AGENCY

Prats v. CA (1978)
Fernandez, J.
Under what topic: IX. What are the obligations and liabilities of principals to
agents?
Petitioner: Antonio E. Prats, doing business under the name of Philippine Real Estate
Exchange
Respondent: Courts of Appeals, Alfonso Doronila, and Philippine National Bank

Synopsis: This is a petition for certiorari to review the decision of CA, dismissing Prats case
for recovery of sum of money. Doronila was ordered in the RTC to pay Prats P1.380M based on
an alleged exclusive option and authority to negotiate the sale of Doronilas property. CA
reversed. SC said that there was no evidence that shows that Prats was the efficient procuring
cause in bringing about the sale, hence he is not entitled to the commission which was
awarded by the RTC. However, he was awarded an amount in the interest of equity.

Doctrine: The principal has the obligation to pay commissions to his agent, subject to the
limitations of the stipulations in the agency. Based on equity, however, in this case, it is but
proper to give compensation to the efforts of the agent which helped further the principals
interest.
Facts:
provided
that
should
negotiations with the buyer
This is a suit for the recovery of a sum
have been started, said period
of money and damages instituted by
is automatically extended until
Prats against Doronila and PNB.
said
negotiations
is
terminated,
but
not
more
than
July 1967: Doronila was the registered
(15) days.
owner of a 300-hectare land in Rizal.
d.
The written offers must be
He offered to sell such land to the
made
by
the
prospective
Social Security System (SSS) for PHP
buyers and if no written offer is
4.00/sq. m. SSS made a counter-offer
made to Doronila until the last
of PHP 3.25/sq. m.
day of this authorization, this
option and authority shall
February 14, 1968: Doronila then gave
expire and become null and
Prats an exclusive option and authority
void.
in writing to negotiate the sale of the
e.
Prospective buyers and all parties
property under the following terms:
interested shall be referred to
a. Prats is to sell the land at a basic
Prats.
price of PHP 3.00/sq. m.
b. A 10% commission shall be paid to
Prats based on PHP 2.10/sq. m. or
at any price finally agreed upon
and if the property be sold over
and above PHP 3.00/sq. m., the
excess shall be paid to Prats in
addition to his 10% commission.
c. Such exclusive option and
authority is good for (60) days
from the date of conformity;

As a result of this exclusive option and

authority
to
negotiate,
Doronila
withdrew his previous offer to sell to
SSS and asked for the return of all
papers
concerning
his
offered
property. These papers were given to
Prats as Doronilas authorized real
estate broker.

AGENCY

February 26, 1968: Doronila was

invited by SSS to have a meeting but
the former declined and asked that
SSS communicate directly with Prats.
Prats wrote SSS signifying his
intentions to sit down and meet with
the latter.

April 18, 1968: Doronila extended

Prats exclusive option and authority
up to May 18.

May 6, 1968: Prats made a formal

written offer to the SSS at the price of
PHP6.00/sq. m. SSS ignored said offer.

May 18, 1968: Prats wrote to Doronila

emphasizing that they still had (15)
days within which to complete the
negotiations as per agreement or until
June 2.

May 30, 1968: Prats wrote to Doronila

again advising him that the SSS
agreed to purchase the land, though
no formal offer was made by the
latter.

June 6, 1968: Doronila wrote to Prats

informing him that he has not
received any written offer from the
SSS during the 60 days of the
exclusive option and authority which
expired on April 14, nor during the
period of extension which expired on
May 18, nor during the 15-day grace
period. As per their agreement, the
option expired and became null and
void.

June 19, 1968: Doronila wrote to SSS

renewing his offer to sell the land at
PHP 4.00/sq. m. SSS replied and made
a counter-offer of PHP 3.25/sq. m., for
a total price of P9,750,000.00.

July 30, 1968: Doronila accepted the

counter-offer and executed the deed
of absolute sale.

September 17, 1968: Prats presented

his statement of account to Doronila
for the payment of his professional
services as real estate broker in the
amount of P1,380,000.00. Doronila
refused to pay. Hence, a suit was filed.

RTC ruled in favor of Prats, ordering

Doronila to pay the commission plus
damages.

CA reversed. As per the agreement, a

written offer by the prospective buyer
was required and if no such written
offer is made until the last day of the
authorization, the option shall expire.

Issue/s - Holding:
WON CA erred in concluding that Prats was
not the efficient procuring cause in bringing
about the sale of Doronilas land to SSS and
as such should not be entitled to his
commission. NO. CA was correct.

Ratio:
It is clear from the stipulation of facts
and evidence on record that the offer
of Doronila to sell the land to SSS was
formally accepted by SSS only on June
20, 1968 after the exclusive option
had already expired. Prats was not the
efficient procuring case in bringing
about the sale proceeding from the
fact of expiration of his exclusive
option.
o This is manifested by the fact
that the SSS officials specifically
requested Prats not to be
present at the meeting with
Doronila on May 29 because the
SSS officials never wanted the
mediation or intervention of
Prats. The conclusion is that this
May 29 meeting was done
independently and not by virtue
of Prats wish or efforts to hold
such meeting.
o The fact that Prats also made
offers of PHP 4.50/sq. m. and

AGENCY

PHP 6.00/sq. m. belies the claim

that he arranged the May 29
meeting as SSS was only willing
to buy it at PHP 3.25/sq. m.
Prats offers to SSS received no
attention.
However, the Court took note that
Prats had taken steps to bring back
together Doronila and SSS:
o Prats wrote several letters to
SSS offering the land and
inviting them to discuss the
offer. He even made a former
offer of PHP 6.00/sq. m., albeit it
was ignored.
o Prats had several dinner and
lunch meetings with Doronila
and his nephew Atty. Asencio.
The latter corroborated this fact.
As such, the Court granted in
equity a sum of PHP 100,000.00
by way of compensation for Prats
efforts and assistance in the
transaction, which however was
finalized and consummated after

the expiration of his

option.

exclusive

Dispositive:
WHEREFORE, the decision appealed from is
hereby affirmed, with the modification that
private respondent Alfonso Doronila in equity
is ordered to pay petitioner or his heirs the
amount of One Hundred Thousand Pesos
(P100,000.00) and that the portion of the
said decision ordering Prats to pay
respondent Doronila attorneys' fees in the
sum of P10,000.00 is set aside.
The lifting of the injunction issued by the
lower court on the PHP 2,000,000.00 cash
deposit of respondent Doronila as ordered by
respondent court is hereby with the
exception of the sum of One Hundred
Thousand Pesos (P100,000.00) which is
ordered segregated therefrom to satisfy the
award herein given to petitioner, the lifting of
said injunction, as herein ordered, is
immediately executory upon promulgation
hereof.