CASE # |A G E N C Y | D i g e s t b y :

Synopsis: An agreement was entered into between Baterna, a licensed real estate broker, and
spouses Diolosa, whereby the former was constituted as
exclusive sales agent of the spouses, its successors, heirs and assigns, to dispose of, sell, cede,
transfer and convey the lots included in VILLA ALEGRE SUBDIVISION owned by the spouses, “until all
the subject property as subdivided is fully disposed of.” Through a letter, the spouses terminated
the services of Baterna as their exclusive sales agent for the reason that the lots remained unsold
were for reservation for their grandchildren.
Baterna filed this suit to recover the unpaid commission against the Diolosas over some of the lots
subject of the agency that were not sold. SC held that because of the express provision in the
agency contract above quoted, the Diolosas could not terminate DIOLOSA v CA (1984)
Ponente: Relova
Petitioner: Mariano Diolosa abd Alegreia Villanueva-Diolosa
Respondent: CA and Quirino Baterna (owner and proprietor of Quin Baterna Realty)

Under what topic: Extinguishment of Agency; Revocation

the agency at will without paying damages. Also, since not one of the grounds under the Civil Code
(re: rescissible contracts) is present, and that it was not shown that Baterna violated any terms of
the contract of agency, Diolosas could not rescind the contract without paying damages.

Doctrine: A contract of agency, being a valid contract, is rescissible only on grounds provided under
Article 1381 and 1382 of the Civil Code.

CASE NO. 15
DIALOSA VS. CA
130 SCRA 300

FACTS:

An agreement was entered into between Baterna, a licensed real estate broker, and
spouses Diolosa, whereby the former was constituted as exclusive sales agent of the spouses, its
successors, heirs and assigns, to dispose of, sell, cede, transfer and convey the lots included in
VILLA ALEGRE SUBDIVISION owned by the spouses, “until all the subject property as
subdivided is fully disposed of.”

Pursuant to said agreement, Baterna acted for and in behalf of the spouses as their agent
in the sale of the lots included in the VILLA ALEGRE SUBDIVISION.

Through a letter, the spouses terminated the services of Baterna as their exclusive sales
agent for the reason that the lots remained unsold were for reservation for their grandchildren.

Baterna filed this suit to recover the unpaid commission against the Diolosas over some
of the lots subject of the agency that were not sold.
CASE # |A G E N C Y | D i g e s t b y :

CFI dismissed the complaint. CA reversed holding that Diolosas could not terminate the
agency at will without paying damages because of the express provision in the contract that
“until all the subject property as subdivided is fully disposed of.” It noted that there were still 27
unsold lots but Diolosas had only 6 granchildren, hence, not a legal reason to terminate the
agency.

ISSUE:
Whether the spouses Diolosa could terminate the agency agreement without paying
damages to Baterna.

HELD:

No, under the contract, the authority to sell is not extinguished until all the lots have been
disposed of. When, therefore, the Diolosas revoked the contract with Baterna in a letter, they
become liable to the latter for damages for breach of contract.

And, it may be added that since the agency agreement is a valid contract, the same may
be rescinded only on grounds specified in Articles 1381 and 1382 of the Civil Code, as follows:

ART. 1381. The following contracts are rescissible:

(1) Those which are entered in to by guardians whenever the wards whom they
represent suffer lesion by more than one-fourth of the value of the things which are the
object thereof;

(2) Those agreed upon in representation of absentees, if the latter suffer the lesion
stated in the preceding number;

(3) Those undertaken in fraud of creditors when the latter cannot in any other name
collect the claims due them;

(4) Those which refer to things under litigation if they have been entered into by the
defendant without the knowledge and approval of the litigants or of competent judicial
authority;

(5) All other contracts specially declared by law to be subject to rescission.

ART. 1382. Payments made in a state of insolvency for obligations to whose

fulfillment the debtor could not be compelled at the time they were effected, are also
rescissible."

Not one of the grounds mentioned above is present which may be the subject of an action
of rescission, much less can spouses Diolosa say that Baterna violated the terms of their
agreement-such as failure to deliver to them the proceeds of the purchase price of the lots.

Petition dismissed.