Obligations of the Principal

7/28/2019 Obligations of the Principal

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Obligations of the principal

SECOND DIVISION

[G.R. No. 159489, February 04, 2008]

FILIPINAS LIFE ASSURANCE COMPANY (now AYALA LIFE ASSURANCE, INC.),Petitioner, vs. CLEMENTE N. PEDROSO, TERESITA O. PEDROSO and JENNIFER N.

PALACIO thru her Attorney-in-Fact PONCIANO C. MARQUEZ, Respondents.

D E C I S I O N

QUISUMBING, J.:

This petition for review on certiorari seeks the reversal of the Decision[1]

and

Resolution,[2]

dated November 29, 2002 and August 5, 2003, respectively, of the

Court of Appeals in CA-G.R. CV No. 33568. The appellate court had affirmed the

Decision[3]

dated October 10, 1989 of the Regional Trial Court (RTC) of Manila,

Branch 3, finding petitioner as defendant and the co-defendants below jointly and

severally liable to the plaintiffs, now herein respondents.

The antecedent facts are as follows:

Respondent Teresita O. Pedroso is a policyholder of a 20-year endowment life

insurance issued by petitioner Filipinas Life Assurance Company (Filipinas Life).

Pedroso claims Renato Valle was her insurance agent since 1972 and Valle

collected her monthly premiums. In the first week of January 1977, Valle told her

that the Filipinas Life Escolta Office was holding a promotional investment

program for policyholders. It was offering 8% prepaid interest a month for certain

amounts deposited on a monthly basis. Enticed, she initially invested and issued a

post-dated check dated January 7, 1977 for P10,000.[4]

In return, Valle issued

Pedroso his personal check for P800 for the 8%

[5]

prepaid interest and a FilipinasLife Agents Receipt No. 807838.

[6]

Subsequently, she called the Escolta office and talked to Francisco Alcantara, the

administrative assistant, who referred her to the branch manager, Angel Apetrior.

Pedroso inquired about the promotional investment and Apetrior confirmed that

there was such a promotion. She was even told she could push through with


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the check she issued. From the records, the check, with the endorsement of

Alcantara at the back, was deposited in the account of Filipinas Life with the

Commercial Bank and Trust Company (CBTC), Escolta Branch.

Relying on the representations made by the petitioners duly authorizedrepresentatives Apetrior and Alcantara, as well as having known agent Valle for

quite some time, Pedroso waited for the maturity of her initial investment. A

month after, her investment of P10,000 was returned to her after she made a

written request for its refund. The formal written request, dated February 3,

1977, was written on an inter-office memorandum form of Filipinas Life prepared

by Alcantara.[7]

To collect the amount, Pedroso personally went to the Escolta

branch where Alcantara gave her the P10,000 in cash. After a second investment,

she made 7 to 8 more investments in varying amounts, totaling P37,000 but at a

lower rate of 5%[8]

prepaid interest a month. Upon maturity of Pedrosossubsequent investments, Valle would take back from Pedroso the corresponding

yellow-colored agents receipt he issued to the latter.

Pedroso told respondent Jennifer N. Palacio, also a Filipinas Life insurance

policyholder, about the investment plan. Palacio made a total investment of

P49,550[9]

but at only 5% prepaid interest. However, when Pedroso tried to

withdraw her investment, Valle did not want to return some P17,000 worth of it.

Palacio also tried to withdraw hers, but Filipinas Life, despite demands, refused to

return her money. With the assistance of their lawyer, they went to Filipinas LifeEscolta Office to collect their respective investments, and to inquire why they had

not seen Valle for quite some time. But their attempts were futile. Hence,

respondents filed an action for the recovery of a sum of money.

After trial, the RTC, Branch 3, Manila, held Filipinas Life and its co-defendants

Valle, Apetrior and Alcantara jointly and solidarily liable to the respondents.

On appeal, the Court of Appeals affirmed the trial courts ruling and

subsequently denied the motion for reconsideration.

Petitioner now comes before us raising a single issue:

WHETHER OR NOT THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR

AND GRAVELY ABUSED ITS DISCRETION IN AFFIRMING THE DECISION OF THE

LOWER COURT HOLDING FLAC [FILIPINAS LIFE] TO BE JOINTLY AND SEVERALLY


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LIABLE WITH ITS CO-DEFENDANTS ON THE CLAIM OF RESPONDENTS INSTEAD OF

HOLDING ITS AGENT, RENATO VALLE, SOLELY LIABLE TO THE RESPONDENTS.[10]

Simply put, did the Court of Appeals err in holding petitioner and its co-

defendants jointly and severally liable to the herein respondents?

Filipinas Life does not dispute that Valle was its agent, but claims that it was only

a life insurance company and was not engaged in the business of collecting

investment money. It contends that the investment scheme offered to

respondents by Valle, Apetrior and Alcantara was outside the scope of their

authority as agents of Filipinas Life such that, it cannot be held liable to the

respondents.[11]

On the other hand, respondents contend that Filipinas Life authorized Valle to

solicit investments from them. In fact, Filipinas Lifes official documents andfacilities were used in consummating the transactions. These transactions,

according to respondents, were confirmed by its officers Apetrior and Alcantara.

Respondents assert they exercised all the diligence required of them in

ascertaining the authority of petitioners agents; and it is Filipinas Life that

failed in its duty to ensure that its agents act within the scope of their authority.

Considering the issue raised in the light of the submissions of the parties, we find

that the petition lacks merit. The Court of Appeals committed no reversible error

nor abused gravely its discretion in rendering the assailed decision and resolution.

It appears indisputable that respondents Pedroso and Palacio had invested

P47,000 and P49,550, respectively. These were received by Valle and remitted to

Filipinas Life, using Filipinas Lifes official receipts, whose authenticity were

not disputed. Valles authority to solicit and receive investments was also

established by the parties. When respondents sought confirmation, Alcantara,

holding a supervisory position, and Apetrior, the branch manager, confirmed that

Valle had authority. While it is true that a person dealing with an agent is put

upon inquiry and must discover at his own peril the agents authority, in thiscase, respondents did exercise due diligence in removing all doubts and in

confirming the validity of the representations made by Valle.

Filipinas Life, as the principal, is liable for obligations contracted by its agent Valle.

By the contract of agency, a person binds himself to render some service or to do


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something in representation or on behalf of another, with the consent or

authority of the latter.[12]

The general rule is that the principal is responsible for

the acts of its agent done within the scope of its authority, and should bear the

damage caused to third persons.[13]

When the agent exceeds his authority, the

agent becomes personally liable for the damage.[14]

But even when the agentexceeds his authority, the principal is still solidarily liable together with the agent

if the principal allowed the agent to act as though the agent had full powers.[15]

In

other words, the acts of an agent beyond the scope of his authority do not bind

the principal, unless the principal ratifies them, expressly or

impliedly.[16]

Ratification in agency is the adoption or confirmation by one person

of an act performed on his behalf by another without authority.[17]

Filipinas Life cannot profess ignorance of Valles acts. Even if Valles

representations were beyond his authority as a debit/insurance agent, FilipinasLife thru Alcantara and Apetrior expressly and knowingly ratified Valles acts. It

cannot even be denied that Filipinas Life benefited from the investments

deposited by Valle in the account of Filipinas Life. In our considered view, Filipinas

Life had clothed Valle with apparent authority; hence, it is now estopped to deny

said authority. Innocent third persons should not be prejudiced if the principal

failed to adopt the needed measures to prevent misrepresentation, much more

so if the principal ratified his agents acts beyond the latters authority. The

act of the agent is considered that of the principal itself. Qui per alium facit per

seipsum facere videtur.He who does a thing by an agent is considered asdoing it himself.

[18]

WHEREFORE, the petition is DENIED for lack of merit. The Decision andResolution, dated November 29, 2002 and August 5, 2003, respectively, of the

Court of Appeals in CA-G.R. CV No. 33568 are AFFIRMED.

Costs against the petitioner.

SO ORDERED.


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THIRD DIVISION

PURITA PAHUD, SOLEDAD PAHUD, and IANLEE CASTILLA (represented by Mother andAttorney-in-Fact VIRGINIA CASTILLA),

Petitioners,

- versus -

COURT OF APPEALS, SPOUSES ISAGANIBELARMINO and LETICIA OCAMPO,EUFEMIA SAN AGUSTIN-MAGSINO,ZENAIDA SAN AGUSTIN-McCRAE,MILAGROS SAN AGUSTIN-FORTMAN,MINERVA SAN AGUSTIN-ATKINSON,FERDINAND SAN AGUSTIN, RAUL SANAGUSTIN, ISABELITA SAN AGUSTIN-LUSTENBERGER and VIRGILIO SANAGUSTIN,

Respondents.

G.R. No. 160346

Present:

CARPIO MORALES,J.,*

CHICO-NAZARIO,**

Acting Chairperson,

VELASCO, JR.,

NACHURA, and

PERALTA,JJ.

Promulgated:

August 25, 2009

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DECISION

NACHURA,J.:

For our resolution is a petition for review on certiorariassailing the April 23,

2003 Decision[1]

and October 8, 2003 Resolution[2]

of the Court of Appeals (CA) in

CA-G.R. CV No. 59426. The appellate court, in the said decision and resolution,

reversed and set aside the January 14, 1998 Decision[3]of the Regional Trial Court

(RTC), which ruled in favor of petitioners.

The dispute stemmed from the following facts.

During their lifetime, spouses Pedro San Agustin and Agatona Genil were

able to acquire a 246-square meter parcel of land situated in BarangayAnos, Los

Baos, Laguna and covered by Original Certificate of Title (OCT) No. O-(1655) 0-

15.[4]

Agatona Genil died on September 13, 1990 while Pedro San Agustin died on

September 14, 1991. Both died intestate, survived by their eight (8) children:

respondents Eufemia, Raul, Ferdinand, Zenaida, Milagros, Minerva, Isabelita and

Virgilio.

Sometime in 1992, Eufemia, Ferdinand and Raul executed a Deed of

Absolute Sale of Undivided Shares[5]

conveying in favor of petitioners (the Pahuds,

for brevity) their respective shares from the lot they inherited from theirdeceased parents forP525,000.00.

[6]Eufemia also signed the deed on behalf of

her four (4) other co-heirs, namely: Isabelita on the basis of a special power of

attorney executed on September 28, 1991,[7]

and also for Milagros, Minerva, and

Zenaida but without their apparent written authority.[8]

The deed of sale was also

not notarized.[9]
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On July 21, 1992, the Pahuds paid P35,792.31 to the Los Baos Rural Bank

where the subject property was mortgaged.[10]

The bank issued a release of

mortgage and turned over the owners copy of the OCT to the Pahuds.[11]

Over

the following months, the Pahuds made more payments to Eufemia and her

siblings totaling to P350,000.00.[12]

They agreed to use the

remainingP87,500.00[13]

to defray the payment for taxes and the expenses in

transferring the title of the property.[14]

When Eufemia and her co-heirs drafted

an extra-judicial settlement of estate to facilitate the transfer of the title to the

Pahuds, Virgilio refused to sign it.[15]

On July 8, 1993, Virgilios co-heirs filed a complaint[16]

for judicial partition ofthe subject property before the RTC of Calamba, Laguna. On November 28, 1994,

in the course of the proceedings for judicial partition, a Compromise

Agreement[17]

was signed with seven (7) of the co-heirs agreeing to sell their

undivided shares to Virgilio for P700,000.00. The compromise agreement was,

however, not approved by the trial court because Atty. Dimetrio Hilbero, lawyer

for Eufemia and her six (6) co-heirs, refused to sign the agreement because he

knew of the previous sale made to the Pahuds.[18]

On December 1, 1994, Eufemia acknowledged having received P700,000.00

from Virgilio.[19]

Virgilio then sold the entire property to spouses Isagani

Belarmino and Leticia Ocampo (Belarminos) sometime in 1994. The Belarminos

immediately constructed a building on the subject property.

Alarmed and bewildered by the ongoing construction on the lot they

purchased, the Pahuds immediately confronted Eufemia who confirmed to themthat Virgilio had sold the property to the Belarminos.

[20] Aggrieved, the Pahuds

filed a complaint in intervention[21]

in the pending case for judicial partition.

After trial, the RTC upheld the validity of the sale to petitioners. The

dispositive portion of the decision reads:
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WHEREFORE, the foregoing considered, the Court orders:

1. the sale of the 7/8 portion of the property covered by

OCT No. O (1655) O-15 by the plaintiffs as heirs of deceased Sps.Pedro San Agustin and Agatona Genil in favor of the Intervenors-

Third Party plaintiffs as valid and enforceable, but obligating the

Intervenors-Third Party plaintiffs to complete the payment of the

purchase price of P437,500.00 by paying the balance of P87,500.00

to defendant Fe (sic) San Agustin Magsino. Upon receipt of the

balance, the plaintiff shall formalize the sale of the 7/8 portion in

favor of the Intervenor[s]-Third Party plaintiffs;

2. declaring the document entitled Salaysay sa Pagsang-ayon sa Bilihan (Exh. 2-a) signed by plaintiff Eufemia San Agustin

attached to the unapproved Compromise Agreement (Exh. 2) as

not a valid sale in favor of defendant Virgilio San Agustin;

3. declaring the sale (Exh. 4) made by defendant Virgilio

San Agustin of the property covered by OCT No. O (1655)-O-15

registered in the names of Spouses Pedro San Agustin and Agatona

Genil in favor of Third-party defendant Spouses Isagani and Leticia

Belarmino as not a valid sale and as inexistent;

4. declaring the defendant Virgilio San Agustin and the

Third-Party defendants spouses Isagani and Leticia Belarmino as in

bad faith in buying the portion of the property already sold by the

plaintiffs in favor of the Intervenors-Third Party Plaintiffs and the

Third-Party Defendant Sps. Isagani and Leticia Belarmino in

constructing the two-[storey] building in (sic)the property subject of

this case; and

5. declaring the parties as not entitled to any damages, with

the parties shouldering their respective responsibilities regarding the

payment of attorney*+s fees to their respective lawyers.

No pronouncement as to costs.


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SO ORDERED.[22]

Not satisfied, respondents appealed the decision to the CA arguing, in themain, that the sale made by Eufemia for and on behalf of her other co-heirs to the

Pahuds should have been declared void and inexistent for want of a written

authority from her co-heirs. The CA yielded and set aside the findings of the trial

court. In disposing the issue, the CA ruled:

WHEREFORE, in view of the foregoing, the Decision dated

January 14, 1998, rendered by the Regional Trial Court of Calamba,

Laguna, Branch 92 in Civil Case No. 2011-93-C forJudicial Partition ishereby REVERSED and SET ASIDE, and a new one entered, as follows:

(1) The case for partition among the plaintiffs-appellees and

appellant Virgilio is now considered closed and terminated;

(2) Ordering plaintiffs-appellees to return to intervenors-appellees

the total amount they received from the latter, plus an interest of

12% per annum from the time the complaint [in] intervention was

filed on April 12, 1995 until actual payment of the same;

(3) Declaring the sale of appellant Virgilio San Agustin to appellants

spouses, Isagani and Leticia Belarmino[,] as valid and binding;

(4) Declaring appellants-spouses as buyers in good faith and for

value and are the owners of the subject property.

No pronouncement as to costs.

SO ORDERED.[23]

Petitioners now come to this Court raising the following arguments:


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I. The Court of Appeals committed grave and reversible

error when it did not apply the second paragraph of Article

1317 of the New Civil Code insofar as ratification is concerned

to the sale of the 4/8 portion of the subject property executed

by respondents San Agustin in favor of petitioners;

II. The Court of Appeals committed grave and reversible error

in holding that respondents spouses Belarminos are in good

faith when they bought the subject property from respondent

Virgilio San Agustin despite the findings of fact by the court a

quo that they were in bad faith which clearly contravenes the

presence of long line of case laws upholding the task of giving

utmost weight and value to the factual findings of the trial

court during appeals; [and]

III. The Court of Appeals committed grave and reversible error

in holding that respondents spouses Belarminos have superior

rights over the property in question than petitioners despite

the fact that the latter were prior in possession thereby

misapplying the provisions of Article 1544 of the New Civil

Code.[24]

The focal issue to be resolved is the status of the sale of the subject

property by Eufemia and her co-heirs to the Pahuds. We find the transaction to be

valid and enforceable.

Article 1874 of the Civil Code plainly provides:

Art. 1874. When a sale of a piece of land or any interest

therein is through an agent, the authority of the latter shall be inwriting; otherwise, the sale shall be void.

Also, under Article 1878,[25]

a special power of attorney is necessary for an

agent to enter into a contract by which the ownership of an immovable property


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is transmitted or acquired, either gratuitously or for a valuable consideration.

Such stringent statutory requirement has been explained in Cosmic Lumber

Corporation v. Court of Appeals:[26]

[T]he authority of an agent to execute a contract [of] sale of real

estate must be conferred in writing and must give him specificauthority, either to conduct the general business of the principal orto execute a binding contract containing terms and conditions which

are in the contract he did execute. A special power of attorney is

necessary to enter into any contract by which the ownership of an

immovable is transmitted or acquired either gratuitously or for a

valuable consideration. The express mandate required by law toenable an appointee of an agency (couched) in general terms to

sell must be one that expressly mentions a sale or that includes asale as a necessary ingredient of the act mentioned. For theprincipal to confer the right upon an agent to sell real estate, a power

of attorney must so express the powers of the agent in clear and

unmistakable language. When there is any reasonable doubt that the

language so used conveys such power, no such construction shall be

given the document.[27]

In several cases, we have repeatedly held that the absence of a written

authority to sell a piece of land is, ipso jure, void,[28]

precisely to protect the

interest of an unsuspecting owner from being prejudiced by the unwarranted act

of another.

Based on the foregoing, it is not difficult to conclude, in principle, that the

sale made by Eufemia, Isabelita and her two brothers to the Pahuds sometime in

1992 should be valid only with respect to the 4/8 portion of the subject

property. The sale with respect to the 3/8 portion, representing the shares

of Zenaida, Milagros, and Minerva, is void because Eufemia could not dispose of

the interest of her co-heirs in the said lot absent any written authority from the

latter, as explicitly required by law. This was, in fact, the ruling of the CA.
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Still, in their petition, the Pahuds argue that the sale with respect to the 3/8

portion of the land should have been deemed ratified when the three co-heirs,

namely: Milagros, Minerva, and Zenaida, executed their respective special power

of attorneys[29]

authorizing Eufemia to represent them in the sale of their shares

in the subject property.[30]

While the sale with respect to the 3/8 portion is void by express provision

of law and not susceptible to ratification,[31]

we nevertheless uphold its validity on

the basis of the common law principle of estoppel.

Article 1431 of the Civil Code provides:

Art. 1431. Through estoppel an admission or representation is

rendered conclusive upon the person making it, and cannot be

denied or disproved as against the person relying thereon.

True, at the time of the sale to the Pahuds, Eufemia was not armed with

the requisite special power of attorney to dispose of the 3/8 portion of the

property. Initially, in their answer to the complaint in intervention,[32]

Eufemia

and her other co-heirs denied having sold their shares to the Pahuds. During the

pre-trial conference, however, they admitted that they had indeed sold 7/8 of the

property to the Pahuds sometime in 1992.[33]

Thus, the previous denial was

superseded, if not accordingly amended, by their subsequent

admission.[34]

Moreover, in their Comment,[35]

the said co-heirs again admitted

the sale made to petitioners.[36]

Interestingly, in no instance did the three (3) heirs concerned assail the

validity of the transaction made by Eufemia to the Pahuds on the basis of want of

written authority to sell. They could have easily filed a case for annulment of the

sale of their respective shares against Eufemia and the Pahuds. Instead, they
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opted to remain silent and left the task of raising the validity of the sale as an

issue to their co-heir, Virgilio, who is not privy to the said transaction. They

cannot be allowed to rely on Eufemia, their attorney-in-fact, to impugn the

validity of the first transaction because to allow them to do so would be

tantamount to giving premium to their sisters dishonest and fraudulent deed.

Undeniably, therefore, the silence and passivity of the three co-heirs on the issue

bar them from making a contrary claim.

It is a basic rule in the law of agency that a principal is subject to liability for

loss caused to another by the latters reliance upon a deceitful representation by

an agent in the course of his employment (1) if the representation is authorized;

(2) if it is within the implied authority of the agent to make for the principal; or (3)if it is apparently authorized, regardless of whether the agent was authorized by

him or not to make the representation.[37]

By their continued silence, Zenaida, Milagros and Minerva have caused the

Pahuds to believe that they have indeed clothed Eufemia with the authority to

transact on their behalf. Clearly, the three co-heirs are now estopped from

impugning the validity of the sale from assailing the authority of Eufemia to enter

into such transaction.

Accordingly, the subsequent sale made by the seven co-heirs to Virgilio was

void because they no longer had any interest over the subject property which

they could alienate at the time of the second transaction.[38]

Nemo dat quod non

habet. Virgilio, however, could still alienate his 1/8 undivided share to the

Belarminos.

The Belarminos, for their part, cannot argue that they purchased the

property from Virgilio in good faith. As a general rule, a purchaser of a real

property is not required to make any further inquiry beyond what the certificate

of title indicates on its face.[39]

But the rule excludes those who purchase with

knowledge of the defect in the title of the vendor or of facts sufficient to induce a
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reasonable and prudent person to inquire into the status of the property.[40]

Such

purchaser cannot close his eyes to facts which should put a reasonable man on

guard, and later claim that he acted in good faith on the belief that there was no

defect in the title of the vendor. His mere refusal to believe that such defect

exists, or his obvious neglect by closing his eyes to the possibility of the existence

of a defect in the vendors title, will not make him an innocent purchaser for

value, if afterwards it turns out that the title was, in fact, defective. In such a

case, he is deemed to have bought the property at his own risk, and any injury or

prejudice occasioned by such transaction must be borne by him.[41]

In the case at bar, the Belarminos were fully aware that the property was

registered not in the name of the immediate transferor, Virgilio, but remained inthe name of Pedro San Agustin and Agatona Genil.

[42] This fact alone is sufficient

impetus to make further inquiry and, thus, negate their claim that they are

purchasers for value in good faith.[43]

They knew that the property was still

subject of partition proceedings before the trial court, and that the compromise

agreement signed by the heirs was not approved by the RTC following the

opposition of the counsel for Eufemia and her six other co-heirs.[44]

The

Belarminos, being transfereespendente lite,are deemed buyers in mala fide, and

they stand exactly in the shoes of the transferor and are bound by any judgment

or decree which may be rendered for or against the transferor.[45]

Furthermore,

had they verified the status of the property by asking the neighboring residents,

they would have been able to talk to the Pahuds who occupy an adjoining

business establishment[46]

and would have known that a portion of the property

had already been sold. All these existing and readily verifiable facts are sufficient

to suggest that the Belarminos knew that they were buying the property at their

own risk.

WHEREFORE, premises considered, the April 23, 2003 Decision of the Court

of Appeals as well as its October 8, 2003 Resolution in CA-G.R. CV No. 59426,

are REVERSED and SET ASIDE. Accordingly, the January 14, 1998 Decision of

Branch 92 of the Regional Trial Court of Calamba, Laguna
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is REINSTATED withthe MODIFICATION that the sale made by respondent Virgilio

San Agustin to respondent spouses Isagani Belarmino and Leticia Ocampo is valid

only with respect to the 1/8 portion of the subject property. The trial court is

ordered to proceed with the partition of the property with dispatch.

SO ORDERED.

EN BANC

G.R. No. L-20145November 15, 1923

VICENTE VERZOSA and RUIZ, REMENTERIA Y CIA., S. en C.,Plaintiffs-Appellants ,vs. SILVINO LIM and SIY CONG BIENG and COMPANY, INC.,Defendants-

Appellants.

STREET,J.:chanrobles virtual law library

This action was instituted in the Court of first Instance of the City of Manila by

Vicente Versoza and Ruiz, Rementeria y Compania, as owners of the coastwisevessel Perla, against Silvino Lim and Siy Cong Bieng & Company, Inc., as owner

and agent, respectively, of the vessel Ban Yek, for the purpose of recovering a

sum of money alleged to be the damages resulting to the plaintiffs from a collision

which occurred on March 9, 1921, between the two vessels mentioned, it being

alleged that said collision was due to the experience, carelessness and lack of skill

on the part of the captain of the Ban Yekand to his failure to observe the rules of

navigation appropriate to the case. The defendants answered with a general

denial, and by way of special defense asserted, among other things, that the

collision was due exclusively to the inexperience and carelessness of the captain

and officers of the steamship Perla; for which reason the defendants in turn, by

way of counterclaim, prayed judgment for the damages suffered by theBan

Yekfrom the same collision. At the hearing the trial judge absolved the

defendants from the complaint and likewise absolved the plaintiffs from the


16/52

defendants' counterclaim. From this judgment both parties

appealed.chanroblesvirtualawlibrarychanrobles virtual law library

It appears in evidence that at about five o'clock in the afternoon of March 9,

1921, the coastwise steamer Ban Yekleft the port of Naga on the Bicol River, inthe Province of Camarines Sur, with destination to the City of Manila. At the time

of her departure from said port the sea was approaching to high tide but the

current was still running in through the Bicol River, with the result that theBan

Yekhad the current against her. As the ship approached the Malbong bend of the

Bicol River, in the municipality of Gainza, another vessel, the Perla, was sighted

coming up the river on the way to Naga. While the boats were yet more than a

kilometer apart, the Ban Yekgave two blasts with her whistle, thus indicating an

intention to pass on the left, or to her own port side. In reply to this signal

the Perlagave a single blast, thereby indicating that she disagreed with the signalgiven by the Ban Yekand would maintain her position on the right, that is, would

keep to the starboard. The Ban Yekmade no reply to this signal. As the Perlawas

navigating with the current, then running in from the sea, this vessel, under

paragraph 163 of Customs Marine Circular No. 53, had the right of way over

the Ban Yek, and the officers of the Perla interpreted the action of the Ban Yekin

not replying to the Perla's signal as an indication of acquiescene of the officers of

the Ban Yekin the determination of the Perla to keep to the

starboard.chanroblesvirtualawlibrarychanrobles virtual law library

The river at this point is about two hundred and fifty feet wide, and the courses

thus being respectively pursued by the two vessels necessarily tended to bring

them into a head-on collision. When the danger of such an occurrence became

imminent, Captain Garrido of the Perla, seeing that he was shut off by the Ban

Yekfrom passing to the right, put his vessel to port, intending to avoid collision or

minimize its impact by getting farther out into the stream. An additional reason

for this maneuver, as stated by Captain Carrido, is that the captain of theBan

Yekwaived his hand to Garrido, indicating that the latter should turn his vessel

towards the middle of the stream. At about the same time that the Perla was thusdeflected from her course the engine on the Ban Yekwas reversed and three

blasts were given by this vessel to indicate that she was

backing.chanroblesvirtualawlibrarychanrobles virtual law library

Now, it appears that when the engine is reversed, a vessel swings to the right or

left in accordance with the direction in which the blades of the propeller are set;


17/52

and as the Ban Yekbegan to back, her bow was thrown out into the stream, a

movement which was assisted by the current of the river. By this means the Ban

Yekwas brought to occupy an oblique position across the stream at the moment

the Perla was passing; and the bow of the Ban Yekcrashed into the starboard

bumpers of the Perla, carrying away external parts of the ship and inflictingmaterial damage on the hull. To effect the repairs thus made necessary to

the Perla cost her owners the sum of P17,827, including expenses of

survey.chanroblesvirtualawlibrarychanrobles virtual law library

The first legal point presented in the case has reference to the sufficiency of the

protest. In this connection it appears that within twenty-four hours after the

arrival of the Perla at the port of Naga, Captain Garrido appeared before Vicente

Rodi, the auxiliary justice of the peace of the municipality of Naga, and made

before that officer the sworn protest which is in evidence as Exhibit B. Thisprotest is sufficient in our opinion to answer all the requirements of article 835 of

the Code of Commerce. A regular justice of the peace would without doubt be

competent to take a marine protest, and the same authority must be conceded to

the auxiliary justice in the absence of any showing in the record to the effect that

the justice of the peace himself was acting at the time in the municipality (Adm.

Code, sec. 211; sec. 334, Code of Civ. Proc., subsecs. 14, 15). We note that in his

certificate to this protest Vicente Rodi added to the appellation of auxiliary justice

of the peace, following his name, the additional designation "notary public ex-

officio." However, under subsection (c) of section 242 of the Administrative Code,it is plain that an auxiliary justice of the peace is not an ex-officio notary public. It

results that the taking of this protest must be ascribed to the officer in his

character as auxiliary justice of the peace and not in the character of notary public

ex-officio. It is hardly necessary to add that this court takes judicial notice of the

fact that Naga is not a port of entry and that no customs official of rank is there

stationed who could have taken cognizance of this

protest.chanroblesvirtualawlibrarychanrobles virtual law library

Upon the point of responsibility for the collision we have no hesitancy in findingthat the fault is to be attributed exclusively to the negligence and inattention of

the captain and pilot in charge of the Ban Yek. The Perla undoubtedly had the

right of way, since this vessel was navigating with the current, and the officers in

charge of the Perla were correct in assuming, from the failure of the Ban Yekto

respond to the single blast of the Perla, that the officers in charge of the Ban

Yekrecognized that the Perla had a right of way and acquiesced in her resolution


18/52

to keep to the right. The excuse urged for the Ban Yekis that this vessel is

somewhat larger than the Perla and that it was desirable for the Ban Yekto keep

on the side of the long arc of the curve of the river; and in this connection it is

suggested that the river is deeper on the outer edge of the bend than on the

inner edge. It is also stated that on a certain previous occasion the Ban Yekoncoming out from this port had gotten stuck in the mud in this bend by keeping too

far to the right. Moreover, it is said to be the practice of ships in navigating this

stream to keep nearer the outside than to the inside of the bend. These

suggestions are by no means convincing. It appears in evidence that the river

bottom here is composed of mud and silt, and as the tide at the time of this

incident was nearly at its flood, there was ample depth of water to have

accommodated the Ban Yekif she had kept to that part of the stream which it

was proper for her to occupy. We may further observe that the disparity in the

size of the vessels was not such as to dominate the situation and deprivethe Perla of the right of way under the conditions stated. Blame for the collision

must therefore, as already stated, be attributed to the Ban

Yek.chanroblesvirtualawlibrarychanrobles virtual law library

On the other hand no fault can be attributed to the officers navigating

the Perla either in maintaining the course which had been determined upon for

that vessel in conformity with the marine regulations applicable to the case or in

deflecting the vessel towards the middle of the stream after the danger of

collision became imminent. The trial judge suggests in his opinion that whenCaptain Garrido saw that the Ban Yekwas holding her course to the left, he

(Garrido) should have changed the course of the Perla to port more promptly. The

validity of this criticism cannot be admitted. Among rules applicable to navigation

none is better founded on reason and experience than that which requires the

navigating officers of any vessel to assume that an approaching vessel will

observe the regulations prescribed for navigation (G. Urrutia & Co. vs. Baco River

Plantation Co., 26 Phil., 632, 637). Any other rule would introduce guess work into

the control of ships and produce uncertainty in the operation of the

regulations.chanroblesvirtualawlibrarychanrobles virtual law library

Our conclusion is that his Honor, the trial judge, was in error in not awarding

damages to the Perla; but no error was committed in absolving the plaintiffs from

the defendants' cross-complaint.chanroblesvirtualawlibrarychanrobles virtual law

library


19/52

The sum of P17,827 in our opinion represents the limit of the plaintiffs' right of

recovery. In the original complaint recovery is sought for an additional amount of

P18,000, most of which consists of damages supposed to have been incurred from

the inability of the Perla to maintain her regular schedule while laid up in the dock

undergoing repairs. The damages thus claimed, in addition to being somewhat ofa speculative nature, are in our opinion not sufficiently proved to warrant the

court in allowing the same.chanroblesvirtualawlibrarychanrobles virtual law

library

Having determined the amount which the plaintiffs are entitled to recover, it

becomes necessary to consider the person, or persons, who must respond for

these damages. Upon this point we note that Silvino Lim is impleaded as owner;

and Siy Cong Bieng & Co. is impleaded as the shipping agent (casa naviera), or

person in responsible control of the Ban Yekat the time of the accident. We notefurther that in article 826 of the Code of Commerce it is declared that

the ownerof any vessel shall be liable for the indemnity due to any other vessel

injured by the fault, negligence, or lack of skill of the captain of the first. We say

"owner," which is the word used in the current translation of this article in the

Spanish Code of Commerce. It is to be observed, however, that the Spanish text

itself uses the wordnaviero; and there is some ambiguity in the use of said word

in this article, owing to the fact that naviero in Spanish has several meanings. The

author of the article which appears under the word naviero in the Enciclopedia

Juridica Espaola tells us that in Spanish it may mean either owner, outfitter,charterer, or agent, though he says that the fundamental and correct meaning of

the word is that of "owner." That naviero, as used in the Spanish text of article

826, means owner is further to be inferred from article 837, which limits the civil

liability expressed in article 826 to the value of the vessel with all her

appurtenances and all the freight earned during the voyage. There would have

been no propriety in limiting liability to the value of the vessel unless the owner

were understood to be the person liable. It is therefore clear that by special

provision of the Code of Commerce the owner is made responsible for the

damage caused by an accident of the kind under consideration in this case; and inmore than one case this court has held the owner liable, when sued alone

(Philippine Shipping Co. vs. Garcia Vergara, 6 Phil., 281; G. Urrutia & Co.vs. Baco

River Plantation Co., 26 Phil., 632).chanroblesvirtualawlibrarychanrobles virtual

law library


20/52

But while it is thus demonstrated that Silvino Lim is liable for these damages in

the character of owner, it does not necessarily follows that Siy Cong Bieng & Co.,

as character or agent (casa naviera), is exempt from liability; and we are of the

opinion that both the owner and agent can be held responsible where both are

impleaded together. In Philippine Shipping Co., vs. Garcia Vergara (6 Phil., 281), itseems to have been accepted as a matter of course that both owner and agent of

the offending vessel are liable for the damage done; and this must, we think, be

true. The liability of the naviero, in the sense of charterer or agent, if not

expressed in article 826 of the Code of Commerce, is clearly deducible from the

general doctrine of jurisprudence stated in article 1902 of the Civil Code, and it is

also recognized, but more especially as regards contractual obligations, in article

586 of the Code of Commerce. Moreover, we are of the opinion that both the

owner and agent (naviero) should be declared to be jointly and severally liable,

since the obligation which is the subject of this action had its origin in a tortiousact and did not arise from contract. Article 1137 of the Civil Code, declaring that

joint obligations shall be apportionable unless otherwise provided, has no

application to obligation arising from tort.chanroblesvirtualawlibrarychanrobles

virtual law library

For the reasons stated the judgment appealed from will be affirmed in so far as it

absolves the plaintiffs from the defendants' cross-complaint but will be reversed

in so far as it absolves the defendants from the plaintiffs' complaint; and

judgment will be entered for the plaintiffs to recover jointly and severally fromthe defendants Silvino Lim and Siy Cong Bieng & Co. the sum of seventeen

thousand eight hundred and twenty-seven pesos (P17,827), with interest from

the date of the institution of the action, without special pronouncement as to

costs of either instance. So ordered.chanroblesvirtualawlibrarychanrobles virtual

law library

Johnson, Malcolm, Avancea, Villamor and Romualdez, JJ., concur.


21/52

Republic of the Philippines

SUPREME COURTManila

THIRD DIVISION

G.R. No. 115838 July 18, 2002

CONSTANTE AMOR DE CASTRO and CORAZON AMOR DE CASTRO, petitioners,vs.

COURT OF APPEALS and FRANCISCO ARTIGO, respondents.

CARPIO,J.:

The Case

Before us is a Petition for Review on Certiorari1

seeking to annul the Decision of

the Court of Appeals2

dated May 4, 1994 in CA-G.R. CV No. 37996, which

affirmed in toto the decision3

of the Regional Trial Court of Quezon City, Branch

80, in Civil Case No. Q-89-2631. The trial court disposed as follows:

"WHEREFORE, the Court finds defendants Constante and Corazon Amor de

Castro jointly and solidarily liable to plaintiff the sum of:

a) P303,606.24 representing unpaid commission;

b) P25,000.00 for and by way of moral damages;

c) P45,000.00 for and by way of attorney's fees;


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d) To pay the cost of this suit.

Quezon City, Metro Manila, December 20, 1991."

The Antecedent Facts

On May 29, 1989, private respondent Francisco Artigo ("Artigo" for brevity) sued

petitioners Constante A. De Castro ("Constante" for brevity) and Corazon A. De

Castro ("Corazon" for brevity) to collect the unpaid balance of his broker's

commission from the De Castros.4

The Court of Appeals summarized the facts in

this wise:

"x x x. Appellants5

were co-owners of four (4) lots located at EDSA corner

New York and Denver Streets in Cubao, Quezon City. In a letter dated

January 24, 1984 (Exhibit "A-1, p. 144, Records), appellee6 was authorizedby appellants to act as real estate broker in the sale of these properties for

the amount ofP23,000,000.00, five percent (5%) of which will be given to

the agent as commission. It was appellee who first found Times Transit

Corporation, represented by its president Mr. Rondaris, as prospective

buyer which desired to buy two (2) lots only, specifically lots 14 and 15.

Eventually, sometime in May of 1985, the sale of lots 14 and 15 was

consummated. Appellee received from appellants P48,893.76 as

commission.

It was then that the rift between the contending parties soon emerged.

Appellee apparently felt short changed because according to him, his total

commission should be P352,500.00 which is five percent (5%) of the agreed

price of P7,050,000.00 paid by Times Transit Corporation to appellants for

the two (2) lots, and that it was he who introduced the buyer to appellants

and unceasingly facilitated the negotiation which ultimately led to the

consummation of the sale. Hence, he sued below to collect the balance

of P303,606.24 after having received P48,893.76 in advance.1wphi1.nt

On the other hand, appellants completely traverse appellee's claims and

essentially argue that appellee is selfishly asking for more than what he

truly deserved as commission to the prejudice of other agents who were

more instrumental in the consummation of the sale. Although appellants

readily concede that it was appellee who first introduced Times Transit

Corp. to them, appellee was not designated by them as their exclusive real


23/52

estate agent but that in fact there were more or less eighteen (18) others

whose collective efforts in the long run dwarfed those of appellee's,

considering that the first negotiation for the sale where appellee took

active participation failed and it was these other agents who successfully

brokered in the second negotiation. But despite this and out of appellants'"pure liberality, beneficence and magnanimity", appellee nevertheless was

given the largest cut in the commission (P48,893.76), although on the

principle ofquantum meruithe would have certainly been entitled to less.

So appellee should not have been heard to complain of getting only a

pittance when he actually got the lion's share of the commission and worse,

he should not have been allowed to get the entire commission.

Furthermore, the purchase price for the two lots was only P3.6 million as

appearing in the deed of sale and not P7.05 million as alleged by appellee.

Thus, even assuming that appellee is entitled to the entire commission, hewould only be getting 5% of the P3.6 million, or P180,000.00."

Ruling of the Court of Appeals

The Court of Appeals affirmed in toto the decision of the trial court.

First. The Court of Appeals found that Constante authorized Artigo to act as agent

in the sale of two lots in Cubao, Quezon City. The handwritten authorization letter

signed by Constante clearly established a contract of agency between Constante

and Artigo. Thus, Artigo sought prospective buyers and found Times Transit

Corporation ("Times Transit" for brevity). Artigo facilitated the negotiations which

eventually led to the sale of the two lots. Therefore, the Court of Appeals decided

that Artigo is entitled to the 5% commission on the purchase price as provided in

the contract of agency.

Second. The Court of Appeals ruled that Artigo's complaint is not dismissible for

failure to implead as indispensable parties the other co-owners of the two lots.

The Court of Appeals explained that it is not necessary to implead the other co-

owners since the action is exclusively based on a contract of agency betweenArtigo and Constante.

Third. The Court of Appeals likewise declared that the trial court did not err in

admitting parol evidence to prove the true amount paid by Times Transit to the

De Castros for the two lots. The Court of Appeals ruled that evidencealiunde could


24/52

be presented to prove that the actual purchase price was P7.05 million and not

P3.6 million as appearing in the deed of sale. Evidence aliunde is admissible

considering that Artigo is not a party, but a mere witness in the deed of sale

between the De Castros and Times Transit. The Court of Appeals explained that,

"the rule that oral evidence is inadmissible to vary the terms of writteninstruments is generally applied only in suits between parties to the instrument

and strangers to the contract are not bound by it." Besides, Artigo was not suing

under the deed of sale, but solely under the contract of agency. Thus, the Court of

Appeals upheld the trial court's finding that the purchase price was P7.05 million

and not P3.6 million.

Hence, the instant petition.

The Issues

According to petitioners, the Court of Appeals erred in -

I. NOT ORDERING THE DISMISSAL OF THE COMPLAINT FOR FAILURE TO

IMPLEAD INDISPENSABLE PARTIES-IN-INTEREST;

II. NOT ORDERING THE DISMISSAL OF THE COMPLAINT ON THE GROUND

THAT ARTIGO'S CLAIM HAS BEEN EXTINGUISHED BY FULL PAYMENT,

WAIVER, OR ABANDONMENT;

III. CONSIDERING INCOMPETENT EVIDENCE;

IV. GIVING CREDENCE TO PATENTLY PERJURED TESTIMONY;

V. SANCTIONING AN AWARD OF MORAL DAMAGES AND ATTORNEY'S FEES;

VI. NOT AWARDING THE DE CASTRO'S MORAL AND EXEMPLARY DAMAGES,

AND ATTORNEY'S FEES.

The Court's Ruling

The petition is bereft of merit.

First Issue: whether the complaint merits dismissal for failure to implead other

co-owners as indispensable parties


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The De Castros argue that Artigo's complaint should have been dismissed for

failure to implead all the co-owners of the two lots. The De Castros claim that

Artigo always knew that the two lots were co-owned by Constante and Corazon

with their other siblings Jose and Carmela whom Constante merely represented.

The De Castros contend that failure to implead such indispensable parties is fatalto the complaint since Artigo, as agent of all the four co-owners, would be paid

with funds co-owned by the four co-owners.

The De Castros' contentions are devoid of legal basis.

An indispensable party is one whose interest will be affected by the court's action

in the litigation, and without whom no final determination of the case can be

had.7

The joinder of indispensable parties is mandatory and courts cannot

proceed without their presence.8

Whenever it appears to the court in the course

of a proceeding that an indispensable party has not been joined, it is the duty of

the court to stop the trial and order the inclusion of such party.9

However, the rule on mandatory joinder of indispensable parties is not applicable

to the instant case.

There is no dispute that Constante appointed Artigo in a handwritten note dated

January 24, 1984 to sell the properties of the De Castros for P23 million at a 5

percent commission. The authority was on a first come, first serve basis. The

authority reads in full:

"24 Jan. 84

To Whom It May Concern:

This is to state that Mr. Francisco Artigo is authorized as our real estate

broker in connection with the sale of our property located at Edsa Corner

New York & Denver, Cubao, Quezon City.

Asking price P 23,000,000.00 with 5% commission as agent's fee.

C.C. de Castro

owner & representing

co-owners


26/52

This authority is on a first-come

First serve basisCAC"

Constante signed the note as owner and as representative of the other co-

owners. Under this note, a contract of agency was clearly constituted between

Constante and Artigo. Whether Constante appointed Artigo as agent, in

Constante's individual or representative capacity, or both, the De Castros cannot

seek the dismissal of the case for failure to implead the other co-owners as

indispensable parties. The De Castros admit that the other co-owners are

solidarily liable under the contract of agency,10

citing Article 1915 of the Civil

Code, which reads:

Art. 1915. If two or more persons have appointed an agent for a common

transaction or undertaking, they shall be solidarily liable to the agent for all

the consequences of the agency.

The solidary liability of the four co-owners, however, militates against the De

Castros' theory that the other co-owners should be impleaded as indispensable

parties. A noted commentator explained Article 1915 thus

"The rule in this article applies even when the appointments were made by

the principals in separate acts, provided that they are for the same

transaction. The solidarity arises from the common interest of theprincipals, and not from the act of constituting the agency. By virtue ofthis solidarity, the agent can recover from any principal the wholecompensation and indemnity owing to him by the others. The parties,however, may, by express agreement, negate this solidary responsibility.

The solidarity does not disappear by the mere partition effected by the

principals after the accomplishment of the agency.

If the undertaking is one in which several are interested, but only some

create the agency, only the latter are solidarily liable, without prejudice tothe effects ofnegotiorum gestio with respect to the others. And if the

power granted includes various transactions some of which are common

and others are not, only those interested in each transaction shall be liable

for it."11


27/52

When the law expressly provides for solidarity of the obligation, as in the liability

of co-principals in a contract of agency, each obligor may be compelled to pay the

entire obligation.12

The agent may recover the whole compensation from any one

of the co-principals, as in this case.

Indeed, Article 1216 of the Civil Code provides that a creditor may sue anyof thesolidary debtors. This article reads:

Art. 1216. The creditor may proceed against any one of the solidary debtors

or some or all of them simultaneously. The demand made against one of

them shall not be an obstacle to those which may subsequently be directed

against the others, so long as the debt has not been fully collected.

Thus, the Court has ruled in Operators Incorporated vs. American Biscuit Co.,

Inc.13 that

"x x x solidarity does not make a solidary obligor an indispensable party in

a suit filed by the creditor. Article 1216 of the Civil Code says that the

creditor `may proceed against anyone of the solidary debtors or some or all

of them simultaneously'." (Emphasis supplied)

Second Issue: whether Artigo's claim has been extinguished by full payment,

waiver or abandonment

The De Castros claim that Artigo was fully paid on June 14, 1985, that is, Artigo

was given "his proportionate share and no longer entitled to any balance."

According to them, Artigo was just one of the agents involved in the sale and

entitled to a "proportionate share" in the commission. They assert that Artigo did

absolutely nothing during the second negotiation but to sign as a witness in the

deed of sale. He did not even prepare the documents for the transaction as an

active real estate broker usually does.

The De Castros' arguments are flimsy.

A contract of agency which is not contrary to law, public order, public policy,

morals or good custom is a valid contract, and constitutes the law between the

parties.14

The contract of agency entered into by Constante with Artigo is the law

between them and both are bound to comply with its terms and conditions in

good faith.


28/52

The mere fact that "other agents" intervened in the consummation of the sale

and were paid their respective commissions cannot vary the terms of the contract

of agency granting Artigo a 5 percent commission based on the selling price.

These "other agents" turned out to be employees of Times Transit, the buyer

Artigo introduced to the De Castros. This prompted the trial court to observe:

"The alleged `second group' of agents came into the picture only during the

so-called `second negotiation' and it is amusing to note that these (sic)

second group, prominent among whom are Atty. Del Castillo and Ms.

Prudencio, happened to be employees of Times Transit, the buyer of the

properties. And their efforts were limited to convincing Constante to 'part

away' with the properties because the redemption period of the foreclosed

properties is around the corner, so to speak. (tsn. June 6, 1991).

x x x

To accept Constante's version of the story is to open the floodgates of fraud

and deceit. A seller could always pretend rejection of the offer and wait for

sometime for others to renew it who are much willing to accept a

commission far less than the original broker. The immorality in the instant

case easily presents itself if one has to consider that the alleged second

group' are the employees of the buyer, Times Transit and they have not

bettered the offer secured by Mr. Artigo for P7 million.

It is to be noted also that while Constante was too particular about the

unrenewed real estate broker's license of Mr. Artigo, he did not bother at

all to inquire as to the licenses of Prudencio and Castillo. (tsn, April 11,

1991, pp. 39-40)."15

(Emphasis supplied)

In any event, we find that the 5 percent real estate broker's commission is

reasonable and within the standard practice in the real estate industry for

transactions of this nature.

The De Castros also contend that Artigo's inaction as well as failure to protest

estops him from recovering more than what was actually paid him. The De

Castros cite Article 1235 of the Civil Code which reads:


29/52

Art. 1235. When the obligee accepts the performance, knowing its

incompleteness and irregularity, and without expressing any protest or

objection, the obligation is deemed fully complied with.

The De Castros' reliance on Article 1235 of the Civil Code is misplaced. Artigo'sacceptance of partial payment of his commission neither amounts to a waiver of

the balance nor puts him in estoppel. This is the import of Article 1235 which was

explained in this wise:

"The word accept, as used in Article 1235 of the Civil Code, means to take

as satisfactory or sufficient, or agree to an incomplete or irregular

performance. Hence, the mere receipt of a partial payment is not

equivalent to the required acceptance of performance as would extinguish

the whole obligation."16

(Emphasis supplied)

There is thus a clear distinction between acceptance and merereceipt.In this

case, it is evident that Artigo merely received the partial payment without waiving

the balance. Thus, there is no estoppel to speak of.

The De Castros further argue that laches should apply because Artigo did not file

his complaint in court until May 29, 1989, or almost four years later. Hence,

Artigo's claim for the balance of his commission is barred by laches.

Laches means the failure or neglect, for an unreasonable and unexplained lengthof time, to do that which by exercising due diligence could or should have been

done earlier. It is negligence or omission to assert a right within a reasonable

time, warranting a presumption that the party entitled to assert it either has

abandoned it or declined to assert it.17

Artigo disputes the claim that he neglected to assert his rights. He was appointed

as agent on January 24, 1984. The two lots were finally sold in June 1985. As

found by the trial court, Artigo demanded in April and July of 1985 the payment of

his commission by Constante on the basis of the selling price of P7.05 million butthere was no response from Constante.

18After it became clear that his demands

for payment have fallen on deaf ears, Artigo decided to sue on May 29, 1989.

Actions upon a written contract, such as a contract of agency, must be brought

within ten years from the time the right of action accrues.19

The right of action

accrues from the moment the breach of right or duty occurs. From this moment,


30/52

the creditor can institute the action even as the ten-year prescriptive period

begins to run.20

The De Castros admit that Artigo's claim was filed within the ten-year prescriptive

period. The De Castros, however, still maintain that Artigo's cause of action isbarred by laches. Laches does not apply because only four years had lapsed from

the time of the sale in June 1985. Artigo made a demand in July 1985 and filed the

action in court on May 29, 1989, well within the ten-year prescriptive period. This

does not constitute an unreasonable delay in asserting one's right. The Court has

ruled, "a delay within the prescriptive period is sanctioned by law and is not

considered to be a delay that would bar relief."21

In explaining that laches applies

only in the absence of a statutory prescriptive period, the Court has stated -

"Laches is recourse in equity. Equity, however, is applied only in the

absence, never in contravention, of statutory law. Thus, laches, cannot, as

a rule, be used to abate a collection suit filed within the prescriptive

period mandated by the Civil Code."22

Clearly, the De Castros' defense of laches finds no support in law, equity or

jurisprudence.

Third issue: whether the determination of the purchase price was made in

violation of the Rules on Evidence

The De Castros want the Court to re-examine the probative value of the evidence

adduced in the trial court to determine whether the actual selling price of the two

lots was P7.05 million and not P3.6 million. The De Castros contend that it is

erroneous to base the 5 percent commission on a purchase price of P7.05 million

as ordered by the trial court and the appellate court. The De Castros insist that

the purchase price is P3.6 million as expressly stated in the deed of sale, the due

execution and authenticity of which was admitted during the trial.

The De Castros believe that the trial and appellate courts committed a mistake inconsidering incompetent evidence and disregarding the best evidence and parole

evidence rules. They claim that the Court of Appeals erroneously affirmedsub

silentio the trial court's reliance on the various correspondences between

Constante and Times Transit which were mere photocopies that do not satisfy the

best evidence rule. Further, these letters covered only the first negotiations


31/52

between Constante and Times Transit which failed; hence, these are immaterial in

determining the final purchase price.

The De Castros further argue that if there was an undervaluation, Artigo who

signed as witness benefited therefrom, and being equally guilty, should be leftwhere he presently stands. They likewise claim that the Court of Appeals erred in

relying on evidence which were not offered for the purpose considered by the

trial court. Specifically, Exhibits "B", "C", "D" and "E" were not offered to prove

that the purchase price was P7.05 Million. Finally, they argue thatthe courts a

quo erred in giving credence to the perjured testimony of Artigo. They want the

entire testimony of Artigo rejected as a falsehood because he was lying when he

claimed at the outset that he was a licensed real estate broker when he was not.

Whether the actual purchase price was P7.05 Million as found by the trial court

and affirmed by the Court of Appeals, or P3.6 Million as claimed by the De

Castros, is a question of fact and not of law. Inevitably, this calls for an inquiry into

the facts and evidence on record. This we can not do.

It is not the function of this Court to re-examine the evidence submitted by the

parties, or analyze or weigh the evidence again.23

This Court is not the proper

venue to consider a factual issue as it is not a trier of facts. In petitions for review

on certiorari as a mode of appeal under Rule 45, a petitioner can only raise

questions of law. Our pronouncement in the case ofCormero vs. Court of

Appeals24bears reiteration:

"At the outset, it is evident from the errors assigned that the petition is

anchored on a plea to review the factual conclusion reached by the

respondent court. Such task however is foreclosed by the rule that in

petitions for certiorari as a mode of appeal, like this one, only questions of

law distinctly set forth may be raised. These questions have been defined

as those that do not call for any examination of the probative value of the

evidence presented by the parties. (Uniland Resources vs. Development

Bank of the Philippines, 200 SCRA 751 [1991] citing Goduco vs. Court ofappeals, et al., 119 Phil. 531; Hernandez vs. Court of Appeals, 149 SCRA 67).

And when this court is asked to go over the proof presented by the parties,

and analyze, assess and weigh them to ascertain if the trial court and the

appellate court were correct in according superior credit to this or that

piece of evidence and eventually, to the totality of the evidence of one


32/52

party or the other, the court cannot and will not do the same. (Elayda vs.

Court of Appeals, 199 SCRA 349 [1991]). Thus, in the absence of any

showing that the findings complained of are totally devoid of support in the

record, or that they are so glaringly erroneous as to constitute serious

abuse of discretion, such findings must stand, for this court is not expectedor required to examine or contrast the oral and documentary evidence

submitted by the parties. (Morales vs. Court of Appeals, 197 SCRA 391

[1991] citing Santa Ana vs. Hernandez, 18 SCRA 973 [1966])."

We find no reason to depart from this principle. The trial and appellate courts are

in a much better position to evaluate properly the evidence. Hence, we find no

other recourse but to affirm their finding on the actual purchase

price.1wphi1.nt

Fourth Issue: whether award of moral damages and attorney's fees is proper

The De Castros claim that Artigo failed to prove that he is entitled to moral

damages and attorney's fees. The De Castros, however, cite no concrete reason

except to say that they are the ones entitled to damages since the case was filed

to harass and extort money from them.

Law and jurisprudence support the award of moral damages and attorney's fees

in favor of Artigo. The award of damages and attorney's fees is left to the sound

discretion of the court, and if such discretion is well exercised, as in this case, itwill not be disturbed on appeal.

25Moral damages may be awarded when in a

breach of contract the defendant acted in bad faith, or in wanton disregard of his

contractual obligation.26

On the other hand, attorney's fees are awarded in

instances where "the defendant acted in gross and evident bad faith in refusing to

satisfy the plaintiff's plainly valid, just and demandable claim."27

There is no

reason to disturb the trial court's finding that "the defendants' lack of good faith

and unkind treatment of the plaintiff in refusing to give his due commission

deserve censure." This warrants the award of P25,000.00 in moral damages

and P 45,000.00 in attorney's fees. The amounts are, in our view, fair andreasonable. Having found a buyer for the two lots, Artigo had already performed

his part of the bargain under the contract of agency. The De Castros should have

exercised fairness and good judgment in dealing with Artigo by fulfilling their own

part of the bargain - paying Artigo his 5 percent broker's commission based on the

actual purchase price of the two lots.


33/52

WHEREFORE, the petition is denied for lack of merit. The Decision of the Court ofAppeals dated May 4, 1994 in CA-G.R. CV No. 37996 is AFFIRMEDin toto.

SO ORDERED.

THIRD DIVISION


34/52

ATTY. ROGELIO E. SARSABA,Petitioner,

- versus -

FE VDA. DE TE, represented by herAttorney-in-Fact, FAUSTINOCASTAEDA,

Respondents.

G.R. No. 175910

Present:

YNARES-SANTIAGO,J.,

Chairperson,

CHICO-NAZARIO,

VELASCO, JR.,

NACHURA, and

PERALTA,JJ.

Promulgated:

July 30, 2009

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

D E C I S I O N

PERALTA,J.:

Before us is a petition for review on certiorari[1]

with prayer for preliminary

injunction assailing the Order[2]

dated March 22, 2006 of the Regional Trial Court

(RTC), Branch 19, Digos City, Davao del Sur, in Civil Case No. 3488.
http://sc.judiciary.gov.ph/jurisprudence/2009/july2009/175910.htm#_ftn1http://sc.judiciary.gov.ph/jurisprudence/2009/july2009/175910.htm#_ftn1http://sc.judiciary.gov.ph/jurisprudence/2009/july2009/175910.htm#_ftn1http://sc.judiciary.gov.ph/jurisprudence/2009/july2009/175910.htm#_ftn2http://sc.judiciary.gov.ph/jurisprudence/2009/july2009/175910.htm#_ftn2http://sc.judiciary.gov.ph/jurisprudence/2009/july2009/175910.htm#_ftn2http://sc.judiciary.gov.ph/jurisprudence/2009/july2009/175910.htm#_ftn1


35/52

The facts, as culled from the records, follow.

On February 14, 1995, a Decision was rendered in NLRC Case No. RAB-11-

07-00608-93 entitled, Patricio Sereno v. Teodoro Gasing/Truck Operator, finding

Sereno to have been illegally dismissed and ordering Gasing to pay him his

monetary claims in the amount of P43,606.47. After the Writ of Execution was

returned unsatisfied, Labor Arbiter Newton R. Sancho issued an Alias Writ of

Execution[3]

on June 10, 1996, directing Fulgencio R. Lavarez, Sheriff II of the

National Labor Relations Commission (NLRC), to satisfy the judgment

award. On July 23, 1996, Lavarez, accompanied by Sereno and his counsel,

petitioner Atty. Rogelio E. Sarsaba, levied a Fuso Truck bearing License Plate No.

LBR-514, which at that time was in the possession of Gasing. On July 30, 1996,

the truck was sold at public auction, with Sereno appearing as the highest

bidder.[4]

Meanwhile, respondent Fe Vda. de Te, represented by her attorney-in-fact,Faustino Castaeda, filed with the RTC, Branch 18, Digos, Davao del Sur, a

Complaint[5]

for recovery of motor vehicle, damages with prayer for the delivery

of the truckpendente lite against petitioner, Sereno, Lavarez and the NLRC of

Davao City, docketed as Civil Case No. 3488.

Respondent alleged that: (1) she is the wife of the late Pedro Te, the

registered owner of the truck, as evidenced by the Official Receipt[6]and

Certificate of Registration;[7]

(2) Gasing merely rented the truck from her; (3)

Lavarez erroneously assumed that Gasing owned the truck because he was, at the

time of the taking,[8]

in possession of the same; and (4) since neither she nor her

husband were parties to the labor case between Sereno and Gasing, she should
http://sc.judiciary.gov.ph/jurisprudence/2009/july2009/175910.htm#_ftn3http://sc.judiciary.gov.ph/jurisprudence/2009/july2009/175910.htm#_ftn3http://sc.judiciary.gov.ph/jurisprudence/2009/july2009/175910.htm#_ftn4http://sc.judiciary.gov.ph/jurisprudence/2009/july2009/175910.htm#_ftn4http://sc.judiciary.gov.ph/jurisprudence/2009/july2009/175910.htm#_ftn4http://sc.ju

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