CHAPTER 5
were not given notice thereof.
EXTINGUISHMENT OF AGENCY
How and When Agency is Extinguished
 ART.1919 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 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.
Principal’s Revocation of the Agency
 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.
 document (i.e. SPA)
 In keeping with the truism that an agency is
highly personal relationship and one built upon
with trust and confidence.
 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.
 GR: Near absolute power of the principal to
revoke agency.
XPN: Breach of contract committed by a
principal who revokes the agency which was
constituted as “irrevocable” or for a definite
period.
FX when principal revokes a contract with
definite term:
 But he does not lose his power to revoke
 The agency is terminated
 He would be liable to the agent for the
damages caused, including the
compensation when the revocation is done
in bad faith.
1. Express Revocation
 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
ART.1922. If the agent had general powers,
revocation of the agency does not prejudice third
persons who acted in good faith and without
knowledge of the revocation. Notice of revocation
in a newspaper of general circulation is a sufficient
warning to third persons.
2. Implied Revocation
 ART. 1923. 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, without
 ART.1924. The agency is revoked if the principal
directly manages the business entrusted to the
agent, dealing directly to third persons.
 ART.1926. A general power of attorney is revoked
by a special one granted to another agent, as
regards the special matter involved in the latter.
 The following have been enumerated as to
constitute implied revocation:
(a) Appointment of New agents for same
Business
 The critical time when the agency is
revoked “from the day on which notice
thereof was given to the former agent”
(b) When Principal Directly Manages the
Business
 It would only mean revocation with
respect to the third persons the
principal deals directly;
 NOT as to 3rd parties who have
previously known the power of attorney
of the agent and who have not deal
with the principal, the agency cannot be
considered revoked;
 The agent must be aware or given
notice;
 Directly managed the business which is
covered by his power of attorney;
NOTE: Continued involvement of the
principal in the management of the
business or the property which is the
object of the power of attorney given to
 an agent does not necessarily mean
there is intent to revoke.
 There is revocation when such acts
would be inconsistent with the terms of
the power of attorney given to the
agent.
(c) Special Power of Attorney Revokes a
General Power of Attorney.
 A special power of attorney granted to
one person is not revoked by a general
power of attorney subsequently
granted in favor of another person as to
the special matter involved in the SPA.
 The rule is embodied in ART. 1923. 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.
3. Revocation of the Basis of Breach of Trust
 EXAMPLE:
 When the agent holds his position indefinite or
when no period has been fixed and so long as
the confidence disappears the principal exists;
But as soon as the confidence disappears the
principal has the right to revoke the power
conferred upon the agent.
4. Effects of Revocation on 3rd Parties
(a) When it Affects Dealings with Specified 3 rd
Parties
 Duty of the principal to give due and timely
notice to the 3rd parties of the termination
of the agency;
Failing to do so, he is responsible to them
for whatever goods may have been in good
faith with or without negligence sent to the
agent without knowledge, actual or
constructive, of the termination of the
relationship.
 SPA duly authorized the agent to represent
and act on behalf of the principal, the
power granted thereto can be relied upon
by 3rd persons
(b) Revocation of General Powers of Attorney
 Revocation of the agency does not
prejudice 3rd persons who acted in good
faith and without knowledge of the
revocation.
(c) Revocation of SPA
5. Irrevocable Agencies
 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 partnership and his
removal from the management is unjustifiable.
 Under Art.1927 of NCC, an agency cannot be
revoked when;
(a) A bilateral contract depends upon the
agency for its fulfillment;
(b) It is the means of fulfilling an obligation
already contracted;
(c) A partner is appointed manager of a
partnership in the contract of partnership
and the removal from management is
unjustifiable.
Example of (1) “agency coupled with interest” is when a
power of attorney is constituted in a contract of real
estate mortgage pursuant to the requirement of Act.
No. 3135, which would empower the mortgagee upon
the default of the mortgagor to pay the principal
obligation, to effect the sale of the mortgage property
through extrajudicial foreclosure.
(2) Situation that where the appointment of agent is not
merely for the benefit of the principal, but allows the
agent to build business interests that would yield him
gains in terms of commission on a long-term basis, such
is in the case of an insurance agent, the same is deed an
“agency coupled with an interest” and cannot just be
removed.
(3) It is the agency that cannot be revoked or withdrawn
by the principal due to an interest of a third party that
depends upon on it, or the mutual interest of both
principal and agent.
Withdrawal of the Agent From the Agency
 ART.1928. 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.
 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 necessary steps to meet the
situation.
 In Valera v. Velasco, it held that the institution
of an action against his principal for the
recovery of the balance in his favor resulting
from the liquidation of the accounts, and the
rendering of a final account were equivalent to
an express renunciation by the agent of the
agency, and terminated the juridical relation
between them.
Death, Civil Interdiction, Incapacity or Insolvency of
the Principal
Since agency is both a fiduciary and a representative
relationship, the death of the principal automatically
extinguishes the contract, for certainly even if the agent
is willing to go on, he has nobody to represent; the
source of authority is extinguished
1. When the Agency Continues Despite Death of the
Principal
 ART.1930. The agency shall remain in full force and
effect even after the death of the principal, it has
been constituted in the common interest of the
latter and of the agent, or in the interest of a third
person who has accepted the stipulation in his
favor.
 The power of sale given in a mortgage is a
power coupled with an interest which survives
the death of the grantor.
2. Effects of Acts Done by Agent Without Knowledge of
Principal’s Death.
 ART.1931 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.
 Under this provision, acts done by agent after
the death of principal is valid and effective
when;
(1) That the agent acted without
knowledge of the death of the
principal; and
(2) That the 3rd person who contracted
with the agent himself acted in
good faith.
 Note: The Civil Code does not impose a
duty on the heirs to notify the agent of
the death of the principal.
Death, Civil Interdiction, Incapacity or Insolvency of
the Agent
 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.
1. In Case of Multiple Agents
 GR: Without showing an intention to the
contrary , in case of agency where there are
several agents constituted for the same
business or property, the death of one or more,
but not all of them would NOT extinguish the
agency, with respect to those who remain
living.
XPN: When it is clear at the constitution of the
agency that the common agents were intended
to be considered as having capacity as a group
and not individually.
Note: Also applicable to legal incapacity or
insolvency.
Dissolution of a Corporation
 Dissolution of a corporation extinguishes its juridical
personality for every purpose that seeks to pursue
“new business,” or that of going concern.
 Its Board of Directors and corporate officers lose
every legal right to enter into a contract or
transaction to pursue new business or done in the
ordinary course of business.
 Any such contract entered into would be VOID,
even as against 3rd parties who acted in good faith,
 for at the point of dissolution, existing creditors
must be protected under the trust fund doctrine.

 However, the corporation after dissolution, and

within 3 years therefrom continues to have juridical
personality for only for purposes of liquidation.
Obligations of Agent When the Agency Extinguished
 Even when the agency relation is terminated, the
agent is bound to keep confidential such matters
and information which he learned in the course of
the agency when such matter or information is
confidential, such as business secrets.
/
 Agent cannot legally terminate an agency in order
to take advantage of the principal’s condition or to
profit by information resulting from his agency, for
such would be a breach of his duty of loyalty.