G.R. No. 163720 - Lim vs. Saban

Case Summary (G.R. No. 163720)

Agency Agreement and Its Terms

The agency agreement between Ybañez and Saban authorized Saban to find a buyer and sell the lot at a net price of P200,000, with any excess over that net price to belong to Saban and his associate. The agreement also provided that expenses incidental to the sale (capital gains tax, documentary stamp, transfer tax, etc.) were to be borne by the agent and/or buyer, except realty taxes. The contract thus contemplated that the agent would obtain the excess (mark-up) as his compensation.

Negotiation, Sale and Payments

Through Saban’s efforts a sale was consummated on March 10, 1994 to Petitioner Lim and co-vendees (the Spouses Lim). The Deed of Absolute Sale showed P200,000 as the price, but the parties negotiated a total of P600,000 inclusive of taxes and incidental expenses. Lim remitted P113,257 for taxes and P50,000 as a broker’s commission to Saban; she also issued four postdated checks aggregating P236,743 to Saban as the remaining balance. Ybañez later requested Lim to cancel the checks and asked that payments be made directly to him.

Complaint, Allegations and Defenses

Saban filed a complaint for collection and damages after the checks were dishonored. He alleged that the agreed P600,000 contained a P400,000 mark-up (over the P200,000 net), and that he was entitled to the excess as his commission. He asserted that Ybañez later told Lim Saban was not entitled to commission because Saban concealed the actual selling price and was not a licensed broker; Lim acted on that information and had the checks cancelled. Ybañez likewise denied Saban’s entitlement, alleging concealment and lack of licensure. Lim contended she was not privy to the agency contract, that she stopped payment at Ybañez’s request and that she and Ybañez had agreed the true purchase price was P200,000.

Trial Court Findings and Ruling

The trial court dismissed the complaint against Ybañez following his death and ultimately dismissed Saban’s complaint against Lim, declaring the four checks stale and non-negotiable and absolving Lim of liability. The trial court computed payments and found Lim had paid amounts for taxes, broker, and directly to Ybañez, resulting in figures the court used in its assessment of total amounts exchanged.

Court of Appeals Decision

The Court of Appeals reversed the trial court, holding Saban entitled to his commission (the excess of the purchase price less P200,000 and incidental expenses). The appellate court found that Ybañez’s attempted revocation was invalid because the agency was coupled with an interest and that Ybañez and Lim connived to deprive Saban of his commission. The CA further held that Lim acted as an accommodation party when she issued the four checks and was therefore liable to Saban for P236,743.

Issues Presented to the Supreme Court

The Supreme Court framed the principal issues as: (1) whether Saban was entitled to receive his commission from the sale; and (2) assuming entitlement, whether Lim was the proper party liable to pay Saban his commission.

Supreme Court Holding on Saban’s Entitlement to Commission

The Supreme Court affirmed that Saban was entitled to his commission. It reasoned that Saban had fully performed his obligations under the agency agreement by finding a buyer and preparing the Deed of Absolute Sale prior to Ybañez’s attempt to revoke authority; depriving him of his commission after consummation of the sale would breach the agency contract. The Court relied on prior decisions (Macondray & Co.; Infante v. Cunanan) which recognize a broker’s right to commission once the broker finds a buyer and negotiates the sale, and which condemn a principal’s bad-faith withdrawal that would unjustly deprive the broker of compensation.

On the Nature of the Agency: Not “Coupled with an Interest”

While affirming Saban’s entitlement, the Supreme Court disagreed with the Court of Appeals’ conclusion that the agency was “coupled with an interest.” Citing Article 1927 and interpretive principles, the Court explained that an agency is coupled with an interest only when the agent’s interest is in the subject matter of the power conferred (not merely an interest in receiving agreed compensation). An ordinary right to compensation does not make an agency one coupled with an interest; therefore the agency here was not the type that could not be revoked on that basis.

Supreme Court’s Analysis of Lim’s Liability to Saban

Although Lim was not a party to the agency contract, the Supreme Court examined the factual matrix and found she knew the agreed P200,000 net price and that the P600,000 figure included taxes and Saban’s commission. The Court analyzed payments and receipts: Lim remitted amounts for taxes and commission and Ybañez acknowledged receipt of sums (including a balance paid on June 28). The Court concluded that Lim issued the four checks reflecting agreement to the P600,000 purchase price, and her subsequent cancellation of those checks at Ybañez’s behest constituted a change of position that prejudiced Saban. Given that Lim had not yet paid the P200,000 balance of the P600,000, the Supreme Court found it just and proper to require Lim to pay Saban the balance of P200,000 as the broker’s commission due from the excess. The Court further observed that since Ybañez rec

Case Syllabus (G.R. No. 163720)

Procedural Posture

Petition for Review on Certiorari to the Supreme Court assails the Court of Appeals Decision dated October 27, 2003 in CA-G.R. V No. 60392; the Supreme Court granted due course to the petition.
Case originated as Complaint for collection of sum of money and damages filed by Florencio Saban against Eduardo Ybañez and Genevieve Lim with the Regional Trial Court (RTC) of Cebu City on August 3, 1994; the case was assigned to Branch 20 of the RTC.
RTC rendered a Decision on May 14, 1997 dismissing Saban’s complaint, declaring the four checks issued by Lim stale and non-negotiable, and absolving Lim from liability; Saban appealed.
Court of Appeals, Seventh Division, in CA-G.R. V No. 60392, promulgated its Decision on October 27, 2003 reversing the RTC and holding Saban entitled to his commission amounting to P236,743.00; Lim’s Motion for Reconsideration was denied by the CA in a Resolution dated May 6, 2004.
Petition brought to the Supreme Court; Supreme Court’s Decision dated December 16, 2004 dismisses the petition and affirms the result reached by the Court of Appeals, with specific modifications as to certain findings.

Parties and Title of Case

Petitioner: Genevieve Lim.
Respondent / Plaintiff-Appellant below: Florencio Saban.
Other relevant person: the late Eduardo Ybañez (owner of the lot), originally a defendant; the spouses Benjamin and Lourdes Lim were co-vendees.
Case caption in Court of Appeals: Florencio Saban, Plaintiff-Appellant v. Eduardo Ybanez and Genevieve Lim, Defendants; Genevieve Lim, Defendant-Appellee.

Facts — Agency Agreement and Sale

On February 8, 1994, Eduardo Ybañez (owner of a 1,000-square meter lot in Cebu City) entered into an Agreement and Authority to Negotiate and Sell (Agency Agreement) with Florencio Saban.
Terms of the Agency Agreement: Ybañez authorized Saban to look for a buyer and sell the lot at the price of P200.00 per square meter (equivalent to P200,000.00) net; "any amount over and above for the stated price resulting from the sale shall belong to Mr. Florencio Saban, Sr. and his associate"; expenses covering sale and transfer such as capital gains tax, documentary stamp, transfer tax and other relative expenses were to be borne to the agent and/or the buyer, except payment of realty taxes.
Through Saban’s efforts, Ybañez and his wife sold the lot to Genevieve Lim and the spouses Benjamin and Lourdes Lim on March 10, 1994; the Deed of Absolute Sale indicates the price as P200,000.00.
However, the vendees (Lim and co-vendees) agreed to purchase the lot at P600,000.00 inclusive of taxes and incidental expenses — the record contains conflicting accounts of payments and the true agreed price.

Payments, Checks, and Related Correspondence

After the sale, Lim remitted to Saban P113,257.00 for payment of taxes and P50,000.00 as broker’s commission.
Lim issued four postdated checks in favor of Saban aggregating P236,743.00, specifically:
- Bank of the Philippine Islands (BPI) Check No. 1112645 dated June 12, 1994 for P25,000.00;
- BPI Check No. 1112647 dated June 19, 1994 for P18,743.00;
- BPI Check No. 1112646 dated June 26, 1994 for P25,000.00;
- Equitable PCI Bank Check No. 021491B dated June 20, 1994 for P168,000.00.
Ybañez sent a letter dated June 10, 1994 to Lim asking her to cancel all checks issued in Saban’s favor and to extend another partial payment for the lot to him (Ybañez).
On presentment, the four checks in Saban’s favor were dishonored; subsequently, Saban filed the Complaint (Aug. 3, 1994).
The record contains evidence of additional payments and receipts:
- Lim’s position: on March 10, 1994 she paid Ybañez P100,000.00 and later P130,000.00 on June 28, 1994, plus she gave Saban P113,257.00 for taxes and P50,000.00 as his commission, totaling P393,257.00.
- RTC’s finding: Lim made payments totaling P563,257.00 (P113,257 taxes, P50,000 broker, and P400,000 directly to Ybañez).
- Ybañez acknowledged receipt of P400,000.00 from Lim and co-vendees; the Court’s reconciliation indicates Ybañez received P100,000 on March 10, 1994, acknowledged receipt (through Saban) of P113,257.00 and P50,000.00, and received P130,000.00 on June 28, 1994 — a total of P230,000.00 going directly to Ybañez; apparent rounding by Ybañez to P400,000.00 and waiver of difference.

Allegations and Defenses

Saban’s allegations (Complaint):
- Lim and co-vendees agreed to purchase the lot for P600,000.00, i.e., a P400,000.00 mark-up over Ybañez’s P200,000.00 asking price.
- Of the P600,000.00: P200,000.00 to Ybañez, P50,000.00 to Lim’s agent, P113,257.00 given to Saban for taxes and incidental expenses, and P236,743.00 covered by four postdated checks to Saban.
- Ybañez later told Lim Saban was not entitled to commission because Saban concealed the actual selling price and because he was not a licensed real estate broker; Ybañez convinced Lim to cancel the checks; Ybañez and Lim connived to deprive Saban of his commission.
- The fourth check was dishonored because the account was closed.
Ybañez’s Answer: claimed Saban not entitled to commission because he concealed actual selling price and was not a licensed real estate broker.
Lim’s Answer: asserted she was not privy to the agency agreement, issued stop payment orders for three checks at Ybañez’s request to pay purchase price directly to Ybañez, and that she agreed with Ybañez that the purchase price was only P200,000.00.
Ybañez died during pendency; upon motion of his counsel, the trial court dismissed the case only against him without objection from other parties; later there was dismissal as against Ybañez with Saban’s express consent due to Ybañez’s death on November 11, 1994 (RTC Order dated March 6, 1995).

Issues Presented to the Court

Whether Florencio Saban is entitled to receive his commission from the sale.
If Saban is entitled to commission, whether Genevieve Lim is the proper party liable to pay Saban his sales commission and whether Lim is liable on the four checks as an accommodation party.

RTC Decision (Trial Court)

RTC dismissed Saban’s complaint and declared the four checks issued by Lim stale and non-negotiable.
RTC absolved Lim from any liability toward Saban.
RTC made factual findings regarding amounts paid by Lim as including P113,257.00 for taxes, P50,000.00 for her broker, and P400,000.00 paid directly to Ybañez (totaling P563,257.00) — contrasting with Lim’s claim of lesser payments.

Court of Appeals Decision (Octob