Bayanin v. Philippine National Bank, G.R. Nos. 240355 & 240375, 27 February 2023
Facts:
Minerva E. Bayanin and Eden A. Cruz, licensed real estate brokers accredited by the Philippine National Bank (PNB), were entitled to a 3% commission on property sales exceeding ₱10 million. They facilitated negotiations between PNB and Avida Land Corporation for the sale of two parcels of land, leading to a ₱40 million deposit from Avida. However, the transaction stalled, prompting Avida to withdraw. Subsequently, PNB and Avida engaged in backdoor negotiations without informing Bayanin and Cruz, eventually reaching a joint venture agreement to develop the properties into Avida Towers Centera. Upon discovering this, Bayanin and Cruz demanded their commission but were denied, leading them to file a case for specific performance and damages against both PNB and Avida.
The Regional Trial Court ruled in favor of the brokers, stating that PNB was contractually obligated to pay the commission and that it acted in bad faith by withholding information. The court ordered PNB to pay ₱41,981,370.00 in commissions, along with moral damages, exemplary damages, and attorney’s fees. The Court of Appeals affirmed this decision, stating that Bayanin and Cruz were instrumental in the negotiations and entitled to their commission, regardless of the MOA’s classification as a joint venture.
Issue:
Whether the Philippine National Bank (PNB) is liable to Minerva E. Bayanin and Eden A. Cruz for their broker’s commission and damages
Ruling:
Yes, PNB is liable and the Court affirms that Bayanin and Cruz, as licensed real estate brokers, are entitled to their commissions. It defines a broker’s role as an intermediary in negotiations and explains that they must be the “procuring cause” of a sale to earn their commission.
In Medrano v. Court Appeals, the Court delineated the role of brokers in contract negotiations and the instances when they are entitled to receive their respective commissions:
“A broker is generally defined 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; he is strictly a
middleman and for some purposes the agent of both parties. A broker is one
whose occupation is to bring parties together, in matters of trade, commerce
or navigation. x x x”
“Procuring cause” is meant to be the proximate cause. 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,
result in accomplishment of prime objective of the employment of the broker producing a purchaser ready, willing and able to buy real estate on the
owner’s terms. A broker will be regarded as the “procuring cause” of a sale,
so as to be entitled to commission, if his efforts are the foundation on which
the negotiations resulting in a sale are begun. 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.”
The Court agrees with the RTC and CA’s conclusion that PNB and Avida had a perfected contract of sale disguised as a joint venture in the MOA. Essential elements of a sale, such as mutual consent, a determinate subject matter, and a specific price, were present. PNB’s argument that the sale lacked a definite price is contradicted by official tax documents indicating a selling price of ₱1,399,379,000.00. Furthermore, the MOA’s provision of ownership and control to Avida indicates it was not a genuine joint venture.
Furthermore, the MOA’s provision granting Avida ownership and control over the properties indicates that the arrangement was not a genuine joint venture, as such a relationship typically requires mutual control. Thus, the Court underscores the importance of recognizing the true nature of contractual agreements, ensuring that brokers like Bayanin and Cruz are rightfully compensated for their roles in the transactions they facilitate.
Doctrine:
Licensed real estate brokers are entitled to commissions if they are the procuring cause of a sale, clarify that the true nature of contractual agreements is determined by their substance rather than their label, assert that the price in a contract of sale must be reasonably certain, emphasizes that ownership and control provisions can indicate the nature of the transaction.
You can read the full text of the case at: https://sc.judiciary.gov.ph/wp-content/uploads/2023/08/240355.pdf
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