G.R. No. 195481 - Oriental Petroleum and Minerals Corp. vs. Tuscan Realty Inc.

Case Summary (G.R. No. 195481)

Factual Background

Oriental Petroleum owned two condominium units in Corinthian Plaza, Makati. On August 13, 1996 it gave Tuscan Realty, Inc. a non-exclusive authority to offer the units for sale. On August 14, 1996 Tuscan Realty submitted an initial list of prospective buyers that included Gateway Holdings Corporation, and it updated the list on September 18, 1996 with Gateway remaining at the top. Oriental Petroleum thereafter informed Tuscan Realty that it would negotiate directly with a certain Gene de los Reyes of Gateway, and Oriental Petroleum entered into a contract to sell with Gateway dated August 1, 1997. Gateway assigned its rights as buyer to Alonzo Ancheta on September 29, 1997, and Oriental Petroleum executed a deed of absolute sale in Ancheta’s favor on December 10, 1997 for P69,595,400.00. Tuscan Realty then demanded payment of a commission of P2,087,862.00.

Trial Court Proceedings

On June 9, 1999 Tuscan Realty filed a complaint for sum of money with application for preliminary attachment before the Makati Regional Trial Court. The RTC granted the application for preliminary attachment on July 28, 1999. After trial, the RTC rendered judgment on November 2, 2005 dismissing the complaint on the ground that Tuscan Realty failed to substantiate that it was responsible for closing the sale of the condominium units.

Proceedings in the Court of Appeals

Tuscan Realty appealed to the Court of Appeals, which on August 11, 2010 reversed the RTC. The Court of Appeals held that Tuscan Realty had shown it was the procuring cause of the sale by having introduced Gateway to Oriental Petroleum and ordered Oriental Petroleum to pay the commission of P2,087,862.00 plus six percent interest from finality of the CA decision until payment.

Issues Presented

The dispositive issue was whether Tuscan Realty, Inc. was entitled to a broker's commission for the sale of Oriental Petroleum’s condominium units to Alonzo Ancheta, given that Tuscan Realty had introduced Gateway as a prospective buyer but did not participate in the direct negotiations between Oriental Petroleum and Gateway, and Gateway later assigned its rights to Ancheta.

The Parties' Contentions

Tuscan Realty, Inc. contended that it had introduced Gateway to Oriental Petroleum and therefore was the procuring cause entitling it to commission calculated at three percent of the sale price. Oriental Petroleum and Minerals Corporation contended that Gateway was not a ready, willing, and able purchaser, that Gateway assigned its rights to Ancheta who became the actual buyer, that Tuscan Realty did not participate in negotiations that closed the sale, and that Tuscan Realty’s entitlement was subject to a minimum price and a delivery deadline which were not met.

Ruling of the Supreme Court

The Supreme Court denied Oriental Petroleum’s petition and affirmed the decision of the Court of Appeals dated August 11, 2010. The Court ordered that the CA judgment awarding Tuscan Realty the commission be upheld.

Legal Basis and Reasoning

The Court applied the doctrine of procuring cause, defined as the cause that starts a continuous series of events resulting in the production of a purchaser who is ready, willing, and able to buy on the owner's terms, a principle the Court described as analogous to proximate cause in torts. The Court found credible evidence that Tuscan Realty had introduced Gateway to Oriental Petroleum: Tuscan Realty’s submitted lists of prospective buyers always included Gateway and Oriental Petroleum’s Executive Vice-President testified that they learned of Gateway’s interest from Mr. Capotosto of Tuscan Realty. The Court emphasized that the intervening assignment by Gateway to Ancheta and the subsequent sale in Ancheta’s favor could not have occurred but for the intermediate and binding contract to sell entered into by Oriental Petroleum with Gateway; Oriental Petroleum therefore could not claim that it found a direct buyer in Ancheta independent of Gateway. The Court rejected Oriental Petroleum’s contention that Tuscan Realty’s lack of participation in later negotiations defeated its claim, noting that Oriental Petroleum had informed Tuscan Realty that it would negotiate directly with Gateway and that established authorities recognize a broker’s right to commission even when the owner revokes authority and directly negotiates with a buyer whom the broker introduced (citing Infante v. Cunanan, 93 Phil. 691 (1953)). The Court also found that Oriental Petroleum had waived the asserted minimum

Case Syllabus (G.R. No. 195481)

Parties and Procedural Posture

Oriental Petroleum and Minerals Corporation was the owner of two condominium units at Corinthian Plaza and the petitioner before the Supreme Court.
Tuscan Realty, Inc. was the broker and respondent who sued for a brokers commission and sought preliminary attachment.
The action was filed as a complaint for sum of money with application for preliminary attachment before the Makati Regional Trial Court.
The Regional Trial Court granted preliminary attachment but later dismissed the complaint for failure to substantiate that Tuscan Realty closed the sale.
The Court of Appeals granted Tuscan Realty's appeal and ordered payment of the brokers commission with interest.
The Supreme Court denied the petition and affirmed the Decision of the Court of Appeals in CA-G.R. CV 86417 dated August 11, 2010.

Key Factual Allegations

Oriental Petroleum and Minerals Corporation gave Tuscan Realty, Inc. a non-exclusive authority to offer the two condominium units for sale on August 13, 1996.
On August 14, 1996 Tuscan Realty, Inc. submitted an initial list of prospective buyers that included Gateway Holdings Corporation and updated that list on September 18, 1996.
Oriental Petroleum and Minerals Corporation advised Tuscan Realty, Inc. that it would directly negotiate with Gene de los Reyes of Gateway Holdings Corporation.
Oriental Petroleum and Minerals Corporation executed a contract to sell with Gateway Holdings Corporation on August 1, 1997.
Gateway Holdings Corporation assigned its rights to Alonzo Ancheta on September 29, 1997, and Oriental Petroleum and Minerals Corporation executed a deed of absolute sale in favor of Alonzo Ancheta on December 10, 1997 for the price of P69,595,400.00.
Tuscan Realty, Inc. demanded a brokers commission of P2,087,862.00, equivalent to three percent of the final purchase price.
Oriental Petroleum and Minerals Corporation refused to pay the commission on the ground that Tuscan Realty, Inc. did not close the sale.

Procedural History

Tuscan Realty, Inc. filed the complaint on June 9, 1999, and obtained preliminary attachment on July 28, 1999.
The Makati Regional Trial Court dismissed the complaint on November 2, 2005 for failure to substantiate the allegation that the broker closed the sale.
Tuscan Realty, Inc. appealed to the Court of Appeals, which reversed the RTC and ordered payment of the commission plus interest on August 11, 2010.
Oriental Petroleum and Minerals Corporation petitioned the Supreme Court from the Court of Appeals decision.
The Supreme Court rendered judgment on July 10, 2013, denying the petition and affirming the Court of Appeals.

Issue Presented

The sole issue was whether Tuscan Realty, Inc. was entitled to a brokers commission for the sale of Oriental Petroleum and Minerals Corporation's condominium units to Alonzo Ancheta.

Contentions of the Parties

Tuscan Realty, Inc. contended that it introduced Gateway Holdings Corporation to Oriental Petroleum and Minerals Corporation and that such introduction procured the sale that resulted in the eventual transfer to Alonzo Ancheta.
Oriental Petroleum and Minerals Corporation contended that Tuscan Realty, Inc. did not participate in or close the negotiations