DINGLASAN, First Batch

COSMIC LUMBER CORPORATION V CA

FACTS

Cosmic Corporation, through its General Manager executed a Special Power of Attorney
appointing Paz G. Villamil-Estrada as attorney-in-fact to initiate, institute and file any court
action for the ejectment of third persons and/or squatters of the entire lot 9127 and 443 for the
said squatters to remove their houses and vacate the premises in order that the corporation may
take material possession of the entire lot
Paz G. Villamil Estrada, by virtue of her power of attorney, instituted an action for the
ejectment of private respondent Isidro Perez and recover the possession of a portion of lot 443
before the RTC
Estrada entered into a Compromise Agreement with Perez, the terms and conditions such
as:
In order for Perez to buy the said lot he is presently occupying, he has to pay to
plaintiff through Estada the sum of P26,640 computed at P80/square meter and that Cosmic
Lumber recognizes ownership and possession of Perez by virtue of this compromise agreement
over said portion of 333 sqm of lot 443 and whatever expenses of subdivision, registration and
other incidental expenses shall be shouldered by Perez although the agreement was approved by
the trial court and the decision became final and executory it was not executed within the 5 year
period from date of its finality allegedly due to the failure of Cosmic Lumber to produce the
owners duplicate copy of title needed to segregate from lot 443 the portion sold by the attorney-
in-fact, Paz Estrada to Perez under the compromise agreement

ISSUE:

W/N there is a contract of agency between Cosmic Lumber, principal and Paz Estrada,
agent thus binding the principal over the compromise agreement made by the agent to a third
person, Perez in selling the portion of the said property

RULING:

No
The authority granted to Villamil-Estrada under the special power of attorney was explicit
and exclusionary: for her to institute any action in court to eject all persons found on lots number
9127 and 443 so that Cosmic Lumber could take material possession thereof and for this
purpose, to appear at the pre-trial and enter into any stipulation of facts and/or compromise
agreement but only insofar as this was protective of the rights and interests of Cosmic Lumber in
the property
Nowhere in this authorization was Villamil-Estrada granted expressly or impliedly any
power to sell the subject property nor a portion thereof
 Neither can a conferment of the power to sell be validly inferred from the specific
authority to enter into a compromise agreement because of the explicit limitation fixed by the
grantor that the compromise entered into shall only be so far as it shall protect the rights and
interest of the corporation in the aforementioned lots.
In the context of special investiture of powers to Villamil-Estrada, alienation by sale of an
immovable certainly cannot be deemed protective of the right of Cosmic Lumber to physically
possess the same, more so when the land was being sold for a price of P80/sqm , very much less
than its assessed value of P250/sqm and considering further that plaintiff never received the
proceeds of the sale
When the sale of a piece of land or any interest thereon is through an agent, the authority
of the latter shall be in writing; otherwise, the sale should be void. Thus, the authority of an agent
to execute a contract for the sale of real estate must be conferred in writing and must give him
specific authority, either to conduct the general business of the principal or to execute a binding
contract containing terms and conditions which are in the contract he did execute
For the principal to confer the right upon an agent to sell real estate, a power of attorney
must so express the powers of the agent in clear and unmistakable language
It is therefore clear that by selling to Perez a portion of Cosmic Lumbers land through a
compromise agreement, Villamil-Estrada acted without or in obvious authority. The sale ipso jure
is consequently void and so is the compromise agreement. This being the case, the judgment
based thereon is necessarily void
When an agent is engaged in the perpetration of a fraud upon his principal for his own
exclusive benefit, he is not really acting for the principal but is really acting for himself, entirely
outside the scope of his agency

J. DANON vs. A. BRIMO (1921)

Procuring Cause

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 anotherpurchaser 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. Thereward 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 atwill, subject only to the ordinary requirements of good
faith.
DETAILED FACTS:

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

Brimo agreed and promised to pay to the Danon commission of 5% provided the
latter could sell said factory for that amount3.

No definite period of time was fixed within which the Danon should effect the
sale. It seems that another broker, Sellner, was also negotiating thesale, 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.

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 permissionfrom him to inspect the
premises. Mr. Kane inspected the factory and, presumably, made a favorable report to
Mr. Prieto. The latter asked for anappointment 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 seeMr. Brimo to perfect the proposed negotiation.

ISSUE:

Whether Danon as broker was theProcuring Causeof 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 bemade, 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 hissuccess. He
may have introduced to each other parties who otherwise would have never met; he
may have created impressions, which under laterand 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 necessarylimitation. 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 defectof title in the ownership of the
seller, some unremoved incumbrance, some defect which is the fault of the latter,
then the broker does not losehis 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 thebroker has done his duty, that he has
brought buyer and seller to an agreement, but that the contract is not consummated and
fails though theafter-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 periodwas fixed by the defendant within which theplaintiff 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 underthe plaintiff's complaint, with costs in
both instances against the plaintiff. So ordered

FRANCISCO VS GSIS

Facts:

The plaintiff, Trinidad J. Francisco, in consideration of a loan mortgaged in favor

of the defendant, Government Service Insurance System a parcel of land known as Vic-
Mari Compound, located at Baesa, Quezon City. The System extrajudicially foreclosed
the mortgage on the ground that up to that date the plaintiff-mortgagor was in arrears on
her monthly instalments. The System itself was the buyer of the property in the
foreclosure sale. The plaintiffs father, Atty. Vicente J. Francisco, sent a letter to the
general manager of the defendant corporation, Mr. Rodolfo P. Andal. And latter the
System approved the request of Francisco to redeem the land through a telegram.
Defendant received the payment and it did not, however, take over the administration of
the compound. The System then sent a letter to Francisco informing of his indebtedness
and the 1 year period of redemption has been expired. And the System argued that the
telegram sent to Francisco saying that the System has approved the request in
redeeming the property is incorrect due to clerical problems.

Issue:
WON the System is liable for the acts of its employees regarding the telegram?

Held:

Yes. There was nothing in the telegram that hinted at any anomaly, or gave
ground to suspect its veracity, and the plaintiff, therefore, can not be blamed for relying
upon it. There is no denying that the telegram was within Andals apparent authority.
Hence, even if it were the board secretary who sent the telegram, the corporation could
not evade the binding effect produced by the telegram. Knowledge of facts acquired or
possessed by an officer or agent of a corporation in the course of his employment, and
in relation to matters within the scope of his authority, is notice to the corporation,
whether he communicates such knowledge or not. Yet, notwithstanding this notice, the
defendant System pocketed the amount, and kept silent about the telegram not being in
accordance with the true facts, as it now alleges. This silence, taken together with the
unconditional acceptance of three other subsequent remittances from plaintiff,
constitutes in itself a binding ratification of the original agreement.

II. ESTABLISHING AGENCY

A. ORAL OR WRITTEN EXPRESS KIND OF AGENCY ( as opposed to implied)

Art. 1869. Agency may be express, or implied from the acts of the principal, from his
silence or lack of action, or his failure to repudiate the agency, knowing that another person
is acting on his behalf without authority.

Agency may be oral, unless the law requires a specific form. (1710a)