Short answer. You may be. Where the agency was given for the purpose of contracting with particular people, revoking it does not prejudice those people unless they were notified. Telling the agent ends his authority between the two of you; only telling the third party protects you against them.
What the law says
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.
Civil Code, Article 1921 — Revocation and Specified Third Persons. Read the full provision →
Two circles of notice, and most people close only one
Revocation works on two levels. Between you and your agent, notice to him ends his authority, and anything he does afterwards he does at his own risk as against you. But the buyer, bank, supplier or tenant on the other side of the table knows nothing of your letter. Having been introduced to an agent you appointed for the purpose of dealing with them, they went on doing exactly what you set up. This article says the revocation does not prejudice them. In practice that means the transaction can still bind you, and you are left to recover from the agent.
It applies to specified persons
The protection is for people the agency was aimed at — named or identifiable persons your agent was authorised to contract with, not the world at large. A general authority made known to the public is governed by a companion rule of its own. So the first question in any dispute is factual: was this person one of those the agency was entrusted to deal with, and were they in fact never told? A stranger who dealt with your former agent on the strength of nothing more than his say-so stands somewhere quite different, and this article does not rescue him.
This is a loss shared between two people who did nothing wrong
It is worth naming what the rule does, because it feels unfair from wherever you are standing. You revoked the authority; you did not want this transaction. The other side accepted an agent you yourself put in front of them and had no way of learning that anything had changed. Both of you are honest and one of you must carry the loss. The Code puts it on the person who was in a position to prevent it — the principal, who knew of the revocation and could have sent one letter. It is not a judgment about your conduct. It is a rule about who could most cheaply have stopped the problem.
What to do now, and what to do next time
Notify every counterparty in writing immediately, and keep proof of receipt; the exposure is still running while you decide. Ask the agent to return the original power of attorney and any documents, keys or property of yours, and to account for everything he did and collected. Where the transaction has already closed, examine what he took under it — a principal who is bound to an outsider still has a claim against the agent who acted after being told to stop. Next time, treat the notice to third parties as part of the revocation itself rather than as a courtesy to be done later.
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.
- Adoracion Lustan vs. Court of Appeals, et Al, G.R. No. 111924, January 27, 1997 — read the decision on LawPhil →