Danon v. Brimo & Co. (September 12, 1921) DOCTRINE: A broker is never entitled to commissions for unsuccessful efforts.

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. Usually the broker is entitled to a fair and reasonable opportunity to perform his obligation, subject of course to the right of the seller to sell independently. But having been granted him, the right of the principal to terminate his 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. NATURE: appeal from trial court decision PONENTE: Johnson, J. FACTS: In August 1918, Brimo talked to Danon and informed him that he wanted to sell his company (Holland American Oil Co.) for 1.2 Million Pesos. He promised Danon a 5 percent commission should Danon be able to find a buyer willing to buy at the stated price. (The trial court also found that Danon was at the very least made aware by Brimo that he was not the only agent looking for a buyer for the company. Another agent, Sellner, was also instructed by Brimo to look for a buyer for the company.) Then Brimo found a buyer, a Mr. Prieto who was president of Sta Ana Oil Mill, willing to buy for 1.2 Million. But before his buyer could talk with Brimo and close a deal, Sellner came in and presented the offer of the buyer he found, who was willing to buy the company at 1.3 Million. Sellners buyer eventually consummated the sale with Brimo for 1.3 Million. Danon filed a case for collection of his commission at the sum of 60,000 pesos as reasonable value of his services as broker. Danons side: He was instructed by Brimo to find a buyer for company for 1.2 Million; he was promised 5% commission in case sale was consummated; he did find a buyer willing to buy; but defendant company without justifiable reason and without having previously notified Danon if its desistance or variation in price and terms.

Defendant company: general denial. Trial court ruled that Danon was entitled to his commission. Brimo appealed. ISSUES: Whether or not Danon was entitled to his commission. HELD: No. RATIO/RULING: Under the proofs in this case, the most that can be said as to what the plaintiff had accomplished is, that he had 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 property in question at the fixed price of P1,200,000. 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. The plaintiff 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 attitude of the defendant the plaintiff endeavored to procure another purchaser and found a Mr. Leas, who delivered to the plaintiff a letter addressed to Mr. Brimo, offering to buy the factory in question at P1,200,000. the offer being good for twentyfour; 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. It will be noted that, according to the plaintiff's own testimony, the defendant agreed and promised to pay him a commission of 5 per cent provided he (the plaintiff) could sell the factory at P1,200.000. It will also be noted that all that the plaintiff had accomplished by way of performance of his contract was, that he had found a person who might have bought the factory in question had not the defendant sold it to someone else.

Under these circumstances it is difficult to see how the plaintiff can recover anything in the premises. The plaintiff's action is not one for damages for breach of contract; it is an action to recover "the reasonable value" of services rendered. What benefit did the plaintiff, by his "services," bestow upon the defendant to entitle him to recover from the latter the sum of P60,000? 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." 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. (Wylie v. Marine National Bank) In Sibbald v. Bethlehem Iron Co., New York CA said: In all the cases, under all and varying forms of expression, the fundamental and correct doctrine, is, thatthe 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. It follows, as a necessary deduction from the established rule, that 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. The broker may devote his time and labor, and expend his money with ever so much of devotion to the interest of his employer, and yet if he fails, if without effecting an agreement or accomplishing a bargain, he abandons the effort, or his authority is fairly and in good faith terminated, he gains no right to commissions. He loses the labor and effort which was staked upon success. And in such event it matters not that after his failure, and the termination of his agency, what he has done proves of use and benefit to the

principal. In a multitude of cases that must necessarily result. He may have introduced to each other parties who otherwise would have never met; he may have created impressions, which under later and more favorable circumstances naturally lead to and materially assist in the consummation of a sale; he may have planted the very seed from which others reap the harvest; but all that gives him no claim. It was part of his risk that failing himself, not successful in fulfilling his obligation, others might be left to some extent to avail themselves of the fruit of his labors. xxx in such a case 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, and consenting 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. And that upon the familiar principle that no one can avail himself of the nonperformance of a condition precedent, who has himself occasioned its nonperformance. But this limitation is not even an exception to the general rule affecting the broker's right for it goes on the ground that the broker has done his duty, that he has brought buyer and seller to an agreement, but that the contract is not consummated and fails though the after-fault of the seller. The cases are uniform in this respect. 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. Usually the broker is entitled to a fair and reasonable opportunity to perform his obligation, subject of course to the right of the seller to sell independently. But having been granted him, the right of the principal to terminate his 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. Thus, if in the midst of negotiations instituted by the broker, and which were plainly and evidently approaching success, the seller should revoke the authority of the broker, with the view of concluding the bargain without his aid, and avoiding the payment of commissionabout to be earned, it might be well said that the due performance his obligation by the broker was purposely prevented by the principal. But if the latter 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. 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. It is clear from the foregoing authorities that, although the present plaintiff could probably have effected the sale of the defendant's factory 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 the sale in question. It must be borne in mind that no definite period was fixed by the defendant within which the plaintiff might effect the sale of its factory. Nor was the plaintiff given by the defendant the exclusive agency of such sale.

Therefore, the plaintiff cannot complaint of the defendant's conduct in selling the property through another agent before the plaintiff's efforts were crowned with success. "One who has employed a broker can himself sell the property to a purchaser whom he has procured, without any aid from the broker." DISPOSITION: decision appealed set aside; defendant company absolved from liability; costs against Danon VOTE: en banc, Araullo, Street, Avancea and Villamor concur CONCURRING/DISSENTING OPINION: none

Compania General de Tobacos de Filipinas v. Diaba (October 6, 1911) DOCTRINE: A third person dealing with an agent has a perfect right to go on believing that agent continues in such capacity until he is given notice by principal that agent is no longer representing him. NATURE: Petition for review on certiorari PONENTE: Johnson, J. FACTS: Compania General commenced an action against Diabu to recover sum of 442 pesos for goods sold and delivered by Compania, through its agent (Gutierrez) to Diabu from Jan to April 1909. Defendant: admitted purchasing from Gutierrez the goods from January to March 15 amounting to 692 pesos. But he said he also sold goods to Gutierrez amounting to 1,308.80. Therefore, there was still a balance due him, 616.80 pesos. Trial judge found plaintiff was indebted to defendant for 616.80 and rendered judgment accordingly. Plaintiff appealed. ISSUES: WON plaintiff was liable to pay goods bought by Gutierrez, its agent.

HELD: Yes. RATIO/RULING: Records showed that Gutierrez has, for several years, been engaged in transaction of selling goods and buying abaca from Diabu. Compania attempted to show that it had suspended Gutierrez as its agent. But there is not convincing proof in the record that the orders given by plaintiff to its agent Gutierrez in suspending him was ever communicated to Diabu. Defendant had a perfect right to believe, until otherwise informed, that the agent of the plaintiff, in his purchase of abaca and other effects, was still representing the plaintiff in said transactions. Gutierrez testified that abaca he purchased from Diabu was purchased by him as agent of plaintiff and that said abaca was actually delivered to plaintiff. The plaintiff, it appears, was perfectly willing to ratify the acts of its agent in selling goods to the defendant, but seemed to be unwilling to ratify said agents acts in purchasing goods from the defendant. DISPOSITION: judgment affirmed VOTE: en banc. Torres, Mapa, Carson, Moreland concur. CONCURRING/DISSENTING OPINION: none

FACTS: Concepcion and Gerundia Rallos were sisters and registered coowners of a parcel of land covered by Transfer Certificate of Title No. 11116 of the Registry of Cebu. y They executed a special power of attorney in favor of their brother, Simeon Rallos, authorizing him to sell such land for and in their behalf. y After Concepcion died, Simeon Rallos sold the undivided shares of his sisters Concepcion and Gerundia to Felix Go Chan & Sons Realty Corporation for the sum of P10,686.90. New TCTs were issued to the latter. y Petitioner Ramon Rallos, administrator of the Intestate Estate of Concepcion filed a complaint praying (1) that the sale of the undivided share of the deceased Concepcion Rallos in lot 5983 be unenforceable, and said share be reconveyed to her estate; (2) 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 and (3) that plaintiff be indemnified by way of attorney's fees and payment of costs of suit. CFI: [Plaintiffs Complaint] y Sale of land was null and void insofar as the one-half proindiviso share of Concepcion Rallos y Ordered the issuance of new TCTs to respondent corporation and the estate of Concepcion in the proportion of share each pro-indiviso and the payment of attorneys fees and cost of litigation [Respondent filed cross claim against Simon Rallos(*Simon and Gerundia died during pendency of case)] y Juan T. Borromeo, administrator of the Estate of Simeon Rallos was ordered to pay defendant the price of the share of the land (P5,343.45) plus attorneys fees [Borromeo filed a third party complaint against Josefina Rallos, special administratrix of the Estate of Gerundia] y Dismissed without prejudice to filing either a complaint against the regular administrator of the Estate of Gerundia

Rallos v. Felix Go Chan (January 31, 1978) DOCTRINE: Agency is extinguished by death of the principal. The exception to this rule is when the agency is coupled with interest. When revocation is because of death of principal, extinguishment is instantaneous, by operation of law, without need for notification to parties concerned. NATURE: appeal of CA decision affirming validity of sale PONENTE: Muoz-Palama

Rallos or a claim in the Intestate-Estate of Cerundia Rallos, covering the same subject-matter CA: CFI Decision reversed, upheld the sale of Concepcions share. MR: denied. ISSUES: 1) WON sale was valid although it was executed after the death of the principal, Concepcion. 2) WON sale fell within the exception to the general rule that death extinguishes the authority of the agent 3) WON agents knowledge of the principals death is a material factor. 4) WON petitioner must suffer the consequence of failing to annotate a notice of death in the title (thus there was good faith on the part of the Respondent vendee) 5) WON good faith on the part of the respondent in this case should be treated parallel to that of an innocent purchaser for a value of a land. HELD/RATIO: Relationship of Agency (concept arising from principles under Art 13171 and 14032)- one party, caged the principal (mandante), authorizes another, called the agent (mandatario), to act for and in his behalf in transactions with third persons. -derivative in nature, power emanating from principal -agents acts are acts of the principal y Essential Elements:

(1) there is consent, express or implied of the parties to

establish the relationship;

(2) the object is the execution of a juridical act in relation to a

third person;

(3) the agents acts as a representative and not for himself,

and

(4) the agent acts within the scope of his authority.

y Extinguishment o Generally: among others3, By the death, civil interdiction, insanity or insolvency of the principal or of the agent - death of the principal effects instantaneous and absolute revocation of the authority of the agent o Exceptions:  (Art. 1930) 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.  (Art. 1931) agent acted without knowledge of the pricipals death and that the third person was in good faith (both these reqs should be present)

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. A contract entered into in the name of another by one who has no authority or the 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, before it is revoked by the other contracting party. 2 The following contracts are unenforceable, unless they are justified: (1) Those entered into in the name of another person by one who hi - been given no authority or legal representation or who has acted beyond his powers; ...

IN THE CASE AT BAR: 1) Sale was void. y 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 (Art. 1317 of the Civil Code). y Simons authority as agent was extinguished upon Consolacions death 2) The sale did not fall under the exceptions to the general rule that death ipso jure extinguishes the authority of the agent o Art. 1930 inapplicable: SPA in favor of Simon Rallos was not coupled with interest
3

See Art. 1919

Art. 1931 inapplicable:  Simon Rallos knew (as can be inferred from his pleadings) of principal Concepcions death  For Art 1931 to apply, both requirements must be present

DISPOSITION: CA Decision reversed, CFI decision affirmed. Sale was null and void. VOTE: 1st Division. A, B, C, D concur CONCURRING/DISSENTING OPINION: none

3) Yes, agents knowledge of principals death is material. Respondent asserts that: there is no provision in the Code which provides that whatever is done by an agent having knowledge of the death of his principal is void even with respect to third persons who may have contracted with him in good faith and without knowledge of the death of the principal Court says: this contention ignored the ignores the existence of the general rule enunciated in Article 1919 that the death of the principal extinguishes the agency. Article 1931, being an exception to the general rule, is to be strictly construed. 4) NO, the Civil Code does not impose a duty upon the heirs to notify the agent or others of the death of the principal. y If revocation was by the act of the principal: a general power which does not specify the persons to whom represents' on should be made, it is the general opinion that all acts, executed with third persons who contracted in good faith, Without knowledge of the revocation, are valid. y BUT, if revocation was due to death of the principal: extinguishment, by operation of law, is instantaneous without the need for notification to the parties concerned. 5) No. y Laws on agency, the terms of which are clear and unmistakable leaving no room for an interpretation contrary to its tenor, should apply, the law provides that death of the principal ipso jure extinguishes the authority of the agent to sell rendering the sale to a third person in good faith unenforceable unless at the agent had no knowledge of the principals death at that time (exception under Art. 1931)