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Mariano Diolosa & Alegria Villanueva-Diolosa v. CA and Quirino Baterna (as owner and proprietor of Quin Baterna Realty) (1984) Relova, J. Facts:

Baterna is a licensed real estate broker. The spouses Biolosa owned the Villa Alegre subdivision. June 20, 1968, they entered into an agreement: Baterna would be their exclusive sales agent to sell the lots of the subdivision until all the property is fully disposed. Sept 27, 1986 (about 3 mos later) the spouses terminated the services of Baterna as because the remaining unsold lots were reserved for their 6 grandkids. (there were 27 lots which remained unsold) Now, Baterna is claiming that under the terms of their contract, he had unrevocable authority to sell the lots until all were disposed. The rescission of the contract contravenes their agreement. He also claims to be entitled to a commission on the lots unsold because of the rescission. The spouses argue that they are within their legal right to terminate the agency because they needed the undisposed lots for the use of their family. They also say that Baterna has no legal right to a commission to unsold lots. CFI dismissed. CA says that notwithstanding NCC 1920 (that the principal may revoke the agency at will) spouses could not terminate the agency agreement without paying damages. o The agency agreement expressly stipulated until all the property as is fully disposed" o The testimony of a certain Roberto Malundo that Baterna agreed to the intention of Mrs. Diolosa to reserve some lots cannot prevail over the clear terms of the agreement. o Wanting to reserve the lots for the grandkids is not a legal reason to rescind the agency agreement. (even if each kid would be given one lot each, there would still be 21 lots available and the spouses have other lands that can be reserved for the kids)

Issue/Held: Can the spouses terminate the agency without paying damages to Baterna, the real estate broker? NO. They have to pay damages. Ratio:

Under the contract, the spouses allowed the real estate broker to sell, cede, etc. until all lots are fully disposed. The authority to sell is not extinguished until all lots are disposed. When they revoked the contract, they became liable to the real estate broker for damages for breach of contract. Since the agency agreement is a valid contract, it may only be rescinded on grounds specified in NCC 138182. ART. 1381. The following contracts are rescissible: (1) Those which are entered in to by guardians whenever the wards whom they represent suffer lesion by more than one-fourth of the value of the things which are the object thereof; (2) Those agreed upon in representation of absentees, if the latter suffer the lesion stated in the preceding number; (3) Those undertaken in fraud of creditors when the latter cannot in any other name collect the claims due them; (4) Those which refer to things under litigation if they have been entered into by the defendant without the knowledge and approval of the litigants or of competent judicial authority; (5) All other contracts specially declared by law to be subject to rescission. ART. 1382. Payments made in a state of insolvency for obligations to whose fulfillment the debtor could not be compelled at the time they were effected, are also rescissible.

In this case, not one of the grounds are present.

Petition denied.