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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)
Example:
(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.