Danilo P.

Villarey III Law 173: Agency and Partnership

2019-21368 Atty. Teodulo G. San Juan, Jr.
2 BGC-Eve

Case: Ramon Rallos v. Felix Go Chan & Sons Realty Corporation and Court of
Appeals, G.R. No. L-24332, January 31, 1978, 81 SCRA 251

Material Facts:
Concepcion and Gerundia Rallos were sisters and registered co-owners of a parcel of
land. They executed a special power of attorney in favor of their brother, Simeon
Rallos, authorizing him to sell the land for and in their behalf. Later on, Concepcion
died. Simeon Rallos, having knowledge of Concepcion’s death, sold the latter’s
undivided share in a parcel of land to Felix Go Chan & Sons Realty Corporation.
Ramon Rallos, the administrator of the Intestate Estate of Concepcion, filed a
complaint praying that the sale be declared unenforceable, and that the Certificate of
Title issued in the name of Felix Go Chan & Sons Realty be cancelled.

Relevant Issue:
The relevant issue of this case is the legal effect of an act performed by an agent after
the death of his principal? Is the sale of the share of Concepcion Rallos still valid
although it was executed by the agent after principal’s death?

Relevant Doctrine:
There are various ways of extinguishing an agency. One of them is the death of the
principal. Art. 1919 of Civil Code provides that an “agency is extinguished… by the
death… of the principal or of the agent…” According to Manresa, the rationale for the
law is found in the juridical basis of agency which is representation. “It is not possible
for the representation to continue to exist once the death of either is establish.” Death
is a necessary cause for its extinction.

The general rule that the death of principal or agent extinguishes the agency is subject
to exceptions. One of these exceptions is provided in Art. 1931 of Civil Code:
“Anything done by the agent, without knowledge the death of the principal or of any
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.” In this provision, act of
agent is valid only under two conditions: (1) agent acted without knowledge of the
death of the principal, and (2) the third person who contracted with the agent himself
acted in good faith.

In this case, it cannot be questioned that the agent, Simeon Rallos, knew of the death
of the principal at the time he sold the latter’s share. This is inferred from the pleadings
filed by Simeon Rallos before the trial court. It is not enough that the third person, Felix
Go Chan & Sons Realty, acted in good faith.

Importance:
This case is important because it emphasizes that the presence of only one condition
of either an agent acting without knowledge of the principal’s death or a third person
who contracted with the agent acted in good faith is not enough to justify the validity of
the action of an agent.