SPA Na, Wala Na: The Curious Case of a Dead Principal and a Very Alive Mortgage
A Legal Newsletter on Real Property, Family Drama, and Special Powers of Attorney Gone Wrong
By: Atty. Eugenio L. Riego II, LLB, MPA, REB
Article for Nov. 17, 2025
THE SITUATION
Meet the illustrious Familia de los Pedros:
- Pedro Sr., the hardworking patriarch
- Maria, the ever-patient wife
- Pedro Jr., the eldest
- Juan, the often-forgotten youngest
After decades of hard work, sweat, and probably a few sipag-at-tyaga motivational speeches, Pedro Sr. managed to acquire a house and lot—better than average, not quite Forbes Park, but definitely pang-may-kaya.
As time passed, however, the inevitable came: old age, illness, and expenses.
Needing funds for medication and family needs, Pedro Sr. executed a Special Power of Attorney (SPA) in favor of Pedro Jr., empowering him to mortgage or even sell the property if necessary. A practical step, because hey—what could go wrong?
Answer: Everything.
Months later, Pedro Sr. died.
And after the usual chaos of funerals, debts, abuloy, and one relative asking “Uy may balato ba kami?”, Pedro Jr. decided to open a business. But because he had no capital, he mortgaged the family house and lot to his friend George, using the SPA.
Unfortunately, Pedro Jr.’s business failed faster than a diet during Christmas season. He couldn’t pay George back.
George, being the good businessman that he is, did what any creditor with a legal mortgage would do: he foreclosed the property.
At the auction sale, he even became the highest bidder, meaning—yes—he got the house and lot.
Maria and Juan were shocked.
“Ha??? You mortgaged our house?? Papa is already dead when you did that! The SPA is invalid!”
George countered: “The SPA is valid when signed, the mortgage was valid, the foreclosure was valid. Therefore… I own the house.”
So now the burning question:
Is the mortgage valid even if the SPA-holder executed it AFTER the death of the principal?
Or is it valid only to Pedro Jr.’s inheritance share?
THE LEGAL ANSWER
In Philippine law, the general rule regarding agency is as clear as daylight:
A Special Power of Attorney is automatically revoked upon the death of the principal.
(Civil Code, Art. 1919)
So when Pedro Sr. died, the SPA died with him—like a cellphone with 1% battery left during a blackout.
Meaning:
a. Any act performed by the agent (Pedro Jr.) AFTER the death of the principal (Pedro Sr.)
b. WITHOUT the knowledge or consent of the co-owners (Maria and Juan)
c. Is INVALID as to the estate or the shares of the other heirs.
Because upon death:
Ownership of the property passes immediately to the heirs by operation of law.
(Civil Code, Art. 777)
Thus:
a. Therefore, the mortgage IS NOT valid as to the entire property.
b. It CAN ONLY bind the undivided, hereditary share of Pedro Jr., since that is the only share he owns.
George, therefore, cannot foreclose the entire house and lot.
At most, he can foreclose Pedro Jr.’s undivided share, and subject to rights of co-heirs like redemption and partition.
So no—George is not the new owner of the full property.
A SIMILAR SUPREME COURT CASE
San Miguel Foods, Inc. v. Alova, et al.
G.R. No. 260071, May 07, 2025
This Supreme Court case echoes the same principle:
an act performed under a special authority becomes invalid when the authority has expired, been revoked, or is exercised without consent of the true owner.
FACTS OF THE SUPREME COURT CASE
In San Miguel Foods, Inc. v. Alova, the issue involved a representative who entered into transactions beyond or after the expiration of his authority.
A contract was executed relying on an authority that was no longer valid, and the supposed principal insisted:
“That agent cannot bind me anymore! His authority has ended!”
The other party insisted the act was binding.
The case essentially revolved around the validity of an act executed without proper authority, and whether the supposed principal (or true owner) is bound by it.
The Supreme Court held:
- When an agent acts WITHOUT VALID AUTHORITY, the act is NOT BINDING on the principal.
- Even if the other party acts in good faith, good faith cannot create authority where none exists.
- A party dealing with an agent must exercise reasonable diligence in verifying whether the authority still exists.
- An expired or invalid authority cannot convey rights, and any contract made thereafter is null and void as to the principal.
Applying this ruling to the Familia de los Pedros:
a. Pedro Sr.’s death extinguished the SPA.
b. Pedro Jr.’s mortgage was made WITHOUT legal authority.
c. Therefore, the mortgage is NOT valid as to the entire property.
d. It is valid ONLY as to Pedro Jr.’s hereditary share (since that share is his property).
Thus, George cannot hide behind the “good faith buyer/mortgagee” defense. He should have verified whether the SPA was still valid or whether Pedro Sr. was even alive.
THE QUICK ADVICE
This story, dear readers, contains multiple lessons in law… and in life.
For agents holding SPAs:
A Special Power of Attorney is not like an unlimited rice promo.
It does not last forever.
It does not revive after the death of the principal.
So if your parent dies, you cannot say:
“Sige, last transaction bago ko i-burial!”
No, no, no. It doesn’t work that way.
For buyers and mortgagees (Hello, George):
Before accepting an SPA, do your due diligence.
Ask important questions like:
a. “Is the principal alive?”
b. “Is the family aware?”
c. “Is this transaction too good to be true?”
d. “Is the house being mortgaged because the business idea is ‘sure na sure’ pero walang business plan?”
If you fail to check these basic things, you might end up buying or financing something that legally binds… nothing.
For heirs:
Just because your kuya handles the finances doesn’t mean he can mortgage the family home.
Especially if Tatay is already in heaven signing celestial SPAs with the angels.
For everyone dealing with real property:
Please—consult professionals.
Land is not like cellphone load you can transfer anytime.
Consequently, a mortgage or sale has legal consequences that can echo for decades.
Because one wrong signature…
One expired SPA…
One dead principal and one very alive mortgage…
Can cause more drama than a full season of a teleserye.
FINAL TAKEAWAY
A Special Power of Attorney dies with the principal.
Any transaction executed afterward is invalid—except as to the agent’s own share.
And most importantly:
“Think before you sign, verify before you mortgage, and for heaven’s sake—check if the principal is still alive.”
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