A lawyer was given an authority by means of a Special Power of Attorney by his client to sell a parcel of land for the amount of P3 Million. Since the client owed the lawyer P1 Million in attorney’s fees in a prior case he handled, the client agreed that if the property is sold, the lawyer was entitled to get 5% agent’s fee plus P1 Million as payment for his unpaid attorney’s fees. The client, however, subsequently found a buyer of his own who was willing to buy the property for a higher amount. Can the client unilaterally rescind the authority he gave in favor of his lawyer? Why or why not? (4%)
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No, the client cannot unilaterally rescind the authority given to his lawyer. Under Article 1927 of the Civil Code, an agency cannot be revoked if it is the means of fulfilling an obligation already contracted. While an agency is
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Quick check
Under Article 1927 of the Civil Code, when is an agency contract rendered irrevocable by the principal?
Under Article 1927, an agency cannot be revoked if it is the means of fulfilling an obligation already contracted.
What is the legal classification of a power of attorney created to secure or satisfy a pre-existing debt owed to the agent?
A power of attorney created to satisfy a pre-existing debt is an agency coupled with an interest.
Why is an agency coupled with an interest exempt from the general rule of revocation at will under Article 1920?
An agency coupled with an interest is irrevocable because it is constituted for the mutual benefit of both parties.
Can a client unilaterally revoke a Special Power of Attorney granted to a lawyer to sell land when the proceeds pay unpaid attorney's fees?
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Under Article 1927 of the Civil Code, what happens to a unilateral revocation attempted by a principal against an agency coupled with an interest?
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Learn more about these topics
1. Agency Coupled Interest
Under Article 1927 of the Civil Code, an agency cannot be revoked if a bilateral contract depends upon it, or if it is the means of fulfilling an obligation already contracted, or if a partner is appointed manager of a partnership in the contract of partnership and his removal from the management is unjustifiable. An agency coupled with an interest is irrevocable by the principal because it is created not merely for the principal's benefit, but for the mutual benefit of both the principal and the agent, or for the protection of the agent's pre-existing contractual rights.
2. Pre-existing Obligation Satisfaction
When a principal executes a special power of attorney authorizing an agent to sell real property with an explicit agreement that the proceeds shall satisfy a pre-existing debt owed to the agent, the agency becomes coupled with an interest. Because the authority serves as the contractual vehicle to discharge the principal's prior financial liability, the principal loses the statutory privilege to revoke the power of attorney at will under Article 1924 or Article 1920. Any unilateral attempt by the principal to revoke such authority is void and without legal force.
3. Revocation Rule Exceptions
While the general rule under Article 1920 of the Civil Code allows the principal to revoke the agency at will, Article 1927 establishes express statutory exceptions to this rule. Where the power of attorney is constituted as a security or as the designated means to fulfill an antecedent debt, the agency creates a vested property interest or right in favor of the agent. Consequently, the principal cannot defeat the agent's security interest by finding another buyer or unilaterally revoking the special power of attorney prior to the complete execution of the agency.