3. Extinguishment

C. Extinguishment (Civil Code, arts. 1919-1932)

Extinguishment of Agency — Civil Code, Arts. 1919–1932

Article 1919. Agency ends through any of the following:

• Revocation by the principal;
• Withdrawal by the agent;
• Death, civil interdiction, insanity, or insolvency of either the principal or the agent;
• Dissolution of the firm or corporation that entrusted or accepted the agency;
• Completion of the agency’s object or purpose; or
• Expiry of the period for which the agency was established.

Article 1920. The principal may revoke the agency at will and require the agent to return the document showing the agent’s authority. Revocation may be express or implied.

Article 1921. When the agency was given to contract with specified persons, revocation does not prejudice those persons unless they were notified of it.

Article 1922. If the agent held general powers, revocation does not prejudice third persons who acted in good faith without knowing of it. Publication of the revocation in a newspaper of general circulation sufficiently warns third persons.

Article 1923. Appointing another agent for the same business or transaction revokes the earlier agency from the day the former agent receives notice, subject to Articles 1921 and 1922.

Article 1924. Agency is revoked when the principal takes over the entrusted business and deals directly with third persons.

Article 1925. If two or more principals issued a power of attorney for a common transaction, any one of them may revoke it without the others’ consent.

Article 1926. A special power of attorney given to another agent revokes a general power of attorney as to the particular matter covered by the special authority.

Article 1927. Agency cannot be revoked when a bilateral contract depends on it, when it serves to perform an obligation already contracted, or when a partner was named manager in the partnership contract and removal from management is unjustifiable.

Article 1928. The agent may withdraw by giving the principal due notice. The agent must indemnify the principal for damage caused by the withdrawal, unless continuing the agency would be impossible without grave detriment to the agent.

Article 1929. Even when withdrawal is justified, the agent must keep acting until the principal has had a reasonable opportunity to take the steps needed to address the situation.

Article 1930. Agency remains effective after the principal’s death if it was created in the common interest of the principal and agent, or for a third person who accepted a stipulation in that person’s favor.

Article 1931. An act of an agent who does not know of the principal’s death or another cause ending the agency remains valid and fully effective as to third persons who contracted with the agent in good faith.

Article 1932. Upon the agent’s death, the agent’s heirs must notify the principal and, meanwhile, take the measures that the circumstances require in the principal’s interest.

Other Modes

• Mutual withdrawal from the relationship by the principal and agent;
• By the happening of a supervening event that makes illegal or impossible the objective or purpose for which the agency was constituted, like the destruction of the subject matter which is the object of the agency.

NOTE: The list is not exclusive; causes are particular only to agency; may be extinguished by the modes of extinguishment of obligations in general whenever they are applicable, like loss of the thing and novation.

Modes of Extinguishing an Agency, Generally (ASO)

• Agreement
• Subsequent acts of the parties which may be either:
• By the act of both parties or by mutual consent
• By the unilateral act of one of them
• By Operation of Law

NOTE: Even if the reason for extinguishing the agency is not true, the agent cannot insist on reinstatement. The agent can only demand damages. (Orient Air Services v. Court of Appeals, G.R. No. 76931, May 29, 1991.)

Exceptions to Extinguishment by Death (KID-C)

• If the agency is coupled with an Interest (Art. 1930);
• If the act of the agent was executed without the Knowledge of the death of the principal and the third person who contracted with the agent acted in good faith. (Art. 1931; Rallos v. Go Chan, G.R. No. L-24332, Jan. 31, 1978.)
• If it has been constituted in the Common interest of the principal and of the agent, or in the interest of a third person who has accepted the stipulation in his favor (Art. 1930)