LAW ON AGENCY, CHAPTER I
Based on the outline of Atty. CLV
RALLOS v. FELIX GO CHAN (Iya, C2020)
January 31, 1978 | Muñoz Palma, J. | Nature: Personal, Representative,
Derivative
PETITIONER: Ramon Rallos, Administrator of the Estate of Concepcion
Rallos
RESPONDENTS: Felix Go Chan & Sons Corporation and Court of
Appeals
SUMMARY: Concepcion nd Gerundia executed a special power of
attorney in favor of their brother Simeon Rallos, authorizing him to sell
for and in their behalf a certain lot. After the death of one of the
principals, Concepcion, Simeon proceeded with selling said lot to Felix Go
Chan. Ramon Rallos, as administrator of the Intestate Estate of
Concepcion, filed a suit against Rallos praying that the sale with Felix Go
Chan be declared void. The lower court ruled in favor Rallos, but was
overturned by the CA.
The Supreme Court resolved the issue in favor of Rallos discussing that
agency being personal, derivative, and representative in nature, death of
one of the parties extinguishes the contract. Simeon has acted without
authority in the sale to Felix Go Chan as during that period, no contract
of agency existed between the deceased and him.
DOCTRINE: Agency is basically personal, representative, and derivative
in nature. The authority of the agent to act emanates from the powers
granted to him by his principal; his act is the act of the principal if done
within the scope of the authority.
FACTS:
1. Concepcion and Gerundia both surnamed Rallos were sisters and
registered coowners of a parcel of land known as Lot No. 5983 of
the Cadastral Survey of Cebu covered by Transfer Certificate of
Title No. 11118 of the Registry of Cebu.
2. On April 21, 1954, the sisters executed a special power of attorney
in favor of their brother, Simeon Rallos, authorizing him to sell
for and in their behalf lot 5983.
3. On March 3, 1955, Concepcion Rallos died.
4. On September 12, 1955, Simeon Rallos sold the undivided shares
of his sisters Concepcion and Gerundia in lot 5983 to Felix Go
Chan & Sons Realty Corporation for the sum of P10,686.90. The
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deed of sale was registered in the Registry of Deeds of Cebu, TCT
No. 11118 was cancelled, and a new Transfer Certificate of Title
was issued in the name of Felix Go Chan.
5. On May 18, 1956 Ramon Rallos as administrator of the Intestate
Estate of Concepcion Rallos filed a complaint, praying:
a. that the sale of the undivided share of the deceased
Concepcion Rallos in lot 5983 be declared unenforceable,
and said share be reconveyed to her estate;
b. that the Certificate of Title issued in the name of Felix Go
Chan & Sons Realty Corporation be cancelled and another
title be issued in the names of the corporation and the
“Intestate estate of Concepcion Rallos” in equal undivided
shares; and
c. that plaintiff Rallos be indemnified by way of attorney’s
fees and payment of costs of suit.
6. The lower court rendered judgment in favor of Rallos declaring
the sale of the 1/2 share of Concepcion Rallos as null and void.
7. On appeal tot he CA, Felix Go Chan was able to reverse the above
decision into his favor.
8. Hence, the case before the SC brought by Rallos.
ISSUE/s:
1. WON Simon Rallos continues to be agent of Concepcion after
death of the principal - NO
RULING: IN VIEW OF ALL THE FOREGOING, We set aside the
decision of respondent appellate court, and We affirm en toto the
judgment rendered by then Hon. Amador E. Gomez of the Court of First
Instance of Cebu, quoted in pages 2 and 3 of this Opinion, with costs
against respondent realty corporation at all instances.
RATIO:
1. It is a basic axiom in civil law embodied in our Civil Code that no
one may contract in the name of another without being
authorized by the latter, or unless he has by law a right to
represent him.
2. A contract entered into in the name of another by one who has no
authority or legal representation, or who has acted beyond his
powers, shall be unenforceable, unless it is ratified, expressly or
impliedly, by the person on whose behalf it has been executed,
 LAW ON AGENCY, CHAPTER I
Based on the outline of Atty. CLV
before it is revoked by the other contracting party.
3. Article 1403 (1) of the same Code also provides “The following
contracts are unenforceable, unless they are justified:
a. Those entered into in the name of another person by one
who has been given no authority or legal representation
or who has acted beyond his powers; x x x”
4. Out of the above given principles, sprung the creation and
acceptance of the relationship of agency whereby one party, called
the principal (mandante), authorizes another, called the agent
(mandatario), to act for and in his behalf in transactions with
third persons.
5. The essential elements of agency are:
a. there is consent, express or implied, of the parties to
establish the relationship;
b. the object is the execution of a juridical act in relation to a
third person;
c. the agents acts as a representative and not for himself;
and
d. the agent acts within the scope of his authority.
6. Agency is basically personal, representative, and derivative in
nature. The authority of the agent to act emanates from the
powers granted to him by his principal; his act is the act of the
principal if done within the scope of the authority.
7. Qui facit per alium facit per se. “He who acts through another
acts himself.”
8. Paragraph 3 of Art. 1919 of the Civil Code provides: “Agency is
extinguished:
a. By the death, civil interdiction, insanity or insolvency of
the principal or of the agent”
9. By reason of the very nature of the relationship between principal
and agent, agency is extinguished by the death of the principal or
the agent.
10. Articles 1930 and 1931 of the Civil Code provide the exceptions to
the general rule aforementioned.
a. ART. 1930. The agency shall remain in full force and
effect even after the death of the principal, if it has been
constituted in the common interest of the latter and of the
agent, or in the interest of a third person who has
accepted the stipulation in his favor.
b. ART. 1931. Anything done by the agent, without
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I. Nature, Objective, & Kinds of Agencies
knowledge of the death of the principal or of any other
cause which extinguishes the agency, is valid and shall be
fully effective with respect to third persons who may have
contracted with him in good faith.
11. Article 1930 is not involved because admittedly the special power
of attorney executed in favor of Simeon Rallos was not coupled
with an interest.
12. Article 1931 is the applicable law. Under this provision, an act
done by the agent after the death of his principal is valid and
effective only under two conditions:
a. that the agent acted without knowledge of the death of
the principal, and
b. that the third person who contracted with the agent
himself acted in good faith. Good faith here means that
the third person was not aware of the death of the
principal at the time he contracted with said agent.
13. In the instant case, it cannot be questioned that the agent,
Simeon Rallos, knew of the death of his principal at the time he
sold the latter’s share in Lot No. 5983 to respondent corporation.
14. On the basis of the established knowledge of Simeon Rallos
concerning the death of his principal, Concepcion Rallos, Article
1931 of the Civil Code is inapplicable. The law expressly requires
for its application lack of knowledge on the part of the agent of
the death of his principal.
15. By reason of the very nature of the relationship between principal
and agent, agency is extinguished ipso jure upon the death of
either principal or agent.
16. Although a revocation of a power of attorney to be effective must
be communicated to the parties concerned, yet a revocation by
operation of law, such as by death of the principal is, as a rule,
instantaneously effective inasmuch as “by legal fiction the agent’s
exercise of authority is regarded as an execution of the principal’s
continuing will.”
17. With death, the principal’s will ceases or is terminated; the source
of authority is extinguished.
 LAW ON AGENCY, CHAPTER I
Based on the outline of Atty. CLV
ORIENT AIR SERVICES & HOTEL REPRESENTATIVES v CA
(Armand, C2020)
May 29, 1991 | Padilla J. |
PETITIONER: American Airlines Inc.
RESPONDENTS: CA and Orient Air Services & Hotel Representatives
Inc.
SUMMARY: American Air entered into a General Sales Agency (GSA)
Agreement with Orient Air, where American Air authorized Orient Air to
be its exclusive sales agent for the sale of air passenger transportation.
American Air then wanted to terminate the agreement alleging that
Orient Air had reneged on its obligations to remit the net proceeds of the
sales. Orient Air denied such allegations and claimed that American Air
still owed them a balance in unpaid overriding commissions. The trial
court rules in favor of Orient Air, giving them a hefty amount for
exemplary damages and attorney’s fees. The CA, affirmed the decision of
the trial court modifying and lessening the award for exemplary damages
and attorney’s fees. American Air moved for reconsideration while Orient
Air moved for partial reconsideration. The CA issued another resolution
denying the reconsideration of American Air and modifying Orient Air’s
motion (see facts for details in modifications). Both parties appealed the
resolution hence the case at bar. The issues are 1) WoN the extent of the
overriding commissions cover only the ticketed sales as per American Air,
or the total revenue of American Air as per Orient Air and 2) WoN the CA
can reinstate Orient Air as the sales agent of American Air. In the first
issue, the Court ruled that in interpreting the agreement as a whole, the
overriding commissions covered the for “all sales of passenger
transportation over American Air services”. In the second issue, the Court
ruled that reinstating Orient Air would be violative of the principles of
agency defined by law as a contract whereby "a person binds himself to
render some service or to do something in representation or on behalf of
another, WITH THE CONSENT OR AUTHORITY OF THE LATTER”
DOCTRINE: In an agent-principal relationship, the personality of the
principal is extended through the facility of the agent. In so doing, the
agent, by legal fiction, becomes the principal, authorized to perform all
acts which the latter would have him do. Such a relationship can only be
effected with the consent of the principal, which must not, in any way, be
compelled by law or by any court.
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I. Nature, Objective, & Kinds of Agencies
FACTS:
1. Consolidation of 2 petitions for review on certiorari of a decision of
the CA.
2. American Airlines (American Air), offering passenger and air
cargo transportation in the Philippines and Orient Air entered
into a General Sales Agency Agreement (Agreement), where
American Air authorized the Orient Air as its exclusive general
sales agent for the sale of air passenger transportation.
3. May 1981 American Air undertook the collection of the proceeds
of tickets originally sold by Orient Air and terminated the
Agreement in accordance with Paragraph 13 thereof, alleging
that Orient Air had reneged on its obligations by failing to
promptly remit the net proceeds of sales for the months January
to March 1981 amounting to $254,400.
4. Four days later, American Air instituted a suit against Orient Air
with the CFI of Manila for Accounting with Preliminary
Attachment, Mandatory Injunction and Restraining Order for
failing to promptly settle past outstanding refunds of which there
were available funds in the possession of the Orient Air to the
damage and prejudice of American Air.
5. Orient Air answered by denying the material allegations of the
complaint with respect to the alleged unremitted amounts. They
contended that American Air still owed them a balance in unpaid
overriding commissions. They further claimed that American
Air’s precipitous conduct had occasioned prejudice to its business
interests.
6. Trial Court – ruled in favor of Orient Air, ordering American Air
to reinstate defendant as its general sales agent for passenger
transportation in the Philippine in accordance with said GSA
agreement, and to pay Orient Air the balance of the overriding
commission total in the amount of $84,932 plus additional $8,000
by way of proper 3% overriding commission per month plus legal
interest, and P1.5M as exemplary damages and P300,000 by way
of attorney’s fees.
7. Intermediate Appellate Court (now CA) – affirmed decision of the
trial court with modifications, lessening the total amount of the
overriding commissions per month, and allowing payment in its
Peso equivalent, with interest of 12%, exemplary damages of
P200,000 and P25,000 in attorney’s fees.
8. American Air moved for reconsideration of the CA decision and
 LAW ON AGENCY, CHAPTER I
Based on the outline of Atty. CLV
Orient Air moved for partial reconsideration, as they wanted to
reinstate the trial court’s decision on exemplary damages and
attorney’s fees. The CA then promulgated a decision denying
American Air’s motion and modifying Orient Air’s motion by
making the sums payable in their Peso equivalent in accordance
with the official rate of exchange prevailing on the date of actual
payment.
9. Both parties appealed the resolution and by resolution of the SC,
both petitions were consolidated, hence the case at bar.
10. American Air - Orient Air’s right to the 3% overriding commission
is based only on sales of its services actually negotiated or
transacted otherwise referred to as “ticketed sales” since
paragraph 5(b) of the Agreement: “In addition to the above
commission, American will pay Orient Air Services an overriding
commission of 3% of the tariff fees and charges for all sales of
transportation over American's services by Orient Air Services or
its sub-agents.” Hence, the sale must be made by Orient Air and
the sale must be done with the use of American Air’s ticket
stocks.
11. Orient Air – overriding commission covers total revenue of
American Air not merely that derived from ticket sales since it is
the exclusive General Sales Agent of American Air, with
corresponding obligations arising from such agency, such as
promotion and solicitation for the services of its principal. In
effect, “all sales of transportation over American Air’s services are
necessarily by Orient Air”
ISSUES:
1. WoN the extent of Orient Air’s right to the 3% overriding
commission is based only on sales of its services actually
negotiated or transacted otherwise referred to as “ticketed sales”
or the total revenue of American Air.
2. WoN the CA can reinstate Orient Air as the sales agent of
American Air
RULING: WHEREFORE, with the foregoing modification, the Court
AFFIRMS the decision and resolution of the respondent Court of Appeals.
RATIO:
1. It is a well settled legal principle that in the interpretation of a
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I. Nature, Objective, & Kinds of Agencies
contract, the entirety thereof must be taken into consideration to
ascertain the meaning of its provisions.
2. The Court finds merit in the contention of Orient Air that the
Agreement, when interpreted in accordance with the foregoing
principles, entitles it to the 3% overriding commission based on
total revenue, or as referred to by the parties, "total flown
revenue."
3. As the designated exclusive General Sales Agent of American Air,
Orient Air was responsible for the promotion and marketing of
American Air's services for air passenger transportation, and the
solicitation of sales therefor.
4. In return for such efforts and services, Orient Air was to be paid
commissions of two (2) kinds:
1) a sales agency commission, ranging from 7-8% of tariff fares
and charges from sales by Orient Air when made on American
Air ticket stock;
2) an overriding commission of 3% of tariff fares and
charges for all sales of passenger transportation over
American Air services.
5. It is immediately observed that the precondition attached to the
first type of commission does not obtain for the second type of
commissions. The latter type of commissions would accrue for
sales of American Air services made not on its ticket stock but on
the ticket stock of other air carriers sold by such carriers or other
authorized ticketing facilities or travel agents. To rule
otherwise, i.e., to limit the basis of such overriding commissions to
sales from American Air ticket stock would erase any distinction
between the two (2) types of commissions and would lead to the
absurd conclusion that the parties had entered into a contract
with meaningless provisions. Such an interpretation must at all
times be avoided with every effort exerted to harmonize the entire
Agreement.
6. It is clear from the records that American Air was the party
responsible for the preparation of the Agreement. Consequently,
any ambiguity in this "contract of adhesion" is to be taken "contra
proferentem", i.e., construed against the party who caused the
ambiguity and could have avoided it by the exercise of a little
more care. Thus, Article 1377 of the Civil Code provides that the
interpretation of obscure words or stipulations in a contract shall
not favor the party who caused the obscurity.
 LAW ON AGENCY, CHAPTER I ATP&JV DIGESTS 5

Based on the outline of Atty. CLV I. Nature, Objective, & Kinds of Agencies

7. As regards the propriety of American Air’s termination of the of the principal, which must not, in any way, be compelled
Agreement, the SC agreed with the ruling of the respondent by law or by any court. The Agreement itself between the
appellate court: parties states that "either party may terminate the Agreement
“It is not denied that Orient withheld remittances but such action without cause by giving the other 30 days' notice by letter,
finds justification from paragraph 4 of the Agreement, Exh. F, telegram or cable." (emphasis supplied) We, therefore, set aside
which provides for remittances to American less commissions to the portion of the ruling of the respondent appellate court
which Orient is entitled, and from paragraph 5(d) which reinstating Orient Air as general sales agent of American Air.
specifically allows Orient to retain the full amount of its
commissions. Since, as stated ante, Orient is entitled to the 3%
override. American's premise, therefore, for the cancellation of the
Agreement did not exist. . . ."
8. American Air's perception that Orient Air was remiss or in
default of its obligations under the Agreement was, in fact, a
situation where the latter acted in accordance with the
Agreement—that of retaining from the sales proceeds and its
accrued commissions before remitting the balance to American
Air.
9. Since the latter was still obligated to Orient Air by way of such
commissions, Orient Air was clearly justified in retaining and
refusing to remit the sums claimed by American Air. The latter's
termination of the Agreement was, therefore, without cause and
basis, for which it should be held liable to Orient Air.
10. The SC likewise affirms the modification in the exemplary
damages and attorney’s fees.
11. However, the SC disagrees that Orient Air be reinstated as its
general sales agent for passenger transportations in the
Philippines in accordance with said GSA agreement.
12. By affirming this ruling of the trial court, respondent appellate
court, in effect, compels American Air to extend its personality to
Orient Air. Such would be violative of the principles and
essence of agency, defined by law as a contract whereby "a
person binds himself to render some service or to do
something in representation or on behalf of another, WITH
THE CONSENT OR AUTHORITY OF THE LATTER.”
13. In an agent-principal relationship, the personality of the
principal is extended through the facility of the agent. In
so doing, the agent, by legal fiction, becomes the principal,
authorized to perform all acts which the latter would have
him do.
14. Such a relationship can only be effected with the consent
 LAW ON AGENCY, CHAPTER I
Based on the outline of Atty. CLV
TAN v. GULLAS (Lij, C2020)
December 3, 2002 | Ynares-Santiago, J. | Commission
PETITIONER: Manuel B. Tan, Gregg M. Tecson, and Alexander Saldaa
RESPONDENTS: Eduardo R. Gullas and Norma S. Gullas
SUMMARY: Eduardo Gullas and Norma Gullas, were the registered
owners of a parcel of land in Cebu. They executed a SPA in favor of Tan
and his associates to sell the landat 550 per square meter at a 3%
commission for 1 month. Tan got in contact with the Sisters of Mary for
the sale. The Sisters of Mary liked the property and expressed their
desire to buy it. The property would be sold at a rate of 200 per square
meter.
Tan and associates wanted to collect their commission but Gullas argued
that another agent was responsible for the sale to the Sisters. Petitioners
filed a complaint to recover their brokers fees along with other damages.
Respondents, in response, argued that Roberto Pacana was responsible
for the sale. Are the petitioners entitled to the commission to the sale.
A broker is one whose occupation is to bring parties together, in matters
of trade commerce or navigation. The claims of respondents that Roberto
Pacana came first and that he was the reason for the sale was
unsubstantiated. They could only show a undated and unnotarized SPA
for Pacana. The petitioners, on the other hand, had clear involvement
with the sale. At the very least, they were responsible for the
introductions. Agents earn commission at the consummation of the sale
but brokers earn theirs by simply bringing buyer and seller together,
even if sale was not made.
DOCTRINE: Broker’s earn commission by bringing the buyer and seller
together regardless if the sale was actually made.
FACTS:
1. Spouses Eduardo R. Gullas and Norma S. Gullas, were the
registered owners of a parcelof land in Cebu, measuring 104,114
sq. m. On June 29, 1992, they executed a special power of
attorney authorizing petitioners Manuel B. Tan, a licensed real
estate broker, and his associates Gregg Tecson and Alexander
Saldaa, to negotiate for the sale of the land at P550 per square
meter, at a commission of 3% of the gross price. The power of
attorney was non exclusive and effective for one month.
ISSUE/s:
2. On the same date, Tan contacted the construction manager
ATP&JV DIGESTS 6
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(engineer Ledesma) of the Sisters of Mary of Banneaux, Inc.
(sisters of mary) On July 1, 1992, petitioner Tan visited the
propert with Ledesma. He would then accompany Sisters of Mary,
to see private respondent Eduardo gullas at his office at the
University of Visayas.
3. The Sisters of Mary saw and inspected the land and found that it
was suitable for their purposes and expressed their desire to buy
it. However, they requested it for 530 per square instead of 550.
4. July 3, Gullas agreed to sell the property to the Sisters of Mary.
Gullas would execute a SPA in favor of Eufemia Caet to sell,
transfer, and convey the land at a fixed price of 200 per square.
July 17, Eufemia executed the deed of sale in the sisters favor for
a total of over 20 million at a rate of 200 per square.
5. Earlier (before the deed of sale), the petitioners (tan and
associates) went to Gullas to claim their commission, but Eduardo
Gullas told them that he and his wife agreed to sell to the Sisters
of Mary. Gullas alleges that another group of agents were
responsible for the sale of land to the Sisters.
6. Petitioners filed a complaint against the defendants for recovery
of their brokers fee (1,655,412.60) as well as moral, exemplary
damages and attorney’s fees. They allege that they were the
efficient procuring cause in bringing about the sale of the
property to the Sisters of Mary. Their efforts being frustrated by
the bad faith and malice of the respondents to evade paying their
brokers fees.
7. The private respondents maintained the opposite. That the
Petitioners Tan were not the efficient procuring cause in the
bringing about of the sale but rather another broker named
Roberto Pacana who introduced the property ahead of Tan.
Pacana was already paid his commission according to Gullas.
8. Trial court was in favor of petitioners and ordered the Gullas
couple to pay up.
9. Decision was appealed by both parties (even the petitioners).
They argued hat the 3 percent commission should be based on the
price 55 million rather than the selling price since the actual price
was underbalued for taxation purposes.They also wanted
damages for bad faith.
10. CA set aside and dismissed the complaint
 LAW ON AGENCY, CHAPTER I ATP&JV DIGESTS 7

Based on the outline of Atty. CLV I. Nature, Objective, & Kinds of Agencies

1. W/n the Petitioners Tan and associates are entitled to the the sale in motion.
brokerage commission 6. For the issue of whether the commission should be based on the
sale price or the agreed price. The court ruled that for equity
RULING: SC affirmed the lower courts decision. Pwede rin wherefore. consideration dictate the sale price should be used. To rule
otherwise would constitute unjust enrichment.
RATIO:
1. 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. Xxx a broker is one whose occupation is to
bring the parties together, in matters of trade, commerce or
navigation.
2. It was established that petitioners were authorized as brokers
non exclusively for a period of one month. The non exclusivity
meant that Gullas could appoint other agents for the same thing
which he did. He also appointed Mr. Bobby Pacana which at that
point was perfectly okay.The problem arose when both party of
agents were entertaining the same buyer, Sisters of Mary.
3. The argument of respondents that Pacana was the one entitled to
the 3% commission is untenable. The petitioners Tan were the
ones responsible for the introduction of the Sisters of Mary to
Eduardo Gullas. Respondents fail to prove that Pacana began
negotiations with Norma Gullas ahead of the petitioners. They
didn’t present anyone not even Norma.
4. Respondents’ contention that Pacana was responsible is also
unsubstantiated. No proof of the negotiations only an undated
and unnotarized SPA. While the lack of a dateand an oath do not
render the SPA invalid however the contract involved a
considerable amount of money. Hence, it would be inconsistent
with sound business practice that the authority to sell is
contained in an undated and unnotarized SPA.
5. It is apparent that private respondents are trying to evade
payment of the commission which rightfully belongs to petitioners
as brokers with respect to the sale. In the case of Alfred Hahn v
CA and BMW, the court ruled that an agent receives a
commission upon the successful conclusion of a sale. On the other
hand, a borker earns his pay merely by bringing the buyer and
the seller together, even if no sale is eventually made. Petitioners,
as brokers, are entitled to commission for at the very least setting
 LAW ON AGENCY, CHAPTER I
Based on the outline of Atty. CLV
MACONDRAY & CO., INC. v. GEORGE SELLNER (PERRAL,
C2020)
Feb. 2, 1916| CARSON J.| Dist. from other similar contracts: Brokerage
PLAINTIFF: MACONDRAY & CO. INC
DEFENDANT: GEORGE S. SELLNER
SUMMARRY: Macondray bought a land from Sellner, a broker, for the
purpose of using it as a coal yard, but due to heavy floods, the land
became unsuitable for the purpose for which it was bought. Consequently,
Macondray asked Sellner to look for another prospective buyer of the said
land for P17, 175 wherein Sellner would get a commission for securing
the purchase over the amount of the initial purchase price. Thereafter,
Sellner found a buyer, Barretto, which for some reason, incurred delays
in his dealings with the said Sale. Young, gen. manager of Macondray
gave noticed that the Sale will be cancelled if Barretto fails to pay the
purchase price within the day (Sep 2, 1912) until 5 in the afternoon.
Unfortunately, Barretto still failed to deliver the purchase price within
the stipulated time, thus the Sale was deemed cancelled. But despite the
cancellation and the revocation of the authority of Sellner, he still
pursued in making the said Sale. Now, Macondray filed an action for the
recovery of a sum of money as a form of damages suffered by the company
due to the acts of the broker. However, SC ruled in favor of Sellner.
DOCTRINE: We do not mean to question the general doctrine as to the
power of a principal to revoke the authority of his agent at will, in the
absence of a contract fixing the duration of the agency (subject, however,
to some well-defined exceptions). Our ruling is that at the time fixed by
the manager of the plaintiff company for the termination of the
negotiations, the defendant real estate agent had already earned the
commissions agreed upon, and could not be deprived thereof by the
arbitrary action of the plaintiff company in declining to execute the
contract of sale for some reason personal to itself. 
 agreed to accept the land if, upon examination, the title and deed
DOCTRINE: The business of a real estate broker or agent, generally, is
only to find a purchaser, and the settled rule as stated by the courts is
that, in the absence of an express contract between the broker and his
principal, the implication generally is that the broker becomes entitled to
the usual commissions whenever he brings to his principal a party who is
able and willing to take the property and enter into a valid contract upon
the terms then named by the principal, although the particulars may be
arranged and the matter negotiated and completed between the principal
ATP&JV DIGESTS 8
I. Nature, Objective, & Kinds of Agencies
and the purchaser directly. (Lunney vs Harley) 

FACTS:
1. In Early 1912 defendant (Sellner), a real estate broker , sold a
parcel of land to herein Plaintiff company (Macondray) for
P17,175.
2. The formal deed of sale was not executed and accepted until July
29, 1912, the agreement of purchase being being conditioned on
the delivery of a Torrens Title.
3. In the meantime, the land was flooded by the high tides and
plaintiff company became highly dissatisfied with its purchase.
4. When the final transfer was made, the plaintiff company
informed defendant broker that the land was wholly unsuited for
use as a coal-yard, for which it has been purchased, and requested
him to find another purchaser.
5. It was expressly understood that the plaintiff company was
willing to dispose of the land for P17,175, and that defendant
broker was to have his commission for securing a purchaser
anything over that amount which he could get.
6. A short time, thereafter, defendant broker reported to plaintiff
company that he had a purchaser for the land in the person of
Antonio Barretto (Prospect Buyer) who was willing to pay
P18,892.50 for its purchase price.
7. Plaintiff company, then, executed a formal deed of conveyance,
together with the certificate of title, and delivered these to
defendant broker with the understanding that he was to (a)
conclude the sale, (b) deliver the title deed and certificate to
Barretto, (c) and receive from him the purchase price.
8. Defendant broker advised Barretto that plaintiff already executed
the title deed and that he was ready to close the deal. Barretto
should prove satisfactory. Defendant broker left the deed of
conveyance with Barretto for the purpose of examining it with the
understanding that if the deed proves satisfactory, Barretto
would give him a check for the amount of the purchase price.
9. Defendant broker retained the possession of the Torrens
certificate of title. A few days after, Barretto was compelled to go
to Tayabas on business where he was detained due to a typhoon
which delayed his return..
 LAW ON AGENCY, CHAPTER I
Based on the outline of Atty. CLV
10. During Barretto’s absence, plaintiff company advised defendant
broker that he must consummate the sale and collect the
purchase money without delay upon Barretto’s return to Manila.
Upon the arrival of Barretto, Defendant broker immediately call
on him and informed him that the plaintiff company desired to
close up the transaction at once, in which Barretto gave his
promise that he would examine the papers as soon as he could
could, and assured defendant broker that he would send his check
for the purchased price in a day or 2 if he found the documents in
proper shape.
11. This assurance was reported to Young (gen. manager of
Macondray and representative throughout the transaction).
Thereafter, Young formally informed defendant broker that
unless the purchase price was paid before 5 o’clock of that same
afternoon (Sept. 2, 1912, Monday) the deal would be off. –Barretto
failed to pay the purchase price by 5 pm; Sale had been cancelled.
12. Because of this notification, defendant broker called upon
Barretto, who in turn, told him that if he would turn over the
Torrens certificate of title, he would let him have a check for the
purchase price.
13. Defendant broker sent the certificate as requested, but did not
receive the check until 36 hours afterwards(received on
Wednesday. Upon the receipt of the check issued by Barretto,
defendant broker immediately tendered the check to plaintiff
company. (but it was too late: sale was already cancelled)
14. Plaintiff company refused to accept the check and soon after filed
an action, claiming that the sale had been “cancelled” upon
the failure of the defendant broker to turn over the purchase price
on the stipulated time ( 5 O’clock in the afternoon of Sep 2, 1912)
given by plaintiff company.
15. Plaintiff company questioned the action of Defendant broker
particularly in pursuing the sale with Barretto despite the given
letter or notice that the Sale is deemed cancelled. Company
asserted that the cancellation of the said Sale, also revoked the
authority of Sellner to pursue the transaction.
16. In which, in this case, plaintiff company, alleged that they are
entitled to the sum of 17,175 by way of damages alleged to have
been suffered by the company as a result of the sale of a parcel of
land which it is alleged was made by the defendant for and on
ATP&JV DIGESTS 9
I. Nature, Objective, & Kinds of Agencies
behalf of the plaintiff company after authority to make the sale
had been revoked.
17. Lower court ruled in favor of plaintiff, and from this judgment
defendant appealed.
ISSUE: W/N Macondray is entitled to damages from Sellner for selling
the land to Barretto for and on behalf of Macondray after Sellner’s
Authoriy had been revoked? –NO
RULING: Judgement entered reversing the judgment of the lower court
and directing the dismissal of the complaint with the cost against
plaintiff company.
RATIO:
1. From the very nature of the transaction it was understood that
the 
purchaser should have a reasonable time in which to
examine the deed of transfer and the other documents of title, and
that defendant exercising an authority impliedly if not expressly
conferred upon him, gave the purchaser a reasonable time in
which to satisfy himself as to the legality and correctness of the
documents of title. That the company through its manager Young,
acquiesced in and ratified what had been done by defendant in
this regard when, with full knowledge of all the facts, Young
advised the defendant, during Barretto's absence in Tayabas, that
the deal must be closed up without delay on Barretto's return to
Manila. 

2. No reason appears, nor had any reason been assigned for the
demand by the plaintiff company for the delivery of the purchase
price at the hour specified under threat in the event of failure to
make payment at that hour it would decline to carry out the
agreement, other than that the manager of the plaintiff company
had been annoyed by the delays which occurred during the earlier
stage of the negotiations, and had changed his mind as to the
desirability of making the sale at the price agreed upon, either
because he believed that he could get a better price elsewhere, or
that the land was worth more to his company than the price he
had agreed to take for it.
3. The commission agreed upon was all over P17,175 which the
defendant could secure from the property, and it is clear that
allowing the defendant this commission, and offsetting it against
 LAW ON AGENCY, CHAPTER I ATP&JV DIGESTS 10

Based on the outline of Atty. CLV I. Nature, Objective, & Kinds of Agencies

the unpaid balance of the market value of the land, the plaintiff 9. Under all the circumstances surrounding the transaction in the
company is not entitled to a money judgment against defendant. case at bar, as they appear from the evidence of record, we have
4. We do not mean to question the general doctrine as to the no hesitation in holding that the plaintiff company's letter of
power of a principal to revoke the authority of his agent at September 2, 1912 demanding payment before five o'clock of the
will, in the absence of a contract fixing the duration of the afternoon of that day, under penalty of the cancellation of its
agency (subject, however, to some well-defined agreement to sell, was an arbitrary unreasonable attempt to deny
exceptions). Our ruling is that at the time fixed by the to the purchaser the reasonable opportunity to inspect the
manager of the plaintiff company for the termination of documents of title, to which he was entitled by virtue of the
the negotiations, the defendant real estate agent had express agreement .
already earned the by commissions agreed upon, and could
not be deprived thereof the arbitrary action of the plaintiff
company in declining to execute the contract of sale for
some reason personal to itself.
5. The business of a real estate broker or agent, generally, is
only to find a purchaser, and the settled rule as stated by
the courts is that, in the absence of an express contract
between the broker and his principal, the implication
generally is that the broker becomes entitled to the usual
commissions whenever he brings to his principal a party
who is able and willing to take the property and enter into
a valid contract upon the terms then named by the
principal, although the particulars may be arranged and
the matter negotiated and completed between the
principal and the purchaser directly. (Lunney vs Harley) 

6. The rights of a real estate broker to be protected against the
arbitrary revocation of his agency, without remuneration for
services rendered in finding a suitable purchaser prior to the
revocation, are clearly and forcefully stated in the following
citation form the opinion in the case of Blumenthal vs. Goodall.
7. The only reasons assigned for the sudden and arbitrary demand
for the payment of the purchase price which was made with the
manifest hope that it would defeat the agent's deal with Barretto,
are that the plaintiff company's manager had become satisfied
that the land was worth more than he had agreed to accept for it;
and that he was piqued and annoyed at the delays which marked
the earlier stages of the negotiations.
8. Time does not appear to have been of the essence of the contract.
The agreement to sell was made without any express stipulation
as to the time within which the purchase price was to be paid. 

 LAW ON AGENCY, CHAPTER I
Based on the outline of Atty. CLV
GUARDEX ENTERPRISES v. NLRC (PELINO, C2020)
November 20, 1990 | Narvasa, J. | Commission in an Agency
Petitioners: Guardex Enterprises and Marcelina A. Escandor
Respondents: National Labor Relations Commission and Jumbee
Orbeta
Summary: Marcelina Escandor, through Guardex, manufactures fire
extinguishers, etc. and also fabricates fire trucks while Jumbee Orbeta is
a freelance salesman. Orbeta learned that Escandor offered to fabricate a
fire truck for Rubberworld and he inquired as to how much the
commission would be regarding the sale of a fire truck, to which Escandor
replied by saying Php 15,000.00/unit. Orbeta offered to look into it and
asked for Php 250.00 representation expenses. Escandor did not hear
from Orbeta, so she sent a letter to Rubberworld and upon receiving a
positive response, sent a quotation. Orbeta eventually was out of sight.
When the negotiation was consummated and the fire truck has been fully
paid and delivered, Orbeta reappeared and sought for his commission.
Escandor refused because Orbeta was not instrumental in securing that
deal. Orbeta filed a case with the NLRC and they ruled in his favor.
Hence this petition. The issue in this case is WON Orbeta is Escandor’s
agent and if he is entitled to the commission. The SC ruled that he is not
Escandor’s agent given that (a) Escandor denied giving verbal authority,
(b) she already offered Rubberworld prior to Orbeta coming into the
picture, (c) she only consented to Orbeta doing a follow up, and (d) the
250.00 representation expense is only for the follow up. There was no
implied agency. Assuming arguendo that there was, Orbeta is not entitled
to the commission the Php 15,000.00 commission is contingent on the
purchase of the fire truck, with a condition that the agent would earn it if
he was instrumental in bringing the sale about. Since he was not, he is
not entitled to it.
Doctrine: When the entitlement of the commission is predicated on a
purchase, it is with the implicit condition that the agent would earn if he
was instrumental in bringing the sale about. Since he is not, then he is
not entitled to the commission.
Facts:
1. Escandor, doing business under the name of Guardex Ent., is
engaged in the manufacture and sale of firefighter equipment (i.e.
ATP&JV DIGESTS 11
I. Nature, Objective, & Kinds of Agencies
extinguishers, fire hose, etc.) and occasionally on the building or
fabrication of fire trucks. Orbeta was a freelance salesman.
2. Orbeta learned that Escandor offered to fabricate a fire truck for
Rubberworld. He wrote to Escandor inquiring commission re sale
of fire truck. Escandor replied by saying it is at Php
15,000.00/unit.
3. Orbeta offered to take a look into the offer and asked for Php
250.00 for representation expenses.
4. Escandor received no info from Orbeta. She inquired in writing
from Rubberworld re sale of fire truck and when they replied, she
sent a quotation.
5. Orbeta was able to sell fire extinguishers and he eventually
dropped out of sight.
6. After 7 months, Escandor finalized the contract with Rubberworld
and she delivered the fire truck and the full payment had been
made.
7. Orbeta reappeared and asked for his commission regarding the
sale, but Escandor refused, arguing that Orbeta had nothing to do
with the negotiation and consummation of the sale.
8. He filed a case with the NLRC on the basis that he was entitled to
the commission. NLRC ruled in his favor. Hence, this petition.
Issue: WON Orbeta is Escandor’s agent re the sale of a fire truck and if
he is entitled to his commission – NOT AN AGENT AND NOT
ENTITLED.
Held: WHEREFORE, the petition for certiorari is GRANTED, and the
judgment of the NLRC and that of the Labor Arbiter are hereby
REVERSED and SET ASIDE and another one rendered dismissing
Orbeta’s claim for unpaid commissions.
Ratio:
On whether Orbeta is Escandor’s agent.
 Orbeta claims that there has been an implied agency on the basis
of the following:
1. Alleged verbal authority given to him to offer a fire truck to
Rubberworld;
2. Alleged written authority to sell the truck based on
Escandor’s letter;
 LAW ON AGENCY, CHAPTER I ATP&JV DIGESTS 12

Based on the outline of Atty. CLV I. Nature, Objective, & Kinds of Agencies

3. Escandor giving Orbeta Php 250.00 for representation

expenses;
4. Orbeta’s submission of the price quotation to Rubberworld
and setting up the meeting between Escandor and the
Purchasing Manager.
 Escandor, on the other hand, denies giving the verbal authority.
 SC: Escandor already made a written offer to Rubberworld.
o She only consented to “follow up” the offer.
o It does not even seem to show that Orbeta even followed
anything up, given that he did not even report to Escandor.
o Representation allowance was for the “follow up” and it is not
conclusive that an agency between the two has been
established.

On whether he is entitled to receive commission

 SC said that assuming arguendo that an agency had been
established, Orbeta is not entitled to receive commission.
o Nothing would prove that he was material to the negotiation
and consummation of the sale, or that he even succeeded or
attempted to carry out the terms.
o The entitlement of the Php 15,000.00 is contingent on the
purchase of the fire truck, with a condition that the agent
would earn it if he was instrumental in bringing the sale
about.
o The agency would have also been revoked since Escandor
made direct negotiations and Orbeta abandoned efforts to
secure the deal.

On whether the NLRC has jurisdiction

 Although not an issue raised, SC said that NLRC only has
jurisdiction of cases involving employer-employee relations.
 LAW ON AGENCY, CHAPTER I
Based on the outline of Atty. CLV
PRATS v. CA (Scribd)
Fernandez, J.
Under what topic: IX. What are the obligations and liabilities of
principals to agents?
Petitioner: Antonio E. Prats, doing business under the name of
Philippine Real Estate Exchange
Respondent: Courts of Appeals, Alfonso Doronila, and Philippine
National Bank
Synopsis: This is a petition for certiorari to review the decision of CA,
dismissing Prats’ case for recovery of sum of money. Doronila was ordered
in the RTC to pay Prats P1.380M based on an alleged exclusive option
and authority to negotiate the sale of Doronila’s property. CA reversed.
SC said that there was no evidence that shows that Prats was the
efficient procuring cause in bringing about the sale, hence he is not
entitled to the commission which was awarded by the RTC. However, he
was awarded an amount in the interest of equity.
Doctrine: The principal has the obligation to pay commissions to his
agent, subject to the limitations of the stipulations in the agency. Based
on equity, however, in this case, it is but proper to give compensation to
the efforts of the agent which helped further the principal’s interest.
Facts:
 This is a suit for the recovery of a sum of money and damages
instituted by Prats against Doronila and PNB.
 July 1967: Doronila was the registered owner of a 300-hectare
land in Rizal. He offered to sell such land to the Social Security
System (SSS) for PHP 4.00/sq. m. SSS made a counter-offer of
PHP 3.25/sq. m.
 February 14, 1968: Doronila then gave Prats an exclusive option
and authority in writing to negotiate the sale of the property
under the following terms:
a. Prats is to sell the land at a basic price of PHP 3.00/sq. m.
b. A 10% commission shall be paid to Prats based on PHP
2.10/sq. m. or at any price finally agreed upon and if the
ATP&JV DIGESTS 13
I. Nature, Objective, & Kinds of Agencies
property be sold over and above PHP 3.00/sq. m., the excess
shall be paid to Prats in addition to his 10% commission.
c. Such exclusive option and authority is good for (60)
days from the date of conformity; provided that should
negotiations with the buyer have been started, said
period is automatically extended until said
negotiations is terminated, but not more than (15)
days.
d. The written offers must be made by the prospective
buyers and if no written offer is made to Doronila until
the last day of this authorization, this option and
authority shall expire and become null and void.
e. Prospective buyers and all parties interested shall be referred
to Prats.
 As a result of this exclusive option and authority to negotiate,
Doronila withdrew his previous offer to sell to SSS and asked for
the return of all papers concerning his offered property. These
papers were given to Prats as Doronila’s authorized real estate
broker.
 February 26, 1968: Doronila was invited by SSS to have a
meeting but the former declined and asked that SSS
communicate directly with Prats. Prats wrote SSS signifying his
intentions to sit down and meet with the latter.
 April 18, 1968: Doronila extended Prat’s exclusive option and
authority up to May 18.
 May 6, 1968: Prats made a formal written offer to the SSS at the
price of PHP6.00/sq. m. SSS ignored said offer.
 May 18, 1968: Prats wrote to Doronila emphasizing that they still
had (15) days within which to complete the negotiations as per
agreement or until June 2.
 May 30, 1968: Prats wrote to Doronila again advising him that
the SSS agreed to purchase the land, though no formal offer was
made by the latter.
 June 6, 1968: Doronila wrote to Prats informing him that he has
not received any written offer from the SSS during the 60 days of
the exclusive option and authority which expired on April 14, nor
during the period of extension which expired on May 18, nor
during the 15-day grace period. As per their agreement, the
option expired and became null and void.
 LAW ON AGENCY, CHAPTER I
Based on the outline of Atty. CLV
 June 19, 1968: Doronila wrote to SSS renewing his offer to sell
the land at PHP 4.00/sq. m. SSS replied and made a counter-offer
of PHP 3.25/sq. m., for a total price of P9,750,000.00.
 July 30, 1968: Doronila accepted the counter-offer and executed
the deed of absolute sale.
 September 17, 1968: Prats presented his statement of account to
Doronila for the payment of his professional services as real
estate broker in the amount of P1,380,000.00. Doronila refused to
pay. Hence, a suit was filed.
 RTC ruled in favor of Prats, ordering Doronila to pay the
commission plus damages.
 CA reversed. As per the agreement, a written offer by the
prospective buyer was required and if no such written offer is
made until the last day of the authorization, the option shall
expire.
Issue/s - Holding:
WON CA erred in concluding that Prats was not the efficient procuring
cause in bringing about the sale of Doronila’s land to SSS and as such
should not be entitled to his commission. NO. CA was correct.
Ratio:
 It is clear from the stipulation of facts and evidence on record that
the offer of Doronila to sell the land to SSS was formally accepted
by SSS only on June 20, 1968 after the exclusive option had
already expired. Prats was not the efficient procuring case in
bringing about the sale proceeding from the fact of expiration of
his exclusive option.
o This is manifested by the fact that the SSS officials
specifically requested Prats not to be present at the
meeting with Doronila on May 29 because the SSS
officials never wanted the mediation or intervention of
Prats. The conclusion is that this May 29 meeting was
done independently and not by virtue of Prat’s wish or
efforts to hold such meeting.
o The fact that Prats also made offers of PHP 4.50/sq. m.
and PHP 6.00/sq. m. belies the claim that he arranged the
May 29 meeting as SSS was only willing to buy it at PHP
3.25/sq. m. Prats’ offers to SSS received no attention.
ATP&JV DIGESTS 14
I. Nature, Objective, & Kinds of Agencies
 However, the Court took note that Prats had taken steps to bring
back together Doronila and SSS:
o Prats wrote several letters to SSS offering the land and
inviting them to discuss the offer. He even made a former
offer of PHP 6.00/sq. m., albeit it was ignored.
o Prats had several dinner and lunch meetings with
Doronila and his nephew Atty. Asencio. The latter
corroborated this fact.
 As such, the Court granted in equity a sum of PHP
100,000.00 by way of compensation for Prats’ efforts and
assistance in the transaction, which however was finalized
and consummated after the expiration of his exclusive
option.
Dispositive:
WHEREFORE, the decision appealed from is hereby affirmed, with the
modification that private respondent Alfonso Doronila in equity is
ordered to pay petitioner or his heirs the amount of One Hundred
Thousand Pesos (P100,000.00) and that the portion of the said decision
ordering Prats to pay respondent Doronila attorneys' fees in the sum of
P10,000.00 is set aside.
The lifting of the injunction issued by the lower court on the PHP
2,000,000.00 cash deposit of respondent Doronila as ordered by
respondent court is hereby with the exception of the sum of One Hundred
Thousand Pesos (P100,000.00) which is ordered segregated therefrom to
satisfy the award herein given to petitioner, the lifting of said injunction,
as herein ordered, is immediately executory upon promulgation hereof.
 LAW ON AGENCY, CHAPTER I
Based on the outline of Atty. CLV
MANOTOK BROTHERS, INC. v. COURT OF APPEALS (Mica,
C2020)
April 7, 1993 | Campos, Jr., J. | Doctrine of “Efficient Procuring Cause”
PETITIONER: Manotok Brothers, Inc.
RESPONDENTS: The Honorable Court of Appeals, The Honorable
Judge of the Regional Trial Court of Manila
SUMMARY: In this case, Manotok Brothers, Inc. owned a parcel of land
and building, which is used by the C.M. Recto High School. They wanted
to sell it to the City of Manila so, they asked the help of private
respondent, Salvador Saligumba. They extended his authority for a
number of times but the ordinance, which appropriated the budget for the
acquisition of the property, occurred after Saligumba’s authority expired.
Petitioner refused to give him his commission. Thus, the case at hand.
The issue here is whether or not he should be given commission. The
Court ruled in favor of private responding, saying (doctrine)
DOCTRINE: Although the sale of the object of agency was perfected
three days after the expiration of the agency, the agent would still be
entitled to receive commission stipulated based on doctrine in Pratts v.
Court of Appeals, that when the agent was the efficient procuring cause
in bringing about the sale he was entitled to compensation.
FACTS:
1. Manotok Brothers, Inc. is the owner of a certain parcel of land
and building which were formerly leased by the City of Manila
and used by the Claro M. Recto High School, at M.F. Jhocson
Street, Sampaloc Manila
2. July 5, 1996—By means of a letter, petitioner authorized private
respondent Salvador Saligumba to negotiate with the City of
Manila the sale of the property for not less than P425,000.00.
Petitioner also agreed to pay private respondent a 5% commission
in the event the sale is finally consummated and paid
3. March 4, 1967—Petitioner executed another letter extending the
authority of private respondent for 120 days.
4. June 26, 1967—extended for 120 more days through another
letter
5. Nov. 16, 1967—through anther letter, the corporation with Rufino
Manotok, its President, as signatory, authorized private
respondent to finalize and consummate the sale of the property to
ATP&JV DIGESTS 15
I. Nature, Objective, & Kinds of Agencies
the City of Manila for not less than P410,000.00. With this,
another extenstion for 180 more days)
6. On April 26, 1968, the Municipal Board of the City of Manila
passed Ordinance No. 6603. This appropriated the sum of
P410,816.00 for the purchase of the property. This was signed,
however, by the City Mayor only on May 17, 1968 (183 days after
the last letter of authorization).
7. Jan. 14, 1969—parties signed the deed of sale of the subject
property. Payments were made twice. There was an initial
payment of P200,000.00 and it was fully satisfied by a check in
the amount of P210,816.00.
8. Saligumba never received any commission, which should have
been P20,554.00. This was because petitioner did not recognize
the latter’s role as an agent in the transaction.
9. Saligumba filed a complaint against petitioner, alleging
that he had successfully negotiated the sale of the
property.
10. He said that it was because of his efforts that the
Municipal Board of Manila passed the ordinance.
11. Petitioner denied this. It claimed:
a. Private respondent would be entitled to a commission only
if the sale was consummated and the price paid within
the period given in the respective letters of authority
b. Private respondent was not the person responsible for the
negotiation and consummation of the sale, instead it was
Filomeno E. Huelgas, the PTA president for 1967-1968 of
the Claro M. Recto High School
c. Counterclaim: P4000 as attorney’s fees and moral
damages
12. During the trial, private respondent testified as to the efforts
undertaken by him. (PUTTING THE PROCESS IN CASE YOU
WANT TO KNOW BUT BASICALLY HE FIXED THE
PROCESS)
a. Started with the meeting with Rufino Manotok at the
office of Fructuoso Ancheta, principal of C.M. Recto High
School (Bisbal, the PTA president was also present)
b. This meeting was set precisely to ask Saligumba to
negotiate the sale of the school lot and building to the City
of Manila
c. He then went to Coun. Mariano Magsalin, author of the
 LAW ON AGENCY, CHAPTER I
Based on the outline of Atty. CLV
ordinance, to present the project
d. He went to the Assessor’s Office for appraisal of the value
of the property
e. Rufino Manotok always renewed the former’s
authorization until the last was given, which was to
remain in force until May 14, 1968.
f. 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.
g. The latter office approved the report and so private
respondent went back to the City Mayor’s Office, which
thereafter indorsed the same to the Municipal Board for
appropriation.
h. 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.
i. Petitioner received the full payment of the purchase price,
but private respondent did not receive a single centavo as
commission.
13. Ancheta and Bisbal testified for private respondent
14. Filomeno Huelgas and Rufino Manotok, petitioner’s president,
testified for the petitioner
15. Huelgas:
a. He said that after he was inducted as the PTA Presidnet,
he followed up the sale with Coun. Magsalin
b. After it was approved by the Mayor, he came to know
Rufino Manotok
c. Manotok offered him a “gratification” in the amount of
P20,000 if the sale was expedited
d. These were confimed by Manotok
16. Bisbal: Huelgas was present but he never offered to help with the
sale. He said that Huelgas was aware that respondent was the
one negotiating the sale
17. CFI: ruled in favor of Saligumba. Ordered to pay petitioner
P20,540 (commission fees) + legal interest + P4000 (attorney’s
fees)
18. CA: affirmed the decision of the CFI
19. MR was denied. So petitioner filed a Review on Certiorari before
this Court
20. This Court issued a Minute Resolution ordering private
ATP&JV DIGESTS 16
I. Nature, Objective, & Kinds of Agencies
respondent to comment on said petition. – returned unserved with
the postmaster’s notation “unclaimed”
21. Court required petitioner to locate private respondent and to
inform the Court of his address within 10 days from notice.
(unsuccessful)
22. Case was dismissed on the ground that the issues raised in the
case at bar cannot be joined. Thus, it became final and executory
on May 3, 1989
(ang daming nangyari. But wait, there’s more)
23. Jan. 9, 1990—private respondent filed a motion to execute the
said judgment before the court of origin
24. Upon discovery of said development, petitioner verified with the
court of origin the circumstances by which private respondent
obtained knowledge of the resolution of this Court.
25. Sensing a fraudulent scheme employed by private respondent,
petitioner then instituted this instant Petition for Relief, on
August 30, 1990.
26. On September 13, 1990, said petition was amended to include, in
the alternative, its petition to re-file its Petition for Certiorari
ISSUE: WON private respondent is entitled to the 5% agent’s
commission
RULING: affirmed the decision of the CA
RATIO:
1. Petitioner’s contention: As a broker, Saligumba’s job is to bring
together the parties. If he does not succeed, then he will not be
entitled to a commission
2. At first, it would seem that Saligumba is not entitled because his
authority had already expired when the Deed of Sale was
executed.
3. However, it is actually within the coverage of the exception rather
than of the general rule. This is enunciated in the case of Prats vs.
Court of Appeals, which ruled in favor of claimant-agent, depite
the expiration of his authority, when a sale was finally
consummated. In the Prats case, the Court said that, while the
claimant-agent was not the efficient procuring cause in bringing
about the sale, he was awarded compensation for his services
 LAW ON AGENCY, CHAPTER I ATP&JV DIGESTS 17

Based on the outline of Atty. CLV I. Nature, Objective, & Kinds of Agencies

4. While in Prats, the agent was not even the efficient procuring
cause in bring about the sale, unlike in the case at bar, it was still
held therein that the agent was entitled to compensation. In the
case at bar, Saligumba was 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
5. In an earlier case,
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.
6. It is to be noted that the ordinace was approved on April 26, 1968
when Saligumba was still in force
7. Moreover, the approval of the Mayor came only three days after
the expiration of Saligumba’s authority
8. Also, from the records, the only party given a written authority by
petitioner to negotiate the sale was private respondent (unlike the
other case cited wherein the person knew that there was another
agent so, the commission would go to the person who finds a
purchaser and effects the sale)
9. Huelgas’ contribution happened only after the ordinance had
already been passed—when the buyer has already agreed to the
purchase and to the rpice
10. It was actually private respondent’s labor that had set in motion
the intervention of the third party
 LAW ON AGENCY, CHAPTER I
Based on the outline of Atty. CLV
INLAND REALTY INVESTMENT v. CA (Cristelle, C2020)
June 9, 1997 | HERMOSISIMA. | distinguished from brokerage
PETITIONER: INLAND REALTY INVESTMENT SERVICE, INC. and
ROMAN M. DE LOS REYES
RESPONDENTS: HON. COURT OF APPEALS, GREGORIO
ARANETA, INC. and J. ARMANDO EDUQUE
SUMMARY: Petitoner Inland Realty is a corporation in the real estate
business and brokerages. Gregorio Araneta (respondent) through its
Assistant general manager J. Armando Eduque, granted Inland Realty
authority to sell the total holdings of Gregorio Araneta Inc. in Architect’s
Bldg. Inc. at a first come first serve basis. At the time, the property was
valued at 98%/9,800 shares of stock at P1,500 per share for 30 days.
Stanford Microsystems counterproposed to Inland Realty to buy the
property at 9,800 shares at P1,000 per share. Total of P9.8M – P4.9M
payable in 5 years at 12% per annum interest until fully paid. Araneta
Inc. wrote to Inland Realty that the price offered by Stanford was too low.
Inland’s authority to sell was extended 3 times, 30 days each – last
extension was up to December 2, 1975. On July 8, 1977, Inland finally
sold the shares to Stanford at P13.5M. Inland sent a demand letter to
Araneta Inc. for the payment of their 5% broker’s commission – declined
by the respondent because respondent claimed that the authority to sell
had long expired. Petitioners were no longer privy to the consummation of
the sale. Both RTC and CA dismissed Inland’s petition because the
authority to sell expired on January 1, 1976 (30 days from Dec. 2, 1975).
Inland contends that as a broker it was already entitled to the
commission by merely introducing the seller to the prospective buyer who
ultimately purchased the shares. W/N Inland can claim the 5%
broker’s commission? NO. Inland Realty is not the efficient procuring
cause of the sale. While they had authority, Inland never exhibited any
substantial acts that proximately, and causatively led to the sale. Inland
merely submitted Stanford’s name as prospective buyer. By selling the
property after the authority to sell had expired, it shows that Inland was
non-participative in the crucial “events” that contributed to the
consummation of the sale. They did not participate in the negotiations,
drafting of the deed of sale, document processing, finalization of terms
and conditions etc. Petition denied.
DOCTRINE: Although buyer was introduced by broker to seller,
nonetheless broker was not entitled to commission even with the
ATP&JV DIGESTS 18
I. Nature, Objective, & Kinds of Agencies
consummation of the sale because the lapse of the period of more than
one (1) year and five (5) months between the expiration of broker’s
authority to sell and the consummation of the sale to the buyer, is
significant index of the broker’s non-participation in the really critical
events leading to the consummation of said sale. Broker was not the
efficient procuring cause in bringing about the sale and therefore not
entitled to the stipulated broker’s commission.
FACTS:
1. On Sept. 16, 1975, Gregorio Araneta, Inc. (D) granted Inland
Realty Investment Service, Inc. (P) a 30-day authority to
sell its 9,800 shares of stock in Architect’s Bldg., Inc. at the price
of P1,500/share.
2. P sent proposal letters to its prospective buyers, one of which was
Stanford Microsystems, Inc. Stanford offered to buy the shares at
P1,000/share.
3. P sent a letter to D to register Stanford as one of its prospective
buyers. D replied that the price offered by Stanford was too low
and suggested if P may make it Better.
4. P’s authority to sell was extended several times: 1) Oct. 2, 1975
for 30 days 2) October 28, 1975 for 30 days and 3) Dec. 2, 1975 for
30 days.
5. On July 8, 1977, the shares were finally sold to Stanford.
6. P then demanded payment of their 5% broker’s
commission from the proceeds of P13.5M or P675,000. D declined
to pay.
7. P filed a claim for unpaid agent’s commission for
brokering the sales transaction.
8. TC dismissed P’s complaint holding that after the
authority to sell expired 30 days from Dec. 2, 1975 or on Jan. 1,
1976, P abandoned the sales transaction and were no longer
privy to the consummation and documentation thereof.
9. P appealed. CA dismissed appeal holding that there was no longer
any agency after the last extension (Dec. 2).
10. P’s agency contract and authority to sell expired on Jan. 1, 1976
while the consummation of the sale to Stanford occurred more
than 1 year and 5 months after the said expiration (July 8, 1977).
ISSUE/s:
1. Whether or not Inland Realty Investment Service, Inc. was
instrumental in the final consummation of the sale to Stanford
 LAW ON AGENCY, CHAPTER I
Based on the outline of Atty. CLV
which was the same company name submitted to D as prospective
buyer - NO
2. Whether or not Inland Realty Investment Service, Inc. is
entitled to broker’s commission - NO
RULING: Petitioners were not the efficient procuring cause in bringing
about the sale in question on July 8, 1977 and are, therefore, not entitled
to the stipulated broker's commission of "5% on the total price."
WHEREFORE, the instant petition is HEREBY DISMISSED.
RATIO:
1. P insists that in the Letter dated Oct. 28, 1976 (Exhibit “L”),
Gregorio Araneta III, in behalf of Araneta, Inc. renewed P’s
authority to sell for another 30 days.
2. Court: P have conspicuously failed to attach a certified copy, or
even a machine copy, of the said letter. They also attempted to
mislead to mislead the Court by saying that the said letter was
marked Exhibit “L” when the actual letter marked as such is
dated Oct. 28, 1975, not 1976.
3. P claims that there is another Letter dated Nov. 16, 1976 and
marked Exhibit “M.”
4. Court: No probative value. It allegedly contained a listing of 4
prospective buyers which does not at all prove that the agency
contract and authority to sell was renewed after it expired on Jan.
1, 1976. Furthermore, it was signed by P de los Reyes, which
makes such document self-serving and therefore, has no
evidentiary value.
5. Where a party is not the efficient procuring cause in
bringing about a sale, he is not entitled to the stipulated
broker's commission.
6. From Sept. 16, 1975 to Jan. 1, 1976, when P’s authority to
sell was subsisting, if at all, P had nothing to show that
they actively served their principal’s interests, pursued to
sell the shares in accordance with the terms and
conditions, and perform substantial acts that
proximately and causatively led to the consummation of
the sale to Stanford of Araneta, Inc.’s shares in Architect’s.
7. The compensation that the principal agrees to pay to the agent is
part of the terms of the contract of agency upon which their minds
ATP&JV DIGESTS 19
I. Nature, Objective, & Kinds of Agencies
meet. Therefore, the extent and manner by which the agent would
be entitled to receive compensation or commission is based on the
terms of the contract.
8. Sometimes, the terms are not that clear, and decisions have had
to deal with the issue of when an agent has merited the right to
receive the compensation either stipulated or implied from the
terms of the contract.
9. The doctrine that may be derived from the various decisions on
the matter are anchored on the nature of the contract of agency as
a species of contracts of services in general. When the
rendering of service alone, and not the results, is the
primordial basis for which the compensation is given, then
the proof that services have been rendered should entitle
the agent to the compensation agreed upon.
10. On the other hand, if the nature of the service to be compensated
is understood by the results to be achieved, e.g., that a particular
contract with a third party is entered into in behalf of the
principal, then mere rendering of service without achievement of
the results agreed upon to be achieved would not entitle the agent
to the compensation agreed upon.
11. Thus, in Inland Realty v. Court of Appeals, 273 SCRA 70 (1997),
the Court held that — Although the ultimate buyer was
introduced by the agent to the principal during the term
of the agency, nevertheless, the lapse of the period of more
than one (1) year and five (5) months between the
expiration of petitioners’ authority to sell and the
consummation of the sale, cannot authorize compelling
the principal to pay the stipulated broker’s fee, since the
agent was not longer entitled thereto.
12. The Court takes into strong consideration that utter lack of
evidence of the agent showing any further involvement in the
negotiations between principal and buyer during that period and
in the subsequent processing of the documents pertinent to said
sale. (at p. 79)
13. Instant petition is HEREBY DISMISSED. Costs Against
petitioners
 LAW ON AGENCY, CHAPTER I
Based on the outline of Atty. CLV
MEDRANO v. CA (Clark, C2020)
February 18, 2005 | Callejo, Sr. J. | Procuring Cause
PETITIONER: Bienvenido R. Medrano and Ibaan Rural Bank
RESPONDENTS: Court of Appeals, Pacita G. Borbon, Josefina E.
Antonio and Estela A. Flor
SUMMARY: Bienvenido Medrano was the Vice-Chairman of Ibaan Rural
Bank. He asked Flor (a cousin), to look for a buyer of a foreclosed asset of
the bank (17-hectare mango plantation with 720 trees priced at P2.2M).
Dominador Lee, a Makati businessman was a client of respondent Pacita
Borbon, a licensed real estate broker. Borbon relayed to her business
associates and friends that she had a ready buyer for a mango orchard.
Flor then advised Borbon that her cousin-in-law owned a mango
plantation which was up for sale. She told Flor to confer with Medrano
and to give them a written authority to negotiate the sale of the property.
Medrano issued the Letter of Authority to Borbon and Antonio to
negotiate with any prospective buyer for the sale of the mango plantation.
He promised Borbon to pay a commission of 5% of the total purchase price
to be agreed upon by the buyer and seller. An ocular inspection was held
by Lee. Lee informed Antonio that he already purchased the property and
had made a down payment ofP1M. The remaining balance of P1.2M was
to be paid upon the approval of the incorporation papers of the
corporation he was organizing by the SEC. Since the sale of the property
was consummated, the respondents asked from the petitioners their
commission, or 5% of the purchase price. The petitioners refused to pay
and offered a measly sum of P5,000.00 each. Hence, the present action.
The issue is whether or not respondents are the procuring cause of the
sale. SC held that indeed they are. Evidence on record shows that the
respondents were instrumental in the sale of the property to Lee. Without
their intervention, no sale could have been consummated. They were the
ones who set the sale of the subject land in motion.
DOCTRINE: “Procuring cause” is meant to be the proximate cause. 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 accomplishment of prime objective of the
employment of the broker – producing a purchaser ready, willing and
able to buy real estate on the owner’s terms.
FACTS:
ATP&JV DIGESTS 20
I. Nature, Objective, & Kinds of Agencies
1. Bienvenido R. Medrano was the Vice-Chairman of Ibaan Rural
Bank, a bank owned by the Medrano family. In 1986, Mr.
Medrano asked Mrs. Estela Flor, a cousin-in-law, to look for a
buyer of a foreclosed asset of the bank, a 17-hectare mango
plantation priced at ₱2,200,000.00, located in Ibaan, Batangas.
2. Mr. Dominador Lee, a businessman from Makati City, was a
client of respondent Mrs. Pacita G. Borbon, a licensed real estate
broker. The two met through a previous transaction where Lee
responded to an ad in a newspaper put up by Borbon for an 8-
hectare property in Lubo, Batangas, planted with atis trees. Lee
expressed that he preferred a land with mango trees instead.
Borbon promised to get back to him as soon as she would be able
to find a property according to his specifications.
3. Borbon relayed to her business associates and friends that she
had a ready buyer for a mango orchard. Flor then advised her
that her cousin-in-law (Medrano) owned a mango plantation
which was up for sale. She told Flor to confer with Medrano and
to give them a written authority to negotiate the sale of the
property. Thus, on September 3, 1986, Medrano issued the Letter
of Authority.
4. Respondents Borbon and Antonio arranged for an ocular
inspection of the property together with Lee which never
materialized due to inclement weather; and the next time, no car
was available for the tripping to Batangas.
5. One day, Lee was on his way to Lipa City to inspect another
property, and decided to might as well take a look at the property
Borbon was offering. He asked for the exact address of the
property and the directions on how to reach the lot in Ibaan from
Lipa City. Lee was instructed to get in touch with Medrano’s
daughter and also an officer of the bank, Mrs. Teresa Ganzon,
regarding the property.
6. Josefina Antonio called Lee to inquire about the result of his
ocular inspection. Lee told her that the mango trees “looked sick”
so he was bringing an agriculturist to the property. Lee informed
her that he already purchased the property and had made a down
payment of ₱1,000,000.00. The remaining balance of
₱1,200,000.00 was to be paid upon the approval of the
incorporation papers of the corporation he was organizing by the
Securities and Exchange Commission.
7. A Deed of Sale was eventually executed on November 6, 1986
 LAW ON AGENCY, CHAPTER I
Based on the outline of Atty. CLV
between the bank, represented by its President/General Manager
Teresa M. Ganzon (as Vendor) and KGB Farms, Inc., represented
by Dominador Lee (as Vendee), for the purchase price of
₱1,200,000.00.
8. Since the sale of the property was consummated, Borbon and
Antonio asked from Medrano their commission, or 5% of the
purchase price. Medrano refused to pay and offered a measly sum
of ₱5,000.00 each. Hence, the filing of this petition.
9. Ibaan Rural Bank alleged that Medrano issued the letter of
authority in favor of all the respondents, upon the representation
of Flor that she had a prospective buyer. Medrano also denied
that the purchase price of the property was ₱2,200,000.00 and
alleged that the property only cost ₱1,200,000.00.
10. Petitioner (Ibaan Rural Bank) contended that the letter of
authority signed by Medrano was not binding or enforceable
against the bank because the latter had a personality separate
and distinct from that of Medrano. Medrano, on the other hand,
denied liability, considering that he was not the registered owner
of the property, but the bank.
11. RTC ruled in favor of Borbon and Antonio. Petitioners Medrano
and the Bank were ordered to pay jointly and severally, the 5%
broker’s commission to herein respondents.
a. The letter of authority was valid and binding as against
Medrano and the Ibaan Rural bank. Medrano signed the
said letter for and in behalf of the bank, and as owner of
the property, promising to pay the respondents a 5%
commission for their efforts in looking for a purchaser of
the property.
b. The sale of the property could not have been possible
without the representation and intervention of the
respondents. As such, they are entitled to the broker’s
commission of 5% of the selling price of ₱1,200,000.00 as
evidenced by the deed of sale.
12. Medrano died and was substituted by his heirs. Filed an MR but
was denied.
13. CA promulgated the assailed decision affirming the finding of the
trial court that the letter of authority was valid and binding.
Applying the principle of agency, the appellate court ruled that
Bienvenido Medrano constituted the respondents as his agents,
granting them authority to represent and act on behalf of the
ATP&JV DIGESTS 21
I. Nature, Objective, & Kinds of Agencies
former in the sale of the 17-hectare mango plantation.
14. The CA also ruled that the trial court did not err in finding that
the respondents were the procuring cause of the sale. Suffice it to
state that were it not for the respondents, Lee would not have
known that there was a mango orchard offered for sale.
ISSUE:
1. WoN THE COURT OF APPEALS ERRED WHEN IT FOUND
THE PRIVATE RESPONDENTS TO BE THE PROCURING
CAUSE OF THE SALE – NO
RULING: From all the foregoing, there can be no other conclusion than
the respondents are indeed the procuring cause of the sale. If not for the
respondents, Lee would not have known about the mango plantation
being sold by the petitioners. The sale was consummated. The bank had
profited from such transaction. It would certainly be iniquitous if the
respondents would not be rewarded their commission pursuant to the
letter of authority. WHEREFORE, the petition is DENIED due course.
The Decision of the Court of Appeals is AFFIRMED.
RATIO:
1. AGENCY RELATED: The records disclose that respondent
Pacita Borbon is a licensed real estate broker and respondents
Josefina Antonio and Estela A. Flor are her associates.
2. A broker is generally defined 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; he is strictly a middleman and for some
purposes the agent of both parties. A broker is one whose
occupation is to bring parties together, in matters of trade,
commerce or navigation.
3. “Procuring cause” is meant to be the proximate cause. 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 accomplishment of prime objective of the
employment of the broker – producing a purchaser ready, willing
and able to buy real estate on the owner’s terms.
a. A broker will be regarded as the “procuring cause”
of a sale, so as to be entitled to commission, if his
 LAW ON AGENCY, CHAPTER I
Based on the outline of Atty. CLV
efforts are the foundation on which the
negotiations resulting in a sale are begun. The
broker must be the efficient agent or the procuring
cause of the 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.
4. Evidence on record shows that the respondents were
instrumental in the sale of the property to Lee. Without their
intervention, no sale could have been consummated. They were
the ones who set the sale of the subject land in motion.
a. Upon being informed by Flor that Medrano was selling his
mango orchard, Borbon lost no time in informing Lee that
they had found a property according to his specifications.
An ocular inspection of the property together with Lee
was immediately planned.
b. While the letter-authority issued in favor of the
respondents was non-exclusive, no evidence was adduced
to show that there were other persons, aside from the
respondents, who informed Lee about the property for
sale.
c. Ms. Teresa Ganzon testified that there were no other
persons other than the respondents who inquired from
her about the sale of the property to Lee.
5. All these circumstances lead us to the inescapable conclusion that
the respondents were the procuring cause of the sale. When there
is a close, proximate and causal connection between the broker’s
efforts and the principal’s sale of his property, the broker is
entitled to a commission.
6. OTHER ISSUES: The petitioners insist that the respondents are
not entitled to any commission since they did not actually perform
any acts of “negotiation” as required in the letter-authority.
a. The clear intention is to reward the respondents for
procuring a buyer for the property. Before negotiating a
sale, a broker must first and foremost bring in a
prospective buyer. It has been held that a broker earns his
pay merely by bringing the buyer and the seller
together, even if no sale is eventually made. The essential
feature of a broker’s conventional employment is merely
to procure a purchaser for a property ready, able, and
ATP&JV DIGESTS 22
I. Nature, Objective, & Kinds of Agencies
willing to buy at the price and on the terms mutually
agreed upon by the owner and the purchaser. And it is not
a prerequisite to the right to compensation that the broker
conduct the negotiations between the parties after they
have been brought into contact with each other through his
efforts.
7. In the case at bar, the role of the respondents in the transaction is
undisputed. Whether or not they participated in the negotiations
of the sale is of no moment. Armed with an authority to procure a
purchaser and with a license to act as broker, we see no reason
why the respondents cannot recover compensation for their efforts
when, in fact, they are the procuring cause of the sale.
8. Medrano’s obligation to pay the respondents commission for their
labor and effort in finding a purchaser or a buyer for the
described parcel of land is unquestionable. In the absence of
fraud, irregularity or illegality in its execution, such letter-
authority serves as a contract, and is considered as the law
between the parties. As such, Medrano cannot renege on the
promise to pay commission on the excuse that he is not the
registered owner of the property. The evidence shows that he
comported himself to be the owner of the property.
9. While it may be true that technically the Ibaan Rural Bank did
not authorize Bienvenido R. Medrano to sell the land under
litigation or that the latter was no longer an officer of the said
bank, still, these circumstances do not convince this Court fully
well to absolve the bank.
 LAW ON AGENCY, CHAPTER I ATP&JV DIGESTS 23

Based on the outline of Atty. CLV I. Nature, Objective, & Kinds of Agencies

Ticong v. Malim, 819 SCRA 116 (2017)

DATE | PONENTE | TOPIC
PETITIONER:
RESPONDENTS:

SUMMARY:

DOCTRINE:

FACTS:
A

ISSUE/S:
A

RULING:
A

RATIO:
A