AGENCY HERNANDEZ

Prats v. CA (1978)
Fernandez, J.

Under what topic: IX. What are the obligations and liabilities of principals to agents?

Petitioner: Antonio E. Prats, doing business under the name of Philippine Real Estate Exchange

Respondent: Courts of Appeals, Alfonso Doronila, and Philippine National Bank

Synopsis: This is a petition for certiorari to review the decision of CA, dismissing Prats’ case for recovery of sum
of money. Doronila was ordered in the RTC to pay Prats P1.380M based on an alleged exclusive option and
authority to negotiate the sale of Doronila’s property. CA reversed. SC said that there was no evidence that shows
that Prats was the efficient procuring cause in bringing about the sale, hence he is not entitled to the commission
which was awarded by the RTC. However, he was awarded an amount in the interest of equity.

Doctrine: The principal has the obligation to pay commissions to his agent, subject to the limitations of the
stipulations in the agency. Based on equity, however, in this case, it is but proper to give compensation to the
efforts of the agent which helped further the principal’s interest.
Facts:
 This is a suit for the recovery of a sum of
money and damages instituted by Prats
against Doronila and PNB.
 July 1967: Doronila was the registered owner
of a 300-hectare land in Rizal. He offered to sell
such land to the Social Security System (SSS)
for PHP 4.00/sq. m. SSS made a counter-offer
of PHP 3.25/sq. m.
 February 14, 1968: Doronila then gave Prats
an exclusive option and authority in writing to
negotiate the sale of the property under the
following terms:
a. Prats is to sell the land at a basic price of
PHP 3.00/sq. m.
b. A 10% commission shall be paid to Prats
based on PHP 2.10/sq. m. or at any price
finally agreed upon and if the property be
sold over and above PHP 3.00/sq. m., the
excess shall be paid to Prats in addition to
his 10% commission.
c. Such exclusive option and authority is
good for (60) days from the date of
conformity; provided that should
negotiations with the buyer have been
started, said period is automatically
extended until said negotiations is
terminated, but not more than (15)
days.
d. The written offers must be made by the
prospective buyers and if no written
offer is made to Doronila until the last
day of this authorization, this option
and authority shall expire and become
null and void.
e. Prospective buyers and all parties
interested shall be referred to Prats.
 As a result of this exclusive option and
authority to negotiate, Doronila withdrew his
previous offer to sell to SSS and asked for the
return of all papers concerning his offered
property. These papers were given to Prats as
Doronila’s authorized real estate broker.
 February 26, 1968: Doronila was invited by
SSS to have a meeting but the former declined
and asked that SSS communicate directly with
Prats. Prats wrote SSS signifying his
intentions to sit down and meet with the
latter.
 April 18, 1968: Doronila extended Prat’s
exclusive option and authority up to May 18.
 May 6, 1968: Prats made a formal written
offer to the SSS at the price of PHP6.00/sq. m.
SSS ignored said offer.
 May 18, 1968: Prats wrote to Doronila
emphasizing that they still had (15) days

within which to complete the negotiations as
per agreement or until June 2.
 May 30, 1968: Prats wrote to Doronila again
advising him that the SSS agreed to purchase
the land, though no formal offer was made by
the latter.
 June 6, 1968: Doronila wrote to Prats
informing him that he has not received any
written offer from the SSS during the 60 days
of the exclusive option and authority which
expired on April 14, nor during the period of
extension which expired on May 18, nor
during the 15-day grace period. As per their
agreement, the option expired and became
null and void.
 June 19, 1968: Doronila wrote to SSS
renewing his offer to sell the land at PHP
4.00/sq. m. SSS replied and made a counter-
offer of PHP 3.25/sq. m., for a total price of
P9,750,000.00.
 July 30, 1968: Doronila accepted the counter-
offer and executed the deed of absolute sale.
 September 17, 1968: Prats presented his
statement of account to Doronila for the
payment of his professional services as real
estate broker in the amount of P1,380,000.00.
Doronila refused to pay. Hence, a suit was
filed.
 RTC ruled in favor of Prats, ordering Doronila
to pay the commission plus damages.
 CA reversed. As per the agreement, a written
offer by the prospective buyer was required
and if no such written offer is made until the
last day of the authorization, the option shall
expire.
Issue/s - Holding:
WON CA erred in concluding that Prats was not the
efficient procuring cause in bringing about the sale of
Doronila’s land to SSS and as such should not be
entitled to his commission. NO. CA was correct.
AGENCY HERNANDEZ
Ratio:
 It is clear from the stipulation of facts and
evidence on record that the offer of Doronila
to sell the land to SSS was formally accepted by
SSS only on June 20, 1968 after the exclusive
option had already expired. Prats was not the
efficient procuring case in bringing about the
sale proceeding from the fact of expiration of
his exclusive option.
o This is manifested by the fact that the
SSS officials specifically requested
Prats not to be present at the meeting
with Doronila on May 29 because the
SSS officials never wanted the
mediation or intervention of Prats. The
conclusion is that this May 29 meeting
was done independently and not by
virtue of Prat’s wish or efforts to hold
such meeting.
o The fact that Prats also made offers of
PHP 4.50/sq. m. and PHP 6.00/sq. m.
belies the claim that he arranged the
May 29 meeting as SSS was only
willing to buy it at PHP 3.25/sq. m.
Prats’ offers to SSS received no
attention.
 However, the Court took note that Prats had
taken steps to bring back together Doronila
and SSS:
o Prats wrote several letters to SSS
offering the land and inviting them to
discuss the offer. He even made a
former offer of PHP 6.00/sq. m., albeit
it was ignored.
o Prats had several dinner and lunch
meetings with Doronila and his
nephew Atty. Asencio. The latter
corroborated this fact.
 As such, the Court granted in equity a sum
of PHP 100,000.00 by way of compensation
for Prats’ efforts and assistance in the
transaction, which however was finalized
and consummated after the expiration of
his exclusive option.
Dispositive:
WHEREFORE, the decision appealed from is hereby
affirmed, with the modification that private
respondent Alfonso Doronila in equity is ordered to

pay petitioner or his heirs the amount of One Hundred
Thousand Pesos (P100,000.00) and that the portion of
the said decision ordering Prats to pay respondent
Doronila attorneys' fees in the sum of P10,000.00 is
set aside.
The lifting of the injunction issued by the lower court
on the PHP 2,000,000.00 cash deposit of respondent
AGENCY HERNANDEZ
Doronila as ordered by respondent court is hereby
with the exception of the sum of One Hundred
Thousand Pesos (P100,000.00) which is ordered
segregated therefrom to satisfy the award herein
given to petitioner, the lifting of said injunction, as
herein ordered, is immediately executory upon
promulgation hereof.