The Supreme Court (SC) has ruled that a Special Power of Attorney (SPA) automatically ends with the death of the person who granted it, and any acts carried out by the agent afterward are void, unless covered by narrow exceptions under the law.
In a decision written by Associate Justice Henri Jean Paul Inting, and made public Aug. 27, the SC’s Third Division ruled that Jessica Alova Uberas lost her authority to act on behalf of her father, Meliton Alova, upon his death in 1998, as the SPA had already been terminated.
In 1998, Meliton executed an SPA authorizing Jessica to manage his property. He died later that year. Despite this, Jessica used the SPA in 2003 to secure a credit line from San Miguel Foods Inc. (SMFI) through a mortgage on her late father’s property. She used this credit line to buy poultry products but failed to pay, leading SMFI to foreclose on the property.
Both the Regional Trial Court (RTC) and the Court of Appeals (CA) determined that Meliton’s death ended the agency. However, the RTC found that because the SPA had the conformity of Felicidad, Meliton’s wife, the mortgage was valid regarding her one-half share of the conjugal property. On the other hand, the CA declared the mortgage invalid, citing that it was not executed on behalf of the spouses.
SMFI appealed to the SC, which partly ruled in its favor, upholding the agency’s termination but validating the mortgage and foreclosure sale with respect to Jessica’s undivided share in the property.
The SC explained that under an SPA, which is a contract of agency, a principal authorizes an agent to act on his or her behalf in transactions with third persons. Agency is personal, representative, and derivative, and it ends upon the death of either the principal or the agent.
Any act by the agent after the principal’s death is void, unless it falls under two Civil Code exceptions, namely, when the agency was for the parties’ common interest; and when the agent, unaware of the death or agency’s end, contracted with a third party in good faith, the SC Office of the Spokesperson said in a press release.
In this case, there was no showing that these exceptions were applicable; Jessica was fully aware of her father’s death, and the SPA was not made for their mutual benefit, it added.
The SC reiterated that for an agent’s act to bind the principal, the deed must clearly be made, signed, and sealed in the principal’s name. “The mortgage was signed by Jessica in her personal capacity, although it described her as Meliton’s attorney-in-fact. The mortgage was neither executed nor sealed in Meliton’s name.”
Neither was Meliton’s wife, Felicidad, bound as a principal under the SPA, as she only provided her marital conformity, the SC said.
The SC clarified, however, that the mortgage and foreclosure sale were not entirely void. “Jessica automatically became a co-owner of the property after her father’s death. When she signed the mortgage, she encumbered her share in the property to secure her obligation to SMFI. Therefore, the mortgage and foreclosure sale were valid only for Jessica’s share.” ||
