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1 RALLOS V. GO CHAN - SANTOS

FACTS: Concepcion and Gerundia both surnamed Rallos were sisters and registeredco-owners of a parcel of land in Cebu. The sisters executed a special power of attorneyin favor of their brother, Simeon Rallos, authorizing him to sell for and in their behalf lot.

Concepcion Rallos died. Simeon Rallos sold the undivided shares of his sistersConcepcion and Gerundia to Felix Go Chan & Sons Realty Corporation for the sum ofP10,686.90.

Simeon Rallos, knew of the death of his principal at the time he sold the latter's share inthe Lot to respondent corporation. The knowledge of the death is clearly to be inferredfrom the pleadings filed by Simon Rallos before the trial court. That Simeon Rallosknew of the death of his sister Concepcion is also a finding of fact of the court aquo and of respondent appellate court when the latter stated that Simon Rallos 'musthave known of the death of his sister, and yet he proceeded with the sale of the lot inthe name of both his sisters Concepcion and Gerundia Rallos without informing

appellant (the realty corporation) of the death of the former.

ISSUE: W/N death of either principal or agent extinguishes the agency.

W/N this case falls into the exceptions to the general rule that death ofeither principal or agent extinguishes the agency.

W/N a vendee in good faith relying on the power of attorney without noticeof death of principle constituted a valid sale.

HELD: 1stIssue:YES,as a general rule.

ART. 1919.Agency is extinguished.

3. By the death, civil interdiction, insanity or insolvency of the principal orof the agent; ... (Emphasis supplied)

By reason of the very nature of the relationship between Principal and agent, agency isextinguished by the death of the principal or the agent. This is the law in this jurisdiction.

Manresacommenting on Art. 1709 of the Spanish Civil Code explains that the rationalefor the law is found in thejuridical basisof agency which is representationThem being

an integration of the personality of the principal integration that of the agent it is notpossible for the representation to continue to exist once the death of either isestablish. Pothieragrees with Manresa that by reason of the nature of agency, death isa necessary cause for its extinction. Laurentsays that the juridical tie between theprincipal and the agent is severed ipso jure upon the death of either without necessityfor the heirs of the fact to notify the agent of the fact of death of the former.

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The same rule prevails at common law the death of the principal effectsinstantaneous and absolute revocation of the authority of the agent unless the Power becoupled with an interest. This is the prevalent rule in American Jurisprudence where itis well-settled that a power without an interest confer. red upon an agent is dissolved bythe principal's death, and any attempted execution of the power afterward is not binding

on the heirs or representatives of the deceased.

2nd

issue: NO, does not even fall into the exceptions.

It is the contention of respondent corporation which notwithstanding the death of theprincipal Concepcion Rallos the act of the attorney-in-fact, Simeon Rallos in selling theformer's sham in the property is valid and enforceable inasmuch as the corporationacted in good faith in buying the property in question. Articles 1930 and 1931 of the CivilCode provide the exceptions to the general rule.

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 ofthe latter and of the agent, or in the interest of a third person who hasaccepted the stipulation in his favor.

ART. 1931. Anything done by the agent, without knowledge of the death ofthe principal or of any other cause which extinguishes the agency, is validand shall be fully effective with respect to third persons who may havecontracted with him in good faith.

Article 1930 is not involved because admittedly the special power of attorney executedin favor of Simeon Rallos was not coupled with an interest.

Article 1931 is the applicable law. Under this provision, an act done by the agent afterthe death of his principal is valid and effective only under two conditions, viz: (1) that theagent acted without knowledge of the death of the principal and (2) that the third personwho contracted with the agent himself acted in good faith . Good faith here means thatthe third person was not aware of the death of the principal at the time he contractedwith said agent. These two requisites must concur the absence of one will render theact of the agent invalid and unenforceable.

On the basis of the established knowledge of Simon Rallos concerning the death of hisprincipal Concepcion Rallos,Article 1931 of the Civil Code is inapplicable.The law

expressly requires for its application lack of knowledge on the part of the agent of thedeath of his principal; it is not enough that the third person acted in good faith.

3rd

issue: NO, even if the vendee, herein, is in good faith and without knowledge of thedeath of the principal.

The revocation by an act of the principal as a mode of terminating an agency should bedistinguished from revocation by operation of law such as death of the principal which

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