Tan vs. Gullas

A broker earns his commission merely by bringing the buyer and the seller together, even if no sale is eventually concluded through his efforts; where the principal thereafter deals directly with the buyer introduced by the broker, the broker is entitled to the stipulated commission, computed on the actual selling price of the property in order to avoid unjust enrichment.

Private respondents Eduardo R. Gullas and Norma S. Gullas were the registered owners of a 104,114-square-meter parcel of land in the Municipality of Minglanilla, Province of Cebu, covered by Transfer Certificate of Title No. 31465, which the religious organization Sisters of Mary of Banneaux, Inc. sought to acquire. Petitioners Manuel B. Tan, a licensed real estate broker, and his associates Gregg M. Tecson and Alexander Saldaña were engaged in the brokerage of real property, an occupation compensated by a commission for bringing parties together in matters of trade, commerce or navigation. The spouses granted non-exclusive authority to more than one agent over the same property, and the dispute turns on which of the agents was entitled to the commission for the single sale that ultimately took place.

Private respondents Eduardo R. Gullas and Norma S. Gullas were the registered owners of a 104,114-square-meter parcel of land in the Municipality of Minglanilla, Province of Cebu, covered by Transfer Certificate of Title No. 31465. On June 29, 1992, they executed a special power of attorney authorizing petitioners Manuel B. Tan, a licensed real estate broker, and his associates Gregg M. Tecson and Alexander Saldaña, to negotiate for the sale of the land at Five Hundred Fifty Pesos (P550.00) per square meter, at a commission of 3% of the gross price. The power of attorney was non-exclusive and effective for one month from June 29, 1992.

On the same date, Tan contacted Engineer Edsel Ledesma, construction manager of the Sisters of Mary of Banneaux, Inc., a religious organization interested in acquiring a property in the Minglanilla area. In the morning of July 1, 1992, Tan visited the property with Engineer Ledesma; thereafter, the two men accompanied Sisters Michaela Kim and Azucena Gaviola, representing the Sisters of Mary, to see Eduardo Gullas in his office at the University of Visayas. The Sisters, who had already seen and inspected the land, found it suitable for their purpose and expressed their desire to buy it, but requested that the selling price be reduced to Five Hundred Thirty Pesos (P530.00) per square meter. Eduardo Gullas referred the prospective buyers to his wife, and it was on that occasion that the buyers first came to know that he was the owner of the property.

On July 3, 1992, the spouses agreed to sell the property to the Sisters of Mary and executed a special power of attorney in favor of Eufemia Cañete, giving her the special authority to sell, transfer and convey the land at a fixed price of Two Hundred Pesos (P200.00) per square meter. On July 17, 1992, attorney-in-fact Cañete executed a deed of sale in favor of the Sisters of Mary for the price of P20,822,800.00, or at the rate of P200.00 per square meter. The buyers subsequently paid the corresponding taxes, and the Register of Deeds of Cebu Province issued TCT No. 75981 in the name of the Sisters of Mary of Banneaux, Inc.

Earlier, on July 3, 1992, in the afternoon, petitioners went to see Eduardo Gullas to claim their commission, but the latter told them that he and his wife had already agreed to sell the property to the Sisters of Mary. The spouses refused to pay the broker's fee and alleged that another group of agents was responsible for the sale of the land to the Sisters of Mary.

On August 28, 1992, petitioners filed a complaint against the spouses for recovery of their broker's fee in the sum of P1,655,412.60, as well as moral and exemplary damages and attorney's fees. They alleged that they were the efficient procuring cause in bringing about the sale of the property to the Sisters of Mary, but that their efforts in consummating the sale were frustrated by the spouses who, in evident bad faith, malice and in order to evade payment of the broker's fee, dealt directly with the buyer whom petitioners had introduced to them; they further pointed out that the deed of sale was undervalued obviously to evade payment of the correct amount of capital gains tax, documentary stamps and other internal revenue taxes. In their answer, the spouses countered that petitioners were not the efficient procuring cause because another broker, Roberto Pacana, had introduced the property to the Sisters of Mary ahead of them; that when petitioners introduced the buyers to Eduardo Gullas, the latter were already decided in buying the property through Pacana, who had been paid his commission; and that petitioners were in Eduardo Gullas's office on July 3, 1992 only to ask for the reimbursement of their cellular phone expenses. In their reply, petitioners alleged that although the Sisters of Mary knew that the subject land was for sale through various agents, it was petitioners who introduced them to the owners thereof.

The trial court found that it was the petitioners who were responsible for the introduction of the representatives of the Sisters of Mary to Eduardo Gullas, and that the spouses failed to substantiate their claim that Pacana had begun negotiations with Norma Gullas ahead of the petitioners, no witness having been presented to establish the alleged prior negotiation among Pacana, Mrs. Gullas and the Sisters of Mary.

• Efficient Procuring Cause: Petitioners alleged that they were the efficient procuring cause in bringing about the sale of the property to the Sisters of Mary, but that their efforts in consummating the sale were frustrated by the private respondents who, in evident bad faith, malice and in order to evade payment of the broker's fee, dealt directly with the buyer whom petitioners had introduced to them.
• Undervaluation of the Deed of Sale: Petitioners pointed out that the deed of sale was undervalued obviously to evade payment of the correct amount of capital gains tax, documentary stamps and other internal revenue taxes.
• Introduction of the Buyers: Petitioners alleged that although the Sisters of Mary knew that the subject land was for sale through various agents, it was petitioners who introduced them to the owners thereof.
• Basis of the Commission: Petitioners contended that their 3% commission for the sale of the property should be based on the price of P55,180,420.00, or at P530.00 per square meter as agreed upon, and not on the alleged actual selling price of P20,822,800.00 or at P200.00 per square meter, since the actual purchase price was undervalued for taxation purposes.
• Moral and Exemplary Damages, Attorney's Fees and Interest: Petitioners claimed that the lower court erred in not awarding moral and exemplary damages in spite of its finding of bad faith; that the amount of P50,000.00 as attorney's fees awarded to them is insufficient; and that the legal interest imposed on their claim should have been pegged at 12% per annum instead of the 6% fixed by the court.

• Lack of Efficient Procuring Cause: Private respondents countered that, contrary to petitioners' claim, they were not the efficient procuring cause in bringing about the consummation of the sale because another broker, Roberto Pacana, introduced the property to the Sisters of Mary ahead of the petitioners.
• Prior Negotiations Through Pacana: Private respondents maintained that when petitioners introduced the buyers to private respondent Eduardo Gullas, the former were already decided in buying the property through Pacana, who had been paid his commission.
• Purpose of the July 3, 1992 Visit: Private respondent Eduardo Gullas admitted that petitioners were in his office on July 3, 1992, but only to ask for the reimbursement of their cellular phone expenses.
• Errors of Fact and Law; No Basis for the Award: Private respondents argued that the lower court committed errors of fact and law in holding that it was petitioners' efforts which brought about the sale of the property and in disregarding the previous negotiations between private respondent Norma Gullas and the Sisters of Mary and Pacana, and that the lower court had no basis for awarding broker's fee, attorney's fees and the costs of litigation to petitioners.

• Entitlement to the Broker's Commission: Whether petitioners, as brokers, are entitled to the 3% broker's commission for the sale of the land to the Sisters of Mary.
• Amount of the Commission: Whether petitioners' commission should be computed on the price at which the land was offered for sale, P530.00 per square meter, or on the actual purchase price of P200.00 per square meter.
• Moral and Exemplary Damages, Attorney's Fees and Interest: Whether petitioners were deprived of moral and exemplary damages, attorney's fees and interest in the forbearance of money.

• Entitlement to the Broker's Commission: Yes. A broker earns his pay merely by bringing the buyer and the seller together, even if no sale is eventually made; petitioners having introduced the representatives of the Sisters of Mary to the owners, the commission is due notwithstanding that the sale was consummated by the spouses through another attorney-in-fact.
• Amount of the Commission: The 3% commission is computed on the actual purchase price of P200.00 per square meter, not on the P530.00 per square meter at which the land was offered; equity considerations preclude a computation that would unjustly enrich the brokers.
• Moral and Exemplary Damages, Attorney's Fees and Interest: No moral or exemplary damages were awarded. The P50,000.00 attorney's fees and costs of litigation were affirmed, and the trial court's award of legal interest at 6% per annum from the filing of the complaint was reinstated.

• Entitlement to the Broker's Commission: A broker was defined, following Schmid and Oberly vs. RJL Martinez Fishing Corporation, as one who is engaged, for others, on a commission, negotiating contracts relative to property with the custody of which he has no concern; the negotiator between other parties, never acting in his own name but in the name of those who employed him; one whose occupation is to bring the parties together, in matters of trade, commerce or navigation. It was established during trial that petitioners, as brokers, were authorized by the spouses to negotiate for the sale of their land within one month from June 29, 1992. The authority was non-exclusive, which meant that the spouses were not precluded from granting the same authority to other agents with respect to the sale of the same property, and they in fact authorized another agent, Bobby Pacana; there was nothing illegal or amiss in that arrangement per se, considering the non-exclusivity of petitioners' authority. The problem arose when it turned out that these agents were entertaining one and the same buyer, the Sisters of Mary. The spouses' argument that Pacana was the one entitled to the stipulated 3% commission was untenable, considering that it was the petitioners who were responsible for the introduction of the representatives of the Sisters of Mary to Eduardo Gullas. The spouses failed to prove their contention that Pacana began negotiations with Norma Gullas way ahead of petitioners: they failed to present witnesses to substantiate the claim, Mrs. Gullas herself was not presented in court to testify about her dealings with Pacana, and neither was Atty. Nachura, who was supposedly the one actively negotiating on behalf of the Sisters of Mary. Nothing on record established the existence of a previous negotiation among Pacana, Mrs. Gullas and the Sisters of Mary; the only evidence the spouses presented was an undated and unnotarized special power of attorney in favor of Pacana. While the lack of a date and an oath does not necessarily render that instrument invalid, the contract involved a considerable amount of money, so it was inconsistent with sound business practice that the authority to sell be contained in an undated and unnotarized special power of attorney, whereas petitioners were given written authority to sell by the spouses. The trial court's evaluation of the witnesses was accorded great respect and finality in the absence of any indication that it overlooked certain facts or circumstances of weight and influence which, if reconsidered, would alter the result of the case. It was readily apparent that the spouses were trying to evade payment of the commission which rightfully belonged to petitioners as brokers with respect to the sale; there was no dispute as to the role petitioners played, and at the very least they set the sale in motion, failing to participate in its consummation only because they were prevented from doing so by the acts of the spouses. Under Alfred Hahn vs. Court of Appeals and Bayerische Motoren Werke Aktiengesellschaft (BMW), an agent receives a commission upon the successful conclusion of a sale, while a broker earns his pay merely by bringing the buyer and the seller together, even if no sale is eventually made. Petitioners, as brokers, were therefore entitled to the commission whether or not the sale of the property subject matter of the contract was concluded through their efforts.
• Amount of the Commission: Following the stipulation in the special power of attorney, petitioners were entitled to a 3% commission for the sale of the land in question. Petitioners maintained that their commission should be based on the price at which the land was offered for sale, P530.00 per square meter; however, the actual purchase price for which the land was sold was only P200.00 per square meter. Equity considerations therefore dictated that petitioners' commission be based on that price, since to rule otherwise would constitute unjust enrichment on the part of petitioners as brokers.
• Moral and Exemplary Damages, Attorney's Fees and Interest: In the matter of attorney's fees and expenses of litigation, the Court affirmed the amount of P50,000.00 awarded by the trial court to petitioners. The dispositive portion reinstated the trial court's decision ordering the spouses to pay the broker's fee with legal interest at the rate of 6% per annum from the filing of the complaint, together with the P50,000.00 attorney's fees and costs of litigation; the reinstated award did not include moral or exemplary damages.

• Broker's right to commission — bringing the parties together — A broker earns his pay merely by bringing the buyer and the seller together, even if no sale is eventually made, whereas an agent receives a commission only upon the successful conclusion of a sale. The Court applied this doctrine to hold that petitioners were entitled to the commission whether or not the sale was concluded through their efforts, since they set the sale in motion and were prevented from participating in its consummation only by the acts of the spouses.
• Definition of a broker — A broker is one who is engaged, for others, on a commission, negotiating contracts relative to property with the custody of which he has no concern; the negotiator between other parties, never acting in his own name but in the name of those who employed him; one whose occupation is to bring the parties together, in matters of trade, commerce or navigation. The Court used this definition to characterize petitioners, a licensed real estate broker and his associates, as brokers entitled to the stipulated commission.
• Non-exclusive agency — A principal who grants a non-exclusive authority to sell is not precluded from granting the same authority to other agents with respect to the same property, and such an arrangement is not illegal per se. The Court recognized the validity of the arrangement but held that where the several agents entertain one and the same buyer, the agent who was in fact responsible for introducing that buyer to the principal is the one entitled to the commission.
• Efficient procuring cause and prevention by the principal — Where the broker's efforts set the sale in motion and he is prevented from participating in its consummation by the acts of the principal, the broker is entitled to his commission. The Court found that petitioners introduced the representatives of the Sisters of Mary to Eduardo Gullas and were excluded from the consummation only because the spouses dealt directly with the buyer.
• Quantum of the commission and unjust enrichment — The broker's stipulated 3% commission is computed on the actual purchase price for which the property was sold, not on the higher price at which it was offered for sale; to compute it on the offered price would constitute unjust enrichment on the part of the broker. The Court applied this to fix the commission on the actual selling price of P200.00 per square meter.
• Finality of the trial court's evaluation of witnesses — The trial court's evaluation of the witnesses is accorded great respect and finality in the absence of any indication that it overlooked certain facts or circumstances of weight and influence which, if reconsidered, would alter the result of the case. The Court invoked this principle in sustaining the trial court's finding that petitioners, not Pacana, introduced the buyers to the spouses.
• Burden of proof on the party asserting prior negotiation — A party claiming that another agent had preceded the brokers in negotiating the sale must substantiate that claim with evidence and witnesses; the failure to present the principal's own testimony and that of the alleged negotiating counsel left the claim unsubstantiated. The Court applied this in rejecting the spouses' attribution of the sale to Pacana, noting that the only supporting evidence was an undated and unnotarized special power of attorney.

• "An agent receives a commission upon the successful conclusion of a sale. On the other hand, a broker earns his pay merely by bringing the buyer and the seller together, even if no sale is eventually made." — This passage, drawn from Alfred Hahn vs. Court of Appeals and Bayerische Motoren Werke Aktiengesellschaft (BMW), states the ratio decidendi on entitlement to the broker's commission and is the formulation most commonly cited in subsequent jurisprudence on brokerage.
• "a broker is one who is engaged, for others, on a commission, negotiating contracts relative to property with the custody of which he has no concern; the negotiator between other parties, never acting in his own name but in the name of those who employed him. x x x a broker is one whose occupation is to bring the parties together, in matters of trade, commerce or navigation." — Quoted from Schmid and Oberly vs. RJL Martinez Fishing Corporation, this passage supplies the canonical definition of a broker on which the Court's characterization of petitioners rests.
• "Therefore, equity considerations dictate that petitioners' commission must be based on this price. To rule otherwise would constitute unjust enrichment on the part of petitioners as brokers." — This passage fixes the quantum of the commission on the actual selling price of P200.00 per square meter rather than the offered price of P530.00 per square meter, and articulates the unjust-enrichment rationale for that computation.
• "The trial court's evaluation of the witnesses is accorded great respect and finality in the absence of any indication that it overlooked certain facts or circumstances of weight and influence, which if reconsidered, would alter the result of the case." — This passage supplies the standard of review that sustained the trial court's factual finding that petitioners, not Pacana, were responsible for introducing the Sisters of Mary to the spouses.

• Schmid and Oberly vs. RJL Martinez Fishing Corporation, 166 SCRA 493 (1988) — Controlling authority for the definition of a "broker" as one engaged, for others, on a commission, negotiating contracts relative to property with the custody of which he has no concern, and whose occupation is to bring the parties together in matters of trade, commerce or navigation; the definition was adopted to characterize petitioners as brokers.
• Alfred Hahn vs. Court of Appeals and Bayerische Motoren Werke Aktiengesellschaft (BMW), 266 SCRA 537 (1997) — Controlling precedent for the rule that an agent receives a commission upon the successful conclusion of a sale while a broker earns his pay merely by bringing the buyer and the seller together, even if no sale is eventually made; followed in holding petitioners entitled to the commission.
• People vs. Realm, 301 SCRA 495 (1999) — Cited, together with the two succeeding cases, for the rule that the trial court's evaluation of the witnesses is accorded great respect and finality absent any indication that it overlooked facts or circumstances of weight and influence which, if reconsidered, would alter the result of the case.
• Yam vs. Court of Appeals, 303 SCRA 1 (1999) — Cited for the same rule on the finality of the trial court's evaluation of witnesses.
• People vs. Maglatay, 304 SCRA 272 (1999) — Cited for the same rule on the finality of the trial court's evaluation of witnesses.

Vitug and Carpio, JJ., concur. Davide, Jr., C.J. (Chairman), took no part due to close relationship to a party. Azcuna, J., was on official leave.