1. Medrano v. Court of Appeals, G.R.No.

150678
FACTS
Bienvenido R. Medrano was the Vice-Chairman of Ibaan Rural Bank, a bank owned
by the Medrano family. In 1986, Mr. Medrano asked Mrs. Estela Flor, a cousin-in-
law, to look for a buyer of a foreclosed asset of the bank, a 17-hectare mango
plantation priced at P2,200,000.00, located in Ibaan, Batangas. Mr. Dominador Lee,
a businessman from Makati City, was a client of respondent Mrs. Pacita G. Borbon, a
licensed real estate broker. The two met through a previous transaction where Lee
responded to an ad in a newspaper put up by Borbon for an 8-hectare property in Lubo,
Batangas, planted with atis trees. Lee expressed that he preferred a land with mango
trees instead. Borbon promised to get back to him as soon as she would be able to find
a property according to his specifications.
Borbon relayed to her business associates and friends that she had a ready buyer for a
mango orchard. Flor then advised her that her cousin-in-law owned a mango
plantation which was up for sale. She told Flor to confer with Medrano and to give
them a written authority to negotiate the sale of the property. Upon being informed
by Flor that Medrano was selling his mango orchard, Borbon lost no time in informing
Lee that they had found a property according to his specifications.
An ocular inspection of the property together with Lee was immediately planned;
unfortunately, it never pushed through for reasons beyond the respondents control.
Since Lee was in a hurry to see the property, he asked the respondents the exact
address and the directions on how to reach Ibaan, Batangas. The respondents
thereupon instructed him to look for Teresa Ganzon, an oficer of the Ibaan Rural Bank
and the person to talk to regarding the property. While the letter of authority issued in
favor of the respondents was nonexclusive, no evidence was adduced to show that
there were other persons, aside from the respondents, who informed Lee about the
property for sale.
Ganzon testified that no advertisement was made announcing the sale of the lot, nor did
she give any authority to other brokers/agents to sell the subject property. However,
despite of the respondent’s participation in finding a buyer for the petitioner’s property,
the petitioners refuse to pay them commission, asserting that they are not the eficient
procuring cause of the sale. It was alleged that they since they did not participate in the
negotiation of the sale, they were thus not entitled to their commission.
Issue:
Whether or not the brokers are entitled to commission for the sale of the subject
property?
Holding and ratio Decidendi :
The brokers were entitled to the commission.
The Supreme Court that the aggrieved brokers were the procuring causes in the
transaction although they did not participate in the negotiation of the sale.
Armed with an authority to procure a purchaser and with a license to act as broker, we
see no reason why the respondents cannot recover compensation for their efforts when,
in fact, they are the procuring cause of the sale.
Procuring cause is meant to be the proximate cause. The term procuring cause, in
describing a brokers activity, refers to a cause originating a series of events which,
without break in their continuity, result in accomplishment of prime objective of the
employment of the broker producing a purchaser ready, willing and able to buy real
estate on the owners terms.
A broker will be regarded as the procuring cause of a sale, so as to be entitled to
commission, if his efforts are the foundation on which the negotiations resulting
in a sale are begun. The broker must be the efficient agent or the procuring cause of
the sale. The means employed by him and his efforts must result in the sale. He
must find the purchaser, and the sale must proceed from his efforts acting as broker.
Indeed, the evidence on record shows that the respondents were instrumental in the
sale of the property to Lee. Without their intervention, no sale could have been
consummated. They were the ones who set the sale of the subject land in motion.
 2. Bicol Savings and Loan v. Court of Appeals, G.R. No. 85302

 FACTS:

Juan de Jesus was the owner of a parcel of land situated in Naga City.

He executed a Special Power of Attorney in favor of his son, Jose de Jesus, to

negotiate, mortgage his real property in any bank either private or public entity
preferably in the Bicol Savings Bank, Naga City, in any amount that may be
agreed upon between the bank and the attorney-in-fact.

By virtue thereof, Jose de Jesus obtained a loan of P20,000 from petitioner bank
and executed a deed of mortgage on the real property.

Juan de Jesus(FATHER) died at an unknown date.

By reason of his failure to pay the loan obligation even during his lifetime, petitioner
bank caused the mortgage to be extrajudicially foreclosed. In the subsequent
public auction, the mortgaged property was sold to the bank as the highest bidder.

Private respondents herein, including Jose de Jesus, who are all the heirs of the late
Juan de Jesus, failed to redeem the property within one year from the date of the
registration of the Provisional Certificate of Sale. Nonetheless, the private respondents
still negotiated for the repurchase of the property but were unsuccessful despite offers
and counter-offers.

Private respondents filed a complaint with the trial court, praying for the
annulment of the deed of sale but the complaint was dismissed by the trial court
ruling that the deed became absolute.

Upon appeal, the CA reversed the ruling o the trial court, ruling that Article 1879 of
the Civil Code and stated that since the special power to mortgage granted to
Jose de Jesus did not include the power to sell, it was error for the lower Court
not to have declared the foreclosure proceedings, and the auction sale held in
null and void because the Special Power of Attorney given by Juan de Jesus to
Jose de Jesus was merely to mortgage his property, and not to extrajudicially
foreclose the mortgage and sell the mortgaged property in the said extrajudicial
foreclosure.

ISSUE:
Whether or not the agent-son exceeded the scope of his authority in agreeing to a
stipulation in the mortgage deed that petitioner bank could extrajudicially foreclose the
mortgaged property.

HELD: 

The sale proscribed by a special power to mortgage under Article 1879 is a voluntary
and independent contract, and not an auction sale resulting from extrajudicial
foreclosure, which is precipitated by the default of a mortgagor. The stipulation
granting an authority to extrajudicially foreclose a mortgage is an ancillary
stipulation supported by the same cause or consideration for the mortgage and
forms an essential or inseparable part of that bilateral agreement.

It matters not that the authority to extrajudicially foreclose was granted by an attorney-
in-fact and not by the mortgagor personally. The stipulation in that regard, although
ancillary, forms an essential part of the mortgage contract and is inseparable
therefrom. No creditor will agree to enter into a mortgage contract without that
stipulation intended for its protection.
 3. Pahud v. Court of Appeals, G.R.No.160346, August 25, 2009

FACTS:
While the sale with respect to the 3/8 portion is void by express provision
of law and not susceptible to ratification, 31 we nevertheless uphold its
validity on the basis of the common law principle of estoppel.
It is a basic rule in the law of agency that a principal is subject to liability
for loss caused to another by the latter’s reliance upon a deceitful
representation by an agent in the course of his employment:
(1) if the representation is authorized;
(2) if it is within the implied authority of the agent to make for the principal;
or (3) if it is apparently authorized, regardless of whether the agent was
authorized by him or not to make the representation.

Spouses Pedro San Agustin and Agatona Genil were able to acquire a 246-square
meter parcel of land situated in Barangay Anos, Los Baños, Laguna and covered
by Original Certificate of Title . Agatona Geniland and Pedro San Agustin died,( both
died intestate) survived by their eight (8) children: respondents,Eufemia, Raul,
Ferdinand, Zenaida, Milagros, Minerva, Isabelita and Virgilio.
Eufemia, Ferdinand and Raul executed a Deed of Absolute Sale of Undivided
Shares conveying in favor of petitioners (the Pahuds, for brevity) their respective
shares . Eufemia also signed the deed on behalf of her four (4) other co-heirs,
namely: Isabelita on the basis of a special power of attorney , and also for
Milagros, Minerva, and Zenaida but without their apparent written authority. The
deed of sale was also not notarized.
The Pahuds paid the accounts into the Los Baños Rural Bank where the subject
property was mortgaged. The bank issued a release of mortgage and turned over
the owner's copy of the OCT to the Pahuds, the Pahuds made more payments to
Eufemia and her siblings.
When Eufemia and her co-heirs drafted an extra-judicial settlement of estate to
facilitate the transfer of the title to the Pahuds, Virgilio refused to sign it.
Virgilio's co-heirs filed a complaintfor judicial partition of the subject property before the
RTC of Calamba, Laguna.In the course of the proceedings for judicial partition, a
Compromise Agreement was signed with seven (7) of the co-heirs agreeing to sell
their undivided shares to Virgilio
The compromise agreement was, however, not approved by the trial court
because Atty. Dimetrio Hilbero, lawyer for Eufemia and her six (6) co-heirs, refused to
sign the agreement because he knew of the previous sale made to the Pahuds.
Eufemia acknowledged having received the payments from Virgilio. Virgilio then sold
the entire property to spouses Isagani Belarmino and Leticia Ocampo
(Belarminos). T
The Belarminos immediately constructed a building on the subject property. Alarmed
and bewildered by the ongoing construction on the lot they purchased, the Pahuds
immediately confronted Eufemia who confirmed to them that Virgilio had sold the
property to the Belarminos.
Then the Pahuds filed a complaint in intervention in the pending case for judicial
partition.
Issues:
1.Whether or not the sale of the subject property by Eufemia and her co-heirs to
the Pahuds is valid and enforceable.
2.Whether or not the sale by co-heirs to Virgilio is void.
3.Whether or not the sale of Virgilio to Belarminos is valid.
Ruling:
1. The transaction needs for qualification:
First: the sale made by Eufemia, Isabelita and her two brothers to the Pahuds should
be valid only with respect to the 4/8 portion of the subject property.
Second: the sale with respect to the 3/8 portion, representing the shares of Zenaida,
Milagros, and Minerva, is void because Eufemia could not dispose of the interest of her
co-heirs in the said lot absent any written authority from the latter, as explicitly required
by law. It is true also there is no special power, they can file an annulment of the sale,
but the true facts of which the seven admitted that they sold their shares to pahuds, they
cannot assail the validity of the transaction. Instead, they just remain silent , because by
allowing them to do so would be tantamountto giving premium to their three (3) sisters
dishonest and fraudulent deed. Thus their silence of the issue bars from a making for a
contrary claim and they are stopped from impugning thevalidity of the sale.While the
sale with respect to the 3/8 portion is void by express provision of law and not
susceptible to ratification. The validity of the said transaction cannot be corrected on the
basis of common law principle of estoppel.The law provides:
 When a sale of a piece of land or any interest therein is through an agent,
the authority of the latter shall be in writing; otherwise, the sale shall be
void.a special power of attorney is necessary for an agent to enter into a
contract by which the ownership of an immovable property is transmitted
or acquired, either gratuitously or for a valuable consideration.
The authority of an agent to execute a contract of 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. A special power of attorney is necessary to enter into any
contract by which the ownership of an immovable is transmitted or acquired either
gratuitously or for a valuable consideration.
The express mandate required by law to enable an appointee of an agency in general
terms to sell must be one that expressly mentions a sale or that includes a sale as a
necessary ingredient of the act mentioned. 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. When there is any reasonable doubt that the
language so used conveys such power, no such construction shall be given the
document. In he absence of a written authority to sell a piece of land is,ipso jure, void,
precisely to protect the interest of an unsuspecting owner from being prejudiced by the
unwarranted act of another.
2. the subsequent sale made by the seven co-heirs to Virgilio was void because
they no longer had any interest over the subject property which they could
alienate at the time of the second transaction. Nemodatquodnonhabet.Virgilio,
however, could still alienate his 1/8 undivided share to the Belarminos.
3. The sale to Bilarminos is not valid, they did not purchased the property from
Virgilio in good faith. the Belarminos were fully aware that the property was registered
not in the name of the immediate transferor, Virgilio, but remained in the name of the
mother title. This fact alone is sufficient impetus to make further inquiry and, thus,
negate their claim that they are purchasers for value in good faith. They knew that the
property was still subject of partition proceedings before the trial court, and that the
compromise agreement signed by the heirs was not approved by the RTC following the
opposition of the counsel for Eufemia and her six other co-heirs. As a general rule, a
purchaser of a real property is not required to make any further inquiry beyond what the
certificate of title indicates on its face. But the rule excludes those who purchase with
knowledge of the defect in the title of the vendor or of facts sufficient to induce a
reasonable and prudent person to inquire into the status of the property. Such
purchaser cannot close his eyes to facts which should put a reasonable man on guard,
and later claim that he acted in good faith on the belief that there was no defect in the
title of the vendor.His mere refusal to believe that such defect exists, or his obvious
neglect by closing his eyes to the possibility of the existence of a defect in the vendor's
title, will not make him an innocent purchaser for value, if afterwards it turns out that the
title was, in fact, defective.In such a case, he is deemed to have bought the property at
his own risk, andany injury or prejudice occasioned by such transaction must be borne
by him.
The Belarminos, being transferees pendente lite, are deemed buyers inmala fide,and
they stand exactly in the shoes of the transferor and are bound by any judgment or
decree which may be rendered for or against the transferor. Furthermore, had they
verified the status of the property by asking the neighboring residents, they would have
been able to talk to the Pahuds who occupy an adjoining business establishment and
would haveknown that a portion of the property had already been sold. The supreme
court reversed and set aside the ruling of the CA and reinstated of the RTC with
modification.

4. Manotok Brothers Inc. v. Court of Appeals, G.R. No. 94753, April 7, 1993
Petitioners: Manotok Brothers, Inc
Respondents: CA, Salvado Saligumba
SUMMARY:
Manotok Brothers, Inc. is the owner of a certain parcel of land and building,
which were formerly leased by Manila City and used by Claro M. Recto HS. Petitioner
authorized private respondent to negotiate with City of Manila forthe sale of the
property, with a promise to pay 5% as commission if sale is consummated.The letters
of authority were extended several times. Then, City of Manila passed an
Ordinance, which appropriated the money needed to buy the property. Even though the
sale is consummated, Saligumba never received any commission. Saligumba
claimed that it was because of his efforts that the Municipal Board passed the
Ordinance. Petitioner, on the other hand, does not recognize the Saligumba’s role as
agent in the transactionand alleged that since the Deed of Sale was
signedafterSaligumba’s authority expired, he is not entitled to any commission. Issue in
this case is whether Saligumba is entitled to the agreed commission fees. The
Court rules in favor of Saligumba. Private respondent is the efficientprocuring cause for
without his efforts,the municipality would not have anything to pass and the Mayor
would not have anything to approve.
DOCTRINE:
•The agent is entitled to his commission when there is a close, proximate and
causal connection between the agent’s efforts and labor and the principal’s sale of his
property.
•Revocation of agency does not prevent earning of sales commission where the
contract of sale had already been perfected and partly executed.
FACTS:
1.ManotokBrothers, Inc. is the owner of a certain parcel of land and building,
which were formerly leased by Manila City and used by Claro M. Recto HS
2.Petitioner authorized respondent Saligumba to negotiate with the City of Manila for the
sale of the property for not less than P425,000. Petitioner also agreed to pay
respondent a 5% commission if sale is consummated.
3.Petitioner, through its president Rufino Manotok, executed severalletters, which just
extended the authority given to private respondent from July 1966 to May 14,
1968.a.Last letter: gave authority to finalize and consummate the sale of property
for not less than P410,000.
4.Municipal Board of City of Manila passed an Ordinance, whichappropriated the sum of
P410,816.00 for the purchase of property of Manotok Inc.
a.However, said ordinance was only signed by Mayor on May 17, 1968 –3 days
after Saligumba’s authority expired.
5. On Jan 1969, the parties signed the deed of sale.6.Even though the sale
is consummated, Saligumba never received any commission (which
should have been P20,554.
6) due to refusal of petitioner.
7. Saligumba claimed that it was because of his efforts that the Municipal
Board passed the Ordinance.
8.Petitioner, on the other hand, does not recognize the Saligumba’s role as agent
in the transaction, on the following grounds:
a.Saligumba would be entitled to a commission only if the sale was
consummated and the price paid within the period given where Saligumba
still has authority.
b.Saligumba was not the person responsible for the negotiation and
consummation. Petitioner alleged that it was Filomena Huelgas, the PTA
president of Claro M. Recto HSin 1967-68, who was responsible for the sale.
9.Saligumba testified the following:a.A meeting was set byRufino Manotok at the
office of the principal, with the then President of PTA(Atty. Bisbal),of the school to
ask Saligumba to negotiate the sale of the school lot and building to Manila City.
b.Saligumba then went to Councilor Magsalin, the author
of the Ordinance, to present the project. He also went to Assessor’s
Office for appraisal of the property’s value.c.While these were
happening, the letter of authority extended to Saligumba
 expired.d.After securing report from appraisal committee, he went to
Mayor’s office to indorse the matter
10.Because of this, the sale was consummated. Manotok Inc received
the full payment of the purchase price but Saligumba was not able to
receive a single centravo as commission.
11.Manotok Inc, on the other hand, testified that Filomeno Huelgas,
the PTA president in 1967, was the one who follow up the sale from the
start with Councilor Magsalin after it wasapproved.
PROCEDURAL:
•RTC rendered judgment sentencing Manotok Inc. to pay private
respondent (Saligumba) the commission fees.
•CA affirmed the ruling.

ISSUE:
The sole issue to be addressed in this petition is whether or not private
respondent is entitled to the five percent (5%) agent's commission. YES

RATIO:
Court ruledin favor of Saligumba (respondent)
1.At first sight, it would seem that private respondent is not entitled
to any commission as he was NOT successful in consummating the sale
between the parties because the Deed of Sale was executed only
afterSaligumba’s authority already expired.
2.However, going deeper into the case would reveal that the caseis
within the coverage of the exception rather than of the general rule.
3.Based on Prats v. CA: The sale was only consummatedafter the
expiration of authority granted to the broker. In equity, the Court notes that
petitioner had diligently taken steps to bring back together the buyer and
the seller. The broker’s efforts somehow were instrumental in bringing the
parties together.
4.Based from the foregoing, the privaterespondent should be paid
with his commission. Private respondent is the efficientprocuring cause for
without his efforts, the municipality would not have anything to pass and the
Mayor would not have anything to approve.
 5.When there is a close, proximate and causal connection between
the agent’s efforts and labor and the principal’s sale of his property, the agent is
entitled to a commission.
6.The City of Manila ultimatelybecame the purchaser of petitioner’s
property mainly through the efforts of Saligumba.a.It is to be noted that the
ordinance was approved on April 26, 1968 while it was signed on May 17,
1968. 3 DAYS after the authority of Saligumba expired.
7.Private respondent pursued with his goal of seeing that the parties
reach an agreement, on the belief that he alone was transacting the business
with the City Government as this was what petitioner made it to appear.
8.It is true that Filomeno Huelgas followed-up on the matter with
Councilor Magsalin BUT his intervention regarding the purchase came only
AFTERthe ordinance had already been passed.Meaning, there was already
meeting of the minds between Manotok Inc and City of Manila due to
Saligumba’s efforts.
9.Revocation of agency does not prevent earning of sales commission
where the contract of sale had already been perfected and partly executed.
WHEREFORE, the decision of CA is AFFIRMED.
 5. Dominion Insurance v. Court of Appeals, G.R.No.129919

Facts:

·          Guevarra instituted civil case against the petitioner to recover sum of money,
which he claimed to have advanced in his capacity as manager of defendant to satisfy
certain claims filed by defendant’s clients.
·          Dominion denied any liability to Guevarra and asserted that the latter was
appointed only as Agency Manager by virtue of Special Power of Attorney.
·          Moreover, it contended that respondent had  deviated from the instructions of the
principal so that the expenses he incurred in the settlement of the claims of the insured
may not be reimbursed from petitioner Dominion.
The pre-trial was always postponed, and during one of the pre-trial conference dominion
failed to arrive therefore the court declared them to be in default. Dominion filed several
Motions to Lift Order of Default but was always denied by the court. The RTC rendered
its decision making Dominion liable to repay Guevarra for the sum advanced and other
damages and fees. Dominion appealed but CA affirmed the decision of RTC and denied
the appeal of Dominion.

ISSUES:
(a) W/N Guevarra acted within his authority as agent of petitioner. - NO
(b) WoN respondent Guevarra is entitled to reimbursement of amounts he paid out of
his personal money in settling the claims of several insured. - YES

RULING:

(a)  NO. Even though the contact entered into by Guevarra and Dominion was with
the word “special” the contents of the document was actually a general agency. A
general power permits the agent to do all acts for which the law does not require
a special power and the contents in the document did not require a special power
of attorney.

Art 1878 of the civil code provides instances when a special power of attorney is
required.:
1) To make such payment as are not usually considered as acts of
administration.
2) any other act of dominion

The payment of claims is not an act of administration which requires a special  

power of attorney before Guevarra could settle the insurance claims of the
insured.

Also Guevarra was instructed that the payment for the insured must come from
the revolving fund or collection in his possession, Gueverra should not have paid
the insured through his own capacity. Under 1918 of civil code an agent who
acted in contravention of the principal’s instruction the principal will not be liable
for the expenses incurred by the agent.

(b)  Yes, the Court holds that while the law on agency prohibits respondent Guevarra
from obtaining reimbursement, his right to recover may still be justified under the
general law on obligations and contracts.
Article 1236, second paragraph, Civil Code, provides “Whoever pays for another
may demand from the debtor what he has paid, except that if he paid without the
knowledge or against the will of the debtor, he can recover only insofar as the
payment has been beneficial to the debtor.”
In this case, when the risk insured against occurred, petitioner’s liability as
insurer arose. This obligation was extinguished when respondent Guevarra paid
the claims and obtained Release of Claim Loss and Subrogation Receipts from
the insured who were paid.
Thus, to the extent that the obligation of the petitioner has been extinguished,
respondent Guevarra may demand for reimbursement from his principal. To rule
otherwise would result in unjust enrichment of petitioner. But the amount of the
revolving fund/ collection that was then in the possession of respondent
Guevarra was P3,604.84. Deducting this from P116,276.95, the amount of
P112,672.11 may be reimbursed to respondent.