MEANA, DANARA ANN S.

A58 BLAW103 7-10AM

EXTINGUISHMENT OF AGENCY

1. BY REVOCATION
Kinds of revocation:
A. Express – when made orally or in writing
B. Implied – when revocation can be inferred from an act of the principal as in the
following :
 When a new agent is appointed for the same business or transaction, the
previous agency is revoked from the day on which notice thereof was
given to the former agent. (Art. 1923)
Example: Pal gave a general power of attorney to John to manage
Pal’s building. Later, Pal gave an exclusive authority to Karlos to manage
Pal’s building and notified giving of such exclusive authority to Karlos.
Effect: John’s authority is implied revoked upon giving of the
notice. The notice need not indicate that John’s authority is being
revoked; otherwise, it will become an express revocation.
 If the principal directly manages the business entrusted to the agent,
dealing directly with the third persons. However, if the purpose of the
principal is just to assist the agent, the latter’s authority is not deemed
revoked.
Example: Pal gave a general power of attorney to John to manage
Pal's building. Later, Pal wrote all the tenants of the building to make
payment of their rental to him alone. John’s authority is implied revoked. If
Pal goes to the building from time to time to just help John in managing
the building, John’s authority is not deemed revoked.
 A General power of attorney is revoked by a special one granted to
another agent, as regards the special matter involved to the latter. (Art.
1926)
Example: Pal gave a general power of attorney to John to manage
Pal’s building. As manager, John’s authority includes among other power
such as building administration, maintenance, repairs, electrical works.
Later, Pal appointed Karlos who is an expert electrician, to manage the
 electrical works of the building. John’s authority with respect to electrical
works is impliedly revoked.

REVOCATION BY PRINCIPAL
Revocation refers to the act of the principal of terminating the agency at
will confidence and representation being the foundation of the contract .
The principal may revoked the agency at will, and compel the agent to
return the document evidencing the agency. (Art. 1920)
RENUNCIATION OF AGENCY BY AGENT
Renunciation refers to the act of the agent of terminating the agency at
will. Agent has the power to renounce the agency relationship giving
notice to the principal that he will no longer serve as an agent. In effect, he
resigns. Thus, if there is no contract existing between the parties or if the
contract is for no fixed or definite period of time, it is terminable by the
agent at will. Even in the face of an express contact, the agent has the
power to renounce the agency, since an agency relationship is voluntary,
although under such circumstances, his breach of contract may create a
liability for wrongful termination. (Art. 1928)
Form of renunciation – it is also be expressed or implied.
Who may revoke the agency of there are two or more principals?
When the power of attorney was granted for a common transaction, any
one of the principal may revoke the same without the consent of the
others. (Art. 1935). This is consistent with the solitary liability of the
principal. (Art. 1915)
When agency may not be revoked at will?
 If bilateral contract depends upon the agency.
Example: Pal sold his lot and building to John for P2, 000,000 under the
following terms: Down payment of P800,000; balance of P1, 200,000 to be
paid in 24 equal monthly installments of P50, 000. The parties stipulated
that: (1) the transfer certificate of title to the Koran building will be
delivered to John upon full payment of the balance of the purchase price;
and (2) John will be given a general power of attorney to manage the
building with his salary of P50, 000 to be applied to the installments.
Here, Pal cannot revoke the agency at will because a bilateral contract

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 depends upon it with John being obligated to pay the purchase price and
Pal to deliver the transfer certificate of title to the property.
 If the agency is a means of fulfilling an obligation already contracted.
Example: Pal borrowed P50, 000 from John. To pay debt, Pal
appointed John as his agent to collect Pal’s receivables and apply the
amounts collected to the debt, Pal cannot revoke the agency at will.
 If a partner is appointed manager of a partnership in the contract of
partnership and his removal from the management is unjustifiable. (Art.
1927)
Removal of a partner appointed as manager in the articles of partnership
without justifiable reason is an actor notation which will require the
consent of all the partners including the manager who sought to be
replaced.
Notice of revocation
 If the agency has been entrusted for the purpose of contracting with
specified persons, the principal must give a timely notice of the revocation
to such third persons. Without such notice, said third persons will not be
prejudiced. Therefore, the act done shall be legally operative against the
principal. (Art. 1921) The notice must be personal.
 If the agent had general powers such as he was entrusted to contract with
the public or any person, revocation of the agency does not prejudice
third persons who acted in good faith and without knowledge of revocation
. Notice of revocation in a newspaper of general circulation is sufficient
warning to third persons. (Art. 1922) However, the revocation is in any
case binding against third person who had knowledge thereof.

2. BY WITHDRAWAL OF THE AGENT

How withdrawal is made?
By the agent giving due notice to the principal of his withdrawal. (Art. 1928)
Liability/obligation of an agent who withdraws:
 The agent must indemnify the principal for any damage suffered by the latter
by reason of the withdrawal, unless the agent should base his withdrawal

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 upon the impossibility of continuing the performance of the agency without
grave detriment to himself.( Art. 1928)
Thus, the agent will not be liable if the reason for his withdrawal is his
failing health.
 The agent who withdraws must continue to act as such until the principal has
had reasonable opportunity to take necessary steps to meet the situation,
even if he withdraws for a valid reason. (Art. 1929)

3. BY THE DEATH, CIVIL INTERDICTION, INSANITY OR INSOLVENCY OF

THE PRINCIPAL OR OF THE AGENT.
A. DEATH
there is no one to be represented if the principal dies. If it is the agent
who dies, there is no one to represent the principal.
Death of the principal
1. When death of principal does not extinguish the agency?
As a general rule, the death of the principal extinguishes the
agency. However, the agency is not extinguished in the following:
a. If the agency has been constituted in the common interest of the
principal and the agent.
Example: Pal borrowed P50, 000 from John. Pal delivered his gold
bracelet to John by way of pledge and gave John the authority to sell
the bracelet if Pal default in the payment of his debt. If Pal dies before
the debt is paid, John remains an agent.
b. If the agency has been constituted in the interest of third person who
has accepted the stipulation in his favor. (Art. 1930)
Example: Pal sells his lot to John for P100, 000 which is payable in
10 equal monthly installments of P10, 000. Pal appointed John as his
agent to make the monthly payment to Third, a creditor of Pal, who
accepted the stipulation in his favor. Even if Pal dies before the
payments are completed, the agency remains. This is a case of
Stipulation pour Autrui.

2. Validity of agent’s act without knowledge of the death of the principal or

otherwise cause of extinguishment of the agency.

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 The Acts of the agent which are done without knowledge of
the death of the principal or any other cause which extinguishes the
agency are valid and shall be fully effective with him in good faith. (Art.
1931)
The agent must finish the business already begun on the
death of the principal, if delay entail any danger. This presupposes that
the agent had knowledge of the principal ‘s death.
Death of the agent
Effect of the death of agent on agency:
The death of the agency extinguishes the agency.
Duty of agent’s heirs
a. To notify the principal of the agent’s death.
b. To adopt in the meantime such measures as the circumstances may
demand in the interest of the principal. (Art. 1932)

B. CIVIL INTERDICTION
A person civilly interdicted is not only in prison. He cannot manage his
property or dispose of it by an act or conveyance inter vivos. In the case of
the principal, he cannot give his consent. In the case of the agent, he will not
be able to carry out the agency because he is deprived of his liberty.
C. INSANITY
The principal cannot give his consent if he is insane. An insane agent
cannot be expected to carry out the agency.
D. INSOLVENCY
The principal cannot give his consent if he is insolvent. An insolvent agent,
on the other hand, cannot be expected to effectively carry out the agency
because the trust originally reposed upon him has been lost.

4. BY THE DISSOLUTION OF THE FIRM OR CORPORATION WHICH ENTRUSTED OR

ACCEPTED THE AGENCY.

5. BY THE ACCOMPLISHMENTS OF THE OBJECT OR PURPOSE OF THE AGENCY.

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6. BY EXPIRATION OF THE PERIOD FOR WHICH THE AGENCY WAS
CONSTITUTED. (ART. 1919)