II. MODES OF EXTINGUISHMENT II.

With death, the principal’s will ceases or is

Articles 1919-1932 terminated; the source of authority is
extinguished.
JURISPRUDENCE:
Art. 1919. Agency is extinguished: In the case of Lavina vs. Court of Appeals,
1. By its revocation; 171 SCRA 691 (1989), it was held that a
2. By the withdrawal of the agent; dead client has no personality and cannot
3. By the death, civil interdiction, insanity or be represented by an attorney.
insolvency of the principal or accepted the
agency;
4. By the dissolution of the firm or corporation Exception:
which entrusted or accepted the agency; 1. That the agency is coupled with interest; (Art.
5. By the accomplishment of the object or 1930) and
purpose of the agency; 2. That the act of the agent was executed without
6. By the expiration of the period for which the knowledge of the death of the principal and the
agency was constituted. third person who contracted with the agent
acted in good faith. (Art. 1931)

By the above provision, the modes of extinguishment  The power to foreclose survives the death of
of agency are: mortgagor.
1. By agreement; (Nos. 5 & 6)
2. By the subsequent acts of the parties which i. Under the Act No. 3135, the power of
may be either: sale in a deed of mortgage is not
a. By the act of both parties or by mutual revoked by the death of the principal
consent; or (mortgagor) as it is not an ordinary
b. By the unilateral act of law. (Nos. 1 & 2) agency that contemplates exclusively
3. By operation of law. (Nos. 3 & 4) the representation of the principal by
the agent but is primarily an authority
 The death, civil interdiction, insanity, or conferred upon the mortgagee for the
insolvency of either party terminates the latter’s own protection.
agency, and this is true notwithstanding that ii. Under the Rules of Court, the right of
the agency period has not yet expired. the mortgagee to extrajudicially
In case of death of one of several principals or foreclose the mortgage after the death
agents of the mortgagor does not depend on
I. The death of one of several principals does the authorization in the deed of
not revoke the agent’s authority nor does mortgage executed by the latter. This
the death of one of several agents put an right exists independently.
end to the agency of all, whether the Section 7, Rule 86 of the Rules of Court
responsibility of the several principals or grants three (3) remedies to a
agents is joint or solidary. mortgagee in case a mortgagor dies.
II. The intention of the parties controls except These are:
as otherwise provided by law. a. To waive the mortgage and
In case of civil interdiction claim the entire debt from the
I. A person under civil interdiction is deprived estate of the mortgagor as an
during the period of his sentence of the ordinary action;
right to manage his property and dispose of b. To foreclose the mortgage
such property by any act or any conveyance judicially and prove any
inter vivos. deficiency as an ordinary claim;
In case of death of the principal or agent and
I. By reason of the very nature of the c. To rely on the mortgage
relationship between the principal and exclusively, foreclosing the
agent, agency is extinguished ipso jure same at any time before it is
upon the death of either principal or agent. barred by prescription without
right to file a claim for any
deficiency.
 will continue until a specified event
 Dissolution of a firm or corporation is occurs, the happening of that
equivalent to its death, being sometimes specified event terminates the
likened to the death of a natural person. agency.

 At least between the parties, principal and In case of loss or destruction of subject matter
agent, the fulfillment of the purpose for which In the absence of any agreement by the parties
the agency is created ipso facto terminates the to the contrary, the loss or destruction of the subject
agency, even though expressed to be matter of the agency or the termination of the
irrevocable. principal’s interest therein terminates the agent’s
authority to deal with reference to it.
 An agency relationship between the parties Exception:
may also be terminated by the non- a. If it is possible to substitute other material
accomplishment of the object or purpose for that which was destroyed without
within a reasonable time. substantial detriment to either party or if
the destroyed subject matter was not in
In case of expiration of term fact essential to the contract, the agency
I. Where the agency, by the terms of the may continue.
original agreement, is created for a fixed b. A partial loss or destruction of the subject
period or is to end at a certain time, the matter does not always result in a complete
expiration of such period or the arrival of termination of the agency, and under such
that time, results in the termination of the circumstances, while the agency may be
relationship, even though the purpose for ended insofar as the destroyed property is
which the agency was created has not been concerned, it may continue in existence as
accomplished. But the parties may consent to other property not affected.
to the continuation of the agency The termination of agency does not necessarily
relationship. free the principal from liability. But should the subject
II. If no time or date is specified, it terminates matter be destroyed without the fault of the principal,
at the end of a reasonable period of time. no liability is assumed by him.
Since it is at will, either party may However, if a third party has given money or a
terminate the agency by giving notice to thing of value for the subject matter, he may sue the
the other. principal to recover the same.
III. A period may be implied from the terms of
the agreement. In case of change of conditions
Where there is a basic change in the
 Art. 1919 gives only those causes of circumstances surrounding the transaction, which was
extinction which are peculiar to agency. The not contemplated by the parties and which would
list is not exclusive. reasonably lead the agent to believe that the principal
would not desire him to act, the authority of the agent
i. An agency may also be is terminated.
extinguished by modes of The agent is under a duty to exercise due care
extinguishment of obligations in in ascertaining the business conditions in the market in
general when applicable, like loss of which he is to act. If they are not conducive to his
the thing or novation. acting, his authority may be terminated.
ii. During the existence of a state of Exceptions:
war, a contract of agency is a. If the original circumstances are restored within
inoperative if the agent or the a reasonable period of time, the agent’s
principal is an enemy alien. authority may be revived.
iii. An agency terminates if a change b. Where the agent has reasonable doubts as to
in the law makes the purpose of whether the principal would desire him to act,
the agency unlawful. his authority will not be terminated if he acts
iv. A sub-agent’s authority terminates reasonably.
with the termination of the agent’s c. When the principal and agent are in close daily
authority. contact, the agent’s authority to act will not
v. If the principal and agent have terminate upon a change of circumstances if
originally agreed that the agency
 the agent knows the principal is aware of the act – when such termination would deprive the
change and does not give him new instructions. agent of his legitimate business.

 While the relation of principal and agent is Return of document evidencing agency
confidential, not all knowledge acquire by  If the authority of the agent is in
the agent is of a confidential nature. writing, the principal can compel the
The court, therefore, must determine: agent to return the document
First, whether the knowledge or information, evidencing the agency.
the use of which the complaint seeks to enjoin,
is confidential; and  Revocation may be express or implied.
Second, whether, it if be confidential, in whole
or in part, its use ought to be prevented. i. An example of implied
revocation is when the principal
appoints a new agent for the
Art. 1920. The principal may revoke the agency at will, same business or transaction or
and compel the agent to return the document when the principal directly
evidencing the agency. Such revocation may be manages the business
express or implied. entrusted to the agent.
ii. When the principal after
 An agency may be terminated by the granting a general power of
subsequent acts of the parties. attorney to an agent, grants a
 When done by the principal, it is called special one to another agent,
“revocation”, and when done by the agent, there is implied revocation of
it is usually spoken of as “withdrawal” or the former as regards the
“renunciation.” special matter involved in the
 Wrongful termination can subject the latter.
terminating party to a suit for damages. iii. The agent’s authority may also
be revoked impliedly in the
 Subject only to the exceptions provided in same manner as in the case of
Art. 1927, the principal may revoke or appointment of an agent.
terminate the agency at will – at any time,
at his mere option, with or without reason Notice of revocation
– since an agency relationship is voluntary. 1. To agent.
As between the principal and agent, express
 As the law makes no distinction, revocation notice to the agent that the agency is revoked is
at will is proper whether the agency is not always necessary.
gratuitous or with compensation.
2. To third persons.
Liability of principal for damage caused by Revocation of an agency becomes operative as
revocation to the agent, from the time the revocation is
While the principal may have absolute power to made known to him. Thus, it has been held that
revoke the agency at any time, he must actual notice must be brought home to former
respond in damages for breach of contract customers, while notice by publication is
where the termination is wrongful. sufficient as to other persons.
1. The principal shall be liable for damages In the absence of any notice of revocation, the
occasioned by the wrongful discharge of the principal may also be held liable even to third
agent before the expiration of the period fixed. persons who never dealt with the agent
In such case, the action for indemnity would be previous to the revocation, if they, in common
derived not from the law, but from the contract with the public at large, are justified in believing
of the parties. that such agency continues to exist.
2. Where no time for the continuance of the
agency is fixed by its terms, the principal is at Renunciation of agency by the agent
liberty to terminate it at will subject only to the  Just as the principal has the power to
requirements of good faith. revoke the agency at will, so too, the
A principal is liable under Art. 19 of the Civil agent has the power to renounce the
Code in terminating an agency, at will – a legal agency relationship, subject only to the
 contractual obligations owing to the
principal, by giving notice to the
principal that he will no longer serve as Art. 1923. The appointment of a new agent for the
an agent. same business or transactions revokes the previous
 An agent cannot legally terminate an agency from the day on which notice thereof was
agency in order to take advantage of given to the former agent, without prejudice to the
the principal’s condition or to profit by provisions of the two preceding articles.
information resulting from his agency. Revocation by appointment of new agent
 There is implied revocation of the previous
Form of renunciation agency when the principal appoints a new
 It is not always necessary for the agent agent for the same business transaction
to renounce the agency expressly. provided there is incompatibility.
 On the other hand, the mere fact that  There is no implied revocation where the
the agent violates his instructions does appointment of another agent is not
not amount to renunciation, and incompatible with the continuation of a like
although he may thus render himself authority in the first agent, or the first agent is
liable to the principal, he does not not given notice of the appointment of the new
cease to be an agent. agent.

No substitution of counsel of record is allowed

Art. 1921. If the agency has been entrusted for the unless the following essential requisites of a valid
purpose of contracting with specified persons, its substitution concur:
revocation shall not prejudice the latter if they were a. There must be a written request for
not given notice thereof. substitution;
b. It must be filed with the written consent of the
Art. 1922. If the agent had general powers, revocation client;
of the agency does not prejudice third persons who c. It must be with the written consent of the
acted in good faith and without knowledge of the attorney to be substituted; and
revocation. Notice of the revocation in a newspaper of d. In case the consent of the attorney to be
general circulation is a sufficient warning to third substituted cannot be obtained, there must be
persons. at least a proof of notice that the motion for
substitution was served on him in the manner
 If the agency is created for the purpose of prescribed by the Rules of Court.
contracting with specific persons, its revocation Jurisprudence:
will not prejudice such third persons until In the case of Santana-Cruz vs. Court of Appeals,
notice thereof is given them. (Art. 1921) 361 SCRA 520 (2001), the authority of the attorney-
 Notice is not required if the third persons in-fact was revoked by the principal, the real party-
already know the revocation. in-interest in a pending litigation. It was held that
the revocation did not affect the authority of the
 In case the agent has general powers, innocent counsel retained by said agent – he remained
third persons dealing with the agent will not be counsel of record of the principal absent a valid
prejudiced by the revocation before they had substitution of counsel. The first counsel may not
knowledge thereof. be presumed substituted by a new counsel merely
from the filing of a formal appearance by the latter.
 An advertisement of the revocation in a
newspaper of general circulation would be
sufficient warning to third persons, for the
publication constitutes notice upon everybody Art. 1924. The agency is revoked if the principal
and this is true whether or not such third directly manages the business entrusted to the agent,
persons have read the newspaper concerned. dealing directly with third persons

 Under Art. 1921, the notice of revocation must

be personal; under Art. 1922, it may be Revocation by direct management of business
personal. by principal himself
 This is another case of implied revocation.
  Unless the only desire of the principal is for him
and the agent to manage the business together, Art. 1927. An agency cannot be revoked if a bilateral
the effect of the direct management of the contract depends upon it, or if it is the means of
business by the principal himself is to revoke fulfilling an obligation already contracted, or if a
the agency for there would no longer be any partner is appointed manager of a partnership in the
basis for the representation previously contract of partnership and his removal from the
conferred. management is unjustifiable.
 This Article should be distinguished from Art.
1916 which governs the relations as between Agency coupled with an interest
themselves of the third persons who separately General rule: The principal may revoke an
contract with the agent and the principal with agency at will. (Art. 1920)
regard to the same thing Exceptions:
Jurisprudence: 1. When the agency is created not only for the
In the case of International Exchange Bank vs. interest of the principal but also for the interest
Briones, 822 SCRA 103 (2017), the Spouses Briones’ of third persons; and
claim for loss cannot be seen as an implied 2. When the agency is created for the mutual
revocation of the agency or their way of excluding interest of both the principal and the agent.
petitioner. They did not disregard or bypass
petitioner when they made an insurance claim; In either case, the agency is deemed as one
rather, they had no choice but to personally do it coupled with an interest.
because of their agent’s negligence. This is not an
implied termination or revocation of agency  The agency cannot be revoked by the sole will
provided for under Art. 1924 of the Civil Code. of the principal as long as the interest of the
agent or of a third person subsists because it is
not solely the rights of the principal which are
Art. 1925. When two or more principals have granted affected.
a power of attorney for a common transaction, any
one of them may revoke the same without the  An agency coupled with an interest cannot be
consent of the other. terminated by the sole will of the principal
although it is so revocable after the interest
Revocation by one of two (2) or more ceases.
principals
As the appointment of an agent by two or more  In order that an agency may be irrevocable
principals for a common transaction or undertaking because coupled with an interest, it is essential
makes them solidarily liable to the agent for all the that the interest of the agent shall be in the
consequences of the agency (Art. 1915), any one of the subject matter of the power conferred and not
principals is granted under this article the right to merely an interest in the exercise of the power
revoke the power of attorney without the consent of conferred and not merely an interest in the
the others. exercise of the power because it entitles him to
In a solidary obligation, the act of one is the act compensation therefor.
of all. An agency is coupled with an interest:
a. Where the agent has parted with value or
incurred liability at the principal’s request,
Art. 1926. A general power of attorney is revoked by a looking to the exercise of the power as means
special one granted to another agent as regards the of reimbursement or indemnity; or
special matter involved in the latter. b. Where the interest in the thing concerning
which the power is to be exercised arises from
Partial revocation of general power by a an assignment, pledge, or lien created by the
special power principal with the agent being given the power
Two agents are involved: one to whom a to deal with the thing in order to make the
general power is previously granted and to whom a assignment, pledge, or lien effectual.
special power is given.
The general power is impliedly revoked as to  The agent’s remedy is to sue for breach of
matters covered by the special power. It is contract if the principal terminates their
indispensable that notice of the revocation be contract.
communicated in some way to the agent.
  The terminology used by the parties is not 1. Without just cause.
controlling. Even though an agency or power is The law imposes upon the agent the duty
made in terms irrevocable, that fact will not to give due notice to the principal and if the
prevent its revocation by the principal where withdrawal is without just cause, to
the agency or power is not, in fact, coupled indemnify the principal should the latter
with an interest. suffer damage by reason of such
withdrawal.
Revocability of agency coupled with an 2. With just cause.
interest If the agent withdraws from the agency for
i. Where there is no just cause. a valid reason as when the withdrawal is
Where the authority given to the agent is based on the impossibility of continuing
supplemented with an interest in the with the agency without grave detriment to
subject matter of the agency itself, the rule himself, or is due to a fortuitous event, the
is that both the right and the power to agent cannot be held liable.
revoke the agency without the agent’s
consent is taken away, and a purported
revocation can have no effect unless by Art. 1929. The agent, even if he should withdraw from
express provision the authority remains the agency for a valid reason, must continue to act
revocable. until the principal has had reasonable opportunity to
take the necessary steps to meet the situation.
ii. Where there is a just cause.
A power of attorney can be made Obligation of agent to continue to act after
irrevocable by contract only in the sense withdrawal
that the principal may not recall it at his Even when the agent withdraws from the
pleasure; but coupled with interest or not, agency for a valid reason, he must continue to act until
the authority certainly can be revoked for a the principal has had reasonable opportunity to take
just cause, such as when the agent betrays the necessary steps to remedy the situation caused by
the interest of the capital. the withdrawal.

 The agent’s power may be given as security

without transferring to the agent any interest in Art. 1930. The agency shall remain in full force and
the subject matter of the agency, or he may be effect even after the death of the principal, if it has
given, in addition, an interest in the subject been constituted in the common interest of the latter
matter of the agency. and of the agent, or in the interest of a third person
who has accepted the stipulation in his favor.
 Persons with a proprietary interest in the
subject matter of their “agency” are not true When death of principal does not terminate
agents at all. agency
In the following cases, the agency remains in
full force and effect even after the death of the
Art. 1928. The agent may withdraw from the agency principal:
by giving due notice to the principal. If the latter 1. If the agency has been constituted in the
should suffer any damage by reason of the common interest of the principal and the agent;
withdrawal, the agent must indemnify him therefor, (Art. 1927) and
unless the agent should base his withdrawal upon the 2. If it has been constituted in the interest of a
impossibility of continuing the performance of the third person who has accepted the stipulation
agency without grave detriment to himself. in his favor.

 Just as the principal may revoke generally the

agency at will, the agent may likewise renounce Art. 1931. Anything done by the agent, without
or withdraw from the agency at any time, knowledge of the death of the principal or of any
without the consent of the principal, even in other cause which extinguishes the agency, is valid
violation of the latter’s contractual rights; and shall be fully effective with respect to third
subject to liability for breach of contract or for persons who may have contracted with his in good
tort. faith.
 Normally, the death of the principal will
terminate the agency. However, the agent is required
to “finish the business already begun on the death of GROUP 2
the principal should delay entail any danger.”
Revocation through death of the principal
Baybay, Sharla P.
should not prejudice third persons who have dealt with Caniban, Darlene C.
the agent in good faith without notice of the Herradura, Joy P.
revocation, such third persons are protected where it is Lorenzo, Junette Mae C.
not shown that the agent had knowledge of the
termination of the agency because of the death of the
Miondas, Junaira D.
principal or of any other cause which extinguishes the San Juan, Vince Jay C.
agency.
Note that Art. 1931 speaks of “knowledge of
death of the principal or of any other cause” and
requires not only the third persons to be in good faith
but also 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.

Duty of agent’s heirs to protect interest of

principal
If the agent dies, the agency is also
extinguished. In such case, the law imposes upon the
heirs of the deceased agent not only the obligation to
notify the principal to enable the latter to adopt
measures as the circumstances may demand in the
interest of the principal.
This Article, however, does not impose a duty
on the heirs of the principal to notify the agent of the
death of the principal.

 An agency calls for personal services.

Therefore, the agent’s duties cannot be
performed by his representatives, and in case
of his death, the agency is generally thereby
terminated.

The rights and obligations of the agent arising

from the contract are not transmissible to his
heirs.
Exceptions:
1. The heirs’ duty to continue the agency after the
death of the agent arises from what may be
termed as an agency by operation of law or a
presumed tacit agency.
2. Where the agency is one coupled with an
interest in the subject matter of the agency. An
agency coupled with interest survives the death
of the agent. It is transmitted to his heirs or
representatives.