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LAW ON AGENCY
Rallos v. Felix Go Chan & Sons Realty Corp., 81 SCRA 251 (1978):
a. Consent, express or implied, of the parties to establish the relationship;
b. Object, which is the Execution of Juridical Acts in Relation to Third Parties;
c. The agent acts as a representative and not for himself; and
d. The agent acts within the scope of his authority.
b. SUBJECT M ATTER: Service – Execution of Juridical Acts in Behalf of Principal and Within the
Scope of Authority
o It is clear from Art. 1868 that the basis of agency is representation.
o One factor which most clearly distinguishes agency from other legal concepts is control: the agent agrees
to act under the control or direction of the principal
c. CONSIDERATION: Agency Presumed to Be for Compensation,
Unless There Is Proof to the Contrary (Art. 1875)
o Old Civil Code: Agency presumed to be gratuitous
o New Civil Code: 1875
A. FROM BROKERAGE
Difference in the Nature of the “Service” Covered: A real estate broker is one who negotiates the sale of real
properties. His business, generally speaking, is only to find a purchaser who is willing to buy the land upon terms
fixed by the owner.
o He has no authority to bind the principal by signing a contract of sale.
o Indeed, an authority to find a purchaser of real property does not include an authority to sell.
On the Duties and Obligations Assumed: “The duties and liability of a broker to his employer are essentially those
which an agent owes to his principal.
o Consequently, the decisive legal provisions on determining whether a broker is mandated to give to the
employer the propina or gift received from the buyer would be Articles 1891 and 1909 of the Civil Code.”
(CLV: Yet the facts did indicate clearly that the real estate broker was appointed as an exclusive agent.)
Entitlement to the Commission Agreed Upon: Agent receives a commission upon successful conclusion of a sale;
whereas, broker earns his pay merely by bringing the buyer and the seller together, even if no sale is eventually
madeTan v. Gullas, 393 SCRA 334 (2002).
o The business of a real estate broker, generally, is only to find a bona fide purchaser, and the settled rule
is that, in the absence of an express stipulation on the matter between broker and his principal, the broker
becomes entitled to the usual commissions only when 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 then named by the principal,
although the particulars may be arranged and the matter negotiated and completed between the principal
and the purchaser directly. Macondray & Co. v. Sellner, 33 Phil. 370 (1916).
o Thus, when the terms of the brokerage arrangement is to the effect that entitlement to the commission was
contingent on the purchase by a customer of a fire truck, the implicit condition being that the broker would
earn the commission if he was instrumental in bringing the sale about. Since the agent had nothing to do
with the sale of the fire truck, he is not entitled to any commission at all. Guardex v. NLRC, 191 SCRA
487 (1990).
o Doctrine of “Efficient Procuring Cause”. – In agencies to sell where the entitlement of the commission
is subject to the successful consummation of the sale with the buyer located by the agent, said agent would
still be entitled to the commission on sales consummated after the expiration of his agency when the facts
show that the agent was the “efficient procuring cause in bringing about the sale”. Pratts v. Court of
Appeals, 81 SCRA 360 (1978).
o Although the sale of the object of agency was perfected three days after expiration of the agency period,
agent would still be entitled to receive commission stipulated based on doctrine in Pratts v. Court of
Appeals, 81 SCRA 360 (1978), that when agent was the efficient procuring cause in bringing about the
sale he was entitled to compensation. Manotok Bros. Inc. v. Court of Appeals, 221 SCRA 224 (1993).
o Although the buyer was introduced by the broker to the seller, nonetheless broker was not entitled to
receive the commission even with the consummation of the sale because the lapse of the period of more
than one (1) year and five (5) months between the expiration of broker’s authority to sell and the
consummation of the sale to the buyer, is significant index of the broker’s non-participation in the really
critical events leading to the consummation of said sale. Broker was not the efficient procuring cause in
bringing about the sale and therefore not entitled to the stipulated broker’s commission. Inland Realty
v. Court of Appeals, 273 SCRA 70 (1997).
o The term “procuring cause” in describing a broker’s activity, refers to a cause originating a series of
events which, without break in their continuity, result in the accomplishment of the prime objective of the
employment of the broker—producing a purchaser ready, willing and able to buy on the owner’s terms. To
be regarded as the “procuring cause” of a sale as to be entitled to a commission, a broker’s efforts must
have been the foundation on which the negotiations resulting in a sale began. Medrano v. Court of
Appeals, 452 SCRA 77 (2005). Ticong v. Malim, 819 SCRA 116 (2017).