AGENCY & PARTNERSHIP | Espenilla, A.Y.

2019-2020 Page 1
Geraldine Marie Paulo | A2021

ROCHA v. PRATS In this case, Antonio Brimo of Respondent Company authorized The SC held that the alleged waiver of the principal was not proven and they agreed
Mencarini to negotiate a sale of a building and lot in Manila. with the TC that said waiver should have been in writing. Since the agent did not
Mencarini was to receive as his compensation the excess of the satisfy the requirements given by the principal in the negotiation of the property, the
purchase price over and above P150,000. Rocha agreed to help agent is not entitled to the commission.
Mencarini in finding a purchaser and received from Brimo an
authorization similar to that of Mencarini. In all cases, the doctrine is, that 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
Rocha obtained an offer from Vicente Madrigal to buy the is to be made, and until that is done his right to commission does not accrue.
property for P165,000 and received authority to sell it. Rocha
wanted to close the transaction with Madrigal who offered to
secure the deferred payment on the purchase price with a
mortgage on the property, but Brimo then insisting on a bank
credit as security and Madrigal declined to agree, the sale failed.

A few days later, Brimo, through another agent, sold the

property to one Concepcion Leyba for P175,000. The issue in
this case is whether or not the principal’s non-waiver of the bank
credit as security for the loan would entitle Rocha to the
commission.
INLAND REALTY V. Gregorio Araneta Inc. gave Inland Realty, a brokerage
CA company, authority to sell its shares in the Architects’ Bldg, Inc.
During the effectiveness of this authority to sell, Inland Realty
was able to present to its principal a prospective buyer, Stanford
Microsystems. During the course of negotiations, Stanford
offered to buy the shares at 9.8M. Gregorio Araneta was not
amenable to this price as it was below their initial asking price.
Unable to come to an agreement, the authority to sell expired
after several extensions.
A year and five months after the expiration of the last extension
of the authority to sell, Gregorio Araneta sold its shares in
Architects’ Bldg to Stanford for 13.5M.
The Court held that Inland Realty was not entitled to its commission as it was not the
efficient procuring cause. It put much weight on the lapse of time between the
expiration of the authority to sell and the consummation of the sale.
Note:
This was an exception to the general rule that the efforts of the agent to bring together
the buyer and the principal may be compensated when there is a showing that the
agent was instrumental in the eventual consummation of the sale.
In this case, there was no showing or even allegation that the principal (Gregorio
Araneta) made any efforts in continuing negotiations with Stanford other than the
negotiations already initiated by Inland Realty. Seeing that the shares were not sold at
the same price initially offered, there was clearly further negotiation involved.

Despite the expiration of the authority to sell, Inland Realty could still have been held
to be entitled to their commission as a matter of equity based on previous SC
decisions.