PARTNERSHIP l Atty.
Espedido l For the exclusive use of EH 404 2016-2017
OCTOBER 7, 2016
MODES OF EXTINGUISHMENT
ART. 1919. MODES OF EXTINGUISHMENT
Article 1919. AgencySisOF extinguished:
EXTINGUISHMENT
(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. (1732a)
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REVOCATION
Principal will terminate the agency
Possible ground of revocation
Loss of trust and confidence in the agency
INSOLVENCY
When a person has more liabilities than assets
When this occurs, you cannot meet your obligations to others
Why insolvency a ground
Because it is important for an agent to be solvent to manage the
business affairs of the principal;
There will be instances when he can be liable for damages to the
principal and 3rd persons, so he must be solvent to satisfy these
liabilities.
CIVIL INTERDICTION
An accessory penalty where a person is removed of his right to enter
into civil relations
Civil interdiction deprives the offender during the period of his
sentence of the right to manage his property and dispose of such
property by any act or any conveyance inter vivos.
Why a ground
He can no longer manage the affairs of the principal
ART. 1920-27. REVOCATION OF PRINCIPAL / AGENT
Article 1920. The principal may revoke the agency at will, and
S OF EXTINGUISHMENT
compel the agent to return the document evidencing the agency. Such
revocation may be express or implied. (1733a)
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. (1734)
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. (n)
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. (1735a)
Article 1924. The agency is revoked if the principal directly manages
the business entrusted to the agent, dealing directly with third
persons. (n)
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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. (n)
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)
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. (n)
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IRREVOCABILITY OF AGENCY
An agency cannot be revoked when:
1. A bilateral contract depends upon it
Example: P sold to X a building for 1million. X only paid 800k. In the
contract of sale, it was also agreed that P would appoint A (agent)
to manage the building and the proceeds would be applied to the
balance.
2. It is the means of fulfilling an obligation already contracted
Example: P owed X 100k. As security for the debt P appoints A as an
agent to collect rents in the business of P. P also authorized A to
apply it to the debt of P to X.
3. The partner is appointed manager of a partnership in the contract
of partnership and his removal from the management is
unjustifiable
How are contracts of agency revoked?
1. Expressly
2. Impliedly
Implied revocation
When there is an appointment of a new agent for the same business
or transaction
But we said earlier that there can be several agents?
The appointment of another agent will not revoke the previous agent
even for the same business or transaction if it is not incompatible.
SITUATION:
If Cheung was appointed as an agent to sell a parcel of land,
and later on Esgana was appointed to sell the very same land
will it revoke Cheung’s appointment as an agent?
A:Not necessarily. If the appointment of Esgana is not incompatible
with the duties of Cheung, then the latter’s appointment is not
revoked.
Incompatible appointment
If Cheung was appointed as the only agent of the principal, which
means he was expressly made the exclusive agent of the principal to
sell that piece of land, then the appointment of Esgana will revoke the
agency.
How will revocation affect 3rd persons?
A: Only affects them if there is notification of the revocation to the 3rd
person. Otherwise if none, then the principal will be liable.
Principal directly manages the business entrusted to the
agent.
means “Principal directly deals with 3rd persons”
PARTNERSHIP l Atty. Espedido l For the exclusive use of EH 404 2016-2017

Who assumes the liabilities of the decedent?
ART. 1928-29. WITHDRAWAL OF AGENT A: The estate becomes liable.
Article 1928. The agent may withdraw from the agency by giving
S OF EXTINGUISHMENT
due notice to the principal. If the latter should suffer any damage by Who represents the estate?
reason of the withdrawal, the agent must indemnify him therefor, A: The executor or the administrator.
unless the agent should base his withdrawal upon the impossibility of
continuing the performance of the agency without grave detriment to EXECUTOR ADMINISTRATOR

himself. (1736a) TESTATE: The person who, INTESTATE: The person
by the will of the testator, who, by judicial decree,
Article 1929. The agent, even if he should withdraw from the agency administers the affairs of administers the affairs of
for a valid reason, must continue to act until the principal has had the estate. the estate.
reasonable opportunity to take the necessary steps to meet the
situation. (1737a) His function is to execute
--------------------------------------------------- what the deceased
instructed as contained in
WITHDRAWAL the will.
On the part of the agent, he may withdraw from the agency
Agent may withdraw anytime from the agency, subject to liabilities if If the principal dies before the agent can accomplish the
any agency, what happens to the agency?
A: The agency is terminated. Agency is a personal contract between
Why a ground the principal and the agent. It cannot be transferred to third parties.
Agency is voluntary by nature
To compel someone to continue an agency is tantamount to The executor/administrator represents the estate, which has a
involuntary servitude prohibited by the constitution distinct and separate personality from the principal.

How to withdraw No one can represent the deceased principal.

Give due notice to the principal of withdrawal
Ground: There exists a justifiable cause; and it will be detrimental if
the agent will not withdraw
Liability of agent for damages upon withdrawal
Agent must indemnify principal for damages suffered by principal due
to the withdrawal
XPT:
1. Withdrawal is based on impossibility of continuing the performance
of the agency w/o grave detriment to himself.
2. Fortuitous event
Obligation of agent upon withdrawal
He must continue to act as an agent until the principal has had
reasonable opportunity to take the necessary steps to meet the
situation
ART. 1930-32. DEATH OF PRINCIPAL / AGENT
Article 1930. The agencyS OFshall remain in full force and effect even
EXTINGUISHMENT
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)
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. (1738)
RULES
GR: Death of the Principal or Agent extinguishes the agency
XPN:
1. That the agency is coupled with an interest
2. That the act of the agent was executed without knowledge of the
death of the principal and the third person who contracted with
the agent in good faith
What does “coupled with interest” mean?
1. When the agency is created not only for the interest of the
principal but also for the interest of third persons
2. When the agency is created for the mutual interest of both the
principal and the agent
In these instances, the agency is deemed to be “coupled with
interest”. It is evident that the agency cannot be revoked by the sole
will of the principal as long as the interest of the agent or of a third
person subsists
Important: If the principal dies, the stipulations in Article 1927 shall
also apply.
Death of the agent
Heirs must notify the principal. Otherwise, estate of the agent will be
liable for damages if agent incurred damages in contracting the
agency.

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. (1739)
---------------------------------------------------
In general, if a person dies, will all his obligations be
extinguished?
No. Death extinguishes criminal liabilities but not civil liabilities;
Otherwise, people can easily borrow money and then later on just
commit suicide to escape payment

Who takes over when a person dies?

A: The heirs.

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