Lim vs Saban

G.R. No. 163720             December 16, 2004


Ybañez owner of a 1,000-square meter lot in Cebu City, entered into an Agency Agreement with Saban. Under the Agreement,  Ybañez authorized Saban to look for a buyer of the lot for P200,000 and to mark up the selling price to include the amounts needed for payment of taxes, transfer of title and other expenses incident to the sale, as well as Saban’s commission for the sale.

Through Saban’s efforts, he was able to sell the lot to the petitioner Genevieve Lim for P600,000 inclusive of taxes and other incidental expenses of the sale. After the sale, Lim remitted to Saban payments and four postdated checks. Subsequently, Ybañez sent a letter to Lim asking to cancel all the checks and to extend another partial payment” for the lot in his favor.

Saban filed a Complaint for collection of sum of money and damages against Ybañez and Lim. He averred that Ybañez and Lim connived to deprive him of his sales commission.

Ybañez claimed that Saban was not entitled to any commission because he concealed the actual selling price from him and because he was not a licensed real estate broker. Lim, for her part, argued that she was not privy to the agreement between Ybañez and Saban, and that she issued stop payment orders for the three checks because Ybañez requested her to pay the purchase price directly to him, instead of coursing it through Saban.

Ybañez died during the pendency of the case before the RTC.

 The Court of Appeals ruled that Ybañez’s revocation of his contract of agency with Saban was invalid because the agency was coupled with an interest and Ybañez effected the revocation in bad faith in order to deprive Saban of his commission and to keep the profits for himself. The appellate court found that Ybañez and Lim connived to deprive Saban of his commission. It declared that Lim is liable to pay Saban the amount of the purchase price of the lot corresponding to his commission. The appellate court further ruled that, in issuing the checks in payment of Saban’s commission, Lim acted as an accommodation party.


Whether or not  Saban is entitled to receive his commission from the sale; and, assuming that Saban is entitled thereto, whether it is Lim who is liable to pay Saban his sales commission.


Yes, Saban is entitled to receive his commission considering that Saban had completely performed his obligations under his contract of agency with Ybañez by finding a suitable buyer to preparing the Deed of Absolute Sale between Ybañez and Lim and her co-vendees.

While Lim is not a party of the Agency contract, it is a  sufficient basis for concluding that Ybañez and Lim connived to deprive Saban of his commission by dealing with each other directly and reducing the purchase price of the lot and leaving nothing to compensate Saban for his efforts. Considering the circumstances surrounding the case, and the undisputed fact that Lim had not yet paid the balance of P200,000.00 of the purchase price of P600,000.00, it is just and proper for her to pay Saban the balance of P200,000.00.

Under Article 1927 of the Civil Code, an agency cannot be revoked if a bilateral contract depends upon it, or if it is the means of fulfilling an obligation already contracted, or if a partner is appointed manager of a partnership in the contract of partnership and his removal from the management is unjustifiable. Stated differently, an agency is deemed as one coupled with an interest where it is established for the mutual benefit of the principal and of the agent, or for the interest of the principal and of third persons, and it cannot be revoked by the principal so long as the interest of the agent or of a third person subsists. In an agency coupled with an interest, the agent’s interest must be in the subject matter of the power conferred and not merely an interest in the exercise of the power because it entitles him to compensation. When an agent’s interest is confined to earning his agreed compensation, the agency is not one coupled with an interest, since an agent’s interest in obtaining his compensation as such agent is an ordinary incident of the agency relationship.


WHEREFORE, in view of the foregoing, the petition is DISMISSED.