Can my agent hand off my business to someone else without my consent?

Silence is not a bar

If you never told your agent, one way or the other, whether they could bring in a substitute to run your business, the default rule favors the agent. The agent may appoint a substitute if the principal has not prohibited him from doing so. An agency agreement that says nothing about substitution does not, on its own, stop your agent from handing the work to someone else. If you want to rule that out, the article's own logic makes clear the prohibition has to come from you, not be assumed by silence.

Permission does not mean the agent walks away clean

Being allowed to appoint a substitute is not the same as being free of responsibility for what that substitute does. The law makes the original agent "responsible for the acts of the substitute" in two situations: when the agent was never given the power to appoint one at all, and when the agent had that power but did not get to name the specific person, and the person who ended up appointed turned out to be notoriously incompetent or insolvent. In both cases, the loss can still trace back to your original agent.

What happens if you did prohibit it

If you did expressly forbid your agent from delegating your business to someone else, that prohibition has real force. All acts of the substitute appointed against the prohibition of the principal shall be void. A substitute brought in over your express objection is not simply someone whose authority you can later challenge — their acts carry no legal effect from the start, as far as this article is concerned.

Why this matters when you find out after the fact

In practice, principals often only learn a substitute was appointed after a transaction has already gone through. Whether you have a claim against your original agent, or whether the substitute's acts bind you at all, turns on exactly which of these situations applies: did you prohibit substitution, did you allow it without naming who, or did you simply never address it? Pin down which scenario you are in before assuming either that you are stuck with the outcome or that it can simply be undone.

Cases citing this provision

These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.

• Sps. May S. Villaluz and Johnny Villaluz, Jr. vs. Land Bank of the Philippines and the Registrar of Deeds for Davao City, G.R. No. 192602, January 18, 2017 — read the decision on LawPhil →
• Corazon L. Escueta, et al. vs. Rufina Lim, G.R. No. 137162, January 24, 2007 — read the decision on LawPhil →

Related provisions

• Civil Code, Article 1892 — Appointment of a Substitute