29/08/2025
Exceptions: (1) when the agency was for the partiesโ common interest, and (2) when the agent, unaware of the death or agencyโs end, contracted with a third party in good faith.
The (SC) has ruled that a Special Power of Attorney (SPA) automatically ceases upon the death of the person who granted it, and any acts carried out by the agent afterwards are void, unless covered by narrow exceptions under the law.
In a Decision written by Associate Justice Henri Jean Paul B. Inting, the SCโs Third Division held that Jessica Alova Uberas lost her authority under the SPA to act on behalf of her father, Meliton Alova, upon his death in 1998.
In 1998, Meliton executed an SPA in favor of Jessica over the subject conjugal property. He died later that year. Despite the death of his father, Jessica still used the same SPA in 2003 to execute a mortgage over the said property in favor of San Miguel Foods, Inc. (SMFI) to secure her loan from the company. Jessica failed to pay the loan and the property was foreclosed where SMFI emerged as the winning bidder.
Felicidad Alova and Decelyn Alova Pution, the widow and other daughter of Meliton, filed a case to nullify the mortgage and the foreclosure sale.
Both the Regional Trial Court (RTC) and the Court of Appeals (CA) determined that Melitonโs death ended the agency. However, the RTC found that because the SPA had the conformity of Felicidad, Melitonโs wife, the mortgage was valid on her ยฝ share of the conjugal property. On the other hand, the CA declared the mortgage invalid, citing that it was not executed on behalf of Spouses Meliton and Felicidad.
SMFI appealed to the SC, which partly ruled in its favor. The Court upheld the agencyโs termination but validated the mortgage and foreclosure sale with respect to Jessicaโs 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 principalโs death is void, unless it falls under two Civil Code exceptions: (1) when the agency was for the partiesโ common interest, and (2) when the agent, unaware of the death or agencyโs end, contracted with a third party in good faith.
In this case, there was no showing that these exceptions were applicable. Jessica was fully aware of her fatherโs death, and the SPA was not made for their mutual benefit.
The SC also reiterated that for an agentโs act to bind the principal, the deed must clearly be made, signed, and sealed in the principalโs name.
Here, although Jessica was described in the beginning of the deed as Melitonโs attorney-in-fact, the mortgage was signed by Jessica in her personal capacity, as it was neither executed nor sealed in Melitonโs name, and without indication that she was acting as attorney-in-fact.
The Court also ruled that Melitonโs wife, Felicidad, was not bound as a principal under the SPA, as she only provided her marital conformity.
However, the Court clarified that the mortgage and foreclosure sale were not entirely void. Jessica automatically became a co-owner of the property after her fatherโs 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 Jessicaโs share.
The Court remanded the case to the RTC to determine Jessicaโs share in the subject property and to annotate the shares of Melitonโs other heirs, and that of SMFI which acquired Jessicaโs interest.
Read the full text of the press release at https://tinyurl.com/27t9k6vy
Read the full text of the Decision at https://sc.judiciary.gov.ph/260071-san-miguel-foods-inc-vs-felicidad-d-alova-and-decelyn-alova-pution/
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