V. MODES OF EXTINGUISHMENT

Question 1

Article 1919. Agency is extinguished:

Answer 1

(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.

Question 2

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 ___________.

The power shall continue to be in full force until __________.

Answer 2

y 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The power shall continue to be in full force until the notice is rescinded in the same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.

Question 3

Article 1920. The principal may revoke the agency _________ and compel the agent to
return the document evidencing the agency. Such revocation may be __________.

Answer 3

Article 1920. The principal may revoke the agency at will and compel the agent to
return the document evidencing the agency. Such revocation may be express or
implied.

NOTE: This is an exception to the rule that the validity or compliance of a
contract cannot be left to the will of one of the parties.

Question 4

Article 1921. If the agency has been entrusted for the purpose of contracting with
_________, its revocation shall not prejudice the latter if _________.

Answer 4

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

Question 5

Article 1922. If the agent had ________, revocation of the agency does not
prejudice third persons who acted _________ of the
revocation. _________ is a
sufficient warning to third persons

Answer 5

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

Question 6

Article 1923. The appointment of a new agent for the same business or transaction
___________, without prejudice to the provisions of the two preceding articles

Answer 6

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

Question 7

Article 1924. The agency is revoked if the principal ______________.

Answer 7

Article 1924. The agency is revoked if the principal directly manages the business
entrusted to the agent, dealing directly with third persons

Question 8

Article 1925. When two or more principals have granted a power of attorney for a
common transaction, ______________.

Answer 8

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

Question 9

Article 1926. A general power of attorney is revoked by _________ involved in the latter.

Answer 9

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.

Question 10

Article 1927. An agency cannot be revoked _________,

or _________, or __________.

Answer 10

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

NOTE: This is the exception to the general rule that the agency is revocable at will:
(1) When the agency is created not only for the interest of the principal
but also for the interest of third persons; and
(2) When the agency is created for the mutual interest of both the
principal and the agent

Question 11

An agency is coupled with an interest where:

Answer 11

(1) Where the agent has parted with value or incurred liability at the
principal’s request, looking to the exercise of the power as the means
of reimbursement or indemnity; or

(2) Where the interest in the thing concerning which, the power is to be
exercised arises from an assignment, pledge or lien created by the
principal with the agent being given the power to deal with the thing
in order to make the assignment, pledge or lien effectual

ETE: The agency coupled with interest becomes
REVOCABLE when the agent betrays the interest of the principal. It is not
open to serious doubt that the irrevocability of a power of attorney may not
be used to shield the perpetration of acts in bad faith, breach of confidence,
or betrayal of trust, by the agent for that would amount to holding that a
power coupled with an interest authorizes the agent to commit frauds against
the principal.

Question 12

ARTICLE 1928. The agent may withdraw from the agency by ________. If the latter should suffer any damage by reason of the withdrawal, _________, unless the agent should base his withdrawal
upon __________.

Answer 12

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 therefor, unless the agent should base his withdrawal
upon the impossibility of continuing the performance of the agency without grave
detriment to himself.

Question 13

Effect of withdrawal by agent with and without just cause

Answer 13

Without just cause – The agent must give due notice to the principal and
indemnify the principal should the latter suffer damage by reason of such
withdrawal. The agent fails in his obligation and as such, he answers for
losses and damages occasioned by the non-fulfillment.

With just cause – The agent is not liable if he withdraws:
(1) Based on the impossibility of continuing with the agency without
grave detriment to himself (Art. 1928.); or
(2) Due to a fortuitous event (Art. 1174.).

Question 14

ARTICLE 1929. The agent, even if he should withdraw from the agency for a valid
reason, must ________.

Answer 14

ARTICLE 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

Question 15

Article 1930. The agency shall remain in full force and effect even after the death
of the principal, if it ____________ or ____________.

Answer 15

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

Other EXC: The agent must finish the business already begun on the death of the
principal, should delay entail any danger [Art. 1884, par. 2, CC]

Question 16

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

Answer 16

is valid and shall be
fully effective with respect to third persons who may have contracted with him in
good faith.

Question 17

Article 1932. If the agent dies, his heirs ________ and _______.

Answer 17

must notify the principal thereof, and in the
meantime adopt such measures as the circumstances may demand in the interest
of the latter.

Question 18

When does a dissolved corporation have a juridical personality?

Answer 18

The corporation after dissolution, and within three years therefrom
continues to have juridical personality for only for purposes of liquidation.

Consequently, the Board of Directors and corporate officers continue to have
agency powers to represent the corporation for any and all purpose that seek
the liquidation of its assets and the payment of all its liabilities.

Question 19

Effect of accomplishment of the object/purpose of the agency

Answer 19

Termination of agency ipso facto — The fulfillment of the purpose for which
agency was created ipso facto terminates agency even though it was
expressly made irrevocable.
• If the purpose has not been accomplished, the agency continues indefinitely
for as long as the intent to continue is manifested through words or actions
of the parties

Question 20

Effect of expiration of the agency period

Answer 20

If created for a fixed period, the expiration of the period extinguishes the
agency even if the purpose was not accomplished.

An agency relationship between the parties may also be terminated by the
non-accomplishment of the object or purpose within a reasonable time.

If no time is specified, the courts may fix the period as under the
circumstances have been probably contemplated by the parties [Art. 1197].

Question 21

Effect of civil interdiction, insanity, or insolvency on agency

Answer 21

A person under civil interdiction and an insane person cannot validly give consent.

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 their 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 their failure

Question 22

Does Article 1926 (a general power of attorney is not revoked by a SPA) apply to the same agent?

Answer 22

NO. Article 1926 – a general power of attorney is not revoked by a special one granted
to the same agent – does not apply. The article contemplates that there should be
two different agents, one granted with GPA and another with SPA. (Dy Buncio v. Ong Guan)