Sub-agent appointment

Dear Atty. Maan,

My mother, through a Special Power of Attorney, appointed her friend as an agent for the purpose of selling a parcel of land in Batangas. The agent then appointed a substitute or sub-agent to sell the land. After the land was sold, my mother sought to nullify the sale effected by the sub-agent on the ground that she did not authorize her friend to appoint a sub-agent. Is the contract of sale executed by the sub-agent indeed valid and binding upon my mother?

Marie

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Dear Marie,

The law creates a presumption that an agent has the power to appoint a substitute. Article 1892 of the New Civil Code provides:

Art. 1892. The agent may appoint a substitute if the principal has not prohibited him from doing so; but he shall be responsible for the acts of the substitute:

(1) When he was not given the power to appoint one;

(2) When he was given such power, but without designating the person, and the person appointed was notoriously incompetent or insolvent.

All acts of the substitute appointed against the prohibition of the principal shall be void.

Further, in the case of Spouses Villaluz v. Land Bank of the Philippines, G.R. No. 192602, 18 January 2017, the Supreme Court ruled that although the law presumes that the agent is authorized to appoint a substitute, it also imposes an obligation upon the agent to exercise this power conscientiously. To protect the principal, Article 1892 allocates responsibility to the agent for the acts of the substitute when the agent was not expressly authorized by the principal to appoint a substitute; and, if so authorized but a specific person is not designated, the agent appoints a substitute who is notoriously incompetent or insolvent. In these instances, the principal has a right of action against both the agent and the substitute if the latter commits acts prejudicial to the principal.

Thus, if the special power of attorney executed by your mother does not expressly prohibit the agent from appointing a substitute, and there is no showing that the substitute was notoriously incompetent or that the agent acted in bad faith or with negligence in choosing the substitute, then the agent acted within the scope of authority.

Hope this helps.

Atty. Mary Antonnette Baudi