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: [Plaintiffs 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 share each pro-indiviso and the payment of attorneys 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 share of the land (P5,343.45) plus attorneys 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 Concepcions 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 agents knowledge of the principals 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 -agents acts are acts of the principal

(1) (2) (3) (4)

Essential Elements: there is consent, express or implied of the parties to establish the relationship; the object is the execution of a juridical act in relation to a third person; the agents acts as a representative and not for himself, and 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 pricipals 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). Simons authority as agent was extinguished upon Concolacions 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:
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

Simon Rallos knew (as can be inferred from his pleadings) of principal Concepcions death For Art 1931 to apply, both requirements must be present

3) Yes, agents knowledge of principals 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 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 principals death at that time (exception under Art. 1931)

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