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substitution or addition of a limited or
general partner; and
(3) The writing to amend (with the certificate,
as amended) or to cancel must be filed for
record in the SEC.
When a person required to sign the writing, a
person desiring the cancellation or amendment
may petition the court to order cancellation or
amendment. The court shall order the SEC to
record the cancellation or amendment if it finds
that the petitioner has a right to have the
writing executed.
From the moment the amended
certificate/writing or a certified copy of a court
order granting the petition for amendment has
been filed, such amended certificate shall
thereafter be the certificate of partnership [Art.
1865].
AGENCY
Contract of Agency
DEFINITION
By the contract of agency:
(1) A person binds himself to render some
service or to do something;
(2) In representation or on behalf of another;
(3) With the consent or authority of the latter
[Art. 1868].
Agency may refer to both a contract, as defined
in the provision, and the representative relation
created. As a relationship, it is fiduciary (based
on trust and confidence), where the agent is
empowered to contract with a third person on
behalf of a principal [De Leon (2010)].
The basis of agency is representation [Victorias
Milling v. CA (2000)].
CHARACTERISTICS
The contract of agency is:
(1) Consensual, perfected by mere consent;
(2) Nominate, has its own name;
(3) Preparatory, entered into as a means to
enter into other contracts;
(4) Principal, does not depend on another
contract for existence and validity;
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CIVIL LAW
(5) Bilateral, if for compensation, giving rise to
reciprocal rights and obligations, but
unilateral, if gratuitous, creating obligations
only for the agent.
FORMATION
ESSENTIAL ELEMENTS
(1) There is consent, express or implied, of the
parties to establish the relationship;
(2) The object is the execution of a juridical act
in relation to third persons;
(3) The agent acts as a representative and not
for himself; and
(4) The agent acts within the scope of his
authority [Rallos v. Felix Go Chan (1978)].
PARTIES
(1) Principal, one whom the agent represents
and from whom he derives his authority;
and
(2) Agent, who acts for and represents the
principal, having derivative authority in
carrying out the business of the latter.
Juridical persons such as corporations and
partnerships can be principals and agents [Art.
1919(4)].
CAPACITY
(1) A principal must have legal capacity to
enter into contract in his own right.
(2) An agent must have legal capacity to enter
into the contract of agency, although he
may not have capacity to enter into the
particular contract subject of agency.
Ratio: One who acts through an agent in law
does the act himself. As such, the capacity to
act by an agent depends in general on the
capacity of the principal to do the act himself as
if he were present.
INTENT
(1) On the part of the principal, there must be
an actual intention to appoint or an
intention naturally inferable from his words
or actions; and
(2) On the part of the agent, there must be an
intention to accept the appointment and act
on it [Victorias Milling v. CA (2000)].
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General rule: In the absence of such intent, there
is no agency.
Exceptions:
(1) Agency by estoppel; and
(2) Agency by operation of law.
CONSENT
An agency, both on the part of the principal and
the agent, is either express or implied. It does
not require express appointment and
acceptance.
As to the principal, the appointment of an agent
may be implied:
(1) From his acts;
(2) From his silence or lack of action; or
(3) From his failure to repudiate the agency,
knowing that another person is acting on his
behalf without authority.
The appointment may be oral, unless the law
requires a specific form [Art. 1869].
As to the agent, acceptance may also be
implied:
(1) From his acts which carry out the agency;
(2) From his silence or inaction according to the
circumstances [Art. 1870];
(3) When both the principal and the agent
being present if:
(a) The principal delivers his power of
attorney to the agent; and
(b) The agent receives it without any
objection [Art. 1871];
(4) When both the principal and the agent
being absent if:
(a) The principal transmits his power of
attorney to the agent, who receives it
without any objection; or
(b) The principal entrusts to him by letter or
telegram a power of attorney with
respect to the business in which he is
habitually engaged as an agent, and he
did not reply to the letter or telegram.
In other cases between persons who are absent,
acceptance cannot be implied from the silence
of the agent [Art. 1872].
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CIVIL LAW
POWER OF ATTORNEY
A power of attorney is an instrument in writing
by which one person, as principal, appoints
another as his agent and confers upon him the
authority to perform certain specified acts of
kinds of acts on his behalf [De Leon (2010)].
FORM OF CONTRACT
General rule: There are no formal requirements
governing the appointment of an agent.
Exceptions: The law imposes formal
requirements on certain types of agency [Art.
1869, par. 2]:
(1) When a sale of piece of land or any interest
therein is through an agent, in which case
the authority shall be in writing; otherwise
the sale is void [Art. 1874];
(2) When the law requires a special power of
attorney [Art. 1878].
The manner by which the parties designate the
relationship is not controlling. The use of this
term (“agent”) in one clause of the contract
cannot dominate the real nature of the
agreement as revealed in other clauses, no less
than in the caption (“agency agreement”) of the
agreement itself [Albadejo y Cia. v. Phil. Refining
(1923)].
ACTS DELEGATED
General rule: What a person may do in person,
he may do through another.
Exceptions:
(1) Personal acts, which the law or public policy
requires to be performed personally (e.g., to
vote, make a will, make statements under
oath, or attend board meetings as director
or trustee of a corporation);
(2) Criminal acts;
(3) Acts not allowed by law to be done by the
principal.
PRESUMPTION OF EXISTENCE
General rule: Agency must exist as a fact. The
law makes no presumption thereof. The person
alleging it has the burden of proof to show, not
only the fact of its existence, but also its nature
and extent [People v. Yabut (1977)].
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Exceptions: A presumption of agency may arise: Requisites:

(1) Where an agency may arise by operation of (1) Actual notice to the agent;
law (e.g., all the partners being considered (2) Notice must pertain to a matter of fact and
agents of the partnership when the manner not of law;
of management has not been agreed upon); (3) The fact must be within the scope of the
or agent’s authority.
(2) To prevent unjust enrichment [De Leon
(2010)]. Exceptions:
(1) Where the agent’s interests are adverse to
COMMUNICATION OF EXISTENCE those of the principal;
There are two ways of giving notice of agency (2) Where the agent’s duty is not to disclose the
with different effects: information (e.g., he is informed by way of
(1) If a person specially informs another (e.g., confidential information);
by letter), the person appointed is (3) Where the person claiming the benefit of
considered an agent with respect to the the rule colludes with the agent to defraud
person specially informed; the principal [De Leon (2010)].
(2) If a person states by public advertisement,
the person appointed is considered an AGENCY AND OTHER
agent with regard to any person. CONTRACTS DISTINGUISHED
One factor which most clearly distinguishes
In either case, the power of the agent continues agency from other legal concepts is control; one
in full force until the notice is rescinded in the person – the agent – agrees to act under the
same manner in which it was given [Art. 1873]. control or direction of another – the principal
[Victorias Milling v. CA (2000)].
DUTY OF THIRD PERSONS
The person dealing with the agent must act Agency Partnership
with ordinary prudence and reasonable
diligence. Obviously, if he knows or has good Representation
reason to believe that the agent is exceeding his An agent acts only for A partner acts for the
authority, he cannot claim protection [Keeler the principal other partners, the
Electric v. Rodriguez (1922)]. partnership and
himself
EFFECT Control
An agent’s power to A partner’s power to
EXTENSION OF PERSONALITY bind the principal is bind his co-partners is
In an agent-principal relationship, the subject to the latter’s not subject to their
personality of the principal is extended through control control
the facility of the agent. The agent, by legal
Personal liability
fiction, becomes the principal, authorized to
perform all acts which the latter would have An agent does not A partner is personally
him do [Litonjua v. Eternit Corp. (2006)]. assume personal liable with all his
liability, if he acts property, after
THEORY OF IMPUTED KNOWLEDGE within the scope of his exhaustion of the
General rule: Notice to the agent constitutes authority partnership properties
notice to the principal [Air France v. CA (1983)]. Share in profits
Thus, knowledge of the agent is ascribed to the An agent is not A partner is entitled to
principal [Rovels Enterprises v. Ocampo (2002)]. entitled to profits, only a share in the profits
compensation of the partnership

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Independent Agency Lease of property

Agency
contractor Control
Control An agent acts under A lessee is not subject
An agent acts under An independent the control and to the control of the
the control and contractor is not instruction of the lessor
instruction of the subject to control, principal
principal except insofar as the Things involved
result of the work is
concerned Agency may involve Lease of property
things other than involves property only
Liability for tort property
Principal is liable for Employer is not liable Authority to bind
torts committed by for torts committed by
the agent with the the independent An agent can bind the Lessee cannot bind
scope of his authority contractor principal the lessor
Sub-agents
Agency to sell Sale
Agents of the agent is Employees of
still subject to the independent Ownership of goods
control of the principal contractor are not Principal retains Buyer acquires
subject to control of ownership ownership
his employer
Payment
Agency Lease of service An agent delivers the A buyer pays the
proceeds of the sale to purchase price
Basis the principal
Representation Employment Return of goods
Purpose Generally, an agent Generally, a buyer
Execution of juridical Execution of piece of can return goods cannot return the
acts in relation to third work or rendition of unsold goods bought
persons service Dealing with the goods
Authorized acts An agent deals with A buyer, being the
Juridical acts Material acts only the goods according owner, can deal with
(creation, to the instructions of the goods as he
modification, the principal pleases
extinction of relations
with third parties) Agency to buy Sale
Discretion Ownership of goods
An agent is authorized Ordinarily, lessor Ownership is acquired Ownership is
to exercise discretion performs only in behalf of the transferred to the
ministerial functions principal buyer
Parties Change in price
Three parties are Two parties are Generally, any change A buyer cannot adjust
involved (principal- involved (employer- in the price is borne by the price already
agent-third party) employee) the principal agreed upon
Payment
Price is paid in behalf Price is paid by the
of the principal buyer

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Agency Guardianship Note: Agency is presumed to be for a

compensation, unless there is proof to the
Person represented contrary [Art. 1875].
An agent represents a A guardian represents
capacitated person an incapacitated As to the extent of business covered:
person (1) Universal;
Source of authority (2) General;
(3) Special.
An agent is appointed A guardian is
by the principal appointed by the court
As to the authority conferred:
Control (1) Couched in general terms;
An agent is subject to A guardian is not (2) Couched in specific terms.
the control of the subject to the control
principal of the ward As to nature and effect:
(1) Ostensible or representative, where the
Authority to bind
agent acts in the name and representation
An agent can make A guardian has no of the principal [Art. 1868];
the principal power to impose (2) Simple or commission, where the agent acts
principally liable personal liability on in his own name but for the account of the
the ward principal.

Agency Trust As to the kinds of principal:

(1) With a disclosed principal, where, at the
Title to property
time the transaction was contracted by the
Title retained by Title passes to the agent, the other party thereto has known:
principal trustee (a) That the agent is acting for a principal;
Control and
(b) The principal’s identity;
An agent is subject to A trustee is only (2) Partially disclosed, where the other party
the control of the subject to the knows or has reason to know that the agent
principal stipulated guidance of
is or may be acting for a principal but is
the trustor
unaware of the principal’s identity;
Termination (3) Undisclosed, where the party has no notice
In general, an agency In general, a trust may of the fact that the agent is acting as such
may be revoked at any be terminated only for a principal.
time when its purpose is
fulfilled AS TO MANNER OF CREATION
EXPRESS AGENCY
Kinds of Agency An express agency is one where the agent has
been actually authorized by the principal, either:
(1) Orally; or
IN GENERAL (2) In writing [Art. 1869].
As to manner of creation:
(1) Express; IMPLIED AGENCY
(2) Implied. The appointment and acceptance are implied:
(1) As to the appointment of an agent by the
As to cause or consideration: principal:
(1) Gratuitous; (a) From his acts;
(2) Compensated or onerous. (b) From his silence or lack of action; or

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(c) From his failure to repudiate the agency AS TO AUTHORITY CONFERRED

knowing that another person is acting
on his behalf without authority [Art.
1869].
COUCHED IN GENERAL TERMS
An agency couched in general terms is one
(2) As to the acceptance of the agency by the
created in general terms and is deemed to
agent:
comprise only acts of administration, even if:
(a) From his acts which carry out the
(1) The principal should state that he withholds
agency;
no power;
(b) From his silence or inaction according
(2) He should state that the agent may execute
to the circumstances (i.e., presence or
such acts as he may consider appropriate;
absence of the parties) [Arts. 1870, 1871
or
and 1872].
(3) Even though the agency should authorize a
general and unlimited management [Art.
AS TO EXTENT OF BUSINESS 1877].
COVERED
(1) Universal agency comprises all acts which COUCHED IN SPECIFIC TERMS
the principal can lawfully delegate to an An agency couched in specific terms
agent; authorizes only the performance of specific acts.
(2) General agency comprises all the business Certain specific acts, however, require special
of the principal. powers of attorney.
(3) Special agency comprises one or more
specific transactions [Art. 1876]. A special power of attorney is an instrument in
writing by which one person, as principal,
General agency Special agency appoints another as his agent and confers upon
Scope of authority him the authority to perform certain specified
acts or kinds of acts on behalf of the principal.
All acts connected Only specific
with the business or authorized acts or The following acts of strict dominion require
employment in which those necessarily special powers of attorney:
agent is engaged implied (1) To make such payments as are not usually
Nature of service authorized considered as acts of administration;
Involves continuous Usually involves a (2) To effect novations which put an end to
service single transaction obligations already in existence at the time
the agency was constituted;
Authority to bind (3) To compromise, to submit questions to
Acts within the scope Acts beyond authority arbitration, to renounce the right to appeal
of authority, even in given cannot bind from a judgment, to waive objections to the
conflict with special principal venue of an action or to abandon a
instructions, may bind prescription already acquired;
principal (4) To waive any obligation gratuitously;
Termination of authority (5) To enter into any contract by which the
ownership of an immovable is transmitted
Notice to third No notice required, or acquired either gratuitously or for a
persons required to since third parties are valuable consideration;
terminate apparent required to inquire as (6) To make gifts, except customary ones for
authority to authority charity or those made to employees in the
Instructions business managed by the agent;
Notice to third The instructions, in so (7) To loan or borrow money, unless the latter
persons required far as they grant act be urgent and indispensable for the
authority, are strictly preservation of the things which are under
construed administration;

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(8) To lease any real property to another person accurate nor correct to conclude that its
for more than one year; absence renders the compromise agreement
(9) To bind the principal to render some service void. In such a case, the compromise is merely
without compensation; unenforceable [Duñgo v. Lopena (1962)].
(10) To bind the principal in a contract of
partnership; SPECIAL KINDS
(11) To obligate the principal as a guarantor or
surety;
(12) To create or convey real rights over AGENCY BY ESTOPPEL
immovable property; Through estoppel:
(13) To accept or repudiate an inheritance; (1) An admission or representation;
(14) To ratify or recognize obligations contracted (2) Is rendered conclusive upon the person
before the agency; making it; and
(15) Any other act of strict dominion (3) Cannot be denied or disproved as against
the person relying thereon [Art. 1431].
The requirement of special power of attorney
refers to the nature of the authorization, not to Ratification Estoppel
its form. Thus, even if a document is titled as a Rests on intention Rests on prejudice
general power of attorney, the requirement of a Retroacts as if Affects only relevant
special power of attorney is met if there is a originally authorized parts of the
clear mandate from the principal specifically transaction
authorizing the performance of the act [Bravo-
Guerrero v. Bravo (2005)]. Substance is Substance is the
confirmation of principal’s
A special power of attorney can be included in unauthorized acts inducement for third
the general power when it is specified therein after it has been done party to act to his
the act or transaction for which the special prejudice
power is required [Veloso v. CA (1996)].
For an agency by estoppel to exist, the following
must be established:
Art. 1879. A special power to sell excludes the
(1) The principal manifested a representation
power to mortgage; and a special power to
of the agent’s authority or knowingly
mortgage does not include the power to sell.
allowed the agent to assume such
authority;
Art. 1879. A special power to compromise does (2) The third person, in good faith, relied upon
not authorize submission to arbitration. such representation;
(3) Relying upon such representation, such
The power to “exact the payment” of sums of third person has changed his position to his
money “by legal means” includes the power to detriment [De Leon (2010)].
institute suits for their recovery [Germann & Co.,
v. Donaldson, Sim & Co. (1901)]. In agency by estoppel, there is no agency. The
alleged agent seemed to have apparent or
A power of attorney “to loan and borrow ostensible authority, but not real authority to
money” and to mortgage the principal’s represent another.
property does not carry with it or imply that that
the agent has a legal right to make the principal An agency by estoppel, which is similar to the
liable for the personal debts of the agent [BPI v. doctrine of apparent authority, requires proof of
De Coster (1925)]. reliance upon the representations, and that, in
turn, needs proof that the representations
Although the Civil Code expressly requires a predated the action taken in reliance [Litonjua v.
special power of attorney in order that one may Eternit Corp. (2006)].
compromise an interest of another, it is neither

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As to liability, implied agency and agency by
estoppel are different in that, in the former, the
principal is liable, while in the latter, the person
who acts in bad faith is liable.
Article 1911 states that: “Even when the agent
has exceeded his authority, the principal is
solidarily liable with the agent if the former
allowed the latter to act as though he had full
powers.” In this case, there is a duly formed
agency and estoppel only applies to the excess
of authority. This is an application of the
doctrine of apparent authority.
The doctrine of apparent authority is to the
effect that: One who clothes another with
apparent authority as his agent, and holds him
out to the public as such, cannot be permitted
to deny the authority of such person to act as his
agent, to the prejudice of innocent third parties
dealing with such person in good faith.
Under the doctrine of apparent authority, the
question in every case is whether the principal
has, by his voluntary act, placed the agent in
such a situation that a person of ordinary
prudence, conversant with business usages and
the nature of the particular business, is justified
in presuming that such agent has authority to
perform the particular act in question
[Professional Services v. Agana (2008)].
AGENCY WITH UNDISCLOSED
PRINCIPAL
General Rule: If an agent acts in his own name
(the principal is undisclosed), the agent is
directly bound in favor of the person with whom
he has contracted as if the transaction were his
own.
Ratio: There is no representation of the principal
when the agent acts in his own name. The third
person cannot allege that he was misled by any
representation since he did not know of the
existence of the undisclosed principal.
Exception: The principal is bound when the
contract involves things belonging to him [Art.
1883]. In this case, the contract is considered as
one between the principal and the third person.
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CIVIL LAW
Qualification: The exception only applies if the
agent contracts with the properties of the
principal within the scope of his authority [PNB
v. Agudelo (1933)].
AGENCY BY OPERATION OF LAW
An agency may exist by operation of law, such
as in the following cases:
(1) Every partner is an agent of the partnership
for the purpose of its business [Art. 1818];
(2) When the principal’s actions would
reasonably lead a third person to conclude
that an agency exists, an agency by
estoppel is created by operation law [Black’s
Law Dictionary (9th)];
(3) In case of certain necessity or emergency, an
agency by necessity may arise.
IRREVOCABLE AGENCY
Article 1927 (on agency coupled with an
interest) mentions three instances where the
sole will of the principal cannot terminate an
agency:
(1) A bilateral contract depends upon it;
(2) It is the means of fulfilling an obligation
already contracted; or
(3) A partner is appointed manager of a
partnership in the contract of partnership
and his removal from the management is
unjustifiable.
Qualifications:
(1) Coupled with interest or not, the authority
certainly can be revoked for a just cause,
such as when the attorney-in-fact betrays
the interest of the principal. It is not open to
serious doubt that the irrevocability of the
power of attorney may not be used to shield
the perpetration of acts in bad faith, breach
of confidence, or betrayal of trust, by the
agent for that would amount to holding
that a power coupled with an interest
authorizes the agent to commit frauds
against the principal [Coleongco v. Claparols
(1964)].
(2) A mere statement in the power of attorney
that it is coupled with an interest is not
enough. In what does such interest consist
must be stated in the power of attorney [Del
Rosario v. Abad (1958)].
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(3) An agency couple with an interest cannot
affect third persons. They are obligatory
only on the principal who executed the
agency [New Manila Lumber v. Republic
(1960)].
KINDS OF AGENTS
AS TO NATURE AND EXTENT OF
AUTHORITY
According to the nature and extent of their
authority, agents have been classified into:
(1) Universal agents are authorized to do all
acts for his principal which can lawfully be
delegated to an agent. So far as such a
condition is possible, such an agent may be
said to have universal authority.
(2) General agents are authorized to do all acts
pertaining to a business of a certain kind or
at a particular place, or all acts pertaining to
a business of a particular class or series. He
has usually authority either expressly
conferred in general terms or in effect made
general by the usages, customs or nature of
the business which he is authorized to
transact. An agent, therefore, who is
empowered to transact all the business of
his principal of a particular kind or in a
particular place, would, for this reason, be
ordinarily deemed a general agent.
(3) Special agents are authorized to do some
particular act or to act upon some particular
occasion (i.e., acts usually in accordance
with specific instructions or under
limitations necessarily implied from the
nature of the act to be done) [Siasat v. IAC
(1985)].
SPECIAL TYPES OF AGENTS
(1) Attorney-at-law is one whose business is to
represent clients in legal proceedings;
(2) Auctioneer is one whose business is to sell
property for others to the highest bidder at
a public sale;
(3) Broker is one whose business is to act as
intermediary between two other parties
such as insurance broker and real estate
broker;
(4) Factor or commission merchant is one
whose business is to receive and sell goods
for a commission, being entrusted with the
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CIVIL LAW
possession of the goods involved in the
transaction.
(5) Cashier in bank is one whose business is to
represent a banking institution in its
financial transactions;
(6) Attorney-in-fact is one who is given
authority by his principal to do a particular
act not of a legal character. In its strict legal
sense, it means an agent having a special
authority.
Attorneys have authority to bind their clients in
any case by any agreement in relation thereto
made in writing, and in taking appeals, and in
all matters of ordinary judicial procedure. But
they cannot, without special authority,
compromise their client’s litigation, or receive
anything in discharge of a client’s claim but the
full amount in cash [Sec. 23, Rule 138, Rules of
Court].
Powers of the Agent
AUTHORITY OF AN AGENT
Authority is the power of the agent to affect the
legal relations of his principal by acts done in
accordance with the principal’s manifestations
of consent. An agent can make the principal
legally responsible only when he is authorized
by the principal to act the way he did [De Leon
(2010)].
KINDS OF AUTHORITY
(1) Actual, when it is actually granted, and it
may be express or implied. It is the authority
that the agent does, in fact, have. It results
from what the principal indicates to the
agent;
(2) Express, when it is directly conferred by
words;
(3) Implied, when it is incidental to the
transaction or reasonably necessary to
accomplish the main purpose of the agency;
(4) Apparent or ostensible, when it arises by the
acts or conduct of the principal giving rise to
an appearance of authority. It makes the
principal responsible to third persons for
certain actions of the agent that were not
really authorized;
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(5) General, when it refers to all the business of
the principal;
(6) Special, when it is limited only to one or
more specific transactions;
(7) By necessity or by operation of law, when it
is demanded by necessity or by virtue of the
existence of an emergency. The agency
terminates when the emergency passes.
SCOPE OF AUTHORITY
General rule: The scope of the authority of
the agent is what appears in the terms of the
power of attorney [Siredy Enterprises v. CA
(2002)].
Exceptions: An agent is considered acting within
the scope of his authority when:
(1) He performs acts which are conducive to the
accomplishment of the purpose of the
agency [Art. 1881];
(2) He performed the agency in a manner more
advantageous to the principal than that
specified by said principal [Art. 1881];
(3) The principal ratifies the act, expressly or
tacitly [Art. 1910].
Art. 1900. So far as third persons are concerned,
an act is deemed to have been performed within
the scope of the agent’s authority, if such act is
within the terms of the power of attorney, as
written, even if the agent has in fact exceeded
the limits of his authority according to an
understanding between the principal and the
agent.
While third persons are bound to inquire into
the extent or scope of the agent’s authority, they
are not required to go beyond the terms of the
written power of attorney. Third persons cannot
be adversely affected by an understanding
between the principal and his agent as to the
limits of the latter’s authority. Third persons
need not concern themselves with instructions
given by the principal to his agent outside of the
written power of attorney [Siredy Enterprises v.
CA (2002)].
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CIVIL LAW
POWER TO BIND THE
PRINCIPAL
Requisites:
(1) The agent must act within the scope of his
authority; and
(2) The agent must act in behalf of the
principal.
Even when the agent acts in his own name the
principal is still bound in the following
instances:
(1) When the contract involves things
belonging to the principal [Art. 1883]; or
(2) When the principal ratifies the contract,
expressly or tacitly [Art. 1910].
EFFECTS OF THE ACTS OF AN
AGENT
When the agent acts:
(1) With authority of the principal:
(a) If done in the name of the principal, the
principal is bound to comply with the
obligations contracted [Art. 1910] and
the agent is not personally liable to the
party with whom he contracts [Art.
1897];
(b) If done in the name of the agent, the
agent is directly bound in favor of the
person with whom he has contracted,
except when the contract involves
things belonging to the principal;
(2) Without authority or beyond the authority
granted by the principal:
(a) If done in the name of the principal, it is
unenforceable against him, unless he
ratifies it expressly or tacitly [Art. 1910];
(b) If done in the name of the agent, the is
personally liable.
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Obligations of Agent
IN GENERAL
GOOD FAITH AND LOYALTY TO HIS
TRUST
The duty of good faith is also called the fiduciary
duty, which imposes upon the agent the
obligation of faithful service. The duty to be
loyal to the principal demands that the agent
look out for the best interests of the principal as
against his own or those of third parties (see Art.
1889).
General rule: Until proven otherwise, the
presumption arises that an agent has
performed his duty in good faith, and the
principal, until notice is received of a breach of
relational duties, may rely upon his agent’s
faithfulness.
Exception: The presumption does not arise
when there is no relation of trust or confidence
between the parties (e.g., the agent is bound
merely as an instrument/servant, or there is no
agency relationship) [De Leon (2010)].
EXERCISE OF REASONABLE CARE
By accepting an employment whose
requirements he knows, without stipulating
otherwise the agent impliedly undertakes that:
(1) He possesses a degree of skill reasonably
and ordinarily competent for the
performance of the service; and
(2) In performing his undertaking, he will
exercise reasonable care, skill and diligence.
OBLIGATION TO CARRY OUT
AGENCY
General rule: The agent is:
(1) Bound by his acceptance to carry out the
agency;
(2) Liable for damages, which the principal may
suffer, in case of non-performance;
(3) Bound to finish the business already begun
on the death of the principal should delay
entail danger [Art. 1884].
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CIVIL LAW
Exception: An agent shall not carry out an
agency if its execution would manifestly result in
loss or damage to the principal [Art. 1888].
OBLIGATION WHEN AGENT
DECLINES
In case a person declines an agency, he is bound
to observe the diligence of a good father of a
family in the custody and preservation of the
goods forwarded to him.
The obligation lasts until the owner, as soon as
practicable:
(1) Appoints an agent; or
(2) Takes charge of the goods [Art. 1885].
Declining an agency is different from
withdrawal. In the former, no agency was
formed. Withdrawal, on the other hand,
presupposes an existing agency.
The obligation of the agent, in case of
withdrawal, is to continue to act as such agent
until the principal has had reasonable
opportunity to take the necessary steps to meet
the situation [Art. 1929].
OBLIGATION TO ADVANCE
NECESSARY FUNDS
General rule: The agent is not bound to advance
the necessary funds. The principal is obliged to
advance to the agent, should the latter so
request, the sums necessary for the execution of
the agency.
Exception: He shall be bound to do so should
there be a stipulation to that effect, subject to
the obligation of the principal to reimburse the
agent.
Exception to the Exception: He is not bound to
do so, even when there is a stipulation, when
the principal is insolvent [Art. 1886].
Note: Insolvency of the principal is also a ground
for extinguishment.
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OBLIGATION TO ACT IN A specific application of this subordination of

ACCORDANCE WITH
INSTRUCTIONS
In the execution of the agency:
(1) The agent shall act in accordance with the
instructions of the principal; or
(2) In default thereof, he shall do all that a
good father of a family would do, as
required by the nature of the business [Art.
1887].
Note: The limits of the agent’s authority shall
not be considered exceeded should it have been
performed in a manner more advantageous to
the principal than that specified by him [Art.
1882].
interests is found in Article 1890:
(1) If the agent has been empowered to borrow
money, he may himself be the lender at the
current rate of interest.
(2) If he has been authorized to lend money at
interest, he cannot borrow it without the
consent of the principal.
OBLIGATION FOR THINGS
RECEIVED
Every agent is bound to:
(1) Render an account of his transactions; and
(2) Deliver to the principal whatever he may
have received by virtue of the agency, even
though it may not be owing to the principal.

Every stipulation exempting the agent to render

Authority Instructions
an account shall be void [Art. 1891].
Sum total of the Private rule of
powers committed or guidance to the agent WHAT TO DELIVER
permitted to the agent The agent has to deliver all money and property
Relates to the Refers to the manner which may have come into his hands or in that
transaction or or mode of agent’s of a sub-agent. This includes gifts from third
business with which action with respect to parties in connection with the agency. It is
the agent is matters within the immaterial whether such money or property is
empowered to act permitted scope of the result of the performance or violation of the
authority agent’s duty, if it be the fruit of the agency.
Binds third parties Does not bind third
parties If the agent fails to deliver and instead converts
or appropriates for his own use the money or
property belonging to the principal, he is liable
OBLIGATION TO PREFER for estafa.
INTEREST OF PRINCIPAL
General rule: The agent shall be liable for WHEN OBLIGATION IS NOT
damages if, there being a conflict between his APPLICABLE
interest and those of the principal, he should (1) If the agent or broker acted only as a
prefer his own [Art. 1889]. middleman with the task of merely bringing
together the vendor and the vendee
Exceptions: The agent is not liable for giving [Domingo v. Domingo (1971)].
preference to his own when: (2) If the agent had informed the principal of
(1) The principal waives the benefit of this rule, the gift or bonus or profit he received from
with full knowledge of the facts; or the purchaser and the principal did not
(2) When the interest of the agent is superior. object thereto;
(3) When a right of lien exists in favor of the
An example of the latter is where the agent has agent.
security interest in goods of the principal in his
possession, he may protect his interest even if in
doing so, he disobeys the principal’s orders or
injures his interest [De Leon (2010)].

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RESPONSIBILITY FOR ACTS OF
SUBSTITUTE
The agent may appoint a substitute if the
principal has not prohibited him from doing so.
The agent is responsible for the acts of the
substitute:
(1) When he was not given the power to
appoint one;
(2) When he was given such power, but:
(a) Without designating the person; and
(b) The person appointed was notoriously
incompetent or insolvent.
All acts of the substitute appointed against the
prohibition of the principal shall be void [Art.
1892].
The principal may bring an action against the
substitute with respect to the obligations which
the latter contracted under the substitution [Art.
1893].
SUB-AGENCY
A sub-agent or substitute is a person employed
or appointed by an agent as his agent, to assist
him in the performance of an act for the
principal, which the agent has been empowered
to perform. The agent is a principal with respect
to the sub-agent.
General rule: The agent may appoint a sub-
agent.
Ratio: The law allows such substitution for
reasons of convenience and practicality.
Exceptions:
(1) The appointment is prohibited by the
principal [Art. 1892];
(2) The work entrusted to the agent requires
special knowledge, skill, or competence,
unless authorized to do so by the principal
[De Leon (2010)].
RELATIONS AMONG THE PARTIES
(1) When the sub-agent has been employed for
own account of the agent, to assist him, the
sub-agent is a stranger to the principal.
(2) When the appointment was authorized by
the principal a fiduciary relationship is
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CIVIL LAW
created between and among the principal,
agent, and sub-agent. Neither the agent
nor the substitute can be held personally
liable so long as they act within the scope of
their authority [Macias & Co. v. Warner,
Barnes & Co. (1922)].
EFFECTS OF SUBSTITUTION
(1) When substitution was prohibited by the
principal, appointment by the agent is an
act in excess of the limits of his authority.
All acts of the substitute are void.
(2) When substitution was authorized, the
agent is only liable when he appointed one
who is notoriously incompetent or insolvent,
unless the person was designated by the
principal.
(3) When substitution was not authorized, but
also not prohibited, the appointment is
valid, but the agent is liable for damage
caused by the substitution to the principal.
(4) When substitution was authorized and the
sub-agent was designated by the principal,
the agent is released from any liability for
the acts of the sub-agent [Art. 1892].
RESPONSIBILITY OF TWO OR
MORE AGENTS
General rule: The responsibility of two or more
agents is not solidary, even though they have
been appointed simultaneously. They are liable
jointly.
Exception: They are solidarily liable if solidarity
has been expressly stipulated [Art. 1894].
If solidarity has been thus agreed upon, each of
the agents is responsible for:
(1) The non-fulfillment of agency, even when
the fellow agents acted beyond the scope of
their authority; and
(2) The fault or negligence of his fellow agents,
except when the fellow agents acted
beyond their authority.
OBLIGATION FOR SUMS
APPLIED TO HIS OWN USE
The agent owes interest:
(1) On the sums applied to his own use from
the day on which he did so; and
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(2) On the sums which he still owes after the
agency is extinguished [Art. 1896].
The liability of the agent for interest for sums
converted to his own use is without prejudice to
a criminal action that may be brought against
him [De Leon (2010)].
The sums referred to as still owing to the
principal after extinguishment of the agency are
those which were not misapplied by the agent,
but were found to be owing to the principal after
such extinguishment.
OBLIGATIONS TO THIRD
PERSONS
LIABILITY OF AGENT FOR
OBLIGATIONS CONTRACTED
General rule: The agent who acts as such is not
personally liable to the party with whom he
contracts. The principal is responsible for such
acts done within the scope of the authority
granted to the agent, and should bear any
damage caused to third persons [Art. 1910].
Exceptions: He is personally liable when:
(1) He acts in his own name [Art. 1883];
(2) He expressly binds himself; or
(3) He exceeds the limits of his authority
without giving such party sufficient notice of
his powers [Art. 1897].
VOID CONTRACTS
The contract entered into by an agent on behalf
of the principal shall be void when:
(1) The agent contracts in the name of the
principal;
(2) He exceeded the scope of his authority;
(3) The principal does not ratify the contract;
and
(4) The party with whom the agent contracted
is aware of the limits of the powers granted
by the principal.
The agent, however, is liable if he undertook to
secure the principal’s ratification.
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CIVIL LAW
PRESENTATION OF POWER OF
ATTORNEY
A third person, with whom the agent wishes to
contract on behalf of the principal may require
the presentation of:
(1) The power of attorney; or
(2) The instructions as regards the agency.
Private or secret orders and instructions of the
principal do not prejudice third persons who
have relied upon the power of attorney or
instructions shown them [Art. 1902].
Art. 1900. So far as third persons are concerned,
an act is deemed to have been performed within
the scope of the agent’s authority, if such act is
within the terms of the power of attorney, as
written, even if the agent has in fact exceeded
the limits of his authority according to an
understanding between the principal and the
agent.
RATIFICATION OF ACTS OF AGENT
A third person, who contracts with the agent
(thereby recognizing the authority of the agent),
cannot later disaffirm his contract based on the
fact that the agent has exceeded his powers, if
the principal has:
(1) Ratified the acts of the agent; or
(2) Signified his willingness to ratify said acts
[Art. 1901].
The ratification has retroactive effect, relating
back to the time of the act or contract ratified
and is equivalent to original authority [Board of
Liquidators v. Kalaw (1967)].
A principal may not accept the benefits of a
transaction and repudiate its burdens. Thus, a
principal who seeks to enforce a sale made by
the agent cannot ordinarily allege that the
agent exceeded his authority.
Before ratification, however, the third person
may repudiate the contract.
IGNORANCE OF AGENT
If a duly authorized agent acts in accordance
with the orders of the principal, the principal
cannot set up the ignorance of the agent as to
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circumstances whereof he himself was, or ought damage and deterioration suffered by the
to have been, aware [Art. 1899]. same [Art. 1903].
(2) The commission agent who handles goods
Ratio: If the principal appoints an agent who is of the same kind and mark, which belong to
ignorant, the fault is his alone. He is bound by different owners, shall:
the acts of the agent. The agent is not liable to (a) Distinguish them by countermarks; and
third persons in this case. (b) Designate the merchandise respectively
belonging to each principal [Art. 1904].
OBLIGATIONS OF A
COMMISSION AGENT SALE OF GOODS ON CREDIT
WITHOUT AUTHORITY
FACTOR OR COMMISSION AGENT General rule: The commission agent cannot sell
A factor or commission agent is one whose on credit. Should he do so, the principal may:
business is to receive and sell goods for a (1) Demand from him payment in cash, in
commission (also called factorage) and who is which case the commission agent shall be
entrusted by the principal with the possession of entitled to any interest or benefit, which
goods to be sold, and usually selling in his own may result from such sale [Art. 1905]; or
name. He may act in his own name or in that of (2) Ratify the sale on credit, in which case the
the principal. principal will have all the risks and
advantages to him [De Leon (2010)].
An ordinary agent need not have possession of
the goods of the principal, while the commission Exception: The commission agent can sell on
agent must be in possession [De Leon (2010)]. credit with the express or implied consent of the
principal.
Ordinary agent Commission agent
SALE OF GOODS ON CREDIT WITH
Acts for and in behalf Acts in his own name
of the principal or that of his principal
AUTHORITY
If the commission agent was authorized to sell
Need not have Must have possession on credit and should he so sell on credit, he
possession of the of the goods shall inform the principal of such sale, with a
goods statement of the names of the buyers. Should
he fail to inform the principal, the sale is
Broker Commission agent deemed to have been made for cash as far as
the principal is concerned [Art. 1906].
Has no custody of the Has custody or
thing to be disposed possession of the
of, only acts as things to be sold The commission agent is obliged to collect the
intermediary between credits of his principal when they become due
seller and buyer and demandable [Art. 1908].
Maintains no relations Maintains relations General rule: Failing to so collect, the agent
with things to be with the thing, the shall be liable for damages.
sold/bought buyer and the seller
Exception: He is not liable if he proves that he
RESPONSIBILITY FOR GOODS exercised due diligence for that purpose.
RECEIVED
(1) The commission agent shall be responsible Should the commission agent receive a
for goods received by him in the terms and guarantee commission (del credere
conditions and as described in the commission) on a sale, in addition to the
consignment, unless upon receiving them ordinary commission, he shall:
he should make a written statement of the (1) Bear the risk of collection; and

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(2) Pay the principal the proceeds of the sale on
the terms agreed upon with the purchaser
[Art. 1907].
RESPONSIBILITY FOR FRAUD
AND NEGLIGENCE
In the fulfillment of his obligation, the agent is
responsible for:
(1) Fraud; and
(2) Negligence.
The circumstance that the agency is or is not
gratuitous will be considered by the courts in
fixing the liability for negligence only [Art. 1909].
The liability may be to the principal or to third
persons.
Obligations of the
Principal
IN GENERAL
In addition to his duties specified under the
contract itself, the principal is under obligation
to deal fairly and in good faith with his agent,
who owes the same to his principal.
OBLIGATION TO COMPLY WITH
CONTRACTS
General rule: The principal must comply with all
the obligations which the agent may have
contracted within the scope of his authority [Art.
1910, par. 1]. As for any obligation where in the
agent has exceeded his power, the principal is
not bound.
Exceptions: The principal is:
(1) Bound by the obligation entered into by the
agent in excess of his power, when he
ratifies it expressly or tacitly [Art. 1910, par.
2];
(2) Solidarily liable with the agent if the
principal allowed the agent to act as though
he had full powers [Art. 1911].
Note: If the agent acts in his own name, but the
contract involves things belonging to the
principal, the contract must be considered as
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entered into between the principal and the third
person [Sy-Juco and Viardo v. Sy-Juco (1920)].
RATIFICATION
Ratification is the adoption or affirmance by a
person of a prior act which did not bind him, but
which was done or professed to be done on his
account, thus giving effect to the acts as if
originally authorized.
Aside from the intent to ratify, the following
conditions must be fulfilled for ratification to be
effective:
(1) The principal must have the capacity and
power to ratify;
(2) He must have had knowledge or had reason
to know of material or essential facts about
the transaction;
(3) He must ratify the acts entirely;
(4) The act must be capable of ratification; and
(5) The act must be done in behalf of the
principal [De Leon (2010)].
Ratification has the following effects:
(1) With respect to the agent, it relieves him of
liability. He may thus recover compensation
from the principal.
(2) With respect to the principal, he assumes
responsibility for the unauthorized act as
fully as if the agent had acted under an
original authority. But he is not liable for
acts outside the authority affirmed by his
ratification.
(3) With respect to third persons, they are
bound by the ratification and cannot set up
the fact that the agent has exceeded his
powers [Art. 1901].
SEPARATE CONTRACTS WITH
PRINCIPAL AND AGENT
When (1) two persons contract with regard to
the same thing, one with the agent and the
other with the principal, and (2) the two
contracts are incompatible with each other, that
of prior date shall be preferred, subject to the
rules on double sales [Art. 1916].
The rules on double sales [Art. 1544] provide:
(1) If the same movable property is sold to
different persons, ownership is transferred
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to whoever first took possession in good
faith.
(2) If it be an immovable:
(a) Ownership belongs to the person who
in good faith first recorded it in the
Registry of Property.
(b) If there is no inscription, ownership shall
belong to the person who, in good faith
was first in possession; and in the
absence of such, to the one who
presents the oldest title, provided there
is good faith.
The liability for damages suffered by the third
person whose contract must be rejected shall
be borne by:
(1) The principal, if the agent acted in good
faith; or
(2) The agent, if he acted in bad faith [Art. 1918].
WHEN PRINCIPAL IS NOT LIABLE, IN
SUMMARY
(1) Void or inexistent contracts [Art. 1409];
(2) Sale of a piece of land or any interest
therein when the authority of the agent is
not in writing [Art. 1874];
(3) Acts of the substitute appointed against the
prohibition of the principal [Art. 1892];
(4) Acts done in excess of the scope of the
agent’s authority [Art. 1898 and 1910];
(5) When the agent acts in his own name,
except when the contract involves things
belonging to the principal [Art. 1883];
(6) Unenforceable contracts [Art. 1403].
OBLIGATION FOR
COMPENSATION OF AGENT
Art. 1875. Agency is presumed to be for a
compensation, unless there is proof to the
contrary.
AMOUNT
The principal must pay the agent:
(1) The compensation agreed upon; or
(2) The reasonable value of the agent's services
if no compensation was specified.
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COMPENSATION OF BROKER
A broker is entitled to the usual commissions
whenever he brings to his principal a party who
is able and willing to take the property and
enter into a valid contract upon the terms
named by the principal. A broker is never
entitled to commission for unsuccessful efforts.
He must prove that he was the procuring cause
of the transaction. Otherwise, he is not entitled
to the stipulated broker’s commission [Inland
Realty v. CA (1997)].
Procuring cause refers to a cause originating a
series of events which, without break in their
continuity, result in the accomplishment of the
prime objective of the employment of the broker
– producing a purchaser ready, willing and able
to buy on the owner’s terms.
Since the broker’s only job is to bring together
the parties to a transaction, it follows that if the
broker does not succeed in bringing the mind of
the purchaser and the vendor to an agreement
with reference to the terms of a sale, he is not
entitled to a commission [Rocha v. Prats (1922)].
If the principal breaks off from negotiations with
a buyer brought by the agent in order to
deliberately deal later with the buyer personally,
this is evident bad faith. In such case, justice
demands compensation for the agent [Infante v.
Cunanan (1953)].
LIABILITY FOR EXPENSES AND
DAMAGES
NECESSARY FUNDS
(1) The principal must advance to the agent,
should the latter so request, the sums
necessary for the execution of the agency.
(2) In case the agent already advanced them,
the principal must reimburse him therefor:
(a) Even if the business or undertaking was
not successful;
(b) Provided that the agent is free from all
fault [Art. 1912].
The reimbursement shall include the interest on
the sums advanced from the day the advances
were made.
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WHEN THE PRINCIPAL IS NOT
LIABLE FOR EXPENSES
The principal is not liable for the expenses
incurred by the agent in the following cases:
(1) If the agent acted in contravention of the
principal’s instructions, unless the latter
should wish to avail himself of the benefits
derived from the contract;
(2) When the expenses were due to the fault of
the agent;
(3) When the agent incurred them with
knowledge that an unfavorable result would
ensue, if the principal was not aware
thereof;
(4) When it was stipulated that:
(a) The expenses would be borne by the
agent; or
(b) That the latter would be allowed only a
certain sum [Art. 1918].
DAMAGES
Art. 1913. The principal must also indemnify the
agent for all the damages which the execution
of the agency may have caused the latter,
without fault or negligence or his part.
RIGHT OF RETENTION BY AN AGENT
The agent may retain in pledge the things which
are the object of the agency until the principal
effects:
(1) Reimbursement of necessary funds
advanced; and
(2) Payment of indemnity for damages [Art.
1914].
This is a case of legal pledge. However, the
agent is not entitled to the excess in case the
things are sold to satisfy his claims.
MULTIPLE PRINCIPALS
If there are two or more principals who
appointed the agent for a common transaction
or undertaking, they shall be solidarily liable for
all the consequences of the agency [Art. 1915].
Requisites:
(1) There are two or more principals;
(2) The principals have all concurred in the
appointment of the same agent; and
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(3) The agent is appointed for a common
transaction or undertaking.
LIABILITY FOR QUASI-DELICT BY AN
AGENT
The principal is solidarily liable to third persons
for torts of an agent committed:
(1) At the principal’s direction; or
(2) In the course and within the scope of the
agent’s employment.
Modes of Extinguishment
IN GENERAL
Agency is extinguished:
(1) By its revocation;
(2) By the withdrawal of the agent;
(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;
(5) By the accomplishment of the object or
purpose of the agency;
(6) By the expiration of the period for which the
agency was constituted [Art. 1919].
The provision enumerates only those which are
peculiar to agency and is, therefore, not
exclusive. Agency may also be extinguished by
the modes of extinguishment of obligations in
general [De Leon (2010)].
The modes of extinguishment may be classified
into three:
(1) By agreement (Nos. 5 and 6);
(2) By subsequent acts of the parties:
(a) By the act of both parties or by mutual
consent; or
(b) By the unilateral act of one of them
(Nos. 1 and 2);
(3) By operation of law (Nos. 3 and 4).
REVOCATION BY PRINCIPAL
General rule: The principal may:
(1) Revoke the agency at will; and
(2) Compel the agent to return the document
evidencing the agency.
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Qualifications: The right of the principal to
terminate the authority of his agent is absolute
and unrestricted, except that he is liable for
damages in case:
(1) He revokes the agency in bad faith [Danon
v. Brimo (1921)]; or
(2) He revokes the agency before the expiration
of the period stipulated in the agency
contract.
Exception: Agency cannot be revoked if it is
coupled with an interest, such that:
(1) A bilateral contract depends upon it;
(2) It is the means of fulfilling an obligation
already contracted; or
(3) A partner is appointed manager of a
partnership in the contract of partnership
and his removal from the management is
unjustifiable.
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.
MANNER
Revocation may be express or implied.
There is express revocation when the principal
clearly and directly makes a cancellation of the
authority of the agent orally or in writing.
There is implied revocation in the following
cases:
(1) 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 requirement
of notice to third persons [Art. 1923].
(2) The agency is revoked if the principal
directly manages the business entrusted to
the agent, dealing directly with third
persons [Art. 1924].
(3) A general power of attorney is revoked by a
special one granted to another agent, as
regards the special matter involved in the
latter [Art. 1926].
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There is implied revocation only where the new
appointment is incompatible with the previous
one.
EFFECT OF REVOCATION IN
RELATION TO THIRD PARTIES
Art. 1921. If the agency has been entrusted for
the purpose of contracting with specified
persons, its revocation shall not prejudice the
latter if they were not given notice thereof.
If the agent had general powers, revocation of
the agency does not prejudice third persons who
acted:
(1) In good faith; and
(2) Without knowledge of the revocation.
Notice of the revocation in a newspaper of
general circulation is a sufficient warning to
third persons [Art. 1922].
WITHDRAWAL BY AGENT
The agent may withdraw from the agency by
giving due notice to the principal.
General rule: If the principal should suffer any
damage by reason of the withdrawal, the agent
must indemnify him therefor.
Exception: The agent is not liable for damages if
he should base his withdrawal upon the
impossibility of continuing the performance of
the agency without grave detriment to himself
[Art. 1928].
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.
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DEATH, CIVIL INTERDICTION, EXPIRATION OF TERM

INSANITY OR INSOLVENCY (1) If created for fixed period, expiration of the
period extinguishes agency even if the
purpose was not accomplished.
DEATH OF PRINCIPAL
(2) If no time is specified, the courts may fix the
General rule: Death extinguishes agency.
period as under the circumstances have
been probably contemplated by the parties
Exceptions:
[Art. 1197]. Otherwise, the agency terminates
(1) The agency remains in full force and effect
at the end of a reasonable period of time.
even after the death of the principal, if it has
Either party can terminate the relationship
been constituted:
at will by giving notice to the other [De Leon
(a) In the common interest of the principal
(2010)].
and agent; or
(b) In the interest of a third person who has
The period contemplated may be implied from
accepted the stipulation in his favor
terms of agreement, purpose of agency, and the
[Art. 1930].
circumstances of the parties.
(2) 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 [Art. 1931].
(3) The agent must finish business already
begun on the death of the principal, should
delay entail any danger [Art. 1884].

DEATH OF AGENT
If the agent dies, his heirs must:
(1) Notify the principal thereof; and
(2) In the meantime adopt such measures as
the circumstances may demand in the
interest of the latter [Art. 1932].

ACCOMPLISHMENT OF OBJECT
OR PURPOSE
The fulfillment of the purpose for which agency
was created ipso facto terminates agency even
though it was expressly made irrevocable. If the
purpose has not been accomplished, the agency
continues indefinitely for as long as the intent to
continue is manifested through words or actions
of the parties.

DISSOLUTION OF FIRM OR
CORPORATION
The dissolution of a partnership or corporation
which entrusted (principal) or accepted (agent)
the agency extinguishes its juridical existence,
except for the purpose of winding up its affairs.
It is equivalent to death.

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