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Real Estate Broker Must Be The Procuring Cause To Receive Commission

This case is about a broker’s claim for commission for having referred a possible buyer who later served as an intermediary to the eventual sale of the property to a third party.

Oriental Petroleum owned two condominium units at Corinthian Plaza in Makati City. It gave Tuscan Realty a “non-exclusive authority to offer” these units for sale. Tuscan Realty submitted an initial list of its prospective client-buyers that included Gateway Holdings Corporation (Gateway) and subsequently updated this list. Oriental Petroleum advised Tuscan Realty that it would undertake direct negotiation with a certain Gene de los Reyes of Gateway for the sale of the units. This resulted in a contract to sell between Oriental Petroleum and Gateway.

Meantime, Gateway apparently turned around nearly two months later and assigned its rights as buyer of the units to Alonzo Ancheta in whose favor Oriental Petroleum executed a deed of absolute sale for the price of P69,595,400.00. Prompted by this development, Tuscan Realty demanded payment of its 3% broker’s commission of P2,087,862.00 by Oriental Petroleum. The latter refused to pay, however, claiming that Tuscan Realty did nothing to close its deal with Gateway and Ancheta.

Tuscan Realty, Inc. filed a complaint for sum of money with application for preliminary attachment against petitioner Oriental Petroleum and Minerals Corporation before the Makati RTC. The RTC granted Tuscan Realty’s application for preliminary attachment but dismissed the complaint on the ground of Tuscan Realty’s failure to substantiate its allegation that it was responsible for closing the sale of the subject condominium units. Tuscan Realty appealed the RTC decision to the CA. The CA granted the appeal and set aside the RTC decision. It ordered Oriental Petroleum to pay Tuscan Realty its broker’s commission of P2,087,862.00, which is 3% of the final purchase price, plus 6% interest from the finality of its decision until actual payment. Hence, the present petition.

 

ISSUE:
Whether or not Tuscan Realty is entitled to a broker’s commission for the sale of Oriental Petroleum’s condominium units to Ancheta.

 

RULING:
Yes. Tuscan Realty is entitled to a broker’s commission. The term “procuring cause” refers to a cause which starts a series of events and results, without break in their continuity, in the accomplishment of a broker’s prime objective of producing a purchaser who is ready, willing, and able to buy on the owner’s terms. To be regarded as the procuring cause of a sale, a broker’s efforts must have been the foundation of the negotiations which subsequently resulted in a sale.

Here, it was Tuscan Realty that introduced Gateway to Oriental Petroleum as an interested buyer of its condominium units. The evidence shows that Tuscan Realty submitted an initial list of prospective buyers with contact details which was subsequently updated with Gateway always on top of the lists. Clearly then, it was on account of Tuscan Realty’s effort that Oriental Petroleum got connected to Gateway, the prospective buyer, resulting in the latter two entering into a contract to sell involving the two condominium units. Although Gateway turned around and sold the condominium units to Ancheta, the fact is that such ultimate sale could not have happened without Gateway’s indispensable intervention as intermediate buyer. Applying the principle of procuring cause, therefore, Tuscan Realty should be given its broker’s commission.

The contract to sell that Oriental Petroleum concluded with Gateway was valid and binding, which precluded Oriental Petroleum from peddling the properties to others. Indeed, Oriental Petroleum executed a deed of absolute sale in Ancheta’s favor by virtue of Gateway’s assignment to him of its rights under the contract to sell. Consequently, it cannot be said that Oriental Petroleum found a direct buyer in Ancheta without the intermediate contract to sell in favor of Gateway, Tuscan Realty’s proposed buyer.

Oriental Petroleum further points out that Tuscan Realty took no part in its negotiation with Gateway. That may be the case but the reason why Tuscan Realty refrained from doing so was because of Oriental Petroleum’s advice that it would henceforth directly negotiate the sale with Gateway. Besides,

Assuming that the Oriental Petroleum’s advice that it would henceforth directly negotiate the sale with Gateway amounted to a revocation of Tuscan Realty’s authority to sell, the Court has always recognized the broker’s right to his commission, although the owner revoked his authority and directly negotiated with the buyer whom he met through the broker’s efforts. It would be unfair not to give the broker the reward he had earned for helping the owner find a buyer who would pay the price.

G.R. No. 195481, July 10, 2013<
ORIENTAL PETROLEUM AND MINERALS CORPORATION, petitioner, vs. TUSCAN REALTY, INC., respondent.
ABAD, J.:

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