Ramos v. Court of Appeals
REITERATIONFacts
The Antecedents: Emerito M. Ramos, doing business as FIMCO, contracted with the Board of Liquidators for the purchase of 20,000 tons of rice. This rice was to be sold to Nippon Trading Co., Ltd. in Japan, with financing arranged through the Bank of Tokyo. FIMCO also entered into contracts with local merchants for the resale of imported goods. Cesario P. Calanoc claimed he was engaged by Ramos to procure purchasers for these goods on a commission basis. Specifically, Calanoc claimed he was instrumental in securing contracts with Wellington & Co. for $1,333,000.00 and with International Mercantile Company for $1,422,000.00. Calanoc sought commissions of 2% on the Wellington & Co. contract and 1% on the International Mercantile Co. contracts. Procedural History: The Court of First Instance of Manila ordered Ramos to pay Calanoc P53,320.00 in commissions for the Wellington & Co. transaction and P17,040.00 for the International Mercantile Co. transactions, plus interest and P10,000.00 in attorney's fees. The Court of Appeals affirmed this decision. Ramos appealed to the Supreme Court, raising issues regarding the commission amount for the Wellington & Co. sale and the award of attorney's fees. The Petition: Petitioner Ramos argued that the Court of Appeals erred in awarding P53,320.00 (2%) as commission for the Wellington & Co. sale, contending it should only be P13,330.00 (1/2% overprice) based on the agreed 23% mark-up and any overprice above that. He also questioned the P10,000.00 attorney's fees award, arguing there was no finding of gross and evident bad faith.
Issue(s)
Whether the Court of Appeals erred in holding petitioner Emerito M. Ramos liable to respondent Cesario P. Calanoc for P53,320.00 in commission for the Wellington & Company transaction, instead of P13,330.00. Whether the Court of Appeals erred in holding petitioner Emerito M. Ramos liable for P10,000.00 in attorney's fees without a specific finding of gross and evident bad faith.
Ruling
The Supreme Court modified the decision of the Court of Appeals. It reduced the commission awarded for the Wellington & Co. transaction from P53,320.00 to P13,330.00 and reduced the attorney's fees from P10,000.00 to P6,000.00. The decision was affirmed in all other respects.
Ratio Decidendi
On the commission for the Wellington & Co. transaction: The Court found that the agreement between Ramos and Calanoc stipulated that Calanoc's commission would be the overprice obtained above the 23% mark-up price. The appellate court's assumption that Calanoc was entitled to 2% simply because he was the efficient procuring cause was not supported by the record. The evidence showed that Ramos set a 23% mark-up, and any amount above that was to be Calanoc's commission. The record did not dispute that Ramos received only P13,330.00 in excess of his original 23% mark-up price in the Wellington & Co. transaction. The Court emphasized that a broker is entitled to commission only upon successful efforts and that the risk of failure is theirs. If the principal sells to a party introduced by the broker at a price lower than that which the broker had negotiated, the broker is not entitled to commission on the higher price, unless the reduction was due to the principal's fault or bad faith. In this case, there was no showing that Mrs. Dee was ready and willing to pay the 25% premium and that Ramos refused it due to bad faith; rather, she paid only 23-1/2%, which Ramos was entitled to accept. On the award of attorney's fees: The Court found that the basis for the award of attorney's fees, which was the alleged evident bad faith of Ramos, was not indubitable. Since the amount of commission was reduced and there was no clear showing of bad faith, fraud, or fault on the part of Ramos in refusing to pay the higher commission, the award of attorney's fees was also reduced. The Court deemed it just and equitable to award attorney's fees in the reduced amount of P6,000.00, considering the services rendered and the admitted refusal of Ramos to satisfy Calanoc's initial claim, even though the amount was later lessened.
Main Doctrine
A broker is entitled to commission only upon successful consummation of the sale under the terms agreed upon. If the principal accepts a price lower than the stipulated terms, the broker's commission is based on the actual price received by the principal, unless the reduction was due to the principal's fault or bad faith.