Case Summary (G.R. No. 243765)
Petitioner, Respondent and Actions Taken
ERABCO performed promotional and selling activities and claimed to have sold 202 units for total sales of P140,461,655.56. MCDC allegedly refused payment of commissions in 2005–2006 despite demand letters. ERABCO filed an action for sum of money with damages, impleading Olivares. The RTC awarded the unpaid commission balance and attorney’s fees; the CA affirmed with modification on interest; MCDC and Olivares brought a Rule 45 petition to the Supreme Court.
Key Dates and Procedural Posture
Marketing Agreement executed July 2003. RTC Decision: October 21, 2013. CA Decision: May 10, 2018; CA Resolution denying reconsideration: December 17, 2018. Supreme Court Decision resolving the petition: January 5, 2022. (Because the Supreme Court decision is dated after 1990, the 1987 Constitution and applicable post‑1987 statutes and rules govern the legal analysis.)
Applicable Law and Standards Cited
- 1987 Philippine Constitution (governing constitutional context where relevant).
- Civil Code, Article 1370 (literal meaning controls when contract terms are clear and leave no doubt).
- Revised Corporation Code (Republic Act No. 11232), Section 30 (circumstances imposing liability on directors, trustees, or officers).
- Rules of Court, Rule 45 (extraordinary review by certiorari) and standards permitting limited factual review on certiorari in specific circumstances.
- Rules on Evidence and Rules on Admissibility (Rule 129, Rule 130, Rule 131 Section 1) including the rules on original documents, secondary evidence, and burden of proof vs. burden of evidence.
- Precedent principles cited in the record (e.g., standards for piercing corporate veil and burden distinctions as set out in Heirs of Fe Tan Uy, Bank of Commerce v. Nite, Sps. Tapayan v. Martinez, and related authorities).
Terms of the Marketing Agreement (material provisions)
- Scope of broker duties: promotion (briefings, presentations, campaigns, site visits, open houses), selling (orientations, buyer screening, sales counseling, solicitation, document review), logistical support, and assistance until buyer moves in.
- Commission structure (Section F): 9% commission for the first P50,000,000 sales within 2–5 months; 10% if the P50,000,000 threshold is reached within that period; commissions computed on selling price excluding processing/move‑in fees and interest income on in‑house financing.
- For Pag‑IBIG and bank financing accounts, commissions released in tranches: (i) 20% on buyer’s full payment of reservation fee and submission of specified documents; (ii) 10% on submission of loan requirements; (iii) 30% upon remittance of four amortizations of equity payments and approved MSVS; (iv) 40% upon release of take‑out proceeds to MCDC and submission of 24 post‑dated checks for Pag‑IBIG and other post‑dated checks. Prior to delivery of third and fourth tranches, accounts must be current.
Factual Findings Relating to Sales and Payments
The lower courts found that ERABCO sold 202 units, yielding total sales of P140,461,655.56. From that total, a 9% commission equated to P12,641,549.00. MCDC had already paid P8,571,629.12 to ERABCO, leaving an unpaid balance of P4,069,919.88. ERABCO’s claim for a 10% commission was rejected for failure to prove that the P50,000,000 sales threshold was achieved within the 2–5 month timeframe required for the higher rate.
RTC Ruling
The RTC concluded that ERABCO fulfilled its contractual obligations and was entitled to commissions. It awarded the unpaid balance of P4,069,919.88 plus legal interest at 12% per annum from last demand, and awarded attorney’s fees of P50,000.00. The RTC rejected ERABCO’s claim for 10% and MCDC’s contention that commissions on certain “bought‑back” units should be lower. The RTC also declared Olivares solidarily liable with MCDC.
CA Ruling and Modification
The Court of Appeals affirmed substantively the RTC’s findings that the Marketing Agreement was clear, ERABCO performed, and MCDC remained liable for the unpaid commission. The CA modified the interest award to conform with jurisprudence: 12% per annum from filing of the complaint up to June 30, 2013; 6% per annum from July 1, 2013 until finality; and 6% thereafter until satisfaction. The CA maintained the award of attorney’s fees (P50,000.00) and rejected MCDC’s defenses including the buy‑back argument.
Issues on Appeal to the Supreme Court
Petitioners raised principally: (1) that the CA’s factual conclusions were speculative and unsupported; (2) that ERABCO failed to prove compliance with the documentary preconditions for each tranche and therefore was not entitled to the commissions it claimed; (3) that ERABCO’s documentary evidence consisted of inadmissible photocopies breaching the best evidence/original document rule; (4) that the burden of proof was improperly shifted to MCDC and Olivares; and (5) that Olivares should not have been held personally liable as he was a mere corporate officer.
Standard of Review under Rule 45 and the Court’s Scope to Review Facts
The Supreme Court reiterated that Rule 45 is not a general venue for reweighing evidence, but recognized specific, well‑settled exceptions permitting review of factual findings: for example, when findings are based on speculation or conjecture, are manifestly mistaken, when there is grave abuse of discretion, misapprehension of facts, conflicting findings, conclusions without citation to specific evidence, or when relevant undisputed facts exist that would justify a different outcome. Applying those parameters, the Court found cause to examine limited factual findings, particularly as to Olivares’ personal liability, because the lower courts’ treatment of that issue lacked evidentiary support.
Contract Interpretation: the Marketing Agreement as Controlling Law Between the Parties
The Court emphasized the established principle that a clear and unambiguous contract controls and must be enforced as written (Article 1370). If the contract language is plain and leaves no doubt as to parties’ intention, the court must give literal effect to its terms and may not rewrite contract provisions or impose conditions not agreed upon. Applying this, the Court found the Marketing Agreement’s provisions to be clear on commission entitlements and the tranches for Pag‑IBIG/bank cases.
Court’s Findings on ERABCO’s Entitlement to Commission
The Supreme Court agreed with the RTC and CA that ERABCO performed its obligations under the Marketing Agreement (Sections A, B, and F), established by receipts, vouchers issued by MCDC, voluminous account records and analyses, and witness testimony. ERABCO proved by a preponderance of evidence that it sold the 202 units and satisfied the requisites for the release of commissions. MCDC and Olivares failed to rebut the evidence supporting ERABCO’s accounting of commissions and payments. The Court explained the distinction between burden of proof (which does not shift) and burden of evidence (which may shift during proceedings), and found that ERABCO carried its burden to make a prima facie case, thereby shifting the evidentiary duty to MCDC and Olivares to refute the claim—an obligation they did not discharge.
Admissibility of Photocopies and Waiver of Objections
The Supreme Court addressed the best evidence/original document rule. It explained the applicable exceptions: secondary evidence is permissible where originals are in the custody of the adverse party and the adverse party fails to produce them after reasonable notice, where originals are voluminous and a summary is necessary, or where originals are public records for which certified copies may be used. Critically, the Court observed that ERABCO had moved for production of MCDC’s documents (motion granted), and MCDC’s counsel admitted the existence, due execution, and genuineness of the requested documents (subject to signature verification). MCDC did not timely object to the formal admission of photocopies at trial; having failed to object at the proper time, MCDC waived the right to later complain about admissibility. The Court invoked precedent t
...continue readingCase Syllabus (G.R. No. 243765)
Case Caption and Nature of the Proceeding
- Petition for Review on Certiorari under Rule 45 filed by Malate Construction Development Corporation (MCDC) and Giovanni Olivares seeking reversal of the Court of Appeals' May 10, 2018 Decision and December 17, 2018 Resolution in CA-G.R. CV No. 103092.
- Subject of the action: enforcement of a Marketing Agreement and recovery of unpaid broker’s (sales) commissions and attorney’s fees claimed by Extraordinary Realty Agents & Brokers Cooperative (ERABCO).
- Final relief sought at the Supreme Court level: modification or reversal of lower courts’ rulings awarding commissions and holding Olivares solidarily liable.
Parties and Roles
- Petitioners: Malate Construction Development Corporation (MCDC), a domestic corporation engaged in development and sale of residential subdivisions (notably low-cost housing projects), and Giovanni Olivares, President of MCDC.
- Respondent / Plaintiff in the trial court: Extraordinary Realty Agents & Brokers Cooperative (ERABCO), a cooperative engaged in realty brokerage, contracted as broker/marketing agent for MCDC’s Mahogany Villas project in Looc, Calamba, Laguna.
- ERABCO impleaded Olivares as a party-defendant in the complaint for sum of money with damages.
Contractual Relationship — Marketing Agreement (Overview)
- Agreement entered: July 2003 Marketing Agreement between MCDC and ERABCO for promotion and sale of Mahogany Villas units.
- Scope of ERABCO’s promotional activities: project briefing, presentations to individuals and groups, campaign, site visits, open houses, and related promotional undertakings.
- Scope of ERABCO’s selling activities: orientations on the project and home financing, buyer screening, sales counseling, solicitation, review of required documents, and other related selling tasks.
- Specific obligations of ERABCO enumerated in the Marketing Agreement included:
- Sell at least ten housing units within two months.
- Underwrite marketing of Mahogany Villas within one year using technical expertise and material capability.
- Participate in company-initiated marketing activities; exercise due prudence in screening and endorsing buyers; collect, compile and examine documentary requirements timely; schedule agents’ visits and provide logistical support; inform MCDC of sales status; assist buyer until final move-in.
- Compensation provisions (Section F):
- Commission rates: 9% commission for the first P50,000,000 sales within 2–5 months; 10% if P50,000,000 reached within specified period; otherwise 9% applies.
- Basis of commissions: selling price of the housing package excluding processing fees, move-in fees, and interest income on in-house financing.
- For Pag-IBIG and bank financing accounts, commission released in tranches:
- 20% upon buyer’s full payment of reservation fee and submission of reservation agreement, Buyers Information Sheet, ITR or CEC, and one latest payslip.
- 10% upon submission of MCDC loan requirements.
- 30% upon remittance of four amortizations of equity payments and approved Membership Status Verification Slip (MSVS).
- 40% upon release of take-out proceeds to MCDC and submission of 24 post-dated checks for Pag-IBIG amortization and post-dated checks for remaining equities.
- Precondition for third and fourth tranche: all accounts must be in current status prior to delivery of commissions.
Factual Background — Sales and Dispute
- ERABCO’s performance: ERABCO promoted and sold 202 housing units in Mahogany Villas with total sales amounting to P140,461,655.56.
- MCDC’s partial payment: MCDC had paid ERABCO P8,571,629.12 in commissions.
- MCDC’s refusal in 2005–2006 to pay remaining commissions prompted ERABCO’s written demands and eventual complaint for sum of money with damages seeking P4,962,935.77 (including interest) and exemplary damages and attorney’s fees of P50,000.00.
- ERABCO’s claim: entitlement to commission based on completed services and fulfillment of conditions required by the Marketing Agreement; seeks nine percent (9%) commission on sales achieved.
- MCDC and Olivares’ counterclaims and defenses: denied ERABCO’s allegations; alleged inconsistencies in claimed amounts; asserted ERABCO received higher commission than entitled; argued that some units merited lower commission percentages because of alleged buy-back transactions by MCDC from Pag-IBIG.
Procedural History — Trial Court to Supreme Court
- Regional Trial Court (RTC), Manila, Branch 47 Decision (October 21, 2013):
- Found ERABCO sold 202 units worth P140,461,655.56 and that ERABCO’s services were completed as per Marketing Agreement.
- Awarded 9% commission of P12,641,549.00; credited payments of P8,571,629.12; ordered defendants to pay balance of P4,069,919.88 plus 12% legal interest per annum from last demand; declared Olivares solidarily liable; awarded attorney’s fees P50,000.00.
- Denied ERABCO’s claim for the higher 10% commission for failure to prove sales over P50,000,000 within 2–5 months.
- Rejected MCDC’s argument that certain units were subject to 5% or 7% commission due to buy-backs.
- Court of Appeals (CA) Decision (May 10, 2018):
- Affirmed RTC holding that the Marketing Agreement’s provisions were clear and unambiguous.
- Agreed that ERABCO sold 202 units and complied with Sections A, B, and F; MCDC failed to disprove the sales and ERABCO’s accounting basis.
- Held MCDC liable for balance P4,069,919.88; modified interest computation consistent with jurisprudence: 12% p.a. from filing of complaint up to June 30, 2013, and 6% p.a. from July 1, 2013 until finality; post-finality interest 6% p.a.; attorney’s fees P50,000 to earn 6% p.a. from finality.
- Denied MCDC’s motion for reconsideration (CA Resolution, December 17, 2018).
- Supreme Court Review (G.R. No. 243765; Decision authored by Justice Gaerlan, January 5, 2022):
- Petition partly granted: affirmed MCDC’s liability to pay unpaid commission balance but deleted Giovanni Olivares’ personal liability.
- Ordered MCDC to pay P4,069,919.88 with 12% p.a. legal interest from filing until June 30, 2013, and 6% p.a. from July 1, 2013 until full satisfaction; total amount to earn 6% p.a. from finality until full satisfaction.
- Modified CA decision by removing personal liability of Olivares.
Issues Presented to the Supreme Court
- Primary issues:
- Whether MCDC is liable to pay ERABCO the unpaid broker’s commission claimed.
- Whether Giovanni Olivares may be held personally and solidarily liable with MCDC for payment of the commissions.
- Additional factual-evidentiary allegations raised by petitioners:
- That the CA’s findings were speculative and unsupported by evidence.
- That ERABCO failed to present documentary proof of compliance with tranche conditions.
- That ERABCO’s documentary proofs were mere photocopies, violating the best evidence/original document rule.
- That the CA shifted the burden of proof to MCDC and Olivares.
- That Olivares, as a corporate officer, sh