SPA terminates upon death
The authority of the agent to act emanates from the power granted to him by his or her principal.
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The authority of the agent to act emanates from the power granted to him by his or her principal.
We encounter special powers of attorney, more commonly referred to as an SPA, almost every day in our lives. When someone is unavailable to do something, he issues an SPA for someone else to act on his behalf. That way, the agent, the one authorized by the principal, the person executing the SPA can act on the latter’s behalf as if the principal himself were present.
And indeed, we see this in cases like the sale of land. In many instances, the seller may be abroad. Thus, in order for the transaction to push through, the seller, as principal, empowers someone to sign for him where the transaction will take place. With that, the sale pushes through where the owner transfers ownership of the land to the buyer, after he receives payment.
See the convenience? Without an SPA, the seller would have to fly to the place of the transaction to personally sign the deed of sale and receive payment. We see SPAs being executed, too by people who may have a medical condition where they are unable to personally attend to whatever commitments they may have.
In countless cases, people execute SPAs for sheer convenience, to make transactions necessitating their personal presence happen even in their absence.
A question is often asked of me: can the agent still use the SPA issued by a principal who is already dead? As a general rule, no. The death of either the principal or the agent extinguishes the agency.
So in one case, the daughter applied for a credit line from a corporation using her father’s property as collateral. She presented the SPA issued by her father authorizing her to use his property as collateral. The problem though is that the daughter knew full well that her father was already deceased. By virtue of this collateral, the corporation granted her the credit line. She availed of it but eventually was not able to pay the debt she incurred.
The time came when the corporation foreclosed on the property subject of the collateral. Her mother and sister subsequently filed with the court an action to declare the foreclosure void, on the ground that she had no authority to use the property as collateral. The reason: the person who authorized her to do so was already dead when she entered into the transaction.
The trial court, after due hearing, found for the complainants. It ruled that the foreclosure was void because the daughter had no authority. It declared though that the daughter and mother, by virtue of the death of the principal, lost their share in the land they inherited from the principal. On appeal, the Court of Appeals modified that decision saying that the mother and daughter were not liable.
Thus the corporation appealed to the Supreme Court. The issue to be resolved was whether the collateral was valid on the strength of the SPA issued by the principal, who was already deceased at the time of the transaction.
The Supreme Court ruled in favor of the invalidity of the mortgage. It decreed, “By the contract of agency, a person binds himself to render some service or to do something in representation or on behalf of another, with the consent or authority of the latter. The relationship of agency is one where a party, called the principal, authorizes another, called the agent, to act for and on his behalf in transactions with third persons.
“The essential elements of agency are (1) there is consent, express or implied, of the parties to establish the relationship; (2) the object is the execution of a juridical act in relation to a third person; (3) the agent acts as a representative and not for himself [or herself]; and (4) the agent acts within the scope of his [her] authority.
“Agency is basically personal, representative, and derivative in nature. The authority of the agent to act emanates from the power granted to him by his or her principal. The agent’s act is the act of the principal if done within the scope of authority. Owing to its nature, agency is extinguished by the death of either principal or the agent. Thus, any act by the agent subsequent to the principal’s death is void ab initio, unless the act fell under the exceptions established under Articles 1930 and 1931 of the Civil Code.
“Here, at the time Jessica executed the real estate mortgage over the subject property, she was well aware of her father’s death. Moreover, there is no showing that Articles 12930 and 1931 are applicable. Hence, Meliton’s death effectively extinguished the agency between Meliton and Jessica.”
With this, the Supreme Court declared the real estate mortgage and foreclosure void because the daughter who mortgaged the property had no authority to do so anymore. However, in this case, the Highest Court further decreed that the foreclosure of the portion inherited by said daughter is valid in favor of the corporation. But that remains to be a discussion for another day, as it involves inheritance and the laws on succession. For now, we focus on the validity of the SPA.
The facts and ruling are from SC G.R. No. 260071 (7 May 2025)
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