Infante v. Cunanan
REITERATIONFacts
1. The Antecedents: Petitioner, Consejo Infante, owned property in Manila. She engaged the services of respondents, Jose Cunanan and Juan Mijares, to sell this property for P30,000, with the condition that the buyer would assume an existing mortgage. The agreement stipulated a commission of 5% of the purchase price plus any overprice obtained. The respondents found a buyer, Pio S. Noche, willing to purchase the property under the agreed terms. However, Infante informed the respondents that she was no longer interested in selling and persuaded them to sign a document canceling their written authority. Subsequently, Infante directly sold the property to Pio S. Noche for P31,000. When the respondents demanded their commission, Infante refused, leading to the initiation of legal action. 2. Procedural History: The respondents filed a lawsuit against the petitioner seeking payment of their commission. The lower court found in favor of the respondents, ordering Infante to pay P2,500 with legal interest and costs. Infante appealed this decision to the Court of Appeals, which affirmed the lower court's judgment in its entirety. This petition for review seeks to overturn the decision of the Court of Appeals. 3. The Petition: This case comes before the Supreme Court via a petition for review. The petitioner argues that the Court of Appeals erred in allowing oral evidence to prove a verbal assurance of commission, given that a written document canceling the agency authority existed. The petitioner contends that this written cancellation, Exhibit 1, effectively terminated the agency agreement before the sale to Pio S. Noche, thereby absolving her of any commission obligation. The core of the petition challenges the admissibility and weight of oral testimony that contradicts the written cancellation, asserting that the parole evidence rule should have precluded such evidence.
Issue(s)
Whether the written cancellation of the agency authority, executed by the agents upon the principal's request, can be set aside based on a prior verbal assurance by the principal to pay commission if the property is sold to the agent's buyer. Whether the parol evidence rule bars the admission of oral evidence to prove the alleged verbal assurance made by the principal.
Ruling
The Supreme Court affirmed the decision of the Court of Appeals, holding that the petitioner was obligated to pay the commission. The Court found that the petitioner acted in bad faith by inducing the respondents to sign a cancellation of their authority through a verbal assurance, only to proceed with the sale to the buyer they had found. This act of subversion could not be sanctioned to allow the petitioner to escape payment.
Ratio Decidendi
On the issue of whether the written cancellation can be set aside based on a prior verbal assurance: The Court held that while a principal generally has the right to withdraw an agent's authority at will (Article 1733 of the Civil Code), this right cannot be exercised in bad faith. In this case, the petitioner induced the respondents to sign a cancellation document by giving a verbal assurance that they would still receive their commission if the property was sold to their buyer, Pio S. Noche. The Court found that the petitioner took advantage of the respondents' services and then used a 'ruse' to evade payment. This act of subversion, which amounts to bad faith, cannot be sanctioned and does not relieve the petitioner of her obligation to pay the commission. On the issue of whether the parol evidence rule bars oral evidence of the verbal assurance: The Court acknowledged that the parol evidence rule generally prohibits the admission of evidence other than the contents of a written agreement when the terms of an agreement have been reduced to writing (Section 22, Rule 123, Rules of Court). However, the Court found that even disregarding the oral evidence of the verbal assurance, there was still enough justification to conclude that the respondents were entitled to the commission. This was based on the factual findings that respondents had found a buyer, and the petitioner, by way of strategem, advised them she was no longer interested and prevailed upon them to sign the cancellation. The Court's reasoning implies that the equitable considerations of bad faith and unfair advantage could override the strict application of the parol evidence rule in this context, or that the findings of the lower courts, which considered such evidence, were sufficiently supported by other evidence or principles of fairness.
Main Doctrine
The Supreme Court affirmed that a principal who induces an agent to sign a cancellation of written authority by making a verbal assurance of commission payment, and then proceeds to sell the property to the agent's buyer, acts in bad faith. Such an act of subversion cannot be sanctioned and does not absolve the principal from the obligation to pay the agreed-upon commission, as it amounts to taking advantage of the agent's services without just compensation.