Lim v. Saban

G.R. No. 163720, 16 December 2004

FACTS:

The late Eduardo Ybañez (Ybañez), the owner of a 1,000-square meter lot in Cebu City 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.

Through Saban’s efforts, Ybañez and his wife were able to sell the lot to the petitioner Genevieve Lim (Lim) and the Spouses LiM. After the sale, Lim remitted to Saban the amounts for payment of taxes due on the transaction as well as broker’s commission. Lim also issued in the name of Saban four postdated checks. Subsequently, 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.

Saban averred that Ybañez and Lim connived to deprive him of his sales commission by withholding payment of the first three checks. He also claimed that Lim failed to make good the fourth check which was dishonored because the account against which it was drawn was closed. RTC rendered its Decision dismissing Saban’s complaint, declaring the four (4) checks issued by Lim as stale and non-negotiable, and absolving Lim from any liability towards Saban.

Appellate court promulgated its Decision reversing the trial court’s ruling. It held that Saban was entitled to his commission amounting to P236,743.00. The Court of Appeals ruled that Ybañez’s revocation of his contract of agency with Saban was invalid because the agency was coupled with an interest and Ybañez effected the revocation in bad faith in order to deprive Saban of his commission and to keep the profits for himself.

It declared that Lim is liable to pay Saban the amount of the purchase price of the lot corresponding to his commission because she issued the four checks knowing that the total amount thereof corresponded to Saban’s commission for the sale, as the agent of Ybañez. She further contends that she is not liable for Ybañez’s debt to Saban under the Agency Agreement as she is not privy thereto. According to Saban, Lim assumed the obligation to pay him his commission. He insists that Lim and Ybañez connived to unjustly deprive him of his commission from the negotiation of the sale, Thus, petition.

ISSUE:

Whether the agency between Saban and Yabnez was revoked, thus not entitled to sales commission.

RULING:

The Court affirms the appellate court’s finding that 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.

The Supreme Court held that 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. Moreover, the Court has already decided in earlier cases that would be in the height of injustice to permit the principal to terminate the contract of agency to the prejudice of the broker when he had already reaped the benefits of the broker’s efforts.

*Case digest by April Rose B. Tuanda, JD – 4, Andres Bonifacio College, SY 2019 – 2020

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