FIRST DIVISION

[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.

SYNOPSIS
Private respondent offered to sell his 300-hectare land to the Social Security
System at P4.00 per square meter. He received and accepted a counter-offer of P3.25
per square meter. But since the System did not take de nite action on the transaction,
private respondent granted petitioner an exclusive 60-day option and authority to sell
the property on condition that if no written offer was made to private respondent until
the last day of the authorization, the authority shall expire and become null and avoid.
The option should have expired on April 18, 1968, but this was extended by private
respondent to May 18, 1968.
During the period of his authorization, petitioner diligently took steps to bring
back together private respondent and the Social Security System. On March 16, 1968,
he wrote the System inviting the chairman to discuss the o cer of the sale of the
property. On May 16, 1968, he made a formal written offer to sell the property at P6.00
per square meter. Thereafter, respondent received a telegram dated May 17, 1968 from
the System informing him that it was considering the purchase of his property.
However, since respondent did not receive a written offer for the purchase of the
property during petitioner's period of authorization (except a latter dated May 18, 1968
coming from petitioner himself on behalf of an undisclosed buyer who was willing to
buy at P4.50 per square meter), respondent informed petitioner in a lot or that pursuant
to their agreement the latter's authority was deemed terminated.
Thereafter, on June 19, 1968, respondent renewed his offer to sell his 300-
hectare land to the System. The transaction was nalized on July 30, 1968, with the
System buying at its original counter offer of P3.25 per square meter.
Petitioner presented his statement of account to respondent for professional
services as real estate broker in the amount of P1,380,000. Respondent refused to pay.
Hence, petitioner sued respondent to recover the sum plus damages. The trial court
found for the petitioner, but on appeal, the Court of Appeals reversed the decision on
factual ndings that petitioner was not the e cient procuring in bringing about the sale
(prescinding from the fact of expiration of his exclusive authority). Hence, this petition.
The Supreme Court found no basis in law to reverse the factual ndings of the
Appellate Court and to grant relief to petitioner. However, in equity, noting that
petitioner had diligently taken steps to bring back together respondent and the Social
Security System, the Supreme Court a rmed the decision appealed from, but ordered
respondent to pay petitioner the amount of P100,000, and set aside that portion of the
decision ordering petitioner to pay respondent attorney's fees.

SYLLABUS

1. APPEAL; FACTUAL FINDINGS OF THE COURT OF APPEALS, CONCLUSIVE ON THE SUPREME

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 COURT. — The factual findings of the Court of Appeals are conclusive on the Supreme Court.

2. EQUITY; PRINCIPAL AND AGENT; ALTHOUGH AGENT IS NOT THE EFFICIENT PROCURING CAUSE,
HE MAY BE COMPENSATED FROM EFFORTS EXERTED TO BRING PRINCIPAL AND BUYER TOGETHER. — In an
action by a real estate broker to recover commission from the principal, although the Court of Appeals' factual
ndings provide no basis in law to grant relief to the broker, since said court found that the
broker was not the e cient procuring cause in bringing about the sale, nevertheless,
relief in equity may be granted where it appears that the agent had diligently taken
steps to bring back together the principal and the prospective buyer.
3. CONTRACTS; PARTIES BOUND BY TERMS AND CONDITIONS THEREOF. — Where the contract
between the real estate broker and the principal requires the former to present to the latter a written offer by the
prospective buyer within the period of the broker's authorization, otherwise the broker's authorization shall expire and
become null and void, the failure of the broker to present such written offer within the stipulated period will terminate
the broker's authorization.

DECISION

FERNANDEZ , J : p

This is a petition for certiorari to review the decision of the Court of Appeals in
CA-G.R. No. 45974-R entitled "Antonio E. Prats, doing business under the name of
Philippine Real Estate Exchange, versus Alfonso Doronila and the Philippine National
Bank", the dispositive part of which reads:
"In view of all the foregoing, it is our considered opinion and hold that the
decision of the lower court he, as it is hereby reversed, and the complaint,
dismissed. On appellant's counterclaim, judgment is hereby rendered directing
appellee to pay attorney's fees in the sum of P10,000 to appellant, no moral
damages as therein claimed being awarded for lack of evidence to justify the
same. The injunction issued by the lower court on the P2,000,000.00 cash deposit
of the appellant is hereby lifted. No special pronouncement as to costs.

SO ORDERED." 1

On September 23, 1958 Antonio E. Prats, doing business under the name of
"Philippine Real Estate Exchange" instituted against Alfonso Doronila and Philippine
National Bank Civil Case No. Q-12412 in the Court of First Instance of Rizal at Quezon
City to recover a sum of money and damages.
The complaint stated that defendant Alfonso Doronila was the registered owner
of 300 hectares of land situated in Montalban, Rizal, covered by Transfer Certi cates of
Title Nos. 77011, 77013, 216747 and 216750; that defendant Doronila had for
sometime tried to sell his aforesaid 300 hectares of land and for that purpose had
designated several agents; that at one time, he had offered the same property to the
Social Security System but failed to consummate any sale; that his offer to sell to the
Social Security System having failed, defendant Doronila on February 14, 1968 gave the
plaintiff an exclusive option and authority in writing to negotiate the sale of his
aforementioned property, which exclusive option and authority the plaintiff caused to
be published in the Manila Times on February 22, 1968; that it was the agreement
between plaintiff and defendant Doronila that the basic price shall be P3.00 per square
meter; that plaintiff shall be entitled to a commission of 10% based on P2.10 per
square meter or at any price nally agreed upon and if the property be sold over and
above P300 per square meter, the excess shall be credited and paid to the plaintiff in
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 addition to his 10% commission based on P2.10 per square meter; that as a result of
the grant of the exclusive option and authority to negotiate the sale of his 300 hectares
of land situated in Montalban, Rizal, in favor of the plaintiff, the defendant Doronila, on
February 20, 1968, wrote a letter to the Social Security System withdrawing his
previous offer to sell the same land and requesting the return to him of all papers
concerning his offered property; that the Social Security System, complying with said
request of defendant Doronila, returned all the papers thereon and defendant Doronila,
in turn, gave them to the plaintiff as his duly authorized real estate broker; that by virtue
of the exclusive written option and authority granted him and relying upon the
announced policy of the President of the Philippines to promote low housing program,
the plaintiff immediately worked to negotiate the sale of defendant Doronila's 300
hectares of land to the Social Security System, making the necessary contacts and
representations to bring the parties together, namely, the owner and the buyer, and
bring about the ultimate sale of the land by defendant Doronila to the Social Security
System; that February 27, 1968, after plaintiff had already contacted the Social Security
System, its Deputy Administrator, Reynaldo J. Gregorio, wrote a letter to defendant
Doronila inviting the latter to a conference regarding the property in question with
Administrator Teodoro, Chairman Gaviola and said Reynaldo J. Gregorio on March 4,
1968 at 10:00 o'clock in the morning, stating that the SSS would like to take up the
offer of the lot; that having granted plaintiff the exclusive written option and authority to
negotiate the sale of his 300 hectares of land, defendant Doronila in a letter dated
February 28, 1968 declined the invitation extended by the Social Security System to
meet with its Administrator and Chairman, and requested them instead "to deal directly"
with the plaintiff; that on March 16, 1968, at the suggestion of defendant Doronila , the
plaintiff wrote a letter to the Social Security System to the effect that plaintiff would be
glad to sit with the o cials of the Social Security System to discuss the sale of the
property of the defendant Doronila; that on March 18, 1968, the Social Security System
sent a telegram to defendant Doronila to submit certain documents regarding the
property offered; that on May 6, 1968, a written offer to sell the 300 hectares of land
belonging to defendant Doronila was formally made by the plaintiff to the Social
Security System and accordingly, on May 7, 1968, the Social Security System
Administrator dispatched the following telegram to defendant Doronila "SSS
considering purchase your property for its housing project Administrator Teodoro";
that a few days thereafter, the plaintiff accompanied the defendant Doronila to the
China Banking Corporation to arrange the matter of clearing payment by check and
delivery of the titles over the property to the Social Security System; that having been
brought together by the plaintiff, the defendant Doronila and the o cials of Social
Security System, on May 29, 1968 and on June 4, 1968, met at the o ce of the SSS
Administrator wherein the price for the purchase of the defendant Doronila's 300
hectares of land was, among others, taken up; that on June 20, 1968, the Social Security
Commission passed Resolution No. 636 making a counter-offer of P3.25 per square
meter subject to an appraisal report; that on June 27, 1968, Resolution No. 662 was
adopted by the Social Security Commission authorizing the Toples & Harding (Far East)
Inc. to conduct an appraisal of the property and to submit a report thereon; that
pursuant thereto, the said company submitted its appraisal report specifying that the
present value of the property is P3.34 per square meter and that a housing program
development would sent the highest and best use thereof; that on July 18, 1968, the
Social Security Commission, at its regular meeting; taking note of the favorable
appraisal report of the Toples & Harding (Far East) Inc., passed Resolution No. 738,
approving the purchase of defendant Doronila's 300 hectares of land in Montalban,
Rizal, at a price of P3.25 per square meter or for a total purchase price of Nine Million
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 Seven Hundred Fifty Thousand Pesos (P9,750,000.00), appropriating the said amount
for the purpose and authorizing the SSS Administrator to sign the necessary
documents to implement the said resolution; that on July 30, 1968, defendant Doronila
and the Social Security System executed the corresponding deed of absolute the 300
hectares of land in Montalban, Rizal, covered by Transfer Certi cate of Title Nos. 7701,
77013, 216747 and 216750 under the terms of which the total price of P9,750,000.00
shall be payable as follows: (a) 60% of the agreed purchase price, or Five Million Eight
Hundred Fifty Thousand Pesos (P5,850,000.00) immediately after signing the deed of
sale, and (b) the balance of 40% of the agreed price, or Three Million Nine Hundred
Thousand Pesos (3,900,000.00) thirty days after the signing of the deed of absolute
sale; that on August 21, 1968, after payment of the purchase price, the deed of
absolute sale executed by defendant Doronila in favor of the Social Security System
was presented for registration in the O ce of the Register of Deeds of Rizal, and
Transfer Certificates of Title Nos. 226574, 226575, 226576, and 226577 in the name of
the Social Security System were issued; that defendant Doronila has received the full
purchase price for his 300 hectares of and in the total amount of P9,750,000.00, which
amount he deposited in his bank Account No. 0012-443 with the defendant Philippine
National Bank; that on September 17, 1968, the plaintiff presented his statement to,
and demanded of defendant Doronila the payment of his professional fee as real estate
broker as computed under the agreement of February 14, 1968 in the total amount of
P1,380,000.00; that notwithstanding such demand; the defendant Doronila, in gross
and evident bad faith, after having availed of the services of plaintiff as real estate
broker, refused to pay the professional fees due him; that as a result of defendant
Doronila's gross and evident bad faith and unjusti ed refusal to pay plaintiff the
professional fees due him under the agreement, the latter has suffered and continues
to suffer mental anguish, serious anxiety, and social humiliation for which defendant
Doronila shall be held liable to pay moral damages; and, that by reason likewise of the
aforesaid act of defendant Doronila, the plaintiff has been compelled to le this action
and to engage the services of counsel at a stipulated professional fee of P250,000.00.
In his answer led on November 18, 1968, the defendant Doronila alleged that
when the plaintiff offered the answering defendant's property to the Social Security
System on May 6, 1968, said defendant had already offered his property to, and had a
closed transaction or contract of sale of, said property with the Social Security System;
that the letter agreement had become null and void because defendant Doronila had
not received any written offer from any prospective buyers of the plaintiff during the
agreed period of 60 days until the last day of the authorization which was April 13,
1968 counting from February 14, 1968; that it is not true that plaintiff brought together
defendant Doronila and the o cials of the Social Security System to take up the
purchase price of defendant Doronila's property for the simple reason that the
plaintiff's offer was P6.00 per square meter and later on reduced to P4.50 per square
meter because the SSS Chairman had already a closed transaction with the defendant
Doronila at the price of P3.25 per square meter and that the offer of the plaintiff
refused by the o cials of the Social Security System; and defendant Doronila did not
answer the statement of collection of the plaintiff because the latter had no right to
demand the payment for services not rendered according to the agreement of the
parties. The answering defendant interposed a counterclaim for damages and
attorney's fees.
On January 18, 1969, the plaintiff and defendant Alfonso Doronila submitted the
following stipulation of facts:

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 "STIPULATION OF FACTS
COME NOW the plaintiff and defendant DORONILA, I their respective
undersigned counsel, and to this Honorable Court, by way of abbreviating the
proceeding in the case at bar, without prejudice to presentation of explanatory
evidence, respectfully submit the following STIPULATION OF FACTS:

1.
That defendant Doronila was the registered owner of 300 hectares of land,
situated in Montalban, Rizal, covered by Transfer Certi cates of Title Nos. 77011,
77013, 216747 (formerly TCT No. 116621) and 216750 (formerly TCT No.
77012).

2.
That on July 3, 1967, defendant DORONILA under his letter (marked Annex
'1' of the answer) addressed to the SSS Chairman, offered his said property to the
Social Security System (SSS) at P4.00 per square meter.

That on July 17, 1967 (Annex '2' of the Answer) the SSS Chairman, Mr.
Ramon G. Gaviola, Jr., replied to defendant DORONILA, as follows:

'This will acknowledge your letter of July 3rd, 1967 relative to your
offer for sale of your real estate property.
In this regard, may I please be informed as to how many hectares,
out of the total 300 hectares offered, are located in Quezon City and how
many hectares are located in Montalban, Rizal. Likewise, as regards your
offer of P4.00 per square meter, would there be any possibility that the
same be reduced to P3.25 per square meter? Finally and before I submit
your proposal for process it is requested that the NAWASA certify to the
effect that they have no objection to having this parcel of land subdivided
for residential house purposes.

Thank you for your offer and may I hear from you at the earliest
possible time.'

2-a
That on July 19, 1967, defendant DORONILA wrote a letter (a, xerox copy,
attached hereto marked as Annex '2-a' for DORONILA) to NAWASA, and that in
reply thereto, on July 25, 1967, the NAWASA wrote the following letter (Xerox copy
attached hereto to be marked as Annex '2-b' for DORONILA) to defendant
DORONILA.
'In connection with your proposed subdivision plan of your
properties adjacent to our Novaliches Watershed, this O ce would like to
impose the following conditions:

1. Since your property is an immediate boundary of our Novaliches Watershed,

a 20-meter road should be constructed along our common boundary.

2. That no waste or drainage water from the subdivision should ow towards

the watershed.

3. That the liquid from the septic tanks or similar waste water should be treated
before it is drained to the Alat River above our Alat Dam.

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 The above conditions are all safeguards to the drinking water of the
people of Manila and Suburbs. It is therefore expected that we all
cooperate to make our drinking water safer from any pollution.'
3.

That on July 19, 1967, defendant DORONILA wrote another letter (marked
as Annex '3' on his Answer) addressed to the SSS Chairman, Mr. Ramon G.
Gaviola, Jr., stating, among others, the following:
'In this connection, I have your counter-offer of P3.25 per square
meter against my offer of P4.00 per square meter, although your counter-
offer is lower comparing to the prices of adjacent properties, I have to
consider the difference as my privilege and opportunity to contribute or
support the Presidential policy to promote low cost housing in this country
particularly to the SSS members by accepting gladly your counter-offer of
P3.25 per square meter with the condition that it should be paid in cash
and such payment shall be made within a period of 30 days from the
above stated date' (2nd paragraph of letter dated July 18, 1967, Annex '3'
of the Answer).
3.a
That on August 10, 1967, the SSS Chairman, Mr. Ramon G. Gaviola, Jr.,
wrote the following (Xerox copy attached hereto and marked as Annex '2-c' for
DORONILA: addressed to defendant DORONILA:

'With reference to your letter, dated July 1967, please be informed

that the same is now with the Administrator for study and comment. The
Commission will act on receipt of information re such studies.
With the assurance that you will be periodically informed of
developments, we remain.'
3-b
That on October 30, 1967, Mr. Pastor B. Sajorda, 'By authority of Atty.
Alfonso Doronila, property owner', wrote the following request (Xerox copy
attached hereto and marked as Annex '2-d' for DORONILA) addressed to Realtor
Vicente L. Narciso for a certi cation regarding the actual prices of DORONILA's
property quoted as follows:

'May I have the honor to request for your certi cation as a member
of the Board of Realtor regarding the actual prices of my real estate raw-
land properties described as Lots 3-B-7, 26-B, 6 and 4-C-3 all adjacent to
each other, containing a total area of 3,000,000 square meters, all
registered in the name of Alfonso Doronila, covered by T.C.T. Nos. 116631,
77013, 77011, and 71012, located at Montalban, Rizal, all adjacent to the
Northern portion of the NAWASA properties in Quezon City including those
other surrounding adjacent properties and even those properties located
before reaching my own properties coming from Manila.

This request is purposely made for my references in case decided to

sell my said properties mentioned above.'

3-c

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 That on November 3, 1961, Realtor Vicente Narciso wrote the following
reply (Xerox copy attached hereto and marked as Annex '2-e' for DORONILA) to
Mr. Pastor B. Sajorda:
'As per your request dated (October 30, 1967, regarding prices of raw
land, it is my nding that the fair market value of raw land in the vicinity of
the NAWASA properties at Quezon City and Montalban, Rizal, including the
properties of Atty. Alfonso Doronila, more particularly known as lots 3-B-7,
26-B, and 4-C-3 containing approximately 3,000,000 square meters is P3.00
to P3.50 per square meter.
Current prices before reaching Doronila's property range from P6.00
to P7.00 per square meter.
4.
That on February 14, 1968, defendant DORONILA granted plaintiff an
exclusive option and authority (Annex 'A' of complaint), under the following terms
and conditions:

'1. The price of the property is THREE (P3.00) PESOS per square meter.

2. A commission of TEN (10%) PERCENT will be paid to us based on P2.10 per

square meter, or at any price that you (DORONILA) nally agree upon, and all expenses shall
be for our account, including preparation of the corresponding deed of conveyance,
documentary stamps and registration fee, whether the sale is caused directly or indirectly by
us within the time of this option. If the property is sold over and above P3.00 per square meter,
the excess amount shall be credited and the herein brokers. In addition to the 10%
commission based on P2.10 per square meter, provided the brokers shall pay the
corresponding taxes to the owner of the excess amount over P3.00 per square meter, unless
paid by check which would the be deductible as additional expenses.

3. This exclusive option and authority is good for a period of sixty (60) days
from the date of your conformity; provided, however, that should negotiations have been
started with a buyer, said period is automatically extended until said negotiations is
terminated, but not more than fifteen (15) days;

4. The written offers must be made by the prospective buyers, unless they
prefer to have us take the offer for and in their behalf some buyers do not want to be known in
the early stages of the negotiations;

5. If no written offer is made to you until the last day of this authorization, this
option and authority shall expire and become null and void;

6. It is clearly understood that prospective buyers and all parties interested in

this property shall be referred to us, and that you will not even quote a price directly to any
agent or buyer. You agree to refer all agents or brokers to us DURING the time this option is in
force; and

7. There are some squatters occupying small portions of the property, which
fact will be reported to the prospective buyers, and said squatters will be removed at our
expense." (Annex 'A' of the complaint.).

Very truly yours,

PHILIPPINE REAL
ESTATE EXCHANGE
(Sgd.) ANTONIO E. PRATS
General Manager

CONFORME:

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 (Sgd.) ALFONSO DORONILA'
Date: February 14, 1968
5.
That on February 19, 1968, plaintiff wrote the following letter to defendant
DORONILA (Annex '4' of the Answer), quoted as follows:
February 19, 1968
Don Alfonso Doronila
Plaza Ferguzon
Ermita, Manila
Dear Don Alfonso:
In view of the exclusive option extended to us for the sale of your property
consisting 300 hectares located at Montalban, Rizal, we earnestly request that
you take immediate steps to withdraw any and all papers pertaining to this
property offered to the SOCIAL SECURITY SYSTEM.

Very truly yours,

PHILIPPINE REAL
ESTATE EXCHANGE
(Sgd.) ANTONIO E. PRATS
General Manager
AEP/acc
RECEIVED ORIGINAL:
By: (Sgd.) ROGELIO DAPITAN'
6.
That on February 20, 1968, pursuant to the letter dated February 19, 1968
of plaintiff, defendant DORONILA wrote a letter (Annex 'B' of the complaint) to the
SSS Administrator stating:
'Inasmuch as the SSS has not acted on my offer to sell a 300
hectare lot located in Montalban, Rizal, for the last five (5) months I
respectfully requested for the return of all my papers concerning this
offered property.'

7.
That on February 27, 1968, defendant DORONILA received the following
letter (Annex 'C' of the complaint) from the SSS Deputy Administrator, Mr.
Reynaldo J. Gregorio, to wit:
'May I take this opportunity of inviting you in behalf of
Administrator Teodoro, to meet with him, Chairman Gaviola and myself on
Friday, March 4, 10:00 A.M. lot offer.
Thanks and regards.
8.
That on February 28, 1968, defendant DORONILA wrote the following letter
(Annex 'D' of the complaint) to the SSS Deputy Administrator:

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 'Thank you for your invitation to meet Administrator Teodoro,
Chairman Gaviola and your goodself, to take up my former offer to sell my
property to the Social Security System.

Since the SSS had not acted on my offer dated July 19, 1967, more
than seven (7) months ago, I have asked for the return of my papers, as per
my letter of February 20, 1968, and which you have kindly returned to me.
As of February 20, 1968, I gave the Philippine Real Estate Exchange
an exclusive option and authority to negotiate the sale of this 300 hectare
land, and I am no longer at liberty to negotiate its sale personally; I shall
therefore request you communicate directly with the Philippine Real
Exchange, P. O. Box 84, Quezon City, and deal with them directly if you are
still interested in my property.
With my kind personal regards, I am'
9.

That on March 16, 1968, plaintiff, acting upon the letter of defendant
DORONILA dated February 28, 1968 (Annex 'D' for plaintiff), wrote the following
letter to SSS Administrator:
'Don Alfonso Doronila, owner of the 300 hectare land located at
Montalban, Rizal, adjoining the Quezon City boundary, has informed us
that the Administrator of the SOCIAL SECURITY SYSTEM, through Mr.
Reynaldo J. Gregorio, has invited him to meet with the Administrator and
Chairman Gaviola to take up the former offer to sell his property to the
SSS.
'In his letter to the Administrator dated February 20, 1968 (which has
been received by the SSS on the same day). Mr. Doronila advised you that
as of February 20, 1968, he gave the PHILIPPINE REAL ESTATE
EXCHANGE (PHILREX) the exclusive option and authority to negotiate the
sale of his 300 hectare land in Montalban, and that he is no longer at
liberty to negotiate its sale personally, and that, if you are still interested in
this property, the SSS should communicate directly with the PHILIPPINE
REAL ESTATE EXCHANGE.
'It is by virtue of this arrangement that Mr. Doronila now refers to us
your invitation and his reply to the SSS and has requested us to get in
touch with you.'
'While, at present we have several prospective buyers interested in
this property, we shall, in compliance with the request of Mr. Doronila, be
happy to sit down with you and Chairman Ramon Gaviola, Jr.'

'Please let us know when it will be convenient to hold the

conference.'

10.
That on April 18, 1968, defendant DORONILA extended the plaintiff
exclusive option and authority to expire May 18, 1968. (Annex 'B' — Reply, letter of
Doronila to SSS Deputy Administrator dated May 8, 1968).
11.
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 That on May 6, 1968, plaintiff made a formal written offer to the Social
Security System to sell the 300 hectare land of defendant DORONILA at the price
of P6.00 per square meter, a Xerox copy of which, bearing the stamp or receipt of
the Social Security System is attached hereof as Annex 'D'-plaintiff.
12.
That on May 17, 1968, the defendant DORONILA received the following
telegram (Annex 'E' of the complaint) from the SSS Administrator, reading:
'SSS CONSIDERING PURCHASE YOUR PROPERTY FOR ITS
HOUSING PROJECT'
13.
That on May 18, 1968, after plaintiff's exclusive option and authority had
been extended, plaintiff wrote the following letter (Annex 'A-Reply' of plaintiff's
REPLY TO ANSWER) to defendant DORONILA, to wit:
'CONFIDENTIAL'
'In our conference last Monday, May 13, 1968, you have been
de nitely advised by responsible parties that the SOCIAL SECURITY
SYSTEM is acquiring your 300-hectare land at Montalban, Rizal, adjoining
the Quezon City Boundary - and that said property will be acquired in
accordance with exclusive option and authority you gave the PHILIPPINE
REAL ESTATE EXCHANGE. You were assured in that conference that the
property will be acquired de nitely, but, as it has been mentioned during
the conference, it may take from 30 to 60 days to have all the papers
prepared and to effect the corresponding payment. The telegram from the
SSS con rming these negotiations has already been received by you, a
copy of which you yourself have kindly furnished us.
'Pursuant to paragraph 3 of the terms of the option that you have kindly
extended, we still have fteen days more from today; May 18, 1968, within which
to nish the negotiations for the sale of your property to the SSS. For your
convenience, we quote the pertinent portion of paragraph 3 of the option:
'. . . provided, however, that should negotiation have been started
with a buyer, said period is automatically extended until said negotiation is
terminated, but no more than fifteen (15) days.'
'Please be assured that we will do our very best to complete these
negotiations for the sale of your property within this fteen-day period. In
the meantime, we hope you will also observe the provisions of paragraph 6
of the exclusive option you have extended to us.'
14.
That on May 18, 1968, plaintiff wrote the following letter (Xerox copy
attached and marked hereof as Annex 'H' for plaintiff) addressed to defendant
DORONILA, to wit:
'By virtue of the exclusive option and authority you have granted the
PHILIPPINE REAL ESTATE EXCHANGE to negotiate the sale of your 300-
hectare land located at Montalban, Rizal, adjoining the Quezon City
boundary, which properties are covered by Transfer Certi cate of Titles
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 Nos. 116631, 77011, 77012 and 77013, of the Registry of Deeds for the
Province of Rizal, we hereby make a rm offer, for and in behalf of our
buyer, to purchase said property at the price of FOUR PESOS AND FIFTY
CENTAVOS (P4.50) per square meter, or the total amount of THIRTEEN
MILLION FIVE HUNDRED THOUSAND (P13,500,000.00) PESOS, Philippine
Currency, payable in Cash and D.B.P. Progress Bonds, on a ratio to be
decided between you and our principal.'
'To expedite the negotiations, we suggest that we sit down
sometime early next week with our principal to take up the nal
arrangement and other details in connection with the purchase of the
subject property.'
'To give you further assurance of the validity of this offer, we refer
you to the CHINA BANKING CORPORATION (Trust Department) who has
already been apprised of these negotiations, to which Bank we strongly
recommend that this transaction be coursed through, for your own security
and protection.'

15.
That on May 30, 1968, plaintiff wrote the following letter (Xerox copy
attached hereto, and marked as Annex 'I' for plaintiff) to defendant DORONILA,
quoted as follows:

'This is to advise you that the SOCIAL SECURITY SYSTEM agreed to

purchase your 300-hectare land located at Montalban, Rizal, which
purchase can be conformed by the Chairman of the SOCIAL SECURITY
COMMISSION. The details will have to be taken up between you and the
Chairman, and we suggest that you communicate with the Chairman at
your earliest convenience.'

'This negotiation was made by virtue of the exclusive option and

authority you have granted the PHILIPPINE REAL ESTATE EXCHANGE,
which option is in full force and effect, and covers the transaction referred
above.'

16.
That on June 6, 1968, defendant DORONILA wrote the following letter
(Annex '7' for DORONILA), to the plaintiff, to wit:

'I have to inform you o cially, that I have not received any written
offer from the SSS or others, to purchase my Montalban property of which
you were given an option and exclusive authority as appearing in your
letter-contract dated February 14, 1968, during the 60 days of your
exclusive authority which expired on April 14, 1968, nor during the
extension which was properly a new exclusive authority of 30 days from
April 18, which expired on May 18, 1968, nor during the provided 15 days
grace, in case that you have closed any transaction to terminate it during
that period, which also expired on June 3, 1968.'
'As stated in said letter, we have the following condition:

'5. If no written offer is made to you until the last day of this
authorization, this option and authority shall expire and becomes null and void.'
'As I have informed you, that on April 16, 1968 or two
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 days after your option expired I have signed an agreement to
sell my property to a group of buyers to whom I asked later
that the effectivity of said agreement will be after your new
authority has expired will be on June 2, and they have
accepted; As your option has expired, and they know that there
was no written offer made by the SSS for any price of my
property, aside of their previous letter announcing me that they
are ready to pay, I was noti ed on June 4, 1968 by their
representative, calling my attention about our agreement; that
is why I am writing you, that having expired your option and
exclusive authority to offer for sale my said property, I noti ed
only this afternoon said to comply our agreement.
'Hoping for your consideration on the matter, as we
have to be guided by contracts that we have to comply, I
hereby express to you my sincere sentiments.'
17.

That on June 19, 1968, defendant DORONILA wrote the following letter
(Annex '5' of the Answer) to the SSS Administrator, renewing his offer to sell his
300 hectare land to the SSS at P4.00 per square meter, to wit:

'This is to renew my offer to sell my properties located at

Montalban, Rizal identified as Lot Nos. 3-B-7, 26-B, 6, and 4-C-3, registered
in my name in the office of the Registry of Deeds of Rizal under T.C.T. Nos.
116631, 77013, 77011 and 216750, containing a total area of 300 hectares
or 3,000.000 square meters.

You will recall that last year, I offered to the Social Security System
the same properties at the price of Four (P4.00) pesos per square meter.
After 3 ocular inspection of Chairman Gaviola, one of said inspections
accompanied by Commissioner Arroyo and after receiving the written
appraisal report of Manila realtor Vicente L. Narciso, the System then made
a counter-offer of Three pesos and twenty- ve (P3.25) per square meter
which I accepted under the condition that the total amount be paid within a
period of thirty (30) days from the date of my acceptance (July 19, 1967).
My acceptance was motivated by the fact that within said period of time I
had hoped to repurchase my sugarcane hacienda in Iloilo with the
proceeds I expected from the sale. No action was however taken by the
System thereon.

Recently, the same properties were offered by Antonio E. Prats of

the Philippine Real Estate Exchange to the Presidential Assistant on
Housing, at the price of six pesos (P6.00) per square meter, who referred it
to the System, but against no action had been taken by the System.
Considering the lapse of time since our original offer during which
prices of real estate have increased considerably, on the one hand, and in
cooperation with the System's implementation of our government's policy
to provide low cost houses to its members, on the other hand, I am
renewing my offer to sell my properties to the system only at the same
price of P4.00 per square meter, or for a total amount of twelve million
pesos (P12,000,000.00), provided the total amount is paid in cash within a
period of fifteen (15) days from this date.'
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 18.
That on June 20, 1968, the Social Security Commission passed Resolution
No. 636 by which the SSS formalized its counter-offer of P3.25 per square meter.
(See Annex 'F' of the complaint)

19.
That on June 25, 1968, the SSS Administrator, Mr. Gilberto Teodoro, wrote
the following reply letter (Annex '6' of the Answer) to defendant DORONILA, to wit:

'This has reference to your letter dated June 9, 1968 renewing your
offer to sell your property located at Montalban, Rizal containing an area
of 300 hectares at P4.00 per square meter. Please be informed that the
said letter was submitted for the consideration of the Social Security
Commission at its last meeting on June 20, 1968 and pursuant to its
Resolution No. 636, current series, it decided that the System reiterate its
counter-offer for P3.25 per square meter subject to a favorable appraisal
report by a reputable appraisal entity as regards particularly to price and
housing project feasibility. Should this counter-offer be acceptable to you,
kindly so indicate by signing hereunder your conformity thereon.

Trusting that the foregoing su ciently advises you on the matter, I

remain.
Very truly yours,
GILBERTO TEODORO
Administrator

CONFORME: With condition that the sale will consummated within Twenty
(20) days from this date.
ALFONSO DORONILA

Returned and received the original by

June 25/68
Admtr's Office'
20.

That on June 27, 1968, the Social Security Commission passed Resolution
No. 662 authorizing the Toples & Harding (Far East) to conduct an appraisal of
the property of defendant DORONILA and to submit a report thereon. (See Annex
'F' of the complaint)
21.

That on July 17, 1968, the Social Security Commission taking note of the
report of Toples & Harding (Far East), passed Resolution No. 738, approving the
purchase of the 300 hectare land of defendant DORONILA, at the price of P3.25
per square meter, for a total purchase price of NINE MILLION SEVEN HUNDRED
FIFTY THOUSAND PESOS (P9,750,000.00), and appropriating the said amount of
money for the purpose. (See Annex 'F' of the complaint).

22.
That on July 30, 1968, defendant DORONILA executed the deed of
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 absolute sale (Annex 'G' of the complaint) over his 300-hectare land, situated in
Montalban, Rizal, covered by TCT Nos. 77011, 77013, 216747 (formerly TCT No.
116631) and 216750 (formerly TCT No. 77012), in favor of the Social Security
System, for the total purchase price of NINE MILLION SEVEN HUNDRED FIFTY
THOUSAND PESOS (P9,750,000.00), Philippine currency, which deed of sale was
presented for registration in the O ce of the Register of Deeds of Rizal on August
21, 1968.

23.
That defendant DORONILA had received the full purchase price of NINE
MILLION SEVEN HUNDRED FIFTY THOUSAND PESOS (P9,750,000.00), Philippine
Currency, in two installments.

24.
That on September 17, 1968, plaintiff presented his STATEMENT OF
ACCOUNT, dated September 16, 1968 (Xerox copy of which is attached hereto
and marked as Annex 'J' plaintiff to defendant DORONILA for the payment of his
professional services as real estate broker in the amount of P1,380,000.00, as
computed on the basis of the letter-agreement, Annex 'A' of the complaint, which
defendant failed to pay.
Manila, for Quezon City, January 18, 1968.

Respectfully submitted:
CRISPIN D. BAIZAS & ASSOCIATES
and A.N. BOLINAO, JR.
By: (Sgd.)
Counsel for the plaintiff
Suite 305, Shurdut Bldg.
Intramuros, Manila
(Sgd.) E. V. Obon
Atty. EUGENIO V. OBON
Counsel for the defendant
9 West Point Street
Quezon City
ALFONSO DORONILA
Counsel for the defendant
428 Plaza de Ferguson
Ermita, Manila" 2
The trial court rendered its decision dated December 12, 1969, the dispositive
part of which reads:
"WHEREFORE, judgment is hereby rendered in favor plaintiff, ordering
defendant Alfonso Doronila, under the rst cause of action, to pay to plaintiff the
sum of P1,380,000.00 with interest thereon at the rate of 6% per annum from
September 23, 1968 until fully paid; and under the second Cause of Action, to pay
plaintiff the sum of P200,000.00 as moral damages; the sum of P100,000. as
exemplary damages; the sum of P150,000.00 as attorney's fees, including the
expenses of litigation and costs of this suit.

The writ of preliminary injunction issued in this case is hereby made

permanent; and the defendant Philippine National Bank is hereby ordered to pay
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 to the plaintiff the amount of P1,380,000.00 and interest on the P1,380,000.00 to
be computed separately out P2,000,000.00 which it presently holds under a xed
time deposit.

SO ORDERED.
December 12, 1969, Quezon City, Philippines.

(SGD.) LOURDES P. SAN DIEGO

J u d g e" 3
The defendant appealed to the Court of Appeals where the appeal was docketed
as CA-G.R. No. 45974-R.
In a decision promulgated on September 19, 1974, the Court of Appeals reversed
the decision of the trial court and dismissed the complaint because:
"In any event, since it has been found that the authority of appellee expired
on June 2, 1968, rather than June 12, 1968 as the lower court opined, the inquiry
would be whether up to that time, a written offer was made by appellee in behalf
of the SSS. The stipulation is clear on this point. There should he a written offer
by the prospective buyer or by appellee for or in their behalf, and that if no such
written offer is made until the last day of the authorization, the option and
authority shall expire and become null and void. Note that the emphasis is placed
on the need of a written offer to save the authority from an automatic termination
on the last day of the authorization. We note such emphasis with special
signi cance in view of the condition relative to automatic extension of not more
than 15 days if negotiations have been started. The question then is when are
negotiations deemed started? In the light of the provisions just cited, it would be
when a response is given by the prospective buyer showing his interest to buy the
property when an offer is made by the seller or broker and make an offer of the
price. Strictly, therefore, prior to May 29, 1968, there were no negotiations yet
started within the contemplation of the letter-agreement of brokerage (Exh. A)
Nevertheless, appellant extended appellee's exclusive authority on expire on May
18, 1968 (par. 10, Stipulation of Facts; R.A. p. 89), which was automatically
extended by 15 days under their agreement, to expire on June 2, 1968, if the
period extended up to May 18, 1968, was a new authority. For, it may even be
considered as taking the place of the 15-day automatic extension, since
appellee's pretension is that negotiations have been started within the original
period of 60 days. Appellant, in xing the expiry date on June 2, 1968, has thus
made a liberal concession in favor of appellee, when he chose not to regard the
extension up to May 18, 1968 as the automatic extension which ought to have
been no more than 15 days, but which he generously stretched twice as long." 4

The petitioner assigned the following errors:

"I
THE RESPONDENT COURT OF APPEALS ERRED CONCLUDING THAT
PETITIONER WAS NOT THE EFFICIENT PROCURING CAUSE IN BRINGING ABOUT
THE SALE PRIVATE RESPONDENT DORONILA'S LAND TO THE SSS.

II
THE RESPONDENT COURT OF APPEALS ERRED CONCLUDING THAT
THERE WAS FAILURE ON THE PART OF HEREIN PETITIONER TO COMPLY WITH
THE TERMS CONDITIONS OF HIS CONTRACT WITH PRIVATE RESPONDENT.
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 III
THE RESPONDENT COURT OF APPEALS ERRED IN CONCLUDING THAT
PETITIONER IS NOT ENTITLED TO HIS COMMISSION.

IV
THE RESPONDENT COURT OF APPEALS ERRED IN AWARDING
ATTORNEY'S FEES TO PRIVATE RESPONDENT DORONILA INSTEAD OF
AFFIRMING THE AWARD OF MORAL AND EXEMPLARY DAMAGES AS WELL AS
ATTORNEY'S FEES TO PETITIONER." 5

The Court in its Resolution of May 23, 1975 originally denied the petition for lack
of merit but upon petitioner's motion for reconsideration and supplemental petition
invoking equity, resolved in its Resolution of August 20, 1975 to give due course
thereto.
From the stipulation of facts and the evidence of record, it is clear that the offer
of defendant Doronila to sell the 300 hectares of land in question to the Social Security
System was formally accepted by the System only on June 20, 1968 after the exclusive
authority, Exhibit A, in favor of the plaintiff, petitioner herein, had expired. The
respondent court's factual ndings that petitioner was not the e cient procuring cause
in bringing about the sale (prescinding from the fact of expiration of his exclusive
authority) which are admittedly nal for purposes of the present petition, provide no
basis in law to grant relief to petitioner. The following pertinent excerpts from
respondent court's extensive decision amply demonstrate this:
"It is noted, however, that even in his brief, when he said —

'According to the testimony of the plaintiff-appellee a few days

before May 29, 1968, he arranged with Mr. Gilberto Teodoro, SSS
Administrator, a meeting with Doronila. He talked with Mr. Teodoro over
the telephone and xed the date of the meeting with defendant-appellant
Doronila for May 29, 1968, and that he was speci cally requested by Mr.
Teodoro not to be present at the meeting, as he, Teodoro, wanted to deal
directly with the defendant-appellant alone. (Tsn., pp. 44-46, March 1,
1969). Finding nothing wrong with such a request, as the sale could be
caused directly or indirectly (Exh. 'A'), and believing that as a broker all that
he needed to do to be entitled to his commission was to bring about a
meeting between the buyer and the seller as to ripen into a sale, plaintiff-
appellee readily acceded to the request.'
appellee is not categorical that it was through his efforts that the meeting
took place on May 29, 1968. He refers to a telephone call he made 'a few
days before May 29, 1968,' but in the conversation he had with Mr. Teodoro,
the latter requested him not to be present in the meeting. From these facts, it
is manifest that the SSS o cials never wanted to be in any way guided by,
or otherwise subject to, the mediation or intervention of, appellee relative to
the negotiation for the purchase of the property. It is thus more reasonable
to conclude that if a meeting was held on May 29, 1968, it was done
independently, and not by virtue of, appellee's wish or efforts to hold such
meeting." 6

xxx xxx xxx

". . . It is even doubtful if he tried to make any arrangement for meeting at
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 all, because on May 18, 1968, he told appellant:

'. . . we hereby make a firm offer, for and in behalf of our buyer, to
purchase said property at the price of Four Pesos and Fifty Centavos
(P4.50) per square meter . . . .'
"As this offer is evidently made in behalf of buyer other than the SSS which
had never offered the price of P4.50 per square meter, appellee could not have at
the same time arranged a meeting between the SSS o cials and appellant with a
view to consummating the sale in favor of the SSS which had made an offer of
only P3.25 per sq. m. and thus lose the much bigger pro t he would realize with a
higher price of P4.50 per sq. meter. This ' rm offer' of P4.50 per sq. m. made by
appellee betrayed his lack of any e cient intervention in the negotiations with the
SSS for the purchase by it of appellant's property. . . . " 7

xxx xxx xxx

". . . This becomes more evident when it is considered that on May 6, 1968
he was making his rst offer to sell the property at P6.00 per sq. m. to the SSS to
which offer he received no answer. It is this cold indifference of the SSS to him
that must have prompted him to look for other buyers, resulting in his making the
rm offer of P4.51 per sq. m. on May 18, 1968, a fact which only goes to show
that for being ignored by the SSS, he gave up all effort to deal with the SSS. . . . ."
8

xxx xxx xxx

". . . For him to claim that it was he who aroused the interest of the SSS in
buying appellant's property is to ignore the fact that as early as June, (July) 1967,
the SSS had directly dealt with appellant to such an extent that the price of P3.25
as offered by the SSS was accepted by appellant, the latter imposing only the
condition that the price should be paid in cash, and within 30 days from the date
of the acceptance. It can truly be said then that the interest of SSS to acquire the
property had been su ciently aroused for there to be any need for appellee to
stimulate it further. Appellee should know this fact for according to him, the 10-
day grace period was agreed upon to give the SSS a chance to pay the price of
the land at P3.25 per sq. m., as a 'compromise' to appellant's insistence that the
SSS be excluded from appellee's option or authority to sell the land." 9
". . . There should be a written offer by the prospective buyer or by appellee
for or in their behalf, and that if no such written offer is made until the last day of
the authorization, the option and authority shall expired and become null and
void. . . . Yet, no such written offer was made. . . . " 1 0

I n equity, however, the Court notes that petition diligently taken steps to bring
back together respondent Doronila and the SSS, among which may be mentioned the
following:
In July, 1967, prior to February 14, 1968, respondent Doronila had offered to sell
the land in question to the Social Security System. Direct negotiations were made by
Doronila with the SSS. The SSS did not then accept the offer of Doronila. Thereafter,
Doronila executed the exclusive authority in favor of petitioner Prats on February 14,
1968. cdrep

Prats communicated with the O ce of the Presidential Housing Commission on

February 23, 1968 offering the Doronila property. Prats wrote a follow-up letter on April
18, 1968 which was answered by the Commission with the suggestion that the
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 property be offered directly to the SSS. Prats wrote the SSS on March 16, 1968, inviting
Chairman Ramon Gaviola, Jr. to discuss the offer of the sale of the property in question
to the SSS. On May 6, 1968, Prats made a formal written offer to the Social Security
System to sell the 300-hectare land of Doronila at the price of P6.00 per square meter.
Doronila received on May 17, 1968 from the SSS Administrator a telegram that the SSS
was considering the purchase of Doronila's property for its housing project. Prats and
his witness Raagas testi ed that Prats had several dinner and lunch meetings with
Doronila and/or his nephew, Atty. Manuel D. Asencio, regarding the progress of the
negotiations with the SSS.
Atty. Asencio had declared that he and his uncle, Alfonso Doronila, were invited
several times by Prats, sometimes to luncheons and sometimes to dinner. On a Sunday,
June 2, 1968, Prats and Raagas had luncheon in Sulu Hotel in Quezon City and they were
joined later by Chairman Gaviola of the SSS.
The Court has noted on the other hand that Doronila nally sold the property to
the Social Security System at P3.25 per square meter which was the very same price
counter-offered by the Social Security System and accepted by him in July, 1967 when
he alone was dealing exclusively with the said buyer long before Prats came into the
picture but that on the other hand Prats' efforts somehow were instrumental in bringing
them together again and nally consummating the transaction the same price of P3.25
square meter, although such nalization was after the expiration of Prats' extended
exclusive authority. Still, such price was higher than that stipulated in the exclusive
authority granted by Doronila to Prats.
Under the circumstances, the Court grants in equity the sum of One Hundred
Thousand Pesos (P100,000.00) by compensation for his efforts and assistance in the
transaction, which however was nalized and consummated after the expiration of his
exclusive authority and sets aside the P10,000.00-attorneys' fees award adjudged
against him by respondent court.
WHEREFORE, the decision appealed from is hereby a rmed, with the
modi cation that private respondent Alfonso Doronila in equity is ordered to pay
petitioner or his heirs the amount of One Hundred Thousand Pesos (P100,000.00) and
that the portion of the said decision sentencing petitioner Prats to pay respondent
Doronila attorneys' fees in the sum of P10,000.00 is set aside. cdphil

The lifting of the injunction issued by the lower court on the P2,000,000.00 cash
deposit of respondent Doronila as ordered by respondent court is hereby a rmed, with
the exception of the sum of One Hundred Thousand Pesos (P100,000.00) which is
ordered segregated therefrom to satisfy the award herein given to petitioner; the lifting
of said injunction, as herein ordered, is immediately executory upon promulgation
hereof.
No pronouncement as to costs.
Teehankee (Chairman), Makasiar, Muñoz Palma and Guerrero, JJ., concur.

Footnotes

1. Rollo, pp. 110-111. The decision was written by Justice Pacifico Castro and concurred in
by Justice Guillermo S. Santos and Justice Jose C. Bautista.
2. Record on Appeal, pp. 76-102, Rollo, p. 57.

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 3. Record on Appeal, pp. 183-184, Rollo, p. 57.

4. Rollo, pp. 98-100.

5. Brief for Petitioner, pp. 28-29, Rollo, p. 352.

6. Pp. 35-36, Court of Appeals decision.

7. Pp. 36-37, ibid.

8. Pp. 37, ibid.

9. Pp. 39, ibid.

10. Pp. 40-41, ibid.

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