Lecture No. 3.

1. Explain the concept of procuring cause of the transaction.

It is the cause originating a series of events and without a break in the continuity, resulted in the accomplishment of
the objective for which the broker was employed.

To be entitled to a commission, the broker must be instrumental in the consummation of the sale-The broker should
produce a purchaser willing and able to buy on the owner’s terms.

2. A person was in need of a property to buy; hence, he authorized the brokers to find one in Sorsogon City. They
found a property; hence, they informed their principal about the exact location. Then, there was negotiation between
the owner and the buyer. It was through the effort of the brokers that the sale was perfected, but the buyer refused to
pay their commission asserting that they were not the efficient procuring cause of the sale. Is the contention correct?
Explain.

The brokers are entitled to a commission being the efficient procuring cause for the consummation of the sale. Without
the intervention of the brokers, the sale would not have been consummated.

3. X constituted Y as his agent sending his friend Z a letter introducing Y as his agent. When Y abused his authority,
X cancelled or revoked Y’s agency and told him not to report for work anymore. Y still continued to deal with Z using
the name of X. Z then sent a billing to X for the payment of the latter’s obligation. Is X liable for the dealings of Y
with Z even after X cancelled his agency? Why?

If a person specially informs another that he has given a power of attorney to a third person, the latter thereby becomes
his duly authorized agent with respect to the person who received the information. The power shall continue to be in
full force until the notice is rescinded in the same manner in which it was given.

In this case, since X did not inform Z of the revocation of the authority in the same manner Y’s authority was
constituted, insofar as Z is concerned, Y is still the agent of X and thus, Y’s acts are binding upon X.

4. Ron, Rani and Lyle inherited from their parents a 500 square meter lot in Sorsogon City which they leased to Ardee
for three (3) years. One year after, Ron, claiming to have the authority to represent his siblings Rani and Lyle, offered
to sell the leased property to Ardee which the latter accepted. The sale was not reduced into writing, but Ardee started
to make partial payments to Ron, which the latter received and acknowledged. After giving the full payment, Ardee
demanded for the execution of a Deed of Absolute Sale which Rani and Lyle refused to do. Worst, Ardee learned that
the siblings sold the same property to Antonio. This compelled Ardee to file a complaint for annulment of the sale
with specific performance and damages. If you are the judge, how will you decide the case? Explain.

The action for annulment of sale with specific performance filed by Ardee with respect to the share pertaining to Rani
and Lyle must be dismissed.

Since the object of the sale is a co-owned property, a co-owner may sell his undivided share or interest in the property
owned in common but the sale will be subject to the result of the partition among co-owners. Each co-owner shall
have ownership of his part and the fruits and benefits pertaining thereto and therefore he may alienate, assign,
mortgage or even substitute another person in its enjoyment.

In co-ownership, there is no mutual agency except as that provided under Art. 487. Ron cannot sell the shares of Rani
and Lyle without a Special Power of Attorney from them and the sale with respect to their shares without their written
authority is void.

Also, the sale of the property to Antonio with respect to the shares of Rani and Lyle is also not valid.

Ardee can only assail the portion pertaining to Ron as the same has been validly sold by Ron.
5. A as principal appointed B as his agent granting him general and unlimited management over A’s properties,
stating that A withholds no power from B and that the agent may execute such acts as he may consider appropriate.
Accordingly, B leased A’s parcel of land in Sorsogon City to C for four (4) years at P60,000.00 per year, payable
annually in advance. B leased another parcel of land of A in Gubat to D for a fixed term at P30,000.00 per month
payable monthly. B sold to E a third parcel of land belonging to A located in Barcelona, Sorsogon for three (3) times
the price that was listed in the inventory by A to B. All those contracts were executed by B while A was confined
due to illness in Sorsogon Provincial Hospital.

Rule on the validity and binding effect of each of the above contracts upon A, the principal. Explain your answers.

The agency couched in general terms comprises only acts of administration.

The lease of the parcel of land in Sorsogon City for a term of 4 years is not binding upon A. A Special Power of
Attorney is necessary in case of lease through an agent of any real property to another person for a period of more
than 1 year.

The lease of the parcel of land in Gubat is valid and binding since the lease is without a fixed term, it is understood
to be on a month to month and payable on a monthly basis.

The sale of the parcel of land in Barcelona is not valid and binding upon A. A Special Power of Attorney is necessary
in case a contract through an agent is entered into by which the ownership of an immovable is transmitted or acquired
either gratuitously or through an agent. Also, when the sale of a piece of land or any interest therein is through an
agent, the authority of the latter shall be in writing otherwise the sale shall be void.

6. Is general agency the same as agency couched in general terms?

No. General agency is a kind of agency which comprises all of the business of the principal. An agency couched in
general terms may be general or special agency. An agency couched in general term comprises only acts of
administration even if the principal should state that he withholds no power or that the agent may execute acts as he
may consider appropriate or even if the agency should authorize a general and unlimited terms.

7. When is a Special Power of Attorney necessary?

A Special Power of Attorney is necessary in cases of strict acts of dominion or ownership.

8. Is the intervention of a notary public necessary for a Special Power of Attorney to be valid?

A Special Power of Attorney is valid even though no notary public had intervened in its execution. However, a
notarized SPA carries the evidentiary weight conferred upon it with respect to its due execution.

9. Suppose that an agent holds a special power to sell a certain property, is he also empowered by implication to
mortgage said property? What if the agent holding a special power to sell , mortgages the property, what would be the
nature of the contract?

A special power to sell excludes the power to mortgage and a special power to mortgage does not include the power
to sell. If an agent holding a special power to sell, mortgages the property, the contract is unenforceable.

10. Suppose that the special power to sell does not specify the terms of the payment, may the agent sell the property
on credit?

No. The agent may not sell the property on credit but this does not mean that the sale is not valid. It is valid but the
principal may demand from the agent the payment in cash, in which case, the agent, once he had delivered the cash
to the principal, would be entitled to any benefit which may have resulted from the sale.