Case Summary (G.R. No. 221220)
Key Dates
Authorization as broker: January 24, 1984 (handwritten authorization by Constante).
Sale consummated: May–June 1985 (two lots sold to Times Transit Corporation).
Partial commission paid to Artigo: P48,893.76 (date within 1985).
Artigo’s demand: April and July 1985.
Suit filed by Artigo: May 29, 1989.
RTC decision: December 20, 1991 (found defendants liable and awarded unpaid commission, moral damages, and attorney’s fees).
Court of Appeals decision: May 4, 1994 (affirmed RTC).
Supreme Court decision date: July 18, 2002. Applicable constitution for decision: 1987 Philippine Constitution.
Applicable Law and Legal Authorities Relied Upon
- 1987 Philippine Constitution (constitutional framework applicable by decision date).
- Civil Code provisions cited: Art. 1915 (solidary liability of co-principals who appoint an agent for a common transaction), Art. 1216 (creditor may proceed against any solidary debtor), Art. 1235 (acceptance of incomplete performance), Art. 1144 (ten-year prescriptive period for actions upon written contract), Art. 1207 (requirements for solidary liability), Art. 2208 (basis for award of attorney’s fees).
- Rules of Court: Rule 45 (petition for review on certiorari).
- Evidentiary principles: parol evidence rule and admissibility of evidence aliunde where parties are not bound by the written instrument.
- Jurisprudence cited in the decision (as summarized by the courts below).
Antecedent Facts and Contract of Agency
Constante signed a handwritten authorization dated January 24, 1984, authorizing Francisco Artigo as real estate broker to sell co-owned properties located at EDSA corner New York & Denver, Cubao, Quezon City, for an asking price of P23,000,000 with a 5% commission on a first-come, first-serve basis. Artigo introduced Times Transit Corporation as a prospective buyer and facilitated negotiations that culminated in the sale of two lots (lots 14 and 15) to Times Transit in May–June 1985. Artigo received a partial commission payment of P48,893.76. He contended the actual selling price for the two lots was P7,050,000, entitling him to a 5% commission of P352,500; he sued to recover the unpaid balance of P303,606.24. The De Castros claimed the deed of sale reflected a purchase price of P3,600,000 and argued that other agents were instrumental in the consummation of the sale.
Ruling Below (Court of Appeals and RTC) — Summary Findings
Both the RTC and the Court of Appeals found: (1) a valid contract of agency existed between Constante (as owner/representative) and Artigo based on the handwritten authorization; (2) Artigo procured and facilitated the buyer that led to the sale of the two lots and was therefore entitled to the 5% commission; (3) the actual purchase price for the two lots was P7,050,000 as evidenced by parol and other extrinsic evidence admissible against strangers to the deed; (4) other co-owners were not indispensable parties and the action could proceed against Constante (and the De Castros) as solidary obligors; and (5) moral damages (P25,000) and attorney’s fees (P45,000) were justified by the defendants’ bad faith in refusing to pay the plainly demandable claim.
Issues Raised by Petitioners to the Supreme Court
Petitioners assigned error to the Court of Appeals’ failure to: (I) dismiss the complaint for failure to implead indispensable parties (other co-owners); (II) dismiss on the ground the claim was extinguished by full payment, waiver, or abandonment; (III) disregard incompetent evidence (best evidence and parol evidence rules); (IV) reject allegedly perjured testimony; (V) sanction an award of moral damages and attorney’s fees; and (VI) award petitioners moral and exemplary damages and attorney’s fees.
Analysis — Indispensable Parties and Solidary Liability (Issue I)
The Court affirmed that joinder of indispensable parties is mandatory only where their absence prevents final adjudication. Here, the handwritten authorization created an agency contract between Constante and Artigo. Under Art. 1915, where two or more persons appoint an agent for a common transaction, they are solidarily liable to the agent; therefore the agent may recover the whole compensation from any one co-principal. Article 1216 further permits a creditor to proceed against any solidary debtor. Given the statutory solidarity, the other co-owners were not indispensable for proceeding against Constante (and the De Castros as solidary debtors) and the complaint was properly maintained without impleading all co-owners.
Analysis — Full Payment, Waiver, Abandonment, and Laches (Issue II)
The petitioners’ contention that the partial payment discharged the obligation or that Artigo waived the balance was rejected. Receipt of a partial payment does not equate to acceptance of incomplete performance that extinguishes the whole obligation under Art. 1235; there must be an affirmative acceptance of incomplete performance. The courts found Artigo merely received partial payment and continued to demand the balance, demonstrating no waiver. Claims of laches also failed: the suit was filed within the ten-year prescriptive period for written contracts (Art. 1144), and delay within the statutory period does not, as a rule, equate to laches sufficient to bar relief. The record showed timely demands in 1985 and suit filed in 1989; this was held not to constitute unreasonable delay.
Analysis — Admissibility of Evidence and Parol Evidence Rule (Issue III)
The De Castros argued the deed of sale showing P3.6 million was the best evidence and that extrinsic evidence could not vary a written instrument. The courts below admitted evidence aliunde to prove the actual price was P7.05 million, reasoning that the parol evidence rule generally applies to suits between parties to the instrument while strangers to the deed are not bound by its terms. Moreover, Artigo sued on the agency contract, not under the deed of sale; hence extrinsic evidence bearing on the true purchase price and contemporaneous negotiations was admissible to establish the basis for the agency commission. The Supreme Court declined to reevaluate factual determinations of the trial and appellate courts, reiterating the Rule 45 limitation that this Court reviews questions of law and will not reweigh evidence absent findings totally devoid of support or showing grave abuse of discretion. Consequently, the factual finding that the effective purchase price was P7.05 million was left undisturbed.
Analysis — Credibility and Alleged Perjured Testimony (Issue IV)
Petitioners urged rejection of Artigo’s testimony on the ground he falsely claimed to be a licensed broker. The lower courts evaluated credibility and the totality of evidence and found no grounds to discard Artigo’s testimony in toto. The Supreme Court adhered to the principle that it will not reassess witness credibility or reweigh evidence on certiorari review
...continue readingCase Syllabus (G.R. No. 221220)
Procedural Posture
- Petition for Review on Certiorari under Rule 45 seeking to annul the Decision of the Court of Appeals dated May 4, 1994 in CA-G.R. CV No. 37996, which affirmed the decision of the Regional Trial Court (RTC) of Quezon City, Branch 80, in Civil Case No. Q-89-2631.
- The RTC decision was rendered December 20, 1991 and disposed: defendants Constante and Corazon Amor de Castro jointly and solidarily liable to plaintiff the sums of:
- P303,606.24 representing unpaid commission;
- P25,000.00 by way of moral damages;
- P45,000.00 by way of attorney’s fees;
- costs of suit.
- Supreme Court resolution rendered July 18, 2002 (G.R. No. 115838) by CARPIO, J., denying the petition and affirming the Court of Appeals decision in toto.
Antecedent Facts
- Petitioners Constante A. De Castro and Corazon A. De Castro (collectively, the De Castros) were co-owners of four lots at EDSA corner New York and Denver Streets, Cubao, Quezon City.
- On January 24, 1984, a handwritten authorization signed by Constante authorized Francisco Artigo as real estate broker to sell the properties for P23,000,000.00 with 5% commission; the authority stated it was “on a first-come First serve basis” and indicated Constante was “owner & representing co-owners.”
- Francisco Artigo (Artigo) located Times Transit Corporation (Times Transit), represented by its president Mr. Rondaris, as a prospective buyer who desired two lots (lots 14 and 15).
- The sale of those two lots was consummated (record references indicate sometime in May 1985; other parts of the record refer to June 1985).
- Artigo received P48,893.76 from the De Castros as partial commission but claimed his total commission should be P352,500.00 (5% of P7,050,000.00), asserting the actual purchase price was P7.05 million and that he was instrumental in introducing and facilitating the transaction.
- Artigo sued on May 29, 1989 to collect the unpaid balance of his broker’s commission (P303,606.24).
Trial Court Decision (RTC)
- RTC found defendants Constante and Corazon jointly and solidarily liable to pay Artigo P303,606.24 unpaid commission, P25,000.00 moral damages, P45,000.00 attorney’s fees, and costs.
- RTC factual findings included that Artigo found the buyer and facilitated negotiations and that a “second group” of agents appeared later (employees of Times Transit) who assisted in convincing Constante to part with the properties but did not better the offer secured by Artigo.
- The trial court criticized Constante’s conduct and noted the alleged “second group” were employees of the buyer, suggesting impropriety if their role were used to reduce Artigo’s rightful claim.
Court of Appeals Ruling
- The Court of Appeals affirmed the trial court in toto.
- Key appellate findings:
- A contract of agency existed between Constante and Artigo based on the handwritten authorization; Artigo is entitled to 5% commission on the purchase price as provided in the contract.
- It was unnecessary to implead other co-owners as indispensable parties because the action was exclusively based on the contract of agency between Constante and Artigo.
- Parol evidence (evidence aliunde) was admissible to establish the true purchase price (P7.05 million) rather than P3.6 million appearing in the deed of sale, because the rule excluding oral evidence to vary written instruments “is generally applied only in suits between parties to the instrument and strangers to the contract are not bound by it,” and Artigo was not suing under the deed but under the agency contract.
Issues Presented by Petitioners
- Petitioners asserted the Court of Appeals erred in: I. Not ordering dismissal for failure to implead indispensable parties-in-interest (other co-owners). II. Not ordering dismissal on the ground that Artigo’s claim was extinguished by full payment, waiver, or abandonment. III. Considering incompetent evidence to determine the purchase price. IV. Giving credence to patently perjured testimony. V. Sanctioning an award of moral damages and attorney’s fees. VI. Not awarding the De Castros moral and exemplary damages, and attorney’s fees.
Supreme Court Ruling — General Disposition
- The petition was denied for lack of merit; the Court of Appeals decision dated May 4, 1994 in CA-G.R. CV No. 37996 was affirmed in toto.
- Puno and Panganiban, JJ., concurred; Sandoval‑Gutierrez, J., took no part due to close family relation with a party.
First Issue — Impleading Indispensable Parties
- Petitioners’ contention:
- Artigo knew the lots were co-owned by Constante, Corazon, Jose and Carmela; failure to implead all co-owners is fatal because funds for commission were co-owned.
- Supreme Court analysis and holdings:
- Defined indispensable party: one whose interest will be affected and without whom no final determination can be had; joinder is mandatory when such party exists.
- However, the January