon Rallos, to pay in concept of
reasonable attorney's fees to 2elix #o Chan 3 Sons Realty
Corporation the sum of "'44.44.
C. -n Third-"arty Complaint of defendant Duan T. Eorromeo administrator
of 7state of Simeon Rallos, against Dosefina Rallos special administratrix
of the 7state of #erundia Rallos?
8+9 5ismissing the third-party complaint without pre>udice to filing either a
complaint against the regular administrator of the 7state of #erundia
Rallos or a claim in the 6ntestate-7state of Cerundia Rallos, covering the
same sub>ect-matter of the third-party complaint, at bar. 8pp. ()-+44,
Record on ppeal9
2elix #o Chan 3 Sons Realty Corporation appealed in due time to the Court of ppeals
from the foregoing >udgment insofar as it set aside the sale of the one-half 8+C.9 share of
Concepcion Rallos. The appellate tribunal, as adverted to earlier, resolved the appeal
on &ovember .4, +(,/ in favor of the appellant corporation sustaining the sale in
<uestion.
1
The appellee administrator, Ramon Rallos, moved for a reconsider of the decision but the
same was denied in a resolution of 1arch /, +(,'.
2
=hat is the legal effect of an act performed by an agent after the death of his principalF pplied more
particularly to the instant case, =e have the <uery. is the sale of the undivided share of Concepcion
Rallos in lot '()* valid although it was executed by the agent after the death of his principalF =hat is the
law in this >urisdiction as to the effect of the death of the principal on the authority of the agent to act for
and in behalf of the latterF 6s the fact of $nowledge of the death of the principal a material factor in
determining the legal effect of an act performed after such deathF
Eefore proceedings to the issues, =e shall briefly restate certain principles of law relevant to the matter
tinder consideration.
+. 6t is a basic axiom in civil law embodied in our Civil Code that no one may contract in the name of
another without being authori0ed by the latter, or unless he has by law a right to represent him.
3

contract entered into in the name of another by one who has no authority or the legal representation or
who has acted beyond his powers, shall be unenforceable, unless it is ratified, expressly or impliedly, by
the person on whose behalf it has been executed, before it is revo$ed by the other contracting party.
4

rticle +/4* 8+9 of the same Code also provides?
RT. +/4*. The following contracts are unenforceable, unless they are >ustified?
8+9 Those entered into in the name of another person by one who hi - been given no
authority or legal representation or who has acted beyond his powers: ...
-ut of the above given principles, sprung the creation and acceptance of the relationship of agency
whereby one party, caged the principal 8mandante9, authori0es another, called the agent 8mandatario9, to
act for and in his behalf in transactions with third persons. The essential elements of agency are? 8+9 there
is consent, express or implied of the parties to establish the relationship: 8.9 the ob>ect is the execution of
a >uridical act in relation to a third person: 8*9 the agents acts as a representative and not for himself, and
8/9 the agent acts within the scope of his authority.
0

gency is basically personal representative, and derivative in nature. The authority of the agent to act
emanates from the powers granted to him by his principal: his act is the act of the principal if done within
the scope of the authority. Qui facit per alium facit se. ;!e who acts through another acts himself;.
1
.. There are various ways of extinguishing agency,
7
but her =e are concerned only with one cause @
death of the principal "aragraph * of rt. +(+( of the Civil Code which was ta$en from rt. +G4( of the
Spanish Civil Code provides?
RT. +(+(. Agency is etinguished.
xxx xxx xxx
*. !y the death, civil interdiction, insanity or insolvency of the principal or of the agent: ...
87mphasis supplied9
Ey reason of the very nature of the relationship between "rincipal and agent, agency is extinguished by
the death of the principal or the agent. This is the law in this >urisdiction.
8

Manresa commenting on rt. +G4( of the Spanish Civil Code explains that the rationale for the law is
found in the "uridical #asis of agency which is representation Them being an in. integration of the
personality of the principal integration that of the agent it is not possible for the representation to continue
to exist once the death of either is establish. $othier agrees with 1anresa that by reason of the nature of
agency, death is a necessary cause for its extinction. %aurent says that the >uridical tie between the
principal and the agent is severed ipso >ure upon the death of either without necessity for the heirs of the
fact to notify the agent of the fact of death of the former.
9

The same rule prevails at common law @ the death of the principal effects instantaneous and absolute
revocation of the authority of the agent unless the "ower be coupled with an interest.
12
This is the
prevalent rule in merican Durisprudence where it is well-settled that a power without an interest confer.
red upon an agent is dissolved by the principal's death, and any attempted execution of the power
afterward is not binding on the heirs or representatives of the deceased.
11

*. 6s the general rule provided for in rticle +(+( that the death of the principal or of the agent
extinguishes the agency, sub>ect to any exception, and if so, is the instant case within that exceptionF
That is the determinative point in issue in this litigation. 6t is the contention of respondent corporation
which was sustained by respondent court that notwithstanding the death of the principal Concepcion
Rallos the act of the attorney-in-fact, Simeon Rallos in selling the former's sham in the property is valid
and enforceable inasmuch as the corporation acted in good faith in buying the property in <uestion.
rticles +(*4 and +(*+ of the Civil Code provide the exceptions to the general rule afore-mentioned.
RT. +(*4. 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.
RT. +(*+. nything done by the agent, without $nowledge 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.
rticle +(*4 is not involved because admittedly the special power of attorney executed in favor of Simeon
Rallos was not coupled with an interest.
rticle +(*+ is the applicable law. Hnder this provision, an act done by the agent after the death of his
principal is valid and effective only under two conditions, vi0? 8+9 that the agent acted &ithout 'no&ledge
of the death of the principal and ()* that the third person &ho contracted &ith the agent himself acted in
good faith. #ood 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 re<uisites must concur the absence of one will render the
act of the agent invalid and unenforceable.
6n the instant case, it cannot be <uestioned that the agent, Simeon Rallos, $new of the death of his
principal at the time he sold the latter's share in %ot &o. '()* to respondent corporation. The $nowledge
of the death is clearly to be inferred from the pleadings filed by Simon Rallos before the trial court.
12
That
Simeon Rallos $new of the death of his sister Concepcion is also a finding of fact of the court a <uo
13
and
of respondent appellate court when the latter stated that Simon Rallos 'must have $nown of the death of
his sister, and yet he proceeded with the sale of the lot in the name of both his sisters Concepcion and
#erundia Rallos without informing appellant 8the realty corporation9 of the death of the former.
14

-n the basis of the established $nowledge of Simon Rallos concerning the death of his principal
Concepcion Rallos, Article +,-+ of the .ivil .ode is inapplica#le. The law expressly re<uires for its
application lac$ of $nowledge on the part of the agent of the death of his principal: it is not enough that the
third person acted in good faith. Thus in Euason 3 Reyes v. "anuyas, the Court applying rticle +G*) of
the old Civil rode now rt. +(*+ of the new Civil Code sustained the validity , of a sale made after the
death of the principal #ecause it &as not sho&n that the agent 'ne& of his principal/s demise.
10
To the
same effect is the case of 0errera, et al., v. %uy 1im 2uan, et al., +(,+, where in the words of Dustice
Desus Earrera the Court stated?
... even granting arguemendo that %uis !errera did die in +(*,, plaintiffs presented no
proof and there is no indication in the record, that the agent %uy Iim #uan was aware of
the death of his principal at the time he sold the property. The death ,f the principal does
not render the act of an agent unenforceable, where the latter had no $nowledge of such
extinguishment of the agency. 8+ SCR /4,, /+.9
/. 6n sustaining the validity of the sale to respondent consideration the Court of ppeals reasoned out that
there is no provision in the Code which provides that whatever is done by an agent having $nowledge of
the death of his principal is void even with respect to third persons who may have contracted with him in
good faith and without $nowledge of the death of the principal.
11

=e cannot see the merits of the foregoing argument as it ignores the existence of the general rule
enunciated in rticle +(+( that the death of the principal extinguishes the agency. That being the general
rule it follows a fortiori that any act of an agent after the death of his principal is void a# initio unless the
same fags under the exception provided for in the aforementioned rticles +(*4 and +(*+. rticle +(*+,
being an exception to the general rule, is to be strictly construed, it is not to be given an interpretation or
application beyond the clear import of its terms for otherwise the courts will be involved in a process of
legislation outside of their >udicial function.
'. nother argument advanced by respondent court is that the vendee acting in good faith relied on the
power of attorney which was duly registered on the original certificate of title recorded in the Register of
5eeds of the province of Cebu, that no notice of the death was aver annotated on said certificate of title
by the heirs of the principal and accordingly they must suffer the conse<uences of such omission.
17

To support such argument reference is made to a portion in Manresa/s Commentaries which =e <uote?
6f the agency has been granted for the purpose of contracting with certain persons, the
revocation must be made $nown to them. Eut if the agency is general iii nature, without
reference to particular person with whom the agent is to contract, it is sufficient that the
principal exercise due diligence to ma$e the revocation of the agency publicity $nown.
6n case of a general power which does not specify the persons to whom represents' on
should be made, it is the general opinion that all acts, executed with third persons who
contracted in good faith, =ithout $nowledge of the revocation, are valid. 6n such case, the
principal may exercise his right against the agent, who, $nowing of the revocation,
continued to assume a personality which he no longer had. 81anresa Jol. ++, pp. ',+
and 'G': pp. +'-+,, rollo9
The above discourse however, treats of revocation by an act of the principal as a mode of terminating an
agency which is to be distinguished from revocation by operation of la& such as death of the principal
which obtains in this case. -n page six of this -pinion =e stressed that by reason of the very nature of
the relationship between principal and agent, agency is extinguished ipso "ure upon the death of either
principal or agent. lthough a revocation of a power of attorney to be effective must be communicated to
the parties concerned,
18
yet a revocation by operation of law, such as by 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 &ill.
19
=ith death, the principal's will ceases or is the of
authority is extinguished.
The Civil Code does not impose a duty on the heirs to notify the agent of the death of the principal =hat
the Code provides in rticle +(*. is that, if the agent die his heirs must notify the principal thereof, and in
the meantime adopt such measures as the circumstances may demand in the interest of the latter.
!ence, the fact that no notice of the death of the principal was registered on the certificate of title of the
property in the -ffice of the Register of 5eeds, is not fatal to the cause of the estate of the principal
,. !olding that the good faith of a third person in said with an agent affords the former sufficient
protection, respondent court drew a ;parallel; between the instant case and that of an innocent purchaser
for value of a land, stating that if a person purchases a registered land from one who ac<uired it in bad
faith @ even to the extent of foregoing or falsifying the deed of sale in his favor @ the registered owner
has no recourse against such innocent purchaser for value but only against the forger.
22

To support the correctness of this respondent corporation, in its brief, cites the case of !londeau, et al., v.
3ano and 4alle"o, ,+ "hil. ,.'. =e <uote from the brief?
6n the case of ngel Elondeau et al. v. gustin &ano et al., ,+ "hil. ,*4, one Jalle>o was a
co-owner of lands with gustin &ano. The latter had a power of attorney supposedly
executed by Jalle>o &ano in his favor. Jalle>o delivered to &ano his land titles. The power
was registered in the -ffice of the Register of 5eeds. =hen the lawyer-husband of
ngela Elondeau went to that -ffice, he found all in order including the power of attorney.
Eut Jalle>o denied having executed the power The lower court sustained Jalle>o and the
plaintiff Elondeau appealed. Reversing the decision of the court a <uo, the Supreme
Court, <uoting the ruling in the case of 5liason v. 6il#orn, .,+ H.S. /'G, held?
Eut there is a narrower ground on which the defenses of the defendant-
appellee must be overruled. gustin &ano had possession of Dose
Jalle>o's title papers. =ithout those title papers handed over to &ano with
the ac<uiescence of Jalle>o, a fraud could not have been perpetuated.
=hen 2ernando de la Canters, a member of the "hilippine Ear and the
husband of ngela Elondeau, the principal plaintiff, searched the
registration record, he found them in due form including the power of
attorney of Jalla>o in favor of &ano. 6f this had not been so and if
thereafter the proper notation of the encumbrance could not have been
made, ngela Elondeau would not have sent "+.,444.44 to the
defendant Jalle>o.' n executed transfer of registered lands placed by the
registered owner thereof in the hands of another operates as a
representation to a third party that the holder of the transfer is authori0ed
to deal with the land.
s between two innocent persons, one of whom must suffer the
conse<uence of a breach of trust, the one who made it possible by his
act of coincidence bear the loss. 8pp. +(-.+9
The !londeau decision, however, is not on all fours with the case before Hs because here =e are
confronted with one who admittedly was an agent of his sister and who sold the property of the latter after
her death with full $nowledge of such death. The situation is expressly covered by a provision of law on
agency the terms of which are clear and unmista$able leaving no room for an interpretation contrary to its
tenor, in the same manner that the ruling in Elondeau and the cases cited therein found a basis in Section
'' of the %and Registration %aw which in part provides?
xxx xxx xxx
The production of the owner's duplicate certificate whenever any voluntary instrument is
presented for registration shall be conclusive authority from the registered owner to the
register of deeds to enter a new certificate or to ma$e a memorandum of registration in
accordance with such instruments, and the new certificate or memorandum Shall be
binding upon the registered owner and upon all persons claiming under him in favor of
every purchaser for value and in good faith? $rovided ho&ever, That in all cases of
registration provided by fraud, the owner may pursue all his legal and e<uitable remedies
against the parties to such fraud without pre>udice, however, to the right, of any innocent
holder for value of a certificate of title. ... 8ct &o. /(, as amended9
G. -ne last point raised by respondent corporation in support of the appealed decision is an +)/. ruling of
the Supreme Court of "ennsylvania in .assiday v. Mc1enzie wherein payments made to an agent after
the death of the principal were held to be ;good;, ;the parties being ignorant of the death;. %et us ta$e
note that the -pinion of Dustice Rogers was premised on the statement that the parties &ere ignorant of
the death of the principal. =e <uote from that decision the following?
... !ere the precise point is, whether a payment to an agent when the "arties are ignorant
of the death is a good payment. in addition to the case in Campbell before cited, the
same >udge %ord 7llenboruogh, has decided in ' 7sp. ++G, the general <uestion that a
payment after the death of principal is not good. Thus, a payment of sailor's wages to a
person having a power of attorney to receive them, has been held void when the principal
was dead at the time of the payment. 6f, by this case, it is meant merely to decide the
general proposition that by operation of law the death of the principal is a revocation of
the powers of the attorney, no ob>ection can be ta$en to it. Eut if it intended to say that his
principle applies where there was ++4 notice of death, or opportunity of twice 6 must be
permitted to dissent from it.
... That a payment may be good today, or bad tomorrow, from the accident circumstance
of the death of the principal, which he did not $now, and which by no possibility could he
$nowF 6t would be un>ust to the agent and un>ust to the debtor. 6n the civil law, the acts of
the agent, done #ona fide in ignorance of the death of his principal are held valid and
binding upon the heirs of the latter. The same rule holds in the Scottish law, and 6 cannot
believe the common law is so unreasonable... 8*( m. 5ec. G,, )4, )+: emphasis
supplied9
To avoid any wrong impression which the -pinion in .assiday v. Mc1enzie may evo$e, mention may be
made that the above represents the minority view in merican >urisprudence. Thus in .layton v. Merrett,
the Court said.@
There are several cases which seem to hold that although, as a general principle, death
revo$es an agency and renders null every act of the agent thereafter performed, yet that
where a payment has been made in ignorance of the death, such payment will be good.
The leading case so holding is that of .assiday v. Mc1enzie, / =atts 3 S. 8"a9 .)., *(
m. G,, where, in an elaborate opinion, this view ii broadly announced. 6t is referred to,
and seems to have been followed, in the case of Dic' v. $age, +G 1o. .*/, 'G m5 .,G:
but in this latter case it appeared that the estate of the deceased principal had received
the benefit of the money paid, and therefore the representative of the estate might well
have been held to be estopped from suing for it again. . . . These cases, in so far, at least,
as they announce the doctrine under discussion, are exceptional. The "ennsylvania
Case, supra 8Cassiday v. 1cIen0ie / =atts 3 S. .)., *( m5 G,9, is believed to stand
almost, if not <uite, alone in announcing the principle in its broadest scope. 8'., 1isc.
*'*, *'G, cited in . C.D. '/(9
So also in 7ravers v. .rane, spea$ing of .assiday v. Mc1enzie, and pointing out that the opinion, except
so far as it related to the particular facts, was a mere dictum, Ealdwin D. said?
The opinion, therefore, of the learned Dudge may be regarded more as an extra>udicial
indication of his views on the general sub>ect, than as the ad>udication of the Court upon
the point in <uestion. Eut accordingly all power weight to this opinion, as the >udgment of
a of great respectability, it stands alone among common law authorities and is opposed
by an array too formidable to permit us to following it. 8+' Cal. +.,+G, cited in . C.D. '/(9
=hatever conflict of legal opinion was generated by .assiday v. Mc1enzie in merican >urisprudence, no
such conflict exists in our own for the simple reason that our statute, the Civil Code, expressly provides
for two exceptions to the general rule that death of the principal revo$es ipso >ure the agency, to wit? 8+9
that the agency is coupled with an interest 8rt +(*49, and 8.9 that the act of the agent was executed
without $nowledge of the death of the principal and the third person who contracted with the agent acted
also in good faith 8rt. +(*+9. 7xception &o. . is the doctrine followed in Cassiday, and again =e stress
the indispensable re<uirement that the agent acted without $nowledge or notice of the death of the
principal 6n the case before Hs the agent Ramon Rallos executed the sale notwithstanding notice of the
death of his principal ccordingly, the agent's act is unenforceable against the estate of his principal.
6& J67= -2 %% T!7 2-R7#-6&#, =e set aside the ecision of respondent appellate court, and =e
affirm en toto the >udgment rendered by then !on. mador 7. #ome0 of the Court of 2irst 6nstance of
Cebu, <uoted in pages . and * of this -pinion, with costs against respondent realty corporation at all
instances.
So -rdered.