G.R. No.

145817 October 19, 2011

URBAN BANK, INC, Petitioner,

vs.
MAGDALENO M. PEÑA, Respondent.

Facts
ISCI sold a parcel of land to Urban Bank. Said parcel of land was occupied by illegal
tenants. Thus ISCI sought the help of Pena to negotiate with the illegal tenants to vacate
the said parcel of land in Pasay. However, said illegal tenants refused the same and
continued with their business operations, since said tenants knew that ISCI is not the
owner and that Urban Bank is now the new owner of said parcel of land.
ISCI sought the help of Urban Bank to authorize Pena for negotiations, however Pena
through an alleged phone conversation, with the president of Urban Bank told Pena to
negotiate with the illegal tenants. Pena asked for 10% of the total price of the land sold
as a requirement to negotiate under Urban Bank, which was supposedly put in writing
once agreed upon by Urban Bank’s president.
The Authorization letter was made in favor of Pena, however, the 10% fee was not
stipulated. Pena was able to settle with the illegal tenants by paying them a sum of money
along with the security guards. Urban Bank refuses to honor and to pay the 10% fee of
Pena, hence the petition.
RTC Ruling:
RTC found the existence of an agency relationship between Peña and Urban Bank and
that Urban Bank should pay the 10% of the total price of the land sold as fees for Pena
CA Ruling
Annulled decision of RTC, no Agency relationship existed
Issue:
1. Whether or not Pena is an agent
2. Whether or not the compensation for the acts of Pena as an agent is proper

Ruling
1. Yes, Pena is an agent of Urban Bank to secure possession of the Pasay property.
In a contract of agency, agents bind themselves to render some service or to do
something in representation or on behalf of the principal, with the consent or
authority of the latter. Whether or not an agency has been created is determined
by the fact that one is representing and acting for another.
 In the case at bar, the actions of Rural Bank resulted in the ratification of Peña’s
authority as an agent acting on its behalf with respect to the Pasay property. By
ratification, even an unauthorized act of an agent becomes an authorized act of
the principal.
Rural bank did not not repudiate the actions of Peña, even if it was fully aware of
his representations to third parties on its behalf as owner of the Pasay property. Its
tacit acquiescence to his dealings with respect to the Pasay property and the
tenants spoke of its intent to ratify his actions, as if these were its own. Even
assuming arguendo that it issued no written authority, the bank duly ratified his
acts as its agent by its acquiescence and acceptance of the benefits, namely, the
peaceful turnover of possession of the property free from sub-tenants.

2. Agency is presumed to be for compensation. Unless the contrary intent is shown,

a person who acts as an agent does so with the expectation of payment according
to the agreement and to the services rendered or results effected. In the case at
bar, there is no showing that Urban Bank agreed to pay Pena a specific amount
for his services, hence the principle against unjust enrichment and the basis on
quantum meruit should be used.
The agency of Pena comprised of services ordinarily performed by a lawyer who
is tasked with the job of ensuring clean possession by the owner of a property. We
thus measure what he is entitled to for the legal services rendered, since no extra-
ordinary skills employing advanced legal training nor sophisticated legal
maneuvering were required to be employed.
Applying the principle of quantum meruit in the case at bar, the 10% payment
based on the purchase price of the said property is unconscionable. The principle
of quantum meruit applies if lawyers are employed without a price agreed upon for
their services, in which case they would be entitled to receive what they merit for
their services, or as much as they have earned. In fixing a reasonable
compensation for the services rendered by a lawyer on the basis of quantum
meruit, one may consider factors such as the time spent and extent of services
rendered; novelty and difficulty of the questions involved; importance of the subject
matter; skill demanded; probability of losing other employment as a result of
acceptance of the proffered case; customary charges for similar services; amount
involved in the controversy and the resulting benefits for the client; certainty of
compensation; character of employment; and professional standing of the lawyer