G.R. No. L-30573 October 29, 1971
VICENTE M. DOMINGO, represented by his heirs, vs. GREGORIO M. DOMINGO, respondent-appellee, TEOFILO P. PURISIMA, intervenor-respondent.

FACTS

Petitioner Vicente M. Domingo granted respondent Gregorio M. Domingo, a real estate broker, an exclusive 30-day agency to sell a lot for P2.00 per square meter, with a 5% commission. The contract stipulated that the commission was also payable if Vicente sold the property within three months after the agency’s termination to a purchaser introduced by Gregorio during the agency period. Gregorio engaged intervenor Teofilo P. Purisima as sub-agent, promising half the commission. Purisima introduced prospective buyer Oscar de Leon. After negotiations, Vicente agreed to sell to Oscar for P109,000.00, with Oscar giving a P1,000.00 earnest money check to Vicente. Oscar also secretly gave Gregorio a P1,000.00 “propina” (gift) for persuading Vicente to lower the price, which Gregorio did not disclose to Vicente.
The sale was not consummated by the agreed date. Vicente later discovered Gregorio still had a copy of the agency contract and tore up the original Gregorio presented. Subsequently, Vicente executed a deed of sale for the property on September 17, 1956, not to Oscar de Leon, but to his wife, Amparo Diaz. The purchase price was partly paid through the conveyance of the spouses’ house and lot. Gregorio and Purisima demanded their commission, which Vicente refused, arguing the sale was to a different buyer.

ISSUE

Whether Gregorio M. Domingo is entitled to a broker’s commission from Vicente M. Domingo for the sale of the property to Amparo Diaz, the wife of the prospective buyer he introduced.

RULING

No, Gregorio Domingo is not entitled to the commission and must forfeit the amounts he received. The Supreme Court reversed the Court of Appeals. The legal logic rests on fundamental principles of agency. First, the sale to Amparo Diaz was in legal effect a sale to Oscar de Leon. As husband and wife with a community of interests, and with the conjugal property used as down payment, Oscar was the real buyer. Gregorio was the efficient procuring cause of the sale, which fell within the protected three-month period following the exclusive agency.
However, Gregorio breached his fiduciary duty to his principal, Vicente, by accepting a secret “propina” from the buyer, Oscar de Leon. An agent owes utmost loyalty and must communicate all information affecting the transaction to the principal. By secretly accepting a gift from the buyer to influence the price against his principal’s interest, Gregorio committed a serious violation of trust. This breach of good faith forfeits his right to any commission from the principal. Consequently, he must return the P300.00 advance and the P1,000.00 “propina” received. The sub-agent, Purisima, can only claim his share from Gregorio, based on their internal agreement, not from Vicente. For the unfounded suit causing mental anguish, the Court awarded moral damages and attorney’s fees to Vicente Domingo’s heirs.