Art. 1909.

The agent is responsible not only for fraud, but also for negligence, which shall be judged with more or
less rigor by the courts, according to whether the agency was or was not for a compensation. (1726)

MANUEL B. TAN, GREGG M. TECSON and

ALEXANDER SALDAA, vs.
EDUARDO R.
GULLAS and NORMA S. GULLAS,
G.R. No. 143978 December 3, 2002
Facts: Respondents, were the registered owners of a parcel of land, they executed aspecial power of
attorney authorizing petitioners Tan, a licensed real estate broker, and hisassociates Tecson and Saldaa,
to negotiate for the sale of the land, at a commission of 3% of thegross price. Tan contacted the Sisters of
Mary of Banneaux, Inc. (hereafter, Sisters of Mary), areligious organization interested in acquiring a
property. The Sisters, who had already seen andinspected the land, found the same suitable for their
purpose and expressed their desire to buy it.
However, they requested that the selling price be reduced. Respondents agreed to sell the property to the
Sisters of Mary. Petitioners went to see respondents who refused to pay the brokers fee and alleged that
another group of agents was responsible for the sale of land to the Sisters of Mary. Petitioners filed a
complaint against the defendants for recovery of their brokers fee. They alleged that they were the
efficient procuring cause in bringing about the sale of the, but that their efforts in consummating the sale
were frustrated by the respondents who, in evident bad faith, malice and in order to evade payment of
brokers fee, dealt directly with the buyer whom petitioners introduced to them.
Issues: (1) Whether or not the petitioners are entitled to the brokerage commission.(2) An agent
distinguished from a broker.
Rulings:
(1) The records show that petitioner Tan is a licensed real estate broker, and other petitioners his
associates. "Broker" as "one who is engaged, for others, on a commission, negotiating contracts
relative to property with the custody of which he has no concern; the negotiator between other parties,
never acting in his own name but in the name of those who employed him. x x x a broker is one whose
occupation is to bring the parties together, in matters of trade, commerce or navigation." The
petitioners were responsible for the introduction of the representatives of the Sisters of Mary to
respondent.(2) There was no dispute as to the role that petitioners played in the transaction. "An agent
receives a commission upon the successful conclusion of a sale. On the other hand, a broker earns his
pay merely by bringing the buyer and the seller together, even if no sale is eventually made." Clearly,
therefore, petitioners, as brokers, should be entitled to the commission whether or not the sale of the
property subject matter of the contract was concluded through their efforts.
PHILIPPINE HEALTH-CARE
JANUARY 28, 2008

PROVIDERS,

INC.

V.

ESTRADA

(2008)

G.R.

NO.

171052

Lessons Applicable: Insurance Broker (Insurance)

FACTS: Philippine Health-Care Providers, Inc. (Maxicare) formally appointed Estrada as its General Agent
evidenced by a letter-agreement dated February 16, 1991 granting him a commission equivalent to: 15 to
18% from individual, family, group accounts 2.5 to 10% on tailored fit plans 10% on standard plans of
commissionable amount on corporate accounts
Maxicare had a "franchising system" in dealing with its agents whereby an agent had to first secure
permission from to list a prospective company as client MERALCO account was included as corporate
accounts applied by Estrada. Estrada submitted proposals and made representations to the officers of
MERALCO regarding the MAXICARE Plan but MERALCO directly negotiated with MAXICARE from December
1, 1991 to November 30, 1992 and was renewed twice for a term of 3 years each March 24, 1992: Estrada
through counsel demanded his commission for the MERALCO account and 9 other accounts but it was

denied by MAXICARE because he was not given a go signal to intervene in the negotiations for the terms
and conditions
RTC: Maxicare liable for breach of contract and ordered it to pay Estrada actual damages in the amount
equivalent to 10% of P20,169,335 representing her commission for Meralco
CA: Affirms in toto
ISSUE: W/N Estrada should be paid his commission for the Maxicare Plans subscribed by Meralco
HELD: YES. petition is DENIED
Both courts were one in the conclusion that Maxicare successfully landed the Meralco account for the sale
of healthcare plans only by virtue of Estradas involvement and participation in the negotiations Maxicares
contention that Estrada may only claim commissions from membership dues which she has collected and
remitted to Maxicare as expressly provided for in the letter-agreement does not convince us. It is readily
apparent that Maxicare is attempting to evade payment of the commission which rightfully belongs to
Estrada as the broker who brought the parties together.
The only reason Estrada was not able to participate in the collection and remittance of premium dues to
Maxicare was because she was prevented from doing so by the acts of Maxicare, its officers, and
employees.
Agent vs. Broker:
agent receives a commission upon the successful conclusion of a sale
broker earns his pay merely by bringing the buyer and the seller together, even if no sale is eventually
made
"procuring cause" in describing a brokers activity cause originating a series of events which, without break
in their continuity, result in the accomplishment
efforts must have been the foundation on which the negotiations resulting in a sale began
Even a cursory reading of the Complaint and all the pleadings filed thereafter before the RTC, CA, and this
Court, readily show that Estrada does not concede, at any point, that her negotiations with Meralco failed
-Counsel's contention is wrong
Estrada is entitled to 10% of the total amount of premiums paid by Meralco to Maxicare as of May 1996
(including succeeding renewals)
SANCHEZ VS. MEDICARD PHIL. INC.
FACTS:
Sometime in 1987 Medicard Inc. appointed petitioner Sanchez as its special corporate agent and
they gave him a commission based on the "cash brought in." In 1988, through petitioner's efforts,
Medicard and Unilab executed a Health Care Program Contract. Unilab paid Medicard P4,148,005.00
representing the premium for one (1) year. Medicard then handed petitioner 18% of said amount or
P746,640.90 representing his commission. Again, through petitioner's initiative, the agency contract
between Medicard and Unilab was renewed for another year. Prior to the expiration of the renewed
contract, Medicard proposed an increase of the premium which Unilab rejected "for the reason that it was
too high,". In a letter dated October 3, 1990, Unilab confirmed its decision not to renew the health
program. Meanwhile, in order not to prejudice its personnel by the termination of their health insurance,
Unilab negotiated with Dr. Montoya and other officers of Medicard, to discuss new ways in order to
continue the insurance coverage. Under the new scheme, Unilab shall pay Medicard only the amount
corresponding to the actual hospitalization expenses incurred by each personnel plus 15% service fee.
Medicard did not give petitioner any commission under the new scheme. Aggrieved, Petitioner demanded
from Medicard payment of P338,000.00 as his commission plus damages, but the latter refused to heed his
demand.
ISSUE:
whether or not the contract of agency has been revoked by Medicard, hence, petitioner is not entitled to a
commission.
HELD:
Yes the Contract of Agency has been revoked, thus the petitioner is not entitled to any commission. It is
dictum that in order for an agent to be entitled to a commission, he must be the procuring cause of the
sale, which simply means that the measures employed by him and the efforts he exerted must result in a
sale. Based on the facts, it may be recalled that through petitioner's efforts, Medicard was able to enter
into a Contract with Unilab, two times, However before the expiration of the renewed contract, Unilab
rejected the proposal. Medicard then requested petitioner to reduce his commission should the contract be

renewed on its third year, but he was obstinate. It is clear that since petitioner refused to reduce his
commission, Medicard directly negotiated with Unilab, thus revoking its agency contract with petitioner.
Such revocation is authorized by Article 1924 of the Civil Code which provides: "The agency is revoked if
the principal directly manages the business entrusted to the agent, dealing directly with third persons."
Moreover, as found by the lower courts, petitioner did not render services to Medicard, his principal, to
entitle him to a commission. There is no indication from the records that he exerted any effort in order that
Unilab and Medicard, after the expiration of the Health Care Program Contract, can renew it for the third
time. In fact, his refusal to reduce his commission constrained Medicard to negotiate directly with Unilab.
We find no reason in law or in equity to rule that he is entitled to a commission.
INFANTE VS. CUNANAN G.R L- 5180 AUGUST 31, 1953
Bautista Angelo, J:
Facts: Infante was the owner of the land with a house built on it. Cunanan and Mijares were contracted to
sell the property from which they would receive commission. Noche agreed to purchase the lot but Infante
informed C & M about her change of mind to sell the lot and had them sign a document stating that their
authority to sell was already cancelled. Subsequently, Infante sold the lot & house to Noche. Defendants
herein demanded for their commission. RTC ordered Infante to pay commission. CA affirmed.
Issue: Whether or not petitioner was duty bound to pay commission notwithstanding that authority to sell
has been cancelled.
Ruling: A principal may withdraw the authority given to an agent at will. But respondents agreed to cancel
the authority given to them upon assurance by petitioner that should property be sold to Noche, they
would be given commission.
That petitioner had changed her mind even if respondents had found a buyer who was willing to close the
deal, is a matter that would give rise to a legal consequence if respondents agree to call off to transaction
in deference to the request of the petitioner. Petitioner took advantage of the services of respondents, but
believing that she could evade payment of their commission, she made use of a ruse by inducing them to
sign the deed of cancellation. This act of subversion cannot be sanctioned and cannot serve as basis for
petitioner to escape payment of the commissions agreed upon.
LIM v. SABAN G.R. No. 163720; December 16, 2004
Ponente: J. Tinga
FACTS: Under an Agency Agreement, Ybaez authorized Saban to look for a buyer of the lot for Two
Hundred Thousand Pesos (P200,000.00) and to mark up the selling price to include the amounts needed
for payment of taxes, transfer of title and other expenses incident to the sale, as well as Saban's
commission for the sale.
Through Saban's efforts, Ybaez and his wife were able to sell the lot to the petitioner Genevieve Lim (Lim)
and the spouses Benjamin and Lourdes Lim (the Spouses Lim) on March 10, 1994. The price of the lot as
indicated in the Deed of Absolute Sale is Two Hundred Thousand Pesos (P200,000.00). It appears,
however, that the vendees agreed to purchase the lot at the price of Six Hundred Thousand Pesos
(P600,000.00), inclusive of taxes and other incidental expenses of the sale.
After the sale, Lim remitted to Saban the amounts of P113,257 for payment of taxes due on the transaction
as well as P50,000.00 as broker's commission. Lim also issued in the name of Saban four postdated checks
in the aggregate amount of P236,743.00.
Subsequently, Ybaez sent a letter dated June 10, 1994 addressed to Lim. In the letter Ybaez asked Lim
to cancel all the checks issued by her in Saban's favor and to "extend another partial payment" for the lot
in his (Ybaez's) favor.
After the four checks in his favor were dishonored upon presentment, Saban filed a complaint for collection
of sum of money and damages against Ybaez and Lim Saban alleged that Ybaez told Lim that he
(Saban) was not entitled to any commission for the sale since he concealed the actual selling price of the

lot from Ybaez and because he was not a licensed real estate broker. Ybaez was able to convince Lim to
cancel all four checks.
In his Answer, Ybaez claimed that Saban was not entitled to any commission because he concealed the
actual selling price from him and because he was not a licensed real estate broker.
ISSUE: Whether Saban is entitled to receive his commission from the sale
HELD: Yes, Saban is entitled to receive his commission from the sale. The Supreme Court held that to
deprive Saban of his commission subsequent to the sale which was consummated through his efforts
would be a breach of his contract of agency with Ybaez which expressly states that Saban would be
entitled to any excess in the purchase price after deducting the P200,000.00 due to Ybaez and the
transfer taxes and other incidental expenses of the sale.
Moreover, the Court has already decided in earlier cases that would be in the height of injustice to
permit the principal to terminate the contract of agency to the prejudice of the broker when he had already
reaped the benefits of the broker's efforts.
PRATS V. COURT OF APPEALS G.R. NO. L-39822, JANUARY 31, 1978, FERNANDEZ, J.
Facts: In 1968, Antonio Prats, under the name of Philippine Real Estate Exchange instituted against
Alfonso Doronilla and PNB a case to recover a sum of money and damages. Doronilla had for sometime
tried to sell his 300 ha land and he had designated several agents for that purpose at one time. He offered
the property to the Social Security System but was unable to consummate the sale. Subsequently he gave
a written authority in writing to Prats to negotiate the sale of the property. Such authorization was
published by Prats in the Manila Times. The parties agreed that Prats will be entitled to 10% commission
and if he will be able to sell it over its price, the excess shall be credited to the latter plus his commission.
Thereafter, Prats negotiated the land to the SSS. SSS invited Doronilla for a conference but the latter
declined and instead instructed that the former should deal with Prats directly. Doronilla had received the
full payment from SSS. When Prats demanded from him his professional fees as real estate broker,
Doronilla refused to pay. Doronilla alleged that Prats had no right to demand the payment not rendered
according to their agreement and that the authority extended to Prats had expired prior to the closing of
the sale..
Issue: Whether petitioner was the efficient procuring cause in bringing about the sale of respondents land
to the SSS.
Ruling: The Supreme Court ruled that Prats was not the efficient procuring cause of the sale. It was not
categorical that it was through Prats efforts that meeting with the SSS official to close the sale took place.
The court concluded that the meeting took place independently because the SSS had manifested
disinterest in Prats intervention. However, in equity, the court noted that Prats had diligently taken steps to
bring back together Doronilla and SSS. Prats efforts somehow were instrumental in bringing them together
again and finally consummating the sale although such finalization was after the expiration of Prats
extended exclusive authority. Doronilla was ordered to pay Prats for his efforts and assistance in the
transaction