INC Agency Digests Feb14 (1)

D2017 AGENCY DIGESTS – February 14

Danon vs. Brimo & Co. (12 September 1921)

JULIO DANON, plaintiff-appellee, vs. ANTONIO A. BRIMO & CO., defendant-appellant.September 12, 1921 (Johnson, J.)

Note: Pls read the original. Medyo magulo ang ponencia so better if alam niyo how it was written para malagyan niyo ng proper sequence of events, according to how you understood the case.

FACTSDanon brought an action to recover P60k from defendant company Brimo & Co. The 60k is allegedly the value of services rendered to Brimo & Co by Danon as a broker. Danon’s allegations:

In August 1918, defendant company, thru Brimo (manager) employed him to look for a purchaser of its factory (Holland American Oil Co.) for P1.2M payable in cash

Defendant promised to pay Danon a commission of 5% of P1.2M if the sale was consummated, or if Danon should find a purchaser ready, able and willing to buy the factory for the said price

Danon then found a purchaser, but then the defendant refused to sell the factory without any justifiable reason, and without notifying Danon of its desistance or variation in the price and terms of the sale.

Defendant interposed a general denial.

Facts found in the SC ruling: Antonio A. Brimo, in a conversation with Danon, informed the latter that

he (Brimo) desired to sell his factory for P 1.2M Brimo agreed and promised to pay to Danon a commission of 5%

provided the latter could sell said factory for that amount No definite period of time was fixed within which Danon should effect the

sale It seems that another broker, Sellner, was also negotiating the sale, or

trying to find a purchaser for the same property and that Danon was informed of the fact either by Brimo himself or by someone else; at least, it is probable that Danon was aware that he was not alone in the field, and his whole effort was to forestall his competitor by being the first to find a purchaser and effect the sale.

It seems that immediately after having an interview with Mr. Brimo, Danon went to see Mauro Prieto (president of the Santa Ana Oil Mill) and offered to sell to him defendant's property at P1.2. After inspection, Prieto asked for an appointment with Mr. Brimo to perfect the negotiation.

In the meantime Sellner, the other broker referred to, had found a purchaser for the same property, who ultimately bought it for P1.3M. For that reason Mr. Prieto, the would be purchaser found by Danon, never came to see Mr. Brimo to perfect the proposed negotiation.

Danon claims that the reasons why the sale to the Santa Ana Mill was not consummated was because Mr. Brimo refused to sell to a Filipino firm and preferred an American buyer; that upon learning such, Danon endeavored to procure another purchaser and found a Mr. Leas, who delivered to Danon a letter addressed to Mr. Brimo, offering to buy the factory at P1.2M, the offer being good for twenty-four; that said offer was not accepted by Brimo because while he was reading the letter of Leas, Sellner came in, drew Brimo into another room, and then and there closed the deal at P1,300,000. The last statement is admitted by the defendant.

TC judge rendered a judgment in favor of the plaintiff and against the defendant for P60k, with costs. Hence this appeal.

ISSUES:1. WON plaintiff was actually given authority to sell the property. -NO2. WON plaintiff performed what was required of him in order to entitle him

to a commission. –NO3. (In relation to #2) Is he entitled to recover P60k? --NO

HELD: Danon is not entitled to the P60k because he was not the “efficient agent or the procuring cause of the sale.” Although Danon could probably have effected the sale had not the defendant sold it to someone else, he is not entitled to the commissions agreed upon because he had no intervention whatever in, and much sale in question. No definite period was fixed by the defendant within which Danon might effect the sale of its factory. Nor was Danon given by the defendant the exclusive agency of such sale. Therefore Danon cannot complain of the defendant's conduct in selling the property through another agent. "One who has employed a broker can himself sell the property to a purchaser whom he has procured, without any aid from the broker." (Hungerford vs. Hicks, etc.)

RATIO1. The proof with regard to the authority of the plaintiff to sell the factory in question for the defendant, on commission, is extremely unsatisfactory. It consists solely of the testimony of the plaintiff and of the manager of the defendant. (see additional facts… ^)

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2. The proof in this regard is no less unsatisfactory. (see additional facts… ^). Under the proofs in this case, the most that can be said as to what Danon had accomplished is that he found a person who might have bought the defendant's factory if the defendant had not sold it to someone else. The evidence does not show that the Santa Ana Oil Mill had definitely decided to buy the factory for P1.2M. The board of directors of said corporation had not resolved to purchase said property; and even if its president could legally make the purchase without previous formal authorization of the board of directors, yet said president does not pretend that he had definitely and formally agreed to buy the factory in question on behalf of his corporation at the price stated (said president testified that he has not informed Danon of his acceptance of the P1.2M price that was offered by the latter).

3. The plaintiff’s action is one to recover "the reasonable value" of services rendered. It is perfectly clear and undisputed that his "services" did not any way contribute towards bringing about the sale of the factory in question. He was not "the efficient agent or the procuring cause of the sale."

Cases cited by the Court

Wylie vs. Marine National Bank, citing a lot of cases: The broker must be the efficient agent or the procuring cause of sale. The means employed by him and his efforts must result in the sale. He must find the purchaser, and the sale must proceed from his efforts acting as broker.

Sibbald vs. Bethlehem Iron Co.:

In all the cases… the fundamental and correct doctrine is that the duty assumed by the broker is to bring the minds of the buyer and seller to an agreement for a sale, and the price and terms on which it is to be made, and until that is done his right to commissions does not accrue . A broker is never entitled to commissions for unsuccessful efforts. The risk of a failure is wholly his. The reward comes only with his success. That is the plain contract and contemplation of the parties. As we said in Wylie vs. Marine National Bank, the principal violates no right of the broker by selling to the first party who offers the price asked, and it matters not that sale is to the very party with whom the broker had been negotiating. He failed to find or produce a purchaser upon the terms prescribed in his employment, and the principal was under no obligation to wait longer that he might make further efforts. The failure therefore and its consequences were the risk of the broker only. This however must be taken with one important and necessary limitation. If the efforts of the broker are rendered a failure by the fault of the employer; if capriciously he changes his mind after the purchaser, ready and willing,

andconsenting to the prescribed terms, is produced; or if the latter declines to complete the contract because of some defect of title in the ownership of the seller, some unremoved incumbrance, some defect which is the fault of the latter, then the broker does not lose his commissions.

x x x x

One other principle applicable to such a contract as existed in the present case needs to be kept in view. Where no time for the continuance of the contract is fixed by its terms either party is at liberty to terminate it at will, subject only to the ordinary requirements of good faith. The right of the principal to terminate his broker’s authority is absolute and unrestricted , except only that he may not do it in bad faith, and as a mere device to escape the payment of the broker's commissions. If the principal acts in good faith, not seeking to escape the payment of commissions, but moved fairly by a view of his own interest, he has the absolute right before a bargain is made while negotiations remain unsuccessful, before commissions are earned, to revoke the broker's authority, and the latter cannot thereafter claim compensation for a sale made by the principal, even though it be to a customer with whom the broker unsuccessfully negotiated, and even though, to some extent, the seller might justly be said to have availed himself of the fruits of the broker's labor.

Zeimer vs. Antisell and Ayres vs. Thomas: The undertaking to procure a purchaser requires of the party so undertaking, not simply to name or introduce a person who may be willing to make any sort of contract in reference to the property, but to produce a party capable, and who ultimately becomes the purchaser.

Tan vs. Gullas (3 December 2002)

MANUEL B. TAN, GREGG M. TECSON and ALEXANDER SALDAÑA v. EDUARDO R. GULLAS and NORMA S. GULLAS3 December 2002 | J. Ynares-Santiago

FACTS: Sps. Eduardo & Norma Gullas were the registered owners of a parcel of land. They executed an SPA authorizing P Manuel Tan (licensed real estate broker) and his associates Gregg Tecson & Alexander Saldaña to negotiate for the sale of the land at P550.00/sqm., at a commission of 3% of the gross price. The SPA was non-exclusive & effective for one month from 29 June 1992.

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On the same date, P Tan contacted Engr. Edsel Ledesma (construction Manager of the Sisters of Mary of Banneaux, Inc. - a religious organization interested in acquiring a property in the Minglanilla area), and they visited the property together a few days after. The two men accomapnied Sisters Michaela Kim & Azucena Gaviola to see R Eduardo Gullas in his office. The sisters found the land suitable for the purpose and expressed desire to buy it, but requested that the selling price be reduced to P530.00/sqm. He referred the prospective buyers to his wife.

R agreed to sell the property to Sisters of Mary, and executed an SPA in favor of Eufemia Cañete, giving her the special authority to sell, transfer and convey the land at a fixed price of P200.00/sqm. Cañete executed a deed of sale in favor of the Sisters of Mary for P20,822,800.00. The Register of Deeds of Cebu issued a TCT in the name of the Sisters of Mary of Banneaux, Inc.

When Ps went to R Eduardo to claim their commission, the latter refused to pay the broker's fee and alleged that another group of agents was responsible for the sale of land to the Sisters of Mary.

P filed a complaint for the recovery of their broker's fee (P1,655,412.60), as well as moral & exemplary damages & attorney's fees. They alleged that they were the efficient procuring cause in bringing about the sale of the property to the Sisters of Mary, but that their efforts in consummating the sale were frustrated by the private respondents who, in evident bad faith, malice and in order to evade payment of broker’s fee, dealt directly with the buyer whom petitioners introduced to them.

R's answer: another broker, Roberto Pacana, introduced the property to the Sisters of Mary ahead of the petitioners.[14] Private respondents maintained that when petitioners introduced the buyers to private respondent Eduardo Gullas, the former were already decided in buying the property through Pacana, who had been paid his commission.

RTC rendered judgment in favor of Ps, ordering Rs to pay them broker's fee with legal interest and attorney's fees. CA reversed, set aside lower court's decision, and dismissed the complaint.

ISSUE: W/N Ps are entitled to the brokerage commission

HELD: YES. P Tan is a licensed real estate broker, and Tecson & Saldaña are his associates. Citing Schmid and Oberly v. RJL Martinez Fishing

Corporation, the Court defined a "broker" as “one who is engaged, for others, on a commission, negotiating contracts relative to property with the custody of which he has no concern; the negotiator between other parties, never acting in his own name but in the name of those who employed him. x x x a broker is one whose occupation is to bring the parties together, in matters of trade, commerce or navigation.”

It was establised that Ps, as brokers, were authorized by Rs to negotiate for the sale of their land within a period of one month. The authority given to them was non-exclusive, which meant that Rs were not precluded from granting the same authority to other agents with respect to the sale of the same property.

Rs failed to prove their contention that Pacana began negotiations with R Norma Gullas way ahead of Tan et. al. They failed to present witnesses to substantiate this claim. It is curious that Mrs. Gullas herself was not presented in court to testify about her dealings with Pacana. Neither was Atty. Nachura who was supposedly the one actively negotiating on behalf of the Sisters of Mary, ever presented in court.

Rs' contention that Pacana was the one responsible for the sale of the land is also unsubstantiated. There was nothing on record which established the existence of a previous negotiation among Pacana, Mrs. Gullas and the Sisters of Mary. The only piece of evidence that the private respondents were able to present is an undated and unnotarized Special Power of Attorney in favor of Pacana. While the lack of a date and an oath do not necessarily render said Special Power of Attorney invalid, it should be borne in mind that the contract involves a considerable amount of money. Hence, it is inconsistent with sound business practice that the authority to sell is contained in an undated and unnotarized Special Power of Attorney. Petitioners, on the other hand, were given the written authority to sell by the private respondents.

It is apparent that Rs are trying to evade payment of the commission which rightfully belong to Ps as brokers with respect to the sale. There was no dispute as to the role that petitioners played in the transaction. At the very least, Ps set the sale in motion. They were not able to participate in its consummation only because they were prevented from doing so by the acts of the private respondents. In the case of Alfred Hahn v. Court of Appeals and Bayerische Motoren Werke Aktiengesellschaft (BMW), the Court ruled that, “An agent receives a commission upon the successful conclusion of a sale. On the other hand, a broker earns his pay merely by bringing the buyer

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and the seller together, even if no sale is eventually made.” Clearly, therefore, Ps, as brokers, should be entitled to the commission whether or not the sale of the property subject matter of the contract was concluded through their efforts.

Re: damagesFollowing the stipulation in the Special Power of Attorney, petitioners are entitled to 3% commission for the sale of the land in question. Petitioners maintain that their commission should be based on the price at which the land was offered for sale, i.e., P530.00 per square meter. However, the actual purchase price for which the land was sold was only P200.00 per square meter. Therefore, equity considerations dictate that petitioners’ commission must be based on this price.To rule otherwise would constitute unjust enrichment on the part of petitioners as brokers. In the matter of attorney’s fees and expenses of litigation, SC affirmed the amount of P50,000.00 awarded by the trial court to the petitioners.

Phil. Health-Care Providers vs. Estrada (28 January 2008)

Facts: [Maxicare] is a domestic corporation engaged in selling health insurance plans whose Chairman, CEO, and Sales marketing managers are impleaded as defendants

On September 15, 1990, [Maxicare] allegedly engaged the services of Carmela Estrada who was doing business under the name of CARA HEALTH to promote and sell the prepaid group practice health care delivery program called MAXICARE Plan with the position of Independent Account Executive. [Maxicare] formally appointed [Estrada] as its "General Agent," evidenced by a letter-agreement dated February 16, 1991. The letter agreement provided for plaintiff-appellee’s [Estrada’s] compensation in the form of commission, viz.:CommissionIn consideration of the performance of your functions and duties as specified in this letter-agreement, [Maxicare] shall pay you a commission equivalent to 15 to 18% from individual, family, group accounts; 2.5 to 10% on tailored fit plans; and 10% on standard plans of commissionable amount on corporate accounts from all membership dues collected and remitted by you to [Maxicare].

[Maxicare] alleged that it followed a "franchising system" in dealing with its

agents whereby an agent had to first secure permission from [Maxicare] to list a prospective company as client. [Estrada] alleged that she did apply with [Maxicare] for the MERALCO account and other accounts, and in fact, its franchise to solicit corporate accounts, MERALCO account included, was renewed on February 11, 1991.

[Estrada] submitted proposals and made representations to the officers of MERALCO regarding the MAXICARE Plan but when MERALCO decided to subscribe to the MAXICARE Plan, [Maxicare] directly negotiated with MERALCO regarding the terms and conditions of the agreement and left [Estrada] out of the discussions on the terms and conditions.

On November 28, 1991, MERALCO eventually subscribed to the MAXICARE Plan and signed a Service Agreement directly with [Maxicare] for medical coverage of its qualified members. As of May 1996, the total amount of premium paid by MERALCO to [Maxicare] was P20,169,335.00.

On March 24, 1992, [Estrada], through counsel, demanded from [Maxicare] that it be paid commissions for the MERALCO account and nine other accounts. In reply, [Maxicare], through counsel, denied [Estrada’s] claims for commission for the MERALCO and other accounts because [Maxicare] directly negotiated with MERALCO and that no agent was given the go signal to intervene in the negotiations for the terms and conditions and the signing of the service agreement. So if ever [Maxicare] was indebted to [Estrada], it was only for P1,555.00 and P43.l2 as commissions on the accounts of Overseas Freighters Co. and Mr. Enrique Acosta, respectively.

After trial, the RTC found Maxicare liable for breach of contract and ordered it to pay Estrada actual damages in the amount equivalent to 10% of P20,169,335.00, representing her commission for the total premiums paid by Meralco to Maxicare from the year 1991 to 1996.

On appeal, the CA affirmed in toto the RTC’s decision. In ruling for Estrada, both the trial and appellate courts held that Estrada was the "efficient procuring cause" in the execution of the service agreement between Meralco and Maxicare.

Issue: WoN Estrada is entitled to the commissions.

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Held: Yes. Maxicare urges us that both the RTC and CA failed to take into account the stipulations contained in the February 19, 1991 letter agreement authorizing the payment of commissions only upon satisfaction of twin conditions, i.e., collection and contemporaneous remittance of premium dues by Estrada to Maxicare. Allegedly, the lower courts disregarded Estrada’s admission that the negotiations with Meralco failed. Thus, the flawed application of the "efficient procuring cause" and the erroneous conclusion upholding Estrada’s entitlement to commissions on contracts completed without her participation.

SC not persuaded.

There is no dispute as to the role that [Estrada] played in selling [Maxicare’s] health insurance plan to Meralco. [Estrada’s] efforts consisted in being the first to offer the Maxicare plan to Meralco, using her connections with some of Meralco Executives, inviting said executives to dinner meetings, making submissions and representations regarding the health plan, sending follow-up letters, etc.

These efforts were recognized by Meralco as shown by the certification issued by its Manpower Planning and Research Staff Head. [Estrada’s] efforts were instrumental in introducing the Meralco account to [Maxicare] in regard to the latter’s Maxicare health insurance plans. [Estrada] was the efficient "intervening cause" in bringing about the service agreement with Meralco.

The finding of "efficient procuring cause" by the CA is a question of fact which we desist from passing upon as it would entail delving into factual matters on which such finding was based.

The jettisoning of the petition is inevitable even upon a close perusal of the merits of the case.

First. Maxicare’s contention that Estrada may only claim commissions from membership dues which she has collected and remitted to Maxicare as expressly provided for in the letter-agreement does not convince us. It is readily apparent that Maxicare is attempting to evade payment of the commission which rightfully belongs to Estrada as the broker who brought the parties together. In fact, Maxicare’s former Chairman Roberto K.

Macasaet testified that Maxicare had been trying to land the Meralco account for two (2) years prior to Estrada’s entry in 1990. Even without that admission, we note that Meralco’s Assistant Vice-President, in a letter to then Maxicare President, categorically acknowledged Estrada’s efforts relative to the sale of Maxicare health plans to Meralco.

At the very least, Estrada penetrated the Meralco market, initially closed to Maxicare, and laid the groundwork for a business relationship. The only reason Estrada was not able to participate in the collection and remittance of premium dues to Maxicare was because she was prevented from doing so by the acts of Maxicare, its officers, and employees.

In Tan v. Gullas, we had occasion to define a broker and distinguish it from an agent, thus:[O]ne who is engaged, for others, on a commission, negotiating contracts relative to property with the custody of which he has no concern; the negotiator between the other parties, never acting in his own name but in the name of those who employed him. [A] broker is one whose occupation is to bring the parties together, in matter of trade, commerce or navigation.

An agent receives a commission upon the successful conclusion of a sale. On the other hand, a broker earns his pay merely by bringing the buyer and the seller together, even if no sale is eventually made.

In relation thereto, we have held that the term "procuring cause" in describing a broker’s activity, refers to a cause originating a series of events which, without break in their continuity, result in the accomplishment of the prime objective of the employment of the broker—producing a purchaser ready, willing and able to buy on the owner’s terms. To be regarded as the "procuring cause" of a sale as to be entitled to a commission, a broker’s efforts must have been the foundation on which the negotiations resulting in a sale began. Verily, Estrada was instrumental in the sale of the Maxicare health plans to Meralco. Without her intervention, no sale could have been consummated.

Second. Maxicare next contends that Estrada herself admitted that her negotiations with Meralco failed.

Even a cursory reading of the Complaint and all the pleadings filed thereafter

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before the RTC, CA, and this Court, readily show that Estrada does not concede, at any point, that her negotiations with Meralco failed. Clearly, Maxicare’s assertion that Estrada herself does not pretend to be the "efficient procuring cause" in the execution of the service agreement between Meralco and Maxicare is baseless and an outright falsehood.

Sanchez vs. Medicard (2 September 2005)

Carlos Sanchez v Medicard PH, Montoya and Ejercito

Facts: Agent Sanchez is a special corporate agent of Principal Medicard. Through his efforts, Medicard was able to sell insurance to 3rd party Unilab (for its employees). The Health Care Program Contract was renewed for another year with an increased premium. Sanchez was paid commission for both years (P746k+P1.34M).

Medicard wanted to increase premium for the 3rd year, but Unilab refused. Medicard asked Sanchez to reduce his commission, and ofc he refused.

But Unilab did not want to prejudice its employees by the termination of the health insurance so it entered into a new insurance scheme with Medicard – this time without the assistance of Sanchez. Under the new scheme, Unilab shall pay Medicard only the amount corresponding to the actual hospitalization expenses incurred by each personnel plus 15% service fee for using Medicard facilities, which amount shall not be less than P780k. No commission for Sanchez this time.

Sanchez demanded from Medicard payment of P338,000.00 as his commission plus damages, but the latter refused to heed his demand. Thus he filed a complaint for sum of money against Medicard before the RTC of Makati.

RTC: Dismissed petition. CA: Affirmed RTC decision. Agency revoked. Not entitled to commission since contract expired.

Hence this Petition for review on certiorari.

Issue: W/N contract of agency has been revoked

Held: GR: For an agent to be entitled to a commission, he must be the procuring cause of the sale, which simply means that the measures employed by him and the efforts he exerted must result in a sale. Conversely, it follows that where his efforts are unsuccessful, or there was no effort on his part, he is not entitled to a commission.

EXC: Equity shiz! This Court held in Prats v CA that for the purpose of equity, an agent who is not the efficient procuring cause is nonetheless entitled to his commission, where said agent, notwithstanding the expiration of his authority, nonetheless, took diligent steps to bring back together the parties, such that a sale was finalized and consummated between them. Also in Manotok v. Ca, the SC held that an agent is still entitled to a commission if he was the efficient procuring cause of the sale even if it took place after his authority had lapsed. The proximate, close, and causal connection between the agent’s efforts and the principal’s sale of his property cannot be ignored.

In this case, it is clear that since Sanchez refused to reduce his commission, Medicard directly negotiated with Unilab, thus revoking its agency contract with petitioner. We hold that such revocation is authorized by Article 1924 of the Civil Code which provides: Art. 1924. The agency is revoked if the principal directly manages the business entrusted to the agent, dealing directly with third persons.”

Moreover, as found by the lower courts, Sanchez did not render services to Medicard to entitle him to a commission. There is no indication from the records that he exerted any effort in order that Unilab and Medicard can renew the contract for the third time. Obviously, he was not the agent or the “procuring cause” of the third Health Care Program Contract between Medicard and Unilab.

SC finds no reason in law or in equity to rule that he is entitled to a commission.

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Infante vs. Cunanan (31 August 1953)

CONSEJO INFANTE, vs. JOSE CUNANAN, JUAN MIJARES and THE COURT OF APPEALS, SECOND DIVISION.

FACTS: Consejo Infante, was the owner of two parcels of land, together with a house built thereon, situated in the City of Manila and covered by Transfer Certificate of Title No. 61786. On or before November 30, 1948, she contracted the services of Jose Cunanan and Juan Mijares, plaintiff herein, to sell the above-mentioned property for a price of P30,000 subject to the condition that the purchaser would assume the mortgage existing thereon in the favor of the Rehabilitation Finance Corporation.

She agreed to pay them a commission of 5 per cent on the purchase price plus whatever overprice they may obtain for the property. Cunanan and Mijares found one Pio S. Noche who was willing to buy the property. Upon introduction of Noche to Infante, Infante told them that she was no longer interested in selling the property. She asked them to sign a document stating that the written authority she had given them was already cancelled.

A few days after, Infante dealth with Noche directly and sold the said property to the latter for a price of 31,000 pesos. Thus, upon learning this transaction, plaintiffs demanded from defendant the payment of their commission, but she refused and so they brought the present action.

Defendant admitted having contracted the services of the plaintiffs to sell her property as set forth in the complaint, but stated that she agreed to pay them a commission of P1,200 only on condition that they buy her a property somewhere in Taft Avenue to where she might transfer after selling her property. Defendant avers that while plaintiffs took steps to sell her property as agreed upon, they sold the property at Taft Avenue to another party and because of this failure it was agreed that the authority she had given them be cancelled.

Lower Court: in favor of plaintiffs. Infante must pay them 2,500 pesos as damages plus legal interest.

Court of Appeals: Affirmed.

ISSUE: WON plaintiffs are entitled to the commission?

HELD: YES.

There is no dispute that respondents were authorized by petitioner to sell her property for the sum of P30,000 with the understanding that they will be given a commission of 5 percent plus whatever overprice they may obtain for the property. Petitioner, however, contends that authority has already been withdrawn on November 30, 1948 when, by the voluntary act of respondents, they executed a document stating that said authority shall be considered cancelled and without any effect.

Petitioner argues that since the agency was already revoked, there is no more obligation on her part to give the plaintiffs their commission because she dealt with Noche on her own. It is true that a principal may withdraw the authority given to an agent at will. However, respondents claim that while they agreed to cancel the written authority given to them, they did so merely upon the verbal assurance given by petitioner that, should the property be sold to their own buyer, Pio S. Noche, they would be given the commission agreed upon. Petitioner, however stresses that the lower courts should not have allowed the respondents to present oral evidence to prove the same since the agreement was reduced into writing..

The plea that oral evidence should not have been allowed to prove the alleged verbal assurance is well taken it appearing that the written authority given to respondents has been cancelled in a written statement. The rule on this matter is that "When the terms of an agreement have been reduced to writing, it is to be considered as containing all those terms, and, therefore, there can be, between parties and their successors in interest, no evidence of the terms of the agreement other than the contents of the writing." (Section 22, Rule 123, Rules of Court.) The only exceptions to this rule are: "(a)Where a mistake or imperfection of the writing, or its failure to express the true intent and agreement of the parties, or the validity of the agreement is put in issue by the pleadings"; and "(b) Where there is an intrinsic ambiguity in the writing." (Ibid.) There is no doubt that the point raised does not come under any of the cases excepted, for there is nothing therein that has been put in issue by respondents in their complaint. The terms of the document seem to be clear and they do not contain any reservation which may in any way run counter to the clear intention of the parties.

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But even disregarding the oral evidence adduced by respondents in contravention of the parole evidence rule, we are, however, of the opinion that there is enough justification for the conclusion reached by the lower court as well as by the Court of Appeals to the effect that respondents are entitled to the commission originally agreed upon. It is a fact found by the Court of Appeals that after petitioner had given the written authority to respondents to sell her land for the sum of P30,000, respondents found a buyer in the person of one Pio S. Noche who was willing to buy the property under the terms agreed upon, and this matter was immediately brought to the knowledge of petitioner. But the latter, perhaps by way of strategem, advised respondents that she was no longer interested in the deal and was able to prevail upon them to sign a document agreeing to the cancellation of the written authority.

That petitioner had changed her mind even if respondents had found a buyer who was willing to close the deal, is a matter that would not give rise to a legal consequence if respondents agree to call off the transaction in deference to the request of the petitioner. But the situation varies if one of the parties takes advantage of the benevolence of the other and acts in a manner that would promote his own selfish interest. This act is unfair as would amount to bad faith. This act cannot be sanctioned without acccording to the party prejudiced the reward which is due him. This is the situation in which respondents were placed by petitioner. Petitioner took advantage of the services rendered by respondents, but believing that she could evade payment of their commission, she made use of a ruse by inducing them to sign the deed of cancellation Exhibit 1. This act of subversion cannot be sanctioned and cannot serve as basis for petitioner to escape payment of the commission agreed upon.

Lim vs. Saban (15 December 2004)

Genevieve Lim vs Florencio Saban GR No. 163720 16 Dec 2004 (Tinga)

FACTS: The late Eduardo Ybañez (Ybañez) owned a 1,000sqm lot in Cebu City and entered into an Agreement and Authority to Negotiate and Sell (Agency Agreement) with respondent Florencio Saban (Saban). Under the Agency Agreement, Ybañez authorized Saban to look for a buyer of the lot for P200,000.00 and to mark up the selling price to include the amounts needed for payment of taxes, transfer of title and other expenses incident to the sale, as well as Saban’s commission for the sale.

Through Saban’s efforts, Ybañez and his wife were able to sell the lot to the petitioner Genevieve Lim (Lim) and the spouses Benjamin and Lourdes Lim (the Spouses Lim). The price of the lot as indicated in the Deed of Absolute Sale is P200,000.00. It appears, however, that the vendees agreed to purchase the lot at the price of P600,000.00, inclusive of taxes and other incidental expenses of the sale. After the sale, Lim remitted to Saban the amounts of P113,257.00 for payment of taxes due on the transaction as well as P50,000.00 as broker’s commission. Lim also issued in the name of Saban four postdated checks in the aggregate amount of P236,743.0. Subsequently, Ybañez sent a letter addressed to Lim asking Lim to cancel all the checks issued by her in Saban’s favor and to “extend another partial payment” for the lot in his (Ybañez’s) favor . After the four checks in his favor were dishonored upon presentment, Saban filed a Complaint for collection of sum of money and damages against Ybañez and Lim with the RTC Cebu City.

In his Complaint, Saban alleged that Ybañez told Lim that he (Saban) was not entitled to any commission for the sale since he concealed the actual selling price of the lot from Ybañez and because he was not a licensed real estate broker. Ybañez was able to convince Lim to cancel all four checks. Saban further averred that Ybañez and Lim connived to deprive him of his sales commission by withholding payment of the first three checks. He also claimed that Lim failed to make good the fourth check which was dishonored because the account against which it was drawn was closed. In his Answer, Ybañez claimed that Saban was not entitled to any commission because he concealed the actual selling price from him and because he was not a licensed real estate broker. Lim, for her part, argued that she was not privy to the agreement between Ybañez and Saban, and that she issued stop payment orders for the three checks because Ybañez requested her to pay the purchase price directly to him, instead of coursing it through Saban. She also alleged that she agreed with Ybañez that the purchase price of the lot was only P200,000.00. (Ybañez died during the pendency of the case before the RTC. Upon motion of his counsel, the trial court dismissed the case only against him without any objection from the other parties)

RTC – dismissed Saban’s complaint, declared 4 checks issued by Lim as stale and non-negotiable, ABSOLVING Lim from any liability towards Saban. Saban appealed to CA.

CA – REVERSED TC. Held that Saban was entitled to his commission amounting to P236,743.00. Ybañez’s revocation of his contract of agency

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with Saban was invalid because the agency was coupled with an interest and Ybañez effected the revocation in bad faith in order to deprive Saban of his commission and to keep the profits for himself. The appellate court found that Ybañez and Lim connived to deprive Saban of his commission. It declared that Lim is liable to pay Saban the amount of the purchase price of the lot corresponding to his commission because she issued the four checks knowing that the total amount thereof corresponded to Saban’s commission for the sale, as the agent of Ybañez. Further, in issuing the checks in payment of Saban’s commission, Lim acted as an accommodation party. She signed the checks as drawer, without receiving value therefor, for the purpose of lending her name to a third person. As such, she is liable to pay Saban as the holder for value of the checks.

MR Denied – Present Petition

LIM: argues that CA ignored the fact that after paying her agent and remitting to Saban the amounts due for taxes and transfer of title, she paid the balance of the purchase price directly to Ybañez. She is not liable for Ybañez’s debt to Saban under the Agency Agreement as she is not privy thereto, and that Saban has no one but himself to blame for consenting to the dismissal of the case against Ybañez and not moving for his substitution by his heirs. Lim prays that should she be found liable to pay Saban the amount of his commission, she should only be held liable to the extent of one-third (1/3) of the amount, since she had two co-vendees (the Spouses Lim) who should share such liability. In his Comment, Saban maintains that Lim agreed to purchase the lot for P600,000.00, which consisted of the P200,000.00 which would be paid to Ybañez, the P50,000.00 due to her broker, the P113,257.00 earmarked for taxes and other expenses incidental to the sale and Saban’s commission as broker for Ybañez. According to Saban, Lim assumed the obligation to pay him his commission. He insists that Lim and Ybañez connived to unjustly deprive him of his commission from the negotiation of the sale.

ISSUE1: WON Saban is entitled to receive his commission from the sale; and, assuming that Saban is entitled thereto, whether it is Lim who is liable to pay Saban his sales commission. YES. Court agrees with CA. Agency was not revoked since Ybañez requested that Lim stop making payment orders for the checks payable to Saban only after the consummation of the sale. At that time, Saban had already performed his obligation as Ybañez’s agent when, through his (Saban’s) efforts, Ybañez executed the Deed of Absolute Sale of the lot with Lim and the Spouses Lim. To deprive Saban of his commission subsequent to the sale which was consummated through his

efforts would be a breach of his contract of agency with Ybañez which expressly states that Saban would be entitled to any excess in the purchase price after deducting the P200,000.00 due to Ybañez and the transfer taxes and other incidental expenses of the sale.

Macondray & Co. v. Sellner, - The Court held that it would be in the height of injustice to permit the principal to terminate the contract of agency to the prejudice of the broker when he had already reaped the benefits of the broker’s efforts. Infante v. Cunanan, et al., The Court ruled that the seller’s withdrawal in bad faith of the brokers’ authority cannot unjustly deprive the brokers of their commissions as the seller’s duly constituted agents. The pronouncements of the Court in the aforecited cases are applicable to the present case, especially considering that Saban had completely performed his obligations under his contract of agency with Ybañez by finding a suitable buyer to preparing the Deed of Absolute Sale between Ybañez and Lim and her co-vendees. Moreover, the contract of agency very clearly states that Saban is entitled to the excess of the mark-up of the price of the lot after deducting Ybañez’s share of P200,000.00 and the taxes and other incidental expenses of the sale.

However, the Court does NOT agree with the CA’s pronouncement that Saban’s agency was one coupled with an interest. Under Article 1927 of the Civil Code, an agency is deemed as one coupled with an interest where it is established for the mutual benefit of the principal and of the agent, or for the interest of the principal and of third persons, and it cannot be revoked by the principal so long as the interest of the agent or of a third person subsists. In an agency coupled with an interest, the agent’s interest must be in the subject matter of the power conferred and not merely an interest in the exercise of the power because it entitles him to compensation. When an agent’s interest is confined to earning his agreed compensation, the agency is not one coupled with an interest, since an agent’s interest in obtaining his compensation as such agent is an ordinary incident of the agency relationship.

ISSUE2: WON Lim proper party against whom Saban should address his claim. Saban’s right to receive compensation for negotiating as broker for Ybañez arises from the Agency Agreement between them. Lim is not a party to the contract. However, the record reveals that she had knowledge of the fact that Ybañez set the price of the lot atP200,000.00 and that the P600,000.00—the price agreed upon by her and Saban—was more than the amount set by Ybañez because it included the

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amount for payment of taxes and for Saban’s commission as broker for Ybañez. Lim’s act of issuing the four checks amounting to P236,743.00 in Saban’s favor belies her claim that she and her co-vendees did not agree to purchase the lot at P600,000.00. If she did not agree thereto, there would be no reason for her to issue those checks which is the balance of P600,000.00 less the amounts of P200,000.00 (due to Ybañez), P50,000.00 (commission), and the P113,257.00 (taxes). The only logical conclusion is that Lim changed her mind about agreeing to purchase the lot at P600,000.00 after talking to Ybañez and ultimately realizing that Saban’s commission is even more than what Ybañez received as his share of the purchase price as vendor. Obviously, this change of mind resulted to the prejudice of Saban whose efforts led to the completion of the sale between the latter, and Lim and her co-vendees. This the Court cannot countenance. CA had sufficient basis for concluding that Ybañez and Lim connived to deprive Saban of his commission by dealing with each other directly and reducing the purchase price of the lot and leaving nothing to compensate Saban for his efforts.Considering the circumstances surrounding the case, and the undisputed fact that Lim had not yet paid the balance ofP200,000.00 of the purchase price of P600,000.00, it is just and proper for her to pay Saban the balance of P200,000.00. Furthermore, since Ybañez received a total of P230,000.00 from Lim, or an excess of P30,000.00 from his asking price ofP200,000.00, Saban may claim such excess from Ybañez’s estate, if that remedy is still available, in view of the trial court’s dismissal of Saban’s complaint as against Ybañez, with Saban’s express consent, due to the latter’s demise.

***EXTRA (BABY CASE): Infante v. Cunanan, et al., is enlightening for the facts therein are similar to the circumstances of the present case. Consejo Infante asked Jose Cunanan and Juan Mijares to find a buyer for her two lots and the house built thereon for Thirty Thousand Pesos (P30,000.00) . She promised to pay them five percent (5%) of the purchase price plus whatever overprice they may obtain for the property. Cunanan and Mijares offered the properties to Pio Noche who in turn expressed willingness to purchase the properties. Cunanan and Mijares thereafter introduced Noche to Infante. However, the latter told Cunanan and Mijares that she was no longer interested in selling the property and asked them to sign a document stating that their written authority to act as her agents for the sale of the properties was already cancelled. Subsequently, Infante sold the properties directly to Noche for Thirty One Thousand Pesos (P31,000.00). The Court upheld the right of Cunanan and Mijares to their commission, explaining that—…[Infante] had changed her mind even if respondent had found a buyer who was willing to close the deal, is a matter

that would not give rise to a legal consequence if [Cunanan and Mijares] agreed to call off the transaction in deference to the request of [Infante]. But the situation varies if one of the parties takes advantage of the benevolence of the other and acts in a manner that would promote his own selfish interest. This act is unfair as would amount to bad faith. This act cannot be sanctioned without according the party prejudiced the reward which is due him. This is the situation in which [Cunanan and Mijares] were placed by [Infante]. [Infante] took advantage of the services rendered by [Cunanan and Mijares], but believing that she could evade payment of their commission, she made use of a ruse by inducing them to sign the deed of cancellation….This act of subversion cannot be sanctioned and cannot serve as basis for [Infante] to escape payment of the commission agreed upon.

**EXTRA: (accommodation party) The appellate court however erred in ruling that Lim is liable on the checks because she issued them as an accommodation party. The accommodation party is liable on the instrument to a holder for value even though the holder at the time of taking the instrument knew him or her to be merely an accommodation party. The accommodation party may of course seek reimbursement from the party accommodated. As gleaned from the text of Section 29 of the Negotiable Instruments Law, the accommodation party is one who meets all these three requisites, viz: (1) he signed the instrument as maker, drawer, acceptor, or indorser; (2) he did not receive value for the signature; and (3) he signed for the purpose of lending his name to some other person. In the case at bar, while Lim signed as drawer of the checks she did not satisfy the two other remaining requisites. Lim received value for her signature on the checks. Neither is there any indication that Lim issued the checks for the purpose of enabling Ybañez, or any other person for that matter, to obtain credit or to raise money, thereby totally debunking the presence of the third requisite of an accommodation party.

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Prats vs. CA (31 January 1978)

Antonio E. Prats, doing business under the name of Phil. Real Estate Exchange v. CA, Alfonso Doronilla, and Phil. Nat’l BankJan. 31, 1978; FernandezPrepared by Tobie Reynes

Putative Agent: PRATSPutative Principal: DORONILLAPutative 3rd Person: SSS

FactsAlfonso DORONILLA owns a 300 ha. parcel of land located in

Montalban, Rizal. On July 3, 1967, DORONILLA wrote directly to the Chairman Social Security System (SSS) Ramon GAVIOLA, offering the said property to SSS at PHP4.00/sq.m. GAVIOLA replied on July 17, 1967, inquiring about details surrounding the parcel of land (e.g. area located in QC, area located in Rizal, possibility of reduced price of PHP3.25/sq.m). On July 19, 1967, DORONILLA wrote another letter to GAVIOLA, accepting his counter-offer of P3.25/sq.m. on the condition that the same should be paid in cash within a period of 30 days.

On Aug. 10, 1967, GAVIOLA wrote to DORONILLA informing the latter that his July 19 letter is with the Administrator for study and comment, and that the Commission will act upon receipt of such studies.

On Oct. 30, 1967 Pastor SAJORDA, by authority of DORONILLA, wrote a letter to realtor Vicente Narciso for certification regarding the actual price of DORONILLA’s properties. The realtor replied, stating that the fair market value range from PHP3.00 to PHP3.50/sq.m.

On Feb. 14, 1968, DORONILLA granted Antonio PRATS an exclusive option and authority under the following terms and conditions:

a. that the price of the property is PHP3.00/sq.m;b. that a commission of 10% will be paid based on

PHP2.10/sq.m. or at any price that PRATS finally agrees upon; provided, that if the property is sold over PHP3.00/sq.m. the excess amount shall be credited and paid to the herein brokers in addition to the 10% commission based on PHP2.10/sq.m, provided that PRATS shall pay the corresponding taxes to the DORONILLA of the excess amount over PHP3.00/sq.m;

c. that the exclusive option and authority is good for a period of 60 days from the date of conformity by PRATS; provided, that should negotiations have been started with a buyer, said period is automatically extended until said negotiations are terminated, but not more than 15 days;

d. That the written offers must be made by the prospective buyers, unless they prefer to have the owners take the offer for and in their behalf of some buyers who do not want to be known in the early stages of negotiations;

e. That if no written offer is made until the last day of the authorization, the option and authority shall expire and become null and void;

f. That all prospective buyers and interested parties by referred to the owners, and that PRATS will not even quote a price directly to any agent or buyer; and

g. That the fact that some squatters are occupying small portions of the land will be reported and the removal of said squatters will be at the owner’s expense.

On Feb. 19, 1968, PRATS wrote a letter to DORONILLA requesting him to withdraw any and all papers pertaining to the property offered to the SSS. DORONILLA then wrote a letter to the SSS Administrator requesting for the return of all documents concerning his offered property. The SSS Administrator GREGORIO replied by inviting DORONILLA to meet with him and GAVIOLA about the lot offer. DORONILLA replied by stating that since the SSS has not acted on his offer more that seven months ago, he has asked for the return of the papers, which have actually been returned. He added that as of Feb. 20, 1968, he has given the Phil. Real Estate Exchange (“PREE”) (i.e. PRATS) an exclusive option and authority to negotiate the sale of his land. He then requested the SSS Administrator to communicate directly with PREE if they are still interested in his property.

On Mar. 16, 1968, PRATS wrote the SSS Administrator to discuss the sale of the property.

On Apr. 18, 1968, DORONILLA extended the exclusive option and authority until May 18, 1968.

On May 6, 1968, PRATS made a formal written offer to SSS at the price of PHP6.00/sq.m. SSS replied via telegram on May 17, 1968 to DORONILLA stating that it is “considering” the purchase. The next day (May 18, also the extended expiry date) PRATS wrote to DORONILLA

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reminding him that they still had 15 days from [May 18] within which to finish the negotiations. On the same daye (May 18) PRATS wrote to DORONILLA stating that they are making a firm offer of PHP4.50/sq.m. and suggesting that they sit down with the SSS to finalize the arrangement.

On May 30, 1968, PRATS wrote to DORONILLA advising him that the SSS has agreed to purchase the property which can be confirmed by the SSS Chairman.

However, on June 6, 1968, DORONILLA wrote to PRATS stating that he has not received any written offer from SSS or others during the effectivity of the extended exclusive authority. On June 19, 1968, DORONILLA himself wrote to the SSS Administrator renewing his offer to sell the land at PHP4.00/sq.m.

On June 20, 1968, the Social Security Commission (SSC) passed Res. No. 636 by which the SSS formalized its counter offer of PHP3.25/sq.m. Also, on July 17, 1968, the SSC passed Res. No. 738 approving the purchase of DORONILLA’s land at PHP3.25/sq.m. Thus, on July 30, 1968, DORONILLA executed a deed of absolute sale in favor of SSS for the total price pf PHP9.75M.

In a letter dated Sept. 17, 1968, PRATS wrote to DORONILLA demanding payment of PHP1.38M for his services. When this was denied, PRATS sued DORONILLA before the RTC, which decided in favor of PRATS, and ordered DORONILLA to pay PHP1.38M with interest, PHP200,000 as moral damages, PHP100,000 as exemplary damages, and PHP150,000 as attorney’s fees. The CA reversed the RTC decision and awarded attorney’s fees in favor of DORONILLA. It reasoned that the authority of PRATS expired on June 2, 1968.

Issue/Held/RatioW/N PRATS is entitled to compensation as stipulated in the exclusive option and authority — NO, he is not. BUT, DORONILLA, in equity, should pay PRATS PHP100,000 as compensation for his efforts and assistance.

It is clear that the offer of DORONILLA to sell the land to the SSS was formally accepted by the latter only on June 20, 1968, after the exclusive authority in favor of PRATS had expired. There is no basis in law to grant relief to PRATS. In equity, however, it must be noted that

PRATS had diligently taken steps to bring back DORONILLA and SSS together.

DORONILLA finally sold the property to SSS at the very same price counter offered by the latter in July 1967 when he alone was dealing with SSS. PRATS’ efforts, however, were somehow instrumental in bringing them together again and finally consummating the transaction at the same price of PHP 3.25/sq.m., although such finalization was after the expiration of the exclusive authority. Still, such price was higher than that stipulated in the exclusive authority.

Under the circumstances, the Court grants in equity PHP100,000 by way of compensation for PRATS’ effort and assistance in the transaction. The award of attorney fees adjudged against PRATS is deleted.

Manotok Brothers vs. CA (7 April 1993)

MANOTOK BROTHERS, INC. vs. THE HONORABLE COURT OF APPEALS, THE HONORABLE JUDGE OF THE REGIONAL TRIAL COURT OF MANILA (Branch VI), and SALVADOR SALIGUMBAG.R. No. 94753 | April 7, 1993 | J. Campos, Jr.

FACTS:By means of a letter 5 dated July 5, 1966, Manotok Brothers, Inc. authorized herein private respondent Salvador Saligumba to negotiate with the City of Manila for the sale of a parcel of land and building which the City formerly leased for not less than P425,000.00. It was being used as Claro M. Recto High School. In the same writing, petitioner agreed to pay private respondent a five percent (5%) commission in the event the sale is finally consummated and paid.

He was granted two extensions of authority for 120 days each time. Finally, the corporation with Rufino Manotok, its President, as signatory, authorized private respondent to finalize and consummate the sale of the property to the City of Manila for not less than P410,000.00. With this letter came another extension of 180 days.

The Municipal Board of the City of Manila passed Ordinance No. 6603, appropriating the sum of P410,816.00 for the purchase of the property which Saligumba was authorized to sell. However, the City Mayor only signed

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the ordinance on May 17, 1968, one hundred eighty three (183) days after the last letter of authorization.

The deed of sale was perfected but Saligumba never received his commission, which should have amounted to P20, 554.50. The Manotok Brothers refused to acknowledge his role as the agent in the transaction.

Saligumba filed a complaint against Manotok Brothers so he may receive his commission. Manotok Brothers denied saying that he would have only received his commission if a sale was perfected and if it was perfected within the given time and that the one responsible for the perfection of the sale was actually another person. A counterclaim for P4000 for attorney’s fees and damages was filed. After hearing the testimonies and accepting evidence, the CFI sentenced petitioner and/or Rufino Manotok to pay Saligumba P20,540.00 by way of his commission fees with legal interest as well as attorney’s fees. The CA affirmed the CFI decision. When it was brought up to the SC as a petition for review on certiorari, a resolution was entered (after having difficulty locating Saligumba) dismissing the case because the issues could not be joined.

This petition for relief was filed because Saligumba filed a motion to execute. Sensing fraudulent schemes in the manner by which Saligumba came to know of the SC’s resolution, it filed this case.

The process which Saligumba underwent as an agent: He went to a meeting with Rufino Manotok and Atty. Bisbal, then PTA president where they asked Saligumba to negotiate the sale to the City of Manila. He then went to Councilor Magsalin (author of the ordinance) and to the Assessor’s Office (to appraise the value). After securing the report of the appraisal committee, he went to the City Mayor's Office, which indorsed the matter to the Superintendent of City Schools of Manila who approved the appraisal. Subsequently, on April 26, 1968, Ordinance No. 6603 was passed by the Municipal Board for the appropriation of the sum corresponding to the purchase price.

Opposition to Saligumba’s story: Fructuoso Huelgas testified to the effect that after being inducted as PTA president in August, 1967 he was the one that followed up the sale from the start with Councilor Magsalin until after it was approved by the Mayor on May 17, 1968. Rufino Manotok confirmed that he knew Huelgas and that there was an agreement between the two of them regarding the "gratification". On rebuttal, Atty. Bisbal said that Huelgas was present in the PTA meetings from 1965 to 1967 but he never offered to help

in the acquisition of said property. Moreover, he testified that Huelgas was aware of the fact that it was private respondent who was negotiating the sale of the subject property.

ISSUE: WON Saligumba is entitled to the five percent (5%) agent's commission – Yes, Huelgas was not the agent of Manotok Brothers

HELD:At first sight, it would seem that private respondent is not entitled to any commission as he was not successful in consummating the sale between the parties, for the sole reason that when the Deed of Sale was finally executed, his extended authority had already expired.

Going deeper however into the case would reveal that it is within the coverage of the exception rather than of the general rule, the exception being that enunciated in the case of Prats vs. Court of Appeals. In its decision in the abovecited case, this Court said, that while it was respondent court's factual findings that petitioner Prats was not the efficient procuring cause in bringing about the sale (prescinding from the fact of expiration of his exclusive authority), still petitioner was awarded compensation for his services.

In the case at bar, private respondent is the efficient procuring cause for without his efforts, the municipality would not have anything to pass and the Mayor would not have anything to approve.

In an earlier case, this Court ruled that when there is a close, proximate and causal connection between the agent's efforts and labor and the principal's sale of his property, the agent is entitled to a commission.

We agree with respondent Court that the City of Manila ultimately became the purchaser of petitioner's property mainly through the efforts of private respondent. Without discounting the fact that when Municipal Ordinance No. 6603 was signed by the City Mayor on May 17, 1968, private respondent's authority had already expired, it is to be noted that the ordinance was approved on April 26, 1968 when private respondent's authorization was still in force. Moreover, the approval by the City Mayor came only three days after the expiration of private respondent's authority. It is also worth emphasizing that from the records, the only party given a written authority by petitioner to negotiate the sale from July 5, 1966 to May 14, 1968 was private respondent.

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Saligumba pursued with his goal of seeing that the parties reach an agreement, on the belief that he alone was transacting the business with the City Government as this was what petitioner made it to appear. This is unlike Danon vs Brimo where the agent was not sure about his role as against another person purporting to be an agent.

While it may be true that Filomeno Huelgas followed up the matter with Councilor Magsalin, the author of Municipal Ordinance No. 6603 and Mayor Villegas, his intervention regarding the purchase came only after the ordinance had already been passed — when the buyer has already agreed to the purchase and to the price for which said property is to be paid. Without the efforts of private respondent then, Mayor Villegas would have nothing to approve in the first place. It was actually private respondent's labor that had set in motion the intervention of the third party that produced the sale, hence he should be amply compensated.

Uniland Resources vs. DBP (16 August 1991)

Uniland Resources v. DBPG.R. No. 95909 | Aug 16, 1991 | J. Gancayco

PARTIESPutative Principal – DBPPutative Agent – Uniland ResourcesThird Person – Counsel Realty

FACTSP Uniland Resources is a private corporation engaged in real estate brokerage and licensed as such while R DBP is a government corporation engaged in finance and banking in a proprietary capacity.

Long before this case arose, Marinduque Mining Corporation obtained a loan from the DBP and as security therefor, mortgaged certain real properties to the latter, among them two lots located in Makati:

a) Office building lot b) Warehouse lot

The aforesaid lots had, however, been previously mortgaged by Marinduque Mining Corp. to Caltex, and the mortgage in favor of DBP was entered on their titles as a second mortgage.

The account of the Marinduque Mining Corp., with the DBP was later transferred to the Assets Privatization Trust (APT) pursuant to Proclamation No. 50.

For failure of the Marinduque Mining Corp. to pay its obligations to Caltex, the latter foreclosed its mortgage on the aforesaid two lots. APT on the other hand, to recover its investment on the Marinduque Account, offered for sale to the public through DBP its right of redemption on said two lots by public bidding.

Considering, however, that Caltex had required that both lots be redeemed, the bidding guidelines set by DBP provided that any bid to purchase either of the two lots would be considered only should there be two bids or a bid for the two items which, when combined, would fully cover the sale of the two lots in question.

The aforesaid bidding was held on May 5, 1987, with only one bidder, the Counsel Realty Corp. (an affiliate of Glaxo, Philippines, the client of petitioner), which offered a bid only for the warehouse lot in the amount of P23,900,000.00. Said bid was thus rejected by DBP.

Seeing, however, that it would make a profit if it redeemed the two lots and then offer them for sale, and as its right to redeem said lots from Caltex would expire on May 8, 1987, DBP retrieved the account from APT and, on the last day for the exercise of its right of redemption, May 8, 1987, redeemed said lots from Caltex for P33,096,321.62, thus acquiring them as its physical assets.

The public bidding for the sale of the two lots was held and again, there was only one bidder, the Charges Realty Corp. (another affiliate of Glaxo, Philippines), for only the warehouse lot and for the amount of P24,070,000.00, which is slightly higher than the amount previously offered by Counsel Realty Corp.

Notwithstanding that there was no bidder for the office building lot, the DBP approved the sale of the warehouse lot to Charges Realty Corp. As for the office building lot, it was later sold by DBP in a negotiated sale to the BPI as trustee for the "Perpetual Care Fund of the Manila Memorial Park.” The DBP admittedly paid the 5% broker's fee on this sale to the DBP Management Corporation, which acted as broker for said negotiated sale.

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After the aforesaid sale, P through its President, wrote two letters to DBP, asking for the payment of its broker's fee in instrumenting the sale of DBP's warehouse lot to Charges Realty Corp. The claim was referred to the Bidding Committee which issued a decision denying the claim. Hence, the instant case filed by P to recover from DBP the aforesaid broker's fee.

Lower court ordered DBP to pay P1,203,500.00 which is the equivalent of 5% broker's fee plus legal interest from the filing of the complaint until fully paid and the sum of P50,000.00 for atty's fees.

CA reversed. MR denied.

ISSUEW/N middleman who had no authority broker the transaction may recover broker’s fee if the sale was eventually consummated between parties introduced by said middleman

HELDNO, but SC allowed due to equity Prats doctrine.

It is obvious that P was never able to secure the required accreditation from DBP to transact business on behalf of the latter. The letters sent by petitioner to the higher officers of the DBP and the APT are merely indicative of P's desire to secure such accreditation. At best these missives are selfserving; the most that they prove is that they were sent by P and received by DBP, which clearly never agreed to be bound thereto. There was no express reply from the DBP or the APT as to the accreditation sought by P. From the very beginning, therefore, P was aware that it had no express authority from DBP to find buyers of its properties.

No implied Agency

P also invokes NCC 1869 in contending that an implied agency existed. P argues that it "should have been stopped, disauthorized and outrightly prevented from dealing the warehouse by the DBP from the inception." On the contrary, these steps were never necessary. In the course of P's dealings with the DBP, it was always made clear to P that only accredited brokers may look for buyers on behalf of DBP. This is not a situation wherein a third party was prejudiced by the refusal of DBP to recognize P as its broker. The controversy is only between the DBP and P, to whom it was emphasized in no uncertain terms that the arrangement sought did not exist. Article 1869, therefore, has no room for operation in this case.

No one may contract in the name of another without being authorized by the latter, unless the former has by law a right to represent him. From this principle, among others, springs the relationship of agency which, as with other contracts, is one founded on mutual consent: the principal agrees to be bound by the acts of the agent and the latter in turn consents to render service on behalf or in representation of the principal.

Equity and Prats doctrine

In equity, the Court recognizes the efforts of P in bringing together respondent DBP and an interested and financiallyable buyer. While not actively involved in the actual bidding and transfer of ownership of the warehouse property, P may be said to have initiated, albeit without proper authority, the transaction that eventually took place. The Court is also aware that DBP was able to realize a substantial profit from the sale of its two properties. While purely circumstantial, there is sufficient reason to believe that the DBP became more confident to venture and redeem the properties from the APT due to the presence of a ready and willing buyer, as communicated and assured by petitioner.’

Prats v. Court of Appeals: There was a finding that the petitioner therein as the agent was no longer the efficient procuring cause in bringing about the sale proceeding from the fact of expiration of his exclusive authority. There was therefore no basis in law to grant the relief sought. Nevertheless, this Court in equity granted the sum of P100,000.00, out of the P1,380,000.00 claimed as commission, by way of compensation for the efforts and assistance rendered by the agent in the transaction prior to the expiration of his authority. These consist in offering the lot for sale to the eventual buyer, sending followup letters, inviting the buyer to dinner and luncheon meetings, etc.

Parallel circumstances obtain in the case at bar. It was petitioner who advised Glaxo, Philippines of the availability of the warehouse property and aroused its interest over the same. Through P, DBP was directly informed of the existence of an interested buyer. P's persistence in communicating with respondent DBP reinforced the seriousness of the offer. This piece of information no doubt had a bearing on the subsequent decisions made by DBP as regards the disposition of its properties.

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DISPOSITIONP100,000.00 awarded to P. The circumstances that came into play in this case do not meet the minimum legal standards required for the existence of an agency relationship and that the award is based purely on equity considerations.

Domingo vs. Domingo (29 October 1971)

Baltazar vs. Ombudsman (6 December 2006

Antonio Baltazar v. Hon. Ombudsman, Eulogio Mariano, Jose Jimenez, Jr., Toribio Ilao, Jr., and Ernesto SalengaGR No. 136433, December 6, 2006

Nephew of attorney-in-fact filed a criminal case stemming from a civil (agrarian) case. But agency cannot be delegated so he has no standing to file a complaint before the Ombudsman.

P: Paciencia RegalaA: Faustino Mercado (A of A: Antonio Baltazar)T: Lessee: Lapid (Sublessee: Rafael, Fishpond Watchman: Salenga)

Facts: Paciencia Regala owns a 7-ha fishpond at Sasmuan, Pampanga. Attorney-in-Fact, Faustino Mercado, leased fishpond to Eduardo

Lapid for P230k for 3 yrs (August 7, 1990 – August 7, 1993) Lapid subleased to Rafael Lopez for P50k for last 7 months of

original lease (January 10 – August 7, 1993) Lapid hired Ernesto Salenga as fishpond watchman, sublessee

Lopez rehired Salenga. March 11, 1993: Salenga, through Francis Lagman, sent a January

28, 1993 demand letter to Lopez and Lapid for unpaid salaries and non-payment of 10% share in harvest

June 5, 1993: Lopez replied, the last 2 months of the sub-lease, he gave rights to Mario Palad and Ambit Perez for P20k.

Salenga filed Complaint before the Provincial Agrarian Adjudication Board (PARAB) for Maintenance of Peaceful Possession, Collection of Sum of Money and Supervision of Harvest

o Amended complaint: prayer for issuance of TRO and preliminary injunction

o July 21, 1993: TRO issuedo Mercado (Attorney-in-Fact) filed motion to intervene

May 29, 1995: Provincial Adjudicator of DARAB Pampanga, Ilao, Jr. dismissed Complaint for lack of merit, appealed to DARAB Appellate Board

November 24, 1994: (pending resolution) Baltazar, alleged nephew of Mercado, instituted Complaint before Ombudsman, charging private respondents of conspiracy through issuance of TRO in allowing Salenga to retain possession of fishpond, etc. and Ilao, Jr. had no jdxn to hear and act on case since no tenancy relation bet. Salenga and Lopez.

Ombudsman found probable cause. Information filed before Sandiganbayan. Ilao, Jr. filed MR and/or reinvestigation granted. After reinvestigation, case was recommended to be dismissed. Ombudsman approved.

Issue: WoN Ombudsman committed GAD

Held: No. Petitioner has no legal standing. He is not the real-party-in-interest. Agency cannot be further delegated

Petitioner asserts he is duly authorized by Mercado to instituted suit by virtue of SPA. However, Mercado is an agent himself and as such cannot further delegate his agency to another. Otherwise put, an agent cannot delegate to another the same agency. The legal maxim potestas delegata non delegare potest; a power once delegated cannot be redelegated, while applied primarily in political law to the exercise of legislative power, is a principle of agency. For another, a redelegation of the agency would be detrimental to the principal as the second agent has no privity of contract with the former. Petitioner has no privity of contract with Regala, owner of fishpond and principal of Mercado.

NCC 1892 allows the agent to appoint a substitute, such is not the situation in the instant case. The SPA clearly delegates the agency to petitioner to pursue the case and not merely as a substitute. Besides, it is clear that what is allowed is a substitute and not a delegation of the agency.

Petitioner is neither a real party in interest with regard to the agrarian case nor in the crim proceedings conducted by the Ombudsman, elevated to the Sandiganbayan. He is not a party who will be benefited/injured by the results of both cases.

Other Issues: Submission of Counter-Affidavit and Agrarian Dispute

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Petition denied for lack of merit. Order and Memorandum of Office of Special Prosecutor are affirmed in toto

Serona vs. People (18 November 2002)

VIRGIE SERONA, petitioner, vs. HON. COURT OF APPEALS and THE PEOPLE OF THE PHILIPPINES, respondents.

FACTS: Leonida Quilatan delivered pieces of jewelry to petitioner Virgie Serona to be sold on commission basis. P shall remit payment or return the pieces of jewelry if not sold to Quilatan within 30 days.

Unknown to Quilatan, petitioner had earlier entrusted the jewelry to one Marichu Labrador for the latter to sell on commission basis. Petitioner was not able to collect payment from Labrador, which caused her to likewise fail to pay her obligation to Quilatan. Quilatan, sent a letter of demand to petitioner for failure to settle her obligation. Thereafter, an information for estafa under Article 315 par 1(b) was filed against petitioner.

Marichu Labrador confirmed that she received pieces of jewelry from petitioner worth P441,035.00. She testified that she sold the jewelry to a person who absconded without paying her. Labrador also explained that in the past, she too had directly transacted with Quilatan for the sale of jewelry on commission basis; however, due to her outstanding account with the latter, she got jewelry from petitioner instead.

TC rendered a decision finding petitioner guilty of estafa. Petitioner appealed to the Court of Appeals, which affirmed the judgment of conviction. MR denied.

PETITONER argues that she neither abused the confidence reposed upon her by Quilatan nor converted or misappropriated the subject jewelry; that her giving the pieces of jewelry to a sub-agent for sale on commission basis did not violate her undertaking with Quilatan. It was established that petitioner had not derived any personal benefit from the loss of the jewelry.

ISSUE: W/N the act of contracting a sub-agent makes P guilty of estafa thru abuse of confidence – No.

HELD: The elements of estafa through misappropriation or conversion are:

(1) that the money, good or other personal property is received by the offender in trust, or on commission, or for administration, or under any other obligation involving the duty to make delivery of, or to return, the same;

(2) that there be misappropriation or conversion of such money or property by the offender or denial on his part of such receipt;

(3) that such misappropriation or conversion or denial is to the prejudice of another; and

(4) that there is a demand made by the offended party on the offender.

The law on agency allows the appointment by an agent of a substitute or sub-agent in the absence of an express agreement to the contrary between the agent and the principal. In the case at bar, the appointment of Labrador as petitioner’s sub-agent was not expressly prohibited by Quilatan, as the acknowledgment receipt does not contain any such limitation. Neither does it appear that petitioner was verbally forbidden by Quilatan from passing on the jewelry to another person. Thus, it cannot be said that petitioner’s act of entrusting the jewelry to Labrador is characterized by abuse of confidence because such an act was not proscribed and is, in fact, legally sanctioned.

In the case at bar, the pieces of jewelry were given by petitioner to Labrador to achieve the very same end for which they were delivered to her in the first place. Consequently, there is no conversion since the pieces of jewelry were not devoted to a purpose or use different from that agreed upon. Similarly, it cannot be said that petitioner misappropriated the jewelry or delivered them to Labrador “without right.” It is consistent with usual practice for the seller to necessarily part with the valuables in order to find a buyer and allow inspection of the items for sale.

In the present case, the agents to whom personal property was entrusted for sale, conclusively proves the inability to return the same is solely due to malfeasance of a subagent to whom the first agent had actually entrusted the property in good faith, and for the same purpose for which it was received; there being no prohibition to do so and the chattel being delivered to the subagent before the owner demands its return or before such return becomes due, we hold that the first agent cannot be held guilty of estafa by either misappropriation or conversion. The abuse of confidence that is characteristic of this offense is missing under the circumstances.

Notwithstanding the above, however, petitioner is not entirely free from any liability towards Quilatan. The rule is that an accused acquitted of estafa may nevertheless be held civilly liable where the facts established by the evidence

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so warrant. Then too, an agent who is not prohibited from appointing a sub-agent but does so without express authority is responsible for the acts of the sub-agent. Considering that the civil action for the recovery of civil liability arising from the offense is deemed instituted with the criminal action, petitioner is liable to pay complainant Quilatan the value of the unpaid pieces of jewelry.

WHEREFORE, the petition is GRANTED.

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Documents

INC Agency Digests Feb14 (1)