After Revoking a Special Power of Attorney: Demanding Accounting and Recovering Documents in the Philippines

Introduction

In the Philippine legal system, a Special Power of Attorney (SPA) is a written authorization granted by a principal to an agent (also known as an attorney-in-fact) to perform specific acts on the principal's behalf, such as selling property, managing bank accounts, or handling legal proceedings. Governed primarily by the Civil Code of the Philippines (Republic Act No. 386), particularly Articles 1868 to 1932 on agency, an SPA is revocable at the principal's discretion unless it is coupled with an interest or made irrevocable by agreement.

Revocation of an SPA marks the end of the agent's authority, but it does not automatically resolve all matters between the principal and agent. Post-revocation obligations, including the rendition of accounts and the return of documents or property, are critical to protect the principal's interests. Failure by the agent to comply can lead to legal disputes, necessitating formal demands and potential court intervention. This article explores the comprehensive legal framework, procedures, and remedies available under Philippine law for demanding accounting and recovering documents after revoking an SPA.

Understanding Special Power of Attorney and Its Revocation

Nature of Special Power of Attorney

An SPA differs from a General Power of Attorney (GPA) in that it limits the agent's authority to enumerated acts, as opposed to broad management of the principal's affairs. It must be in writing and, for acts involving real property or those requiring public instruments (e.g., sale of land), notarized to be valid against third parties. Under Article 1878 of the Civil Code, specific acts like selling immovable property or accepting donations require an SPA.

Grounds and Methods of Revocation

The principal may revoke an SPA at any time, as agency is based on trust and confidence (Article 1920, Civil Code). Revocation can occur due to loss of trust, completion of the purpose, or other reasons, without needing the agent's consent. Exceptions include:

Irrevocable SPAs coupled with an interest (e.g., the agent has a stake in the property).
SPAs forming part of a bilateral contract where revocation would breach the agreement.

Revocation can be express (via a written notice or deed of revocation) or implied (e.g., through the principal's actions inconsistent with the agency). For validity:

The agent must be notified directly (Article 1921).
If the SPA was registered (e.g., with the Registry of Deeds for real property), the revocation should also be registered to bind third parties.
Notice to third parties who dealt with the agent is advisable to prevent apparent authority issues (Article 1922).

Without proper notification, the agent may continue acting in good faith, and the principal remains liable for such acts until notice is given.

Effects of Revocation

Upon revocation, the agent's authority ceases immediately (Article 1893). The agent must:

Stop performing acts under the SPA.
Complete ongoing transactions if delay would prejudice the principal (Article 1892).
Fulfill post-agency duties, such as accounting and returning assets.

Revocation does not retroactively invalidate acts done in good faith before notice, but it triggers the agent's accountability.

Obligations of the Agent After Revocation

Under Philippine law, the relationship of agency imposes fiduciary duties on the agent, which extend beyond revocation. Article 1884 requires the agent to act with diligence and loyalty, while Article 1891 mandates the rendition of accounts and delivery of received items.

Duty to Render Accounting

The agent is bound to provide a detailed report of all transactions conducted under the SPA. This includes:

Receipts and disbursements.
Profits or losses incurred.
Any benefits derived personally from the agency.

Accounting must cover the entire period of the agency, not just post-revocation activities. If the agent managed funds or property, they must account for interest or fruits (Article 1896). Failure to account can imply negligence or bad faith, potentially leading to liability for damages.

Duty to Return Documents and Property

The agent must deliver to the principal:

All documents received or created under the agency (e.g., contracts, titles, receipts).
Any property, money, or assets acquired or held on the principal's behalf.
Fruits or proceeds from the property (Article 1895).

Retention of documents or property without justification constitutes a breach of trust. If the agent claims a lien (e.g., for unpaid commissions under Article 1914), they must prove it, but this does not excuse accounting.

These obligations arise automatically upon revocation and are enforceable even if not explicitly stated in the SPA.

Demanding Accounting from the Agent

Initial Steps: Informal Demand

The principal should first send a written demand letter to the agent, outlining:

Confirmation of revocation.
Request for a full accounting within a reasonable period (e.g., 15-30 days).
Specification of required details, such as financial statements or transaction logs.

This letter serves as evidence of good faith and may prompt voluntary compliance. It can be sent via registered mail or personal delivery for proof of receipt.

Formal Demand and Legal Basis

If ignored, escalate to a formal demand, possibly through a lawyer. The legal foundation includes:

Article 1891: Explicit duty to account.
Rules on agency emphasizing fiduciary responsibility.

In cases involving significant assets, the principal may request audited accounts if the agent handled complex transactions.

Challenges in Demanding Accounting

Common issues include:

Agent's denial of transactions.
Incomplete or falsified records.
Agent's insolvency, complicating recovery.

The principal bears the burden of proving the agency's scope, but once established, the agent must disprove any discrepancies.

Recovering Documents and Property

Procedure for Recovery

Similar to accounting, start with a demand letter specifying:

List of documents/property to be returned.
Deadline for compliance.
Warning of legal action.

If the agent refuses, the principal can pursue:

Replevin: A civil action under Rule 60 of the Rules of Court to recover personal property (including documents) unlawfully withheld. The principal must show ownership and right to possession.
Delivery of Personal Property: If part of a broader suit, under ordinary civil procedure.

For immovable property, actions like ejectment or quieting of title may apply if the agent occupies it.

Handling Third-Party Involvement

If documents are with third parties (e.g., banks or registries), the principal can present the revocation notice to retrieve them. Subpoena duces tecum may be used in court to compel production.

Special Considerations

Lost or Destroyed Documents: The agent is liable for negligence (Article 1887) and must provide substitutes or compensate.
Digital Documents: In the era of electronic transactions, recovery includes emails, digital signatures, or online records, governed by the Electronic Commerce Act (Republic Act No. 8792).
Confidentiality: The agent must not disclose sensitive information post-revocation, breaching which could lead to damages.

Legal Remedies for Non-Compliance

If the agent fails to comply, the principal has several options:

Civil Actions

Action for Accounting: Filed in the Regional Trial Court (RTC) if the amount exceeds P400,000 (or P2,000,000 in Metro Manila under Republic Act No. 7691); otherwise, Municipal Trial Court (MTC). This compels rendition of accounts and may include damages.
Damages for Breach: Under Article 1884, for losses due to the agent's fault.
Specific Performance: To enforce return of documents/property.
Injunction: To prevent the agent from disposing of assets.

Criminal Liabilities

Estafa (Article 315, Revised Penal Code): If the agent misappropriates funds or property with intent to defraud.
Falsification of Documents (Article 171-172, RPC): If accounts are altered.
Qualified Theft: In extreme cases of withholding.

Prosecution requires probable cause, and civil remedies can proceed independently.

Alternative Dispute Resolution

Mediation or arbitration may be pursued if the SPA includes such clauses, under the Alternative Dispute Resolution Act (Republic Act No. 9285). Barangay conciliation is mandatory for disputes between residents of the same locality (Katarungang Pambarangay Law).

Prescription Periods

Actions prescribe after:

10 years for written contracts (Article 1144, Civil Code).
4 years for oral obligations or injuries (Article 1146).

Timely action is crucial.

Practical Steps for Principals

Document Everything: Keep copies of the SPA, revocation notice, and correspondence.
Seek Legal Advice: Consult a lawyer to draft demands and assess remedies.
Secure Assets: If possible, notify third parties immediately to freeze transactions.
Gather Evidence: Collect proofs of the agent's transactions.
File Promptly: Avoid delays to prevent prescription or asset dissipation.
Consider Notarization: Notarize the revocation for evidentiary weight.

In complex cases, engage forensic accountants for auditing.

Conclusion

Revoking a Special Power of Attorney in the Philippines is straightforward, but ensuring the agent's compliance with post-revocation duties requires diligence. Demanding accounting and recovering documents safeguard the principal's rights and prevent abuse. By understanding the Civil Code provisions and available remedies, principals can effectively navigate these processes. While voluntary compliance is ideal, judicial intervention ensures accountability, upholding the fiduciary nature of agency relationships. Principals are encouraged to act promptly and professionally to resolve matters efficiently.