Ticong vs. Malim

A real estate broker is entitled to the stipulated overprice commission when the broker is the procuring cause of the sale, meaning the broker's efforts originated a series of events which, without break in their continuity, resulted in the accomplishment of the prime objective of producing a purchaser ready, willing and able to buy real estate on the owner's terms. The contract between the parties, being the law between them, governs the entitlement to commission, and the lack of a real estate broker's license does not invalidate the sale transaction or the commission agreement.

Manuel A. Malim was a realty broker/dealer, while Minda Abangan and May Macal were his associates. The Ticongs—Lorenzo Ticong, Patrocinio Ticong, and Wilma Ticong Lao—were the registered owners of several parcels of land located in Digos, Davao del Sur, covered by Transfer Certificate of Title Nos. T-11244, T-11246, T-18686, and T-18687, with a total area of 5,000 square meters. The parties entered into a Memorandum of Agreement authorizing the respondents to look, negotiate, and sell the properties to prospective buyers on a commission basis, with an overprice arrangement on top of the P900.00 per square meter net asking price. The dispute concerns the interpretation and enforceability of this MOA and the respondents' entitlement to the overprice commission.

Manuel A. Malim, a realty broker/dealer, together with his associates Minda Abangan and May Macal, filed a complaint for collection of sum of money, damages, and attorney's fees against Lorenzo Ticong, Patrocinio Ticong, and Wilma Ticong Lao, the registered owners of several parcels of land in Digos, Davao del Sur, covered by TCT Nos. T-11244, T-11246, T-18686, and T-18687, totaling 5,000 square meters. On February 5, 2000, Malim, presenting himself as the authorized representative of the Ticongs, sent a letter of "formal intent to sell" to Jainus C. Perez, the real estate field supervisor of the Church of Jesus Christ of Latter-Day Saints, offering to sell the subject properties for P2,000.00 per square meter. Below Malim's signature were inscribed the words "NOTED/CONFORMED" with the signature of Lorenzo Ticong above "Lorenzo Ticong, Lot Owner."

On February 11, 2000, the parties signed a Memorandum of Agreement authorizing the respondents to "look, negotiate, and sell to any prospective buyer" for the properties on a commission basis, and authorizing them to charge an "overprice" on top of the P900.00 per square meter net asking price. The MOA provided that the respondents were entitled to a 5% commission as Broker's Finders Fee if they themselves bought the property for P900.00 per square meter or sold it to a third party for that exact amount. The subject properties were eventually sold to the Buyer at P1,460.00 per square meter, or for the total amount of P7,300,000.00. The respondents claimed entitlement to an overprice commission of P2,800,000.00 based on the P560.00 per square meter overprice, but the Ticongs paid them only P50,000.00 and refused to pay the remaining balance despite demands.

The Ticongs contended that the MOA was crafted and solely prepared by the respondents and that they signed it without comprehending its salient aspects due to their limited education. They claimed that the sale prospered through their own active, direct, and personal efforts and was eventually attained when they sued the Buyer, and that the respondents had received a total of P225,000.00, not just P50,000.00. The Ticongs denied that the respondents offered to sell their properties to the Buyer, pointed out that the respondents were not even licensed realty brokers, and argued that the overprice commission and 5% finders' fee provisions were not valid, binding, and enforceable against them.

Ma. Lorena Ticong, one of the children and heirs of Lorenzo Ticong, argued on appeal that although the respondents introduced and brought the parties together for negotiations, their efforts did not contribute to the conclusion of the transaction. She claimed that it was Wilma who followed up with the Buyer's representative, but the Buyer replied that it would no longer push through with the purchase because the results of the soil test and survey showed that developing the land would entail a high cost. The Ticongs were thus forced to file a complaint for specific performance, which was eventually settled by the parties. She averred that the institution of the civil action for specific performance constituted a break in the continuity of the series of events which the respondents had initially set in motion.

The respondents countered that documentary evidence—including the February 5, 2000 letter of intent signed by Malim with the conformity of Lorenzo Ticong, a letter from the Ticongs to Perez stating that their "official and registered broker is M.A.M. & Associates & Brokerage and no other authorized agents," and an acknowledgment receipt dated March 30, 2001 showing the Ticongs' payment of P50,000.00 as "partial payment to commission"—proved that the Ticongs recognized them as the procuring cause of the sale.

• Procuring Cause: Ma. Lorena argued that the CA committed serious and reversible error in affirming the trial court's finding that the respondents were the efficient procuring cause of the sale, insisting that although the respondents introduced and brought the parties together, their meager efforts did not contribute to the conclusion of the transaction, and that the institution of the civil action for specific performance against the Buyer constituted a break in the continuity of the series of events which the respondents had initially set in motion.

• Entitlement to Commission: The petitioners insisted that the respondents were not entitled to the overprice commission but only to the 5% Broker's Finders Fee as stipulated in the MOA, since they were not the efficient procuring cause of the final sale.

• Unconscionable Award: Patrocinio and Wilma argued that even granting that the respondents were entitled to receive the overprice commission, the amount awarded was unconscionable, considering that the respondents were not even licensed brokers.

• Procedural Defects: The respondents raised that the petition in G.R. No. 222887 was filed out of time and contained a defective Verification and Certification of Non-Forum Shopping, as it was verified and notarized on February 6, 2016, or nine days ahead of the petition dated February 15, 2016.

• Procuring Cause: The respondents countered that they were the ones who caused the sale of the subject property, citing documentary evidence such as the February 5, 2000 letter of intent signed by Malim with the conformity of Lorenzo Ticong, the letter of the Ticongs sent to Perez stating that their "official and registered broker is M.A.M. & Associates & Brokerage and no other authorized agents," and the acknowledgment receipt dated March 30, 2001 showing the Ticongs' payment of P50,000.00 as "partial payment to commission," as proof that the Ticongs recognized them as the procuring cause of the sale.

• Entitlement to Overprice: The respondents underscored that they were entitled to the overprice based on the clear import of the valid MOA executed by the parties.

• Procuring Cause: Whether the respondents were the procuring cause of the sale of the subject properties, entitling them to the broker's overprice commission.

• Entitlement to Overprice Commission: Whether the respondents were entitled to the overprice commission of P2.8 million or only to the 5% Broker's Finders Fee under the MOA.

• Procedural Compliance: Whether the petition in G.R. No. 222887 was filed out of time and with a defective Verification and Certification of Non-Forum Shopping, warranting dismissal.

• Procuring Cause: Yes. The respondents were the procuring cause of the sale, their efforts having originated a series of events which, without break in their continuity, resulted in the consummation of the sale to the Buyer. The evidence on record showed that the respondents were instrumental in the sale, and without their intervention, no sale would have been consummated.

• Entitlement to Overprice Commission: Yes. Under the clear provisions of the MOA, the respondents were entitled to the overprice amount as commission, having sold the property to a third party for a higher price than the P900.00 per square meter net asking price. The overprice was P560.00 per square meter, totaling P2,800,000.00, from which amounts already paid by the Ticongs should be deducted.

• Procedural Compliance: The petition in G.R. No. 222887 was filed out of time and contained a defective Verification and Certification of Non-Forum Shopping, failing to comply with the jurisdictional requirements under the Rules. Nevertheless, even if these defects were glossed over, the petitions still failed on the merits.

• Procuring Cause: The Court emphasized that in petitions for review on certiorari under Rule 45 of the Rules of Court, only questions of law may be put into issue, and questions of fact are not cognizable by the Court. The issues raised by the petitioners—whether the respondents were the procuring cause of the sale—are factual in nature, requiring the Court to delve into the records and review the evidence presented. The Court defined "procuring cause" as a cause originating a series of events which, without break in their continuity, results in the accomplishment of the prime objective of employing the broker—to produce a purchaser ready, willing and able to buy real estate on the owner's terms. To be regarded as the procuring cause of a sale, a broker's efforts must have been the foundation of the negotiations which subsequently resulted in a sale. The Court found the respondents' role in the successful consummation of the sale undisputed, as shown by: (a) the February 5, 2000 formal letter of intent sent by Malim with the conformity of Lorenzo Ticong; (b) the April 15, 2000 letter where the Ticongs expressly recognized the respondents as their sole agents and middlemen; (c) the testimony of Javier Alvero, an employee of the Ticongs, that the respondents were the agents who negotiated the sale; (d) the P50,000.00 partial payment of commission as stated in the acknowledgment receipt dated March 30, 2001; and (e) Malim's testimony proving the efforts exerted by the respondents through constant follow-ups with the Buyer by letters and telephone calls. When there is a close, proximate and causal connection between the agent's efforts and the sale of the property, the agents are entitled to their commission.

• Entitlement to Overprice Commission: The Court examined the pertinent provisions of the MOA, paragraphs 3, 4, and 5, which provided that the Ticongs decided to sell the lots for a net of P900.00 per square meter, that the respondents were authorized to make an overprice on top of the P900.00 per square meter net asking price, and that the respondents were authorized to look, negotiate, and sell to any prospective buyer. The Court interpreted these provisions to mean that the respondents were entitled to a 5% commission if they themselves bought the property for P900.00 per square meter or had sold it to a third party for the exact amount of P900.00 per square meter. In this case, however, the respondents sold the property to a third party, the Buyer, for a higher price of P1,460.00 per square meter. The respondents were thus entitled to the overprice amount as commission, which was P560.00 per square meter or a total of P2,800,000.00. From this amount, the amounts paid by the Ticongs to the respondents should be deducted, which the RTC can determine in a summary hearing in the execution stage. The Court reiterated the basic principle that a contract is the law between the parties, and its stipulations are binding on them, unless the contract is contrary to law, morals, good customs, public order or public policy. The Ticongs, having freely and willingly entered into the MOA, cannot renege on their obligation to pay the overprice commission on the flimsy excuse that the respondents were not licensed brokers. The Court found no reversible error in the findings of the CA and the RTC, and was bound by such factual findings in the absence of any compelling reason to reverse the same.

• Procedural Compliance: The Court noted that the petition in G.R. No. 222887 was filed out of time and contained a defective Verification and Certification of Non-Forum Shopping, as it was verified and notarized on February 6, 2016, or nine days ahead of the petition dated February 15, 2016. The petition thus failed to comply with the jurisdictional requirements under the Rules. Nevertheless, even if the Court would gloss over these defects, the petitions must still fail on the merits.

• Procuring Cause Doctrine — The term "procuring cause," in describing a broker's activity, refers to a cause originating a series of events which, without break in their continuity, results in the accomplishment of the prime objective of employing the broker—to produce a purchaser ready, willing and able to buy real estate on the owner's terms. To be regarded as the procuring cause of a sale, a broker's efforts must have been the foundation of the negotiations which subsequently resulted in a sale. 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. When there is a close, proximate and causal connection between the agent's efforts and the sale of the property, the agents are entitled to their commission. The Court applied this doctrine in finding that the respondents were the procuring cause of the sale, as their efforts brought the Ticongs and the Buyer together and laid the groundwork for the sale transaction.

• Contract as Law Between the Parties — A contract is the law between the parties, and its stipulations are binding on them, unless the contract is contrary to law, morals, good customs, public order or public policy. The Court applied this principle in holding that the Ticongs, having freely and willingly entered into the MOA, cannot renege on their obligation to pay the overprice commission on the flimsy excuse that the respondents were not licensed brokers.

• Rule 45 Limited to Questions of Law — In petitions for review on certiorari under Rule 45 of the Rules of Court, only questions of law may be put into issue; questions of fact are not cognizable by the Supreme Court. The Court applied this principle in declining to review the factual findings of the lower courts regarding the respondents' status as procuring cause of the sale.

• "The term 'procuring cause,' in describing a broker's activity, refers to a cause originating a series of events which, without break in their continuity, results in the accomplishment of the prime objective of employing the broker - to produce a purchaser ready, willing and able to buy real estate on the owner's terms." — This passage defines the procuring cause doctrine, which is the central legal principle governing the respondents' entitlement to the overprice commission.

• "To be regarded as the procuring cause of a sale, a broker's efforts must have been the foundation of the negotiations which subsequently resulted in a sale." — This passage articulates the standard for determining whether a broker's efforts constitute the procuring cause of a sale, requiring that the broker's efforts be the foundation of the negotiations.

• "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." — This passage states the canonical formulation of the procuring cause doctrine, requiring that the broker find the purchaser and that the sale proceed from the broker's efforts.

• "Basic is the principle that a contract (the MOA in this case) is the law between the parties, and its stipulations are binding on them, unless the contract is contrary to law, morals, good customs, public order or public policy." — This passage states the principle of contract as law between the parties, which the Court applied in holding that the Ticongs cannot renege on their obligation to pay the overprice commission under the MOA.

• Moldex Realty, Inc. vs. Saberon, 708 Phil. 314 (2013) — Cited by the CA for the proposition that sale transactions by those who lacked certificates of registration and licenses to sell are valid, supporting the ruling that the respondents' lack of realty broker licenses did not nullify the MOA.

• Medrano vs. Court of Appeals, 492 Phil. 222 (2005) — Cited as controlling authority defining the procuring cause doctrine and the standard for determining a broker's entitlement to commission, including the requirement that the broker's efforts be the foundation of the negotiations resulting in the sale.

• Oriental Petroleum and Minerals Corp. vs. Tuscan Realty, Inc., 713 Phil. 693 (2013) — Cited for the proposition that to be regarded as the procuring cause of a sale, a broker's efforts must have been the foundation of the negotiations which subsequently resulted in a sale.

• Danon vs. Brimo, 42 Phil. 133 (1921) — Cited for the canonical formulation that the broker must be the efficient agent or the procuring cause of the sale, that the means employed by him and his efforts must result in the sale, and that he must find the purchaser.

• Manotok Brothers, Inc. vs. Court of Appeals, G.R. No. 94753, April 7, 1993, 221 SCRA 224 — Cited for the proposition that when there is a close, proximate and causal connection between the agent's efforts and the sale of the property, the agents are entitled to their commission.

• Philippine Health-Care Providers, Inc. (MAXICARE) vs. Estrada, 566 Phil. 603 (2008) — Cited for the principle that in petitions for review on certiorari under Rule 45 of the Rules of Court, only questions of law may be put into issue, and questions of fact are not cognizable by the Court.

• Mendiola vs. Commerz Trading Int'l, Inc., 715 Phil. 856 (2013) — Cited for the principle that a contract is the law between the parties, and its stipulations are binding on them, unless the contract is contrary to law, morals, good customs, public order or public policy.

• Rule 45, Rules of Court — Governs petitions for review on certiorari to the Supreme Court, limiting the same to questions of law. The Court applied this rule in declining to review the factual findings of the lower courts regarding the respondents' status as procuring cause of the sale.

• Rule 45, Rules of Court (Verification and Certification of Non-Forum Shopping) — Requires petitions to be verified and to contain a certification of non-forum shopping. The Court noted that the petition in G.R. No. 222887 contained a defective Verification and Certification of Non-Forum Shopping, as it was verified and notarized nine days ahead of the petition, failing to comply with the jurisdictional requirements under the Rules.

• Carpio, Acting C.J. (Chairperson)
• Peralta, J.
• Jardeleza, J.