Chapter 4

EXTINGUISHMENT OF AGENCY

interest of the latter and of the agent, or in the interest of a third

person who has accepted the stipulation in his favor.

ART. 1928. RIGHT OF AGENT TO WITHDRAW

-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.

The agent may renounce or withdraw from the agency any

time, without the consent of the principal, even in violation
of the latters contractual rights; subject to the liability for
breach of contract or for tort.
Basis:

The constitutional prohibition against involuntary

servitude

Agency is a voluntary relationship between the

parties.
Withdrawal without just cause:
1. Agent has the duty to give due notice to the principal
2. Agent should indemnify the principal should the latter
suffer damage by reason of such withdrawal

Reason: The agent fails in his obligation and as such,

he answers for losses and damages occasioned by
the non-fulfillment.
Withdrawal with just cause:

Agent not liable to principal

Examples of just cause:

Impossibility of continuing the agency without grave

detriment to himself (Art. 1928)

Fortuitous event (Art. 1174)

Reason: While the agent is forbidden to prefer his

interests to those of the principal, he is not required to
sacrifice his own interests just to serve the principal.

ART. 1929. OBLIGATION OF AGENT TO CONTINUE TO

ACT AFTER WITHDRAWAL

ART. 1931. NATURE OF AGENTS AUTHORITY AFTER

DEATH OF PRINCIPAL
-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.

Even when the agent withdraws from the agency for a

valid reason, he must continue to act until the principal has
had reasonable opportunity to take the necessary steps
like the appointment of a new agent to remedy the
situation caused by the withdrawal.
Purpose: to prevent damage or prejudice to the principal

--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.

ART. 1930. WHEN DEATH OF PRINCIPAL DOES NOT

TERMINATE THE AGENCY

-The agency shall remain in full force and effect even after the
death of the principal, if it has been constituted in the common

Third persons who have dealt with the agent are protected
where it is not shown that the agent had knowledge of the
termination of the agency because of the death of the
principal or of any other cause which extinguishes the
agency.
This article requires that the third person and the agent
must be in good faith and without knowledge of death of
the principal or of any other cause.

ART. 1932. DUTY OF THE AGENTS HEIRS TO PROTECT

THE INTEREST OF THE PRINCIPAL

-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.

General rule: Agency is terminated by the death of the

principal.

Why? Agency is based on representation. Upon the

death of the principal, there is no one to be
represented.
Exceptions:
1. If the agency has been constituted in the common
interest of the principal and the agent (Art. 1927)
2. If it has been constituted in the interest of a third
person who has accepted the stipulation in his favor

In the aforementioned exceptions, the agency

remains in full force and effect even after the death of
the principal.

If the agent dies, the agency is also extinguished.

The law imposes upon the heirs of the deceased agent
the obligation to:
1. Notify the principal- to enable the principal
reasonable opportunity to take such steps as may be
necessary to meet the situation
2. Adopt such measures as the circumstances may
demand in the interest of the principal
Note: there is no duty on the heirs of the principal to notify
the agent of the death of the principal
General rule: In case of the agents death, the agency is
terminated.

Reason: An agency calls for personal services, which

ordinarily 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:
1. Agency by operation of law- the heirs duty to
continue arises from presumed agency

2. Where the agency is coupled with an interest in

the subject matter of the agency- the death of the
agent will not instantly end the relationship, and
consequently, his heirs or representatives may

subsequently exercise the power conferred at least

insofar as may be necessary to protect the interests
of the estate of the agent. An agency coupled with an
interest survives the death of the agent as it is
transmitted to his heirs or representatives.