REVOCATION

Art. 1915. If two or more persons have appointed an agent for a common transaction or
undertaking, they shall be solidarily liable to the agent for all the consequences of the agency.

Solidary Liability of Principals - Solidarity is the rule under this Article because of the common
transaction. Thus, even if the agent have been appointed separately, the rule should apply in the interest
of justice.

Examples:

(a) W, X and Y employ agent A to sell land owned in common by the three, with A receiving a commission
of P1,500,000. If A is successful, A can collect from any of the three the amount of P1,500,000 because
of their solidary liability. Of course, if X pays the P1,500,000, he can recover reimbursement of P500,000
each from Y and W.

(b) C, D and E appoint F as their agent to sell their sepa- rate houses. The liability of C, D and E are
merely joint and not solidary even if the appointment is made in one instrument. This is because this is
NOT a common transaction or undertaking.

Art. 1922. If the agent had general powers, revocation of the agency does not prejudice third
person 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.

Agency When Third Parties Are Not Specified

(a) In this Article, as distinguished from the preceding one, the third persons have not been
SPECIFIED.

(b) Note the effect of a revocation in a newspaper of general circulation.

Art. 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.

Effect of Appointment of a New Agent

(a) Appointment of a new agent revokes the first agency only in case of incompatibility.

(b) A special power revokes a general one. (Art. 1926).

(c) If the first agent is not notified of the appointment of the second agent, it is understood that the
first agency still exists

Art. 1925. When two or more principals have granted a power of attorney for a common
transaction, any one of them may revoke the same without the consent of the others.

Revocation by One of Two or More Principals

The power to revoke here is a consequence of the solidary liability of co-principals.

Rule When Special Power Is Granted to Another Agent

(a) In this Article, two agents are involved.

(b) A specific right naturally prevails over a general one.

Art. 1927. 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.

When an Agency Cannot Be Revoked

This enumerates three instances of irrevocability:

(a) If a bilateral contract depends upon the agency.

Example 1: P wanted to make A his surety so P made A his agent as a sort of inducement to safeguard
him from eventual loss. Under American Law, this is referred to as an agency or authority necessary to
effectuate a security; it is also an agency or authority coupled with an interest.

Example 2: A power to sell, where the property is delivered to the agent to dispose of it for the protection
of himself and other creditors is an authority coupled with an interest, and therefore irrevocable, provided
the interest is indicated in the power of attorney. (Del Rosario v. Abad, 104 Phil. 648). Example 3: If the
agency is only a clause or a part of a reciprocal contract.

Reasons:

The contract itself and, therefore, also the clause on the agency, cannot generally be revoked
except thru mutual consent.

(b) If the agency is the means of fulfilling an obligation already contracted.

Example: Sonia is indebted to Concepcion for the purchase of a diamond headband. But Sonia in the
mean- time has no money. So she appoints Concepcion as her agent to collect from Maria some money
which Maria owes her (Sonia), which money in turn will be applied to the purchase price of the headband.
It is clear that Sonia cannot revoke the agency here, unless she first pays Concepcion.

Effect When “Interest” Terminates - An agency coupled with an interest cannot be terminated
unilaterally by the principal, but revocation can be made AFTER the interest terminates. So if the
Government allows the De la Rama Steamship Co. to manage the former’s vessel for 2 years in order to
pay the company for its help in acquiring the vessels, at the end of said two years, the Government may
end the agency.
WITHDRAWAL BY AGENT

Art. 1928. The agent may withdraw from the agency by giving due notice to the principal. If the
latter should suffer any damage by reason of the withdrawal, the agent must indemnify him
therefor, unless the agent should base his withdrawal upon the impossibility of continuing the
performance of the agency without grave detriment to himself.

Withdrawal by Agent

(a) Just as a principal may revoke generally under Art. 1920, so also may an agent withdraw
under Art. 1928.

(b) Reasons of health can justify withdrawal by the agent.

Effect When Agent Sues Principal - When an agent files a complaint against the principal for a
monetary claim in the former’s favor, dignity and decorum will not ordinarily permit the continuation of the
agency. Such a complaint is therefore equivalent to withdrawal of the agent from the agency.

Art. 1929. The agent, even if he should withdraw from the agency for a valid reason, must continue
to act until the principal has had reasonable opportunity to take the necessary steps to meet the
situation.

When a Withdrawn Agent Must Still Act - Reason for the Article — to prevent damage to the principal.

DEATH OF PRINCPAL OR AGENT

Art. 1930. The agency shall remain in full force and effect even after the death of the principal, if it
has been constituted in the common interest of the latter and of the agent, or in the interest of a
third person who has accepted the stipulation in his favor.

When Agency Continues Even After Death of Principal - This Article speaks of an agency:

(a) coupled with a common interest;

Example of COMMON interest: Zenaida borrows from Jose, and as security entrusts to Jose a ring, which
Jose can sell in case Zenaida fails to pay the debt at the time of maturity. Even if Zenaida dies, the
agency of Jose would still remain.

(b) coupled with the interest of a third person who has accepted the stipulation in his favor.

Example of Interest of a THIRD PERSON: Melady sells his land to Bravo and appoints Bravo his agent in
paying with the purchase price what Melady owes Arellano, a third person. Here even when Melady dies,
the agency of Bravo continues to exist.

Agency Coupled With an Interest - It is a well-settled general rule that if the authority of an agent is
coupled with an interest, it is not revocable by the death, act, or condition of the principal, unless there is
some agreement to the contrary between the parties. This is a well-recognized exception to the rule that
the death of the principal revokes the authority of an agent appointed by him. However, it must be noted
that an agent whose agency is coupled with an interest cannot stand on a better ground than a partner
appointed as manager in the articles of partnership insofar as revocability of authority or power is
concerned. Inasmuch as a partner appointed as manager in the articles of partnership can be divested of
his power if there is a just or lawful cause, it follows that an agent whose agency is coupled with an
interest can also be stripped of his power of attorney, if there is a JUST CAUSE.
Nature of the Agent’s Interest - In order that a power may be irrevocable because it is coupled with an
interest, it is necessary that the interest shall be in the subject matter of the power and not in the
proceeds which will arise from the exercise of the power. The person clothed with the power must derive
under the instrument creating it, or from the nature of the relation, a present or future interest in the thing
or subject itself on which the power is to be exercised, and not merely that which is produced by the
exercise of the power.

(a) A power has been held NOT to be coupled with an interest where the interest arises out of
commission or out of the proceeds of a trans action as where the agent’s interest is merely his right to
receive, by way of compensation, a certain percentage of the proceeds.

(b) But a power to make a collection or sale out of the proceeds to pay an existing debt due to the
agent from the principal is a power coupled with an interest, as is also an interest, as is also an authority
to the agent to reimburse himself from such proceeds for advances made to the principal. It has also
been held that authority to loan money and to collect the same and account for all over a given percent,
which the agent is to retain as his compensation is authority coupled with an interest.

The Entire Agreement to Be Construed - Whether an interest which will make the agency or power
irrevocable exists in a particular case is to be determined from the entire agreement between the parties,
and from the facts and circumstances attending the relation existing between the parties. The terminology
used by the parties is not controlling; even though an agency or power is made in terms irrevocable, that
fact will not prevent its revocation by the principal where the agency or power is not in fact, coupled with
an interest. Nor will the fact of a stipulation in the instrument that the intention of the grantor of the power
is that it shall be construed as a power of attorney coupled with an interest in the subject matter thereof
prevent its revocation.

Art. 1931. Anything done by the agent, without knowledge of the death of the principal or of any
other cause which extinguishes the agency, is valid and shall be fully effective with respect to
third persons who may have contracted with him in good faith.

Effect of Agent’s Act Without Knowledge of the Termination of the Agency - Note that the law here
requires the third persons to be in good faith. If in bad faith, they cannot be protected.

Rule in Case Business Was Already Begun - Under the second paragraph of Art. 1884, the agent
“must also finish the business already begun on the death of the principal should delay entail any
danger.”

Art. 1932. If the agent dies, his heirs must notify the principal thereof, and in the meantime adopt
such measures as the circumstances may demand in the interest of the latter.

Death of the Agent - If the heirs of the dead agent are unable to give notice, one good measure for them
to do is to consign the object or property of the agency in court. In this way, they can still protect the
interests of the principal, who trusted their predecessor in interest.

The heir’s duty arises from what may be termed as a presumed agency or tacit agency or an agency by
operation of law.

Effect of Agent’s Death in Case of Agency Coupled with an Interest - In an agency coupled with an
interest, does the death of the agent terminate the agency?

ANS.: Generally, the agent’s death ends the agency for it should not be continued by one upon whom the
principal has reposed no confidence, but under American Law, when the agency is coupled with an
interest, it has been held that the agent’s death does not terminate the agency; such a power may be
subsequently exercised by his personal representative, at least insofar as may be essential to protect the
interests of the estate of the agent.
TRUST

CONCEPT OF TRUST

‘Trust’ Defined

(a) It is the right to the beneficial enjoyment of property, the legal title to which is vested in another.

(b) It is a fiduciary relationship concerning property which obliges the person holding it to deal with the
property for the benefit of another. The person holding, in view of his equitable title, is allowed to exercise
certain powers belonging to the owner of the legal title.

Characteristics of a ‘Trust’

(a) It is a fiduciary relationship.

(b) Created by law or by agreement. (Art. 1441, Civil Code).

(c) Where the legal title is held by one, and the equitable title or beneficial title is held by another.

‘Trust’ Distinguished from ‘Guardianship’ or ‘Executorship’ - In a trust, the trustee or holder has LEGAL TITLE to
the property; a guardian, administrator, or executor does not have.

‘Trust’ Distinguished from a ‘Stipulation Pour Autrui’

(a) A trust may exist because of a legal provision or because of an agreement; a stipulation pour autrui can arise
only in the case of contracts.

(b) A trust refers to specific property; a stipulation pour autrui refers to specific property or to other things.

Co-Ownership as a ‘Trust’ - A co-ownership is a form of trust, with each co-owner being a trustee for each of the
others.

Art. 1440. A person who establishes a trust is called the trustor; one in whom confidence is reposed as
regards property for the benefit of another person is known as the trustee; and the person for whose benefit
the trust has been created is referred to as the beneficiary.

Parties to a ‘Trust’

(a) trustor or settler — he establishes the trust

(b) trustee — holds the property in trust for the benefit of another

(c) beneficiary or cestui que trust — the person for whose ben- efit the trust has been created

(NOTE: The trustor may at the same time be also the beneficiary.)

Elements of a ‘Trust’

(a) Parties to the trust

(b) The trust property or the trust estate or the subject matter of the trust
Art. 1441. TRusts are either express or implied. Express trusts are created by the intention of the trustor or of
the parties. Implied trusts come into being by operation of law.

Classification of Trusts

(a) Express trust — created by the parties, or by the intention of the trustor. (Art. 1441).

(b) Implied trust — created by operation of law (“trust by operation of law”). [NOTE: There are two kinds of implied
trusts:

1) Resulting trust — (also called bare or passive trust) — Here, there is an intent to create a trust but it is not effective
as an express trust.

[Example: Art. 1451, where a person who inherits property registers the same in another’s name, whom he
does not intend to have any beneficial interest therein for he wants this for himself.

2) Constructive trust — Here, no intention to create a trust is present, but a trust is nevertheless created by law to
prevent unjust enrichment or oppression.

[Example: If a person acquires property by mistake, he is considered by the law as a trustee while he holds the
same. (Art. 1456, Civil Code).

Art. 1442. The principles of the general law of trusts, insofar as they are not in conflict with this Code, the
Code of Commerce, the Rules of Court and special laws are hereby adopted.

Suppletory Effect of the General Law of Trusts - The principles of the general law of trusts are merely suppletory.
(Art. 1442).

Comment of the Code Commission - This Article incorporates a large part of the American law on trusts, and thereby
the Philippine legal system will be am- plified and will be rendered more suited to a just and equitable solution of many
questions.

Anglo-American Precedents - As the law of trust has been much more frequently applied in the U.S. and in England
than it has in Spain, such may be drawn freely upon Anglo-American precedents. This is particu- larly so, because Anglo-
American trusts are derived from Roman and Civil Law nations.