Terms of contract guide parties
Dear Atty. Angela,
My good friend and I agreed that I will sell his properties and I will get an 8 percent commission based on the selling price for each sale and this was signed by the both of us in a written contract. I was able to sell several properties to buyers, but when I was already asking for my commission, he refused to pay me. He insisted that the 8 percent commission was too high and wanted to reduce it to 5 percent instead. I found this very unfair and I would like to know if I can still collect the 8 percent commission we initially agreed upon.
Fred Dear Fred,
Under Article 1306 of the New Civil Code of the Philippines, “the contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy.” In addition, Art. 1370 of the same code provides that, “if the terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulations shall control. If the words appear to be contrary to the evident intention of the parties, the latter shall prevail over the former.”
The term stipulated in the written contract that you signed with your friend specifically on the 8 percent commission would be upheld by the court as this is the law between the two of you which you both agreed upon. He has no right to unilaterally change the provision of the contract, without your expressed consent.
In Malate Construction v. Extraordinary Realty Agents & Brokers Cooperative, G.R. 243765 (2022), the Supreme Court reiterated, “(I)t is settled that a contract is the law between the parties and the courts must enforce the contract as long as it is not contrary to law, morals, good customs or public policy. Courts cannot stipulate for the parties or amend their agreement, for to do so would transgress their freedom of contract and alter their real intention.”
When the language of the contract is plain and unambiguous, its meaning should be determined without reference to extrinsic facts or aids. The parties’ intention must be determined solely from the language of their contract. The contract must be taken to mean that which, on its face, it purports to mean.
Based on the facts you provided, there is nothing in the contract which shows any sign that it is contrary to law, morals, good customs, or public policy. Further, since the contract you have is clear and unambiguous, the 8 percent commission rate will prevail over his refusal to pay.