FUNDAMENTOS TEORICOS

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

3. Article 1884. The agent is bound by his acceptance to carry out the agency and is liable for the damages which, through his non-performance, the principal may suffer.

He must also finish the business already begun on the death of the principal, should delay entail any danger.

Here, there is an imperative need to finish the business which was started by the agent in order to avoid danger, prejudice or damage to the principal.

What happens if after the death of the principal, the agent or a attorney-in-fact continues to manage the estate of the deceased principal? Take note, he becomes a negotiorum gestor. There is an extra-contractual obligation governed by Article 2144 of the Civil Code. The agent becomes a negotiorum gestor of the decedent‘s heirs and the heirs are liable for the obligation assumed by the negotiorum gestor and tfor the interest and benefit of the estate.

Article 2144. Whoever voluntarily takes charge of the agency or management of the business or property of another, without any power from the latter, is obliged to continue the same until the termination of the affair and its incidents, or to require the person concerned to substitute him, if the owner is in a position to do so. xxx

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.

Here an agency for the purpose of contracting with specified third persons. Take note, the revocation of this agency shall not

prejudice the specified persons who were not timely notified of the acts of revocation because these specified persons must be given the opportunity to meet the situation so that they may be able to protect their rights and interests.

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 sufficient warning to third persons.

It applies when the agent is clothed with general powers of attorney. Under the said provision, if the agency is revoked by the principal and the third person dealing with the agent is not aware of the revocation, the transaction will be binding upon the principal even if the agent is in bad faith.

If the agent is in good faith, meaning, he has no knowledge of the revocation. The third person is in good faith also, the principal is bound by the contract.

Example, the agent is in bad faith, the third person is also in bad faith. If both of them are aware of the revocation and they still proceeded with the transaction, the principal is not bound by the contract unless he ratifies the same.

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.

In order for the revocation to be valid, first notice must be given to the first agent. If no notice is given to the first agent and that said first agent continued the agency in good faith, what is the effect of the contract that he entered into? It is binding upon the principal.

The second power of attorney revoking the first one operates only after due notice is given to the first agent, because this speaks of two agents. Another principle, it is important for the two agencies must be incompatible. Thus, if the two agencies are not

incompatible, they may co-exist.

Example, Agent 1 is appointed to buy land in Davao. If Agent 2 is appointed to buy land in Davao, then these two agencies are not incompatible.

What is exclusive agency? There is exclusive agency if:

1. It is expressly stipulated; and

2. When compensation is anchored on the success of the transactions entrusted to the agent.

Under this exclusive agency, the principal is deprived of the authority to appoint a new agent for the same transaction whether the new appointment is joined with the first agent or by way of implied revocation of the power of the first agent. The exclusive agency to be valid must be limited with respect to the transaction or with respect to the time.

Article 1927. An agency cannot be revoked if a bilateral contract depends upon it, or if it is a 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.

Article 1927 speaks of power of attorney coupled with interest. Take note, as a general rule, that is irrevocable.

What is a power of attorney coupled with obligation? Is that the same with a power of attorney coupled with interest? A power of attorney coupled with obligation is one where the authority given is to secure the agent against some of the obligations assumed or liability incurred on the principal‘s behalf. This is irrevocable like a power of attorney coupled with interest.

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

This speaks of knowledge by the agent of the fact of death of the principal or some other grounds of extinguishment of agency. The act is valid, effective and enforceable with respect to the third person.

Article 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.

Under this article, the heirs of the agent are required to notify the principal of the facts of death, that is the first duty. Second duty, the heirs must adopt measures within their power to protect the interest of the principal. There are two duties imposed. What is the basis of these duties imposed on the heirs of the agent?

The basis of this duty is presumed agency or agency by operation of law.

There is a duty imposed by law on the heirs of the agent upon his death. Is there a duty on the part of the heirs of the principal to notify the agent? There is no duty. That is the case of Rallos. It is the usual duty of an agent to keep periodic contact or

communication with the principal.

BUS ORG – TRUST