SC: SPA invalid upon death of principal

The effectiveness of 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 falling under narrow exceptions in law, the Supreme Court (SC) has ruled.

In a decision dated 7 May 2025 but released only recently, the SC’s Third Division, through Associate Justice Henri Jean Paul Inting, held 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 been terminated.

Meliton executed an SPA in 1998 authorizing Jessica to manage his property but he died later that year.

In 2003, Jessica used the SPA to secure a credit line from San Miguel Foods Inc. (SMFI) through a mortgage on her late father’s property. She used the credit line to buy poultry products but failed to repay it, prompting SMFI to foreclose on the property.

Both the Regional Trial Court (RTC) and the Court of Appeals (CA) ruled that Meliton’s death ended the agency. The RTC, however, held that the SPA remained valid over the conjugal property because of the conformity of Meliton’s wife, Felicidad.

The CA disagreed, declaring the mortgage invalid since it was not executed on behalf of the spouses.

SMFI appealed, and the SC partly ruled in its favor. While upholding that the SPA had been terminated, the SC validated the mortgage and foreclosure sale with respect to Jessica’s undivided share in the property.

The SC explained that an SPA, as a contract of agency, authorizes an agent to act on behalf of a principal in dealings with third parties. Because agency is personal, representative and derivative, it is automatically extinguished 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: (1) when the agency was for the common interest of the parties, or (2) when the agent, unaware of the death or termination, contracts in good faith with a third party.

The Court said neither applied here since Jessica was fully aware of her father’s death, and the SPA was not made for their mutual benefit.

The SC said that for an agent’s act to bind the principal, the deed must clearly be signed and executed in the principal’s name. In this case, Jessica signed the mortgage in her own capacity, even if she described herself as Meliton’s attorney-in-fact.

The mortgage was neither executed nor sealed in Meliton’s name, and Felicidad was not bound as a principal, as she had only given her marital conformity.

The Court clarified, however, that the mortgage and foreclosure sale were not entirely void.

Jessica automatically became a co-owner of the property upon her father’s death, and when she signed the mortgage, she encumbered her own undivided share to secure her obligation to SMFI.

Thus, the mortgage and foreclosure sale were valid only as to Jessica’s share.