Modes of extinguishing an agency, generally:

1. Agreement
2. Subsequent acts of the parties which may
be
either:
a. By the act of both parties or by
mutual consent
b. By the unilateral act of one of them
3. 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.
What happens of the subject matter of the
agency
is lost or destroyed?
In the absence of any agreement by the
parties to the contrary, the loss or destruction
of the
subject matter of the agency terminates the
agents
authority to deal with reference to it
Exceptions:
1. if it is possible to substitute other material
for that which was destroyed without
substantial detriment to either party
2. if the destroyed subject matter was not in
fact essential to the contract
3. a partial loss or destruction
Form of renunciation:
It is not always necessary for the agent to
renounce the agency expressly. He can do so
impliedly, such as:
1. where he has conducted himself in a
manner
incompatible with his duties as agent
2. when he abandons the object of his agency
and acts for himself in committing a fraud
upon his principals
3. when he files a complaint against the
principal and adopts
Art 1930 Exceptions to
Extinguishment by Death
1. If the agency is coupled with an
interest

2. 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
3. To avoid damage
4. 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. 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)
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)
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)
Can the heirs continue the agency?

General Rule: agency calls for personal

services on
the part of the agent; rights & obligations
are not
transmissible
Exceptions:
a. Agency by operation of law, or a
presumed or tacit agency
b. Agency is coupled with an interest in
the subject matter of the agency (ex.
power of sale in a mortgage).
Exceptions to Extinguishment Upon
Loss or
Destruction of Subject Matter
1) If it is possible to substitute other
material for that
which was destroyed without substantial
detriment to either party or if the
destroyed
subject matter was not in fact essential to
the
contract;
2) A partial loss or destruction does not
always
result in a complete termination of the
agency,
and under such circumstances, while the
agency
may be ended in so far as the destroyed
property
is concerned, it may continue in existence
as to
other property not affected
i) If the loss brought about by the principal
(ex.. principal sells subject matter to
another party even if an agent has been
constituted in reference to it), principal
liable for damages for his wrongful
terminating act; if subject matter is lost
without principals fault, no liability
assumed by him
Change of Circumstance:
General Rule: when there is a basic
change in the
circumstances surrounding the
transaction, which as

not contemplated by the parties and

which would
reasonably lead the agent to believe that
the principal
would not desire him to act, the authority
of the agent
is terminated
Exceptions:
a. If the original circumstances are
restored
within a reasonable period of time, the
agent's authority may be revived
b. Where the agent has reasonable
doubts
as to whether the principal would desire
him to act, his authority will not be
terminated if he acts reasonably
c. Where the principal and agent are in
close daily contact, the agent's authority
to act will not terminate upon a change of
circumstances if the agent knows the
principal is aware of the change and
does not give him new instructions.
ARTICLE 1920
Revocation: Termination of the agency by the
subsequent act of the principal
Renunciation/Withdrawal: Termination of the
agency by the subsequent act of the agent
May the agency be extinguished at will?
A. AGENT may do so but subject to the
contractual obligations owing the principal
(i.e. fixed period of
time for the agency or purpose not yet
accomplished);
1. Expressly or impliedly
a. conducted himself in a manner
incompatible with his duties;
b. abandons the object of agency and acts
for himself in committing a fraud upon his
principal;
c. he files a complaint against the
principal
and adopts an antagonistic attitude
towards him
with just cause - give due notice

 without just cause - liable for

damages if agent suffers
damages thereby UNLESS the agent should
base his withdrawal
upon the impossibility of
continuing the performance of
the agency without grave
detriment to himself
2. The mere fact that the agent violates
his
instructions does not amount to
renunciation,
and although he may thus render himself
liable to the principal, he does not cease
to become an agent.
B. PRINCIPAL may also revoke the
agency at will
Exception: agency coupled with interest
a. When a bilateral contract depends
upon the agency
b. When the agency is the means of
fulfilling an obligation already
contracted
c. When a partner is appointed as
manager of a partnership in the
contract of partnership and his
removal from the management is
unjustifiable.
Exception to the exception: when the
agent acts to defraud the principal
Implied Revocation of Agency
1. Principal appoints a new agent for the
same
business or transaction, only if there is
incompatibility); effective as between the
principal
and the agent only if communicated to the
agent;
does not prejudice rights of third persons
acting
in good faith without knowledge of the
revocation
2. Principal directly manages the
business
entrusted to the agent, dealing directly

with 3rd
persons
Effect of Issuance of a Special Power
of Attorney:
The general power is impliedly revoked
as to
matters covered by the special power
because a
special power naturally prevails over a
general
Power.
Principals Liability for Damages
despite
Revocation:
1. If the agency was constituted for a
fixed
period, the principal shall be liable for
damages occasioned by the wrongful
discharge of the agent before the
expiration
of the period fixed
2. Even if there was no time fixed for the
continuance of the agency, but the agent
can
prove that the principal acted in bad faith
by
revoking the agency in order to avoid the
payment of commission about to be
earned,
the principal can be held liable for
damages
Necessity of Notice of Revocation
1. As to the agent - express notice
always
necessary; sufficient notice if the party to
be
notified actually knows, or has reason to
know, a
fact indicating that his authority has been
terminated/suspended; revocation without
notice
to the agent will not render invalid an act

done in
pursuance of the authority
2. As to 3rd persons express notice
necessary
3. As to former customers - actual
notice must be
given to them because they always
assume the
continuance of the agency relationship
4. As to other persons - notice by
publication is
enough
Effect of Extinguishment Without
Notice
Act of agent deemed valid insofar as 3rd
parties
acting in good faith and without
knowledge of
revocation