Case Summary (G.R. No. L-30573)
Factual Background
• On June 2, 1956, Vicente M. Domingo granted Gregorio Domingo an exclusive agency to sell Lot No. 883, Piedad Estate (≈88,477 sqm) at ₱2.00 per sqm (₱176,954.00) for a 5% commission. The term was 30 days, plus a three-month extension if a buyer introduced during the agency consummated the sale thereafter.
• On June 3, 1956, Gregorio engaged Purisima as sub-agent (50% of Gregorio’s 5% commission). Purisima introduced Oscar de Leon, whose initial offer was below ₱2.00 per sqm. Through negotiations (Exhibits B, C, D), Vicente agreed to sell at ₱1.20 per sqm (₱109,000.00), with earnest money installments of ₱1,000.00 and promissory adjustments to deed-of-sale dates.
• Oscar de Leon secretly gave Gregorio a ₱1,000 “propina” for securing the reduced price without disclosing this to Vicente. The final deed of sale (Exhibit G, September 17, 1956) listed Amparo Diaz (Oscar’s wife) as vendee, but the transaction was effectively Oscar’s.
• When Gregorio demanded his 5% commission (Exhibit H), Vicente refused, tore up the agency contract (Exhibit A), and insisted no sale to Gregorio’s buyer had taken place.
Procedural History
Trial Court: Awarded Gregorio ₱2,307.50 (5% of ₱109,000.00), Purisima ₱2,607.50, interest, ₱1,000 moral damages, ₱500 attorney’s fees, plus costs.
Court of Appeals (Special Division of Five, March 12, 1969): Affirmed.
This Appeal: Petitioners-Appellants sought reversal.
Issues Presented
- Does Gregorio’s failure to disclose the ₱1,000 propina to his principal constitute fraud and forfeit his right to the 5% commission?
- Is Purisima entitled to recover his share of the commission directly from Vicente or only from Gregorio?
- Were the awards of legal interest, moral and exemplary damages, attorney’s fees, and costs proper?
Applicable Law
• New Civil Code (effective 1950):
– Art. 1891: Agent must render full account and deliver to principal all received by virtue of the agency; stipulations exempting this duty are void.
– Art. 1909: Agent is liable for fraud and negligence, judged more strictly when agency is for compensation.
• Spanish Civil Code (predecessor) and consistent Philippine jurisprudence impose the highest good faith, forbidding secret profits or bonuses without principal’s knowledge and consent.
Secret Profit and Broker’s Duty
Under Art. 1891–1909, an agent owes absolute loyalty and candor. Acceptance of any secret bonus from a third party, undisclosed to the principal, is a breach of fiduciary duty. Jurisprudence holds that an undisclosed propina “corrupts the duty to serve only the principal’s interests” and compels forfeiture of the agent’s commission, irrespective of actual harm or benefit.
Forfeiture of Commission
Gregorio’s acceptance of a ₱1,000 gift from Oscar de Leon without Vicente’s knowledge constituted a secret profit. This placed Gregorio in a position “wholly inconsistent” with his agency. Consequently, he forfeits any right to his 5% commission and must return any advances received (₱300).
Liability of Sub-Agent Purisima
Purísima’s contract was with Gregorio alone; Vicente never contracted with him. Therefore, Purísima may recover only from Gregorio. Since Gregorio received ₱1,300 total (₱30
Case Syllabus (G.R. No. L-30573)
Procedural History
- Trial court rendered judgment in favor of Gregorio M. Domingo and intervenor Teofilo P. Purisima, awarding P2,307.50 to Gregorio, P2,607.50 to Teofilo with legal interest from complaint filing, plus P1,000 moral/exemplary damages and P500 attorney’s fees, costs.
- Special Division of Five of the Court of Appeals affirmed the trial court’s decision by majority decision dated March 12, 1969.
- Petitioners-appellants (heirs of Vicente M. Domingo) sought reversal in the Supreme Court of the majority decision.
Facts of the Case
- On June 2, 1956 (Exhibit “A”), Vicente M. Domingo granted Gregorio M. Domingo exclusive agency to sell Lot No. 883, Piedad Estate (≈88,477 sq m) at P2.00/sq m (P176,954 total) for a 5% commission.
- Agency was for 30 days, with a three-month post-termination protection if sold to a purchaser introduced by Gregorio.
- Gregorio retained the original and one copy of Exhibit “A”; a duplicate was given to Vicente.
- On June 3, 1956, Gregorio engaged Teofilo P. Purisima as sub-agent, promising him half of the 5% commission.
Negotiation and Contract Amendments
- Teofilo introduced Oscar de Leon as prospective buyer; initial offer was below P2.00/sq m.
- After negotiations, Oscar offered P109,000 on June 20, 1956 (Exhibit “C”), signed by Vicente.
- Oscar paid P1,000 earnest money to Vicente (letter Exhibit “4”); Vicente advanced Gregorio P300.
- Oscar confirmed the P1.20/sq m offer in writing (Exhibit “D”).
- Parties agreed that Oscar’s wife would vacate their Denver Street property as part of the down payment; Exhibit “C” was amended twice (once dated June 30, 1956, typographical error “1957”).
Secret Gift and Alleged Breach
- Oscar secretly gifted Gregorio P1,000 “propina” for securing the reduced price; Gregorio did not disclose this to Vicente.
- Oscar failed to pay the additional P1,000 earnest money and ultimately abandoned the negotiation, forfeiting both P1,000 sums.