AGENCY

a. Nature, Form, and Kinds of Agency

1. Definition [Art. 1868, CC]
Agency – By the contract of agency, a person binds himself to render some service or to do
something in representation or on behalf of another, with the consent or authority of the latter. (Art. 1868,
CC)

2. Purpose
 To bind a person to render some service or to do something in representation or on behalf
of another with the latter’s consent or authority.

3. Nine (9) Characteristic (B – U – N – C – P) (P – O – R – F)

Characteristics of a contract of agency:
1. Bilateral; – If it is for compensation, it gives rise to reciprocal rights and obligations.
2. Unilateral; – If gratuitous, it creates obligations for only one of the parties.
3. Nominate; – It has its own name.
4. Consensual; – It is perfected by mere consent.
5. Principal; – It can stand by itself without need of another contract.
6. Preparatory and Progressive; – It is entered into as a means for other purposes that deal with the
public in a particular manner: for the agent to enter into juridical acts with the public in the name of the
principal. (Villanueva and Villanueva – Tiansay, 2015)
7. Generally onerous;
8. Representative relation; and – The agent acts for and on behalf of the principal on matters within
the scope of his authority and said acts have the same legal effect as if they were personally executed by the
principal.
9. Fiduciary and Revocable – For the creation of legal relationship of representation by the agent on
behalf of the principal, the powers of the former are essentially derived from the latter.
Neither the principal nor the agent can be legally made to remain in the relationship when they choose to have it
terminated.

4. Four (4) Essential Elements (C – O – R – S)

Essential elements of an agency:
1. Consent (express or implied) of the parties to establish the relationship.
NOTE: A person may express his consent:
 a. by contract (NCC Art 1868), orally or in writing;
b. by conduct (NCC, Art. 1869);
c. by ratification (NCC, Art. 1910); or
d. the consent may arise by presumption or operation of law.
2. The object is the execution of a juridical act in relation to third persons;
3. The agent acts as a representative and not for himself.; and
4. The agent acts within the scope of his authority. (International Exchange Bank v Spouses
Briones, et al, G.R. No. 205657, March 29, 2017)

5. Four (4) Determination of Existence of Agency

Determination of Existence of Agency is by necessity where:
1. Real existence of emergency;
2. Inability of the agent to communicate with the principal;
3. Exercise of additional authority is for the principal’s protection; and
4. Adoption of fairly reasonable means, premises duly considered.

6. Agency v Similar Contracts

Agency and similar contracts or relations. In order to classify a contract, due regard must be
given to its essential clauses. A contract is what the law defines it to be and not what it is called by the
contracting parties. (Quiroga vs. Parsons Hardware Co., 38 Phil. 501 [1918]) The essence of the contract determines
what law should apply to the relation between the contracting parties. (American Rubber Co. vs. Collector of
Internal Revenue, 64 SCRA 569 [1975]) The important characteristic feature of an agency relationship which
distinguishes it from similar contracts or relations is the agent’s power to bring about business relations
between his principal and third persons. This power is perhaps the most distinctive mark of the agent, as
contrasted with others who act in representative capacities but are not agents. Also, general agents (see Art.
1876) are to be distinguished from certain particular kinds of agents. Thus, while attorneys – at – law,
auctioneers, brokers, factors, partners, officers and agents of corporations, and public officers may, in
some respects at least, be regarded as agents, they are distinguishable from general agents because their
authority is of a special and limited character in most respects.

7. Kinds of Agency
Two (2) Kinds of Agency
1) In General
 1. As to manner of creation: Agency may be express, or implied from the acts of the principal,
from his silence or lack of action, or his failure to repudiate the agency, knowing that another
person is acting on his behalf without authority.
Agency may be oral, unless the law requires a specific form. (Art. 1869 CC)
Acceptance by the agent may also be express, or implied from his acts which carry out the agency,
or from his silence or inaction according to the circumstances. (Art. 1870, CC)
As a rule, agency is not presumed. A presumption of agency may arise, however, in those few
cases where agency may arise by operation of law (i.e. Art. 1803, CC) or to prevent unjust
enrichment.
 Express; and – An express agency is one where the agent has been actually authorized
by the principal, either:
a. Orally; or
b. In writing [Art.1869, CC]
 Implied.

2. As to cause or consideration:
 Gratuitous; and
 Compensated or onerous.
Note: Agency is presumed to be for a compensation, unless there is proof to the contrary [Art. 1875, CC].

3. As to the extent of business covered:

 General; and – comprises all the business of the principal.
Scope: All acts connected with the business or employment in which agent is engaged
 Special. – comprises one or more specific transactions [Art. 1876, CC]
Scope: Only authorized acts or those necessarily implied
To be a General Agent, it is sufficient that the listed authorized transactions apparently cover all that is required to run the
business of the principal. It is not necessary that the power granted actually says “all the business of the principal.” [ Dominion
Insurance v. CA, G.R. No. 129919 (2002)]

4. As to the authority conferred:

 Couched in general terms; and – an agency couched in general terms is one created in
general terms and is deemed to comprise only acts of administration, even if:
1. The principal should state that he withholds no power;

2. He should state that the agent may execute such acts as he may consider
appropriate; or
3. Even though the agency should authorize a general and unlimited management
[Art. 1877, CC]
 Couched in specific terms. – An agency couched in specific terms authorizes only the
performance of specific acts. Certain specific acts, however, require special powers of
attorney.
 A special power of attorney is an instrument in writing by which one person, as principal,
appoints another as his agent and confers upon him the authority to perform certain
specified acts or kinds of acts on behalf of the principal.

5. As to nature and effect: and

 Ostensible or representative, where the agent acts in the name and representation of the
principal [Art. 1868, CC]; and
 Simple or commission, where the agent acting his own name but for the account of the
principal.
6. As to the kinds of principal:
 With a disclosed principal, where, at the time the transaction was contracted by the
agent, the other party thereto was known:
1. that the agent was acting for a principal; and
2. the principal’s identity;
 Partially disclosed, where the other party knows or has reason to know that the agent is
or may be acting for a principal but is unaware of the principal’s identity; and
 Undisclosed, where the party has no notice of the fact that the agent is acting as such for a
principal (special kind of agency)
2) Special Kinds of Agency
1. Agency by Estoppel
 Based on statute – 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 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. [Art. 1873 par.1, CC]
 Based on jurisprudence – Requisites:
1. The principal manifested a representation of the agent’s authority or
knowingly allowed the agent to assume such authority;
2. The third person, in good faith, relied upon such representation; and
3. Relying upon such representation, such third person has changed his
position to his detriment.
Agency by estoppel is similar to the doctrine of apparent authority. It requires proof of reliance
upon the representation and that the representation predated the action which relied on the representation.
[Litonjua v Eternit, G.R. No. 144805 (2006)]
As to liability, implied agency and agency by estoppel are different in that, in the former, the
principal is liable, while in the latter, the person who acts in bad faith is liable.
“Even when the agent has exceeded his authority, the principal is solidarily liable
with the agent if the former allowed the latter to act as though he had full powers.” (Art. 1911, CC)
 In this case, there is a duly formed agency and estoppel only applies to the excess of authority –
application of the doctrine of apparent authority.
The doctrine of apparent authority is to the effect that: One who clothes another with apparent
authority as his agent, and holds him out to the public as such, cannot be permitted to deny the authority
of such person to act as his agent, to the prejudice of
innocent third parties dealing with such person in good faith.
Under the doctrine of apparent authority, the question in every case is whether the principal has, by
his voluntary act, placed the agent in such a situation that a person of ordinary prudence, conversant with
business usages and the nature of the particular
business, is justified in presuming that such agent has authority to perform the particular act in question
[Professional Services v. Agana, G.R. No. 126297 (2008)].
2. Agency with Undisclosed Principal
General Rule: If an agent acts in his own name (the principal is undisclosed), the agent is
directly bound in favor of the person with whom he has contracted as if the transaction were his
own.
Ratio: There is no representation of the principal when the agent acts in his own name.
The third person cannot allege that he was misled by any representation since he did not know of
the existence of the undisclosed principal.
Exception: The principal is bound when the contract involves things belonging to him
[Art. 1883, CC].
In this case, the contract is considered as one between the principal and the third person.
Qualification: The exception only applies if the agent contracts with the properties of the
principal within the scope of his authority [PNB v. Agudelo, G.R. No. L-39037 (1933)].
3. Irrevocable Agency – 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.
On agency coupled with an interest - three instances where the sole will of the principal cannot
terminate an agency: Art. 1927, CC
1. A bilateral contract depends upon it: When an agency is constituted as a clause in a
bilateral contract, that is, when the agency is inserted in another agreement, the agency ceases to be
revocable at the pleasure of the principal as the agency shall now follow the condition of the
bilateral agreement. [Republic v. Evangelista, G.R. No. 156015 (2005)].
2. It is the means of fulfilling an obligation already contracted: For example, P
borrows from B P50,000. As security for the debt, P gives A, a power of attorney to collect rents
due from tenants of P and authorizes A to apply the same to the debt of P50,000. In this case, P
cannot revoke the agency, without any justifiable cause, for it is a means of fulfilling his obligation
to B.
 3. A partner is appointed manager of a partnership in the contract of
partnership and his removal from the management is unjustifiable: The reason
is that the appointment is in effect one of the conditions of the contract and it is only logical that

such appointment should not be revoked without the consent of all the partners.

b. Obligations of the Agent

8. To Carry Out the Agency
In General – The agent is bound by his acceptance to carry out the agency, and is liable for the damages
which, through his nonperformance, the principal may suffer. (Par. 1, Art. 1884, CC)
An agent is also liable for its own negligent acts or omission in the performance of its duties. Such person is liable for
damages caused to the principal by such negligent acts. [British Airways v. CA, G.R. No. 121824 (1998)]
Continuing Business – He must also finish the business already begun on the death of the principal,
should delay entail any danger. (Par. 2, Art. 1884, CC)
In case of Withdrawal – 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. (Art. 1929, CC)
Agent Not Required to Carry Out Agency – An agent shall not carry out an agency if its
execution would manifestly result in loss or damage to the principal. Art. 1888, CC
The article covers only acts that would “manifestly” lead to losses; in other words, the agent
cannot be a guarantor that the principal would suffer no loss or damage in the pursuit of the agency; the
sustaining of losses due to human error is part of the risk that every owner or principal assumes.

9. To Advance the Necessary Funds [Art.1886, CC]

Should there be a stipulation that the agent shall advance the necessary funds, he shall be bound to
do so except when the principal is insolvent. (Art. 1886, CC)
Conditions:
a. There is a stipulation stating that the agent shall advance the necessary funds; and
b. The principal must be solvent

10.To Act in Accordance with Principal’s Instructions

In the execution of the agency, the agent shall act in accordance with the instructions of the
principal.
In default thereof, he shall do all that a good father of a family would do, as required by the nature
of the business. Art. 1887, CC
The agent must act within the scope of his authority. He may do such acts as
may be conducive to the accomplishment of the purpose of the agency. Art. 1881, CC
 An agent can bind his principal if he acts within the scope of authority granted to him.
Powers of attorney are generally construed strictly. The general rule is that the power of attorney
must be pursued within legal strictures, and the agent can neither go beyond it; nor beside it. The act done
must be legally identical with that authorized to be done. [Woodchild v Roxas, G.R. No. 140667 (2004)]
Authority v Instruction
Authority Instructions
Sum total of the powers
committed or permitted Private rule of guidance
to the agent to the agent
Refers to the manner or
Relates to the transaction mode of agent’s action
or business with which with respect to matters
the agent is empowered within the permitted
to act scope of authority
Does not bind third
Binds the parties parties

11. To Prefer Interest of Principal Over Personal Interest in General

The agent shall be liable for damages if, there being a conflict between his interests and those of the
principal, he should prefer his own. Art. 1889, CC
Note: Agency is a fiduciary relationship. A breach of that relationship will expose the agent to liability for damages – Art.
1889, CC does not declare the contract void, but merely makes the agent liable for damages suffered by the principal.

12.To Render Accounts and Deliver Things Received by Virtue of the Agency
Every agent is bound to render an account of his transactions and to deliver to the principal
whatever he may have received by virtue of the agency, even though it may not be owing to the principal.
Every stipulation exempting the agent from the obligation to render an account shall be void. Art.
1891, CC
If an agent receives a secret gift from a client, he must report it and deliver it to the principal. The
law imposes upon the agent the absolute obligation to make a full disclosure or complete account to his
principal of all his transactions and other material facts relevant to the agency. If he makes a secret profit,
he is guilty of breach of his loyalty, and he forfeits his right to his commission. [Domingo v. Domingo, G.R. No.
L-30573 (1971)]
Note: Report imports a statement of collections. Accounting means settling of account of administration or agency,
which includes payment.
 13.To Be Responsible for Substitutes
General Rule: If the Agent validly appoints a substitute, the Principal is liable for the Substitute’s acts
Exception: [Art. 1892, CC]
1. If the agent appoints a substitute although he was not given the power to appoint one
2. If the agent was given the power to appoint a substitute, and the principal did not designate
the person he can appoint, but he appoints someone who is notoriously incompetent or
insolvent (proven by history or record of failures in similar business ventures in the past).
Note: In the two aforementioned situations, the agent, not the principal, will be the one responsible for the acts of the substitute.

14.To Pay Interest

The agent owes interest on the sums he has applied to his own use from the day on which he did so,
and on those which he still owes after the extinguishment of the agency. Art. 1896, CC
Art. 1896 contemplates two distinct cases:
1. Sums belonging to the principal which the agent applied to his own use:
The agent who converted to his personal use the funds of the principal is liable for interest by
way of compensation or indemnity which shall be computed from the day on which he did so.
2. Sums which the agent still owes the principal after the expiration of the
agency: While there is no liability for interest on sums which have not been converted for
the agent’s own use [De Borja v De Borja, 58 Phil. 811 (1933)], the agent who is found to
owe the principal sums after the extinguishment of the agency is liable for interest from the
date the agency is extinguished.
Applicability: The agent may only borrow funds from the agent if he has been authorized to lend money at interest [Art
1890]. If he does borrow, then he should pay interest for the amount he borrowed.

15.To Answer for His Negligence or Fraud [Art. 1909, CC]

The agent is responsible not only for fraud, but also for negligence, which shall be judged with
more or less rigor by the courts, according to whether the agency was or was not for a compensation. ART.
1909, CC
The article has been applied against an agent for negligence which caused damage against itself,
thereby preventing it from recovering from the principal what it lost. [Metro bank v CA, G.R. No. 88166 (1991)]

16.Special Obligations of Factor/ Commission Agents

 A factor or commission agent is one whose business is to receive and sell goods for a commission
(also called factorage) and who is entrusted by the principal with the possession of goods to be sold, and
usually selling in his own name. He may act in his own name or in that of the principal.
An ordinary agent need not have possession of the goods of the principal, while the commission
agent must be in possession.

Commission Agent
Ordinary Agent
Acts for and in behalf of the principal Private rule of guidance to the agent
Refers to the manner or mode of agent’s action
Need not have possession of the goods with respect to matters within the permitted scope
of authority

Broker
Has no custody of the thing to be disposed of,
only acts as intermediary between seller and buyer Has custody or possession of the things to be sold
Maintains no relations with things to be Maintain relations with the thing, the buyer and
sold/bought the seller

c. Liabilities of the Agent

17.Liability to Third Persons
General Rule: the agent who transacts as an agent is not personally liable to the third person for the
obligation entered into
Exceptions:
a. When the agent expressly binds himself;
b. When the agent exceeds the limits of his authority without giving the person he is transacting with sufficient
notice of his powers; and [Art 1897, CC]
c. When all of the following are present:
1. The person transacting with the agent is aware of the limits of the agent’s authority;
2. The agent exceeded the scope of his authority;
3. The agent exceeded his or her authority; and
4. The principal did not ratify the contract.
Note: In (c), the transaction will be considered void.
 18.Liability to the Principal
If an agent acts in his own name, the principal has no right of action against the persons with whom
the agent has contracted; neither have such persons against the principal.
In such case the agent is the one directly bound in favor of the person with whom he has
contracted, as if the transaction were his own, except when the contract involves things belonging to the
principal.
The provisions of this article shall be understood to be without prejudice to the actions between the
principal and agent. Art. 1883, CC (“Agency with an undisclosed principal”)
General Rule: If the agent enters contract without notice to the third party that he was acting as an
agent, the agent is directly bound as a party to the contract, and the principal and the third person have no
right of action against one another.
Exception: When the contract involves things belonging to the principal. The principal may seek
damages for such contract.
The exception under Art 1883 “does not say that (a third party) does not have, and cannot bring an
action against the agent also.” [Beaumont v Prieto, G.R. No. L- 8988 (1916)]

19.Liability of Two or More Agents

The responsibility of two or more agents, even though they have been appointed simultaneously, is
not solidary, if solidarity has not been expressly stipulated. Art. 1894, CC
General Rule: Two or more agents are jointly liable.
Each of the agents can be held solidarily liable for the non – fulfilment of the agency or for injuries
caused by fault or negligence if:
1. The principal simultaneously appoints more than one agent; and
2. There is an express stipulation that such agents are solidarily liable
An agent will not be solidarily liable if the fellow agents acted beyond the scope of authority. [Art. 1895, CC]

d. Obligations of the Principal

20.To Comply with the obligations contracted by the agent
The principal must comply with all the obligations which the agent may have contracted within the
scope of his authority. Par. 1, Art. 1910, CC
Doctrine of Representation
 All contracts and transactions entered into by the agent on behalf of the principal within
the scope of his authority are binding on the principal as though he himself had entered into them directly.
 If the agent acts within the scope of his authority, then the principal must comply. Otherwise, the principal is bound to
comply only if he ratifies the agent’s act that was done beyond the scope of his authority.
Acts of the agent within the scope of his authority:
1. Those expressly specified in the power of attorney;
2. Conducive acts;
3. Advantageous acts; and
4. Collateral acts
Ratified Acts – As for any obligation wherein the agent has exceeded his power, the principal is
not bound except when he ratifies it expressly or tacitly. Par. 2, Art. 1910, CC
The principal must have full knowledge at the time of ratification of all the material facts and
circumstances relating to the unauthorized act of the person who assumed to act as agent. If the material
facts were suppressed or unknown, there can be no ratification. [Manila Memorial v Linsangan, G.R. No. 151319
(2004)]
By benefitting from the unauthorized act of an agent, the principal is said to have ratified the acts of
the agent and is estopped from denying said authority. [Filipinas Life v Pedroso, G.R. No. 159489 (2008)]
However, in some cases, the mere acceptance of benefits is not tantamount to ratification by the
principal. Acts which are absolutely void cannot be ratified.
When Estoppel Applies (Agency by estoppel) – Even when the agent has exceeded his authority,
the principal is solidarily liable with the agent if the former allowed the latter to act as though he had full
powers. Art. 1911, CC
Even if there was no express authority, the principal is still solidarily liable because he allowed the
agent to act as if he had authority.
Acts by the Agent in His Own Name but Involving Things of the Principal [Art. 1883, par.
2, CC] – When the properties of the principal are involved, the principal is bound even when the contract
was entered into in the name of the agent. The purpose of this rule is to protect third persons against
possible collusion between the agent and the principal. [Gold Star Mining Co. v Lim-Jimena, G.R. No. L-25301
(1968); PNB v. Agudelo, G.R. No. 39037 (1933)]

21.To Advance the Necessary Sums and Reimburse the Agent

The principal must advance to the agent, should the latter so request, the sums necessary for the
execution of the agency. Should the agent have advanced them, the principal must reimburse him
therefor, even if the business or undertaking was not successful, provided the agent is free from all fault.
The reimbursement shall include interest on the sums advanced, from the day on which the advance
was made. [Article 1912, CC]
 The principal is not liable for the expenses incurred by the agent in the following cases [Art. 1918,
CC]:
1. If the agent acted in contravention of the principal's instructions, unless the latter should wish to avail
himself of the benefits derived from the contract;
2. When the expenses were due to the fault of the agent;
3. When the agent incurred them with knowledge that an unfavorable result would ensue, if the principal
was not aware thereof; and
4. When it was stipulated that the expenses would be borne by the agent, or that the latter would be
allowed only a certain sum.
General Rule: The principal must advance or reimburse (with interest) the sums necessary to
execute the agency.
Exceptions:
1. Expenses incurred through acts which contravene the principal’s instructions, and the principal does
not want to derive benefit therefrom;
2. Expenses due to the fault of the agent;
3. Expenses incurred by the agent with the knowledge that an unfavorable result would ensue, and the
principal was unaware;
4. If there is a stipulation that expenses would be borne by the agent or that he would be allowed only a
certain sum; and
5. Expenses incurred from acts outside the authority of the agent.
Sums to be reimbursed include those from unsuccessful undertakings as well as those initially in
contravention of the principal’s instructions but later becomes a source of benefits.
Note: Compare the obligation of the principal with the obligation of the agent, who is bound to advance the sums
necessary to carry out the agency only when he so consents or it is stipulated in the agreement and if the principal is not
insolvent. (Art. 1912 vis-à-vis Art. 1886)
22. To Indemnify the Agent for Damages
The principal must also indemnify the agent for all the damages which the execution of the agency
may have caused the latter, without fault or negligence on his part. Art. 1913, CC
General Rule: The principal must indemnify the agent for damages in the execution of the agency.
Exception: When damage was caused due to the fault or negligence of the agent.

23. To Pay the Agent’s Compensation

 Agency is presumed to be for a compensation, unless there is proof to the contrary. Art.
1875, CC

24. To Be Solidarily Liable

 The principal is bound and liable for the acts of the agent done within the scope of his authority
(express, conducive, advantageous, and collateral acts), for unauthorized acts which the principal has
ratified and for acts which is estopped from denying.
Even when the agent has exceeded his authority, the principal is solidarily liable with the agent if
the former allowed the latter to act as though he had full powers. Art. 1911, CC
Requisites:
1. Agency relationship exists;
2. The agent acts in excess of his authority; and
3. The principal allowed the agent to act as though he had full powers.
If two or more persons have appointed an agent for a common transaction or undertaking, they
shall be solidarily liable to the agent for all the consequences of the agency. Art. 1915, CC

Requisites:
1. There are two or more principals;
2. The principals have all concurred in the appointment of the same agent; and
3. The agent is appointed for a common transaction or undertaking

e. Extinguishment of Agency
Six (6) Modes of Extinguishment of Agency (E – D – W – A – R – D)
1. Expiration of the period;
2. Death, civil interdiction, insanity or insolvency of principal or of the agent;
3. Withdrawal by the agent;
4. Accomplishment of the object or the purpose of the agency;
5. Revocation; and
6. Dissolution of the firm or corporation which entrusted or accepted the agency.
Note: The list is not exclusive; May also be extinguished by the modes of extinguishment of obligations in general
whenever they are applicable, like loss of the thing and novation.

25.Expiration of the period for which it was constituted

Two (2) Expiration of the period for which it was constituted is:
a. If created for fixed period, expiration of the period extinguishes agency even if the purpose was not accomplished; and
b. If no time is specified, the courts may fix the period as under the circumstances have been probably contemplated by
the parties [Art. 1197, CC]. Otherwise, the agency terminates at the end of a reasonable period of time. Either party can
terminate the relationship at will by giving notice to the other.
The period contemplated may be implied from terms of agreement, purpose of agency, and the
circumstances of the parties.
 26.Death, civil interdiction, insanity, insolvency
In General – By reason of the very nature of the relationship between the principal and agent,
agency is extinguished by the death of the principal or the agent. Any act of an agent after the death of his
principal is void ab initio unless the same falls under the exceptions provided for in the aforementioned
Art 1930 and 1931, CC.

Exceptions:
1. Agency Coupled with an Interest – 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. Art. 1930, CC
2. Contract between Agent Without Knowledge of Death and Third Person
in Good Faith – 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. Art. 1931, CC
3. Unfinished business – He must also finish the business already begun on the death of the principal,
should delay entail any danger. Par. 2, Art. 1884, CC

Death of Agent -
If the agent dies, his heirs must:
1. Notify the principal thereof; and
2. In the meantime, adopt such measures as the circumstances may demand in the interest of the latter [Art. 1932, CC].

27.Withdrawal of the agent

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. Art. 1928, CC
General Rule: The agent may withdraw so long as he gives due notice to the principal. If the
principal suffers damage because of the withdrawal, then the agent must indemnify him, except if the
basis of his withdrawal is because continuing the performance of the agency is impossible without grave
detriment to the agent.
If the Agent files a complaint against his principal, then he is understood to have renounced the
agency because his act was more expressive than words and could not have caused any doubt. [Valera v.
Velasco, G.R. No. L-28050 (1928)]

28.Accomplishment of the object of the agency

  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.

29.Six (6) Revocation

1) In General – 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. Art. 1920, CC
General Rule: The principal may revoke the agency at will.
Exception: Agency cannot be revoked if it is coupled with an interest, such that:
1. A bilateral contract depends upon it;
2. It is the means of fulfilling an obligation already contracted; or
3. A partner is appointed manager of a partnership in the contract of partnership and his removal from the
management is unjustifiable.
The principal can revoke the agency even if the period fixed in the contract has not yet expired.
[CMS Logging v CA, G.R. No. L-41420 (1992)]
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. Art. 1925, CC
Note: The rule enunciated by Art. 1925, CC is consistent with Art. 1915, CC which provides that, if two or more persons
have appointed an agent for a common transaction or undertaking, they shall be solidarily liable to the agent for all the
consequences of the agency.
Qualifications:
The right of the principal to terminate the authority of his agent is absolute and
unrestricted, except that he is liable for damages in case:
1. He revokes the agency in bad faith [Danon v Brimo, G.R. No. 15823 (1921)]; or
2. He revokes the agency before the expiration of the period stipulated in the agency contract.
2) Two (2) instances when Revocation is Not Binding on Third Persons
1. When Notice is Required – 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; and
Art. 1921, CC
2. When a Third Person in Good Faith Has No Knowledge of Revocation – 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. Art. 1922, CC

An agent with general powers is most likely, an agent authorized to transact with the general public
in contradistinction to the agent who contracts with specified persons under Art. 1921, CC.
3) Appointment of New Agent
  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. Art. 1923, CC
Revocation takes effect when notice is given to the former agent, not when the new agent is
appointed.
4) Direct Management by the Principal
 The agency is revoked if the principal directly manages the business entrusted to the
agent, dealing directly with third persons. Art. 1924, CC
If the principal believes that the agent is in breach of the contract and thereby decides to deal with
the business directly, then the agency is said to be revoked. [CMS Logging v CA, supra]
The mere act of direct management by the principal is not enough to revoke the agency without
such intention.
5) Special Authority Revokes the General Authority Where a Special Matter is Involved
 A general power of attorney is revoked by a special one granted to another agent, as
regards the special matter involved in the latter. Art. 1926, CC
If Agent 1 is given a general agency, and Agent 2 is later given a special agency, then Agent 1 can
no longer perform the powers granted to Agent 2 under the special agency
6) When Agency Cannot Be Revoked
 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. Art. 1927, CC
 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. Art. 1930, CC
Even if the agency is coupled with an interest (which means that it is irrevocable), it may still be
revoked if there is just cause to terminate such agency relationship.

30.Dissolution of the firm/corp. Which entrusted/accepted the agency

 The dissolution of a partnership or corporation which entrusted (principal) or accepted
(agent) the agency extinguishes its juridical existence, except for the purpose of winding up its affairs. It
is equivalent to death.