By: Atty. Gregorio B. Austral, CPA
Can an agent continue to represent the principal after the latter dies?
The Supreme Court’s recent Decision in San Miguel Foods, Inc. v. Alova addresses the critical legal implications of an agent utilizing a Special Power of Attorney (SPA) after the principal’s death. The dispute involves a parcel of land, which is the conjugal property of Spouses Meliton Alova (Meliton) and Felicidad Alova (Felicidad). On March 12, 1998, Meliton executed an SPA in favor of his daughter, Jessica Alova Uberas (Jessica), granting her authority over the subject property, which was registered under Transfer Certificate of Title No. (TCT) T-60482. Meliton subsequently died on October 31, 1998.
Despite Meliton’s demise, Jessica obtained a Credit Line Agreement from petitioner San Miguel Foods, Inc. (SMFI). Subsequently, on September 2, 2003, Jessica secured this loan obligation by constituting a Real Estate Mortgage over the subject property, expressly using her late father’s SPA as the basis for the encumbrance. Jessica failed to remit payment for poultry products purchased through the credit line, amounting to PHP495,194.80. Consequently, SMFI initiated extrajudicial foreclosure proceedings against the property, resulting in SMFI emerging as the winning bidder at the public auction. This led respondents, Felicidad and Decelyn Alova Pution, to file a Complaint for Declaration of Nullity/Annulment of Real Estate Mortgage and Extrajudicial Foreclosure Sale.
The main issue presented to the Court was whether Jessica could represent her deceased father using the SPA he executed before his death.
A contract of agency, by its fundamental nature, is personal, representative, and derivative. A fundamental tenet of agency law, articulated in Article 1919 of the Civil Code, dictates that agency is extinguished by the death of either the principal or the agent. Therefore, any act by the agent after the principal’s death is void ab initio.
When Jessica executed the real estate mortgage in September 2003, Meliton was already deceased, meaning his death had already effectively extinguished the contract of agency. The exceptions provided under Articles 1930 and 1931 of the Civil Code, which allow agency to subsist despite the principal’s death, were found to be inapplicable, as the agency was not constituted for the common interest of Meliton and Jessica, and there was no dispute that Jessica was “well aware” of Meliton’s death at the time of execution.
In its final disposition, the Supreme Court partially granted the petition, reversing the CA decision that had declared the entire mortgage void ab initio. The Court held that while the SPA was indeed void due to the principal’s death, the mortgage and foreclosure sale were not entirely void. Upon Meliton’s death, Jessica automatically became a co-owner of the property as a legal heir. As a co-owner, Jessica had the full ownership of her part and the authority to mortgage it pursuant to Article 493 of the Civil Code. Thus, when Jessica executed the mortgage in her personal capacity (to secure her personal obligation to SMFI), she validly encumbered her own undivided share in the subject property.
Consequently, the Real Estate Mortgage and Foreclosure Sale are declared valid only insofar as Jessica Alova Uberas’ share in the property is concerned. The case was remanded to the Regional Trial Court for the determination of the exact size of Jessica’s specific share in the said property. (San Miguel Foods, Inc. v. Alova, G.R. No. 260071, (07 May 2025))