Below is a general overview and discussion of Misappropriation Liability for Unappointed Company Representatives under Philippine law. This write-up is for informational purposes only and does not constitute legal advice. For specific concerns, consulting a qualified attorney is recommended.

1. Introduction

Under Philippine law, misappropriation typically refers to the unauthorized use or conversion of property or funds belonging to another. While most discussions on misappropriation concern duly authorized agents or employees, there are situations in which individuals—who are not officially appointed or do not hold any formal position—act as “representatives” of a company. Such unauthorized representations can lead to legal complications for both the individual acting without authority and the parties dealing with that individual.

This article explores:

The legal concept of misappropriation.
The applicable civil and criminal laws in the Philippine context.
Key doctrines under the Civil Code and the Revised Penal Code.
Practical implications for businesses and possible remedies.

2. What Does “Unappointed Company Representative” Mean?

An unappointed company representative is an individual who, without formal appointment or valid authority, holds themselves out or performs acts on behalf of a business entity. This may occur in various ways:

Self-Representation: A person claims to be an agent, officer, or employee of the company without any basis or authority.
Expired/Terminated Authority: A former agent or employee whose official authority has been revoked or terminated yet continues to act as though it remains in effect.
Unauthorized Expansion of Authority: An employee or officer authorized only for a specific transaction oversteps the limitations and conducts additional transactions without company approval.

In any such scenario, if this unauthorized individual receives property, funds, or otherwise conducts significant business on behalf of the company, issues of liability—both civil and criminal—may arise if misappropriation or misuse of those funds or property is proven.

3. Legal Basis for Misappropriation Liability

3.1. Criminal Liability Under the Revised Penal Code

Philippine criminal law defines Estafa (Swindling) and Other Forms of Deceit under the Revised Penal Code (RPC). The most relevant provision is often Article 315, which describes Estafa by misappropriation or conversion. Even if a person is not an officially appointed representative of a company, they can still be held liable for estafa if the following elements are present:

Misappropriation or Conversion of funds or property received in trust, or on commission, or for administration, or under any other obligation involving the duty to return or deliver the same.
Demand by the offended party for the return of the funds or property. (In some cases, actual demand may be inferred from circumstances if it is not explicitly made in writing.)
Failure to Account or Return: The offender fails to return the funds or property, implying conversion to personal use.
Damage to the offended party (the company or third party dealing with the unappointed representative).

If someone who was never validly authorized by the company represents themselves as an agent, collects payments, or otherwise uses or disposes of company property, such actions may give rise to estafa charges if the elements are sufficiently met.

Key Note: The lack of formal appointment does not shield an individual from liability if there is deception or fraudulent intent in appropriating company assets.

3.2. Civil Liability Under the Civil Code

A. Unauthorized Agency and the Principle of Representation

Under Title X (Agency) of the Civil Code of the Philippines, an agent must have authority—explicit or implied—to bind the principal (in this case, the company). Where there is no valid agency, the principal is generally not bound by the acts of the would-be agent. However, problems arise if the would-be agent (unappointed representative) nonetheless receives property or money intended for the principal.

Article 1897 (Civil Code) provides that an agent who exceeds their authority is personally liable for the obligations they contract, unless the principal ratifies them.
If there is no agency at all (i.e., the person is not appointed or authorized) and the principal does not ratify the act, then the unappointed person essentially acts on their own, opening themselves to personal liability for obligations and potential misappropriation.

B. Quasi-Delicts or Civil Frauds

Apart from contractual or agency-based causes of action, the Civil Code also includes provisions on quasi-delicts (Article 2176, Civil Code). If the unauthorized representative’s actions cause harm or damage to the company or a third party due to negligence or fault—although not strictly amounting to a crime—liability can arise in tort (quasi-delict).

Example: If an unappointed person mishandles funds through gross negligence, the company or aggrieved party could sue for damages under quasi-delict even if criminal intent (fraud) cannot be conclusively proven.

C. Doctrine of Apparent Authority vs. No Authority

There is a recognized doctrine in Philippine jurisprudence known as “apparent authority” or “ostensible agency.” If the actions or representations of the company (intentionally or by negligence) cause third parties to believe that an individual is authorized to act on its behalf, the company could be estopped from denying the individual’s authority for the transactions carried out. However, this generally applies where the company’s own conduct creates the impression of authority.

For an unappointed representative, if no act or statement from the company gives the impression of such authority, the company can disown the individual’s acts. In this case:

The company is not bound by the unauthorized individual’s acts.
The would-be representative may be held personally liable.
If there has been misappropriation of funds obtained by falsely representing authority, the would-be representative may face both civil and criminal liability.

4. Common Factual Scenarios in the Philippine Context

Former Employee or Agent Continuing Transactions
- A person whose contract ended continues to collect from clients by presenting outdated company IDs or forging authority letters.
- Criminal liability for estafa could attach if they refuse to turn over collected funds.
Unauthorized Third-Party “Fixers”
- Individuals who present themselves as affiliated with a company to facilitate deals, especially in procurement or supply chain contexts.
- If they receive advanced payments or property for the supposed “company transactions,” they risk prosecution for estafa or other fraud offenses.
Unregistered Sub-Dealers or Distributors
- Someone poses as a sub-dealer of a company’s products without formal appointment.
- Liabilities can arise if they collect payments from unsuspecting buyers and fail to deliver products or remit proceeds.

5. Remedies for Companies

Criminal Complaint (Estafa or Related Offenses)
- Filing a criminal complaint under Article 315 of the Revised Penal Code for misappropriation or conversion.
- Submitting evidence of unauthorized acts, deception, or conversion of funds/property.
- Initiating prosecution to protect the company’s interests and deter future incidents.
Civil Action for Recovery of Funds/Property
- Filing a civil case to recover sums of money or property from the unappointed individual who took possession.
- Alternatively, a complaint for damages (e.g., for lost profits, injury to reputation) may be filed if the company suffered direct and consequential losses.
Injunctions or Temporary Restraining Orders (TRO)
- If the individual continues to represent themselves as part of the company, the company can apply for an injunction or TRO in court to stop such misrepresentations immediately.
Notices and Public Warnings
- Publishing formal notices or advisories disavowing the individual’s authority can help prevent further harm to the company and third parties who might be misled.
- Official letters to clients, customers, and suppliers clarifying the revocation or non-existence of authority.

6. Liability of the Company

6.1. When Might the Company Be Held Liable?

Estoppel / Apparent Authority: If the company’s own action or inaction led others to reasonably believe that the unappointed individual was legitimately acting for the company, the company might be obligated to honor transactions carried out, at least in relation to innocent third parties.
Negligence in Oversight: If the company failed to implement internal controls or disclaimers regarding ex-employees, or allowed unauthorized persons to continue using official documentation (e.g., letterheads, seals, ID cards), a court might hold the company partially responsible under certain circumstances.

6.2. Internal Disciplinary Actions or Corporate Policies

To avoid potential liability, companies should maintain robust internal procedures:

Clear Appointment Protocols: Documenting who can act on behalf of the company and ensuring third parties are made aware of these authorized representatives.
Regular Audits & Updates: Ensuring that once someone’s authority is terminated, relevant departments and third parties (banks, suppliers, customers) are immediately informed.
Secure Company Assets & IDs: Requiring the return of company ID cards, letterheads, and official stamps or seals upon termination of employment or agency.

7. Conclusion

Misappropriation liability for unappointed company representatives in the Philippines is anchored on the legal principles of estafa under the Revised Penal Code and unauthorized agency under the Civil Code. Even if a person is not formally appointed, claiming or acting as a representative and subsequently converting or misappropriating company property or funds can expose them to criminal (Estafa) and civil liabilities (damages, restitution).

Companies can mitigate these risks through vigilant monitoring of official representatives, prompt revocation of expired authorities, and issuing public notices to warn about unauthorized individuals. Victims—whether the company itself or third parties—have avenues to seek legal recourse both criminally and civilly.

Maintaining clear boundaries of authority and quickly addressing any misuse of company credentials help prevent and reduce harm caused by unappointed representatives. Ultimately, while Philippine law provides remedies for misappropriation, the best approach lies in prevention, proper documentation, and swift enforcement of company rights when unauthorized acts are discovered.

Disclaimer: This material is provided for general informational purposes and should not be taken as legal advice. For specific cases or legal questions, please consult a qualified lawyer experienced in Philippine corporate, criminal, or civil law.