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Chapter 2 OBLIGATIONS OF THE AGENT ART. 1884. The agent is bound by his acceptance to carry out the agency and is liable for the damages which, through his non-performance, the principal may suffer. He must also finish the business already begun on the death of the principal, should delay entail any danger. (1718) Obligations, in general, of agent to principal. (1) Good faith and loyalty to his trust, agent’s first duty. — As has been pointed out (see discussions under Art. 1868.), the relations
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  Chapter 2 OBLIGATIONS OF THE AGENT ART. 1884. The agent is bound by his acceptance to carry out the agency and is liable for the damages which, through his non-performance, the principal may suffer. He must also finish the business already begun on the death of the principal, should delay entail any danger. (1718) Obligations, in general, of agent to principal. (1) Good faith and l  oyalty to his trust, agent’s fi  rst duty. —    As has been pointed out (see discussions under Art. 1868.), the relationship existing between principal and agent is a fiduciary one, demanding conditions of trust and confidence. 1 Accordingly, 1(15) How Far a Lawyer May Go in Supporting a Client’s Cause. —   The lawyer owes “entire devotion to the interest of the client, warm zeal in th e maintenance and defense of his right and the exertion of his utmost learning and ability,” to the end that nothing  be taken or be withheld from him, save by the rules of law, legally applied. No fear of  judicial disfavor or public unpopularity should restrain him from the full discharge of his duty. In the judicial forum, the client is entitled to the benefit of any and every remedy and defense that is authorized by the law of the land, and he may expect his lawyer to assert every such remedy or defense. But it is steadfastly to be borne in mind that the great trust of the lawyer is to be performed within and not without the bounds of the law. The office of attorney does not permit, much less does it demand of him for any client, violation of law or any manner of fraud or chicanery. He must obey his own conscience and not that of his client. (Canons of Professional Ethics.) Canon 19. —  A LAWYER SHALL REPRESENT HIS CLIENT WITH ZEAL WITHIN THE BOUNDS OF THE LAW. Rule 19.01. —  A lawyer shall employ only fair and honest means to attain the lawful objectives of his client and shall not present, participate in presenting or threaten 447 448 AGENCY in all transactions concerning or affecting the subject matter of the agency, it is the duty of the agent to act with the utmost good faith and loyalty for the furtherance and advancement of the interests of the principal. The duty of good faith is also called the fiduciary duly which imposes upon the agent the obligation of faithful service. The duty to be loyal to the principal demands that the agent look out for the best interests of the principal as against his own or those of the third party. It is immaterial in the application of this rule that the agency is one coupled with interest (see Art. 1927.), or that the compensation given the agency is small or nominal, or that it is a gratuitous agency. (3 C.J.S. 6-7.) (a) Presumption. —    An agent’s acts which tend to violate  his fiduciary duty are not only invalid as to the principal, but are also against public policy. In the absence of proof to the contrary, however, the presumption arises that an agent has performed his duty in good faith, and the principal, until notice is received of a breach of relational duties, may rely upon his agent’s faithfulness. ( Ibid  ., 7.)  (b) General rule as to loyalty when not applicable. —  The general rule as to loyalty does not apply to cases where no relation of trust or confidence exists between the parties, as where the agent is bound merely as an instrument, more properly as a servant, to perform a service, or where there is no showing of an agency relationship.  (Ibid.) (2) Obedience to principal’s instruction. —  An agent must obey all lawful orders and instructions of the principal within the scope of the agency. If he fails to do so, he becomes liable for any loss the principal incurs even though he can show that he acted in good faith or exercised reasonableness. Even a gratuitous to present unfounded criminal charges to obtain an improper advantage in any case or proceeding. Rule 19.02. —  A lawyer who has received information that his client has, in the course of the representation, perpetrated a fraud upon a person or tribunal, shall promptly call upon the client to rectify the same, and failing which he shall terminate the relationship with such client in accordance with the Rules of Court. Rule 19.03. —  A lawyer shall not allow his client to dictate the procedure in handling the case. (Code of Professional Responsibility.)  Art. 1884 449 agent must follow instructions or become responsible for any loss resulting from failure to do so. But an agent is not liable if he violates the principal’s instructions for a good reason. Related to   the agent’s duty to obey instructions is the duty to keep within  the limits of his authority when acting for the principal. An agent must know the extent of his authority. If he is in doubt, he should ask the principal for clarification. (3) Exercise of reasonable care. —   By accepting an employment whose requirements he knows, without stipulating otherwise, the agent impliedly undertakes that he possesses a degree of skill reasonably or ordinarily competent for the performance of the service, and that in performing his undertaking, he will exercise reasonable care, skill and diligence. He does not agree that he will make no mistake whatsoever, or that he will exercise the highest skill or diligence, but he does agree that he will exercise reasonable skill, and that he will take the usual precautions (Mechem, Sec. 524, p. 360; see Art. 1909; British Airways vs. Court of Appeals, 285 SCRA 450 [1998].) as a reasonably careful agent would under similar circumstances. Failure to do so constitutes a breach of his duty. ILLUSTRATIVE CASES: 1. In attempting a settlement of a controversy, a lawyer lost sight of a statute of limitations which had run against his client. Facts: P’s wagon suffered from a collision with a traincar   operated by T Corporation, the collision being caused by the negligence of the driver of T. A (lawyer), on taking charge of the case, attempted a settlement, and the controversy extended until a six (6) months’ statute of limitations had run against P.   A claimed that he was misled by the conduct of the corporation and he was satisfied that it would pay. Issue: Is A guilty of negligence?  Held: Yes. The duty of A was not discharged when he communicated the offer of T to P who made no reply. It was his duty to know the provisions of the law and to apply his knowledge. To lose sight of the statute was to fail in that degree of care and skill to which the client is entitled. If he had written a warning to P that the period of limitation was running out  Art. 1884 OBLIGATIONS OF THE AGENT 450 AGENCY and that if P were meditating legal proceedings he should have given instructions at once, that might have satisfi ed his (A’s)  obligation to P. (Fletcher & Sons vs. Lubb Booth & Helliwell, 1 K.B. 275 [1919].)  ________ ________ ________ 2.  Agent, in violation of instruction of principal, delivered a note entrusted to him by principal, to a person who misappropriated the note. Facts: P delivered a note to A to get discounted, instructing him “not to let the note get out of his reach without receiving   the money.” A delivered the note to T, who promised to  get it discounted and bring back the money, but instead misappropriated the note. Issue: Is A liable for the conversion 2 of the note? Held: Yes. The delivery to T was unauthorized and wrongful because it was contrary to the express directions of P. It was an unlawful in terference with P’s property which resulted in loss  and that interference and disposition constituted a conversion.  A had no more right to deliver the note to T to take away, any more than he had to pay his own debt with it. Morally, there might be a difference, but in law, both acts would be a conversion, each consisting in exercising an unauthorized dominion over P’s property. (Laverty vs. Snerthen, 68 N.Y. 522 [1877].)  ________ ________ ________ 3.  Agent violated instructions as to price. Facts:  A (broke r) sold property of P at a price below P’s  instructions. Issue: Is A liable for conversion of the property? Held: No. In this case A did nothing with the property but what he was authorized to do. He had a right to sell and deliver the property. He disobeyed instructions as to price only and was liable for misconduct, but not for conversion of the property, a distinction which, in a practical sense, may seem technical, but it is founded probably upon the distinction 2Conversion is the unauthorized exercise of the right of ownership over goods or property of another person.  Art. 1884 451 between an unauthorized interference with the property itself and the avails or terms of sale. ( Dufresne vs. Hutchinson, 3 Taunt. 117, and Sarjeant vs. Blunt, 16 Johns. 74, cited in the Laverty case.)  Specific obligations of agent to principal. They are the following: (1) To carry out the agency which he has accepted; (2) To answer for damages which through his performance the principal may suffer (Ibid.); (3) To finish the business already begun on the death of the principal should delay entail any danger (Ibid.); (4) To observe the diligence of a good father of a family in the custody and preservation of the goods forwarded to him by the owner in case he declines an agency, until an agent is appointed (Art. 1885.); (5) To advance the necessary funds should there be a stipulation to do so (Art. 1886.); (6) To act in accordance with the instructions of the principal, and in default thereof, to do all that a good father of a family would do (Art. 1887.); (7) Not to carry out the agency if its execution would manifestly result in loss or damage to the principal (Art. 1888.); (8) To answer for damages if there being a conflict between his interests and those of the principal, he should prefer his own (Art. 1889.); (9) Not to loan to himself if he has been authorized to lend money at interest (Art. 1890.); (10) To render an account of his transactions and to deliver to the principal whatever he may have received by virtue of the agency (Art. 1891.); (11) To distinguish goods by countermarks and designate the merchandise respectively belonging to each principal, in the case of a commission agent who handles goods of the same kind and mark, which belong to different owners (Art. 1904.);  Art. 1884 OBLIGATIONS OF THE AGENT 452 AGENCY (12) To be responsible in certain cases for the acts of the substitute appointed by him (Art. 1892.); (13) To pay interest on funds he has applied to his own use (Art. 1896.); (14) To inform the principal, where an authorized sale of credit has been made, of such sale (Art. 1906.); (15) To bear the risk of collection, should he receive also on a sale, a guarantee commission (Art. 1907.); (16) To indemnify the principal for damages for his failure to collect the credits of his principal at the time that they become due (Art. 1908.); and (17) To be responsible for fraud or negligence. (Art. 1909.) Obligation to carry out the agency.  A person is free to refuse to be an agent (Art. 1885.) but once he accepts the agency, he is bound to carry it out in accordance with its terms in good faith (Art. 1159.) and following the instructions, if any, of the principal. (Art. 1887.) He is normally expected to exercise the degree of care and skill that is reasonable under the circumstances. By contract, the parties may make the agent’s duty of diligence in carrying out the agency either stricter   
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