Title
Manotok Brothers, Inc. vs. Court of Appeals
Case
G.R. No. 94753
Decision Date
Apr 7, 1993
Petitioner refused to pay agent's commission after property sale, claiming authority expired. Court ruled agent entitled as efficient procuring cause.

Case Summary (G.R. No. 94753)

Key Dates and Procedural Posture

Several authorizations were issued between 1966 and November 16, 1967, with extensions culminating in an authorization said to remain in force until May 14, 1968. Municipal Ordinance No. 6603 appropriating P410,816.00 was passed April 26, 1968 and signed by the Mayor on May 17, 1968. The deed of sale was executed January 14, 1969, with full payment completed April 8, 1969. Trial court judgment awarded the broker his commission and attorney’s fees; the Court of Appeals affirmed. Petitioner filed a petition for review before the Supreme Court, which initially issued procedural resolutions and later, in 1990, set aside an earlier dismissal and issued a temporary restraining order; the Supreme Court’s final disposition affirmed the Court of Appeals’ decision and lifted the TRO.

Applicable Law and Constitutional Basis

Because the decision was rendered after 1990, the applicable constitutional framework for procedural matters is the 1987 Constitution. Substantively, the case turns on agency and brokerage principles under civil law and relevant Philippine jurisprudence governing brokers’ entitlement to commission, including the general rule that a broker is entitled to commission only upon successful consummation of the sale and the recognized equitable exception illustrated in prior decisions (notably Prats v. Court of Appeals and others cited by the Court).

Facts Material to the Dispute

Manotok Brothers executed a series of written authorizations empowering Saligumba to negotiate the sale of the company’s land and building formerly leased to and used by a public school. The letters set minimum sale prices and provided for a five-percent commission. Saligumba undertook negotiation steps, including meetings with municipal actors, seeking appraisals, and submitting proposals that led to the Municipal Board’s appropriation ordinance. The ordinance was passed while Saligumba’s authority was still effective but was signed by the Mayor three days after the last authorization expired. The sale was ultimately consummated and fully paid; the petitioner refused to pay the broker’s commission, prompting Saligumba to sue for P20,554.50 as commission and to obtain attorney’s fees.

Trial and Appellate Findings

The trial court credited Saligumba’s testimony and supporting witnesses (Ancheta, Atty. Bisbal) that he was authorized and performed the acts necessary to procure the sale, and thus awarded the commission plus legal interest and attorney’s fees. The Court of Appeals affirmed the trial court’s factual findings and legal conclusion that the broker was entitled to compensation. The Supreme Court, after procedural developments including an initial dismissal and later setting aside of that dismissal, reviewed the substantive question and affirmed the appellate ruling.

Central Legal Issue

Whether Saligumba, whose written authority expired before the actual execution of the deed of sale, is nevertheless entitled to the five-percent commission for having procured the sale of petitioner’s property to the City of Manila.

Parties’ Contentions

Petitioner’s contentions: a broker is entitled to commission only if he brings the parties to agreement and consummation within the period of his authority; Saligumba failed to effect the sale within the authorization periods and thus is not entitled to commission; alternatively, Filomeno Huelgas or others were the actual procuring causes. Respondent Saligumba’s contention: his efforts were the efficient procuring cause; he secured municipal action culminating in the appropriation ordinance and the sale, so he is entitled to the agreed commission despite the expiration of his written authority before formal signing.

Supreme Court’s Legal Analysis — General Rule and Equitable Exception

The Court acknowledged the established principle that a broker ordinarily acquires a right to commission only upon successful consummation of the sale. However, the Court emphasized the equitable exception recognized in precedent (notably Prats v. Court of Appeals): where the agent’s diligent efforts are the proximate or efficient procuring cause of the transaction and materially contribute to bringing the parties together, equity may award compensation even if the formal consummation occurs after the agent’s authority has expired. The Court contrasted applicable precedent that denied commission where the claimant knew another agent was also negotiating (Danon v. Brimo) and thus could not claim exclusivity; that factual circumstance did not obtain here.

Application of Precedent to the Facts

The Court found that Saligumba was the only party given written authority to negotiate from July 5, 1966 through May 14, 1968, and that his efforts led to the appraisal, endorsement to the Superintendent of City Schools, and submission to the Municipal Board resulting in Ordinance No. 6603. The ordinance was passed on April 26, 1968—while his authority was still in force—and the Mayor’s signature followed only three days after expiration. The Court determined that without Saligumba’s initiative and work, there would have been no ordinance for the Mayor to approve and no sale to consummate; Huelgas’s later interventions occurred after the critical municipal approvals had already been secured. Given the close, proximate, and causal connection between Saligumba’s efforts and the City’s

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