G.R. No.

L-30573 October 29, 1971

VICENTE M. DOMINGO, represented by his heirs, ANTONINA RAYMUNDO VDA. DE DOMINGO, RICARDO,
CESAR, AMELIA, VICENTE JR., SALVADOR, IRENE and JOSELITO, all surnamed DOMINGO, petitioners-
appellants,

vs.

GREGORIO M. DOMINGO, respondent-appellee, TEOFILO P. PURISIMA, intervenor-respondent.

Facts:

On June 2, 1965, Vicente Domingo granted Gregorio Domingo, a real estate broker, the
exclusive agency to sell his lot No.883 Piedad Estate with an area of 88, 477 square meters at the rate of
2.00 per square meters with a commission of 5% on the total price, if the property is sold by Vicente or
by anyone during the 30 day duration of the agency or if the property is sold by Vicente within 3 months
from the termination of the contract of agency with notice to Vicente. That Gregorio authorized Teofilo
to look for a prospective buyer and he introduced Oscar de Leon. He submitted a written offer which
was very lower at a rate of 2.00 per square meters and petitioner directed Gregorio to tell the
prospective buyer to raise his offer, that the latter raised his offer to 109,000.00. Upon demand Oscar
De Leon issued a check in the amount of 1000 as earnest money and confirmed his offer to buy the lot at
1.20 per sqm and he will vacate in his house as part of the purchase price. That Oscar told Gregorio that
he did not receive the money from his brother, for which reason he was giving up the negotiation
including the earnest money and the gift of 1000 as given to Vicente and Gregorio. Gregorio then
proceeded to the Office of the Register of Deeds and found out that a Deed of Sale was executed by
Amparo Diaz. Upon learning that Vicente sold his property to the same buyer, he demanded a payment
of 109,000.00.

Issue:

Whether or not Gregorio is entitled to 5% commission.

Ruling:

No. Gregorio is not entitled to 5% commission. Under Article 1891 of the Civil Code, 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. In the case at bar,
Gregorio Domingo, as a broker, received a gift in the amount of 1000 from the prospective buyer Oscar
de Leon, without the knowledge and consent of his principal, herein petitioner-appellant Vicente
Domingo. His acceptance of said substantial monetary gift corrupted his duty to serve the interests only
of his principal and undermined his loyalty to his principal, who gave him partial advance of 300.00 on
his commission. As a consequence, instead of exerting his best to persuade his prospective buyer to
purchase the property on the most advantageous terms desired by his principal, the broker, herein
defendant-appellee Gregorio Domingo, succeeded in persuading his principal to accept the counter-
offer of the prospective buyer to purchase the property at P1.20 per square meter or One Hundred Nine
Thousand Pesos (P109,000.00) in round figure for the lot of 88,477 square meters, which is very mu ch
lower the the price of P2.00 per square meter or One Hundred Seventy-Six Thousand Nine Hundred
Fifty-Four Pesos (P176,954.00) for said lot originally offered by his principal. As a necessary consequence
of such breach of trust, defendant-appellee Gregorio Domingo must forfeit his right to the commission
and must return the part of the commission he received from his principal. Therefore, Gregorio
Domingo is entitled to pay the heirs of Vicente Domingo.