MODES OF EXTINGUISHMENT OF AGENCY (1919-1932)

* Presumption of continuance of agency when once shown to have existed, in the absence of anything to show its
termination; and the burden of proving a revocation or other termination of an agency is on the party asserting it.
* Presence, capacity, and solvency of BOTH parties essential for continuance of agency.
MODES OF EXTINGUISHING AN AGENCY.
E - Expiration of the period
(1) by agreement (Nos. 5, 6.)
D - Death
(5) By the Accomplishment of the object or purpose of the agency;
W - Withdrawal of the agent
(6) By the Expiration of the period for which the agency was constituted. A - Accomplishment of object
(2) by the subsequent acts of the parties which may be either:
R - Revocation
D - Dissolution
(a) by the act of both parties or by mutual consent
O - Others
(b) by the unilateral act of one of them (Nos. 1, 2.)
(1) By its Revocation;
(2) By the Withdrawal of the agent;
(3) by operation of law. (Nos. 3, 4.)
(3) By the Death, civil interdiction, insanity or insolvency of the principal or of the agent;
(4) By the Dissolution of the firm or corporation which entrusted or accepted the agency
Modes provided not exclusive.
(1) Generally : by the modes of extinguishment of obligations in general when applicable, like
a) loss or destruction of subject matter (PARTY AT FAULT, LIABLE)
GR: In the absence of any agreement by the parties to the contrary, loss/destruction of SM of the agency or
termination of Ps interest therein terminates As authority to deal with reference to it.
Exceptions: (the agency may continue)
(a) If it is possible to substitute other SM without substantial detriment to either party or if the destroyed
SM was not in fact essential to the contract, the agency may continue.
(b) A partial loss or destruction of SM does not always result in a complete termination of the agency, it
may continue in existence as to other property not affected.
b) novation. (Art. 1231.)
c) rescind or cancel their contract by mutual agreement
(2) War : if the agent or the principal is an enemy alien. Since war suspends all commercial intercourse between the
residents of two belligerent states
(3) Legal impossibility : as to the parties or to the purpose
(4) Termination of agents authority with the destruction or loss of the trust
(5) Occurrence of a specified event. If the principal and agent have originally agreed, the happening of the event
obviously terminates the agency. The event is in the nature of a resolutory condition.
Change of conditions:
GR: Where there is a basic change in the circumstances surrounding the transaction, which was not contemplated
by the parties and would reasonably lead A to believe that P would not desire him to act, the authority of A is terminated.
Exceptions:
(a) If the original circumstances are restored w/in a reasonable period of time, As authority may be revived.
(b) Where A has reasonable doubts as to whether P would desire him to act, As authority will not be terminated if he
acts reasonably.
(c) Where the parties are in close daily contact, As authority to act will not terminate upon a change of circumstances
if A knows P is aware of the change and does not give him new instructions.
EXPRESS
KINDS OF REVOCATION
IMPLIED 1923 - when P appoints a new A for the same business/transaction
1924 - when A directly manages the business entrusted to A
1926 - when P after granting GPA to A1, grants a SPA to A2 as regards the special matter involved in the latter
1869 - in the same manner as in the case of appointment of A

EXPRESS A institutes an action against P for the recovery of the balance in his favor
KINDS OF RENUNCIATIONLiquidation of the accounts between A & P arising from the agency
A Renders a final account of his operations
IMPLIED A conducted himself in a manner clearly incompatible with his duties as A
A abandons the object of agency, acts for himself in committing fraud upon P

(1) By its revocation;

MODES OF EXTINGUISHMENT OF AGENCY (1919-1932)

ART. 1920. The principal may revoke the agency at will, and compel the agent to return the document evidencing
the agency. Such revocation may be express or implied.
*When done by the principal, it is called revocation and when done by the agent, it is usually spoken of as withdrawal or renunciation.

BY PRINCIPAL:
GR: Agency generally revocable at will by principal since an agency is voluntary. (even if agency is irrevocable)
Exceptions (1927 & 1930 - coupled w/ interest)
1. if a bilateral contract depends upon it
2. if it is the means of fulfilling an obligation already contracted
3. if a partner is appointed manager of a partnership in the contract of partnership & his removal from the
management is unjustifiable.
4. when the agency is coupled with interest of A re SM
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. (n)
Interest in the subject matter of power conferred. An agency is coupled with an interest:
(a) where the agent has parted with value or incurred liability at the principals request, looking to the exercise of the
power as the means of reimbursement or indemnity
(b) where the interest in the thing concerning which the power is to be exercised arises from an assignment, pledge
or
lien created by the principal with the agent being given the power to deal with the thing in order to make the
assignment, pledge or lien effectual.
* The fiduciary relationship inherent in contracts of agency is replaced by material consideration in an agency coupled with
an interest which bars the removal/dismissal of A as atty-in-fact on the ground of loss of trust & confidence.

Sufficiency of interest. it must be a present interest in SM itself & that an interest in the proceeds of the powers
exercise
as compensation is insufficient. * Terminology used by parties not controlling.
Revocability of agency coupled with an interest.
(1) no just cause: A contract not to revoke an agency only abridges the right of P to revoke & not his power to
revoke.
(2) just cause: power of attorney can be made irrevocable by contract ONLY in that P may not recall it at his pleasure
WON coupled w/ interest = ALWAYS REVOCABLE IF FOR JUST CAUSE
--Reason for the rule:
(a) Authority of A emanates from or depends on the will of P
(b) Confidence being the cardinal basis of the relation, it should cease when such confidence disappears.
(c) Relationship is consensual and personal in nature and no one can be forced to retain one as A against his will.
LIABILITY OF P FOR DAMAGE CAUSED BY REVOCATION.
Where agency constituted for a fixed period. --for damages occasioned by the wrongful discharge of A before the
expiration of the period fixed and action for indemnity shall derive from the contract of the parties.
* NO LIABILITY where the principal has the absolute right to revoke the agency, even if the period fixed in the
contract of agency has not yet expired unless such was done in order to evade the payment of As commission
Where no time fixed for continuance of agency. P is at liberty to terminate it at will IN GOOD FAITH.
--if IN BAD FAITH, P liable for damages
* Compel the return of document evidencing agency IF IN WRITING to prevent A from using the GPA/SPA & avoid
liability to 3P who may subsequently deal with the agent on the faith of the instrument.
NOTICE OF REVOCATION.
(1) To agent - EXPRESS notice not necessary if 3P actually knows or has reason to know facts indicating AS
authority has been terminated/suspended=sufficient notice.
Revocation w/out notice to A=not invalidate an act done in pursuance of the authority.
(2) To third persons. Actual notice to former customers, while notice by publication is sufficient as to other persons.
(a) GR: Acts of A w/in the apparent scope of his authority are binding on P as regards one who had formerly dealt
with
him through A and who has no notice of the revocation.
(b) NO notice of revocation, P liable to 3P who never dealt with A previous to the revocation, if they, in common w/
public at large are justified in believing that such agency continues to exist. (especially so where, after revocation, A is
permitted to deal with the principals goods in his own name and in a manner indicating that he is the owner.
ART. 1921. If the agency has been entrusted for the purpose of contracting with specified persons, its revocation
shall NOT prejudice 3P if they were not given notice thereof.
ART. 1922. If A had general powers, revocation does NOT prejudice 3P in good faith AND w/out knowledge of the
revocation. Notice in a newspaper of general circulation is a sufficient warning to 3P.
REASON FOR THE LAW: Since 3P have been made to believe by P that A is authorized to deal w/ them, 3P have a right
to presume that the representation continues to exist in the absence of notification by P.
* Under 1921, the notice of revocation MUST be personal; under 1922, it MAY be personal. (1873.)
ART. 1923. The appointment of a new A for the same business or transaction revokes the previous agency from

MODES OF EXTINGUISHMENT OF AGENCY (1919-1932)

the day on which notice thereof was given to the former A, w/out prejudice to the provisions of
the two preceding articles. (ONLY IF THERE IS incompatibility)
* But the revocation does not become effective as between the principal and the agent until it is communicated to
the latter. If first A is not notified of the appointment of second AA it is understood that the first agency still exists.
ART. 1924. The agency is revoked if P directly manages the business entrusted to A dealing directly w/ 3P.
--unless the only desire of P is for him and A to manage the business together. (ONLY IF THERE IS incompatibility)
--If the purpose of P is to avoid payment of As commission, the implied revocation is deemed made in bad faith and
cannot be sanctioned without according to the agent the commission which is due him.
--Article 1924 should be distinguished from Article 1916 which governs the relations as between themselves of third
persons who separately contract with the agent and the principal with regard to the same thing.
ART. 1916. When 2 persons contract with regard to the same thing, 1 of them with A & the other with P, and the
two contracts are incompatible with each other, that of prior date shall be preferred,
without prejudice to the provisions of article 1544. (n)
--Rule where two persons contract separately with agent and principal.
--This is subject to the rules under NCC 1544 (DOUBLE SALE):
movable property:
first taken possession in good faith,
immovable property:

in good faith first recorded it in the Registry of Property

if no inscription, in good faith first in the possession

in the absence, to the person who presents the oldest title in good faith.
ART. 1917. In the case referred to in the preceding article,
if A has acted in good faith, P shall be liable in damages to the 3P whose contract must be rejected.
If the agent acted in bad faith, he alone shall be responsible. (n)
Liability of Principal if Agent Acted in Good Faith or in Bad Faith
*Article 1916 governs the rights of 3Ps as between themselves.
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. (n)
-- The power to revoke here is a consequence of the solidary liability of co-principals.
ART. 1926. A GPA is revoked by SPA granted to another agent, as regards the special matter involved in the
latter.
--like 1923, two agents are involved: one w/ GPA previously granted and the other w/ SPA given
--ALSO apply where the SPA is subsequently granted to the same A
--It is indispensable that notice of the revocation be communicated in some way to A
BY AGENT:
(1) Agency terminable at will by A subject only to the contractual obligations owing to the principal.
--if there is no contract existing between the parties
--if the contract is for no fixed or definite period of time
(2) Reason for the rule: if terminated in violation of a contract, P has no right to affirmative specific performance of the
agency for the essence of the relationship is consensual (willingness of A to act for P)
(2) By the withdrawal of the agent
ART. 1928. A may withdraw from the agency by giving due notice to P. If P should suffer any damage by reason
of the withdrawal, A must indemnify P unless A should base his withdrawal upon the impossibility of
continuing the performance of the agency without grave detriment to himself.
* A may renounce or withdraw from the agency at any time, without the consent of the principal, even in violation of the
latters contractual rights; subject to liability for breach of contract or for tort.
(1) Without just cause. AFTER notice, indemnify P should the latter suffer damage by reason of such withdrawal
because a fails in his obligation and as such, he answers for losses and damages occasioned by the non-fulfillment.
(2) With just cause. A NOT LIABLE.
--as when the withdrawal is based on the impossibility of continuing with the agency without grave detriment to
himself (1928) OR due to a fortuitous event (1174), OR health
*While A is forbidden to prefer his interests to those of P, he is not required to sacrifice his own interests just to serve P.
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.
PURPOSE: to prevent damage or prejudice to the principal.

(3) By the death, civil interdiction, insanity or insolvency of the principal or of the agent
Death of one of several Ps does not revoke As authority nor does the death of one of several As put an end to the
agency of all, whether the responsibility of the several principals or agents is joint or solidary.
GR: Agency is extinguished ipso jure upon the death of either principal or agent.

MODES OF EXTINGUISHMENT OF AGENCY (1919-1932)

EXCEPTIONS:
(a) the agency is coupled with an interest (1930)
(1) if the agency has been constituted in the common interest of P and A (1927)
(2) if it has been constituted in the interest of a 3P who has accepted the stipulation in his favor
(3) Power to foreclose survives death of mortgagor. (Act No. 3135)
(b) the act of A was executed w/out knowledge of death of P and 3P who contracted w/ A acted in good faith. (1931)
ART. 1930. The agency shall remain in full force and effect even after the death of P, if it has been constituted in
the common interest of P and of A, or in the interest of a 3P who has accepted the stipulation in his favor.
PURPOSE: There is no one to be represented where P is already dead.
ART. 1931. Anything done by A, w/out knowledge of the death of P or of any other cause which extinguishes the
agency, is valid and shall be fully effective with respect to 3Ps who may have contracted with him in good faith.
* A is required to finish the business already begun on the death of P should delay entail any danger (1884-2)
* BOTH A AND 3P MUST BE IN GOOD FAITH
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.
*Duty of agents heirs : to notify the principal AND to adopt measures to protect the interest of the principal.
* Article 1932 does not impose a duty on the heirs of the principal to notify the agent of the death of the principal.
Continuation by agents heirs of agency.
GR: An agency calls for personal services. As duties cannot be performed by his personal representatives.
The rights and obligations of the agent arising from the contract are not transmissible to his heirs.
Exceptions:
(a) Agency by operation of law or a presumed or tacit agency (TEMPORARILY)
(b) Agency coupled with interest in SM (insofar as may be necessary to protect the interests of the estate of A)
* Civil interdiction deprives the offender during the period of his sentence of the right to manage his property and
dispose of such property by any act or any conveyance inter vivos. A person under civil interdiction cannot validly
give consent.
* As by an act of insolvency, P loses control of SM of the agency, the authority of A to act for P generally ceases by
operation of law upon an adjudication of the principals insolvency. The insolvency of A will also ordinarily put an end
to the agency, at least if it is in any way connected with the agents business which has caused his failure. But the
insolvency of the agent will not destroy any right he may have under a power coupled with interest.
(4) By the dissolution of the firm or corporation which entrusted or accepted the agency
--extinguishes its juridical existence as far as the right to go on doing ordinary business is concerned, except for the
purpose of winding up its affairs. After winding up, the existence of the firm or corporation is terminated for all
purposes.
(5) By the accomplishment of the object or purpose of the agency
--Termination of agency ipso facto. At least as between P & A, even though expressed to be irrevocable.
--Continued existence of authority illogical
* An agency relationship between the parties may also be terminated by the non-accomplishment of the object or
purpose within a reasonable time
(6) By the expiration of the period for which the agency was constituted
--for a fixed period or end at a certain time : even though the purpose has not been accomplished.
--Term not specified: at the end of a reasonable period of time. Either, party can terminate by giving notice to the
other
--Period implied: from the terms of the agreement, the purpose of the agency, and the circumstances of the parties.