ATTY. ERNESTO C.

PEREZ II, CTEP®

Managing Partner
PEREZ VALENCIA & PEREZ Law Firm
Managing Director
REALTTORNEY® REAL ESTATE PLANNING CONSULTANCY
Blogger, Author and Lecturer
PRC-Accredited Lecturer/Speaker of Training Programs
Post-Baccalaureate Diploma in Real Estate Management
https://realttorney.com
 Objectives of the Presentation
1. We’ll review the pertinent definitions in Rep. Act No.
9646 and Pres. Decree No. 957 of a “real estate broker”
and scrutinize its nature as a profession.

2. After the 2-hour presentation, you should be able to

understand what are the requirements to be met to
claim your compensation for the transaction you
successfully helped close.

3. Learn the Decisions of the Philippine Supreme of the

Philippines regarding the right to compensation of real
estate broker practicing in the Philippines since the
1910s.
HISTORICAL OVERVIEW
Macondray & Co., Inc. v. Sellner is the first
case decided by the SC regarding the right of
a real estate broker to his agreed commission
for the sale of a parcel of land in the early 1912.

▪ No hint of any government regulation to

police the actions of these brokers or agents
for almost 15 years after the passage of Act
No. 496 in 1902.
HISTORICAL OVERVIEW
The only piece of legislation that came close
to regulating the actions of real estate brokers
or agents was Section 3 (e) of Act No. 2728
enacted on January 31, 1918.
▪ “(e) To x x x qualify, approve, authorize, and license for periods
not to exceed three years, as exchange agents, merchandise
brokers, x x x and to suspend and revoke said licenses or any
of them for cause, and to organize and authorize association of
exchange agents, merchandise brokers, x x x subject to such
regulations as it may prescribe, and to consolidate, suspend, and
dissolve the same.”
HISTORICAL OVERVIEW
Eventually, Act No. 2728 was amended by Act
No. 3715 (enacted on November 20, 1930) and Act No.
3969 (enacted on December 2, 1932).
▪ It was the amendment of Act No. 3969 that
included for the first time the words “real-
estate brokers” as the group of people that
the Bureau of Commerce and Industry
regulated.
HISTORICAL OVERVIEW
By 1933, like-minded individuals, who are real
estate brokers or agents in the Philippines can
apply for a 3-year license at the Bureau of
Commerce and Industry.
▪ However, Act No. 2728, as amended by Acts No. 3715
and 3969, did not define comprehensively the extent
or sufficiency of the training and qualifications that a
real estate broker must complete.
HISTORICAL OVERVIEW
Eventually, Commerce Administrative
Code No. 60-1, dated April 18, 1960 was
promulgated by the then Bureau of Domestic
Trade. It provided a more efficient mechanism
in the licensing of the real estate salesman,
broker and appraisers and raises it to a
profession from a mere business.
HISTORICAL OVERVIEW
The Department Administrative Order No.
1-75, Series of 1975 was then promulgated,
and finally in 1985, Ministry Order No. 39,
Series of 1985 was issued to replace DAO No.
1-75.
▪ The passage of MO No. 39, started the
‘professionalization of the realty service practice’.
HISTORICAL OVERVIEW
Between the promulgation of DAO No. 1-75,
Series of 1975 and MO No. 39, Series of 1985,
Presidential Decree No. 957 was signed into
law by then Pres. Marcos on July 12, 1976.
▪ PD 957 is the first law in the Philippines that
defined who real estate developer, dealer,
broker and salesman are and what they do.
HISTORICAL OVERVIEW
MO No. 39 – Rules and Regulations
Governing the Licensing and Supervision of
Real Estate Salesmen, Brokers, Appraisers and
Consultants and Realty Service Organizations
▪ It governed the real estate service practice of
natural or juridical persons and realty service
organization for the next 24 years.
HISTORICAL OVERVIEW
Before the enactment of R.A. 9646, the
practice of the real estate service in the
country was regulated and supervised by
the DTI, through its Bureau of Trade
Regulation and Consumer Protection, in
the exercise of its consumer regulation
functions.
HISTORICAL OVERVIEW
Pursuant to MO No. 39, the licensing,
registration and regulation of real estate
salesmen, real estate brokers, real estate
appraisers and real estate consultants, the
duration of their licenses, their renewal and
termination of the same are all under the
BTRCP.
HISTORICAL OVERVIEW
And should the real estate service
practitioners run violates the law, or
engages in unethical practices in their
transactions, it was the BTRCP that
investigate and imposes suspensions and
revocations of the licenses.
REAL ESTATE SERVICE ACT OF THE
PHILIPPINES

APPROVED BY GMA - JUNE 29, 2009

PUBLISHED JULY 15, 2009
EFFECTIVE JULY 30, 2009
OF THE PHILIPPINES 2009
R.A. No. 9646 [RESA]
Section 3. Definition of Terms. – As used in
this Act, the following :

x x x
(c) “Real estate” refers to the land and all those
items which are attached to the land. It is the
physical, tangible entity, together with all the
additions or improvements on, above or below
the ground.
R.A. No. 9646 [Section 3]
(e) “Real estate developer” refers to any natural
or juridical person engaged in the business of
developing real estate development project for
his/her or its own account and offering them for
sale or lease.

(f) “Real property” includes all the rights,

interests and benefits related to the ownership of
real estate.
R.A. No. 9646 [Section 3]
(g) “Real estate service practitioners” shall
refer to and consist of the following:
x x x

(4) Real estate broker – a duly registered and licensed

natural person who, for a professional fee, commission or
other valuable consideration, acts as an agent of a party in a
real estate transaction to offer, advertise, solicit, list,
promote, mediate, negotiate or effect the meeting of the
minds on the sale, purchase, exchange, mortgage, lease or
joint venture, or other similar transactions on real estate or
any interest therein.
Pres. Decree No. 957
Section 2. Definition of Terms When Used in this
Decree, the following terms shall, unless the
context otherwise indicates, have the following
meaning:
x x x

(l) Broker. “Broker” shall mean any person who,

for commission or other compensation,
undertakes to sell or negotiate the sale of a real
estate belonging to another.
R.A. No. 9646 [RESA]
Section 27. Acts Constituting the Practice of
Real Estate Service. – Any single act or
transaction embraced within the provisions of
Section 3(g) hereof, as performed by real
estate service practitioners, shall constitute an
act of engaging in the practice of real estate
service.
Pres. Decree No. 957
NOTE: For those brokers and salespersons
into project selling, any single act or
transaction thereof shall constitute practice
of real estate service. [Sec. 4.1, 4.9 and 4.17,
HLURB Board Resolution No. 922, Series of 2014]
R.A. No. 9646 [RESA]
Section 28. Exemptions from the Acts
Constituting the Practice of Real Estate
Service. – The provisions of this Act and its
rules and regulations shall not apply to the
following:
R.A. No. 9646 [Section 28]
(a) Any person, natural or juridical, who shall
directly perform by himself/herself the acts
mentioned in Section 3 hereof with reference
to his/her or its own property, except real
estate developers; [FSBO]

(b) Any receiver, trustee or assignee in

bankruptcy or insolvency proceedings; [FRIA]
R.A. No. 9646 [Section 28]
(c) Any person acting pursuant to the order of
any court of justice; [Executors, Administrators or
Guardians]

(d) Any person who is a duly constituted

attorney-in-fact for purposes of sale,
mortgage, lease or exchange, or other similar
contracts of real estate, without requiring
any form of compensation or remuneration;
and
R.A. No. 9646 [Section 28]
(e) Public officers in the performance of their
official duties and functions, except
government assessors and appraisers. [Court
Sheriff, Liquidators or Deputy Liquidators of the PDIC]

Can financial institutions perform acts

constituting the practice of real estate service by
disposing of Real and Other Properties Owned
or Acquired (ROPOA)?
REAL ESTATE AGENCY
Real Estate Agency is a status that defines the
duties of the agents and the rights of the
client-principal.

In real estate, agency is normally created by

either a written listing agreement with a seller
or a buyer agency agreement with a buyer.

Is it wise to have a verbal listing or agency

agreement?
REAL ESTATE AGENCY
By definition in RESA, it seems that real
estate brokers have many capacities (i.e., offer,
advertise, solicit, list, promote, mediate, negotiate or
effect the meeting of the minds on the sale, etc.).

However, most brokers serve only as the agent

of the seller, who agrees to pay a real estate
commission if the broker secures a buyer
meeting the seller’s terms of sale.
William M. Shenkel, Modern Real Estate Principles [Revised Edition], p. 292
REAL ESTATE AGENCY

Seller [PRINCIPAL] AGENT Buyers [PROSPECTS]

On the flipside…

Buyer [PRINCIPAL] AGENT Sellers [PROSPECTS]

REAL ESTATE AGENCY
In practice, the real estate broker must find a
property that meets buyer requirements, and
to this extent the broker serves the buyer.

“ready, willing and able buyer”

REAL ESTATE AGENCY
But the legal relationship between the “agent”
and the principal requires that the broker
observe certain duties of the agents to the
principal.

“Principal-Agent Relationship”
LAW ON AGENCY [Civil Code]
Under Article 1868 of the Civil Code, by the
contract of agency a person binds himself to
render some service or to do something in
representation or on behalf of another, with
the consent or authority of the latter.

The agency may be express or implied. It may

be in writing or oral.
LAW ON AGENCY [Civil Code]
Under Article 1875, the agency is presumed to
be for a compensation, unless there is proof to
the contrary. [c.f. Section 28 (d), RESA]
Agent Duties to the Principal
Generally, a seller agrees to pay a commission
if the listingbroker completes the purpose of
the agency; namely, to find a buyer who meets
the terms of the sale.

According to Prof. Shenkel, the relation

between the seller and the broker in this type
of agency requires that the broker observe
seven (7) duties.
Agent Duties to the Principal (1)
Loyal to his or her principal. – Real estate
brokers often have access to information that
bears on the future value of real estate.
Hence, the broker must not make
misrepresentations and must not conceal
facts to the harm of the principal.
Agent Duties to the Principal (1)
In fact, loyalty requires that the real estate
broker advise the principal of events that may
affect the seller’s interest. Furthermore, the
broker must not mislead or deceive the
principal in any way.
[C.f. Section 3 (a), Article III, PRBRES Resolution No. 39,
Series of 2019 (Code of Ethics & Responsibilities of Real
Estate Service Practitioners)]
Resolution No. 39, Series of 2019
Section 3. To the Client

(a) The Practitioner shall be honest and

trustworthy and shall observe sincerity,
impartiality, fairness and loyalty in
his/her professional practice.
Agent Duties to the Principal (2)
Real estate broker acts as a fiduciary. –
The fiduciary relationship is formed when
good conscience requires that one act at all
times for the sole benefit and interest of
another. Because of the fiduciary relationship
of the agency, the broker has no right to hold
an interest adverse to that of the principal.
Agent Duties to the Principal (2)
This rule prohibits the real estate broker from
buying the seller’s property through a third
party for resale at a profit.
Agent Duties to the Principal (3)
The broker must account for money
deposits. – In real estate agency, the broker
may hold monies on deposit pending the
closing of the sale, which may take several
days or weeks. Hence, the broker may not
withhold funds due to the seller.
Agent Duties to the Principal (4)
The broker must obey the instructions of
the principal. – It is equally clear that in
offering real property for sale through an
agency, the seller-principal specifies
acceptable terms of sale. [C.f. Article 1881, Civil
Code of the Philippines]
LAW ON AGENCY [Civil Code]
Under Article 1881, the agent must act within
the scope of his authority. He may do such
acts as may be conducive to the
accomplishment of the purpose of the agency.
Agent Duties to the Principal (4)
For example: If the seller requires a cash down
payment, the broker violates the agency in
accepting a personal check. If the check is
returned for insufficiency of funds, the agent
would be personally liable since he or she did
not follow the instructions of the principal.
Agent Duties to the Principal (5)
The broker must act in person. – In
employing an agent broker, the seller relies on
the personal services of the real estate broker.
Even if the broker cooperates with another
broker in the sale of the property, it is
presumed that the cooperating broker acts
under the instructions from the listing
agency or agreement.
Agent Duties to the Principal (5)
The issue is that the seller enlists the personal
services of the real estate broker on the basis
of his or her reputation, skill and experience.
Consequently, the broker would be in
violation of the agency relationship if he or
she delegated his or her work to others.

But I employ several real estate

salespersons, what now?
Agent Duties to the Principal (6)
No Personal Interest. – The real estate
broker must not have a personal interest in
the property for which he or she acts as broker
without full disclosure to the principal.

A broker may not gain secret profits from the

principal.
Agent Duties to the Principal (6)
The real estate broker must not deliberately
list the property for an exorbitant price and
later secretly buy the property at a lower price
in his or her own name.
Agent Duties to the Principal (7)
Acting for Buyer and Seller. – The real
estate broker is prohibited form acting for
both the buyer and the seller without full
disclosure. Without disclosure, the broker is
in violation of his or her agency if he or she
accepts a commission from the principal. In
short, without permission the broker may not
serve two (2) masters.
Compensation Requirements
1. Valid real estate license is required, as
mandated by the provisions of the Real Estate
Service Act [Rep. Act No. 9646]

2. Procuring Cause of the Sale. Most

litigation over the payment of real estate
commissions often arise from disputes over
who was the procuring cause of the sale.
Compensation Requirements
3. Evidence of Broker Employment. The
listing agreement provides evidence of
employment or engagement of one’s services.

4. Qualified Buyer. The concept of “ready,

willing, and able buyer” is controlling. Buyers
who offer to purchase a seller’s property on
terms unacceptable to the seller do not
establish a claim for real estate commissions.
Compensation Requirements
As a general rule, the real estate broker earns
compensation only when he or she
successfully procures a customer, usually a
purchaser, who is ready, willing, and able to
complete the transaction at a price and on
terms and conditions which are stipulated in
the listing agreement, or which are otherwise
consented to by the “principal” or employer.
Compensation Requirements
Unless the seller accepts the purchaser’s offer
to buy on terms other than the seller’s original
terms, the broker has not earned a
commission.

Similarly, if the buyer does not qualify for the

required loan, the listing agreement will
usually excuse the seller from paying a
commission.
Macondray & Co., Inc. v. Sellner,
33 Phil. 370 (1916)

Brief Facts: Early in 1912, George Sellner, a real

estate broker, sold a certain parcel of land to
Macondray & Co., Inc. for P17,175.00.

When the final transfer was made, Macondray

informed Sellner that the land was wholly
unsuited for use as a coal-yard and requested
him to find another purchaser.
Macondray & Co., Inc. v. Sellner,
33 Phil. 370 (1916)

Macondray was willing to dispose the land for

P17,175.00, and Sellner was to have his
commission for the sale over and above the
agreed selling price.

A short time thereafter, Sellner reported to

Macondray that he had a purchaser for the land
willing to pay P18,692.50.
Macondray & Co., Inc. v. Sellner,
33 Phil. 370 (1916)

Macondray executed a formal deed of

conveyance, and together with the Torrens
certificate of title, was delivered to Sellner to
conclude the sale with Mr. Baretto.

Mr. Baretto wanted to conduct due diligence on

the Torrens title and deed of conveyance. If
satisfied, a check for the agreed price will be
issued to Sellner.
Macondray & Co., Inc. v. Sellner,
33 Phil. 370 (1916)

Mr. Baretto had to go to Tayabas on business and

delayed his returned to Manila. Macondray
wanted to close the deal immediately. But delays
persisted.

Macondray threatened to call off the deal if

payment will not be made by September 2.
Payment was made 36 hours later. But,
Macondray refused to receive the payment.
Macondray & Co., Inc. v. Sellner,
33 Phil. 370 (1916)

Macondray filed an action to recover P17,175.00

as damages for the cancelled sale when payment
was not received on the stipulated date and time.

Issue: Whether Macondray had the right to

terminate the sale after the hour indicated had
passed. And, whether Macondray had the right
to claim monetary damages against Sellner.
Macondray & Co., Inc. v. Sellner,
33 Phil. 370 (1916)

HELD: The SC quoted a Decision in the US

which said: “The business of a real estate broker
or agent is only to find a purchaser.”

“The broker becomes entitled to the usual

commission whenever he brings to his principal a
party who is able and willing to take the property
and enter into a valid contract upon the terms
Macondray & Co., Inc. v. Sellner,
33 Phil. 370 (1916)

then named by the principal, although the

particulars may be arranged, and the matter
negotiated and completed between the principal
and the purchaser directly.”

No written listing agreement by Sellner? Can an

oral “listing agreement” be the basis to collect
commission?
Danon vs. Brimo & Co., [G.R. No. 15823,
September 12, 1921]

Brief Facts: Antonio Brimo in a conversation

with Julio Danon, informed that he (Brimo)
desired to sell his factory for the amount of P1.2
million; that Brimo agreed to pay 5%
commission if Danon could sell the property for
that amount; and no definite period of time was
fixed for Danon to effect the sale.
Danon vs. Brimo & Co., [G.R. No. 15823,
September 12, 1921]

It seems that another broker, Sellner, was also

negotiating the sale for the same property.

Immediately after the conversation, Danon went

to see Mauro Prieto and offered to sell him the
factory of Brimo at P1.2 million. After learning
that Brimo wanted to really sell the factory,
Prieto asked to see Brimo to negotiate the sale.
Danon vs. Brimo & Co., [G.R. No. 15823,
September 12, 1921]

In the meantime, Sellner, the other broker

referred to, had found a purchaser for the same
property, who ultimately bought it for P1.3
million.

For that reason, Mr. Prieto, the would-be

purchaser found by Danon, never came to see
Mr. Brimo to perfect the proposed negotiation.
Danon vs. Brimo & Co., [G.R. No. 15823,
September 12, 1921]

Danon claims that the reasons why the sale to

Mr. Prieto was not consummated was because
Mr. Brimo refused to sell to a Filipino firm and
preferred an American buyer.

Issue: Is Julio Danon entitled to recover the sum

of P60,000.00 as compensation for his service?
Danon vs. Brimo & Co., [G.R. No. 15823,
September 12, 1921]

HELD: Mr. Justice Johnson, observed that “the

most that can be said as to what [Danon] had
accomplished is, that he had found a person
who might have bought the defendant’s factory if
the defendant had not sold it to someone else.

The evidence does not show that [Mr. Prieto] has

definitely decided to buy the property in
question at the fixed price of P1.2 million.
Danon vs. Brimo & Co., [G.R. No. 15823,
September 12, 1921]

Simply put, Danon was not “the efficient agent or

the procuring cause of the sale.” The means
employed by him, and his efforts must result in
the sale. He must find the purchaser, and the sale
must proceed from his efforts acting as broker.

“A broker is never entitled to commission for

unsuccessful efforts.”
Danon vs. Brimo & Co., [G.R. No. 15823,
September 12, 1921]
Infante vs. Cunanan, et al., [G.R. No. L-
5180, August 31, 1953]
Brief Facts: Consejo Infante was the owner of
two parcels of land, together with a house built
thereon, situated in the City of Manila and
covered by Transfer Certificate of Title No. 61786.
Infante vs. Cunanan, et al., [G.R. No. L-
5180, August 31, 1953]
On or before November 30, 1948, she contracted
the services of Jose Cunanan and Juan Mijares, to
sell the above-mentioned property for a price of
P30,000 subject to the condition that the
purchaser would assume the mortgage existing
thereon in the favor of the Rehabilitation
Finance Corporation.
Infante vs. Cunanan, et al., [G.R. No. L-
5180, August 31, 1953]
She agreed to pay them a commission of 5
percent on the purchase price plus whatever
overprice they may obtain for the property.

Cunanan, et al. found Pio S. Noche who was

willing to buy the property under the terms
agreed upon with Infante.
Infante vs. Cunanan, et al., [G.R. No. L-
5180, August 31, 1953]
But when they introduced Noche to Infante,
the latter informed them that she was no
longer interested in selling the property and
succeeded in making them sign a document
stating therein that the written authority she
had given them was already cancelled.
Infante vs. Cunanan, et al., [G.R. No. L-
5180, August 31, 1953]
However, on December 20, 1948, Infante dealt
directly with Noche selling to him the property
for P31,000. Upon learning this transaction,
plaintiffs demanded from defendant the
payment of their commission, but she refused
and so they brought the present action.
Infante vs. Cunanan, et al., [G.R. No. L-
5180, August 31, 1953]
HELD: The Court found Infante to be in bad
faith. It stated that she took “advantage of the
benevolence of the other and acts in a manner
that would promote [her] own selfish interest.
This act is unfair as would amount to bad faith.”
Infante vs. Cunanan, et al., [G.R. No. L-
5180, August 31, 1953]
While it is true that the property owner who
agreed to employ real estate brokers to sell her
property and promised to pay a commission for
that completed transaction has every right to
cancel such authority to sell given to the broker,
such cannot be done if it was to evade payment
of the commission to the brokers.
SIDEBAR
Please note that our RESA has no specific
provisions that deal with the real estate brokers’
right to commissions or compensations.

Question 0f the Day: Do brokers really need to

have a written contract signed by their client (the
property owner) in order to be entitled to the
commission or compensation agreed upon?
SIDEBAR
In the Philippine setting, the first case decided
by the Supreme Court that mentioned the
execution of an “exclusive option and authority”
by the property owner in favor of a real estate
broker, is also the first case where the Court
granted in equity an amount to the broker for his
efforts and assistance in the transaction, which
however was finalized and consummated after
the expiration of the broker’s exclusive authority.
Prats vs. Honorable Court of Appeals,
[G.R. No. L-39822, January 31, 1978]
Brief Facts: Alfonso Doronila was the registered
owner of 300 hectares of land, situated in
Montalban, Rizal covered by several land titles.
In July 3, 1967, Atty. Doronila offered to sell his
real properties directly to the Social Security
System (SSS) at P4.00 per square meter.
However, SSS did not accept this offer, and
countered to buy at P3.25 per square meter.
Prats vs. Honorable Court of Appeals,
[G.R. No. L-39822, January 31, 1978]
Atty. Doronila accepted the price countered by
SSS upon the condition that the entire purchase
price be paid in cash and such payment be made
within a period of 30 days from the date of the
letter accepting the counter-offer. Then, SSS
informed Atty. Doronila that the matter is now
with the Administrator for study and comment.
Prats vs. Honorable Court of Appeals,
[G.R. No. L-39822, January 31, 1978]
However, nothing was heard from SSS in the
next 6 months. On February 14, 1968, Atty.
Doronila granted Antonio E. Prats, doing
business under the name of “Philippine Real
Estate Exchange” (PHILREX) an exclusive
option and authority. Here are the pertinent
terms and conditions.
Prats vs. Honorable Court of Appeals,
[G.R. No. L-39822, January 31, 1978]
1. The price of the property is P3.00/sqm.

2. A commission of TEN (10%) PERCENT will be

paid to us based on P2.10 per square meter, or
at any price that you DORONILA finally agree
upon, and all expenses shall be for our
account…
Prats vs. Honorable Court of Appeals,
[G.R. No. L-39822, January 31, 1978]
3. This exclusive option and authority is good
for a period of sixty (60) days from the date of
your conformity; provided, however, that
should negotiations have been started with a
buyer, said period is automatically extended
until said negotiations is terminated, but not
more than fifteen (15) days.
Prats vs. Honorable Court of Appeals,
[G.R. No. L-39822, January 31, 1978]
4. If no written offer is made to you until the last
day of this authorization, this option and
authority shall expire and become null and
void.

5. It is clearly understood that prospective

buyers and all parties interested in this
property shall be referred to us, and that you
will not even quote a price directly to anyone.
Prats vs. Honorable Court of Appeals,
[G.R. No. L-39822, January 31, 1978]
On February 19, 1968, Mr. Prats wrote Atty.
Doronila requesting him to take immediate steps
to withdraw any and all papers pertaining to the
300-hectare property offered to SSS. The latter
complied and wrote SSS asking for the return of
all documents of the same property previously
offered in July 3, 1967.
Prats vs. Honorable Court of Appeals,
[G.R. No. L-39822, January 31, 1978]
In reply to this letter of Atty. Doronila, the SSS
sent a letter dated February 27, 1968 inviting
Atty. Doronila for a meeting to discuss the offer
of the lot in question. Atty. Doronila informed
SSS that he gave PHILREX an exclusive option
and authority to negotiate the sale of the 300-
hectare land and that he is no longer at liberty to
negotiate its sale personally.
Prats vs. Honorable Court of Appeals,
[G.R. No. L-39822, January 31, 1978]
Mr. Prats wrote SSS inviting its Chairman to
discuss the offer of the sale of the lot owned by
Atty. Doronila. While waiting for the reply of
SSS, Atty. Doronila extended the exclusive
option and authority in favor of Mr.
Prats/PHILREX on April 18, 1968 – which expires
on May 18, 1968.
Prats vs. Honorable Court of Appeals,
[G.R. No. L-39822, January 31, 1978]
On June 16, 1968 Atty. Doronila wrote a letter to
Mr. Prats informing the latter that he has not
received any written offer from the SSS or other
parties to purchase his Montalban property of
which Mr. Prats was given an option and
exclusive authority (in the Letter-Contract
dated February 14, 1968) during the 60 days of
his exclusive authority which expired on April 14,
1968.
Prats vs. Honorable Court of Appeals,
[G.R. No. L-39822, January 31, 1978]
Neither did Atty. Doronila received any written
offer during the provided 15 days grace period, in
case that Mr. Prats had closed any transaction to
terminate it during that period, which also
expired on June 3, 1968.
Prats vs. Honorable Court of Appeals,
[G.R. No. L-39822, January 31, 1978]
Atty. Doronila reminded Mr. Prats on the
following condition stated in paragraph 5: “If no
written offer is made to you until the last day of
this authorization, this option and authority shall
expire and becomes null and void.”
Prats vs. Honorable Court of Appeals,
[G.R. No. L-39822, January 31, 1978]
On June 19, 1968, Atty. Doronila wrote a letter to
the SSS Administrator, renewing his offer to sell
his 300-hectare property to SSS at P4.00 per
square. A day later, on June 20, 1968 the Social
Security Commission passed Resolution No. 636
which formalized the counter-offer of SSS at
P3.25 per square meter.
Prats vs. Honorable Court of Appeals,
[G.R. No. L-39822, January 31, 1978]
Eventually, on July 30, 1968, Atty. Doronila
executed a Deed of Absolute Sale over his 300-
hectare land, situated in Montalban, Rizal in
favor of the SSS for the total purchase price of
NINE MILLION SEVEN HUNDRED FIFTY
THOUSAND PESOS (P9,750,000.00), Philippine
currency.
Prats vs. Honorable Court of Appeals,
[G.R. No. L-39822, January 31, 1978]
On September 17, 1968, Mr. Prats presented his
Statement of Account to Atty. Doronila for the
payment of his professional services as real estate
broker in the amount of P1,380,000.00, as
computed on the basis of the letter-agreement
dated February 14, 1968. Understandably, Atty.
Doronila did not pay the said amount stated in
the said Statement of Account of Mr. Prats.
Prats vs. Honorable Court of Appeals,
[G.R. No. L-39822, January 31, 1978]
On September 23, 1968, Mr. Prats instituted a
complaint for sum of money and damages
against Atty. Doronila and the Philippine
National Bank. The trial court rendered
judgment in favor of Mr. Prats in its decision
dated December 12, 1968.
Prats vs. Honorable Court of Appeals,
[G.R. No. L-39822, January 31, 1978]
Of course, Atty. Doronila appealed to the Court
of Appeals which reversed the decision of the
trial court and dismissed the complaint.

Issue: Whether Mr. Prats was the efficient

procuring cause in bringing about the sale
despite the fact that the exclusive authority had
already expired.
Prats vs. Honorable Court of Appeals,
[G.R. No. L-39822, January 31, 1978]
HELD: The Supreme Court in its Resolution of
May 23, 1975 originally denied the petition for
lack of merit but upon the Motion for
Reconsideration and Supplemental Petition
invoking equity filed by Mr. Prats, the Court
resolved in its Resolution of August 20, 1975 to
give due course thereto.
Prats vs. Honorable Court of Appeals,
[G.R. No. L-39822, January 31, 1978]
In the end, our Supreme Court “grants in equity
the sum of One Hundred Thousand
(P100,000.00) by way of compensation for his
[Mr. Prats’] efforts and assistance in the
transaction.”
Prats vs. Honorable Court of Appeals,
[G.R. No. L-39822, January 31, 1978]
It should be emphasized that the Highest Court
in the Philippines did not overturn the ruling of
the Court of Appeals holding Mr. Prats was not
the procuring cause of the transaction between
Atty. Doronila and the SSS.
Prats vs. Honorable Court of Appeals,
[G.R. No. L-39822, January 31, 1978]
The Court held that for the purpose of equity, a
real estate broker who is not the efficient
procuring cause is nonetheless entitled to his
commission, where the said broker,
notwithstanding the expiration of his authority,
nonetheless took diligent steps to bring back
together the parties, such that a sale was
finalized and consummated between them.
Manotok Brothers, Inc. v. Court of
Appeals [G.R. No. 94753, April 7, 1993]
Brief Facts: Manotok Brothers, Inc. (MBI) is the
owner of a certain parcel of land and building
which were formerly leased by the City of Manila
and used by the Claro M. Recto High School, at
M.F. Jhocson Street, Sampaloc Manila.
Manotok Brothers, Inc. v. Court of
Appeals [G.R. No. 94753, April 7, 1993]
In a Letter dated July 5, 1966, MBI authorized
Salvador Saligumba to negotiate with the City of
Manila the sale of the aforementioned property
for not less than P425,000.00. In the same
writing, MBI agreed to pay Mr. Saligumba a five
percent (5%) commission in the event the sale is
finally consummated and paid.
Manotok Brothers, Inc. v. Court of
Appeals [G.R. No. 94753, April 7, 1993]
MBI wrote several letters that extended the
authority of Mr. Saligumba for 120 more days in
each letter. The last letter of extension granting
another 120 more days was dated June 26, 1967.
Manotok Brothers, Inc. v. Court of
Appeals [G.R. No. 94753, April 7, 1993]
Finally, in a Letter dated November 16, 1967, MBI,
through its President (Rufino Manotok) as
signatory, authorized Mr. Saligumba to finalize
and consummate the sale of the property to the
City of Manila for not less than P410,000.00.
With this letter came another extension of 180
days.
Manotok Brothers, Inc. v. Court of
Appeals [G.R. No. 94753, April 7, 1993]
The Municipal Board of the City of Manila
eventually, on April 26, 1968, passed Ordinance
No. 6603, appropriating the sum of P410,816.00
for the purchase of the property which Mr.
Saligumba was authorized to sell.
Manotok Brothers, Inc. v. Court of
Appeals [G.R. No. 94753, April 7, 1993]
Said ordinance however, was signed by the City
Mayor only on May 17, 1968, one hundred eighty
three (183) days after the last letter of
authorization.

On January 14, 1969, the MBI and the City of

Manila signed the deed of sale of the subject
property.
Manotok Brothers, Inc. v. Court of
Appeals [G.R. No. 94753, April 7, 1993]
The initial payment of P200,000.00 having been
made, the purchase price was fully satisfied with
a second payment on April 8, 1969 by a check in
the amount of P210,816.00.
Manotok Brothers, Inc. v. Court of
Appeals [G.R. No. 94753, April 7, 1993]
Notwithstanding the realization of the sale, Mr.
Saligumba never received any commission,
which should have amounted to P20,554.50. This
was due to the refusal of MBI to pay Mr.
Saligumba said amount as the former does not
recognize the latter’s role as agent in the
transaction.
Manotok Brothers, Inc. v. Court of
Appeals [G.R. No. 94753, April 7, 1993]
Consequently, on June 29, 1969, Mr. Saligumba
filed a complaint against MBI, alleging that he
had successfully negotiated the sale of the
property.

MBI claimed otherwise. It denied the claim of

Mr. Saligumba on the following grounds:
Manotok Brothers, Inc. v. Court of
Appeals [G.R. No. 94753, April 7, 1993]
(1) Mr. Saligumba would be entitled to a
commission only if the sale was
consummated and the price paid within the
period given in the respective letters of
authority; and
(2) Mr. Saligumba was not the person responsible
for the negotiation and consummation of the
sale, instead it was Filomeno E. Huelgas
Manotok Brothers, Inc. v. Court of
Appeals [G.R. No. 94753, April 7, 1993]
The trial court ordered MBI to pay Saligumba his
commission. On appeal to the CA, the decision
of the trial court was affirmed.

Issue: Whether Mr. Saligumba is entitled to the

five percent (5%) agent’s commission.
Manotok Brothers, Inc. v. Court of
Appeals [G.R. No. 94753, April 7, 1993]
HELD: The Court said that at first sight, it would
seem that [Mr. Saligumba] is not entitled to any
commission as he was not successful in
consummating the sale between the parties, for
the sole reason that when the Deed of Sale was
finally executed, his extended authority had
already expired.
Manotok Brothers, Inc. v. Court of
Appeals [G.R. No. 94753, April 7, 1993]
By this alone, one might be misled to believe that
this case squarely falls within the ambit of the
established principle that a broker or agent is not
entitled to any commission until he has
successfully done the job given to him.”
Manotok Brothers, Inc. v. Court of
Appeals [G.R. No. 94753, April 7, 1993]
Going deeper however into the case would reveal
that it is within the coverage of the exception
rather than of the general rule, the exception
being that enunciated in the case of Prats vs.
Court of Appeals.
Manotok Brothers, Inc. v. Court of
Appeals [G.R. No. 94753, April 7, 1993]
However, the Court held that Mr. Prats was not
even the efficient procuring cause in bringing
about the sale between Atty. Dornila and the SSS.

In contrast, the Court held in the Manotok

Brothers case that Mr. Saligumba “is the efficient
procuring cause for without his efforts, the
municipality would not have anything to pass,
and the mayor would have nothing to approve...
Tan v. Gullas [G.R. No. 143978, December 3,
2002]

Brief Facts: Spouses Eduardo R. Gullas and

Norma S. Gullas were the registered owners of a
parcel of land in the Municipality of Minglanilla,
Province of Cebu.
Tan v. Gullas [G.R. No. 143978, December 3,
2002]

On June 29, 1992, they executed a Special Power

of Attorney authorizing Manuel B. Tan, a
licensed real estate broker, and his associates
Gregg M. Tecson and Alexander Saldaña, to
negotiate for the sale of the land at Five Hundred
Fifty Pesos (P550.00) per square meter, at a
commission of 3% of the gross price.
Tan v. Gullas [G.R. No. 143978, December 3,
2002]

The Power of Attorney was non-exclusive and

effective for one month from June 29, 1992.

On the same date, Mr. Tan contacted Engr. Edsel

Ledesma, construction manager of the Sisters of
Mary of Banneaux, Inc., a religious organization
interested in acquiring a property in the
Minglanilla area.
Tan v. Gullas [G.R. No. 143978, December 3,
2002]

In the morning of July 1, 1992, Mr. Tan visited the

property with Engr. Ledesma.

Thereafter, the two men accompanied the

representatives of the Sisters of Mary, to see Mr.
Eduardo Gullas in his office at the University of
Visayas.
Tan v. Gullas [G.R. No. 143978, December 3,
2002]

The Sisters, who had already seen and inspected

the land, found the same suitable for their
purpose and expressed their desire to buy it.

They requested that the selling price be reduced

to P530.00/sqm. instead of P550.00/sqm. Cong.
Gullas referred the prospective buyers to his wife
Norma Gullas.
Tan v. Gullas [G.R. No. 143978, December 3,
2002]

On July 3, 1992, Sps. Gullas agreed to sell the

property to the Sisters of Mary, and subsequently
executed a Special Power of Attorney in favor of
Eufemia Cañete, giving her the special authority
to sell, transfer and convey the land at a fixed
price of P200.00/sqm.
Tan v. Gullas [G.R. No. 143978, December 3,
2002]

In the afternoon of July 3, 1992, Mr. Tan and his

associates went to see Cong. Gullas to claim their
commission. However, Sps. Gullas refused to pay
the broker’s fee and alleged that another group of
agents was responsible for the sale of land to the
Sisters of Mary.
Tan v. Gullas [G.R. No. 143978, December 3,
2002]

On August 28, 1992, Mr. Tan and his associates

filed a complaint against Sps. Gullas for recovery
of their broker’s fee in the sum of P1,655,412.60.

After trial, the Trial Court rendered judgment in

favor of Mr. Tan and his associates and order Sps.
Gullas to pay the sum of P624,684.00 as broker’s
fee.
Tan v. Gullas [G.R. No. 143978, December 3,
2002]

Both parties appealed to the Court of Appeals.

The CA reversed and set aside the lower court’s

decision and rendered another judgment
dismissing the complaint. The group of Mr. Tan
appealed to the Supreme Court.
Tan v. Gullas [G.R. No. 143978, December 3,
2002]

Issue: Whether the licensed real estate broker is

entitled to the commission as stated in the
Special Power of Attorney dated June 29, 1992.

HELD: During the trial, it was established that

Mr. Tan’s group, as brokers, were authorized by
Sps. Gullas to negotiate for the sale of their land
within a period of one month reckoned from
June 29, 1992.
Tan v. Gullas [G.R. No. 143978, December 3,
2002]

The argument of Sps. Gullas that Pacana was the

one entitled to the stipulated 3% commission is
untenable, considering that it was the group of
Mr. Tan who were responsible for the
introduction of the representatives of the Sisters
of Mary to Eduardo Gullas.
Tan v. Gullas [G.R. No. 143978, December 3,
2002]

Sps. Gullas failed to prove their contention that

Pacana began negotiations with Norma Gullas
way ahead of Mr. Tan’s group. They failed to
present witnesses to substantiate this claim.
There was nothing on record which established
the existence of a previous negotiation among
Pacana, Mrs. Gullas and the Sisters of Mary.
Tan v. Gullas [G.R. No. 143978, December 3,
2002]

Sps. Gullas failed to prove their contention that

Pacana began negotiations with Norma Gullas
way ahead of Mr. Tan’s group. They failed to
present witnesses to substantiate this claim.
There was nothing on record which established
the existence of a previous negotiation among
Pacana, Mrs. Gullas and the Sisters of Mary.
Tan v. Gullas [G.R. No. 143978, December 3,
2002]

Indeed, it is readily apparent that Sps. Gullas

are trying to evade payment of the
commission which rightfully belong to Mr.
Tan’s group as brokers with respect to the
sale. There was no dispute as to the role that Mr.
Tan’s group played in the transaction.
Tan v. Gullas [G.R. No. 143978, December 3,
2002]

At the very least, Mr. Tan’s group set the sale in

motion. They were not able to participate in its
consummation only because they were
prevented from doing so by the acts of Sps.
Gullas.

So, how much commission is Mr. Tan’s group

entitled?
Tan v. Gullas [G.R. No. 143978, December 3,
2002]

Mr. Tan’s group is entitled to a commission of 3%

for the sale of the property based on the price of
P200/sqm, which is the price indicated on the
Deed of Sale, and not the P530/sqm which the
land was offered to the buyer.

To rule otherwise would constitute unjust

enrichment on the part of the brokers.
SIDEBAR
Such a ruling is in line with the long-standing
principle that the real estate broker earns
compensation only when he successfully
procures a buyer, who is ready, willing and able
to complete the transaction at a price and on the
terms and conditions which are stipulated in the
listing agreement, or which are otherwise
consented to by the property owner.
SIDEBAR
In this case, the Supreme Court defined a
“broker” from a specific term in a case not
related to or about real estate.

The case of Schmid & Oberly, Inc. attempted to

define the term “indentor” as it apply to a
dispute between a corporation engaged in deep-
see fishing and the importer of electric
generators purchased by the said corporation.
SIDEBAR
It would have been more suitable if the Court
quoted the definition of “real estate broker”
under Section 3 of Ministry Order (MO) No.
39, Series of 1985, since this is the current
regulatory law governing the practice of real
estate brokerage at the time when the case was
filed in the trial court in 1992
Medrano v. Court of Appeals [G.R. No.
150678, Febraury 18, 2005]

Brief Facts: Bienvenido R. Medrano was the

Vice-Chairman of Ibaan Rural Bank, a bank
owned by the Medrano family. In 1986, Mr.
Medrano asked Mrs. Estela Flor, a cousin-in-law,
to look for a buyer of a foreclosed asset of the
bank, a 17-hectare mango plantation priced at
P2,200,000.00, located in Ibaan, Batangas.
Medrano v. Court of Appeals [G.R. No.
150678, Febraury 18, 2005]

Mr. Dominador Lee, a businessman from Makati

City, was a client of Mrs. Pacita G. Borbon, a
licensed real estate broker. Mr. Lee expressed
that he preferred a land with mango trees
instead. Mrs. Borbon promised to get back to
him as soon as she would be able to find a
property according to his specifications.
Medrano v. Court of Appeals [G.R. No.
150678, Febraury 18, 2005]

Mrs. Borbon relayed to her business associates

and friends that she had a ready buyer for a
mango orchard. Mrs. Flor then advised her that
her cousin-in-law owned a mango plantation
which was up for sale.
Medrano v. Court of Appeals [G.R. No.
150678, Febraury 18, 2005]

Mrs. Borbon told Mrs. Flor to confer with Mr.

Medrano and to give them a written authority to
negotiate the sale of the property.

On September 3, 1986, Mr. Medrano issued the

Letter of Authority stating among others, the
following:
Medrano v. Court of Appeals [G.R. No.
150678, Febraury 18, 2005]

location of the property, the lot area,

improvements on the lot, the asking price and a
commission of 5% of the total purchase price,
agreed upon by the seller and buyer, will be paid
for the labor and effort in finding a purchaser.
Medrano v. Court of Appeals [G.R. No.
150678, Febraury 18, 2005]

Mrs. Borbon and Mrs. Flor arranged for an ocular

inspection of the property together with Mr. Lee
which never materialized. Eventually, Mr. Lee
was available to view the property but Borbon
and Flor were unavailable. So, Mr. Lee was
instructed to get in touch with a Mr. Medrano’s
daughter.
Medrano v. Court of Appeals [G.R. No.
150678, Febraury 18, 2005]

Three weeks thereafter, Ms. Antonio called Mr.

Lee again to make a follow-up of the latter’s visit
to Ibaan. Mr. Lee informed her that he already
purchased the property and had made a down
payment of P1,000,000.00. The remaining
balance will be paid upon the approval of the
incorporation papers by the SEC.
Medrano v. Court of Appeals [G.R. No.
150678, Febraury 18, 2005]

According to Ms. Antonio, Mr. Lee asked her if

they had already received their commission. She
answered “no,” and Mr. Lee expressed surprise
over this. Since the sale of the property was
consummated, Mrs. Borbon’s group asked from
Mr. Medrano and the Ibaan Rural Bank their
commission, or 5% of the purchase price.
Medrano v. Court of Appeals [G.R. No.
150678, Febraury 18, 2005]

But Mr. Medrano and the Bank refused to pay

and offered a measly sum of P5,000.00 each.

Hence, the group of Mrs. Borbon were

constrained to file an action against Mr. Medrano
and the Ibaan Rural Bank.
Medrano v. Court of Appeals [G.R. No.
150678, Febraury 18, 2005]

The trial court decided in favor of Mrs. Borbon,

Mrs. Flor and Ms. Antonio. Mr. Medrano and the
Rural Bank of Ibaan were order to pay, jointly
and severally, the 5% broker’s commission to the
group of Mrs. Borbon.

On appeal to the CA, it affirmed the finding of

the trial court that the Letter of Authority was
valid and binding.
SIDEBAR
The Court used the same definition of “broker”
as it did in the case of Tan vs. Gullas, and not
the definition in Section 3 of MO No. 39, Series
of 1985.

The Medrano case is the jurisprudence that

discussed lengthily the concept of “procuring
cause” as used in real estate brokerage.
Medrano v. Court of Appeals [G.R. No.
150678, Febraury 18, 2005]

Issue: Whether the licensed real estate broker is

entitled to the commission as stated in the Letter
of Authority dated September 3, 1986.

HELD: The Court denied the Petition for Review

of Petitioner. It identified the efforts employed
by Mrs. Borbon and her associates that resulted
in the sale of the 17-hectare mango plantation by
the Rural Bank of Ibaan to Mr. Lee.
Medrano v. Court of Appeals [G.R. No.
150678, Febraury 18, 2005]

In the eyes of the Court, it does not matter

whether the licensed real estate broker (Mrs.
Borbon’s group) did not even look at the
property themselves; did not introduce the buyer
to the seller; did not hold any conferences with
the buyer, nor take part in concluding the sale.
Medrano v. Court of Appeals [G.R. No.
150678, Febraury 18, 2005]

In the end, the Court ruled that without the

intervention of Mrs. Borbon and her associates,
no sale could have been consummated. They
were the ones who set the sale of the subject land
in motion because of the efforts they employed.
Medrano v. Court of Appeals [G.R. No.
150678, Febraury 18, 2005]

Therefore, when there is a close, proximate and

causal connection between the broker’s efforts
and the principal’s sale of his property, the
broker is entitled to a commission.
Medrano v. Court of Appeals [G.R. No.
150678, Febraury 18, 2005]

The Court held that “[i]n the absence of fraud,

irregularity or illegality in its execution, such
letter-authority serves as a contract, and is
considered as the law between the parties.” And
because of this legal principle, Mr. Medrano
cannot renege on the promise to pay commission
on the flimsy excuse that he is not the registered
owner of the property.”
Ruiz, et al. v. Delos Santos [G.R. No.
166386, January 27, 2009]

Brief Facts: Dominga, Apolonia, Florencio,

Cornelia, Tomasa and Olimpio, all surnamed
Ruiz were the original owners of seven parcels of
land with a total area of 194,284 square meters
located in Barangay Kaytinga, Alfonso, Cavite.
Cirila delos Santos is a duly licensed real estate
broker.
Ruiz, et al. v. Delos Santos [G.R. No.
166386, January 27, 2009]

Sometime in 1995, Olimpio Ruiz gave Ms. delos

Santos the plan of the subject properties and
verbally authorized her to sell the same.
Thereafter, Ms. delos Santos referred in writing
the subject properties to Odessa Antiporda, a
fellow real estate broker who knows of a
prospective buyer for the property.
Ruiz, et al. v. Delos Santos [G.R. No.
166386, January 27, 2009]

Ms. Antiporda in turn referred the subject

properties to one Alfred Tantiansu. Olimpio Ruiz
then gave Ms. delos Santos a written authority
to sell the same subject properties.
Ruiz, et al. v. Delos Santos [G.R. No.
166386, January 27, 2009]

In May 1996, Ms. delos Santos introduced

Olimpio Ruiz to Mr. Tantiansu and they all went
together to the location of the properties. Mr.
Tantiansu showed interest in the properties and
asked for the lowering of price, which Olimpio
Ruiz pegged at P315.00/sqm.
Ruiz, et al. v. Delos Santos [G.R. No.
166386, January 27, 2009]

Ms. delos Santos asked Olimpio Ruiz for the

renewal of her authority, to sell to which the
former obliged. In the authority to sell, it was
specified that she would still be paid her
commission even after the said authority expired,
provided she registered in writing her
prospective buyer with whom she negotiated
during the period of authority.
Ruiz, et al. v. Delos Santos [G.R. No.
166386, January 27, 2009]

Accordingly, Ms. delos Santos notified the Ruiz

family in writing that Mr. Tantiansu was her
buyer.

A meeting was subsequently held among

Olimpio Ruiz, Ms. delos Santos and Mr.
Tantiansu in the latter’s office where the
prospective buyer showed interest in buying the
subject properties.
Ruiz, et al. v. Delos Santos [G.R. No.
166386, January 27, 2009]

A few weeks later, a meeting was held between

Olimpio Ruiz and Mr. Tantiansu only, without
Ms. delos Santos.

Olimpio Ruiz asked Ms. delos Santos to lower

her commission from 5% to 2.5%, otherwise, the
sale would not push through. As a counter-offer,
Ms. delos Santos was amenable to 4%
commission.
Ruiz, et al. v. Delos Santos [G.R. No.
166386, January 27, 2009]

Ms. delos Santos later learned that the subject

properties were sold to different corporations at
P60.00 per square meter, as indicated in the
deeds of sale. And upon investigation, she found
out that the corporations were owned by Mr.
Tantiansu.
Ruiz, et al. v. Delos Santos [G.R. No.
166386, January 27, 2009]

Ms. delos Santos then demanded the payment of

her commission, but was rejected by the Ruiz
family.

Ms. delos Santos filed suit in RTC Las Piñas City,

a Complaint for Collection of Sum of Money and
Damages against the Ruiz family.
Ruiz, et al. v. Delos Santos [G.R. No.
166386, January 27, 2009]

Ms. delos Santos then demanded the payment of

her commission but was rejected by the Ruiz
family.

After trial on the merits, the trial court rendered

judgment in favor of Ms. delos Santos and
ordered the Ruiz family to pay her the sum of
P2,447,524.80 plus legal interest thereon from
the filing of the complaint.
Ruiz, et al. v. Delos Santos [G.R. No.
166386, January 27, 2009]

The Ruiz family filed their Notice of Appeal. This

case discussed more the procedural infirmities
and missteps committed by the legal counsel of
the Ruiz family.

The matter of the right to the commission of Ms.

delos Santos was simply disposed by our
Supreme Court in a single paragraph.
Ruiz, et al. v. Delos Santos [G.R. No.
166386, January 27, 2009]

“[Ms. delos Santos] has sufficiently shown that

she was authorized in writing by [the Ruiz
family] to sell the subject property; that [Ms.
delos Santos] was instrumental in bringing
about the meeting of Olimpio Ruiz and
Tantiansu and the transaction concerning the
sale of subject property; and that it was proven
Ruiz, et al. v. Delos Santos [G.R. No.
166386, January 27, 2009]

by evidence that the buyer of the subject

property was Tantiansu. Thus, [Ms. delos Santos]
is entitled to the broker’s commission as agreed
upon between her and the [the Ruiz family].
[The Ruiz family] claims that Tantiansu had
explicitly bound himself to pay the broker’s
commission after the consummation of the sale
Ruiz, et al. v. Delos Santos [G.R. No.
166386, January 27, 2009]

would not relieve [the Ruiz family] of their

liability to [Ms. delos Santos] since, as correctly
held by RTC, whatever Tantiansu and petitioners
agreed relative to the payment of broker’s
commission is binding only upon themselves
and not binding on [Ms. delos Santos] who does
not appear to have consented thereto.”
Oriental Petroleum and Mineral Corp.
v. Tuscan Realty, Inc. [713 Phil. 693]
Brief Facts: Oriental Petroleum owned two
condominium units at Corinthian Plaza in
Makati City. On August 13, 1996 it gave Tuscan
Realty a “non-exclusive authority to offer” these
units for sale. On August 14, 1996 Tuscan Realty
submitted an initial list of its prospective client-
buyers that included Gateway Holdings
Corporation (Gateway).
Oriental Petroleum and Mineral Corp.
v. Tuscan Realty, Inc. [713 Phil. 693]
Tuscan Realty updated this list on September 18,
1996. Subsequently, Oriental Petroleum advised
Tuscan Realty that it would undertake direct
negotiation with a certain Gene de los Reyes of
Gateway for the sale of the units. This resulted in
a contract to sell between Oriental Petroleum
and Gateway on August 1, 1997.
Oriental Petroleum and Mineral Corp.
v. Tuscan Realty, Inc. [713 Phil. 693]
Meantime, Gateway apparently turned around
nearly two months later on September 29, 1997
and assigned its rights as buyer of the units to
Alonzo Ancheta in whose favor Oriental
Petroleum executed a deed of absolute sale on
December 10, 1997 for the price of
P69,595,400.00
Oriental Petroleum and Mineral Corp.
v. Tuscan Realty, Inc. [713 Phil. 693]
Prompted by this development, Tuscan Realty
demanded payment of its broker’s commission
of P2,087,862.00 by Oriental Petroleum. The
latter refused to pay, however, claiming that
Tuscan Realty did nothing to close its deal with
Gateway and Ancheta.
Oriental Petroleum and Mineral Corp.
v. Tuscan Realty, Inc. [713 Phil. 693]
On June 9, 1999 Tuscan Realty filed a complaint
for sum of money with application for
preliminary attachment against Oriental
Petroleum at the RTC of Makati City. Six years
later, on November 2, 2005, the trial court
dismissed the complaint for failure to
substantiate its claim it was responsible for
closing the sale of the condominium units.
Oriental Petroleum and Mineral Corp.
v. Tuscan Realty, Inc. [713 Phil. 693]
Tuscan Realty appealed the RTC decision to the
Court of Appeals. On August 11, 2010 the Court of
Appeals set aside the RTC decision. The CA
ordered Oriental Petroleum to pay Tuscan Realty
its broker’s commission of P2,087,862.00, which
is 3% of the final purchase price.

Oriental Petroleum appealed to the Supreme

Court.
SIDEBAR
It is unclear if Tuscan Realty is a real estate
brokerage entity duly licensed under Article V of
Ministry Order No. 39, Series of 1985.

At the time the case was filed in RTC Makati

City, the regulatory law in effect at that time is
MO No. 39.
Oriental Petroleum and Mineral Corp.
v. Tuscan Realty, Inc. [713 Phil. 693]
Issue: Whether Tuscan Realty is entitled to a
broker’s commission for the sale of Oriental
Petroleum’s condominium units to Mr. Ancheta.

HELD: The Supreme Court ruled in favor of

Tuscan Realty. It affirmed the decision of the
Court of Appeals in this manner:
Oriental Petroleum and Mineral Corp.
v. Tuscan Realty, Inc. [713 Phil. 693]
The CA invoked the principle of ‘procuring cause’
in ordering the payment of broker’s commission
to Tuscan Realty.

Here, it was Tuscan Realty that introduced

Gateway to Oriental Petroleum as an interested
buyer of its condominium units.
Oriental Petroleum and Mineral Corp.
v. Tuscan Realty, Inc. [713 Phil. 693]
Oriental Petroleum’s own EVP attested to this,
saying that they learned of Gateway’s interest in
the properties from Tuscan Realty.

Clearly then, it was on account of Tuscan Realty’s

effort that Oriental Petroleum got connected to
Gateway, the prospective buyer, resulting in the
latter two entering into a contract to sell
involving the two condominium units.
Ticong v. Malim, et al. [G.R. No. 220785,
March 1, 2017]
Brief Facts: A Complaint for Collection of Sum
of Money, Damages and Attorney’s Fees was filed
by Manuel A. Malim, Minda Abangan and May
Macal against Lorenzo Ticong, Patrocinio Ticong
and Wilma Ticong Lao (the Ticongs) before the
Regional Trial Court.
Ticong v. Malim, et al. [G.R. No. 220785,
March 1, 2017]
Malim was a realty broker/dealer while Abangan
and Macal were his associates; that the Ticongs
were the registered owners of several parcels of
land located in Digos, Davao del Sur; that on
February 5, 2000, Malim, presenting himself as
the authorized representative of the Ticongs sent
a letter of “formal intent to sell” to Jainus C.
Perez.
Ticong v. Malim, et al. [G.R. No. 220785,
March 1, 2017]
Mr. Perez was the real estate field supervisor of
the Church of Jesus Christ of Latter-Day Saints
(Buyer). Malim offered to sell the subject
properties for P2,000.00/sqm.; and that below
Malim’s signature were inscribed the words,
“NOTED/CONFORMED” with the signature of
Lorenzo Ticong above “Lorenzo Ticong, Lot
Owner.”
Ticong v. Malim, et al. [G.R. No. 220785,
March 1, 2017]
Malim and his associates further stated that on
February 11, 2000, they signed the Memorandum
of Agreement (MOA) authorizing them to “look,
negotiate, and sell to any prospective buyer” for
their properties on a commission basis; that they
were also authorized by the Ticongs to charge an
“overprice” on top of the P900.00/sqm. price.
Ticong v. Malim, et al. [G.R. No. 220785,
March 1, 2017]
The subject properties were eventually sold at
P1,460.00/sqm or for the total amount of
P7,300,000.00; that the sale was made possible
due to their efforts which should entitle them to
an overprice commission of P2,800,000.00 based
on the P560.00/sqm. overprice.
Ticong v. Malim, et al. [G.R. No. 220785,
March 1, 2017]
The Ticongs, however, paid them only
P50,000.00 and refused to pay the remaining
balance despite demands. Meanwhile, The
Ticongs denied that Malim and his associates
offered to sell their properties to the Buyer.
Ticong v. Malim, et al. [G.R. No. 220785,
March 1, 2017]
They pointed out that Malim and his associates
were not even licensed realty brokers and
considering the questionable and anomalous
nature of the MOA, the provision therein with
respect to the overprice commission and 5%
finders’ fee were not valid, binding and
enforceable against them.
Ticong v. Malim, et al. [G.R. No. 220785,
March 1, 2017]
On December 3, 2007, the trial court rendered a
decision upholding the validity of the MOA as
the parties’ expression of their intention to enter
into a real estate brokerage. It debunked the
Ticongs’ allegation of fraud in signing the MOA
for want of sufficient proof.
Ticong v. Malim, et al. [G.R. No. 220785,
March 1, 2017]
Lastly, the trial court stressed that it was through
the efforts of Malim and his associates that the
Ticongs and the Buyer had come together for the
finalization of the sale.

The Ticongs appealed this decision to the Court

of Appeals, which upheld the decision of the trial
Court. Then, the Ticongs appealed to the
Supreme Court.
Ticong v. Malim, et al. [G.R. No. 220785,
March 1, 2017]
Issue: Whether Malim and his associates were
entitled to the payment of their brokers’
overprice commission for being the procuring
cause of the sale.

HELD: The Court affirmed the decisions of the

trial court and the Court of Appeal in concluding
that Malim and his associates were the procuring
cause of the sale.
Ticong v. Malim, et al. [G.R. No. 220785,
March 1, 2017]
The fact that Malim and his associates were not
licensed real estate brokers does not affect the
validity and enforceability of the said MOA.

The Ticongs, having freely and willingly entered

into a contract by executing the MOA, cannot
renege on their obligation to pay the overprice
commission on the flimsy excuse that [Malim
and his associates] were not licensed brokers.
SIDEBAR
The case was filed sometime in 2003 and decided
on December 2007. At the time of the
transaction, MO No. 39 was the governing
regulation.

However, there was no penal provision in MO

No. 39 to punish the practice of real estate
brokerage by unlicensed persons – natural or
juridical.
SIDEBAR
This is the first case decided by the Highest
Court of our land that awarded “overprice
commission” to a real estate broker who was
admittedly unlicensed.

We hope that this is the last case that will be

decided in such a manner, with the passage of
Rep. Act No. 9646.
FINAL THOUGHT
It is important to keep in mind that in all the
Supreme Court cases we have analyzed thus far,
the presence of a written document executed in
favor of a real estate broker is key to proving
he/she is the procuring cause and serves as basis
on how much compensation he/she is entitled.
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