Domingo v.
Domingo Article 1891 of the New Civil Code amends Article
Petitioner Vicente Domingo, now deceased,
represented by his heir.
Vicente granted Gregorio Domingo, a real estate
broker, the exclusive agency to sell of Piedad
Estate with a commission of 5% on the total
price.
Gregorio authorized Purisima to look for a buyer,
promising him one-half of the 5% commission.
Purisima introduced de Leon to Gregorio as a
prospective buyer.
CA found the exclusive agency contract is genuine
that Amparo Diaz, vendee, wife of Oscar de Leon
the sale to Amparo of Vicente’s property is
practically a sale to Oscar de Leon, since husband
and wife have common or identical interests; that
Gregorio and Teofilo Purisima were the efficient
cause in the consummation of the sale.
Issue: Whether the failure of Gregorio to disclose
to Vicente the P1000 payment by Oscar as a gift or
“propina” for having persuaded Vicente to reduce
the purchase price from P2.00 to P1.20/ sq. meter
constitutes fraud as to cause a forfeiture of his
commission on the sale price.
Ruling: The duties and liabilities of a broker to his
employer are essentially those which an agent owes
to his principal.
Art. 1891. Every agent is bound to render
an account of his transactions and to
deliver to the principal whatever he may
have received by virtue of the agency, even
though it may not be owing to the
principal.
Every stipulation exempting the agent
from the obligation to render an account
shall be void.
Art. 1909. The agent is responsible not
only for fraud but also for negligence,
which shall be judged with more less rigor
by the courts, according to whether the
agency was or was not for a compensation.
17 of the old Spanish Civil Code which provides
that:
Art. 1720. Every agent is bound to give an
account of his transaction and to pay to the
principal whatever he may have received
by virtue of the agency, even though what
he has received is not due to the principal.
The modification in Article 1891 in changing the
phrase “to pay” to “to deliver” is more
comprehensive than the former.
Paragraph 2 of Article 1891 is designed to stress the
highest loyalty that is required to an agent –
condemning as void any stipulation exempting the
agent from the duty and liability imposed on him in
paragraph 1.
The utmost good faith, fidelity, honesty, candor
and fairness on the part of the agent, the real estate
broker in this case, to his principal, the vendor.
The law imposes upon the agent the absolute
obligation to make a full disclosure or complete
account to his principal of all his transactions
and other material facts relevant to the agency,
so much so that the law as amended does not
countenance any stipulation exempting the agent
from such an obligation and considers such an
exemption as void.
The duty of an agent is likened to that of a trustee.
This is not a technical or arbitrary rule but a rule
founded on the highest and truest principle of
morality as well as of the strictest justice.
An agent who takes a secret profit in the nature of
a bonus, gratuity or personal benefit from the
vendee, without revealing the same to his principal,
the vendor, is guilty of a breach of his loyalty to the
principal and forfeits his right to collect the
commission from his principal, even if the principal
does not suffer any injury by reason of such breach
of fidelity, or that he obtained better results or that
the agency is a gratuitous one, or that usage or
custom allows it; because the rule is to prevent the
possibility of any wrong, not to remedy or repair an
actual damage.
45
By taking such profit or bonus or gift or propina
from the vendee, the agent thereby assumes a
position wholly inconsistent with that of being an
agent for his principal, who has a right to treat him,
insofar as his commission is concerned, as if no
agency had existed. The fact that the principal may
have been benefited by the valuable services of the
said agent does not exculpate the agent who has
only himself to blame for such a result by reason of
his treachery or perfidy.
Because of his responsibility under the aforecited
article 1720, an agent is likewise liable for estafa
for failure to deliver to his principal the total
amount collected by him in behalf of his principal
and cannot retain the commission pertaining to him
by subtracting the same from his collections.
A lawyer is equally liable under said Article 1720 if
he fails to deliver to his client all the money and
property received by him for his client despite his
attorney's lien.
In this case, Gregorio as the broker, received a gift
for P1000 from prospective buyer Oscar de leon,
without knowledge and consent of his principal
Vicente. His acceptance of substantial monetary
gift corrupted his duty to serve the interests only of
his principal and undermined his loyalty to the
principal.
The Article 1891 of the CC will not apply if the
agent or broker acted only as a middleman with the
task to merely bringing together the vendor and
vendee. Gregorio here was not a middleman but an
agent of the petitioner. Gregorio must forfeit his
right to the commission and must return the part
of the commission he received from his principal.
Purisima, the sub-agent, can only recover from
Gregorio his one-half share of whatever amount
Gregorio received and not with Vicente.
Murao v. People
Murao is the sole owner of Lorna Murao Industrial
Commercial Enterprise (LMICE), engaged in
selling and refilling fire extinguishers.
Murao and Federico entered into a dealership
agreement for the marketing, distribution, and
refilling of fire extinguishers within Puerto Princesa
City. In their agreement, Federico could obtain
50% discount from LMICE provided he sets up his
own sales force, acquires and issues his own sales
invoice. Failure to comply, Federico was still
allowed to act as part-time sales agent for LMICE.
Federico complained that he was entitled to a
commission equivalent to 50% of the gross sales he
had made on behalf of LMICE but Murao
maintained its only for 30%.
In June 1994, Federico filed an estafa against
petitioners for refusing to pay Federico his
commission.
Issue: Whether or not Federico, respondent is
entitled to a 50% commission without evidence to
support such claim?
Ruling: The findings of the RTC and CA that
petitioners committed estafa rest on the erroneous
belief that private complainant already owned 50%
of the amount paid by the City government of
Puerto Princessa to LMICE.
His right to a commission does not make private
complainant Federico a joint owner of the
money paid to LMICE by the Puerto Princessa
City Government but merely establishes the
relation of agent and principal.
Federico never had the opportunity to operate as a
dealer for LMICE, but he was allowed to act as a
sales agent. He can negotiate for and on behalf of
LMICE for the refill and delivery of fire
extinguishers.
When negotiations for the sale or refill were
successful, Federico prepared the document,
purchase orders, invoice, and receipts in the name
of LMICE.
All profits made and any advantage gained by an
agent in the execution of his agency should belong
to the principal. Federico was merely collecting
what rightfully belonged to LMICE.
Since LMICE is the lawful owner of the entire
proceeds of check payment then the petitioner is
under no obligation to return the money to
46
Federico. There was no fiduciary relationship
between the complainant and the accused. A
fiduciary relationship is essential element of estafa
by misappropriation or conversion, without which
the accused could not have committed estafa.
RTC used the case of Manahan v. CA. However, SC
said that although a contract may not be fiduciary
in character, the lessee clearly had the civil
obligation to return the truck to the lessor at the
end of lease period otherwise may constitute estafa.
In contrast, this case concerns an agency contract
whereby the principal already received a payment
from the client but refused to give the sales agent
his commission. Federico could not claim
ownership over the said payment.
To misappropriate to one's use includes, not only
conversion to one's personal advantage, but also
every attempt to dispose of the property of another
without right.
There is a violation of the agency contract and not
from the criminal act.
In appointing a substitute
ART. 1892. The agent may appoint a substitute if
the principal has not prohibited him from doing so;
but he shall be responsible for the acts of the
substitute: (1) When he was not given the power to
appoint one;
(2) When he was given such power, but without
designating the person, and the person appointed
was notoriously incompetent or insolvent.
All acts of the substitute appointed against the
prohibition of the principal shall be void. (1721)
International Films v. Lyric Film Exchange
GR 42465.
Bernard Gabelman was the Phil. Agent of the
International Films (China) by virtue of a power of
attorney. In 1933, International Film through its
agent, leased the film “Monte Carlo Madness” to
the Film Exchange, defendant.
The condition of the contract was that Film
Exchange would answer for the loss of the film
whatever the cause.
Gabelman went to Albo, the chief of film dept. of
Lyric Film Exchange. Gabelman was informed that
he could not deposit the film in the safety vault
since it would not be covered by the insurance of
Luric Film. Gabelman requested Albo to permit
him to deposit under Gabelman’s responsibility.
As there was a verbal contract, the film was
deposited in the vault of Lyric Exchange.
Gabelman resigned and succeeded by Lazarus
Joseph. He informed the latter of the deposit of the
film as well as the verbal contract entered into
between him and Lyric Film Exchange whereby the
latter would act as subagent of the plaintiff
company.
Lazarus had taken possession of the Phil agency of
International Film went to Lyric Film to ask for the
return of Monte Carlo Madness, White Devils and
Congress Dance films.
The bodega of the Lyric Film Exchange was burned
including Monte Carlo Madness film which was not
insured.
Issue: Whether or not Lyric Film Exchange is
responsible to the International Film for the
destruction of the Monte Carlo Madness?
Ruling: it does not appear sufficiently proven that
the understanding between Lazarus Joseph, second
agent of the International Film would continue
showing the said film under the same contract.
The preponderance of evidence shows that the
verbal agreement between Gabelman and Albo,
chief of film dept of Film Exchange, that Monte
Carlo Madness would remain deposited in the
safety vault of the defendant company under the
responsibility of the former agent and that the Film
Exchange as his subagent where International Film
would receive 5 % of the receipts and 15% in excess
of a certain amount.
If, as it has been sufficiently proven in our opinion,
the verbal contract had between Bernard
Gabelman, the former agent of the plaintiff
47
company, and Vicente Albo, chief of the film
department of the defendant company, was a sub-
agency or a submandate, the defendant company is
not civilly liable for the destruction by fire of the
film in question because as a mere submandatary or
subagent, it was not obliged to fulfill more than the
contents of the mandate and to answer for the
damages caused to the principal by his failure to do
so (art. 1718, Civil Code). The fact that the film was
not insured against fire does not constitute fraud or
negligence on the part of the defendant company,
the Lyric Film Exchange, Inc., because as a
subagent, it received no instruction to that
effect from its principal and the insurance of
the film does not form a part of the obligation
imposed upon it by law.
2) that the defendant company, as subagent of the
plaintiff in the exhibition of the film "Monte Carlo
Madness", was not obliged to insure it against fire,
not having received any express mandate to that
effect, and it is not liable for the accidental
destruction thereof by fire.
Metrobank & Trust Company vs. CA GR 88866
The Metropolitan Bank, a commercial bank while
Golden Savings and Loan Associations operated
in Calapan, Mindoro.
Eduardo Gomez opened and account with
Golden Savings and deposited over a period of
two months 38 treasury warrants with a total value
of P1,755,228.37. They were all drawn by the
Philippine Fish Marketing Authority and signed by
its General Manager and countersigned by its
auditor.
Six of these were directly payable to Gomez.
All these warrants were subsequently indorsed by
Gloria Castillo as Cashier of Golden Savings and
deposited to its Savings Account No. 2498 in
Metrobank Calapan.
More than 2 weeks after depost, Gloria Castillo
went to the Calapan branch several times to ask
whether the warrants had been cleared. However
“exasperated” over Gloria’s repeated inquiries and
as accommodation for a valued client, petitioner
decided to allow Golden Savings to withdraw
from the proceeds of the warrant.
Golden Savings subsequently allowed Gomez to
withdraw total amount of P1,167,500 from the
proceeds of the apparently cleared warrants.
Metrobank informed Golden Savings that 32 of
the warrants had been dishonored by Bureau of
Treasury and demanded refund to Golden
Savings.
Metrobank sued Golden Savings at RTC.
Issue:
Ruling: Metrobank was negligent in giving Golden
Savings the impression that the treasury warrants
had been cleared and it was safe to allow Gomez to
withdraw the proceeds from his account.
To secure the clearance of the treasury warrants
that Golden Savings deposited them to its account
with Metrobank. Golden Savings had no clearing
facilities of its own. It relied on Metrobank to
determine the validity of the warrants through its
own services. The proceeds of the warrants were
withheld from Gomez until Metrobank allowed
Golden Savings itself to withdraw them from its
own deposit. It was only when Metrobank gave the
go-signal that Gomez was finally allowed by
Golden Savings to withdraw them from his
account.
Metrobank said that the conditions show that it was
acting only as a collecting agent for Golden Savings
and give it the right to “charge back to the
depositor’s account any amount previously
credited, whether or not such item is returned. This
also applies to checks”.. It is claimed that said
conditions are in the nature of contractual
stipulations and became binding on Golden
Savings when Gloria Castillo as its cashier, signed
the deposit slips.
In stressing that it was acting only as a collecting
agent for Golden Savings, Metrobank seems to be
suggesting that as a mere agent it cannot be liable
to the principal. This is not exactly true. On the
contrary, Article 1909 of the Civil Code clearly
48
provides that — courts which we see no reason to disturb. And as
we said in MWSS v. Court of Appeals:10
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 Forgery cannot be presumed (Siasat, et al.
the agency was or was not for a v. IAC, et al., 139 SCRA 238). It must be
compensation. established by clear, positive and
convincing evidence. This was not done in
The negligence of Metrobank has been sufficiently the present case.
established. To repeat for emphasis, it was the
clearance given by it that assured Golden Savings it The total value of the 32 treasury warrants
was already safe to allow Gomez to withdraw the dishonored was P1,754,089.00, from which Gomez
proceeds of the treasury warrants he had deposited was allowed to withdraw P1,167,500.00 before
Metrobank misled Golden Savings. Golden Savings was notified of the dishonor. The
amount he has withdrawn must be charged not to
There may have been no express clearance, as Golden Savings but to Metrobank, which must
Metrobank insists (although this is refuted by bear the consequences of its own negligence.
Golden Savings) but in any case that clearance
could be implied from its allowing Golden Savings
to withdraw from its account not only once or even
twice but three times. The total withdrawal was in
excess of its original balance before the treasury
warrants were deposited, which only added to its
belief that the treasury warrants had indeed been
cleared.

Metrobank's argument that it may recover the

disputed amount if the warrants are not paid for
any reason is not acceptable. Any reason does not
mean no reason at all. Otherwise, there would have
been no need at all for Golden Savings to deposit
the treasury warrants with it for clearance. There
would have been no need for it to wait until the
warrants had been cleared before paying the
proceeds thereof to Gomez. Such a condition, if
interpreted in the way the petitioner suggests, is not
binding for being arbitrary and unconscionable.
And it becomes more so in the case at bar when it
is considered that the supposed dishonor of the
warrants was not communicated to Golden Savings
before it made its own payment to Gomez.

The belated notification aggravated the petitioner's

earlier negligence in giving express or at least
implied clearance to the treasury warrants and
allowing payments therefrom to Golden Savings.
But that is not all. On top of this, the supposed
reason for the dishonor, to wit, the forgery of the
signatures of the general manager and the auditor
of the drawer corporation, has not been
established.9 This was the finding of the lower

49

PNB v. Agudelo
Agudelo y Gonzaga executed in favor of her
nephew Mauro Garrucho for a special power of
attorney to enable him to sell, alienate, and
mortgage in manner and form he might deem
convenient, all her real estate in Occidental
Negros.
Amparo Garrucho executed the document she
conferred upon her brother Mauro Garrucho a
special power of attorney sufficiently broad in
scope to enable him to sell, alienate, mortgage or
otherwise encumber, in manner and form he
might deem convenient, all her real estate situated
in Occidental Negros.
Nothing in the power of attorney authorized
Mauro to contract any loan nor to constitute a
mortgage on the properties belonging to the
respective principals, to secure his obligations.
Mauro executed a mortgage in favor of PNB the
title of property of Amparo to secure payments of
credit, loans, commercial overdrafts not exceeding
P6,000 with interest.
Mauro maintained a personal current account with
the bank, form of a commercial credit
withdrawable through checks.
Mauro executed a mortgage the property of
Agudelo y Gonzaga to secure payment of credits,
loans and commercial overdrafts for P16,000.
In connection of the credits, loans, and
commercial overdrafts amounting to P21,000
which had been granted him, Mauro A. Garrucho,
on the said date July 15, 1922, executed the
promissory note, for P21,000 as a novation of the
former promissory notes for P6,000 and P16,000,
respectively.
Amparo Garrucho sold the lot to Paz Agudelo-
Gonzaga.
Issue Whether or not Paz Agudelo-Gonzaga is
liable for the payment of the loans obtained by
Mauro from PNB?
Ruling: there is nothing in the said mortgage deeds
to show that Mauro A. Garrucho is attorney in
fact of Amparo A. Garrucho and of Paz Agudelo
y Gonzaga, and that he obtained the loans
mentioned in the aforesaid mortgage deeds and
constituted said mortgages as security for the
payment of said loans, for the account and at the
request of said Amparo A. Garrucho and Paz
Agudelo y Gonzaga.
Mauro Garrucho, acted in his personal capacity.
Mauro A. Garrucho, in his capacity as mortgage
debtor, appointed the mortgage creditor
Philippine National Bank as his attorney in fact so
that it might take actual and full possession of the
mortgaged properties by means of force in case of
violation of any of the conditions stipulated in the
respective mortgage contracts.
If Mauro A. Garrucho acted in his capacity as
mere attorney in fact of Amparo A. Garrucho and
of Paz Agudelo y Gonzaga, he could not delegate
his power, in view of the legal principle of
"delegata potestas delegare non potest" (a
delegated power cannot be delegated).
He executed the promissory notes evidencing the
aforesaid loans, under his own signature, without
authority from his principal and, therefore, was
not binding upon the latter.
Furthermore, the records do not show that the
loan obtained by Mauro A. Garrucho, evidenced
by the promissory note, Exhibit B, was for his
principal Paz Agudelo y Gonzaga. The special
power of attorney, Exhibit K, does not authorize
Mauro A. Garrucho to constitute a mortgage on
the real estate of his principal to secure his
personal obligations. Therefore, in doing so by
virtue of the document, Exhibit C, he exceeded
the scope if his authority and his principal is not
liable for his acts.
It is noted that Mauro A. Garrucho was not
authorized to execute promissory notes even in
the name of his principal Paz Agudelo y Gonzaga,
nor to constitute a mortgage on her real properties
to secure such promissory notes. The plaintiff
50
Philippine National Bank should know this
inasmuch as it is in duty bound to ascertain the
extent of the agent's authority before dealing with
him. Therefore, Mauro A. Garrucho and not Paz
Agudelo y Gonzaga is personally liable for the
amount of the promissory note
When an agent negotiates a loan in his personal
capacity and executes a promissory note under his
own signature, without express authority from his
principal, giving as security therefor real estate
belonging to the letter, also in his own name and
not in the name and representation of the said
principal, the obligation do constructed by him is
personal and does not bind his aforesaid principal.
PHILIPPINE PRODUCTS
COMPANY, plaintiff-appellant,
vs.
PRIMATERIA SOCIETE ANONYME
POUR LE COMMERCE EXTERIEUR:
PRIMATERIA (PHILIPPINES) INC.,
ALEXANDER G. BAYLIN and JOSE M.
CRAME, defendants-appellees.
Defendant Primateria, through Baylin entered into
an agreement with plaintiff Philippine Products
Company, whereby the PBC undertook to buy
copra in the Philippines for the account of
Primateria during a tentative experimental period
of one month from date.
Plaintiff shipped the copra to foreign countries as
a result a total amount due to the plaintiff was
33,009.71.
Baylin acted as authorized agent of Primateria.
Baylin acted indiscriminately in these transactions
in the dual capacities of agent of the Zurich firm
and executive vice-president of Primateria
Philippines, which also acted as agent of
Primateria Zurich. It is likewise undisputed that
Primateria Zurich had no license to transact
business in the Philippines.
Section 68 of the Corporation Law states: "No
foreign corporation or corporation formed,
organized, or existing under any laws other than
those of the Philippines shall be permitted to
transact business in the Philippines, until after it
shall have obtained a license for that purpose from
the Securities and Exchange Commission .. ." And
under Section 69, "any officer or agent of the
corporation or any person transacting business for
any foreign corporation not having the license
prescribed shall be punished by imprisonment
Lower Court: liable to the plaintiff with legal
interest.
Issue: whether its agents may be held personally
liable on contracts made in the name of the entity
with third persons in the Philippines.
Ruling: The lower court ruled that the Primateria
Zurich was not duly proven to be a
foreign corporation; nor that a societe
anonyme ("sociedad anomima") is a corporation; and
that failing such proof, the societe cannot be
deemed to fall within the prescription of Section
68 of the Corporation Law. We agree with the said
court's conclusion. In fact, our corporation law
recognized the difference between sociedades
anonimas and corporations.
At any rate, we do not see how the plaintiff could
recover from both the principal (Primateria Zurich)
and its agents. It has been given judgment against
the principal for the whole amount. It asked for
such judgment, and did not appeal from it. It
clearly stated that its appeal concerned the other
three defendants.
But plaintiff alleges that the appellees as agents of
Primateria Zurich are liable to it under Art. 1897
of the New Civil Code which reads as follows:
Art. 1897. The agent who acts as such is
not personally liable to the party with
whom he contracts, unless he expressly
binds himself or exceeds the limits of his
authority without giving such party
sufficient notice of his powers.
But there is no proof that, as agents,
they exceeded the limits of their authority. In fact,
the principal — Primateria Zurich — who should
be the one to raise the point, never raised it,
denied its liability on the ground of excess of
authority. At any rate, the article does not hold
51
that in cases of excess of authority, both the agent
and the principal are liable to the other contracting
party.
This view of the cause dispenses with the necessity
of deciding the other two issues, namely: whether
the agent of a foreign corporation doing business,
but not licensed here is personally liable for
contracts made by him in the name of such
corporation.1 Although, the solution should not be
difficult, since we already held that such foreign
corporation may be sued here (General
Corporation vs. Union Ins., 87 Phil. 509). And
obviously, liability of the agent is necessarily
premised on the inability to sue the principal or
non-liability of such principal. In the absence of
express legislation, of course.
GOLD STAR MINING CO., INC., petitioner,
vs. MARTA LIM-JIMENA, respondents.
Facts:
Ananias Isaac Lincallo bound himself in writing to
turn to Victor Jimena one-half (1/2) of the
proceeds from all mining claims that he would
purchase with the money to be advanced by the
latter. This agreement was later on modified so as
to include the lands constituting the same, and so
as to bind thereby their "heirs, assigns, or legal
representatives." Apparently, the mining rights
over part of the claims were assigned by Lincallo
to Gold Star Mining Co., Inc.
The mining rights over parts of the claims were
assigned by Lincallo to Gold Star Mining Co., Inc.,
while others were assigned to Marinduque Iron
Mines Agents. Meanwhile, Jimena repeatedly
apprised both mining corporations of his interests
over the mining claims so assigned and/or leased
by Lincallo. However, both corporations ignored
his demands. Jimena also demanded Lincallo for
the payment of the P5,800 he gave Lincallo as
money to purchase the mining claims and the lands,
but to no avail. Lincallo did not only fail to settle
his accounts with Jimena, he even transferred about
majority of his share in the royalties due from Gold
Star to Gregorio Tolentino, a salaried employee. 
 repeatedly denied of his interests, Jimena has an
Jimena filed a suit against Lincallo for recovery of
his advances and his one-half share in the
royalties, and impleaded Gold Star and
Marinduque Iron Mines, as well as Tolentino, later
on as defendants.
Trial court issued a writ of preliminary injunction,
preventing both mining companies from paying
royalties. Despite of such injunction, Gold Star still
paid P30,691.92 to Lincallo and Tolentino
(claiming that a writ of prelimary attachment filed
by Jimena supposedly superseded the injunction,
but the condition to such attachment - the filing of
a bond - was not fulfilled, so it cannot besaid that
the injunction was superseded).

Jimena and Tolentino died successively during the
pendency of the case in the trial court and were,
accordingly, substituted by their respective widows
and children.

CFI decided in favor of Victor Jimena’s heirs,
declaring among others that they be entitled to half
of the shares of the royalties of Lincallo, that both
mining companies pay directly to the former half of
the shares of the royalties until said contracts were
terminated, that Lincallo pay the heirs the capital
Victor Jimena gave him to purchase the mining
claims and the latter’s shares with interest, and that
Gold Star Mining Co., Inc. pay them the sum of
P30,691.92 solidarily with Ananias Isaac Lincallo
for violation of an injunction.
The defendants appealed to the CA, which
affirmed CFI Manila’s decision.
Issue: WON the CA erred in finding that the
Jimenas have a cause of action against Gold Star
Mining Co., as there is no privity of contract
between Gold Star and Jimena.
Ruling: NO. The existence of a common subject-
matter supplies the juridical 
 link. Jimena
repeatedly made demands upon God Star for the
payment of his 1⁄2 share of the royalties, but all in
vain, so he was forced to implead Gold Star for
having refused to recognize his right. Furthermore,
under such conditions wherein Jimena was
action against Gold Star, pursuant to Art. 1883,
NCC, which provides that the principal may sue the
52
person with whom the agent dealt with in his
(agent’s) own name, when the transaction ‘involves
things belonging to the principal.’ 
 representative of the said plaintiff's creditors, the
HARTFORD BEAUMONT, plaintiff-appellee,
vs. MAURO PRIETO, defendants and
appellants.
FACTS: On 19 January 1912 (offer/option still
stood), Borck, in writing, accepted the terms of the
offer and requested of Valdes to be allowed to
inspect the property, titles, and other documents
pertaining to the property, and offered to pay the
defendant immediately as soon as a reasonable
examination could be made of said documents.
Defendants, however, refused to deliver to him the
documents and to execute any instrument of
conveyance in his favor. Plaintiff avers that, by
reason of such refusal, he incurred great expense
and suffered great losses. He filed a complaint (first
against Valdes, later amended to include Legarda)
praying that defendants be ordered to execute a
public instrument in his favor evidencing the
contract/obligation, to convey in absolute sale to
him the property (specific performance), to render an
account of rents & profits collected from 19
January (accounting), & damages in case of
impossibility of specific performance.
While this complaint was not yet amended, the
defendant Valdes filed a demurrer, on the grounds
that there was a misjoinder of parties on account
of the erroneous inclusion therein of the
defendant Valdes, that the complaint did not set
forth fact that constituted a cause of action against
said defendant, and that it was ambiguous,
unintelligible and vague. This demurrer was
overruled on April 11, 1912. The defendant Benito
Legarda also interposed a demurrer to the amended
complaint on the grounds that the facts therein set
forth did not constitute a right of action against
him. This demurrer was likewise overruled on June
26, 1912.
Meanwhile, on 22 June 1912, ruling on a petition
made in voluntary insolvency proceedings brought
by Borck, and in view of the agreement entered into
in said proceedings by all of the latter's creditors,
ordered that the plaintiff Borck be substituted in
the instant proceedings by Hartford
Beaumont, as the trustee appointed therein and
assignee of his rights, in said proceedings.
CFI decided in favor of Borck: Instrument
constituted a contract by which the principal
defendant undertook to convey to the plaintiff the
property; plaintiff entitle to specific performance
and net income; ordered to execute & deliver to
plaintiff good & sufficient conveyance, free of all
encumbrance, of the property.
Plaintiff's cause of action is based on the failure of
Valdes, as the agent/attorney-in-fact of Legarda, to
perform the obligation contracted by Valdes to sell
to Borck the property belonging to Legarda. He
seeks to require fulfillment of the said obligation
and to secure payment of a proper indemnity for
damages because of failure to timely comply.
(Note: Remember that Valdes signed the letter to Borck in
his own name (thereby appearing that he acted in his own
name), altough Borck knew that Valdes was Legarda's
agent or attoney-in-fact.)
ISSUE: W/N Borck has a cause of action against
Legarda, the principal
Held: YES. Although, according to article 1717 of
the Civil Code (now Article 1883) when the agent
acts in his own name he is not personally liable to
the person with whom he enters into a contract
when things belonging to the principal are the
object thereof, yet such third person has a right of
action not only against the principal but also against
the agent, when the rights and obligations which are
the subject-matter of the litigation cannot be legally
and juridically determined without hearing both of
them.
In this case, the Court treated the notarized power
of attorney registered in the register of deeds as
constuting prima facie proof of the fact that Benito
Valdes is the attorney-in-fact of Benito Legarda,
and that he is vested with the powers specified
therein, on account of Legarda's not having denied
under oath the genuiness and due execution of the
said document, it was therefore incumbent upon
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Legarda himself to prove that he had not executed
the said power of attorney in Valdes' favor and that
he had not conferred upon him, by virtue thereof,
the powers therein mentioned.
MACONDRAY & CO., INC., plaintiff-appellee,
vs. GEORGE S. SELLNER, defendant-
appellant.
FACTS: Sellner, a real estate broker, sold a parcel
of land to the company Macondray & Co., Inc. for
P17,175. The land was flooded by high tides and
Macondray became highly dissatisfied with its
purchase. Macondray informed Sellner that the
land was not suited for use as a coal-yard, the
purpose for which it had been bought, and
requested the latter to find another buyer. The land
was to be sold at the price Macondray purchased it
for, and exceed proceeds would serve as Sellner’s
commission.
Sellner informed Macondray that he found a buyer:
Antonio Barretto, who was willing to pay
P18,892.50, or P2.75/sq. m. Macondray executed a
formal deed of conveyance and delivered this
together with the certificate of title to Sellner on the
understanding that the latter would deliver these to
Barretto, conclude the sale, and receive the
purchase price.
Barretto agreed to accept the land on the condition
that he finds the title and deed satisfactory after
inspection. Sellner left the deed of conveyance with
Barretto, with the understanding that if the title and
the deed of conveyance were as represented,
Barretto would give him his check for the amount
of the purchase price.
Barretto retained possession of the TCT; but a few
days later, he was compelled to go to Tayabas on
business and was detained by a typhoon which
delayed his return. During Barretto’s absence,
Macondray advised Sellner that he must
consummate the sale without delay upon Barretto’s
return.
Aug. 31: Barretto returned; Sellner informed him of
the company’s desire to close up the transaction;
but the former requested for 1-2 more days to
inspect the documents before issuing the check.
Sept. 2: was reported to Young, Macondray’s
general manager. Young informed Sellner that
unless the purchase price was paid before 5PM of
the same day, the deal would be off. Sellner called
Barretto, and the latter told him that if the TCT was
sent, he would issue the check. Sellner sent the TCT
but received the check 36 hours after. Upon receipt
of the check from Barretto, Sellner immediately
tendered Macondray a check for the agreed selling
price of P17,175.
Macondray refused to accept the check and filed
this action to recover damages claiming that the sale
had been cancelled because Sellner failed to turn
over the purchase price on Sept. 2.
RULING: Re: Commission
The commission agreed upon was all that was over
the purchase price P17,175 which the defendant
could secure from the property, and it is clear that
allowing the defendant this commission, and
offsetting it against the unpaid balance of the
market value of the land, the plaintiff company
is not entitled to a money judgment against
defendant.
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.
The rights of a real estate broker are to be protected
against the arbitrary revocation of his agency,
without remuneration for services rendered in
finding a suitable purchaser prior to the revocation.
Macondray’s letter demanding payment at 5PM on
the afternoon of Sept. 2 under penalty of
cancellation of the agreement to sell was an
arbitrary unreasonable attempt to deny to
Barretto the reasonable opportunity to inspect
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the documents of title, to which he was entitled
by virtue of the express agreement with Sellner,
Macondray’s agent, before any attempt was made
to revoke his agency.
It follows that Barretto's right to enforce the
agreement to sell was in no wise affected by the
attempt of the plaintiff company to "cancel" the
agreement; and that Macondray suffered no
damage by the consummation of the agreement by
the acceptance of the stipulated purchase price by
the defendant real estate agent.
JULIO DANON, plaintiff-appellee,
vs. ANTONIO A. BRIMO & CO., defendant-
appellant.
FACTS:
This action was brought to recover the sum of
P60,000, alleged to be the value of services
rendered to the defendant by the plaintiff as a
broker. The plaintiff alleges that in the month of
August, 1918, the defendant company, through its
manager, Antonio A. Brimo, employed him to look
for a purchaser of its factory known as "Holland
American Oil Co.," for the sum of P1,200,000,
payable in cash; that the defendant promised to pay
the plaintiff, as compensation for his services, a
commission of five per cent on the said sum of
P1,200,000, if the sale was consummated, or if the
plaintiff should find a purchaser ready, able and
willing to buy said factory for the said sum of
P1,200,000; that subsequently the plaintiff found
such a purchaser, but that the defendant refused to
sell the said factory without any justifiable motive
or reason therefor and without having previously
notified the plaintiff of its desistance or variation in
the price and terms of the sale.
To that complaint the defendant interposed a
general denial. Honorable Simplicio del Rosario,
judge, rendered a judgment in favor of the plaintiff
and against the defendant for the sum of P60,000,
with costs. From that judgment the defendant
appealed to this court.
ISSUE: WON the plaintiff had performed all that
was required of him under that contract to entitle
him to recover the commission agreed upon. =
NO.
The proof in this regard is no less unsatisfactory. It
seems that immediately after having an interview
with Mr. Brimo, as above stated, the plaintiff went
to see Mr. Mauro Prieto, president of the Santa Ana
Oil Mill, a corporation, and offered to sell to him
the defendant's property at P1,200,000. Mr. Kane,
its manager, inspected the factory and, presumably,
made a favorable report to Mr. Prieto. The latter
asked for an appointment with Mr. Brimo to
perfect the negotiation. In the meantime Sellner,
the other broker referred to, had found a purchaser
for the same property, who ultimately bought it for
P1,300,000. For that reason Mr. Prieto, the would
be purchaser found by the plaintiff, never came to
see Mr. Brimo to perfect the proposed negotiation.
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.
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.
Other issue: WON the plaintiff is entitled to
recover the sum of P60,000, claimed by him as
compensation for his services. = NO!
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."
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
55
entitled to the commissions agreed upon
because he had no intervention whatever in,
and much 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."
Manotok Brothers v. CA
Petitioners are owners of a parcel of land and
building which were formerly leased by City of
Manila and used by Claro M Recto high school in
Sampaloc.
Petitioner authorized respondent Salvador
Saligumba to negotiate with the city of Manila the
sale of property for not less than P425,000.
Petitioner agreed to pay private respondent 5%
commission in the event the sale is finally
consummated and paid.
Petitioner extended the authority of private
respondent for 120 days and another extension
was granted to him for 120 days.
The City of Manila passed ordinance to purchase
the property for P410,816. Private respondent
never received any commission amounting to
P20,554.50. This was due to the refusal of the
petitioner.
Petitioner alleged denied the claim of private
respondent on the following grounds:
(1) 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; and
(2) 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.
Private respondent, testified as to the efforts
undertaken by him to ensure the
consummation of the sale. He recounted that
it first began at a meeting with Rufino
Manotok at the office of Fructuoso Ancheta,
principal of C.M. Recto High School. Atty.
Dominador Bisbal, then president of the
PTA, was also present. The meeting was set
precisely to ask private respondent to
negotiate the sale of the school lot and
building to the City of Manila.
CFI: rendered judgment sentencing petitioner
and/or Rufino Manotok to pay unto private
respondent the sum of P20,540.00 by way of
his commission fees with legal interest
thereon from the date of the filing of the
complaint until payment. The lower court also
ordered petitioner to pay private respondent
the amount of P4,000.00 as and for attorney's
fees
It is petitioner's contention that as a broker,
private respondent's job is to bring together the
parties to a transaction. Accordingly, if the broker
does not succeed in bringing the minds of the
purchaser and the vendor to an agreement with
respect to the sale, he is not entitled to a
commission.
Private respondent, on the other hand, opposes
petitioner's position maintaining that it was
because of his efforts that a purchase actually
materialized between the parties
Issue: Whether or not the private respondent is
entitled to 5% agent’s commission?
Ruling:
We rule in favor of private respondent.
At first sight, it would seem that private respondent
is not entitled to any commission as he was not
successful in consummating the sale between the
parties, for the sole reason that when the Deed of
56
Sale was finally executed, his extended authority
had already expired.
that while it was respondent court's (referring to
the Court of Appeals) factual findings that
petitioner Prats (claimant-agent) was not the
efficient procuring cause in bringing about the sale
(prescinding from the fact of expiration of his
exclusive authority), still petitioner was awarded
compensation for his services. And We quote:
Without the efforts of private respondent then,
Mayor Villegas would have nothing to approve in
the first place. It was actually private
respondent's labor that had set in motion the
intervention of the third party that produced
the sale, hence he should be amply
compensated.

"In equity, however, the Court notes that

petitioner had diligently taken steps to
bring back together respondent Doronila
and the SSS,.

The court has noted on the other hand

that Doronila finally sold the property to
the Social Security System at P3.25 per
square meter which was the very same
price counter-offered by the Social
Security System and accepted by him in
July, 1967 when he alone was dealing
exclusively with the said buyer long
before Prats came into the picture but
that on the other hand Prats' efforts
somehow were instrumental in bringing
them together again and finally
consummating the transaction at the same
price of P3.25 per square meter, although
such finalization was after the expiration
of Prats' extended exclusive authority.

Court agrees with the respondent Court that

the City of Manila ultimately became the
purchaser of petitioner's property mainly
through the efforts of private respondent.
Without discounting the fact that when Municipal
Ordinance No. 6603 was signed by the City Mayor
on May 17, 1968, private respondent's authority
had already expired, it is to be noted that the
ordinance was approved on April 26, 1968
when private respondent's authorization was
still in force. Moreover, the approval by the
City Mayor came only three days after the
expiration of private respondent's authority.

It is also worth emphasizing that from the records,

the only party given a written authority by
petitioner to negotiate the sale from July 5, 1966
to May 14, 1968 was private respondent

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