G.R. No. L-25463 April 4, 1975
EMERITO M. RAMOS, petitioner, vs. THE HONORABLE COURT OF APPEALS (Special First Division) and CESARIO P. CALANOC, respondents.

FACTS

Petitioner Emerito M. Ramos, using the firm name Farm Implement & Machinery Co. (FIMCO), entered into a barter transaction involving rice and the importation of goods from Japan. He engaged the services of respondent Cesario P. Calanoc to procure purchasers for these imported goods. The agreement, as found by the courts, was that Calanoc’s compensation would be the excess over a required 23% mark-up price on the invoice value of the importations sold to buyers. Calanoc successfully introduced Ramos to Mrs. Salustiana Dee of Wellington & Co., leading to a contract. Calanoc claimed Mrs. Dee agreed to a 25% mark-up, entitling him to a 2% commission (the excess over 23%). However, the final contract between Ramos and Wellington & Co. reflected only a 23.5% mark-up. Ramos paid Calanoc only a 0.5% commission, corresponding to the actual excess received.
The Court of First Instance ruled in favor of Calanoc, ordering Ramos to pay the 2% commission (P53,320.00) on the Wellington & Co. transaction, plus attorney’s fees. The Court of Appeals affirmed this decision, holding Ramos liable for the full 2% based on the finding that Calanoc had secured a buyer willing to pay the 25% premium.

ISSUE

Whether the Court of Appeals erred in holding Ramos liable for a 2% commission based on an alleged 25% mark-up agreement, instead of limiting liability to the 0.5% commission corresponding to the 23.5% mark-up actually realized in the final contract.

RULING

The Supreme Court modified the decision of the Court of Appeals. The legal logic centers on the nature of a broker’s compensation and the principle that a broker is entitled to his commission only upon the successful execution of a contract under the terms procured. The Court found that the agreement between Ramos and Calanoc was for the latter to receive the excess over a 23% mark-up. Crucially, there was no independent, enforceable proof that Mrs. Dee had firmly committed to a 25% mark-up in a contract binding on Ramos. The final, consummated contract was for only 23.5%. Since Ramos gained nothing from reducing the mark-up and there was no evidence of bad faith, fraud, or fault on his part in accepting the lower rate, Calanoc’s commission must be based on the actual proceeds of the completed sale. A broker’s right to commission is generally dependent on the terms of the executed contract, unless the failure to obtain the higher price is due to the principal’s fault. Here, no such fault was established. Therefore, Calanoc was entitled only to 0.5% (P13,330.00), representing the actual excess received by Ramos. The award for attorney’s fees was also reduced to P6,000.00 as a reasonable amount under the circumstances. The decision was affirmed in all other respects.