Irrevocable Agency When A Treasure Hunt Creates Binding Obligations

The Supreme Court’s 2005 ruling in Republic v. Evangelista (G.R. No. 156015) clarifies a crucial point in Philippine contract law: an agency coupled with interest cannot be revoked at the principal’s sole whim. The case arose from a treasure hunt on private land, but its principles apply to any situation where an agent’s compensation depends on the subject matter of the agency.

The Dispute

Dante Legaspi owned land in Norzagaray, Bulacan. In November 1999, military officials, acting for the Republic, allowed a treasure hunter to dig, tunnel, and blast on the property. Legaspi’s nephew, Paul Gutierrez, was later appointed attorney-in-fact through a Special Power of Attorney (SPA). Gutierrez was authorized to manage treasure-hunting activities, file cases against unauthorized entrants, and hire lawyers. In exchange, Gutierrez would receive 40% of any treasure found.

When Gutierrez filed a damages suit against the military officials, Legaspi executed a Deed of Revocation to cancel the SPA. The petitioners argued Gutierrez had no standing to sue. The trial court and Court of Appeals disagreed, and the Supreme Court affirmed.

The Rule on Revocation

Under Article 1868 of the Civil Code, an agency is a contract where the agent renders service in representation of the principal. Generally, because agency rests on trust and confidence, the principal may revoke it at will. However, Article 1927 provides an exception: an agency coupled with interest is irrevocable.

An agency is coupled with interest when a bilateral contract depends on it. The agency becomes part of another obligation or agreement. Revoking it would not only affect the principal but also the agent and third persons who relied on the arrangement.

Why the Agency Was Irrevocable

The Court found that Gutierrez’s agency was coupled with interest. The SPA gave him the power to manage treasure hunting, file cases, and engage lawyers. Critically, he was entitled to 40% of any treasure recovered. He also hired Atty. Homobono Adaza, who was to receive 30% of Legaspi’s share as legal fees.

The treasure was the subject matter of the agency. Both Gutierrez and Atty. Adaza had a direct interest in it. Because the bilateral contracts depended on the agency, Legaspi could not unilaterally revoke it. The Deed of Revocation had no effect, and Gutierrez retained authority to continue the case.

The Preliminary Injunction Was Proper

The Court also upheld the issuance of a preliminary injunction. Under Section 3, Rule 58 of the 1997 Rules of Civil Procedure, a writ may issue when the applicant has a prima facie right and the acts sought to be enjoined violate that right.

Here, Legaspi had title to the land and a right to peaceful possession. The diggings occurred on his property. Whether the fenced area exceeded the titled area was a factual issue for the main trial. The injunction preserved the status quo and prevented irreparable damage. A preliminary injunction requires only prima facie evidence, not conclusive proof of violation.

Judicial Inhibition

Finally, the Court rejected claims that the trial judge was biased. Adverse or erroneous rulings, without proof of malice, do not establish partiality. To disqualify a judge, bias must stem from an extrajudicial source. The judge’s death during the case rendered this issue moot.

Practical Takeaways

• An agency coupled with interest is irrevocable when a bilateral contract depends on it. This protects agents and third parties who relied on the arrangement.
• An agent’s right to a share of the subject matter—such as a percentage of treasure, property, or proceeds—can make the agency irrevocable.
• A principal cannot defeat an agent’s authority by executing a unilateral revocation if the agency is coupled with interest.
• A preliminary injunction is available to protect prima facie rights during litigation, even if the merits remain disputed.
• Judges’ rulings against a party do not prove bias unless they stem from an extrajudicial source.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.