MODES OF EXTINGUISHMENT OF AGENCY

Article 1919. Agency is extinguished: (1) By its revocation; we talk about the PRINCIPAL; when you revoke, it means you are the one who granted the power to the agent. Relate this 1920 as to how revocation is made. (2) By the withdrawal of the agent; here we talk about the agent. Relate with article 1928. (3) By the death, civil interdiction, insanity or insolvency of the principal or of the agent; here, we talk about death, civil interdiction/insanity/insolvency of either principal or agent. (4) By the dissolution of the firm or corporation which entrusted (referring to the principal) or accepted (referring to the agent) the agency; death of the juridical entity results to extinguishment of 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. Article 1920. The principal may revoke the agency at will, (this refers to revocation; even if the agency is for a certain period, the principal always has the power to revoke the same) and compel the agent to return the document evidencing the agency.(this is the Power of attorney as proof of the extent of the authority. So if you revoke the power, you can also compel the return of such document evidencing the agnecy) Such revocation may be express or implied. This is actually an exception to 1308 on Mutuality of contracts. Fulfillment of contract cannot be left to the will of one of the contracting parties. Here, the revocation can be made at anytime by the principal. So it is an exception to the rule on mutuality of contracts. Reasons: know the reason for agency. 1. It is based on trust and confidence. If he thereby loses trust, then he can withdraw such authority of the agent even without cause. 2. The power emanates from the PRINCIPAL. He who bequeaths such power also has the power to withdraw it anytime.

3. The relationship is consensual. EXCEPTION TO THE RULE: Is there an agency where principal cannot revoke the authority given to agent? YES. Article 1927; see article. General rule: agency is revocable under 1920. Exception: 1927. Article 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 of partnership and his removal from the management is unjustifiable. Article 1930. The agency shall remain in full force and effect even after the death of the principal, if 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. (n) AGENCY COUPLED WITH AN INTEREST articles 1927 in relation to 1930 If you are working on a law firm or into a brokerage, you have to be sure that the agency cannot be revoked. It must be exclusive because the property that is involved is quite big. Sir mentions a situation where someone would show you a contract entitled agency coupled with interest. That is ERRONEOUS. It is not the title or the name which makes it an agency coupled with an interest. You have to look into the details. Examine the details and determine if such agency relation is one coupled with an interest for it to be irrevocable. An agency coupled with an interest is irrevocable and even survives the death of the principal. Remember: in article 1919, the death of the principal would extinguish the agency. Why? Theres no more source of authority. It happens by operation of law. It is like an automatic revocation of agency. But then article 1930, which is actually same with article 1927, still an agency coupled with interest will survive the death of the principal. Why is that so? We have to go into the details of this article. What are these kinds of agency which are coupled with an interest?

1. Under 1927, an agency cannot be revoked if a bilateral contract depends upon it. Example: P sells his factory to B upon installment. There is a down payment of 800,000. P entered into a contract to sell with B. 200,000 balance payable in 6 months installment. There is an agreement to the effect that P will have to appoint A as agent in the meantime because P here still owns the factory and upon full payment, P will execute the absolute deed of sale to B. So P appoints A to manage the factory and apply the proceeds or profits thereof to the balance of the debt of B. In this case, P cannot revoke the agency of A to manage the factory because the bilateral contract of sale depends upon this agency relation with P. Take note that the irrevocability of agency would only be up to the time that the bilateral contract exists. After the fulfillment of the obligation here, the agency relation would now be revocable. 2. Or it is a means of fulfilling an obligation already contracted. Example: D borrowed 500K from P payable in 1 year. As security for the debt, there is an agreement that D will constitute A as his agent to sell his parcel of land if D is not able to pay P within the period given in the contract of loan. (Take note that it is not a contract of mortgage) there is a separate agency relation between D and A, although it is for the fulfillment of the oblagion of D to P. Relate this with article 1930 in relation to a third person. Under article 1930, it says, if it is constituted in rd the interest of a 3 person who has accepted the stipulation in his favor rd (stipulation pour autrui: article 1311 3 paragraph) Who accepts the stipulation in favor of a third person for this to be effectual?

1930 in relation to 1311 on relativity of contracts. P is not party to the contract between D and A so there is no relativity as to him that is why we have this stipulation pour autrui or in favor of a third person. If this is the situation, the D, as long as the contract or obligation to pay his creditor exists, he cannot revoke the agency which exists between him and A because it involves a means in fulfilling an obligation in favor of a third person. 3. Agency for the Mutual benefit of the parties. D owes A for the services of the latter. There must be compensation for services. There is no cash so D entered into an agency relation with A for A to sell his land and to apply the proceeds thereof as payment for his compensation in another transaction. In this case, D cannot revoke the agency relation between him and A so long as the payment of the services is satisfied. It is an agency constituted for mutual benefit of the parties. Take note that in these kinds of relations, the fiduciary relationship that is inherent in agency does not actually exist. Why? Because there is now a pecuniary interest that exists on the part rd of the agent or a 3 person on the subject matter of the agency iteset. In ordinary agency, it is as simple as agent having no interest other than for the benefit of principal. Here, the agent has a pecuniary interest Do not confuse agency coupled with an interest with Article 1914 on compensation of the agent. As an agent in a contract of agency, recall that agent has a lien over the things that are the subject matter of agency. Is that the interest that is being referred to in an agency coupled with interest? NO. Look at 1914. Article 1914. The agent may retain in pledge the things which are the object of the agency until the principal effects the reimbursement and pays the

indemnity set forth in the two preceding articles. What are those things? 1. Advances made by the agent in furtherance of the agency 2. Damages to which the agent suffered from the execution of the agency. For these expenses, the agent has a lien for the goods in his possession and which is the subject matter of the agency. BUT that is NOT the kind of interest meant in an agency coupled with an interest. The interest is one that extends to the very subject matter of the management delegated. To sell the land so that compensation in another utang will be paid. That is the interest of the agent! Not his commission here but rather, in another contract. So that he has a pecuniary interest in the subject matter of the agency, otherwise, he cannot claim was is due him in the contract of agency. Because if he claims for damages he suffered or advances made, then his right would only be under 1914 and that is only contained on the thing subject matter of the contract. Take note of that. When you become lawyers and somebody would approach you, do not succumb to such advances. SUMMARY: 1. As a general rule, agency is revocable at will. 2. Exception: when the agency is one coupled with an interest. 3. When it is so, you have to look at the circumstances of the case. examine the extent of the authority given to agent in relation to some other obligations or contracts. Article 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. Recall that in article 1873. Article 1873. If a person specially informs another or states by public advertisement that he has given a power of attorney to a third person, the latter thereby becomes a duly authorized agent, in the former case with respect to the person who received

the special information, and in the latter case with regard to any person. The power shall continue to be in full force until the notice is rescinded in the same manner in which it was given. So if you are the principal and ou revoke the authority of the agent, you have to take into rd consideration the presence of 3 persons. You have to ask the manner of communicaiton given rd to 3 persons to notify them of the agency. rd Otherwise, 3 persons would nto be bound by the revocation of the agency. Specific notification? If specially notified, then he should be specially notified of the revocation as well. Article 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 the revocation in a newspaper of general circulation is a sufficient warning to third persons. Agency published in the newspaper, you also have to comply with the same notice requirement. 1921 and 1922 in relation to 1873. That is for EXPRESS REVOCATION. Can revocation be done impliedly? Going back to 1920, such revocation may be express or implied. What are some instances where law says there is implied revocation? 1. Article 1923. 2. Article 1924 3. Article 1926 4. Article 1925 Article 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 agent, without prejudice to the provisions of the two preceding articles. P appoints A as his agent to sell his parcel of land X. a week after, P also appointed B to sell the same parcel of land X.

Question: is there implied revocation of the agency between P and A Answer: NO. in 1923, there has to be an inocmpality between the two agency relations. They must be incompatible with each other. Can you appoint several agents to perform the same task for you? YES; in the case of brokers who will look for buyers of your land. There could be several agents. However, if the contract of P and B is that B is the only and exclusive agent to sell, then it becomes now incompatible with the atency relation between P and A. because if you say agent B is exclusive, then there should not be that power of A. if such is the case, there is an implied revocation of the prior authority given between P and A. The key rule here is INCOMPATIBLITY. ARTICLE 1924is another form of mutual revocation. Article 1924. The agency is revoked if the principal directly manages the business entrusted to the agent, dealing directly with third persons. Principal taking over without informing the agent. Can he do that? Yes. Just because somebody is authorized does not mean that the principal himself cannot act directly. But if he does that, for example, in a business, then there is already implied revocation of such power. 1925 we have already discussed this. Article 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. If there are several principals, who can revoke? Any of the principals can revoke. He can totally revoke the agency. This is also in relation to the payment. The obligation of the principal to pay several agents is SOLIDARY. For example, as a lawyer, you were engaged by several co-owners of parcel of

land to represent them. You can demand from anyone of them. 1926 is PARTIAL REVOCATION. Article 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. (n) For example, Agency to manage the business and the authority of general management is given to A and then later, B was appointed by principal to manage a particular department, i.e. personnel department. In this case, it is a partial revocation of the general management given to A to manage the business. Because there is a particular function given to a particular agent. SUMMARY: Modes of revocation of agency 1. Express1921 and 1922 2. Implied1923,1924, 1925,1926 Take note of the exceptions on the rule on agency coupled with an interest: 1927 in relation to 1930, 1914 and 1311. WITHDRAWAL OF THE AGENT Article 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 therefore, unless the agent should base his withdrawal upon the impossibility of continuing the performance of the agency without grave detriment to himself. If the principal has the power anytime to revoke the agency, the agent also has the same power to withdraw at ANYTIME. Even without just cause? YES. But then, the thing is, he would be liable to the principal. Recall 1884. Article 1884. The agent is bound by his acceptance to carry out the agency, and is liable for the damages which, through his non-performance, the principal may suffer. Recall 1170 on obligations and contracts. Article 1170. Those who in the performance of their obligations are guilty of fraud, negligence, or delay, and those who in any manner contravene the tenor thereof, are liable for damages. So if you just withdraw without just cause, then you can be made laible because you have the obligation to perfrom the agency obligation. Article 1928 is very clear.

When you withdraw without just cause, you are liable for damages BUT it does not mean that you cannot withdraw. WITH JUST CAUSE 1. IMPOSSIBILITY OF PERFORMANCE is given as just cause in 1928. That is the last phrase of the article. Unless the agent should base his withdrawal upon the impossibility of continuing the performance of the agency without grave detriment to himself. 2. FORTUITOUS EVENT

Answer: NO. The principal cannot force the agent to continue on with the negotiations until the contract is closed with the buyer. There is a civil obligations, yes there is. That is why we talk about 1884, etc. but you cannot force somebody to continue performing doing something for you. DEATH When either the principal or agent dies, the agency relation is extinguished and this happens by operation of law. It is automatic. Is there an agency that survives the death of the principal or agent? YES, an agency coupled with an interest. Why? Because there is something else that depends upon it. There is a pecuniary interest on the subject matter. Until and unless that is satisfied, the agency relation will survive and cannot be revoked and thus survives the death of either the principal or agent. You might have studied already act no. 3135 on real estate mortgage. REM would survive the death of the mortgagor. In fact, under Rule 68, section 7, there is no rule to file in as far as the mortgagee is concerned if the mortgagor dies. You can proceed as claimant to estate of the mortgagor or foreclose the mortgage, etc. that is under special civil actions. Suffice it to say for our purposes that it is also one of the exceptions. That is also an agency, right? Because if there is a loan and if you are a mortgagor, you authorize the mortgagee to sell the property for and in your behalf, there is no automatic application of the REM to the debt. You cannot just assume the property for yourself once the mortgagor dies because that is equivalent to a pactum commissorium. That is void! If you truly look at it and you relate Act. NO. 3135 on the nature of the real estate mortgage and article 1927, actually there is a contract that depends upon the agency. The satisfaction of the debt for the mortgagee creditor, that is the contract and Its fulfillment depends upon the agency. The power is given to the mortgagee in case of non-payment. That also survives the death of either party. Another one: article 1923.

1929 is related to Just Cause and the corresponding obligation in case of withdrawal. Article 1929. The agent, even if he should withdraw from the agency for a valid reason (that is, he has no obligation and no liability for damages), must continue to act until the principal has had reasonable opportunity to take the necessary steps to meet the situation. This is also an example of AGENCY BY OPERATION OF LAW. Take note that agency is also personal and consensual, the moment agent withdraws, there is actually no more agency to speak of but because of 1929, he must still continue to act as such until the principal has taken steps to meet the situation. VIP CASE: Can the principal, in case of withdraw without just cause on the part of the agent, file an action for specific performance to compel agent to continue on with the agency? Facts: The agent has already reached a prospective buyer for the parcel of land and the principal knows that they are already in the process of closing the deal. But the principal for some reasons cannot deal directly with the prospective buyer. For no apparent reason at all, the agent withdraws from the agency? Sayang diba? They are about to close the deal and this buyer is only willing to talk to the agent. What can the principal do? Issue: Can he file a case for SPECIFIC PERFORMANCE with PRYAER FOR ISSUANCE OF WRIT OF PRELIMINARY MANDATORY INJUNCTION?

Article 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. In this case, technically, death does not extinguish the agency for lack of knowledge of rd the agent and the 3 person acting. So those are the instances where agency survives death: 1. 1931lack of knowledge of the death 2. Agency coupled with an interest 3. Act no. 3135 on real estate mortgage How about a lawyer who representing a client? How does the death of the client affect the agency? Your study of rules on civpro, recall rule 3, section 15. You have to make a diagram of that and you imprint that on your mind. The agency is EXTINGUISHED that is why there is an obligation of the lawyer to inform the court and make the necessary substitution of the parties. LAVINA V. CA 171 S 69. Read that in relation to the role of the lawyer when it comes to death of principal In relation to 1927 and 1930 on agency cou 1. Bacaling v. janilla 380 s 4=714 2. Sevilla v. ca 160 171 As I have said, the death of principal or the agent will extinguish the agency, except for the 3 exceptions earlier mentioned. Under article 1932, the heirs of agent have the obligation to inform the principal of the death of the agent. Article 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. This is also a kind of agency by operation of law. Q: what if it is an agency coupled with an interest and the agent dies, who will take the place of the agent?

A: the heirs and successors in interest. Rationale: remember that just like in other contracts like in case of the principal, the heirs and successors in interest will take his place. But can you say the same thing in case of article 1800 in relation to 1927. That is also a kind of agency that is irrevocable. If you are a managing partner, your power cannot be revoked as a managing partner. Will it survive the death? It is irrevocable, yes. But if the managing partner dies, will it survive so much so that heirs will take his place? Of course not, because that will run counter in the very nature of partnership. There is no right to succession in partnership. Succession in interest, YES but a succession to be a partner does not exist. Becoming a managing partner is based on trust and confidence. It is different in general contracts. In agency, there should mutual trust and confidence. But in agency coupled with an interest, the same does not exist. That is why it would survive the death of the principal or agent and can be succeeded by the heirs or successors in interest of the principal or agent. There is no trust and confidence needed. There is a pecuniary interest in the subject matter of the agency itself for it to be used as means to fulfill another obligation.

CIVIL INTERDICITON of principal and agnet youcannto act legally anymore because you are civily inutile. You lack the capacity. Relate this with article 1327. Article 1327. The following cannot give consent to a contract: (1) Unemancipated minors; (2) Insane or demented persons, and deaf-mutes who do not know how to write OTHER MODES OF EXTINGUISHING AGENCY Q: are the modes provided under article 1919, exclusive? A: NO. There are others, such as: 1. Loss of the thing or subject matter of the agency by way of fortuitous event (1231 (2))

2. Legal impossibilityyou are a lawyer and you became a judge, you cannot anymore practice and represent your client in the firm because there is legal impossibility (article 1266)

(INCOMPLETE!!!) *I used Tins notes for BusOrg final exam