Can a power of attorney be revoked if it was given as the means of fulfilling an obligation?

Why most agencies can be revoked but this one cannot

The ordinary rule is that a principal may withdraw an agent's authority whenever he pleases. Agency rests on trust, and the law does not force anyone to keep a representative he no longer wants. The Civil Code carves out three situations where that freedom disappears, and the common thread is that the authority is no longer purely for the principal's own benefit — someone else's rights are riding on it. In those cases the power of attorney has stopped being a convenience and become part of the security or the machinery of a deal. Revoking it would let the principal defeat an obligation he has already assumed, so the law simply does not allow the revocation to take effect.

Authority given as the means of performing an obligation

This is the situation most people encounter. A borrower signs a power of attorney authorising the lender, or a person named by the lender, to sell or transfer a specific property and apply the proceeds to the debt. A seller authorises a broker to sign the deed as part of an arrangement in which the broker's fee comes out of the price. In each case the authority is the mechanism by which an existing obligation gets performed. Withdrawing it would strip the other party of the very thing he bargained for. The obligation must already exist when the authority is given; a power of attorney signed in advance of any commitment is an ordinary revocable one.

The other two situations the article covers

The provision also protects an agency on which a bilateral contract depends — where the authority is a term of a two-sided agreement, so that cancelling it would unravel the contract itself. And it protects a partner who is appointed manager in the contract of partnership: his removal from management cannot be forced through unless it is justified. In all three branches, the agency is described as coupled with an interest belonging to someone other than the principal alone. That third party's stake, not the principal's continuing confidence, is what keeps the authority alive.

What this means in practice

If you are the one who gave the authority, sending a revocation letter does not necessarily end it. An act the agent performs within a genuinely irrevocable authority can still bind you, and a third person who deals with the agent in good faith is protected. If you believe the underlying obligation has been paid or the deal has collapsed, the answer is to establish that the obligation is extinguished — the authority falls with it — rather than to assume a bare revocation works. If you are the party relying on the authority, keep the document that shows why it was given, because the protection depends on proving the link to the obligation. Where property or substantial money is involved, have the instrument reviewed by counsel before you act on it or against it.

Cases citing this provision

These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.

• International Exchange Bank now Union Bank of the Philippines vs. Sps. Jerome and Quinnie Briones and John Doe, G.R. No. 205657, March 29, 2017 — read the decision on LawPhil →
• Genevieve Lim vs. Florencio Saban, G.R. No. 163720, December 16, 2004 — read the decision on LawPhil →
• National Sugar Trading, etc. vs. Philippine National Bank, G.R. No. 151218, January 28, 2003 — read the decision on LawPhil →

Related provisions

• Civil Code, Article 1927 — Irrevocable Agency (Agency Coupled With an Interest)