G.R. No. 27404 , December 24, 1927
M. SINGH, plaintiff-appellee, vs. TAN CHAY, defendant-appellant.

FACTS

M. Singh, a real estate broker, entered into two separate contracts with Tan Chay, a merchant seeking to buy coconut lands. Under the first contract (Exhibit A), Tan Chay agreed to buy the estate of Eduardo Campos through Singh’s mediation for P160,000. When Singh secured an offer from the administrator and required Tan Chay to deposit funds to proceed, Tan Chay refused, claiming Singh had misrepresented the number of coconut trees on the property. The deal fell through, and the property was sold to another.

Subsequently, the parties executed a second contract (Exhibit B), wherein Tan Chay agreed to buy three parcels of land from Bernardo Marquez through Singh’s mediation, with the price based on the number of coconut trees at P4.50 per tree. However, Tan Chay then secretly negotiated directly with Marquez and purchased the mortgage credit on the property, ultimately contracting to buy the lands himself for P175,000, thereby cutting Singh out of the transaction.

Singh sued for damages for breach of both contracts. The trial court ruled in favor of Singh, awarding P25,000 for the first breach and P50,000 for the second, totaling P75,000. Tan Chay appealed.

ISSUE

1. Whether Tan Chay is liable for damages for breaching the first contract (Exhibit A).
2. Whether Tan Chay is liable for damages for breaching the second contract (Exhibit B), and if so, whether the award of damages was based on sufficient evidence.

RULING

1. On the First Cause of Action (Exhibit A): The Supreme Court REVERSED the trial court’s decision and ABSOLVED Tan Chay from liability. The Court found that the contract did not obligate Tan Chay to advance any money as a deposit or indication of good faith prior to the consummation of the sale. His refusal to make the deposit requested by the seller’s administrator did not constitute a breach of his contractual obligation to Singh.

2. On the Second Cause of Action (Exhibit B): The Supreme Court SET ASIDE the judgment and REMANDED the case to the trial court for a new trial. The Court held that Tan Chay was liable in principle for damages because he deliberately circumvented the broker Singh to avoid paying a commission, which constituted a breach of the mediation contract. However, the awarded damages of P50,000 were computed based on the estimated number of coconut trees (50,000), which was supported only by Singh’s hearsay testimony about what Marquez told him. While this testimony was not objected to, the Court, exercising its discretion to prevent a possible miscarriage of justice and noting the unskillful representation of the defendant below, ordered a new trial to properly ascertain the actual number of trees and compute the accurate damages.

DISPOSITIVE PORTION:
The judgment on the first cause of action is reversed and the defendant is absolved. The judgment on the second cause of action is set aside and the case is remanded to the court of origin for a new trial, with permission for either party to amend pleadings. No costs.

SEPARATE OPINION:
Justice Malcolm dissented in part, stating he would reverse on the first cause, affirm on the second cause, and deny the petition for a new trial.