Bringing the parties together

Is there any difference between being an agent and being a broker? This is the question tackled in this case of Roberto and Mr. and Mrs. Garcia.

Mr. and Mrs. Garcia owned a parcel of land with an area of 104,114 sq.m. covered by TCT No.31465. On June 29, 1992, the spouses executed a special power of attorney authorizing Roberto, a licensed real estate broker, and his associates Andy and Cesar, to negotiate for the sale of said land at P550 per square meter, at a commission of three percent of the gross price. The power of attorney was non-exclusive and valid for one month only.

On the same date, Roberto approached his friend Eddie who was the construction manager of a religious congregation interested in acquiring property within the area. Two sisters of the congregation had already seen and inspected the land and expressed their desire to buy it after finding it suitable for their purpose. So on July 1 1992,or two days later, Roberto and Eddie visited the property to verify the identity and location of the land then accompanied the two sisters to Mr. Garcia at the latter’s office. Having met the owner for the first time, the sisters haggled for a reduction of the price from P550 to P530 per square meter. Mr. Garcia referred them to Mrs. Garcia.

After another two days or on July 3, 1992, the sisters and the Garcia spouses already reached an agreement. They agreed that in the Deed of Sale the price will be fixed at P200 per square meter and it will be signed by the attorney-in-fact of the spouses. When Roberto and his associates learned about it, they immediately went to see Mr. Garcia to claim their commission. But Mr. Garcia refused to pay it and told them that since their authority was non- exclusive, another group of agents led by Pablo was responsible for the sale of the land to the sisters. Mr. Garcia showed them an undated and unnotarized special power of attorney in favor of Pablo.

The sale was eventually concluded and the spouses Garcia received payment of the agreed purchase price but they continued to refuse to pay Roberto and his associates their broker’s fee. So the latter sued the said spouses for recovery of their broker’s fee in the sum of P1,655,412.60 or three percent of the offered purchase price of P530 per square meter plus moral and exemplary damages and attorney’s fees.

After trial, the lower court decided in favor of Roberto, Andy and Cesar and ordered Mr. and Mrs. Garcia to pay them their broker’s fee but only in the sum of P624,684 based on the actual purchase price of P200 per square meter as appearing in the Deed of Sale, with legal interest of six percent per annum plus attorney’s fees of P50,000.

Was the lower court correct?

Yes.

Roberto is a licensed real estate broker and Andy and Cesar are his associates. There is no dispute as to the role they played in the transaction. At the very least they set the sale in motion. They are not able to participate in its consummation only because they are prevented from doing so by the acts of the spouses. Unlike an agent who receives a commission only upon the successful conclusion of a sale, a broker earns his pay merely by bringing the buyer and the seller together, even if no sale is eventually made. A broker is one whose occupation is to bring the parties together in matters of trade, commerce or navigation.

The claim of the spouses that Pablo, another agent was the one responsible for the sale of the land is unsubstantiated. They only presented an unnotarized and undated special power of attorney in favor of Pablo. The contract here involves a considerable amount of money. It is inconsistent with sound business practice that the authority to sell is contained in an undated and unnotarized special power of attorney. On the other hand, the written authority of Roberto, Andy and Cesar were duly notarized and dated. It is readily apparent that the spouses were only trying to evade payment of the commission which rightfully belongs to Roberto and his associates.

Equity considerations dictate that the commission should only be based on the actual price for which the land was sold which is P200 per square meters and not on the price for which it was offered for sale, or P530 per sq.m. So the award of P624,684 is also proper (Tan et al. vs. Gullas et.al. G.R.143978, December 3, 2002).

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