Lim v. Saban

 Facts: 

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.

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). 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. 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. 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. 

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. 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 in favor of Saban for the remaining P236,743.00.

Issues: 

(1) Whether or not Saban is entitled to receive his commission from the sale

(2) assuming that Saban is entitled thereto, whether or not it is Lim who is liable to pay Saban his sales commission.

Held: 

On the first issue, the Supreme Court ruled in the affirmative.  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. 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.

However, the agency cannot be treated as one coupled with an interest. 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.

            Ruling on the second issue, the Supreme Court stated that 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.

            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. Considering the circumstances surrounding the case, and the undisputed fact that Lim had not 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. 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, 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.