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Broker should look out for principal’s best interests

Persida Acosta

Dear PAO,

I am an OFW (overseas Filipino worker) working in Australia, and engaged the services of Pamela (a real-estate broker) to sell my 475 square meter residential lot in the province of Zambales. For this purpose, I executed a Special Power of Attorney empowering Pamela to sell the property in my name, place and stead and to also receive the proceeds thereof while I was in Sydney. Pamela and I agreed that she will receive a 5 percent commission from the sale of the property regardless of the actual selling price. Through Pamela’s efforts, she was able to seal a deal with a buyer of the residential lot for P3,000,000.00 and so I agreed to the sale of the property. Little did I know that Pamela cracked a deal with the buyer where she will get P300,000.00 from the buyer on top of the 5 percent commission I promised. I felt cheated by this scheme and thought that it was unfair since the buyer all along was willing to pay P3,300,000.00 for my property. Can I claim the P300,000.00 unreported commission?


Dear Neal,

You may claim the three-hundred-thousand pesos (P300,000.00) that Pamela received as a commission from the buyer. It should be emphasized that based on your narration of facts, Pamela is your duly appointed agent and should be looking out for your best interests. In fact, Article 1891 of the New Civil Code on the law on agency provides that an agent must deliver to the principal all that he or she receives by virtue of such agency, to wit:

“Art. 1891. Every agent is bound to render an account of his transactions and to deliver to the principal whatever he may have received by virtue of the agency, even though it may not be owing to the principal.” [Emphasis supplied.]

In your case, the commission worth three-hundred-thousand pesos (P300,000.00), which Pamela received from the buyer was in connection with the sale of your residential property at the price of three million pesos (P3,000,000.00 ) and thus, pursuant to your agency agreement. Regrettably, the acts of your agent, Pamela, become questionable considering that she also stands to benefit without your consent in selling at that price.

More important, Pamela also loses her right to collect her five percent (5 percent) commission from you, because of the breach of trust and loyalty when she received the commission worth three-hundred thousand pesos (P300,000.00) from the buyer whom you do not not know. Significantly, in the case of Heirs of Vicente M. Domingo, et al., vs. Gregorio Domingo, et al. (G.R. No. L-30573, 29 October 1971), penned by former Chief Justice Felix Makasiar, the Supreme Court held that loyalty to the principal is breached by an agent who receives personal benefit from the vendee and forfeits the right to collect the commission from the principal, thus:

“Hence, an agent who takes a secret profit in the nature of a bonus, gratuity or personal benefit from the vendee, without revealing the same to his principal, the vendor, is guilty of a breach of his loyalty to the principal and forfeits his right to collect the commission from his principal, even if the principal does not suffer any injury by reason of such breach of fidelity, or that he obtained better results or that the agency is a gratuitous one, or that usage or custom allows it; because the rule is to prevent the possibility of any wrong, not to remedy or repair an actual damage. By taking such profit or bonus or gift or propina from the vendee, the agent thereby assumes a position wholly inconsistent with that of being an agent for his principal, who has a right to treat him, insofar as his commission is concerned, as if no agency had existed. The fact that the principal may have been benefited from the valuable services of the said agent does not exculpate the agent who has only himself to blame for such a result by reason of his treachery or perfidy.

x x x

As a necessary consequence of such breach of trust, defendant-appellee Gregorio Domingo must forfeit his right to the commission and must return the part of the commission he received from his principal.” [Emphasis supplied.]

We find it necessary to mention that this opinion is solely based on the facts you have narrated and our appreciation of the same. Thus, the opinion may vary when the facts are changed or further elaborated. We hope that we were able to enlighten you on the matter.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net.

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