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9. INLAND REALTY V.

CA
G.R. No. 76969
June 9, 1997
FACTS:
Petitioner Inland Realty Investment Service, Inc. (Inland Realty) is a corporation engaged
in the real estate business and brokerages. Respondent Gregorio Araneta Inc., through its
Assistant General Manager J. Armando Eduque, granted Inland Realty the authority to sell on a
first come first served basis the total holdings of Gregorio Araneta, Inc. in Architects' Bldg. Inc.,
equivalent to 98% or 9,800 shares of stock at P1,500 per share for 30 days.
After receiving a proposal letter from Inland Realty, Stanford Microsystems, Inc., a
prospective buyer, counter-proposed to buy 9,800 shares at P1,000 per share or for a total
of P9.8M, P4.9M payable in five years at 12% per annum interest until fully paid. Araneta, Inc.
replied to a letter sent by Inland Realty, saying that the price offered by Stanford was too low and
suggested that Inland Realty negotiate more for a lower price with Standford.
The authority to sell given to Inland Realty by Gregorio Araneta Inc. was extended for
three times, 30 days each, where the last extension of its contract expired on December 2, 1975.
On July 8, 1977, Inland Realty finally sold the 9,800 shares of stock in Architects' Bldg.,
Inc. to Stanford Microsystems, Inc. for P13.5M. Thereafter, Inland Realty sent a demand letter to
Gregorio Araneta Inc., for the payment of their 5% brokers commission (P675,000), which was
declined by respondent, claiming that after their authority to sell expired thirty (30) days from
December 2, 1975, petitioners were no longer privy to the consummation of the sale.
Inland Realty filed a case in RTC for the collection of its brokers commission from
respondent, but the RTC dismissed its case. On its appeal, the CA also dismissed Inland Realtys
petition, since the petitioners agency contract and authority to sell already expired on January 1,
1976, whereas the consummation of the sale to Stanford had only been on July 8, 1977 or more
than 1 year and 5 months after petitioners' agency contract and authority to sell expired.
The petitioner filed this present petition before the Supreme Court, contending that Inland
Realty, as a broker is automatically entitled to the 5% commission merely upon securing for, and
introducing to, the seller, the buyer who ultimately purchases from the former the object of the
sale, regardless of the expiration of the broker's contract of agency and authority to sell.
ISSUE: Whether or not Inland Realty is entitled for the 5% brokers commission.
HELD: NO. The Court ruled that since Inland Realty was not the efficient procuring cause in
bringing about the sale on July 8, 1977, therefore it is not entitled to the 5% broker's
commission. During the subsistence of its authority to sell, Inland Realty had nothing to show
that they performed substantial acts that proximately and causatively led to the consummation of
the sale to Stanford of Araneta, Inc.'s 9,800 shares in Architects'. Inland Realty failed in selling
said shares under the terms and conditions set out by Araneta, Inc.; it did nothing but submit
Stanford's name as prospective buyer.
The lapse of more than one (1) year and five (5) months between the expiration of
petitioners' authority to sell and the consummation of the sale to Stanford shows the petitioners
non-participation in the crucial events leading to the consummation of said sale, i.e., the
negotiations to convince Stanford to sell at Araneta, Inc.'s asking price, the finalization of the
terms and conditions of the sale, the drafting of the deed of sale, the processing of pertinent
documents, and the delivery of the shares of stock to Stanford.
Therefore, the Court dismissed Inland Realtys present petition.

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