G.R. No. 199894 - People vs. Claro y Mahinay

Bienvenido R. Medrano, serving as Vice-Chairman of Ibaan Rural Bank and representing the Medrano family, was involved in handling a foreclosed asset—a 17‑hectare mango plantation in Ibaan, Batangas.
In 1986, Medrano, through his cousin-in-law Mrs. Estela A. Flor, initiated the search for a buyer for the said property by issuing a Letter of Authority.
The Letter of Authority, dated September 3, 1986, empowered three individuals—Mrs. Pacita G. Borbon, Miss Josefina E. Antonio, and Mrs. Estela A. Flor—to negotiate the sale of the mango plantation and guaranteed a 5% commission on the final sale price for their efforts.

Mrs. Pacita G. Borbon, a licensed real estate broker, was already known for her business in real estate, having previously facilitated transactions such as an 8‑hectare property deal.
Respondents Borbon, Antonio, and Flor, acting on the issuance of the Letter of Authority, disseminated the information regarding the mango plantation sale and arranged early inspections with the prospective buyer, Dominador Lee, a businessman from Makati City.
Despite initial setbacks (inclement weather, logistical difficulties, and conflicting schedules), communication between Lee and the respondents led to a follow-up, eventually culminating in Lee’s confirmation of purchasing the property.

Dominador Lee, who had earlier expressed preference for a mango plantation, was directed by the respondents to coordinate with an officer of the bank, Mrs. Teresa Ganzon, thereby establishing the chain of communication.
Within weeks, Lee completed the transaction by making a down payment of P1,000,000.00, with the balance fixed at P1,200,000.00, followed by the execution of a Deed of Sale on November 6, 1986, between KGB Farms, Inc. (represented by Lee) and the Ibaan Rural Bank.
After the consummation of the sale, the respondents demanded their 5% commission as per the Letter of Authority, which petitioners (the bank and Medrano’s estate) resisted by questioning the validity and scope of the authority as well as the role played by the respondents.

The Regional Trial Court (RTC) of Makati City, Branch 135, ruled in favor of the respondents, upholding that the Letter of Authority was valid and binding on both Bienvenido Medrano and Ibaan Rural Bank, and awarded the respondents a 5% broker’s commission based on the sale price.
On appeal, the Court of Appeals (CA) affirmed the RTC’s decision, further endorsing the application of agency principles by holding that Medrano had, by his actions, constituted the respondents as his agents in the sale.
The petitioners argued that Medrano had no authority to bind the bank because he was not the registered owner, and that the respondents did not perform the full negotiation required by the Letter of Authority. They also highlighted procedural issues related to Medrano’s death and the absence of substitution of his party.

Medrano’s subsequent demise raised a procedural challenge regarding substitution of parties; however, the lower courts maintained that his death did not extinguish the monetary obligations accruing from the executed Letter of Authority.
The petitioners filed multiple assignments of error on appeal, contending errors in establishing the procuring cause and interpreting the scope of the Letter of Authority, among other issues.
Ultimately, the CA and later the Supreme Court denied the petition for review and affirmed the lower court decisions awarding the 5% commission.

Whether the Letter of Authority issued by Medrano was binding and enforceable against the Ibaan Rural Bank despite Medrano not being the registered owner of the property.
Whether the respondents, by merely bringing in Dominador Lee as a prospective buyer, acted as the efficient procuring cause of the sale.
Whether the actions taken by the respondents—despite not engaging in the full negotiation process—fulfilled the requirements under the Letter of Authority to warrant a 5% commission.
Whether the trial court erred in holding the estate of the deceased Medrano liable for the commission, considering issues of agency and substitution of parties.
Whether the evidentiary basis used by the appellate courts sufficiently established a causal link between the respondents’ conduct and the eventual sale of the property.