Quiz No.
5
Obligations of the Principal; Modes of Extinguishment of Agency
Atty. Martin Gacias
(A.) May the principal revoke the agency at will?
(B.) When is an agency irrevocable?
(C.) What is meant by an agency couple with interest?
1. Arnold sold a large parcel of land in Cebu to Mel for P10 million payable in annual installments over a period of
10 years, but title will remain with Arnold until the purchase price is fully paid. To enable Mel to pay the price,
Arnold gave him a power of attorney authorizing him to subdivide the land, sell the individual lots and deliver the
proceeds to Arnold, to be applied to the purchase price. Five (5) years later, Arnold revoked the power of attorney
and took over the sale of the subdivision lots himself. Is the revocation valid?
(A.) In an agency coupled with interest, does the death of the agent terminate the agency?
(B.) What are the modes of extinguishment of a contract of agency?
(C.) May an agent withdraw from the agency?
(D.) What is the effect on the contract of agency in case of death of the principal?
(E.) What is the effect in case the agent should act without knowledge of the termination of the agency?
2. Mr. A borrowed P10Million from ABC Bank and to secure its payment, Mr. A signed a Deed of Real Estate
Mortgage (REM) in favor of ABC Bank in the usual printed form. Included therein, it was provided, among others,
that “for the purpose of extrajudicial foreclosure, the mortgagor hereby appoints the mortgagee as his attorney-in-
fact to sell the property mortgaged, to sign all documents and perform any act necessary to accomplish the said
purpose”. Mr. A failed to pay the loan and thus, the bank foreclosed and purchased the property at a foreclosure sale.
During the one-year period of redemption, Mr. A passed away and the property was not redeemed despite the lapse
of the one-year period. ABC Bank, despite having knowledge of the death of Mr. A, consolidated its title by
executing an Affidavit of Consolidation and the Deed of Sale of the land in its favor as empowered in the Deed of
REM. After ABC Bank consolidated its title, the heirs of Mr. A asked ABC Bank to allow them to redeem the
property by paying only the P10 Million plus accrued interest and expenses of the foreclosure, contending that the
sale in favor of ABC Bank was invalid due to the prior death of Mr. A which therefore revoked the power of attorney
inserted in the Deed of REM. The bank demanded the payment of P20Million, the fair market value then of the
property. Can the bank be compelled to accept the tender of redemption by the heirs of Mr. A? State your reasons.
(A.) X and Y are siblings. They are the registered owners of a parcel of land. They executed a SPA in favor of Z, their brother, authorizing him to
sell the property for and in their behalf. However, X died a few days afterwards. 4 months after the death of X, Z sold the land to ABC Realty
Corp and the sale was duly registered. A, the administrator of the estate of X, brought an action for the reconveyance of X’s ½ share on the
property on the ground that the contract of sale insofar as X is concerned is unenforceable. Will the action prosper?
(B.) What is the rule when both the principal and the agent entered into a contract with respect to the same thing?
3. A in 2005, A executed a power of attorney authorizing B to sell a parcel of land consisting of more than 14
hectares. A died in 2014. In 2016, four of his children sold more than 12 hectares of land to C. In 2017, B sold 8
hectares of the same land to D. it appears that C did not register the sale executed by the children. D, who was not
aware of the previous sale, on the other hand, registered the sale executed by B whose authority to sell was
annotated on the back of the original certificate of title.
A. What was the effect of the death of A upon B’s authority to sell the land?
B. Assuming that B still had the authority to sell the land, who has a better right over said land, C or D?
(A.) When is the principal not liable for the expenses incurred by the agent?
(B.) Enumerate the obligations of a principal.
4. X constituted Y as his agent to sell his land on December 9, 2021. X sold the land to A. Such contract was not
registered. On January 4, 2022, Y sold the land to B, who registered the deed of sale and obtained a title. When A
discovered the sale and transfer, he went to court and asked for reconveyance. Will the action prosper? Why?
(A.) Enumerate the instances when agency cannot be revoked at the principal’s will.
(B.) What are the effects in case the principal should appoint a new agent?
(C.) What is the effect if the principal directly manages the business?
5. X appointed Y as his agent to sell the house and lot. One week thereafter, X appointed Z as his agent to sell the
same house and lot. What is the effect of the appointment of Z with respect to the agency of Y? Are there any
exceptions?
