AGENCY

(Article 1920-1924)

Maria Charise C Leyson

Reporter

Art. 1920. The principal may revoke the agency at will, and compel the agent to return
the document evidencing the agency. Such revocation may be express or implied.

GR : Agency generally revocable at the will by principal

Exception : Under Article 1927
1. When the agency is created not only for the interest of the principal
but also for the interest of third persons;
2. When the agency is created for the mutual interest of both the principal
and the agent.
Reason:
*The principal-agent relationship is consensual and personal in nature and no one
can be forced to retain another as his agent against his will.

Revocation of document evidencing agency

If the authority of the agent is in writing, the principal can compel the agent to return
the document evidencing the agency.
The purpose is to prevent the agent from making use of the power of attorney and
thus avoid liability to third persons who may subsequently deal with the agent on the faith of
the instrument.

Renunciation of agency by agent

The agent has the power to renounce the agency relationship, subject only to the
contractual obligations owing to the principal.

Article1921. If the agency has been entrusted for the purpose of contracting with
specified persons, its revocation shall not prejudice the latter if they were not given
notice thereof.

Article1922. If the agent had general powers, revocation of the agency does not
prejudice third persons who acted in good faith and without knowledge of the
revocation. Notice of the revocation in a newspaper of general circulation is a
sufficient warning to third persons.

Effect of revocation in relation to third persons

1. Agent authorized to contract with specified persons. If the agency is created for the
purpose of contracting with specific persons, its revocation will not prejudice such third
persons until notice thereof is given them.

Reason: Since the third persons have been made to believe by the principal that
the agent is authorized to deal with them, they have the right to presume that the
representation continues to exist in the absence of notification by the principal.

1
 2. Agent authorized to contract with public in general. The fact that the revocation
was advertised in a newspaper of general circulation would be sufficient warning to third
persons, for the publication constitutes notice upon everybody and this is true whether or not
such third persons have read the newspaper concerned.

Article 1923. The appointment of a new agent for the same business or transaction
revokes the previous agency from the day on which notice thereof was given to the
former agent, without prejudice to the provisions of the two preceding articles.

Revocation by appointment of new agent

There is implied revocation of the previous agency when the principal appoints a new
agent for the same business or transaction provided there is incompatibility.

Example:
P authorized A to sell the formers land. Subsequently, P also gave authority to B to
sell the same land. There is no implied revocation of the previous agency. The intention of P
may be to authorize both A and B for the same transaction. If B was given an exclusive
authority to sell, there is an implied revocation of the previous agency.

In either case, the knowledge by A (or B) of the sale or contract for sale of the land
by B (or A), terminates the authority of A (or B).

Article 1924. The agency is revoked if the principal directly manages the business
entrusted to the agent, dealing directly with third persons.

The above article provides for another case of implied revocation.

1. Unless the only desire of the principal is for him and the agent to manage the business
together, the effect of the direct management of the business by the principal himself is to
revoke the agency for there would no longer be any basis for the representation previously
conferred.

2. If the purpose of the principal in dealing directly with the purchaser and himself effecting
the sale of the principals property is to avoid payment of his agents commission, the implied
revocation is deemed made in bad faith and cannot be sanctioned without according to the
agent the commission which is due to him.

Example:
1. P authorized A to manage the formers printing press. Every now and then, P
takes direct part in the management of the business. There is no implied revocation where
the only purpose of P is to help A in the management of the business.

2. P authorized A to collect whatever amounts may be due to P from T.

Subsequently, P demanded payment from T, telling the latter to remit to him (P) the amount
the collection of which he entrusted to A. The agency to A is revoked.