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Christian Angelo B.

Onate
JD2B

General Topic: Agency


Specific Topic: Duty of Agent to Principal, Accountability of Agent.

DOMINGO v. DOMINGO
G.R. No. L-30573
October 29, 1971
MAKASIAR, J.

Party 1: Vicente M. Domingo (petitioner)


Party 2: Gregorio M. Domingo(respondents)
Party 3: Teofilo P. Purisima (Intervenor)

Facts:

Petitioner-appellant Vicente M. Domingo, now deceased and represented by his heirs, sought to
reverse the decision of the Special Division of Five of the Court of Appeals, which sentenced
Vicente Domingo to pay Gregorio Domingo P2,307.50 and the intervenor Teofilo P. Purisima
P2,607.50.

Vicente granted Gregorio, a real estate broker, the exclusive agency to sell his lot No. 883 of
Piedad Estate with an area of about 88,477 square meters at the rate of P2.00 per square meter
(or for P176,954.00) with a commission of 5% on the total price, if the property is sold by
Vicente or by anyone else during the 30-day duration of the agency or if the property is sold by
Vicente within three months from the termination of the agency to a purchaser to whom it was
submitted by Gregorio during the continuance of the agency with notice to Vicente.

Gregorio then authorized the intervenor, Teofilo to look for a buyer, promising him 2.5%
commision. Teofilo then introduced Oscar to Gregorio as a prospective buyer. Oscar agreed to
pay P109,000 and upon demand of Vicente, Oscar issued an earnest money amounting
P1,000.00. Thereafter, the agreement was amended to the effect that Oscar de Leon will vacate
his house and lot on December 1, 1956 as part of the purchase price.

Gregorio received P1000.00 as a gift from Oscar for successfully persuading Vicente to sell his
lot at a lower price. It was not disclosed to Vicente. Upon learning that Vicente sold his property
to the same buyer, Oscar de Leon and his wife, he demanded in writing payment of his
commission on the sale price of One Hundred Nine Thousand Pesos (P109,000.00). Vicente
said that Gregorio is not entitled to the commission because he sold the property not to
Gregorio’s buyer, but to Oscar’s Wife.
The Court of Appeals ruled that the exclusive agency contract is genuine since Amparo Diaz is
the wife of Oscar De Leon, thus the sale of Vicente’s property is practically a sale to Oscar De
Leon. Gregorio and Teofilo are entitled to their commissions.

Issue:

1. Whether the failure on the part of Gregorio to disclose to Vicente the payment to him by
Oscar de Leon of the amount of One Thousand Pesos (P1,000.00) as gift or "propina"
for having persuaded Vicente to reduce the purchase price from P2.00 to P1.20 per
square meter, so constitutes fraud as to cause a forfeiture of his 5% commission on the
sale price; and
2. Whether Vicente or Gregorio should be liable directly to the intervenor Teofilo Purisima
for the latter's share in the expected commission of Gregorio by reason of the sale.

Ruling:

1. Yes. The duties and liabilities of a broker to his employer are essentially those which an
agent owes to his principal. Consequently, the decisive legal provisions are found in
Articles 1891 and 1909 of the New Civil Code. The aforecited provisions demand the
utmost good faith, fidelity, honesty, candor and fairness on the part of the agent, the real
estate broker in this case, to his principal, the vendor. The law imposes upon the agent
the absolute obligation to make a full disclosure or complete account to his principal of
all his transactions and other material facts relevant to the agency, so much so that the
law as amended does not countenance any stipulation exempting the agent from such
an obligation and considers such an exemption as void. The duly of an agent is likened
to that of a trustee. This is not a technical or arbitrary rule but a rule founded on the
highest and truest principle of morality as well as of the strictest justice.

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 by 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.

2. Where a principal has paid an agent or broker a commission while ignorant of the fact
that the latter has been unfaithful, the principal may recover back the commission paid,
since an agent or broker who has been unfaithful is not entitled to any compensation. If
the agent does not conduct himself with entire fidelity towards his principal, but is guilty
of taking a secret profit or commission in regard the matter in which he is employed, he
loses his right to compensation on the ground that he has taken a position wholly
inconsistent with that of agent for his employer, and which gives his employer, upon
discovering it, the right to treat him so far as compensation, at least, is concerned as if
no agency had existed. This may operate to give to the principal the benefit of valuable
services rendered by the agent, but the agent has only himself to blame for that result.

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