GR 24332; (January, 1978) (Digest)
G.R. No. L-24332. January 31, 1978.
RAMON RALLOS, Administrator of the Estate of CONCEPCION RALLOS, petitioner, vs. FELIX GO CHAN & SONS REALTY CORPORATION and COURT OF APPEALS, respondents.
FACTS
Concepcion Rallos and her sister Gerundia were registered co-owners of a parcel of land in Cebu. On April 21, 1954, they executed a special power of attorney in favor of their brother, Simeon Rallos, authorizing him to sell the property. Concepcion Rallos died on March 3, 1955. Subsequently, on September 12, 1955, Simeon Rallos sold the undivided shares of both sisters to Felix Go Chan & Sons Realty Corporation. The sale was registered, and a new title was issued in the vendee’s name.
Ramon Rallos, as administrator of Concepcion’s estate, filed a complaint to have the sale of her share declared unenforceable and for its reconveyance. The trial court ruled in favor of the estate, declaring the sale null and void as to Concepcion’s share and ordering its reconveyance. The Court of Appeals reversed this decision, upholding the validity of the sale. The estate elevated the case to the Supreme Court via a petition for review.
ISSUE
Is the sale of the undivided share of a deceased principal, executed by her agent after her death but pursuant to a power of attorney, valid and enforceable against her estate?
RULING
No. The Supreme Court reversed the Court of Appeals and reinstated the trial court’s judgment. The Court held that the authority of an agent is extinguished upon the death of the principal. This rule is grounded in the personal and fiduciary nature of agency, which is terminated by the death of the principal as the basis of representation ceases to exist. Consequently, any act performed by the agent after the death of the principal is void and unenforceable against the estate, as the agent no longer possesses any authority to bind the deceased.
The Court rejected the argument that the sale was valid because the vendee was a purchaser in good faith and had no knowledge of the principal’s death. The legal effect of the agent’s lack of authority is not dependent on the third party’s knowledge or good faith. The death of the principal instantly revokes the agency by operation of law. Since the agent acted without authority, the contract is unenforceable under Article 1317 of the Civil Code, unless ratified. No ratification was possible as the principal was already deceased. Therefore, the sale of Concepcion Rallos’s share was null and void, and her estate was entitled to reconveyance. The Court emphasized that the governing principle is the termination of the agency by the death of the principal, not the third party’s awareness of that death.