[ELEMENTS OF AGENCY]
19191 is found in the juridical basis of agency which
01 RALLOS V. GO CHAN
31 January 1978 | Muñoz Palma, J. |
Petitioner/s: RAMON RALLOS, Administrator of the Estate of CONCEPCION
RALLOS
Respondent/s: FELIX GO CHAN & SONS REALTY CORPORATION and COURT
OF APPEALS
Facts:
● Concepcion and Gerundia Rallos, sisters, co-owned a parcel of land in Cebu.
● April 21, 1954 – the sisters executed a special power of attorney in favor of their
brother, Simeon, authorizing him to sell the lot.
● March 3, 1955 – Concepcion died.
● September 12, 1955 – Simeon sold the undivided shares of his sisters in the lot
to Felix Go Chan & Sons Realty Corporation for P10,686.90. Deed of sale was
registered and a new TCT was issued in the name of Go Chan & Sons.
● May 18, 1956 – Ramon Rallos, administrator of the Intestate Estate of
Concepcion, filed a complaint in CFI Cebu praying that the Title in the name of
Felix Go Chan & Sons Realty Corp. be cancelled and another title be issued in
the names of the corporation and the “Intestate estate of Concepcion Rallos” in
equal undivided shares.
● While the case was pending in the trial court, both Simeon and his sister
Gerundia died and they were substituted by the respective administrators of their
estates.
CFI: Petition granted.
CA: Reversed CFI. Sale was valid in so far as the ½ undivided share of Concepcion.
 Respondent: Notwithstanding the death of the principal, the act of Simeon in
selling the former’s share in the property is valid and enforceable inasmuch as
the corporation acted in good faith in buying the lot.
Ruling:
W/N the sale of the undivided share of Concepcion Rallos was valid although it was
executed by the agent after the death of his principal. NO. The exception under Art.
1931 does not apply as the agent knew of the principal’s death.
● No one may contract in the name of another without being authorized by the
principal, or unless he has by law a right to represent him. This is unenforceable
unless ratified by the person on whose behalf it has been executed before it is
revoked by the other contracting party.
● Essential elements of agency:
○ (1) consent, express or implied, of the parties;
○ (2) object is the execution of a juridical act in relation to a third person;
○ (3) agent acts as a representative and not for himself; and
○ (4) agent acts within the scope of his authority.
● Agency is personal, representative, and derivative in nature.
● By reason of the very nature of the relationship between principal and agent,
agency is extinguished by the death of the principal or the agent.
● Manresa – rationale for Art.
is representation. There being an integration of the personality of the principal
into that of the agent it is not possible for the representation to continue to
exist once the death of either is established.
● Laurent – the juridical tie between the principal and the agent is severed ipso
jure upon the death of either without necessity for the heirs of the principal to
notify the agent of the fact of death of the former.
● Exceptions to Art. 1919(3) are found in articles 19302 and 19313.
○ 1930 does not apply in this case because the SPA issued in favor of
Simeon was not coupled with an interest
● 1931 applies to this case. Elements of its applicability, which must both concur,
are:
○ 1. Agent acted without knowledge of the death of the principal
○ 2. Third person who contracted with the agent acted in good faith
● Simeon knew of the death of his principal when he sold the latter’s share in the
lot. This can be inferred from the pleadings filed by Simeon before the trial court.
● Article 1931 of the Civil Code is inapplicable because it is established that
Simeon knew of the death of his principal, Concepcion. It is not enough that the
third person acted in good faith, the agent must have also acted without
knowledge of the principal’s death.
● Manresa – when the power is general such that it does not specify the persons to
whom representation should be made, all acts executed with third persons who
contracted in good faith, without knowledge of the revocation of the agent’s
power, are valid. The principal may then exercise his right against the agent,
who, knowing of the revocation, continued to assume a personality which he no
longer had.
○ This does not apply to this case because this type of revocation is not the
same as revocation by operation of law
● Cassiday v. McKenzie –payments made to an agent after the death of the
principal were held to be “good”, “the parties being ignorant of the death”.
○ Justice Rogers’s opinion was premised on the statement that the
parties were ignorant of the death of the principal.
○ Claytom v. Merrett held that this case is exceptional and is not the
general rule.
Dispositive
IN VIEW OF ALL THE FOREGOING, We set aside the decision of respondent
appellate court, and We affirm en toto the judgment rendered by then Hon. Amador E.
Gomez of the Court of First Instance of Cebu, quoted in pages 2 and 3 of this
Opinion, with costs against respondent realty corporation at all instances.
Notes
Insert notes
1 ART. 1919. Agency is extinguished: 3. By the death, civil interdiction, insanity or insolvency of the
principal or of the agent; x x x.
2 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.
3 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.