2.
Withdrawal
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 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)
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.
(1736a)
Just as the principal may revoke generally the agency at will, the agent
may likewise renounce or withdraw from the agency at any time, without
the consent of the principal, even in violation of the latter’s contractual
rights; subject to liability for breach of contract or for tort.
 This rule applies whether the agency is gratuitous or for
compensation and is based on the constitutional prohibition against
involuntary servitude.
 It is also consistent with the concept that agency is voluntary.
Withdrawal without just cause – the law imposes upon the agent the duty
to give due notice to the principal and if the withdrawal is without just
cause, to indemnify the principal should the latter suffer damage by
reason of such withdrawal.
 The reason for this is that the agent fails in his obligation and as
such, he answers for losses and damages occasioned by the non-
fulfilment.
Withdrawal with just cause – as when the withdrawal is based on the
impossibility of continuing with the agency without grave detriment to
himself, or is due to a fortuitous event, the agent cannot be held liable.
 While the agent is forbidden to prefer his interests to those of the
principal, he is not required to sacrifice his own interests just to
serve the principal.
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 the necessary steps to meet the
situation.
The purpose of the law is to prevent damage or prejudice to the principal.
The law reconciles the interests of the agent with those of the principal,
and if it permits the withdrawal of the agent, it is on the condition that no
damage results to the principal, and if the agent desires to be relieved of
the obligation of making reparation when he withdraws for a just cause,
he must continue to act so that no injury may be caused to the principal.
The obligation imposed by Art. 1929 is similar to that provided in Art. 1885
in the case of a person who declines an agency.
3. Death
Whether the death of one of two or more principals or of one of two or
more agents terminates the agency depends upon the intention of the
parties.
 Generally, the death of one of several principals does not revoke the
agent’s authority nor does the death of one of several agents put an
end to the agency of all, whether the responsibility of the several
principals or agents is joint or solidary.
 The intention of the parties controls except as otherwise provided
by law.
General rule on the death of the principal or agent: by reason of the very
nature of the relationship between the principal and agent, agency is
extinguished ipso jure upon the death of either principal or agent.
 Although a revocation of a power of attorney to be effective must
be communicated by the parties concerned, yet a revocation by
operation of law, such as by death of the principal, is, as a rule,
instantaneously effective inasmuch as “by legal fiction the agent’s
exercise of authority is regarded as an execution of the principal’s
continuing will.”
 On the other hand, if the agent dies, he can no longer act for the
benefit and representation of the principal. There can be no
principal where there is no agent.
Exceptions:
1. The agency is coupled with an interest (Art. 1930)
2. The act of the agent was executed without knowledge of the death
of the principal and the third person who contracted with the agent
acted in good faith (Art. 1931)
The power of sale in a deed of mortgage is not revoked by the death of
the principal (mortgagor) as it is not an ordinary agency that contemplates
exclusively the representation of the principal by the agent but is primarily
an authority conferred upon the mortgagee for the latter’s own
protection.
 It is an ancillary stipulation supported by the same cause or
consideration for the mortgage and forms an essential and
inseparable part of that bilateral agreement. That power survives
the death of the mortgagor.
 The right exists independently of said stipulation and is clearly
recognized in Rule 86, Sec. 7 which grants to a mortgagee three
remedies that can be alternatively pursued in case the mortgagor
dies:
1. To waive the mortgage and claim the entire debt from the
estate of the mortgagor as an ordinary action
2. To foreclose the mortgage judicially and prove any deficiency
as an ordinary claim
3. To rely on the mortgage exclusively, foreclosing the same at
any time before it is barred by prescription without right to
file a claim for any deficiency.
Art. 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 favour. (n)
General rule: agency is terminated instantly by the death of the principal.
Exceptions:
1. If the agency has been constituted in the common interest of the
principal and the agent.
2. If it has been constituted in the interest of a third person who has
accepted the stipulation in his favor.
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. (1738)
In the case where the principal’s affairs must be wound up, or even in rare
cases, carried on for a time by the agent after the death of the principal,
the agent acts because of a prior and not a presently existing relation with
the creator of the authority.
 The agent’s duty is no longer to the deceased but to a quasi-entity
(the principal’s estate).
 It is for the personal representative (executor or administrator)
vested by law with the authority to administer the liquidation of the
principal’s affairs to say what shall be done about the business
originally delegated by the principal to the agent.
 If the agent has to continue the business, it must be by the personal
representative’s authority and as his agent.
In the same way that revocation of the agency does not prejudice third
persons who have dealt with the agent in good faith without notice of the
revocation, such third persons are protected where it is not shown that
the agent had knowledge of the termination of the agency because of the
death of the principal or of any other cause which extinguishes the
agency.
 A contrary rule would operate very unjustly and produce very great
hardships.
 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. (1739)
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 reasonable opportunity to take
such steps as may be necessary to meet the situation but also to adopt
such measures as the circumstances may demand in the interest of the
principal.
 But there is no duty on the heirs of the principal to notify the agent
of the death of the principal.
Continuation by the agent’s heirs of the agency
 General rule: an agency calls for personal services. Ordinarily,
therefore, the agent’s duties cannot be performed by his personal
representatives, and in case of his death, the agency is generally
thereby terminated.
o Since the death of the agent ends his ability to perform the
duties of the agency, the event of the agent’s death
terminates the agency relationship at least in those instances
where personal services and skill are required or cannot be
performed by the agent’s representative.
 This is true even though the agency is for a specified
period which has not yet expired.
o The rights and obligations of the agent arising from the
contract are not transmissible to his heirs.
 Exceptions:
o 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.
 The heirs can continue the agency only temporarily as
the essence of agency is personal confidence.
 The principal has a right to an agent of his choice.
 There is nothing to suggest that he would or should
expect the authority to pass to the agent’s heirs or
personal representatives.
o Where the agency is one coupled with an interest in the
subject matter of the agency, the death of the agent will not
instantly end the relationship.
 Consequently, his heirs or representatives may
subsequently exercise the power conferred at least
insofar as may be necessary to protect the interests of
the estate of the agent.
 An agency coupled with an interest survives the death
of the agent and it is transmitted to his heirs or
representatives.
4. Civil Interdiction
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.
 A person under civil interdiction cannot validly give consent.
5. Insanity
Since agency requires the presence, capacity, and solvency of both the
principal and agent, the death, civil interdiction, insanity, or insolvency of
either party terminates the agency.
 This is true notwithstanding that the agency period has not yet
expired.
6. Insolvency
As by an act of insolvency the principal loses control of the subject matter
of the agency, the authority of the agent to act for his principal generally
ceases by operation of law upon an adjudication of the principal’s
insolvency.
 The insolvency of the agent will also ordinarily put an end to the
agency, at least if it is in any way connected with the agent’s
business which has caused his failure.
 But the insolvency of the agent will not destroy any right he may
have under a power coupled with interest.
7. Dissolution
Dissolution of a firm or corporation which entrusted (as principal) or
accepted (as agent) the agency, extinguished its juridical existence as far
as the right to go on doing ordinary business is concerned.
 Except for the purpose of winding up its affairs.
o After winding up, the existence of the firm or corporation is
terminated for all purposes.
 It is equivalent to its death.
8. Accomplishment
At least as between the principal and agent, the fulfilment of the purpose
for which the agency is created ipso facto terminates the agency, even
though expressed to be irrevocable.
 It is illogical to assume the continued existence of authority to do
something which can no longer be done.
 An agency relationship may also be terminated by the non-
accomplishment of the object or purpose within a reasonable time.
9. Expiration
Where an agency, by the terms of the original agreement, is created for a
fixed period or is to end at a certain time, the expiration of such period or
the arrival of that time results in the termination of the relationship, even
though the purpose for which the agency was created has not been
accomplished.
 The parties may consent to the continuation of the agency
relationship beyond the period originally fixed.
 If no time is specified, it terminates at the end of a reasonable
period of time.
o The relationship is an agency at will and either party can
terminate the relationship at will by giving notice to the other.
 The period may be implied from the terms of the agreement, the
purpose of the agency, and the circumstances of the parties.
o Where the agent was appointed to manage the business
affairs while the principal is abroad, the agency automatically
terminates when the principal returns.