On the day you find out: revoke, then audit, then pursue
Order matters on the first day. Revoke first, because the document in his hands can keep being used, and every day of delay is another day he could sign something. Have the board or the person entitled issue a written revocation that names the authority being revoked, its date and when the revocation takes effect. Serve it on the manager and get an acknowledgement. At the same time, instruct the bank to remove his signing rights and online banking access, and tell your main customers, suppliers and landlord which contact person they should deal with from now on.
Next, audit. Pull recent bank statements, contracts, receipts and the log of how the company seal has been used, and list everything he did in the company's name. Only after that should you consider accountability: asking for an explanation, suspension or a police complaint. Many owners do it the other way round, confront the manager by phone first, and find that documents disappear overnight or more papers get signed.
Be careful not to shut down your own operations while taking authority back. Payroll, tax filings and rent still need someone to handle them, so arrange a replacement before you revoke, even if it is only a temporary representative with limited written authority. If changing the bank signatory gets stuck, see when the bank signatory leaves. A clear handover plan also makes it easier to show later that the company acted promptly and responsibly once it knew.
Write down the time you discovered the problem and every step you took that day. A dated record of prompt action helps later if anyone argues the company tolerated or ratified what the manager did.
Check every act against what the authority actually allowed
Whether you can refuse to be bound starts with the wording of the document you gave him. Take out the original power of attorney, board resolution or secretary's certificate and read exactly what matters it covers, any limits on amounts or scope, its duration and whether he could delegate. Many remote owners signed a broad, almost unlimited authority for convenience. In that case most of what he signed probably falls inside it, and disowning it afterwards will be very difficult.
Sort his acts into three groups. The first is clearly within the authority, such as routine purchases and agreed payments; these will generally bind the company, and any issue is his liability to you. The second is clearly outside it, for example an authority to process permits used to sign a loan, give a guarantee for a third party or dispose of company assets; here you have room to argue the company is not bound. The third is the grey zone, where the wording is vague and the other side had reason to believe he had power. That is where litigation usually happens.
Record the result in a table: document, date, counterparty, amount or obligation, the authority relied on, which group it falls into and the evidence. That table becomes the working document for your discussions with lawyers, the bank and counterparties. How to word an authorisation so it is harder to abuse is covered in writing an authorization letter.
If the authority was issued abroad and authenticated, keep the authenticated copy with the table, because the other side will ask to see exactly what was shown to them at signing.
Dealing with third parties: notify them, but do not stop paying unilaterally
Whether an unauthorised contract binds the company depends largely on whether the other side knew, or should have known, that he lacked authority. So once you have revoked it, let the outside world know quickly. Send written notice to known counterparties stating that the authority has been revoked, that specific matters were not authorised by the company and whose signature is valid from now on. Where appropriate, publish a statement through the company's official channels. How to word one, and what not to say, is covered in writing a company clarification statement.
Notifying people is not the same as declaring a contract void. For contracts already signed and performed by the other side, do not announce on your own that you will not pay or deliver. Doing so can turn the company from the wronged party into the party in breach. The better route is a lawyer's letter setting out the company's position and asking the counterparty for the signing documents, followed by negotiation.
Loans and guarantees are the most dangerous obligations, so tell lenders and creditors as early as possible. If they keep lending or demanding performance after receiving notice, the company's defence becomes much stronger. If you wait until they have already sued, you will be arguing from behind, and every month of silence can be read as the company accepting what was done.
Keep proof of every notice you send: delivery receipts, email confirmations and copies of any published statement. If a counterparty later claims it never knew the authority had ended, that proof is what your lawyer will rely on. Also check whether any regulator or registry holds the manager's name as your authorised representative, and update those records at the same time so that new dealings cannot rely on outdated information.
Inside the company: suspension, investigation and recovery
How you deal with the manager depends on what happened. Exceeding authority without personal gain is mainly a matter of internal discipline and who bears the loss. Fictitious transactions, kickbacks or money routed to his own or related accounts raise questions of misappropriation and possible criminal liability. Either way, follow due process: give written reasons, allow him to respond and, where justified, use preventive suspension. Do not dismiss him verbally on the spot or hold on to his personal belongings.
Preserving evidence is the priority during the investigation. Secure and copy emails, chat records, the seal register, bank confirmations and original contracts, ideally with a third party present as witness. The sequence for investigating and recovering misappropriated funds is covered in employee embezzlement and theft.
If he still holds company documents, seals, accounts or customer data and will not return them, demand their return in writing by a specific date with an itemised list. If he still refuses, have a lawyer assess the civil and criminal options. Meanwhile, update the bank and authorities so that whatever he still holds becomes less useful to him. Keep the business informed internally on a need-to-know basis, so that rumours do not cause other staff to take sides or remove records of their own.
Decide early who in the company is allowed to speak to the manager about the matter, and keep those conversations in writing where possible. Separate the investigation from the day-to-day running of the business, so that operational staff are not drawn into gathering evidence. If the facts suggest a criminal matter, take legal advice before confronting him, because how the evidence was obtained and preserved will matter later.
Granting authority remotely next time: narrow, short and dual-signed
Fixing this afterwards costs far more than designing it properly at the start. When you grant authority to a local manager again, follow three principles. Make the matters specific, limited to a particular process or type of contract rather than a general authority. Keep the duration short so it expires automatically and has to be renewed. Require two signatures or a director's written confirmation for major matters such as borrowing, guarantees, disposal of assets and payments above an agreed threshold.
Set the bank up to match: tiered online banking permissions, a second approver for large payments, and statements sent directly to the owner's email. Do not leave the company seal and every important original with the same person. How to word the board resolution used for bank matters is covered in writing a board resolution for the bank.
Finally, check regularly. Look at the bank statement and the contract list every month and reconcile the seal register every quarter. Authority is not a one-off decision. The biggest risk for an owner who is rarely in the Philippines is a long stretch in which nobody is actually looking at the books, so build the checks into a calendar rather than relying on memory.
Review every standing authority at least once a year, even when nothing has gone wrong. People change roles, relationships change and an authority that made sense when it was issued may be far too wide today. A short annual review costs little compared with unwinding a single unauthorised loan or guarantee.
How YIXING can help
YIXING Travel Consultancy (SEC registration CS202009551, Bureau of Immigration accredited agent CA-202624381-1) provides compliance retainer services for companies whose owners are not usually in the Philippines. We help draft and serve revocation notices, update authorised representative details with banks and government offices, prepare a monthly compliance calendar and reconciliation checklist, and bring in a licensed lawyer when unauthorised contracts or staff discipline issues need legal judgement.
We are not a law firm. We do not litigate, we do not give opinions on whether a contract is binding, and we promise no recovery outcome. What we can do is handle the administrative side in the right order, taking back authority, notifying people, reviewing records and updating registrations, so that your lawyer can focus on the legal questions.
If you have only just discovered the problem, gather the authority document, recent bank statements and a list of what he signed, then sit down with your lawyer and us to agree the sequence. The sooner the authority is withdrawn, the fewer issues there will be to contest later. For owners who will remain mostly abroad while the business carries on, a simple monthly remote checklist is the best place to start. For individual cases, consult a licensed lawyer; this article is not legal advice.
If the manager was also the company's point of contact for government offices, we can help identify where his name is registered, prepare the change filings and make sure notices from regulators reach the right person from now on. That reduces the risk of missing deadlines while the dispute is being sorted out.
Frequently Asked Questions
Is the company bound by contracts the manager signed under the authority?
How do I revoke the authority properly?
Can I just tell the other side the contract is void and stop paying?
He borrowed money in the company's name and the lender is here. What now?
Can I fire the manager immediately?
He will not return the seal and documents. What can I do?
How should I grant authority remotely in future?
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