ARTICLE 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

GENERAL RULE 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. [Art. 1920, CC] EXCEPTIONS (Art. 1927) 1. The right of the principal to terminate the authority of his agent is absolute and unrestricted, except only that he may not do so in bad faith [Danon v Brimo, 1921] 2. Agency is coupled with an interest [Art. 1927, CC] a. A bilateral contract depends upon it b. It is the means of fulfilling an obligation already contracted; c. Partner is appointed manager of a partnership in the contract of partnership and his removal from the management is unjustifiable.

KINDS OF TERMINATION 1. Principal 2. Agent revocation withdrawal or renunciation (Art 1919,2)

REASON FOR THE RULE UNDER ART. 1920 1. Authority of the agent emanates from the principal 2. Confidence between the principal and the agent being the cardinal basis of the relation, it stands to reason that it should cease when such confidence disappears 3.The principal agent relationship is consensual and personal in nature no one can be forced to retain another as his agent against his will

When revocation makes principal liable for damages

1. If there is a period stipulated in the agency contract, the agent may still revoke the agents authority at will; but principal will be liable for damages. 2. No period fixed: principal liable if the agent can prove the former acted in bad faith.

Revocation may be express or implied 1. Expressprincipal clearly and directly makes a cancellation of the authority of the agent in writing or orally 2. Implied a. 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 Art. 1921 and Art. 1922, CC [Art. 1923, CC] b. The agency is revoked if the principal directly manages the business entrusted to the agent, dealing directly with third persons. [Art. 1924, CC] c. A general power of attorney is revoked by a special one granted to another agent, as regards the special matter involved in the latter [Art. 1926, CC] d. In all three cases, there is implied revocation only where the new appointment is incompatible with the previous one.

NOTICE OF REVOCATION
1. Agent - express notice to the agent that the agency is revoked is not always necessary

2. Third persons * former customer(s) actual notice * other persons publication is sufficient
KINDS OF RENUNCIATION (Agent)

1. Express 2. Implied
EXAMPLES OF IMPLIED RENUNCIATION - When the agent abandons the object of agency and acts himself in committing a fraud upon the principal, his capacity as agent ceases - When the agent institute an action against the principal

CASE UNDER ART 1920 BARRETTO VS SANTA MARINA G.R. No. L-8169, December 29, 1913 Facts:

Santa Marina, a resident of Spain as then the owner and proprietor of the business known as the La Insular Cigar and Cigarette Factory. Barretto held the position of an agent of Santa Marina and for the management of the said business. That on January 8, 1910, the defendant, without reason, justification, or pretext and in violation of the contract before mentioned, summarily and arbitrarily dispensed the plaintiff's services and removed him from the management of the business, since which date the defendant had refused to pay him the compensation, or any part thereof, due him and payable in full for services rendered compelling Barretto to file a complaint against Santa Marina. The latter alleged that he can revoke the agency at will in the absence of any fixed period for the termination of the said contract of agency. I addition, Barretto also sent a letter informing Santa Marina that the former is resigning as an agent of the latter. Santa Marina did not immediately reply for several months but later on, McGavin was then appointed as well as the new agent of Santa Marina.
Issue: (1) WON Santa Marina can revoke the agency at will (2) WON Barretto is entitled for to demand indemnity for losses and damage

Held:
It is clearly to be inferred that the contract of agency can subsist only so long as the principal has confidence in his agent, because, from the moment such confidence disappears and although there be a fixed period for the exercise of the office of agent, a circumstance that does not appear in the present case the principal has a perfect right to revoke the power that he had conferred upon the agent owing to the confidence he had in him and which for sound reasons had ceased to exist. From the mere fact that the principal no longer had confidence in the agent, he is entitled to withdraw it and to revoke the power he conferred upon the latter, even before the expiration of the period of the engagement or of the agreement made between them; but, in the present case, once it has been shown that, between the deceased Joaquin Santa Marina and the latter's heir, now the defendant, on the one hand, and the plaintiff Barretto, on the other, no period whatever was stipulated during which the last-named should hold the office and manager of the said factory, it is unquestionable that the defendant, even without good reasons, could lawfully revoke the power conferred upon the plaintiff and appoint in his place Mr. McGavin, and thereby contracted no liability whatever other than the obligation to pay the plaintiff the salary pertaining to one month and some odd days, as held in the judgment below.

ARTICLE 1921
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. ARTICLE 1922

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.

EFFECTS OF REVOCATION IN RELATION TO THIRD PERSONS

1. Agent authorized to contract with specified persons notice must be personal 2, Agent authorized to contract with public in general revocation published in newspaper of general circulation is sufficient and it may also be personal

CASE UNDER ART. 1921

LUSTAN VS CA G.R. No. 111924 January 27, 1997 Facts: Lustan was the registered owner of land located in Iloilo. Lustan then leased the property to spouses Parangan for a term of ten (10) years and an annual rent of One Thousand (P1,000.00) Pesos. During the period of lease, Parangan was regularly extending loans in small amounts to petitioner to defray her daily expenses and to finance her daughter's education. On July 29, 1970, petitioner executed a Special Power of Attorney in favor of Parangan to secure an agricultural loan from private respondent Philippine National Bank (PNB) with the aforesaid lot as collateral. On February 18, 1972, a second Special Power of Attorney was executed by petitioner, by virtue of which, Parangan was able to secure four (4) additional loans.The last three loans were without the knowledge of herein petitioner and all the proceeds therefrom were used by Parangan for his own benefit. Upon discovery of the said loan, Lustan argues that the last three mortgages were void for lack of authority. Issue: (1) WON the loans made by Parangan without knowledge of Lustan is binding with PNB. (2) WON Lustan is liable for the actions of Parangan under the SPO.

Held: She totally failed to consider that said Special Powers of Attorney are a continuing one and absent a valid revocation duly furnished to the mortgagee, the same continues to have force and effect as against third persons who had no knowledge of such lack of authority. Article 1921 of the Civil Code provides: Art. 1921. 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. The Special Power of Attorney executed by petitioner in favor of Parangan duly authorized the latter to represent and act on behalf of the former. Having done so, petitioner clothed Parangan with authority to deal with PNB on her behalf and in the absence of any proof that the bank had knowledge that the last three loans were without the express authority of petitioner, it cannot be prejudiced thereby. As far as third persons are concerned, an act is deemed to have been performed within the scope of the agent's authority if such is within the terms of the power of attorney as written even if the agent has in fact exceeded the limits of his authority according to the understanding between the principal and the agent. 22 The Special Power of Attorney particularly provides that the same is good not only for the principal loan but also for subsequent commercial, industrial, agricultural loan or credit accommodation that the attorney-in-fact may obtain and until the power of attorney is revoked in a public instrument and a copy of which is furnished to PNB. 23 Even when the agent has exceeded his authority, the principal is solidarily liable with the agent if the former allowed the latter to act as though he had full powers (Article 1911, Civil Code).

CASE UNDER ART. 1922

RAMMANI VS CA G.R. No. 85494 May 7, 1991 Facts: Ishwar, Choithram and Navalrai were brothers. Since Ishwar and his wife were based in New York, Ishwar appointed Choithram as attorney-in-fact in purchasing parcels of land owned by Ortigas & Company, Ltd. Partnership. Ishwar executed a general power of attorney on January 24, 1966 appointing Navalrai and Choithram as attorneys-in-fact, empowering them to manage and conduct their business concern in the Philippines. Acting in his capacity, Choitram transacted the purchase of the land with Ortigas through installments. He paid the downpayment and installments through his personal checks. Later on, when Ishwar asked Choithram to account for the income and expenses relative to these properties during the period 1967 to 1970. Choithram failed and refused to render such accounting. As a consequence, on February 4, 1971, Ishwar revoked the general power of attorney. Choithram and Ortigas were duly notified of such revocation on April 1, 1971 and May 24, 1971, respectively. Said notice was also registered with the Securities and Exchange Commission on March 29, 1971 and was published in the April 2, 1971 issue of The Manila Times for the information of the general public. Issue:

WON the notice was valid.

Held:

The problem is compounded in that respondent Ortigas is caught in the web of this bitter fight. It had all the time been dealing with Choithram as attorney-in-fact of Ishwar. However, evidence had been adduced that notice in writing had been served not only on Choithram, but also on Ortigas, of the revocation of Choithram's power of attorney by Ishwar's lawyer, on May 24, 1971. A publication of said notice was made in the April 2, 1971 issue of The Manila Times for the information of the general public. Such notice of revocation in a newspaper of general circulation is sufficient warning to third persons including Ortigas. A notice of revocation was also registered with the Securities and Exchange Commission on March 29, 1 971. Indeed in the letter of Choithram to Ishwar of June 25, 1971, Choithram was pleading that Ishwar execute another power of attorney to be shown to Ortigas who apparently learned of the revocation of Choithram's power of attorney. Despite said notices, Ortigas nevertheless acceded to the representation of Choithram, as alleged attorney-in-fact of Ishwar, to assign the rights of petitioner Ishwar to Nirmla. While the primary blame should be laid at the doorstep of Choithram, Ortigas is not entirely without fault. It should have required Choithram to secure another power of attorney from Ishwar. For recklessly believing the pretension of Choithram that his power of attorney was still good, it must, therefore, share in the latter's liability to Ishwar.

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.

THINGS TO REMEMBER UNDER ARTICLE 1923 There is only an implied revocation of the previous agency when the principal appoints a new agent for the SAME BUSINESS OR TRANSACTION provided that there is incompatibility. Effectivity upon notice; until communicated to the previous agent No implied revocation if the appointment of another agent is not imcompatible with the continuation of a like authority in the first agent or the first agent was was not given notice to the appointment of the new agent

Case: Art.1923
Garcia vs De Manzano GR No. L-13414, February 4, 1919 Facts:

Narciso Manzano, a merchant executed a general power-of-attorney to his son, Angel L. Manzano on the 9th of February, 1910, and on the 25th of March a second general power-of-attorney to his wife, Josefa Samson. Manzano was the owner of a half interest in a small steamer, the San Nicolas, the other half being owned by Ocejo, Perez & Co., with whom there was a partnership agreement to run the steamer for a few years. When the period expired, Ocejo, Perez & Co., refused to continue the contact and demanded that Manzano buy or sell. The latter refused and Garcia then purchased the half interest of Ocejo, Perez & Co. Angel Manzano then sold the half interest of his father to Garcia, When Narciso died, his wife, Josefa bacame the administratrix of the estate of her husband. Upon discovery of the sale of the said boat, she sent a letter to Garcia demanding the profit of the vessel. The first complaint filed by Garcia was in relation to the mortgage land in Quezon that was transacted by Angel Manzano. When Josefa filed an answer, she argued that the power-of-attorney to the wife revoked the one to the son, in accordance with article 1735 of the Civil code (Article 1923, NCC), and that even if not revoked the power-of-attorney did not authorize the sale of the boat by Angel L. Manzano

Issue: WON the execution of the 2nd general power-of-attorney Josefa revoked the previous appointment executed in favor of Angel.

Held: Article 1735 of the Civil code is as follows: The appointment of a new agent for the same business produces a revocation of the previous agency from the day on which notice was given to the former agent, excepting the provisions of the next preceding article. There is no proof in the record that the first agent, the son, knew of the power-of-attorney to his mother. It was necessary under the law for the defendants, in order to establish their counterclaim, to prove that the son had notice of the second power-of-attorney. They have not done so, and it must be considered that Angel L. Manzano was acting under a valid power-of-attorney from his father which had not been legally revoked on the date of the sale of the half interest in the steamer to the plaintiff's son, which half interest was legally inherited by the plaintiffs. The defendant's next argument is that the power-of-attorney, if valid, does not authorize the sale of the half interest in the boat to the plaintiff. The power-of-attorney authorizes the sale of real property, the buying of real property and mortgaging the same the borrowing of money and in fact is general and complete. The power does not expressly state that the agent may sell the boat, but a power so full and complete authoring the sale of real property, must necessarily carry with it the right to sell a half interest in a small boat. The record further shows the sale was necessary in order to get money or a credit without which it would be impossible to continue the business which was being conducted in the name of Narciso L. Manzano and for his benefit. We consider that the authorization is so complete that it carries with it full authority to sell the one-half interest in the boat which was then owned by Narciso L. Manzano.