RALLOS v FELIX GO CHAN & REALTY COPR.

, Munoz-Palma

Plaintiff: Ramon Rallos

Defendant: Felix Go Chan & Sons Realty Corporation
Facts:

 Concepcion and Gerundia Rallos were sisters and registered co-owners of a parcel of land known
as Lot No. 5983 of the Cadastral Survey of Cebu covered by Transfer Certificate of Title No.
11116 of the Registry of Cebu.
 They executed a special power of attorney in favor of their brother, Simeon Rallos, authorizing
him to sell such land for and in their behalf.
 After Concepcion died, Simeon Rallos sold the undivided shares of his sisters Concepcion and
Gerundia to Felix Go Chan & Sons Realty Corporation for the sum of P10,686.90. New TCTs were
issued to the latter.
 Petitioner Ramon Rallos, administrator of the Intestate Estate of Concepcion filed a complaint
praying (1) that the sale of the undivided share of the deceased Concepcion Rallos in lot 5983 be
unenforceable, and said share be reconveyed to her estate; (2) that the Certificate of 'title issued
in the name of Felix Go Chan & Sons Realty Corporation be cancelled and another title be issued
in the names of the corporation and the "Intestate estate of Concepcion Rallos" in equal
undivided and (3) that plaintiff be indemnified by way of attorney's fees and payment of costs of
suit.

CFI: [Plaintiff’s Complaint]

 Sale of land was null and void insofar as the one-half pro-indiviso share of Concepcion Rallos
 Ordered the issuance of new TCTs to respondent corporation and the estate of Concepcion in the
proportion of ½ share each pro-indiviso and the payment of attorney’s fees and cost of litigation

[Respondent filed cross claim against Simon Rallos(*Simon and Gerundia died during pendency of case)]
 Juan T. Borromeo, administrator of the Estate of Simeon Rallos was ordered to pay defendant
the price of the ½ share of the land (P5,343.45) plus attorney’s fees

[Borromeo filed a third party complaint against Josefina Rallos, special administratrix of the Estate of
Gerundia]
 Dismissed without prejudice to filing either a complaint against the regular administrator of the
Estate of Gerundia Rallos or a claim in the Intestate-Estate of Cerundia Rallos, covering the same
subject-matter

CA: CFI Decision reversed, upheld the sale of Concepcion’s share.

MR: denied.

Issues:
1) WON sale was valid although it was executed after the death of the principal, Concepcion.
2) WON sale fell within the exception to the general rule that death extinguishes the authority of the
agent
3) WON agent’s knowledge of the principal’s death is a material factor.
4) WON petitioner must suffer the consequence of failing to annotate a notice of death in the title
(thus there was good faith on the part of the Respondent vendee)
5) WON good faith on the part of the respondent in this case should be treated parallel to that of an
innocent purchaser for a value of a land.
Held/Ratio:

(Court discussed relevant principles first)

Relationship of Agency (concept arising from principles under Art 13171 and 14032)- one party, caged the
principal (mandante), authorizes another, called the agent (mandatario), to act for and in his behalf in
transactions with third persons.
-derivative in nature, power emanating from principal
-agent’s acts are acts of the principal

 Essential Elements:
(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 agents acts as a representative and not for himself, and
(4) the agent acts within the scope of his authority.

 Extinguishment
o Generally: among others3, By the death, civil interdiction, insanity or insolvency of the
principal or of the agent
- death of the principal effects instantaneous and absolute revocation of the
authority of the agent
o Exceptions:
 (Art. 1930) 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) agent acted without knowledge of the pricipal’s death and that the
third person was in good faith (both these reqs should be present)

IN THE CASE AT BAR:

1) Sale was void.

 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 (Art. 1317 of the Civil Code).
 Simon’s authority as agent was extinguished upon Concolacion’s death

2) The sale did not fall under the exceptions to the general rule that death ipso jure extinguishes
the authority of the agent
o Art. 1930 inapplicable: SPA in favor of Simon Rallos was not coupled with interest
o Art. 1931 inapplicable:
 Simon Rallos knew (as can be inferred from his pleadings) of principal
Concepcion’s death
 For Art 1931 to apply, both requirements must be present

3) Yes, agent’s knowledge of principal’s death is material.

Respondent asserts that: there is no provision in the Code which provides that whatever is done
by an agent having knowledge 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 knowledge of the death of
the principal
1
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. A 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 revoked by the other contracting party.
2
The following contracts are unenforceable, unless they are justified: (1) 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; ...
3
See Art. 1919
 Court says: this contention ignored the ignores the existence of the general rule enunciated in
Article 1919 that the death of the principal extinguishes the agency. Article 1931, being an
exception to the general rule, is to be strictly construed.

4) NO, the Civil Code does not impose a duty upon the heirs to notify the agent or others of the
death of the principal.
 If revocation was by the act of the principal: 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, Without knowledge of the
revocation, are valid.
 BUT, if revocation was due to death of the principal: extinguishment, by operation of law, is
instantaneous without the need for notification to the parties concerned.

5) No.
 Laws on agency, the terms of which are clear and unmistakable leaving no room for an
interpretation contrary to its tenor, should apply, the law provides that death of the principal
ipso jure extinguishes the authority of the agent to sell rendering the sale to a third person in
good faith unenforceable unless at the agent had no knowledge of the principal’s death at
that time (exception under Art. 1931)

Dispositive: CA Decision reversed, CFI decision affirmed. Sale was null and void.