AGENCY:
(30%) percent.
G.R. No. L-67889 October 10, 1985
PRIMITIVO SIASAT and MARCELINO SIASAT, petitioners,
vs.
INTERMEDIATE APPELLATE COURT and TERESITA NACIANCENO,
respondents.
Payawal, Jimenez & Associates for petitioners.
Nelson A. Loyola for private respondent.
GUTIERREZ, JR., J.:
This is a petition for review of the decision of the Intermediate Appellate Court affirming in toto
the judgment of the Court of First Instance of Manila, Branch XXI, which ordered the petitioner to
pay respondent the thirty percent (30%) commission on 15,666 pieces of Philippine flags worth
P936,960.00, moral damages, attorney's fees and the costs of the suit.
Sometime in 1974, respondent Teresita Nacianceno succeeded in convincing officials of the then
Department of Education and Culture, hereinafter called Department, to purchase without public
bidding, one million pesos worth of national flags for the use of public schools throughout the
country. The respondent was able to expedite the approval of the purchase by hand-carrying the
different indorsements from one office to another, so that by the first week of September, 1974,
all the legal requirements had been complied with, except the release of the purchase orders.
When Nacianceno was informed by the Chief of the Budget Division of the Department that the
purchase orders could not be released unless a formal offer to deliver the flags in accordance
with the required specifications was first submitted for approval, she contacted the owners of the
United Flag Industry on September 17, 1974. The next day, after the transaction was discussed,
the following document (Exhibit A) was drawn up:
Mrs. Tessie Nacianceno,
This is to formalize our agreement for you to represent United Flag Industry to
deal with any entity or organization, private or government in connection with
the marketing of our products-flags and all its accessories.
For your service, you will be entitled to a commission of thirty
Signed
Mr. Primitive Siasat
Owner and Gen. Manager
On October 16, 1974, the first delivery of 7,933 flags was made by the United Flag Industry. The
next day, on October 17, 1974, the respondent's authority to represent the United Flag Industry
was revoked by petitioner Primitivo Siasat.
According to the findings of the courts below, Siasat, after receiving the payment of P469,980.00
on October 23, 1974 for the first delivery, tendered the amount of P23,900.00 or five percent
(5%) of the amount received, to the respondent as payment of her commission. The latter
allegedly protested. She refused to accept the said amount insisting on the 30% commission
agreed upon. The respondent was prevailed upon to accept the same, however, because of the
assurance of the petitioners that they would pay the commission in full after they delivered the
other half of the order. The respondent states that she later on learned that petitioner Siasat had
already received payment for the second delivery of 7,833 flags. When she confronted the
petitioners, they vehemently denied receipt of the payment, at the same time claiming that the
respondent had no participation whatsoever with regard to the second delivery of flags and that
the agency had already been revoked.
The respondent originally filed a complaint with the Complaints and Investigation Office in
Malacañang but when nothing came of the complaint, she filed an action in the Court of First
Instance of Manila to recover the following commissions: 25%, as balance on the first delivery
and 30%, on the second delivery.
The trial court decided in favor of the respondent. The dispositive portion of the decision reads as
follows:
WHEREFORE, judgment is hereby rendered sentencing Primitivo Siasat to pay
to the plaintiff the sum of P281,988.00, minus the sum P23,900.00, with legal
interest from the date of this decision, and ordering the defendants to pay
jointly and solidarily the sum of P25,000.00 as moral damages, and P25,000.00
as attorney's fees, also with legal interest from the date of this decision, and
the costs.
The decision was affirmed in toto by the Intermediate Appellate Court. After their motion for
reconsideration was denied, the petitioners went to this Court on a petition for review on August
6, 1984.
ISSUES: In assailing the appellate court's decision, the petition tenders the following arguments:
first, the authorization making the respondent the petitioner's representative merely states that
she could deal with any entity in connection with the marketing of their products for a
commission of 30%. There was no specific authorization for the sale of 15,666 Philippine flags to
the Department; second, there were two transactions involved evidenced by the separate
purchase orders and separate delivery receipts, Exhibit 6-C for the purchase and deliver on
October 16, 1974, and Exhibits 7 to 7-C, for the purchase and delivery on November 6, 1974. The
revocation of agency effected by the parties with mutual consent on October 17, 1974, therefore,
forecloses the
respondent's claim of 30% commission on the second transaction; and last, there was no basis for
the granting of attorney's fees and moral damages because there was no showing of bad faith on
the part of the petitioner. It was respondent who showed bad faith in denying having received
her commission on the first delivery. The petitioner's counterclaim, therefore, should have been
granted.
This petition was initially dismissed for lack of merit in a minute resolution.On a motion for
reconsideration, however,this Court give due course to the petition on November 14, 1984.
HELD:
After a careful review of the records, we are constrained to sustain with some modifications the
decision of the appellate court.
We find respondent's argument regarding respondent's incapacity to represent them in the
transaction with the Department untenable. There are several kinds of agents. To quote a
commentator on the matter:
An agent may be (1) universal: (2) general, or (3) special. A universal; agent is
one authorized to do all acts for his principal which can lawfully be delegated
to an agent. So far as such a condition is possible, such an agent may be said to
have universal authority. (Mec. Sec. 58).
A general agent is one authorized to do all acts pertaining to a business of a
certain kind or at a particular place, or all acts pertaining to a business of a
particular class or series. He has usually authority either expressly conferred in
general terms or in effect made general by the usages, customs or nature of
the business which he is authorized to transact.
An agent, therefore, who is empowered to transact all the business of his
principal of a particular kind or in a particular place, would, for this reason, be
ordinarily deemed a general agent. (Mec Sec. ,30).
A special agent is one authorized to do some particular act or to act upon some
particular occasion. lie acts usually in accordance with specific instructions or
under limitations necessarily implied from the nature of the act to be done.
(Mec. Sec. 61) (Padilla, Civil Law The Civil Code Annotated, Vol. VI, 1969
Edition, p. 204).
One does not have to undertake a close scrutiny of the document embodying the agreement
between the petitioners and the respondent to deduce that the 'latter was instituted as a general
agent. Indeed, it can easily be seen by the way general words were employed in the agreement
that no restrictions were intended as to the manner the agency was to be carried out or in the
place where it was to be executed. The power granted to the respondent was so broad that it
practically covers the negotiations leading to, and the execution of, a contract of sale of
petitioners' merchandise with any entity or organization.
There is no merit in petitioners' allegations that the contract of agency between the parties was
entered into under fraudulent representation because respondent "would not disclose the
agency with which she was supposed to transact and made the petitioner believe that she would
be dealing with The Visayas", and that "the petitioner had known of the transactions and/or
project for the said purchase of the Philippine flags by the Department of Education and Culture
and precisely it was the one being followed up also by the petitioner."
If the circumstances were as claimed by the petitioners, they would have exerted efforts to
protect their interests by limiting the respondent's authority. There was nothing to prevent the
petitioners from stating in the contract of agency that the respondent could represent them only
in the Visayas. Or to state that the Department of Education and Culture and the Department of
National Defense, which alone would need a million pesos worth of flags, are outside the scope
of the agency. As the trial court opined, it is incredible that they could be so careless after being
in the business for fifteen years.
A cardinal rule of evidence embodied in Section 7 Rule 130 of our Revised Rules of Court states
that "when the terms of an agreement have been reduced to writing, it is to be considered as
containing all such terms, and, therefore, there can be between the parties and their successors-
in-interest, no evidence of the terms of the agreement other than the contents of the writing",
except in cases specifically mentioned in the same rule. Petitioners have failed to show that their
agreement falls under any of these exceptions. The respondent was given ample authority to
transact with the Department in behalf of the petitioners. Equally without merit is the petitioners'
proposition that the transaction involved two separate contracts because there were two
purchase orders and two deliveries. The petitioners' evidence is overcome by other pieces of
evidence proving that there was only one transaction.
The indorsement of then Assistant Executive Secretary Roberto Reyes to the Budget Commission
on September 3, 1974 (Exhibit "C") attests to the fact that out of the total budget of the
Department for the fiscal year 1975, "P1,000,000.00 is for the purchase of national flags." This is
also reflected in the Financial and Work Plan Request for Allotment (Exhibit "F") submitted by
Secretary Juan Manuel for fiscal year 1975 which however, divided the allocation and release of
the funds into three, corresponding to the second, third, and fourth quarters of the said year.
Later correspondence between the Department and the Budget Commission (Exhibits "D" and
"E") show that the first allotment of P500.000.00 was released during the second quarter.
However, due to the necessity of furnishing all of the public schools in the country with the
Philippine flag, Secretary Manuel requested for the immediate release of the programmed
allotments intended for the third and fourth quarters. These circumstances explain why two
purchase orders and two deliveries had to be made on one transaction.
The petitioners' evidence does not necessarily prove that there were two separate transactions.
Exhibit "6" is a general indorsement made by Secretary Manuel for the purchase of the national
flags for public schools. It contains no reference to the number of flags to be ordered or the
amount of funds to be released. Exhibit "7" is a letter request for a "similar authority" to purchase
flags from the United Flag Industry. This was, however, written by Dr. Narciso Albarracin who was
appointed Acting Secretary of the Department after Secretary Manuel's tenure, and who may not
have known the real nature of the transaction.
If the contracts were separate and distinct from one another, the whole or at least a substantial
part of the government's supply procurement process would have been repeated. In this case,
what were issued were mere indorsements for the release of funds and authorization for the next
purchase.
Since only one transaction was involved, we deny the petitioners' contention that respondent
Nacianceno is not entitled to the stipulated commission on the second delivery because of the
revocation of the agency effected after the first delivery. The revocation of agency could not
prevent the respondent from earning her commission because as the trial court opined, it came
too late, the contract of sale having been already perfected and partly executed.
In Macondray & Co. v. Sellner (33 Phil. 370, 377), a case analogous to this one in principle, this
Court held:
We do not mean to question the general doctrine as to the power of a
principal to revoke the authority of his agent at will, in the absence of a
contract fixing the duration of the agency (subject, however, to some well
defined exceptions). Our ruling is that at the time fixed by the manager of the
plaintiff company for the termination of the negotiations, the defendant real
estate agent had already earned the commissions agreed upon, and could not
be deprived thereof by the arbitrary action of the plaintiff company in
declining to execute the contract of sale for some reason personal to itself.
The principal cannot deprive his agent of the commission agreed upon by cancelling the agency
and, thereafter, dealing directly with the buyer. (Infante v. Cunanan, 93 Phil. 691).
The appellate courts citation of its previous ruling in Heimbrod et al. v. Ledesma (C.A. 49 O.G.
1507) is correct:
The appellee is entitled to recovery. No citation is necessary to show that the
general law of contracts the equitable principle of estoppel. and the expense
of another, uphold payment of compensation for services rendered.
There is merit, however, in the petitioners' contention that the agent's commission on the first
delivery was fully paid. The evidence does not sustain the respondent's claim that the petitioners
paid her only 5% and that their right to collect another 25% commission on the first delivery must
be upheld.
When respondent Nacianceno asked the Malacanang Complaints and Investigation Office to help
her collect her commission, her statement under oath referred exclusively to the 30%
commission on the second delivery. The statement was emphatic that "now" her demand was for
the 30% commission on the (second) release of P469,980.00. The demand letter of the
respondent's lawyer dated November 13, 1984 asked petitioner Siasat only for the 30%
commission due from the second delivery. The fact that the respondent demanded only the
commission on the second delivery without reference to the alleged unpaid balance which was
only slightly less than the amount claimed can only mean that the commission on the first
delivery was already fully paid, Considering the sizeable sum involved, such an omission is too
glaringly remiss to be regarded as an oversight.
Moreover, the respondent's authorization letter (Exhibit "5") bears her signature with the
handwritten words "Fully Paid", inscribed above it.
The respondent contested her signature as a forgery, Handwriting experts from two government
agencies testified on the matter. The reason given by the trial court in ruling for the respondent is
too flimsy to warrant a finding of forgery.
The court stated that in thirteen documents presented as exhibits, the private respondent signed
her name as "Tessie Nacianceno" while in this particular instance, she signed as "T. Nacianceno."
The stated basis is inadequate to sustain the respondent's allegation of forgery. A variance in the
manner the respondent signed her name can not be considered as conclusive proof that the
questioned signature is a forgery. The mere fact that the respondent signed thirteen documents
using her full name does not rule out the possibility of her having signed the notation "Fully Paid",
with her initial for the given came and the surname written in full. What she was signing was a
mere acknowledgment.
This leaves the expert testimony as the sole basis for the verdict of forgery.
In support of their allegation of full payment as evidenced by the signed authorization letter
(Exhibit "5-A"), the petitioners presented as witness Mr. Francisco Cruz. Jr., a senior document
examiner of the Philippine Constabulary Crime laboratory. In rebuttal, the respondent presented
Mr. Arcadio Ramos, a junior document examiner of the National Bureau of Investigation.
We also rule against the respondent's allegation that the petitioners acted in bad faith when they
revoked the agency given to the respondent.
Fraud and bad faith are matters not to be presumed but matters to be alleged with sufficient
facts. To support a judgment for damages, facts which justify the inference of a lack or absence of
good faith must be alleged and proven. (Bacolod-Murcia Milling Co., Inc. vs. First Farmers Milling
Co., Inc., Etc., 103 SCRA 436).
There is no evidence on record from which to conclude that the revocation of the agency was
deliberately effected by the petitioners to avoid payment of the respondent's commission. What
appears before us is only the petitioner's use in court of such a factual allegation as a defense
against the respondent's claim. This alone does not per se make the petitioners guilty of bad faith
for that defense should have been fully litigated.
Moral damages cannot be awarded in the absence of a wrongful act or omission or of fraud or
bad faith. (R & B Surety & Insurance Co., Inc. vs. Intermediate Appellate Court, 129 SCRA 736).
We therefore, rule that the award of P25,000.00 as moral damages is without basis.
The additional award of P25,000.00 damages by way of attorney's fees, was given by the courts
below on the basis of Article 2208, Paragraph 2, of the Civil Code, which provides: "When the
defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur
expenses to protect his interests;" attorney's fees may be awarded as damages. (Pirovano et al. v.
De la Rama Steamship Co., 96 Phil. 335).
The underlying circumstances of this case lead us to rule out any award of attorney's fees. For
one thing, the respondent did not come to court with completely clean hands. For another, the
petitioners apparently believed they could legally revoke the agency in the manner they did and
deal directly with education officials handling the purchase of Philippine flags. They had reason to
sincerely believe they did not have to pay a commission for the second delivery of flags.
We cannot close this case without commenting adversely on the inexplicably strange
procurement policies of the Department of Education and Culture in its purchase of Philippine
flags. There is no reason why a shocking 30% of the taxpayers' money should go to an agent or
facilitator who had no flags to sell and whose only work was to secure and handcarry the
indorsements of education and budget officials. There are only a few manufacturers of flags in
our country with the petitioners claiming to have supplied flags for our public schools on earlier
occasions. If public bidding was deemed unnecessary, the Department should have negotiated
directly with flag manufacturers. Considering the sad plight of underpaid and overworked
classroom teachers whose pitiful salaries and allowances cannot sometimes be paid on time, a
P300,000.00 fee for a P1,000,000.00 purchase of flags is not only clearly unnecessary but a
scandalous waste of public funds as well.
WHEREFORE, the decision of the respondent court is hereby MODIFIED. The petitioners are
ordered to pay the respondent the amount of ONE HUNDRED FOURTY THOUSAND NINE
HUNDRED AND NINETY FOUR PESOS (P140,994.00) as her commission on the second delivery of
flags with legal interest from the date of the trial court's decision. No pronouncement as to costs.
G.R. No. 163720 December 16, 2004
GENEVIEVE LIM, petitioner,
vs.
FLORENCIO SABAN, respondents.
TINGA, J.:
Before the Court is a Petition for Review on Certiorari assailing the Decision1 dated October 27,
2003 of the Court of Appeals, Seventh Division, in CA-G.R. V No. 60392.2
The late Eduardo Ybañez (Ybañez), the owner of a 1,000-square meter lot in Cebu City (the "lot"),
entered into an Agreement and Authority to Negotiate and Sell (Agency Agreement) with
respondent Florencio Saban (Saban) on February 8, 1994. Under the Agency Agreement, Ybañez
authorized Saban to look for a buyer of the lot for Two Hundred Thousand Pesos (P200,000.00)
and to mark up the selling price to include the amounts needed for payment of taxes, transfer of
title and other expenses incident to the sale, as well as Saban’s commission for the sale.3
Through Saban’s efforts, Ybañez and his wife were able to sell the lot to the petitioner Genevieve
Lim (Lim) and the spouses Benjamin and Lourdes Lim (the Spouses Lim) on March 10, 1994. The
price of the lot as indicated in the Deed of Absolute Sale is Two Hundred Thousand Pesos
(P200,000.00).4 It appears, however, that the vendees agreed to purchase the lot at the price of
Six Hundred Thousand Pesos (P600,000.00), inclusive of taxes and other incidental expenses of
the sale. After the sale, Lim remitted to Saban the amounts of One Hundred Thirteen Thousand
Two Hundred Fifty Seven Pesos (P113,257.00) for payment of taxes due on the transaction as well
as Fifty Thousand Pesos (P50,000.00) as broker’s commission.5 Lim also issued in the name of
Saban four postdated checks in the aggregate amount of Two Hundred Thirty Six Thousand Seven
Hundred Forty Three Pesos (P236,743.00). Subsequently, Ybañez sent a letter dated June 10,
1994 addressed to Lim. In the letter Ybañez asked Lim to cancel all the checks issued by her in
Saban’s favor and to "extend another partial payment" for the lot in his (Ybañez’s) favor. 6
After the four checks in his favor were dishonored upon presentment, Saban filed a Complaint for
collection of sum of money and damages against Ybañez and Lim with the Regional Trial Court
(RTC) of Cebu City on August 3, 1994.7 The case was assigned to Branch 20 of the RTC.
In his Complaint, Saban alleged that Lim and the Spouses Lim agreed to purchase the lot for
P600,000.00, i.e., with a mark-up of Four Hundred Thousand Pesos (P400,000.00) from the price
set by Ybañez. Of the total purchase price of P600,000.00, P200,000.00 went to Ybañez,
P50,000.00 allegedly went to Lim’s agent, and P113,257.00 was given to Saban to cover taxes and
other expenses incidental to the sale. Lim also issued four (4) postdated checks 8 in favor of Saban
for the remaining P236,743.00.9
Saban alleged that Ybañez told Lim that he (Saban) was not entitled to any commission for the
sale since he concealed the actual selling price of the lot from Ybañez and because he was not a
licensed real estate broker. Ybañez was able to convince Lim to cancel all four checks.
Saban further averred that Ybañez and Lim connived to deprive him of his sales commission by
withholding payment of the first three checks. He also claimed that Lim failed to make good the
fourth check which was dishonored because the account against which it was drawn was closed.
In his Answer, Ybañez claimed that Saban was not entitled to any commission because he
concealed the actual selling price from him and because he was not a licensed real estate broker.
Lim, for her part, argued that she was not privy to the agreement between Ybañez and Saban,
and that she issued stop payment orders for the three checks because Ybañez requested her to
pay the purchase price directly to him, instead of coursing it through Saban. She also alleged that
she agreed with Ybañez that the purchase price of the lot was only P200,000.00.
Ybañez died during the pendency of the case before the RTC. Upon motion of his counsel, the
trial court dismissed the case only against him without any objection from the other parties.10
On May 14, 1997, the RTC rendered its Decision11 dismissing Saban’s complaint, declaring the four
(4) checks issued by Lim as stale and non-negotiable, and absolving Lim from any liability towards
Saban.
Saban appealed the trial court’s Decision to the Court of Appeals.
On October 27, 2003, the appellate court promulgated its Decision12 reversing the trial court’s
ruling. It held that Saban was entitled to his commission amounting to P236,743.00.13
The Court of Appeals ruled that Ybañez’s revocation of his contract of agency with Saban was
invalid because the agency was coupled with an interest and Ybañez effected the revocation in
bad faith in order to deprive Saban of his commission and to keep the profits for himself.14
The appellate court found that Ybañez and Lim connived to deprive Saban of his commission. It
declared that Lim is liable to pay Saban the amount of the purchase price of the lot corresponding
to his commission because she issued the four checks knowing that the total amount thereof
corresponded to Saban’s commission for the sale, as the agent of Ybañez. The appellate court
further ruled that, in issuing the checks in payment of Saban’s commission, Lim acted as an
accommodation party. She signed the checks as drawer, without receiving value therefor, for the
purpose of lending her name to a third person. As such, she is liable to pay Saban as the holder
for value of the checks.15
Lim filed a Motion for Reconsideration of the appellate court’s Decision, but her Motion was
denied by the Court of Appeals in a Resolution dated May 6, 2004.16
Not satisfied with the decision of the Court of Appeals, Lim filed the present petition.
Lim argues that the appellate court ignored the fact that after paying her agent and remitting to
Saban the amounts due for taxes and transfer of title, she paid the balance of the purchase price
directly to Ybañez.17
She further contends that she is not liable for Ybañez’s debt to Saban under the Agency
Agreement as she is not privy thereto, and that Saban has no one but himself to blame for
consenting to the dismissal of the case against Ybañez and not moving for his substitution by his
heirs.18
Lim also assails the findings of the appellate court that she issued the checks as an
accommodation party for Ybañez and that she connived with the latter to deprive Saban of his
commission.19
Lim prays that should she be found liable to pay Saban the amount of his commission, she should
only be held liable to the extent of one-third (1/3) of the amount, since she had two co-vendees
(the Spouses Lim) who should share such liability.20
In his Comment, Saban maintains that Lim agreed to purchase the lot for P600,000.00, which
consisted of the P200,000.00 which would be paid to Ybañez, the P50,000.00 due to her broker,
the P113,257.00 earmarked for taxes and other expenses incidental to the sale and Saban’s
commission as broker for Ybañez. According to Saban, Lim assumed the obligation to pay him his
commission. He insists that Lim and Ybañez connived to unjustly deprive him of his commission
from the negotiation of the sale.21
ISSUES:
The issues for the Court’s resolution are whether Saban is entitled to receive his commission from
the sale; and, assuming that Saban is entitled thereto, whether it is Lim who is liable to pay Saban
his sales commission.
The Court gives due course to the petition, but agrees with the result reached by the Court of
Appeals.
HELD:
The Court affirms the appellate court’s finding that the agency was not revoked since Ybañez
requested that Lim make stop payment orders for the checks payable to Saban only after the
consummation of the sale on March 10, 1994. At that time, Saban had already performed his
obligation as Ybañez’s agent when, through his (Saban’s) efforts, Ybañez executed the Deed of
Absolute Sale of the lot with Lim and the Spouses Lim.
To deprive Saban of his commission subsequent to the sale which was consummated through his
efforts would be a breach of his contract of agency with Ybañez which expressly states that Saban
would be entitled to any excess in the purchase price after deducting the P200,000.00 due to
Ybañez and the transfer taxes and other incidental expenses of the sale.22
In Macondray & Co. v. Sellner,23 the Court recognized the right of a broker to his commission for
finding a suitable buyer for the seller’s property even though the seller himself consummated the
sale with the buyer.24 The Court held that it would be in the height of injustice to permit the
principal to terminate the contract of agency to the prejudice of the broker when he had already
reaped the benefits of the broker’s efforts.
In Infante v. Cunanan, et al.,25 the Court upheld the right of the brokers to their commissions
although the seller revoked their authority to act in his behalf after they had found a buyer for his
properties and negotiated the sale directly with the buyer whom he met through the brokers’
efforts. The Court ruled that the seller’s withdrawal in bad faith of the brokers’ authority cannot
unjustly deprive the brokers of their commissions as the seller’s duly constituted agents.
The pronouncements of the Court in the aforecited cases are applicable to the present case,
especially considering that Saban had completely performed his obligations under his contract of
agency with Ybañez by finding a suitable buyer to preparing the Deed of Absolute Sale between
Ybañez and Lim and her co-vendees. Moreover, the contract of agency very clearly states that
Saban is entitled to the excess of the mark-up of the price of the lot after deducting Ybañez’s
share of P200,000.00 and the taxes and other incidental expenses of the sale.
However, the Court does not agree with the appellate court’s pronouncement that Saban’s
agency was one coupled with an interest. Under Article 1927 of the Civil Code, an agency cannot
be revoked if a bilateral contract depends upon it, or if it is the means of fulfilling an obligation
already contracted, or if a partner is appointed manager of a partnership in the contract of
partnership and his removal from the management is unjustifiable. Stated differently, an agency
is deemed as one coupled with an interest where it is established for the mutual benefit of the
principal and of the agent, or for the interest of the principal and of third persons, and it cannot
be revoked by the principal so long as the interest of the agent or of a third person subsists. In an
agency coupled with an interest, the agent’s interest must be in the subject matter of the power
conferred and not merely an interest in the exercise of the power because it entitles him to
compensation. When an agent’s interest is confined to earning his agreed compensation, the
agency is not one coupled with an interest, since an agent’s interest in obtaining his
compensation as such agent is an ordinary incident of the agency relationship.26
Saban’s entitlement to his commission having been settled, the Court must now determine
whether Lim is the proper party against whom Saban should address his claim.
Saban’s right to receive compensation for negotiating as broker for Ybañez arises from the
Agency Agreement between them. Lim is not a party to the contract. However, the record reveals
that she had knowledge of the fact that Ybañez set the price of the lot at P200,000.00 and that
the P600,000.00—the price agreed upon by her and Saban—was more than the amount set by
Ybañez because it included the amount for payment of taxes and for Saban’s commission as
broker for Ybañez.
According to the trial court, Lim made the following payments for the lot: P113,257.00 for taxes,
P50,000.00 for her broker, and P400.000.00 directly to Ybañez, or a total of Five Hundred Sixty
Three Thousand Two Hundred Fifty Seven Pesos (P563,257.00).27 Lim, on the other hand, claims
that on March 10, 1994, the date of execution of the Deed of Absolute Sale, she paid directly to
Ybañez the amount of One Hundred Thousand Pesos (P100,000.00) only, and gave to Saban
P113,257.00 for payment of taxes and P50,000.00 as his commission,28 and One Hundred Thirty
Thousand Pesos (P130,000.00) on June 28, 1994,29 or a total of Three Hundred Ninety Three
Thousand Two Hundred Fifty Seven Pesos (P393,257.00). Ybañez, for his part, acknowledged that
Lim and her co-vendees paid him P400,000.00 which he said was the full amount for the sale of
the lot.30 It thus appears that he received P100,000.00 on March 10, 1994, acknowledged receipt
(through Saban) of the P113,257.00 earmarked for taxes and P50,000.00 for commission, and
received the balance of P130,000.00 on June 28, 1994. Thus, a total of P230,000.00 went directly
to Ybañez. Apparently, although the amount actually paid by Lim was P393,257.00, Ybañez
rounded off the amount to P400,000.00 and waived the difference.
Lim’s act of issuing the four checks amounting to P236,743.00 in Saban’s favor belies her claim
that she and her co-vendees did not agree to purchase the lot at P600,000.00. If she did not agree
thereto, there would be no reason for her to issue those checks which is the balance of
P600,000.00 less the amounts of P200,000.00 (due to Ybañez), P50,000.00 (commission), and the
P113,257.00 (taxes). The only logical conclusion is that Lim changed her mind about agreeing to
purchase the lot at P600,000.00 after talking to Ybañez and ultimately realizing that Saban’s
commission is even more than what Ybañez received as his share of the purchase price as vendor.
Obviously, this change of mind resulted to the prejudice of Saban whose efforts led to the
completion of the sale between the latter, and Lim and her co-vendees. This the Court cannot
countenance.
The ruling of the Court in Infante v. Cunanan, et al., cited earlier, is enlightening for the facts
therein are similar to the circumstances of the present case. In that case, Consejo Infante asked
Jose Cunanan and Juan Mijares to find a buyer for her two lots and the house built thereon for
Thirty Thousand Pesos (P30,000.00) . She promised to pay them five percent (5%) of the purchase
price plus whatever overprice they may obtain for the property. Cunanan and Mijares offered the
properties to Pio Noche who in turn expressed willingness to purchase the properties. Cunanan
and Mijares thereafter introduced Noche to Infante. However, the latter told Cunanan and
Mijares that she was no longer interested in selling the property and asked them to sign a
document stating that their written authority to act as her agents for the sale of the properties
was already cancelled. Subsequently, Infante sold the properties directly to Noche for Thirty One
Thousand Pesos (P31,000.00). The Court upheld the right of Cunanan and Mijares to their
commission, explaining that—
…[Infante] had changed her mind even if respondent had found a buyer who was willing
to close the deal, is a matter that would not give rise to a legal consequence if [Cunanan
and Mijares] agreed to call off the transaction in deference to the request of [Infante].
But the situation varies if one of the parties takes advantage of the benevolence of the
other and acts in a manner that would promote his own selfish interest. This act is unfair
as would amount to bad faith. This act cannot be sanctioned without according the
party prejudiced the reward which is due him. This is the situation in which [Cunanan
and Mijares] were placed by [Infante]. [Infante] took advantage of the services rendered
by [Cunanan and Mijares], but believing that she could evade payment of their
commission, she made use of a ruse by inducing them to sign the deed of
cancellation….This act of subversion cannot be sanctioned and cannot serve as basis for
[Infante] to escape payment of the commission agreed upon.31
The appellate court therefore had sufficient basis for concluding that Ybañez and Lim connived to Neither is there any indication that Lim issued the checks for the purpose of enabling Ybañez, or
deprive Saban of his commission by dealing with each other directly and reducing the purchase any other person for that matter, to obtain credit or to raise money, thereby totally debunking
price of the lot and leaving nothing to compensate Saban for his efforts. the presence of the third requisite of an accommodation party.

Considering the circumstances surrounding the case, and the undisputed fact that Lim had not WHEREFORE, in view of the foregoing, the petition is DISMISSED.
yet paid the balance of P200,000.00 of the purchase price of P600,000.00, it is just and proper for
her to pay Saban the balance of P200,000.00. SO ORDERED.

Furthermore, since Ybañez received a total of P230,000.00 from Lim, or an excess of P30,000.00
from his asking price of P200,000.00, Saban may claim such excess from Ybañez’s estate, if that
remedy is still available,32 in view of the trial court’s dismissal of Saban’s complaint as against
Ybañez, with Saban’s express consent, due to the latter’s demise on November 11, 1994.33

The appellate court however erred in ruling that Lim is liable on the checks because she issued
them as an accommodation party. Section 29 of the Negotiable Instruments Law defines an
accommodation party as a person "who has signed the negotiable instrument as maker, drawer,
acceptor or indorser, without receiving value therefor, for the purpose of lending his name to
some other person." The accommodation party is liable on the instrument to a holder for value
even though the holder at the time of taking the instrument knew him or her to be merely an
accommodation party. The accommodation party may of course seek reimbursement from the
party accommodated.34

As gleaned from the text of Section 29 of the Negotiable Instruments Law, the accommodation
party is one who meets all these three requisites, viz: (1) he signed the instrument as maker,
drawer, acceptor, or indorser; (2) he did not receive value for the signature; and (3) he signed for
the purpose of lending his name to some other person. In the case at bar, while Lim signed as
drawer of the checks she did not satisfy the two other remaining requisites.

The absence of the second requisite becomes pellucid when it is noted at the outset that Lim
issued the checks in question on account of her transaction, along with the other purchasers,
with Ybañez which was a sale and, therefore, a reciprocal contract. Specifically, she drew the
checks in payment of the balance of the purchase price of the lot subject of the transaction. And
she had to pay the agreed purchase price in consideration for the sale of the lot to her and her
co-vendees. In other words, the amounts covered by the checks form part of the cause or
consideration from Ybañez’s end, as vendor, while the lot represented the cause or consideration
on the side of Lim, as vendee.35 Ergo, Lim received value for her signature on the checks.