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ART. 1893. In the cases mentioned in Nos.

1 and 2 of the
preceding article, the principal may furthermore bring an action
against the substitute with the respect to the obligation which the
latter has contracted under the substitution.
Subagent Defined
A subagent is a person to whom the agent delegates as his
agent, the performance of an act for the principal which the agent has
been empowered to perform through his representative. (Restatement
of the Law on Agency, Sec. 5, p. 20)
Power of agent to appoint subagent or substitute
Unless prohibited by the principal, the agent may appoint a
subagent or substitute. While ordinarily the selection of an agent is
determined largely by the trust and confidence that the principal has in
the agent, the principal need not fear prejudice as he has a right of action
not only against the agent but also against the substitute.
This right of action against the substitute is an exception to the
general rule that contracts are binding only between the contracting
parties, their assigns and heirs. In reality, the subagent or substitute is a
stranger to the principal.
Effects of substitution
1. Substitution prohibited – when the substitute is appointed
by the agent against the express prohibition of the principal,
the agent exceeds the limit of his authority. (Art. 1881) The
law says that all acts of the substitute in such case shall be
void.
2. Substitution authorized – if in contract of agency, the agent
is given the power to appoint a substitute, the substitution
has the effect of releasing the agent from his responsibility
unless the person appointed is notoriously incompetent or
insolvent. (Art. 1892[2]) But if the substitute is the person
designed by the principal, the consequence is the absolute
exception of the agent.
3. Substitution not authorized, but substitution not prohibited
– if the agent appoints a substitute when he was not given
to appoint one, the law the validity of the substitution if the
same is beneficial to the principal because the agency has
thus been executed in fulfillment of its object. If the
substitution has occasioned damage to the principal, the
agent shall be primarily responsible for the acts of the
substitute as if he himself executed them. But the principal
has also a right of action against the substitute.
ART. 1894. The responsibility of two or more agents,
even though they have been appointed simultaneously, is
not solidary, if solidarity has not been expressly stip-ulated.
(1723)
ART. 1895. If solidarity has been agreed upon, each of
the agents is responsible for the non-fulfillment of the
agency, and for the fault or negligence of his fellow agents,
except in the latter case when the fellow agents acted
beyond the scope of their authority. (n)

Liability of two or more agents towards principal is joint not


solidary
1. In a joint obligation, each debtor is liable only for a
proportionate part of debt. If it is solidary, each debtor is
liable for the entire obligation. The presumption is that an
obligation is joint. The rule in Article 1894 follows the
general principle respecting solidarity.
2. If solidarity has been agreed upon, each of the agents
becomes solitarily liable:
a. For the non-fulfillment of the agency; and
b. For the fault or negligence of his fellow agents
provided the latter acted within the scope of their
authority.

The innocent agent has a right later on to recover from


the guilt or negligence agent.
3. An agent who exceeds his power does not act s such agent,
and, therefore, the principal assumes no liability to third
persons. Since this is so, solidary liability among the agents
cannot be demanded by the principal.

Example:

a. P appointed A1 and A2 as his agents to sell his (P’s) Toyota


car. The appointment did not indicate did not indicate whether
the agents’ liability was joint or solidary. While A1 was drunk
one day, he alone drove the car to a prospective buyer. Not
being in control of his senses, he caused the car bump an
electric post resulting in damages to the car amounting to
10,000.00.
ART. 1896. 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. (1724a)

Liability of agent for interest.


Article 1896 contemplates two distinct cases. The first refers to
sums belonging to the principal which the agent applied to his own use
and the second, to sums which the agent still owes the principal after
the expiration of the agency.
(1) The agent who converted to his personal use the funds of the
principal is liable for interest by way of compensation or indemnity (not
to be confused with interest for delay) which shall be computed from
the day on which he did so. Of course, the agent’s liability is without
prejudice to a criminal action that may be brought against him because
of the conversion.

(2) While there is no liability for interest on sums which have not
been converted for the agent’s own use (De Borja vs. 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.

Necessity of demand by principal.

Is it always necessary that a demand for payment be made by the


principal in order that delay shall exist?
A negative answer seems evident in view of the clear provisions of
the article. (see Art. 1169[1].) It is clear that if by provision of law the
agent is bound to deliver to the principal whatever he may have received
by virtue of the agency (Art. 1891.), demand is no longer necessary. (11
Manresa 532.)