Uniland Resources vs. DBP

A broker who has not been duly authorized or accredited by the seller, whether expressly or impliedly, cannot legally claim a commission, but may be granted equitable compensation for efforts that contributed to the eventual consummation of the sale, provided the circumstances warrant it.

Uniland Resources is a private corporation engaged in real estate brokerage and duly licensed as such. Development Bank of the Philippines (DBP) is a government financial institution operating in a proprietary capacity. Long before the dispute arose, Marinduque Mining Corporation had obtained a loan from DBP and mortgaged two Makati lots as security—a corner lot with a four-story concrete building (the "office building lot") and a lot with a concrete/steel warehouse (the "warehouse lot"). These lots had previously been mortgaged to Caltex, making DBP's mortgage a second lien. The Marinduque account was later transferred to the Assets Privatization Trust (APT) pursuant to Proclamation No. 50. When Marinduque defaulted on its Caltex obligation, Caltex foreclosed on both lots, prompting DBP to consider redeeming them for resale.

Uniland Resources is a licensed real estate brokerage corporation. DBP is a government financial institution. Marinduque Mining Corporation had mortgaged two Makati lots to DBP as security for a loan: a corner lot with a four-story building (the "office building lot," covered by TCT No. 114138) and a lot with a warehouse (the "warehouse lot," covered by TCT No. 16279, measuring 12,355 square meters). Both lots had been previously mortgaged to Caltex, making DBP's lien a second mortgage. The Marinduque account was later transferred to the Assets Privatization Trust (APT) under Proclamation No. 50.

When Marinduque defaulted on its Caltex obligation, Caltex foreclosed on both lots. APT, to recover its investment, offered for public sale through DBP its right of redemption over the two lots by public bidding on May 5, 1987. Because Caltex required that both lots be redeemed together, the bidding guidelines stipulated that any bid would be considered only if there were two bids or a combined bid covering both lots. Only one bidder appeared—Counsel Realty Corp., an affiliate of Glaxo Philippines and a client of Uniland—which bid solely for the warehouse lot at P23,900,000. DBP rejected the bid for non-compliance with the guidelines.

DBP then decided to redeem both lots itself. On May 8, 1987—the last day to exercise its right of redemption—DBP redeemed the lots from Caltex for P33,096,321.62, acquiring them as physical assets. DBP thereafter prepared to sell the lots, calling a pre-bidding conference and formulating new guidelines. On July 30, 1987, a second public bidding was held. Again, only one bidder appeared—Charges Realty Corp., another Glaxo affiliate—which bid P24,070,000 for the warehouse lot alone. No bid was submitted for the office building lot. Notwithstanding the absence of a bid for the office building lot, DBP approved the sale of the warehouse lot to Charges Realty Corp., with documentation completed on November 23, 1987. The office building lot was later sold through a negotiated sale to the Bank of P.I. as trustee for the Perpetual Care Fund of the Manila Memorial Park for P17,460,000, documented on November 17, 1987. DBP paid a five percent broker's fee on that negotiated sale to DBP Management Corporation, which acted as broker.

After the sale of the warehouse lot, Uniland, through its President, wrote two letters to DBP—one to its Senior Vice President and another to its Vice Chairman—claiming payment of a broker's fee for having instrumented the sale to Charges Realty Corp. DBP's Bidding Committee, chaired by Amanda S. Guiam, met on November 9, 1987, and on November 18, 1987, denied Uniland's claim. Uniland thereafter filed suit to recover the broker's fee. The RTC found in favor of Uniland, awarding P1,203,500 as a five percent commission plus interest and P50,000 in attorney's fees. The Court of Appeals reversed and dismissed the complaint, finding that Uniland had never been accredited or authorized by DBP to act as its broker. The RTC itself had acknowledged that there was no express reply from DBP or APT regarding the accreditation Uniland sought.

• Question of Law: Petitioner alleged that the petition raised a question of law, contending that the Court of Appeals based its decision only on controversial facts favorable to DBP and disregarded evidence in petitioner's favor, particularly letters sent to DBP's higher officers prior to the bidding and sale requesting accreditation as a broker and volunteering the name of its client, Glaxo Philippines, as an interested prospective buyer.
• Implied Agency: Petitioner invoked Article 1869 of the Civil Code, arguing that an implied agency existed and that it "should have been stopped, disauthorized and outrightly prevented from dealing" the warehouse lot by DBP from the inception.
• Accreditation as Mere Formality: Petitioner disparaged the formality of accreditation as merely a mechanical act requiring little discretion, so long as a person or entity looks for a buyer and initiates or promotes the interests of the seller.
• Equity: Petitioner invoked equity considerations, pointing to its efforts in bringing together DBP and an interested, financially-able buyer, and claiming the amount of P1,203,500 as commission computed at five percent of the sale price of the warehouse property.

• Nature of the Petition: Whether the petition raises a pure question of law reviewable under Rule 45, or whether it necessitates a reexamination of factual findings.
• Existence of Agency: Whether an implied agency existed between petitioner and respondent DBP under Article 1869 of the Civil Code.
• Entitlement to Commission: Whether petitioner is legally entitled to a broker's commission despite the absence of express accreditation or authorization from DBP.
• Equitable Compensation: Whether petitioner is entitled to compensation in equity for its role in the eventual sale of the warehouse lot.

• Nature of the Petition: No. The petition necessarily involves examination and reevaluation of the evidence, which cannot be done in a petition for certiorari under Rule 45, where only questions of law may be raised.
• Existence of Agency: No. Article 1869 has no room for operation, as DBP consistently made clear to petitioner that only accredited brokers may look for buyers on its behalf, and no third party was prejudiced by DBP's refusal to recognize petitioner as its broker.
• Entitlement to Commission: No. No agency relationship existed because petitioner was never authorized—expressly or impliedly—to act on DBP's behalf, and agency is founded on mutual consent.
• Equitable Compensation: Yes. In equity, respondent DBP is ordered to pay petitioner P100,000 for the role petitioner played in the transaction, following the precedent and proportion set in Prats vs. Court of Appeals.

• Nature of the Petition: The rule in petitions for certiorari as a mode of appeal is that only questions of law distinctly set forth may be raised—questions that do not call for examination of the probative value of the evidence. Petitioner's singular assignment of error necessarily requires going over the facts of the case, involving examination and reevaluation of evidence. Mere disagreement between the Court of Appeals and the trial court as to the facts does not warrant review by the Supreme Court. The doctrine that the factual findings of the Court of Appeals are conclusive and binding on this Court applies even when the CA disagrees with the lower court, so long as the CA's findings are borne out by the record or based on substantial evidence. Petitioner failed to show that the case falls under any recognized exception. The Court nonetheless perused the assailed decision and found petitioner's primary assertion unfounded; the CA addressed all factual contentions and its findings are consistent with and sufficiently supported by the records.

• Existence of Agency: Petitioner was never able to secure the required accreditation from DBP. The letters sent by petitioner to DBP's and APT's higher officers are at best self-serving, proving only that they were sent and received; DBP clearly never agreed to be bound thereby. The trial court itself acknowledged there was no express reply from DBP or APT regarding the accreditation sought. Throughout the dealings, it was always made clear to petitioner that only accredited brokers may look for buyers on behalf of DBP. This is not a situation where a third party was prejudiced by DBP's refusal to recognize petitioner as its broker; the controversy is solely between DBP and petitioner, to whom it was emphasized that the arrangement sought did not exist. Article 1869, which allows implied agency from the principal's silence or failure to repudiate, therefore has no application.

• Entitlement to Commission: Petitioner's stance goes against the basic axiom in Civil Law that no one may contract in the name of another without being authorized by the latter, unless the former has by law a right to represent him. From this principle springs the relationship of agency, which—like other contracts—is founded on mutual consent: the principal agrees to be bound by the acts of the agent, and the latter consents to render service on behalf of the principal. Absent accreditation or any form of authorization, petitioner had no legal basis to claim a broker's commission. Petitioner's argument that accreditation is a mere mechanical act was rejected; formalities such as accreditation result from the evolution of sound business practices for the protection and benefit of all parties and are designed to prevent situations like the one at bar.

• Equitable Compensation: While the legal standards for agency were not met, the Court recognized petitioner's efforts in bringing together DBP and an interested, financially-able buyer. Petitioner advised Glaxo Philippines of the availability of the warehouse property, aroused its interest, and directly informed DBP of the existence of an interested buyer. Petitioner's persistence in communicating with DBP reinforced the seriousness of the offer, which had a bearing on DBP's subsequent decisions regarding the disposition of its properties. There is sufficient reason to believe that DBP became more confident in redeeming the properties from APT due to the presence of a ready and willing buyer, as communicated by petitioner. Following the precedent in Prats vs. Court of Appeals—where the Court granted P100,000 out of P1,380,000 claimed as commission, by way of compensation for the agent's efforts prior to the expiration of his authority—parallel circumstances obtain here. The Court granted P100,000 in equity, roughly proportionate to the award in Prats, while emphasizing that the circumstances do not meet the minimum legal standards for agency and that the award is based purely on equity.

• Conclusiveness of CA Findings of Fact — The factual findings of the Court of Appeals are conclusive and binding on the Supreme Court, even when the CA reverses the trial court's factual findings, so long as the CA's findings are borne out by the record or based on substantial evidence. Mere disagreement between the CA and the trial court on the facts does not warrant Supreme Court review. The doctrine is not absolute, but the petitioner must sufficiently prove that the case falls under a recognized exception. In this case, petitioner failed to do so, and the Court found the CA's findings consistent with the records.

• Agency Founded on Mutual Consent — Agency is a contract founded on mutual consent: the principal agrees to be bound by the acts of the agent, and the latter consents to render service on behalf or in representation of the principal. No one may contract in the name of another without being authorized by the latter, unless the former has by law a right to represent him. The Court applied this principle to hold that absent accreditation or authorization from DBP, no agency relationship arose, and petitioner could not legally claim a commission.

• Implied Agency Under Article 1869 — Agency may be express, or implied from the acts of the principal, from his silence or lack of action, or his failure to repudiate the agency, knowing that another person is acting on his behalf without authority. The Court held this provision inapplicable because DBP consistently made clear to petitioner that only accredited brokers could act on its behalf; there was no silence or failure to repudiate that could give rise to implied agency, and no third party was prejudiced.

• Equitable Compensation for Unauthorized Broker — Even where no agency relationship exists and a broker has no legal right to commission, the Court may in equity grant compensation for the broker's efforts in bringing together the buyer and seller, following the precedent in Prats vs. Court of Appeals. The award is based purely on equity and does not constitute recognition of a legal entitlement to commission.

• "In the law on agency, it is elementary that when the main transaction between the principal parties does not materialize, the claim for commission of the duly authorized broker is disallowed." — The opening statement framing the legal question of the case, contrasting the established rule for authorized brokers with the novel question of whether an unauthorized middleman may claim commission.

• "From this principle, among others, springs the relationship of agency which, as with other contracts, is one founded on mutual consent: the principal agrees to be bound by the acts of the agent and the latter in turn consents to render service on behalf or in representation of the principal." — The Court's articulation of the consensual nature of agency, anchoring its rejection of petitioner's commission claim in the absence of mutual consent.

• "It is emphasized, however, that the circumstances that came into play in this case do not meet the minimum legal standards required for the existence of an agency relationship and that the award is based purely on equity considerations." — The Court's explicit caveat that the P100,000 equitable award does not constitute recognition of a legal agency relationship, preserving the doctrinal distinction between legal commission and equitable compensation.

• Prats vs. Court of Appeals, G.R. No. L-39822, Jan. 31, 1978, 81 SCRA 360 — Controlling precedent followed. In Prats, the agent's exclusive authority had expired, so he was no longer the efficient procuring cause and had no legal basis for commission. The Court nonetheless granted P100,000 in equity out of P1,380,000 claimed, as compensation for the agent's efforts prior to expiration. The Court found parallel circumstances in the present case and applied the same equitable principle and roughly the same proportion.

• Alsua-Betts vs. Court of Appeals, G.R. Nos. L-46430-31, July 30, 1979, 92 SCRA 332 — Cited for the doctrine that the factual findings of the Court of Appeals are conclusive and binding on the Supreme Court, even when the CA reverses the trial court, so long as the findings are borne out by the record or based on substantial evidence.

• Goduco vs. Court of Appeals, G.R. No. L-17647, Feb. 28, 1964, 119 Phil. 531 — Cited for the definition of questions of law in petitions for certiorari as those that do not call for examination of the probative value of the evidence.

• Rallos vs. Felix Go Chan and Sons Realty Corporation, G.R. No. L-24332, Jan. 31, 1978, 81 SCRA 251 — Cited in support of the principle that agency is a contract founded on mutual consent.

• Article 1317, Civil Code — Provides that no one may contract in the name of another without being authorized by the latter, unless the former has by law a right to represent him. The Court relied on this provision as the foundational axiom from which the relationship of agency springs, holding that petitioner, lacking authorization from DBP, could not legally claim a broker's commission.

• Article 1869, Civil Code — Provides that agency may be express, or implied from the acts of the principal, from his silence or lack of action, or his failure to repudiate the agency, knowing that another person is acting on his behalf without authority. Petitioner invoked this article to argue implied agency existed; the Court held it has no application because DBP consistently made clear that only accredited brokers could act on its behalf, and no third party was prejudiced.

• Rule 45, Section 2, Rules of Court — Governs petitions for review on certiorari, limiting review to questions of law distinctly set forth. The Court applied this rule to hold that petitioner's assignment of error, which necessitated factual reexamination, was not cognizable.

Narvasa (Chairman), Cruz, Griño-Aquino, and Medialdea, JJ., concurred.