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Inland Realty Investment Service, Inc. vs. Court of Appeals

*

G.R. No. 76969. June 9, 1997.

INLAND REALTY INVESTMENT SERVICE, INC. and

ROMAN M. DE LOS REYES, petitioners, vs. HON.
COURT OF APPEALS, GREGORIO ARANETA, INC. and
J. ARMANDO EDUQUE, respondents.
Contempt A partys blatant attempt to mislead the Supreme
Court is contemptuous conduct that the Court sternly condemns.
This claim is a blatant lie. In the first place, petitioners have
con
_________________
*

FIRST DIVISION.

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Inland Realty Investment Service, Inc. vs. Court of Appeals

spicuously failed to attach a certified copy of this Letter dated

October 28, 1976. They have, in fact, not attached even a machine
copy thereof. All they gave this court is their word that said
Letter dated October 28, 1976 does exist, and on that basis, they
expect us to accordingly rule in their favor. Such naivety, this
court will not tolerate. We will not treat lightly petitioners
attempt to mislead this court by claiming that the Letter dated
October 28, 1976 was marked as Exhibit L by the trial court,
when the truth is that the trial court marked as Exhibit L, and
the respondent Court of Appeals considered as Exhibit L,
private respondent Araneta, Inc.s Letter dated October 28, 1975,
not 1976. Needless to say, this blatant attempt to mislead this
court, is contemptuous conduct that we sternly condemn.
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Sales Agency Brokers Commissions Where a party is not the

efficient procuring cause in bringing about a sale, he is not entitled
to the stipulated brokers commission.The Court of Appeals
cannot be faulted for emphasizing the lapse of more than one (1)
year and five (5) months between the expiration of petitioners
authority to sell and the consummation of the sale to Stanford, to
be a significant index of petitioners nonparticipation in the
really critical events leading to the consummation of said sale,
i.e., the negotiations to convince Stanford to sell at Araneta, Inc.s
asking price, the finalization of the terms and conditions of the
sale, the drafting of the deed of sale, the processing of pertinent
documents, and the delivery of the shares of stock to Stanford.
Certainly, when the lapse of the period of more than one (1) year
and five (5) months between the expiration of petitioners
authority to sell and the consummation of the sale, is viewed in
the context of the utter lack of evidence of petitioners
involvement in the negotiations between Araneta, Inc. and
Stanford during that period and in the subsequent processing of
the documents pertinent to said sale, it becomes undeniable that
the respondent Court of Appeals did not at all err in affirming the
trial courts dismissal of petitioners claim for unpaid brokerage
commission. Petitioners were not the efficient procuring cause in
bringing about the sale in question on July 8, 1977 and are,
therefore, not entitled to the stipulated brokers commission of
5% on the total price.

PETITION for review on certiorari of a decision of the

Court of Appeals.
The facts are stated in the opinion of the Court.
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Inland Realty Investment Service, Inc. vs. Court of Appeals

Antonio P. Barredo for petitioners.

Mario P. Bihag, Jr. for private respondents.
HERMOSISIMA, JR., J.:
Herein petitioners Inland Realty Investment Service, Inc.
(hereafter, Inland Realty) and Roman
M. de los Reyes
1
seek the reversal of the Decision of2 the Intermediate
Appellate Court (now Court
of Appeals) which affirmed the
3
trial courts dismissal of petitioners claim for unpaid
agents commission for brokering the sales transaction
involving 9,800 shares of stock in Architects Bldg., Inc.
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(hereafter, Architects) between private respondent

Gregorio Araneta, Inc. (hereafter, Araneta, Inc.) as seller
and Stanford Microsystems, Inc. (hereafter, Stanford) as
buyer.
Petitioners come to us with a twofold agenda: (1) to
obtain from us a declaration that the trial court and the
respondent appellate court gravely erred when
appreciating the facts of the case by disregarding Exhibits
L, a Letter dated October 28, 1976 signed by Gregorio
Araneta II, renewing petitioners authority to act as sales
agent for a period of thirty (30) days from same date, and
Exhibit M, a Letter dated November 16, 1976 signed by
petitioner de los Reyes, naming four (4) other prospective
buyers, respectively and (2) to obtain from us a categorical
ruling that a broker is automatically entitled to the
stipulated commission merely upon securing for, and
introducing to, the seller the particular buyer who
ultimately purchases from the former the object of the sale,
regardless of the expiration of the brokers contract of
agency and authority to sell.
_______________
1

In ACG.R. CV No. 00221, promulgated on May 29, 1986, and penned

by Associate Justices Floreliana CastroBartolome with Associate Justices

Jorge R. Coquia and Bienvenido C. Ejercito, concurring Rollo, pp. 6165.
2

Third Civil Cases Division.

Decision rendered on January 5, 1981 by the Court of First Instance

(now Regional Trial Court) of Manila, Branch VII.

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Inland Realty Investment Service, Inc. vs. Court of Appeals

Before we proceed to address petitioners objectives, there

is a need to unfold the facts of the case. For that purpose,
we quote hereunder the findings of fact of the Court of
Appeals with which petitioners agree, except as to the
respondent appellate courts noninclusion of the
aforementioned Exhibits L and M:
From the evidence, the following facts appear undisputed: On
September 16, 1975, defendant corporation thru its codefendant
Assistant General Manager J. Armando Eduque, granted to
plaintiffs a 30day authority to sell its x x x 9,800 shares of stock
in Architects Bldg., Inc. as follows:

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September 16, 1975

TO WHOM IT MAY CONCERN:
This is to authorize Mr. R.M. de los Reyes,
representing Inland Realty, to sell on a first come first
served basis the total holdings of Gregorio Araneta,
Inc. in Architects [Bldg.], Inc. equivalent to 98% or
9,800 shares of stock at the price of P1,500.00 per
share for a period of 30 days.
(SGD.) J. ARMANDO EDUQUE
Asst. General Manager
Plaintiff Inland Realty Investment Service, Inc. (Inland Realty for
short) is a corporation engaged [in], among others x x x the real
estate business [and] brokerages, duly licensed by the Bureau of
Domestic Trade x x x. [Inland Realty] planned their sales
campaign, sending proposal letters to prospective buyers. One
such prospective buyer to whom a proposal letter was sent to was
Stanford Microsystems, Inc. x x x [that] counterproposed to buy
9,800 shares offered at P1,000.00 per share or for a total of
P9,800,000.00, P4,900,000.00 payable in five years at 12% per
annum interest until fully paid.
Upon plaintiffs receipt of the said counterproposal, it
immediately [sic] wrote defendant a letter to register Stanford
Microsystems, Inc. as one of its prospective buyers x x x.
Defendant Araneta, Inc., thru its Assistant General Manager J.
Armando Eduque, replied that the price offered by Stanford was
too low and suggested that plaintiffs see if the price and terms of
payment can be improved upon by Stanford x x x. Other
prospective buyers were submitted to defendants among whom
were Atty. Maximo F. Belmonte and Mr. Joselito Hernandez. The
authority to sell given to plaintiffs by de
74

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Inland Realty Investment Service, Inc. vs. Court of Appeals

fendants was extended several times: the first being on October 2,

1975, for 30 days from said date (Exh. J), the second on October
28, 1975 for 30 days from said date (Exh. L) and on December 2,
1975 for 30 days from said date (Exh. K).
Plaintiff Roman de los Reyes, manager of Inland Realtys
brokerage division, who by contract with Inland Realty would be
entitled to 1/2 of the claim asserted herein, testified that when his
company was initially granted the authority to sell, he asked for
an exclusive authority and for a longer period but Armando
Eduque would not give, but according to this witness, the life of

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the authority could always be extended for the purpose of

negotiation that would be continuing.
On July 8, 1977, plaintiffs finally sold the 9,800 shares of stock
[in] Architects [Bldg.], Inc. to Stanford Microsystems, Inc. for
P13,500,000.00 x x x.
On September 6, 1977, plaintiffs demanded formally [from]
defendants, through a letter of demand, for payment of their 5%
broker[s] commission at P13,500,000.00 or a total amount of
P675,000.00 x x x which was declined by [defendants]
on the
4
ground that the claim has no factual or legal basis.

Ascribing merit to private respondents defense that, after

their authority to sell expired thirty (30) days from
December 2, 1975, or on January 1, 1976, petitioners
abandoned the sales transaction and were no longer privy
to the consummation and documentation thereof, the trial
court dismissed petitioners complaint for collection of
unpaid brokers commission.
Petitioners appealed, but the Court of Appeals was
unswayed in the face of evidence of the expiration of
petitioners agency contract and authority to sell on
January 1, 1976 and the consummation of the sale to
Stanford on July 8, 1977 or more than one (1) year and five
(5) months after petitioners agency contract and authority
to sell expired. Respondent appellate court dismissed
petitioners appeal in this wise:
________________
4

Decision of the Court of Appeals dated May 29, 1986, pp. 23 Rollo,

pp. 6263.
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Inland Realty Investment Service, Inc. vs. Court of Appeals

x x x The resolution would seem to hinge on the question of
whether plaintiff was instrumental in the final consummation of
the sale to Stanford which was the same name of the company
submitted to defendants as a prospective buyer although their
price was considered by defendant to be too low and defendants
wrote to plaintiff if the price may be improved upon by Stanford x
x x. This was on October 13, 1975. After that, there was an
extension for 30 days from October 28, 1975 of the authority (Exh.
L) and another on December 2, 1975 for another 30 days from the
said date x x x. x x x There is nothing in the record or in the
testimonial evidence that the authority extended 30 days from the
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last date of extension was ever reserved nor extended, nor has
there been any communication made to defendants that the
plaintiff was actually negotiating with Stanford a better price
that what was previously offered by it x x x.
In fact there was no longer any agency after the last extension.
Certainly, the length of time which had transpired from the date
of last extension of authority to the final consummation of the sale
with Stanford of about one (1) year and five (5) months without
any communication at all from plaintiffs to defendants with
respect to the suggestion of defendants that Stanfords offer was
too low and suggested if plaintiffs may make it better. We have a
case of proposal and counterproposal which would not constitute
a definite closing of the transaction just because it was plaintiff
who solely
suggested to defendants the name of Stanford as buyer
5
x x x.

Unable to accept the dismissal of its claim for unpaid

brokers commission, petitioners filed the instant petition
for review asking us (1) to pass upon the factual issue of
the alleged extension of their agency contract and authority
to sell and (2) to rule in favor of a brokers automatic
entitlement to the stipulated commission merely upon
securing for, and introducing to, the seller, the particular
buyer who ultimately purchases from the former the object
of the sale, regardless of the expiration of the brokers
contract of agency and authority to sell.
We find for private respondents.
________________
5

Decision of the Court of Appeals dated May 29, 1986, pp. 35 Rollo,

pp. 6365.
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SUPREME COURT REPORTS ANNOTATED

Inland Realty Investment Service, Inc. vs. Court of Appeals

I
Petitioners take exception to the finding of the respondent
Court of Appeals that their contract of agency and
authority to sell expired thirty (30) days from its last
renewal on December 2, 1975. They insist that, in the
Letter dated October 28, 1976, Gregorio Araneta III, in
behalf of Araneta, Inc., renewed petitioner Inland Realtys
authority to act as agent to sell the formers 9,800 shares in
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Architects for another thirty (30) days from same date.

This Letter dated October 28, 1976, petitioners claim, was
marked as Exhibit L during the trial proceedings before
the trial court.
This claim is a blatant lie. In the first place, petitioners
have conspicuously failed to attach a certified copy of this
Letter dated October 28, 1976. They have, in fact, not
attached even a machine copy thereof. All they gave this
court is their word that said Letter dated October 28, 1976
does exist, and on that basis, they expect us to accordingly
rule in their favor.
Such naivety, this court will not tolerate. We will not
treat lightly petitioners attempt to mislead this court by
claiming that the Letter dated October 28, 1976 was
marked as Exhibit L by the trial court, when the truth is
that the trial court marked as Exhibit L, and the
respondent Court of Appeals considered as Exhibit L,
private respondent Araneta, Inc.s Letter dated October 28,
1975, not 1976. Needless to say, this blatant attempt to
mislead this court, is contemptuous conduct that we sternly
condemn.
II
The Letter dated November 16, 1976, claimed by
petitioners to have been marked as Exhibit M, has no
probative value, considering that its very existence remains
under a heavy cloud of doubt and that hypothetically
assuming its existence, its alleged content, namely, a
listing of four (4) other prospective buyers, does not at all
prove that the agency contract and authority to sell in favor
of petitioners was renewed or revived after it expired on
January 1, 1976. As in
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Inland Realty Investment Service, Inc. vs. Court of Appeals

the case of the Letter dated October 28, 1976, petitioners

have miserably failed to attach any copy of the Letter dated
November 16, 1976. A copy thereof would not help
petitioners failing cause, anyway, especially considering
that said letter was signed by petitioner De los Reyes and
would therefore take on the nature of selfserving
document that has no evidentiary value insofar as
petitioners are concerned.
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III
Finally, petitioners asseverate that, regardless of whether
or not their agency contract and authority to sell had
expired, they are automatically entitled to their brokers
commission merely upon securing for and introducing to
private respondent Araneta, Inc. the buyer in the person of
Stanford which ultimately acquired ownership over
Araneta, Inc.s 9,800 shares in Architects.
Petitioners asseverations are devoid of merit.
It is understandable, though, why petitioners have
resorted to a campaign for an automatic and blanket
entitlement to brokerage commission upon doing nothing
but submitting to private respondent Araneta, Inc., the
name of Stanford as prospective buyer of the latters shares
in Architects. Of course petitioners would advocate as such
because precisely petitioners did nothing but submit
Stanfords name as prospective buyer. Petitioners did not
succeed in outrightly selling said shares under the
predetermined terms and conditions set out by Araneta,
Inc., e.g., that the price per share is P1,500.00. They admit
that they could not dissuade Stanford from haggling for the
price of P1,000.00 per share with the balance of 50% of the
total purchase price payable in five (5) years at 12%
interest per annum. From September 16, 1975 to January
1, 1976, when petitioners authority to sell was subsisting,
if at all, petitioners had nothing to show that they actively
served their principals interests, pursued to sell the shares
in accordance with their principals terms and conditions,
and performed substantial acts that proximately and
causatively led to the consummation of the sale to Stanford
of Araneta, Inc.s 9,800 shares in Architects.
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SUPREME COURT REPORTS ANNOTATED

Inland Realty Investment Service, Inc. vs. Court of Appeals

The Court of Appeals cannot be faulted for emphasizing the

lapse of more than one (1) year and five (5) months between
the expiration of petitioners authority to sell and the
consummation of the sale to Stanford, to be a significant
index of petitioners nonparticipation in the really critical
events leading to the consummation of said sale, i.e., the
negotiations to convince Stanford to sell at Araneta, Inc.s
asking price, the finalization of the terms and conditions of
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the sale, the drafting of the deed of sale, the processing of

pertinent documents, and the delivery of the shares of
stock to Stanford. Certainly, when the lapse of the period of
more than one (1) year and five (5) months between the
expiration of petitioners authority to sell and the
consummation of the sale, is viewed in the context of the
utter lack of evidence of petitioners involvement in the
negotiations between Araneta, Inc. and Stanford during
that period and in the subsequent processing of the
documents pertinent to said sale, it becomes undeniable
that the respondent Court of Appeals did not at all err in
affirming the trial courts dismissal of petitioners claim for
unpaid brokerage commission.
6
Petitioners were not the efficient procuring cause in
bringing about the sale in question on July 8, 1977 and are,
therefore, not entitled to the stipulated brokers
commission of 5% on the total price.
WHEREFORE, the instant petition is HEREBY
DISMISSED. Costs against petitioners.
SO ORDERED.
Bellosillo, Vitug and Kapunan, JJ., concur.
Padilla (Chairman), J., On leave.
Petition dismissed.
Notes.Any act on the part of a lawyer which visibly
tends to obstruct, pervert, impede and degrade the
administration of justice is contumacious, calling for both
an exercise
____________
6

Prats v. Court of Appeals, 81 SCRA 360, 381 [1978].

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People vs. Bergonia

of disciplinary action and warranting application of the

contempt power. (Masinsin vs. Albano, 232 SCRA 631
[1994])
Any conduct of media, or any other party for that
matter, which tends to, directly or indirectly, impede,
obstruct or degrade the administration of justice, is subject
to the contempt powers of the courts. (People vs. Flores, 239
SCRA 83 [1994])
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If a bank could give the authority to sell to a licensed

broker, the Court sees no reason to doubt the authority to
sell of two of the banks vicepresidents whose precise job
therein was to manage and administer real estate property.
(Limketkai Sons Milling, Inc. vs. Court of Appeals, 250
SCRA 523[1995])
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