January 31, 1978
the said SLDR. Enclosed in the letter were a copy of SLDR No. 1214M and a letter of authority
[G.R. No. 117356. June 19, 2000]
VICTORIAS MILLING CO., INC., petitioner, vs. COURT OF APPEALS and CONSOLIDATED
SUGAR CORPORATION, respondents.
QUISUMBING, J.:
FACTS:
St. Therese Merchandising (STM) regularly bought sugar from Victorias Milling Co (VMC).
In the course of their dealings, VMC issued several Shipping List/Delivery Receipts (SLDRs) to
STM as proof of purchases. Among these was SLDR No. 1214M. SLDR No. 1214M, dated October
16, 1989, covers 25,000 bags of sugar. Each bag contained 50 kg and priced at P638.00 per bag.
The transaction covered was a direct sale.
On October 25, 1989, STM sold to private respondent Consolidated Sugar Corporation
(CSC) its rights in the same SLDR for P14,750,000.00. CSC issued checks in payment. That same
day, CSC wrote petitioner that it had been authorized by STM to withdraw the sugar covered by
from STM authorizing CSC to withdraw for and in our behalf the refined sugar covered by the
SLDR On Oct. 27, 1989, STM issued checks to VMC as payment for 50,000 bags, covering SLDR
No. 1214M. CSC surrendered the SLDR No. 1214M and to VMCs NAWACO Warehouse and
was allowed to withdraw sugar. But only 2,000 bags had been released because VMC refused to
release the other 23,000 bags.
Therefore, CSC informed VMC that SLDR No. 1214M had been sold and endorsed to it.
But VMC replied that it could not allow any further withdrawals of sugar against SLDR No. 1214M
because STM had already withdrawn all the sugar covered by the cleared checks. VMC also
claimed that CSC was only representing itself as STMs agent as it had withdrawn the 2,000 bags
against SLDR No. 1214M for and in behalf of STM. Hence, CSC filed a complaint for specific
performance against Teresita Ng Sy (doing business under STM's name) and VMC. However, the
suit against Sy was discontinued because later became a witness. RTC ruled in favor of CSC and
ordered VMC to deliver the 23,000 bags left. CA concurred. Hence this appeal.
ISSUES:
W/N CA erred in not ruling that CSC was an agent of STM and hence, estopped to sue upon SLDR
No. 1214M as assignee.
HELD:
NO. CSC was not an agent of STM. VMC heavily relies on STMs letter of authority that said CSC
is authorized to withdraw sugar for and in our behalf. It is clear from Art. 1868 that the: basis of
agency is representation. On the part of the principal, there must be an actual intention to appoint
or an intention naturally inferable from his words or actions, and on the part of the agent, there
must be an intention to accept the appointment and act on it, and in the absence of such intent,
there is generally NO agency. One factor, which most clearly distinguishes agency from other legal
concepts, is control; one person the agent agrees to act under the control or direction of another
the principal. Indeed, the very word agency has come to connote control by the principal. The
control factor, more than any other, has caused the courts to put contracts between principal and
agent in a separate category. Where the relation of agency is dependent upon the acts of the
parties, the law makes no presumption of agency and it is always a fact to be proved, with the
burden of proof resting upon the persons alleging the agency, to show not only the fact of its
existence but also its nature and extent. It appears that CSC was a buyer and not an agent of STM.
CSC was not subject to STMs control. The terms for and in our behalf should not be eyed as
pointing to the existence of an agency relation. Whether or not a contract is one of sale or agency
depends on the intention of the parties as gathered from the whole scope and effect of the language
employed. Ultimately, what is decisive is the intention of the parties. (In fact, CSC even informed
VMC that the SLDR was sold and endorsed to it.)
Agency distinguished from sale.
In an agency to sell, the agent, in dealing with the thing received, is bound to act according to the
instructions of his principal, while in a sale, the buyer can deal with the thing as he pleases, being
the owner. The elementary notion of sale is the transfer of title to a thing from one to another, while
the essence of agency involves the idea of an appointment of one to act for another. Agency is a
relationship which often results in a sale, but the sale is a subsequent step in the transaction.
(Teller, op. cit., p. 26; see Commissioner of Internal Revenue vs. Manila Machinery & Supply Co.,
135 SCRA 8 [1985].) An authorization given to another containing the phrase for and in our behalf
does not necessarily establish an agency, as ultimately what is decisive is the intention of the
parties. Thus, the use of the words sold and endorsed may mean that the parties intended a
contract of sale, and not a contract of agency.
[G.R. No. 151319. November 22, 2004]
MANILA MEMORIAL PARK CEMETERY, INC., petitioner, vs. PEDRO L. LINSANGAN,
respondent.
TINGA, J.:
FACTS:
Florencia Baluyot offered Atty. Pedro L. Linsangan a lot called Garden State at the Holy Cross
Memorial Park owned by petitioner (MMPCI). According to Baluyot, a former owner of a memorial
lot under Contract No. 25012 was no longer interested in acquiring the lot and had opted to sell his
rights subject to reimbursement of the amounts he already paid. The contract was for P95,000.00.
Baluyot reassured Atty. Linsangan that once reimbursement is made to the former buyer, the
contract would be transferred to him.
Atty. Linsangan agreed and gave Baluyot P35,295.00 representing the amount to be reimbursed
to the original buyer and to complete the down payment to MMPCI. Baluyot issued handwritten and
typewritten receipts for these payments. Contract No. 28660 has a listed price of P132,250.00.
Atty. Linsangan objected to the new contract price, as the same was not the amount previously
agreed upon. To convince Atty. Linsangan, Baluyot executed a document confirming that while the
contract price is P132,250.00, Atty. Linsangan would pay only the original price of P95,000.00.
Later on, Baluyot verbally advised Atty. Linsangan that Contract No. 28660 was cancelled for
reasons the latter could not explain. For the alleged failure of MMPCI and Baluyot to conform to
their agreement, Atty. Linsangan filed a Complaint for Breach of Contract and Damages against
the former.
MMPCI alleged that Contract No. 28660 was cancelled conformably with the terms of the contract
because of non-payment of arrearages. MMPCI stated that Baluyot was not an agent but an
independent contractor, and as such was not authorized to represent MMPCI or to use its name
except as to the extent expressly stated in the Agency Manager Agreement. Moreover, MMPCI
was not aware of the arrangements entered into by Atty. Linsangan and Baluyot, as it in fact
received a down payment and monthly installments as indicated in the contract.
The trial court held MMPCI and Baluyot jointly and severally liable. The Court of Appeals affirmed
the decision of the trial court.
ISSUES:
1. Whether or not there was a contract of agency between Baluyot and MMPCI?
2. Whether or not MMPCI should be liable for Baluyots act?
HELD:
First Issue. Yes. 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. As
properly found both by the trial court and the Court of Appeals, Baluyot was authorized to solicit
and remit to MMPCI offers to purchase interment spaces obtained on forms provided by MMPCI.
The terms of the offer to purchase, therefore, are contained in such forms and, when signed by the
buyer and an authorized officer of MMPCI, becomes binding on both parties.
Second Issue. No. While there is no more question as to the agency relationship between Baluyot
and MMPCI, there is no indication that MMPCI let the public, or specifically, Atty. Linsangan to
believe that Baluyot had the authority to alter the standard contracts of the company. Neither is
there any showing that prior to signing Contract No. 28660, MMPCI had any knowledge of Baluyot's
commitment to Atty. Linsangan. Even assuming that Atty. Linsangan was misled by MMPCI's
actuations, he still cannot invoke the principle of estoppel, as he was clearly negligent in his
dealings with Baluyot, and could have easily determined, had he only been cautious and prudent,
whether said agent was clothed with the authority to change the terms of the principal's written
contract.
To repeat, the acts of the agent beyond the scope of his authority do not bind the principal unless
the latter ratifies the same. It also bears emphasis that when the third person knows that the agent
was acting beyond his power or authority, the principal cannot be held liable for the acts of the
agent. If the said third person was aware of such limits of authority, he is to blame and is not entitled
to recover damages from the agent, unless the latter undertook to secure the principal's ratification.
EUROTECH INDUSTRIAL TECHNOLOGIES, INC. v. CUIZON
G.R. No. 167552; April 23, 2007
Ponente: J. Chico-Nazario
FACTS:
From January to April 1995, petitioner sold to Impact Systems various products allegedly
amounting to P91,338.00 pesos. Subsequently, respondents sought to buy from petitioner one unit
of sludge pump valued at P250,000.00 with respondents making a down payment of P50,000.00.
When the sludge pump arrived from the United Kingdom, petitioner refused to deliver the same to
respondents without their having fully settled their indebtedness to petitioner. Thus, on 28 June
1995, respondent EDWIN and Alberto de Jesus, general manager of petitioner, executed a Deed
of Assignment of receivables in favor of petitioner. Impact systems is owed by ERWIN Cuizon.
Despite the existence of the Deed of Assignment, respondents proceeded to collect from Toledo
Power Company the amount of P365,135.29. Alarmed by this development, petitioner made
several demands upon respondents to pay their obligations. As a result, respondents were able to
make partial payments to petitioner. On 7 October 1996, petitioner's counsel sent respondents a
final demand letter wherein it was stated that as of 11 June 1996, respondents' total obligations
stood at P295,000.00 excluding interests and attorney's fees. Because of respondents' failure to
abide by said final demand letter, petitioner instituted a complaint for sum of money, damages, with
application for preliminary attachment against herein respondents
By way of special and affirmative defenses, respondent EDWIN alleged that he is not a real party
in interest in this case. According to him, he was acting as mere agent of his principal, which was
the Impact Systems, in his transaction with petitioner and the latter was very much aware of this
fact.
ISSUE:
Whether the act of Edwin in signing the Deed of Assignment binds his principal Impact Systems
HELD:
Yes, the act of Edwin in signing the Deed of Assignment binds Impact Systems
The Supreme Court held that in a contract of agency, a person binds himself to render some
service or to do something in representation or on behalf of another with the latter's consent. Its
purpose is to extend the personality of the principal or the party for whom another acts and from
whom he or she derives the authority to act. It is said that the basis of agency is representation,
that is, the agent acts for and on behalf of the principal on matters within the scope of his authority
and said acts have the same legal effect as if they were personally executed by the principal.
In this case at hand, the parties do not dispute the existence of the agency relationship between
respondents ERWIN as principal and EDWIN as agent.
G.R. No. L-67889 October 10, 1985
PRIMITIVO SIASAT and MARCELINO SIASAT, petitioners, vs. INTERMEDIATE APPELLATE
COURT and TERESITA NACIANCENO, respondents.
Ponente: GUTIERREZ, JR., J.
FACTS:
Sometime in 1974, respondent Teresita Nacianceno succeeded in convincing officials of the then
Department of Education and Culture, to purchase without public bidding, one million pesos worth
of national flags for the use of public schools throughout the country. And for her service, she was
entitled to a commission of thirty (30%) percent. On October 16, 1974, the first delivery of 7,933
flags was made by the United Flag Industry. The next day, on October 17, 1974, the respondent's
authority to represent the United Flag Industry was revoked by petitioner Primitivo Siasat.
According to the findings of the courts below, Siasat, after receiving the payment of P469,980.00
on October 23, 1974 for the first delivery, tendered the amount of P23,900.00 or five percent (5%)
of the amount received, to the respondent as payment of her commission. The latter allegedly
protested. She refused to accept the said amount insisting on the 30% commission agreed upon.
The respondent was prevailed upon to accept the same because of the assurance of the petitioners
that they would pay the commission in full after they delivered the other half of the order. The
respondent states that she later on learned that petitioner Siasat had already received payment for
the second delivery of 7,833 flags. When she confronted the petitioners, they vehemently denied
receipt of the payment, at the same time claiming that the respondent had no participation
whatsoever with regard to the second delivery of flags and that the agency had already been
revoked. She then filed a case in court. The trial court decided in favor of the respondent. In
assailing the appellate court's decision, the petition tenders the following arguments: first, the
authorization making the respondent the petitioner's representative merely states that she could
deal with any entity in connection with the marketing of their products for a commission of 30%.
There was no specific authorization for the sale of 15,666 Philippine flags to the Department;
second, there were two transactions involved evidenced by the separate purchase orders and
separate delivery receipts, The revocation of agency effected by the parties with mutual consent
on October 17, 1974, therefore, forecloses the respondent's claim of 30% commission on the
second transaction; and last,regarding damages and attorneys fees.
ISSUE: Whether or not respondent is an agent of petitioners.
HELD: YES, Respondent is indeed their agent. There are several kinds of agents. First, a universal
agent one who is authorized to do all acts for his principal which can lawfully be delegated to an
agent. Second, a general agent one authorized to do all acts pertaining to a business of a certain
kind or at a particular place, or all acts pertaining to a business of a particular class or series. And
third, a special agent one authorized to do some particular act or act upon some particular
occasion. He acts usually in accordance with specific instructions the respondent is upon close
scrutiny be classified as a general agent. Indeed, it can easily be seen by the way general words
were employed in the agreement that no restrictions were intended as to the manner the agency
was to be carried out or in the place where it was to be executed. The power granted to the
respondent was so broad that it practically covers the negotiations leading to, and the execution
of, a contract of sale of petitioners' merchandise with any entity or organization. A cardinal rule of
evidence embodied in Section 7 Rule 130 of our Revised Rules of Court states that "when the
terms of an agreement have been reduced to writing, it is to be considered as containing all such
terms, and, therefore, there can be between the parties and their successors-in-interest, no
evidence of the terms of the agreement other than the contents of the writing", except in cases
specifically mentioned in the same rule. Petitioners have failed to show that their agreement falls
under any of these exceptions. The petitioners' evidence is overcome by other pieces of evidence
proving that there was only one transaction. Since only one transaction was involved, we deny the
petitioners' contention that respondent Nacianceno is not entitled to the stipulated commission on
the second delivery because of the revocation of the agency effected after the first delivery. The
revocation of agency could not prevent the respondent from earning her commission because as
the trial court opined, it came too late, the contract of sale having been already perfected and partly
executed. We do not mean to question the general doctrine as to the power of a principal to revoke
the authority of his agent at will, in the absence of a contract fixing the duration of the agency
however, The principal cannot deprive his agent of the commission agreed upon by canceling the
agency and, thereafter, dealing directly with the buyer. The petitioners are ordered to pay the
respondent the amount of ONE HUNDRED FOURTY THOUSAND NINE HUNDRED AND NINETY
FOUR PESOS (P140,994.00) as her commission on the second delivery of flags with legal interest
from the date of the trial court's decision. No pronouncement as to costs. SO ORDERED.
Nielson & Co. Inc. vs. Lepanto Consolidated Mining Co.
[GR L-21601, 28 December 1968]
Zaldivar (J)
Parties:
plaintiff-appelant: Nielson & Co
defendant-appelle: Lepanto Consolidated Mining Co.
Facts:
An operating agreement was executed before World War II (on 30 January 1937) between
Nielson & Co. Inc. and the Lepanto Consolidated Mining Co. whereby the former operated
and managed the mining properties owned by the latter for a management fee of P2,500.00 a
month and a 10% participation in the net profits resulting from the operation of the mining
properties, for a period of 5 years.
In the latter part of 1941, the parties agreed to renew the contract for another period of 5 years,
but in the mean time, the Pacific War broke out in December 1941.
In January 1942 operation of the mining properties was disrupted on account of the war. The
mill, power plant, supplies on hand, equipment, concentrates on hand and mines, were
destroyed. The Japanese forces thereafter occupied the mining properties, operated the
mines during the continuance of the war.
After the mining properties were liberated from the Japanese forces, LEPANTO took
possession thereof and embarked in rebuilding and reconstructing the mines and mill. On 26
June 1948 the mines resumed operation under the exclusive management of LEPANTO.
Shortly after the mines were liberated from the Japanese invaders in 1945, a disagreement
arose between NIELSON and LEPANTO over the status of the operating contract which as
renewed expired in 1947. Under the terms thereof, the management contract shall remain in
suspense in case fortuitous event or force majeure, such as war or civil commotion, adversely
affects the work of mining and milling.
On 6 February 1958, NIELSON brought an action against LEPANTO to recover certain sums
of money representing damages allegedly suffered by the former in view of the refusal of the
latter to comply with the terms of a management contract.

The Trial Court dismissed the complaint.
The Supreme Court reversed the decision. It held that the war suspended the contract by
virtue of the force majeure clause. And that the intention of the parties regarding the meaning
and usage concerning the force majeure clause meant the extension of the same for a period
equivalent to the suspension.
In this motion for reconsideration, LEPANTO advances a new theory. It now asserts that the
management contract in question is a contract of agency such that it has the right to revoke
and terminate the said contract, as it did terminate the same, under the law of agency, and
particularly pursuant to Article 1733 of the Old Civil Code (Article 1920 of the New Civil Code).
Issue: Whether the management contract is a contract of agency or a contract of lease of services.
Held:
Contract of Agency v Contract of Lease of Services:
Article 1709 of the Old Civil Code, defining contract of agency, provides that "By the contract
of agency, one person binds himself to render some service or do something for the account
or at the request of another."
Article 1544, defining contract of lease of service, provides that "In a lease of work or services,
one of the parties binds himself to make or construct something or to render a service to the
other for a price certain."
In both agency and lease of services one of the parties binds himself to render some service
to the other party. Agency, however, is distinguished from lease of work or services in that the
basis of agency is representation, while in the lease of work or services the basis is
employment. The lessor of services does not represent his employer, while the agent
represents his principal. Further, agency is a preparatory contract, as agency "does not stop
with the agency because the purpose is to enter into other contracts."The most characteristic
feature of an agency relationship is the agent's power to bring about business relations
between his principal and third persons. "The agent is destined to execute juridical acts
(creation, modification or extinction of relations with third parties). Lease of services
contemplate only material (non-juridical) acts."
Neilson not executing juridical acts:
Herein, the principal and paramount undertaking of Nielson under the management contract
was the operation and development of the mine and the operation of the mill. All the other
undertakings mentioned in the contract are necessary or incidental to the principal
undertaking. In the performance of this principal undertaking Nielson was not in any way
executing juridical acts for Lepanto, destined to create, modify or extinguish business relations
between Lepanto and third persons. In other words, in performing its principal undertaking
Nielson was not acting as an agent of Lepanto, in the sense that the term agent is interpreted
under the law of agency, but as one who was performing material acts for an employer, for a
compensation.
Prior approval of LEPANTO required:
It is true that the management contract provides that Nielson would also act as purchasing
agent of supplies and enter into contracts regarding the sale of mineral, but the contract also
provides that Nielson could not make any purchase, or sell the minerals, without the prior
approval of Lepanto. It is clear, therefore, that even in these cases Nielson could not execute
juridical acts which would bind Lepanto without first securing the approval of Lepanto. Nielson,
then, was to act only as an intermediary, not as an agent.
Detailed operating contract:
The statements in the annual report for 1936, and from the provision of paragraph XI of the
Management contract, that the employment by Lepanto of Nielson to operate and manage its
mines was principally in consideration of the know-how and technical services that Nielson
offered Lepanto. The contract thus entered into pursuant to the offer made by Nielson and
accepted by Lepanto was a "detailed operating contract". It was not a contract of agency.
Nowhere in the record is it shown that Lepanto considered Nielson as its agent and that
Lepanto terminated the management contract because it had lost its trust and confidence in
Nielson.
Contract cannot be revoked at will:
From the provision of paragraph XI of the management contract, Lepanto could not terminate
the agreement at will. Lepanto could terminate or cancel the agreement by giving notice of
termination ninety days in advance only in the event that Nielson should prosecute in bad faith
and not in accordance with approved mining practice the operation and development of the
mining properties of Lepanto. Lepanto could not terminate the agreement if Nielson should
cease to prosecute the operation and development of the mining properties by reason of acts
of God, strike and other causes beyond the control of Nielson. The management contract in
question is not revocable at the will of Lepanto. It is not a contract of agency as defined in
Article 1709 of the old Civil Code, but a contract of lease of services as defined in Article 1544
of the same Code. This contract can not be unilaterally revoked by Lepanto.
Dispositive:
IN VIEW OF THE FOREGOING CONSIDERATIONS, We hereby reverse the decision of the
court a quo and enter in lieu thereof another, ordering the appellee Lepanto to pay the appellant
Nielson.
Ker and Co., LTD vs Lingad
GR No. L-20871 April 30, 1971
Facts:
CIR assessed the sum of P20,272.33 as the commercial brokers percentage tax, surcharge, and
compromise penalty against Ker & Co. Ker and Co. requested for the cancellation of the
assessment and filed a petition for review with the Court of Tax Appeals. The CTA ruled that Ker
and Co is liable as a commercial broker. Ker has a contract with US rubber. Ker is the distributor
of the said company. Ker was precluded from disposing the products elsewhere unless there has
been a written consent from the company. The prices, discounts, terms of payment, terms of
delivery and other conditions of sale were subject to change in the discretion of the Company.
Issue:
Whether the relationship of Ker and Co and US rubber was that of a vendor- vendee or principal-
broker
Ruling:
The relationship of Ker and Co and US rubber was that of a principal-broker/ agency. Ker and Co
is only an agent of the US rubber because it can dispose of the products of the Company only to
certain persons or entities and within stipulated limits, unless excepted by the contract or by the
 Rubber Company, it merely receives, accepts and/or holds upon consignment the products, which
remain properties of the latter company, every effort shall be made by petitioner to promote in every
way the sale of the products and that sales made by petitioner are subject to approval by the
company. Since the company retained ownership of the goods, even as it delivered possession
unto the dealer for resale to customers, the price and terms of which were subject to the companys
control, the relationship between the company and the dealer is one of agency.
[ GR .No. 15823, Sep 12, 1921 ]
JULIO DANON v. ANTONIO A. BRIMO
42 Phil. 133
JOHNSON, J.:
NATURE: Action to recover the sum of P60,000, alleged to be the value of services by the plaintiff
as a broker.
QUICK FACTS & HELD:
Danon (Broker) found a purchaser for the factory of his manager (Brimo), who promised 5%
commission to Danon; Another broker found another purchaser who would buy the factory at a
higher price, said factory was sold to this purchaser; As such, Danons client did not perfect the
sale with Brimo. Held: Danon not the procuring cause. A broker is never entitled to commissions
for unsuccessful efforts. The risk of failure is only his. The reward comes only with his success.
Where no time for the continuance of the contract is fixed by its terms, either party is at liberty to
terminate it at will, subject only to the ordinary requirements of good faith.
DETAILED FACTS:
1. Antonio Brimo, informed the Danon, that he (Brimo) desired to sell his factory, the Holland
American Oil Co., for the sum of P1,200,000
2. Brimo agreed and promised to pay to the Danon commission of 5% provided the latter could
sell said factory for that amount
3. No definite period of time was fixed within which the Danon should effect the sale. It seems
that another broker, Sellner, was also negotiating the sale, or trying to find a purchaser for the
same property and that the plaintiff was informed of the fact either by Brimo himself or by
someone else; at least, it is probable that the plaintiff was aware that he was not alone in
the field, and his whole effort was to forestall his competitor by being the first to find a
purchaser and effect the sale.
4. Immediately after having an interview with Mr. Brimo, Danon went to see Mr. Mauro Prieto,
president of the Santa Ana Oil Mill, a corporation, and offered to sell to him the defendant's
property at P1,200,000. The said corporation was at that time in need of such a factory, and
Mr. Prieto, instructed the manager, Samuel E. Kane, to see Mr. Brimo and ascertain whether
he really wanted to sell said factory, and, if so, to get permission from him to inspect the
premises. Mr. Kane inspected the factory and, presumably, made a favorable report to Mr.
Prieto. The latter asked for an appointment with Mr. Brimo to perfect the negotiation. In the
meantime Sellner, the other broker referred to, had found a purchaser for the same property,
who ultimately bought it for P1,300,000. For that reason Mr. Prieto, the would be purchaser
found by the plaintiff, never came to see Mr. Brimo to perfect the proposed negotiation.
ISSUE: Whether Danon as broker was the Procuring Cause of Sale? NO. Whether Danon is
entitled to Compensation - NO
HELD:
The most that can be said as to what the plaintiff had accomplished is, that he had found a
person who might have bought the defendant's factory. The evidence does not show that the
Santa Ana Oil Mill had definitely decided to buy the property at the fixed price of P1,200,000.
The plaintiff claims that the reason why the sale was not consummated was because Mr. Brimo
refused to sell.
Defendant agreed and promised to pay him a commission of 5% provided he (the plaintiff) could
sell the factory at P1,200.000. It is difficult to see how the plaintiff can recover anything in the
premises. The plaintiff's action is an action to recover "the reasonable value" of services
rendered.
It is clear that his "services" did not contribute towards bringing about the sale. He was not "the
efficient agent or the procuring cause of the sale."
The broker must be the efficient agent or the procuring cause of sale. The means
employed by him and his efforts must result in the sale.
The duty assumed by the broker is to bring the minds of the buyer and seller to an agreement
for a sale, and the price and terms on which it is to be made, and until that is done his right to
commissions does not accrue.
It follows, that a broker is never entitled to commissions for unsuccessful efforts. The risk
of a failure is wholly his. The reward comes only with his success. He may have introduced to
each other parties who otherwise would have never met; he may have created impressions,
which under later and more favorable circumstances naturally lead to and materially assist in
the consummation of a sale; he may have planted the very seed from which others reap the
harvest; but all that gives him no claim.
The failure therefore and its consequences were the risk of the broker only. This however must
be taken with one important and necessary limitation. If the efforts of the broker are
rendered a failure by the fault of the employer; if capriciously he changes his mind after
the purchaser, ready and willing, and consenting to the prescribed terms, is produced;
or if the latter declines to complete the contract because of some defect of title in the
ownership of the seller, some unremoved incumbrance, some defect which is the fault
of the latter, then the broker does not lose his commissions. But this limitation is not even
an exception to the general rule affecting the broker's right for it goes on the ground that the
broker has done his duty, that he has brought buyer and seller to an agreement, but that the
contract is not consummated and fails though the after-fault of the seller.
One other principle applicable: Where no time for the continuance of the contract is fixed by its
terms either party is at liberty to terminate it at will, subject only to the ordinary requirements
of good faith. Usually the broker is entitled to a fair and reasonable opportunity to perform his
obligation, subject of course to the right of the seller to sell independently. But having been
granted him, the right of the principal to terminate his authority is absolute and unrestricted,
except only that he may not do it in bad faith.
Although the present plaintiff could probably have effected the sale, he is not entitled to the
commissions agreed upon because he had no intervention whatever in, and much sale
in question. It must be borne in mind that no definite period was fixed by the defendant within
which the plaintiff might effect the sale of its factory. Nor was the plaintiff given by the
defendant the exclusive agency of such sale. Therefore, the plaintiff cannot complaint of the
defendant's conduct in selling the property through another agent before the plaintiff's efforts
were crowned with success. "One who has employed a broker can himself sell the property to
a purchaser whom he has procured, without any aid from the broker."
DISPOSITIVE: For the foregoing reasons the judgment appealed from is hereby revoked and the
defendant is hereby absolved from all liability under the plaintiff's complaint, with costs in both
instances against the plaintiff. So ordered.
PHILIPPINE HEALTH-CARE PROVIDERS, INC. (MAXICARE),Petitioner,
CARMELA ESTRADA/CARA HEALTH SERVICES,Respondent.
G.R. No. 171052 / January 28, 2008
NACHURA, J.:
FACTS: Estrada is entitled to 10% of the total amount of premiums paid by Meralco to Maxicare as of
May 1996 (including succeeding renewals)
Philippine Health-Care Providers, Inc. (Maxicare) formally appointed Estrada as its General
Agent evidenced by a letter-agreement dated February 16, 1991 granting him a commission
equivalent to:
15 to 18% from individual, family, group accounts
2.5 to 10% on tailored fit plans
10% on standard plans of commissionable amount on corporate accounts
Maxicare had a "franchising system" in dealing with its agents whereby an agent had to first
secure permission from to list a prospective company as client
MERALCO account was included as corporate accounts applied by Estrada
Estrada submitted proposals and made representations to the officers of MERALCO
regarding the MAXICARE Plan but MERALCO directly negotiated with MAXICARE from
December 1, 1991 to November 30, 1992 and was renewed twice for a term of 3 years each
March 24, 1992: Estrada through counsel demanded his commission for the MERALCO
account and 9 other accounts but it was denied by MAXICARE because he was not given
a go signal to intervene in the negotiations for the terms and conditions
RTC: Maxicare liable for breach of contract and ordered it to pay Estrada actual damages in
the amount equivalent to 10% of P20,169,335 representing her commission for Meralco
CA: Affirms in toto

ISSUE: W/N Estrada should be paid his commission for the Maxicare Plans subscribed by
Meralco

HELD: YES. petition is DENIED

Both courts were one in the conclusion that Maxicare successfully landed the Meralco
account for the sale of healthcare plans only by virtue of Estradas involvement and
participation in the negotiations
Maxicares contention that Estrada may only claim commissions from membership dues
which she has collected and remitted to Maxicare as expressly provided for in the letter-
agreement does not convince us. It is readily apparent that Maxicare is attempting to evade
payment of the commission which rightfully belongs to Estrada as the broker who brought
the parties together.
The only reason Estrada was not able to participate in the collection and remittance of
premium dues to Maxicare was because she was prevented from doing so by the acts of
Maxicare, its officers, and employees.
Agent vs. Broker:
agent
receives a commission upon the successful conclusion of a sale
broker
earns his pay merely by bringing the buyer and the seller together, even if no sale is
eventually made
"procuring cause" in describing a brokers activity
cause originating a series of events which, without break in their continuity, result in the
accomplishment
efforts must have been the foundation on which the negotiations resulting in a sale began
Even a cursory reading of the Complaint and all the pleadings filed thereafter before the
RTC, CA, and this Court, readily show that Estrada does not concede, at any point, that her
negotiations with Meralco failed -Counsel's contention is wrong