G.R. No. L-39822 January 31, 1978
ANTONIO E. PRATS, doing business under the name of Philippine Real Estate Exchange, petitioner, vs. HON. COURT OF APPEALS, ALFONSO DORONILA and PHILIPPINE NATIONAL BANK, respondents.

FACTS

Petitioner Antonio Prats, a real estate broker, was granted an exclusive written option and authority by respondent Alfonso Doronila on February 14, 1968, to negotiate the sale of Doronila’s 300-hectare property. The agreement stipulated a basic price of P3.00 per square meter, with Prats entitled to a 10% commission based on P2.10 per square meter, plus any excess over the P3.00 price. Prats actively negotiated with the Social Security System (SSS), which had previously dealt directly with Doronila. Prats facilitated meetings and communications, culminating in the SSS Commission passing a resolution on July 18, 1968, approving the purchase at P3.25 per square meter.
However, Doronila’s exclusive authority to Prats had expired on May 14, 1968, and was only verbally extended until the end of May 1968. The SSS resolution of approval and the subsequent final deed of sale were executed after this period. Doronila refused to pay Prats any commission, leading Prats to file a complaint for sum of money and damages. The trial court ruled in favor of Prats, but the Court of Appeals reversed, dismissing the complaint and awarding attorney’s fees to Doronila.

ISSUE

Whether petitioner Prats is entitled to a broker’s commission for the sale of the property to the SSS, given that the final consummation of the sale occurred after the expiration of his exclusive authority.

RULING

No, Prats is not entitled to the stipulated commission as a matter of strict legal right. The Supreme Court affirmed the Court of Appeals’ decision that the cause of action for the commission had not accrued because the sale was finalized after the expiration of the exclusive authority. The contract was one of agency, and Prats’ authority had lapsed. The SSS’s approval in principle via a resolution did not constitute a perfected sale; a perfected contract of sale between Doronila and the SSS was only reached later, which was beyond the scope of Prats’ authority.
However, the Supreme Court modified the decision based on equity. The Court found that Prats’ efforts were instrumental in bringing the parties together again and ultimately consummating the transaction at a price higher than the basic price in the authority. While the sale was finalized after his authority expired, justice demanded he be compensated for his material assistance. Consequently, the Court ordered Doronila to pay Prats the sum of One Hundred Thousand Pesos (P100,000.00) by way of equitable compensation, and set aside the award of attorney’s fees against Prats. The legal logic hinges on distinguishing a broker’s enforceable contractual right to a commission from an equitable claim for reasonable compensation for beneficial services rendered that led to a sale, even if the formal conditions of the agency were not fully met.