Ignacio vs. Ragasa

A real estate broker is entitled to a commission when there is a close, proximate, and causal connection between the broker's efforts and the principal's sale of property or joint venture agreement — the broker being the procuring cause of the transaction. It is inconsequential that the broker's authority had already expired when the agreements were executed, provided the negotiation for the transactions began during the effectivity of the broker's authority and were carried out through the broker's efforts.

The petitioners, Roberto R. Ignacio and Teresa R. Ignacio, doing business under the name and style Teresa R. Ignacio Enterprises, owned undeveloped lands in Mindanao Avenue, Quezon City and developed subdivision sites in Las Piñas City, Parañaque City, and Bacoor. On January 11, 2000, they engaged the services of the respondents, Myrna P. Ragasa and Azucena B. Roa, both licensed real estate brokers, on an exclusive basis, to look for and negotiate with a person or entity for a joint venture project involving these properties. The contract was embodied in an Authority to Look and Negotiate for a Joint Venture Partner, effective for six months from January 10, 2000, or until July 10, 2000, which provided that the petitioners would pay the respondents a commission equivalent to five percent (5%) of the price of the properties.

On January 11, 2000, the petitioners engaged the respondents, both licensed real estate brokers, on an exclusive basis, to look for and negotiate with a person or entity for a joint venture project involving the petitioners' undeveloped lands in Mindanao Avenue, Quezon City and the developed subdivision sites in Las Piñas City, Parañaque City, and Bacoor. The contract was embodied in the Authority to Look and Negotiate for a Joint Venture Partner, effective for six months from January 10, 2000, or until July 10, 2000, which provided that the petitioners would pay the respondents a commission equivalent to five percent (5%) of the price of the properties.

On January 13, 2000, the respondents met with Mr. Porfirio Yusingbo, Jr., the General Manager of Woodridge Properties, Inc., and presented to him the different subdivisions and project sites available for investment. After inspecting the properties, Yusingbo expressed Woodridge's interest in acquiring and developing the Krause Park and Teresa Park properties. As a result, Woodridge sent the respondents a formal proposal dated January 21, 2000 for a joint venture agreement with the petitioners covering the Teresa Park, which the respondents relayed to the petitioners via facsimile. On January 25, 2000, the petitioners met with the representatives of Woodridge to discuss the prices of the properties, and Woodridge likewise intimated that it would develop both the Krause Park and the Teresa Park.

On February 4, 2000, the respondents met again with Yusingbo and Mr. Elmer Loredo, Woodridge's broker, to discuss Woodridge's proposal for bulk purchase covering the Teresa Park, including the terms of payment. On February 9, 2000, the respondents presented Woodridge's offer to petitioner Roberto Ignacio, and they discussed the projected cash inflows and the advantages of the scheme. Petitioner Ignacio said he wanted to sell the lots in batches at a lower volume, instead of in bulk. The respondents communicated the offer to Woodridge, and the latter intimated that it would make a revised offer. On March 9, 2000, Woodridge changed its offer from direct acquisition to joint venture, covering 200 lots in Teresa Park, and sent the proposal to the respondents, who, in turn, relayed it to the petitioners. In a meeting on March 13, 2000, the petitioners and respondents discussed the proposal for joint venture. Petitioners commented that Woodridge's offer was low, but the respondents reassured them that they could negotiate for a better price. After this March 13, 2000 meeting, however, the petitioners stopped communicating with the respondents. Several attempts were made by the respondents to contact the petitioners to follow up on the proposal of Woodridge, but to no avail.

Sometime thereafter, the respondents learned that the petitioners continued to negotiate with Woodridge, and this led to the execution of two joint venture agreements between the petitioners and Woodridge covering the Krause Park, notarized on March 7, 2000 and October 16, 2000. For the Teresa Park, four joint venture agreements were executed between the petitioners and Woodridge, notarized on December 6, 2000, March 12, 2001, September 25, 2001, and October 1, 2002. Aside from the joint venture agreements, several deeds of sale were also executed between the petitioners and Woodridge, dated September 24, 2001 and August 25, 2003. Per the respondents' estimate, the petitioners earned P26,068,000.00 and P22,497,000.00 for the sale of the Krause Park and Teresa Park projects, respectively. The respondents demanded payment of their commission, contending that the joint venture agreements and the sales over the Krause Park and Teresa Park were products of their successful negotiation with Woodridge. The petitioners, however, refused to pay despite demand.

In their Answer, the petitioners denied that they had an obligation to pay the respondents, contending that the respondents offered their services as exclusive real estate brokers but were never engaged; that they were not looking for an exclusive agency and entertained brokers on a "first come, first served" basis; that they were not agreeable with the respondents' proposal to sell the lots below the prevailing market value with no escalation clause; and that the sale of the Krause Park and the Teresa Park was made through the joint efforts of their consultants, Engr. Julius Aragon and Florence Cabansag. The trial court found in favor of the respondents, ruling that they were entitled to brokers' fees and damages because the sale and development of the Krause Park and the Teresa Park were made possible because of the respondents' efforts. The CA affirmed, holding that the respondents were the procuring cause of the joint venture agreements and sales, and that the proximity in time between the meetings held by the respondents and Woodridge and the subsequent execution of the joint venture agreements led to a logical conclusion that it was the respondents who brokered the transactions.

• Procuring Cause: Petitioners contended that the respondents are not entitled to commission or brokers' fees because they are not the procuring cause for the successful business transactions between the petitioners and Woodridge.
• Admission of Limited Responsibility: Petitioners argued that the respondents allegedly admitted that they did not negotiate a successful joint venture agreement between the petitioners and Woodridge because, according to the respondents, their sole responsibility was merely to look for or source potential buyers and not to successfully negotiate a joint venture agreement.
• Failure of Negotiation: Petitioners maintained that the respondents miserably failed in their duty to negotiate a successful joint venture agreement because the respondents insisted on the bulk sale of the petitioners' properties instead of a joint venture agreement.
• Expiration of Authority: Petitioners argued that the respondents' authority already expired when the petitioners entered into the joint venture agreements and deeds of sale with Woodridge for the development of the properties in Teresa Park and Krause Park.
• Interest Rate: Petitioners contended that the interest rate should be at the prevailing rate of six percent (6%) per annum, and not twelve percent (12%) per annum.

N/A — The decision does not recount the respondents' specific arguments on appeal beyond their position that the joint venture agreements and sales over the Krause Park and Teresa Park were products of their successful negotiation with Woodridge, as stated in their demand for payment and complaint.

• Propriety of Rule 45 Review: Whether the Court of Appeals committed serious and reversible error in ruling that the respondents are entitled to brokers' fees.
• Entitlement to Commission: Whether the respondents, as real estate brokers, are entitled to commission or brokers' fees as the procuring cause of the joint venture agreements and sales between the petitioners and Woodridge.
• Interest Rate: Whether the applicable legal interest rate on the monetary awards should be 6% per annum instead of 12% per annum.

• Propriety of Rule 45 Review: No. The issue raised by the petitioners is factual in nature, requiring this Court to review the evidence presented during trial, which is not the role of the Court under Rule 45, and none of the recognized exceptions to the rule that factual findings of appellate courts are conclusive apply.
• Entitlement to Commission: Yes. The respondents are entitled to a commission because there was a close, proximate, and causal connection between the respondents' efforts and the joint venture agreements and sales, and it is inconsequential that their authority had expired when the agreements were executed since the negotiations began during the effectivity of their authority.
• Interest Rate: Yes. The interest rate should be 6% per annum, not 12% per annum, because the obligation involved herein is not a loan or forbearance of money but the performance of a brokerage service, falling under paragraph II, subparagraph 2 of the Nacar guidelines.

• Propriety of Rule 45 Review: The Rules of Court requires that only questions of law should be raised in petitions filed under Rule 45. The Court is not a trier of facts and will not entertain questions of fact as the factual findings of the appellate courts are "final, binding[,] or conclusive on the parties and upon this [c]ourt" when supported by substantial evidence. The Court enumerated the ten (10) recognized exceptions first listed in Medina vs. Mayor Asistio, Jr., which include findings grounded entirely on speculation, manifestly mistaken inferences, grave abuse of discretion, misapprehension of facts, conflicting findings, findings beyond the issues, findings contrary to the trial court, conclusions without citation of specific evidence, undisputed facts, and findings premised on supposed absence of evidence contradicted by the record. In this case, the issue raised by the petitioners obviously asks this Court to review the evidence presented during the trial, which is factual in nature, and none of the exceptions are present. The findings of the lower courts are supported by substantial evidence.

• Entitlement to Commission: Even if the Court were to look into the merits of the petitioners' main contention, the petition must still fail. Citing Medrano vs. Court of Appeals, the Court held that "when there is a close, proximate, and causal connection between the broker's efforts and the principal's sale of his property — or joint venture agreement, in this case — the broker is entitled to a commission." As aptly ruled by the CA, the proximity in time between the meetings held by the respondents and Woodridge and the subsequent execution of the joint venture agreements leads to a logical conclusion that it was the respondents who brokered the transactions. Likewise, it is inconsequential that the authority of the respondents as brokers had already expired when the joint venture agreements over the subject properties were executed, because the negotiation for these transactions began during the effectivity of the authority of the respondents, and these were carried out through their efforts.

• Interest Rate: The Court agreed with the petitioners that the interest rate should be at the prevailing rate of six percent (6%) per annum, and not twelve percent (12%) per annum, citing Nacar vs. Gallery Frames, which modified the guidelines laid down in Eastern Shipping Lines, Inc. vs. Court of Appeals to embody BSP-MB Circular No. 799. The Court noted that the rate of six percent (6%) per annum could only be applied prospectively and not retroactively, and that the twelve percent (12%) per annum legal interest shall apply only until June 30, 2013. The Court then determined whether the obligation involved herein is a loan and forbearance of money. The term "forbearance," within the context of usury law, has been described as a contractual obligation of a lender or creditor to refrain, during a given period of time, from requiring the borrower or debtor to repay the loan or debt then due and payable. Forbearance of money, goods or credits refers to arrangements other than loan agreements, where a person acquiesces to the temporary use of his money, goods or credits pending the happening of certain events or fulfilment of certain conditions. This case, however, does not involve an acquiescence to the temporary use of a party's money but the performance of a brokerage service. Thus, the matter of interest award arising from the dispute falls under paragraph II, subparagraph 2 of the modified guidelines, which necessitates the imposition of interest at the rate of 6%, instead of the 12% imposed by the courts below.

• Procuring Cause Doctrine — A real estate broker is entitled to a commission when there is a close, proximate, and causal connection between the broker's efforts and the principal's sale of his property or joint venture agreement. The Court applied this doctrine in affirming the respondents' entitlement to commission, finding that the proximity in time between the meetings held by the respondents and Woodridge and the subsequent execution of the joint venture agreements led to a logical conclusion that it was the respondents who brokered the transactions. The expiration of the broker's authority is inconsequential where the negotiation for the transactions began during the effectivity of the authority and were carried out through the broker's efforts.

• Doctrine of Conclusiveness of Factual Findings of Appellate Courts — Factual findings of the appellate courts are "final, binding[,] or conclusive on the parties and upon this [c]ourt" when supported by substantial evidence, and will not be reviewed nor disturbed on appeal to the Supreme Court. The Court enumerated the ten (10) recognized exceptions first listed in Medina vs. Mayor Asistio, Jr.: (1) when the conclusion is a finding grounded entirely on speculation, surmises or conjectures; (2) when the inference made is manifestly mistaken, absurd or impossible; (3) where there is a grave abuse of discretion; (4) when the judgment is based on a misapprehension of facts; (5) when the findings of fact are conflicting; (6) when the Court of Appeals, in making its findings, went beyond the issues of the case and the same is contrary to the admissions of both appellant and appellee; (7) the findings of the Court of Appeals are contrary to those of the trial court; (8) when the findings of fact are conclusions without citation of specific evidence on which they are based; (9) when the facts set forth in the petition as well as in the petitioner's main and reply briefs are not disputed by the respondents; and (10) the finding of fact of the Court of Appeals is premised on the supposed absence of evidence and is contradicted by the evidence on record.

• Nacar Guidelines on Legal Interest — The guidelines laid down in Eastern Shipping Lines, Inc. vs. Court of Appeals were modified to embody BSP-MB Circular No. 799: (1) when an obligation is breached and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due should be that which may have been stipulated in writing, and in the absence of stipulation, the rate of interest shall be 6% per annum to be computed from default; (2) when an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum; and (3) when the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest shall be 6% per annum from such finality until its satisfaction. The Court applied these guidelines in modifying the interest rate from 12% to 6% per annum, finding that the obligation involved the performance of a brokerage service, not a loan or forbearance of money.

• "when there is a close, proximate, and causal connection between the broker's efforts and the principal's sale of his property - or joint venture agreement, in this case - the broker is entitled to a commission." — This passage from Medrano v. Court of Appeals states the controlling doctrine on the broker's entitlement to commission, which the Court applied to affirm the respondents' right to their brokers' fees.

• "This case, however, does not involve an acquiescence to the temporary use of a party's money but the performance of a brokerage service." — This passage distinguishes the present case from a loan or forbearance of money, justifying the application of the 6% interest rate under paragraph II, subparagraph 2 of the Nacar guidelines.

• "The negotiation for these transactions began during the effectivity of the authority of the respondents, and these were carried out through their efforts. Thus, the respondents are entitled to a commission." — This passage establishes that the expiration of the broker's authority does not defeat the claim for commission where negotiations began during the effectivity of the authority and were carried out through the broker's efforts.

• Medrano vs. Court of Appeals, 492 Phil. 222, 234 (2005) — Controlling precedent for the procuring cause doctrine, establishing that a broker is entitled to a commission when there is a close, proximate, and causal connection between the broker's efforts and the principal's sale of his property or joint venture agreement.
• Nacar vs. Gallery Frames, et al., 716 Phil. 267, 278-279 (2013) — Controlling precedent modifying the guidelines on legal interest laid down in Eastern Shipping Lines, Inc. vs. Court of Appeals to embody BSP-MB Circular No. 799, setting the rate of legal interest at 6% per annum.
• Eastern Shipping Lines, Inc. vs. Court of Appeals, 304 Phil. 236, 252-254 (1994) — The case whose guidelines on legal interest were modified by Nacar vs. Gallery Frames.
• Medina vs. Mayor Asistio, Jr., 269 Phil. 225 (1990) — The case that first listed the ten (10) recognized exceptions to the rule that factual findings of appellate courts are conclusive on the Supreme Court.
• Commissioner of Internal Revenue vs. Embroidery and Garments Industries (Phil.), Inc., 364 Phil. 541, 546 (1999) — Cited for the rule that factual findings of appellate courts are "final, binding[,] or conclusive on the parties and upon this [c]ourt" when supported by substantial evidence.
• S.C. Megaworld Construction and Development Corporation vs. Engr. Parada, 717 Phil. 752, 771 (2013) — Cited for the definition of "forbearance" within the context of usury law.
• Estores vs. Spouses Supangan, 686 Phil. 86, 97 (2012) — Cited for the definition of forbearance of money, goods or credits as arrangements other than loan agreements where a person acquiesces to the temporary use of his money, goods or credits pending the happening of certain events or fulfilment of certain conditions.

• Rule 45, Section 1, Rules of Court — Provides that only questions of law should be raised in petitions filed under Rule 45, which the Court applied in holding that the issue raised by the petitioners was factual in nature and not proper for review.
• Article 1169, Civil Code — Cited in the Nacar guidelines for the computation of legal interest from default, i.e., from judicial or extrajudicial demand.
• BSP-MB Circular No. 799 — The Bangko Sentral ng Pilipinas circular embodied in the Nacar guidelines, which set the rate of legal interest at 6% per annum, applied by the Court in modifying the interest rate imposed by the lower courts.

Caguioa, J. Reyes, Jr., Lazaro-Javier, and Zalameda, JJ., concurred. Associate Justice Mario V. Lopez was designated as an Additional Member in lieu of Associate Justice Mario V. Lopez, per Raffle dated January 27, 2020.

N/A — No dissenting opinions were noted in the provided case text.