G.R. No.

94050 November 21, 1991 booth decoration and materials but does not include interior designs which will be per
our specifications and expenses.
SYLVIA H. BEDIA and HONTIVEROS & ASSOCIATED PRODUCERS PHILS.
YIELDS, INC., petitioners, PARTICIPANT'S PARTICIPATION

vs. AUTHORIZED SIGNATURE: ACCEPTED BY:

EMILY A. WHITE and HOLMAN T. WHITE, respondents. (SGD.) EMILY WHITE (SGD.) SYLVIA H. BEDIA

Ramon A. Gonzales for petitioner of the Court. DATE: 8/13/80 DATE: Aug. 1, 1980

Renato S. Corpuz for private respondents. On August 10, 1986, White and her husband filed a complaint in the Regional Trial
Court of Pasay City for damages against Bedia and Hontiveros & Associated
Producers Phil. Yields, Inc. for damages caused by their fraudulent violation of their
agreement. She averred that Bedia had approached her and persuaded her to
participate in the State of Texas Fair, and that she made a down payment of $500.00
CRUZ, J.:
to Bedia on the agreed display space. In due time, she enplaned for Dallas with her
merchandise but was dismayed to learn later that the defendants had not paid for or
The basic issue before us is the capacity in which petitioner Sylvia H. Bedia entered registered any display space in her name, nor were they authorized by the state fair
into the subject contract with private respondent Emily A. White. Both the trial court director to recruit participants. She said she incurred losses as a result for which the
and the respondent court held she was acting in her own personal behalf. She faults defendants should be held solidarily liable. 2
this finding as reversible error and insists that she was merely acting as an agent.
In their joint answer, the defendants denied the plaintiff's allegation that they had
The case arose when Bedia and White entered into a Participation Contract 1 reading deceived her and explained that no display space was registered in her name as she
in full as follows: was only supposed to share the space leased by Hontiveros in its name. She was not
allowed to display her goods in that space because she had not paid her balance of
THE STATE FAIR OF TEXAS '80 $1,750.00, in violation of their contract. Bedia also made the particular averment that
she did not sign the Participation Contract on her own behalf but as an agent of
Hontiveros and that she had later returned the advance payment of $500.00 to the
PARTICIPATION CONTRACT
plaintiff. The defendants filed their own counterclaim and complained of malice on
the part of the plaintiffs. 3
PARTICIPANT (COMPANY NAME) EMILY WHITE
In the course of the trial, the complaint against Hontiveros was dismissed on motion of the plaintiffs. 4
ENTERPRISES
In his decision dated May 29, 1986, Judge Fermin Martin, Jr. found Bedia liable for fraud and awarded the plaintiffs actual and
I/We, the abovementioned company hereby agrees to participate in the 1980 Dallas moral damages plus attorney's fees and the costs. The court said:
State Fair to be held in Dallas, Texas on October 3, to October 19,1980. I/We request
for a 15 square meter booth space worth $2,250.00 U.S. Dollars. In claiming to be a mere agent of Hontiveros & Associated Producers Phil. Yields, Inc., defendant Sylvia H. Bedia evidently
attempted to escape liability for herself. Unfortunately for her, the "Participation Contract" is not actually in representation or in
I/We further understand that this participation contract shall be deemed non- the name of said corporation. It is a covenant entered into by her in her personal capacity, for no one may contract in the name
cancellable after payment of the said down payment, and that any intention on our of another without being authorized by the latter, or unless she has by law a right to represent her. (Art. 1347, new Civil Code)
part to cancel the same shall render whatever amount we have paid forfeited in favor
of HONTIVEROS & ASSOCIATED PRODUCERS PHILIPPINE YIELDS, INC. Sustaining the trail court on this point, the respondent court 5 declared in its decision dated March 30,
1990:
FOR THE ABOVE CONSIDERATION, I/We understand the HONTIVEROS &
ASSOCIATED PRODUCERS PHIL. YIELDS, INC. shall: Reserve said booth for our
The evidence, on the whole, shows that she definitely acted on her own. She
exclusive perusal; We also understand that the above cost includes overall exterior
represented herself as authorized by the State of Texas to solicit and assign booths at them against the agent.
the Texas fair; she assured the appellee that she could give her booth. Under Article
1883 of the New Civil Code, if the agent acts in his own name, the principal has no WHEREFORE, the appealed decision dated March 30, 1990, of the respondent court is
right of action against the persons with whom the agent had contracted. REVERSED and a new judgment is rendered dismissing Civil Case No. 9246-P in the
Regional Trial Court of Pasay City.
We do not share these views.
SO ORDERED.
It is noteworthy that in her letter to the Minister of Trade dated December 23,1984,
Emily White began:

I am a local exporter who was recruited by Hontiveros & Associated Producers Phil.
Yields, Inc. to participate in the State Fair of Dallas, Texas which was held last Oct. 3
to 19, 1980. Hontiveros & Associated charged me US$150.00 per square meter for
display booth of said fair. I have paid an advance of US$500.00 as partial payment
for the total space of 15 square meter of which is $2,250.00 (Two Thousand Two
Hundred Fifty Dollars). 6

As the Participation Contract was signed by Bedia, the above statement was an acknowledgment by White that Bedia was only
acting for Hontiveros when it recruited her as a participant in the Texas State Fair and charged her a partial payment of
$500.00. This amount was to be fortified to Hontiveros in case of cancellation by her of the agreement. The fact that the
contract was typewritten on the letterhead stationery of Hontiveros bolsters this conclusion in the absence of any showing that
said stationery had been illegally used by Bedia.

Significantly, Hontiveros itself has not repudiated Bedia's agency as it would have if she had really not signed in its name. In the
answer it filed with Bedia, it did not deny the latter's allegation in Paragraph 4 thereof that she was only acting as its agent
when she solicited White's participation. In fact, by filing the answer jointly with Bedia through their common counsel,
Hontiveros affirmed this allegation.

If the plaintiffs had any doubt about the capacity in which Bedia was acting, what they should have done was verify the matter
with Hontiveros. They did not. Instead, they simply accepted Bedia's representation that she was an agent of Hontiveros and
dealt with her as such. Under Article 1910 of the Civil Code, "the principal must comply with all the obligations which the agent
may have contracted within the scope of his authority." Hence, the private respondents cannot now hold Bedia liable for the acts
performed by her for, and imputable to, Hontiveros as her principal.

The plaintiffs' position became all the more untenable when they moved on June 5, 1984, for the dismissal of the complaint
against Hontiveros, 7
leaving Bedia as the sole defendant. Hontiveros had admitted as early
as when it filed its answer that Bedia was acting as its agent. The effect of the
motion was to leave the plaintiffs without a cause of action against Bedia for the
obligation, if any, of Hontiveros.

Our conclusion is that since it has not been found that Bedia was acting beyond the
scope of her authority when she entered into the Participation Contract on behalf of
Hontiveros, it is the latter that should be held answerable for any obligation arising
from that agreement. By moving to dismiss the complaint against Hontiveros, the
plaintiffs virtually disarmed themselves and forfeited whatever claims they might have
proved against the latter under the contract signed for it by Bedia. It should be
obvious that having waived these claims against the principal, they cannot now assert
 Angel Apetrior. Pedroso inquired about the promotional investment and Apetrior
FILIPINAS LIFE ASSURANCE COMPANY (now AYALA LIFE G.R. No. 159489 confirmed that there was such a promotion. She was even told she could push
ASSURANCE, INC.), through with the check she issued. From the records, the check, with the
Petitioner, Present: endorsement of Alcantara at the back, was deposited in the account of Filipinas Life
with the Commercial Bank and Trust Company (CBTC), Escolta Branch.
QUISUMBING, J., Chairperson,
CARPIO, Relying on the representations made by the petitioners duly authorized
- versus - CARPIO MORALES, representatives Apetrior and Alcantara, as well as having known agent Valle for quite
TINGA, and some time, Pedroso waited for the maturity of her initial investment. A month after,
VELASCO, JR., JJ.her investment of P10,000 was returned to her after she made a written request for
CLEMENTE N. PEDROSO, its refund. The formal written request, dated February 3, 1977, was written on an
TERESITA O. PEDROSO and JENNIFER N. PALACIO thru her inter-office memorandum form of Filipinas Life prepared by Alcantara.[if
Attorney-in-Fact PONCIANO C. MARQUEZ, !supportFootnotes][7][endif] To collect the amount, Pedroso personally went to the Escolta
Respondents. Promulgated: 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
February 4, 2008 rate of 5%[if !supportFootnotes][8][endif] prepaid interest a month. Upon maturity of
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Pedrosos subsequent investments, Valle would take back from Pedroso the
x corresponding yellow-colored agents receipt he issued to the latter.

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

insurance policyholder, about the investment plan. Palacio made a total investment of
QUISUMBING, J.: P49,550[if !supportFootnotes][9][endif] but at only 5% prepaid interest. However, when
Pedroso tried to withdraw her investment, Valle did not want to return some P17,000
This petition for review on certiorari seeks the reversal of the Decision [if worth of it. Palacio also tried to withdraw hers, but Filipinas Life, despite demands,
!supportFootnotes][1][endif]
and Resolution,[if !supportFootnotes][2][endif] dated November 29, refused to return her money. With the assistance of their lawyer, they went to
2002 and August 5, 2003, respectively, of the Court of Appeals in CA-G.R. CV No. Filipinas Life Escolta Office to collect their respective investments, and to inquire why
33568. The appellate court had affirmed the Decision[if !supportFootnotes][3][endif] dated they had not seen Valle for quite some time. But their attempts were futile. Hence,
October 10, 1989 of the Regional Trial Court (RTC) of Manila, Branch 3, finding respondents filed an action for the recovery of a sum of money.
petitioner as defendant and the co-defendants below jointly and severally liable to
the plaintiffs, now herein respondents. After trial, the RTC, Branch 3, Manila, held Filipinas Life and its co-
defendants Valle, Apetrior and Alcantara jointly and solidarily liable to the
The antecedent facts are as follows: respondents.

Respondent Teresita O. Pedroso is a policyholder of a 20-year endowment life On appeal, the Court of Appeals affirmed the trial courts ruling and
insurance issued by petitioner Filipinas Life Assurance Company (Filipinas Life). subsequently denied the motion for reconsideration.
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 Petitioner now comes before us raising a single issue:
Filipinas Life Escolta Office was holding a promotional investment program for
policyholders. It was offering 8% prepaid interest a month for certain amounts WHETHER OR NOT THE COURT OF APPEALS COMMITTED A REVERSIBLE
deposited on a monthly basis. Enticed, she initially invested and issued a post-dated ERROR AND GRAVELY ABUSED ITS DISCRETION IN
check dated January 7, 1977 for P10,000.[if !supportFootnotes][4][endif] In return, Valle AFFIRMING THE DECISION OF THE LOWER COURT
issued Pedroso his personal check for P800 for the 8%[if !supportFootnotes][5][endif] HOLDING FLAC [FILIPINAS LIFE] TO BE JOINTLY AND
prepaid interest and a Filipinas Life Agents Receipt No. 807838. [if SEVERALLY LIABLE WITH ITS CO-DEFENDANTS ON THE
!supportFootnotes][6][endif]
CLAIM OF RESPONDENTS INSTEAD OF HOLDING ITS
AGENT, RENATO VALLE, SOLELY LIABLE TO THE
Subsequently, she called the Escolta office and talked to Francisco RESPONDENTS.[if !supportFootnotes][10][endif]
Alcantara, the administrative assistant, who referred her to the branch manager,
 Simply put, did the Court of Appeals err in holding petitioner and its co- Filipinas Life cannot profess ignorance of Valles acts. Even if Valles
defendants jointly and severally liable to the herein respondents? representations were beyond his authority as a debit/insurance agent, Filipinas Life
thru Alcantara and Apetrior expressly and knowingly ratified Valles acts. It cannot
Filipinas Life does not dispute that Valle was its agent, but claims that it even be denied that Filipinas Life benefited from the investments deposited by Valle
was only a life insurance company and was not engaged in the business of collecting in the account of Filipinas Life. In our considered view, Filipinas Life had clothed Valle
investment money. It contends that the investment scheme offered to respondents with apparent authority; hence, it is now estopped to deny said authority. Innocent
by Valle, Apetrior and Alcantara was outside the scope of their authority as agents of third persons should not be prejudiced if the principal failed to adopt the needed
Filipinas Life such that, it cannot be held liable to the respondents. [if measures to prevent misrepresentation, much more so if the principal ratified his
!supportFootnotes][11][endif] 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 as doing it himself.[if !supportFootnotes][18][endif]
On the other hand, respondents contend that Filipinas Life authorized
Valle to solicit investments from them. In fact, Filipinas Lifes official documents and
facilities were used in consummating the transactions. These transactions, according WHEREFORE, the petition is DENIED for lack of merit. The Decision and
to respondents, were confirmed by its officers Apetrior and Alcantara. Respondents Resolution, dated November 29, 2002 and August 5, 2003, respectively, of the Court
assert they exercised all the diligence required of them in ascertaining the authority of Appeals in CA-G.R. CV No. 33568 are AFFIRMED.
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. Costs against the petitioner.

Considering the issue raised in the light of the submissions of the parties, SO ORDERED.
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 this case, 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 something in representation or on behalf of another, with the consent or
authority of the latter.[if !supportFootnotes][12][endif] 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.[if !supportFootnotes][13][endif] When the
agent exceeds his authority, the agent becomes personally liable for the damage.[if
!supportFootnotes][14][endif] But even when the agent exceeds 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.[if !supportFootnotes][15][endif] 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.[if !supportFootnotes][16][endif]
Ratification in agency is the adoption or confirmation by one person of an act
performed on his behalf by another without authority.[if !supportFootnotes][17][endif]
 On November 21, 1978, the Ventanilla spouses, having learned of the supposed sale
G.R. No. 107282 March 16, 1994 of their lots to Crisostomo, commenced an action for specific performance, annulment
of deeds, and damages against Manila Remnant Co., Inc., A.U. Valencia and Co.,
Inc., and Carlos Crisostomo. It was docketed as Civil Case No. 26411 in the Court of
THE MANILA REMNANT CO., INC., petitioner,
First Instance of Quezon City, Branch

vs.
7-B.

HON. COURT OF APPEALS, AND SPS. OSCAR C. VENTANILLA AND CARMEN

On November 17, 1980, the trial court rendered a decision declaring the contracts to
GLORIA DIAZ, respondents.
sell in favor of the Ventanillas valid and subsisting, and annulling the contract to sell
in favor of Crisostomo. It ordered the MRCI to execute an absolute deed of sale in
Tabalingcos & Associates Law Office for petitioner. favor of the Ventanillas, free from all liens and encumbrances. Damages and
attorney's fees in the total amount of P210,000.00 were also awarded to the
Oscar C. Ventanilla, Jr. and Augusto Garmaitan for private respondents. Ventanillas for which the MRCI, AUVCI, and Crisostomo were held solidarily liable.

The lower court ruled further that if for any reason the transfer of the lots could not
be effected, the defendants would be solidarily liable to the Ventanillas for
reimbursement of the sum of P73,122.35, representing the amount paid for the two
CRUZ, J.:
lots, and legal interest thereon from March 1970, plus the decreed damages and
attorney's fees. Valencia was also held liable to MRCI for moral and exemplary
The present petition is an offshoot of our decision in Manila Remnant Co., Inc., damages and attorney's fees.
(MRCI) v. Court of Appeals, promulgated on November 22, 1990.
From this decision, separate appeals were filed by Valencia and MRCI. The appellate
That case involved parcels of land in Quezon City which were owned by petitioner court, however, sustained the trial court in toto.
MRCI and became the subject of its agreement with A.U. Valencia and Co., Inc.,
(AUVCI) by virtue of which the latter was to act as the petitioner's agent in the
MRCI then filed before this Court a petition for certiorari to review the portion of the
development and sale of the property. For a stipulated fee, AUVCI was to convert the
decision of the Court of Appeals upholding the solidary liability of MRCI, AUVCI and
lands into a subdivision, manage the sale of the lots, execute contracts and issue
Carlos Crisostomo for the payment of moral and exemplary damages and attorney's
official receipts to the lot buyers. At the time of the agreement, the president of both
fees to the Ventanillas.
MRCI and AUVCI was Artemio U. Valencia.

On November 22, 1990, this Court affirmed the decision by the Court of Appeals and
Pursuant to the above agreement, AUVCI executed two contracts to sell dated March
declared the judgment of the trial court immediately executory.
3, 1970, covering Lots 1 and 2, Block 17, in favor of spouses Oscar C. Ventanilla and
Carmen Gloria Diaz for the combined contract price of P66,571.00, payable monthly
in ten years. After ten days and without the knowledge of the Ventanilla couple, The Present Case
Valencia, as president of MRCI, resold the same parcels to Carlos Crisostomo, one of
his sales agents, without any consideration. Upon orders of Valencia, the monthly On January 25, 1991, the spouses Ventanilla filed with the trial court a motion for the
payments of the Ventanillas were remitted to the MRCI as payments of Crisostomo, issuance of a writ of execution in Civil Case No. 26411. The writ was issued on May 3,
for which receipts were issued in his name. The receipts were kept by Valencia 1991, and served upon MRCI on May 9, 1991.
without the knowledge of the Ventanillas and Crisostomo. The Ventanillas continued
paying their monthly installments.
In a manifestation and motion filed by MRCI with the trial court on May 24, 1991, the
petitioner alleged that the subject properties could not be delivered to the Ventanillas
On May 30, 1973, MRCI informed AUVCI that it was terminating their agreement because they had already been sold to Samuel Marquez on February 7, 1990, while
because of discrepancies discovered in the latter's collections and remittances. On their petition was pending in this Court. Nevertheless, MRCI offered to reimburse the
June 6, 1973, Valencia was removed by the board of directors of MRCI as its amount paid by the respondents, including legal interest plus the aforestated
president. damages. MRCI also prayed that its tender of payment be accepted and all
garnishments on their accounts lifted.
The Ventanillas accepted the amount of P210,000.00 as damages and attorney's fees legal impediment to the execution of the absolute deed of sale to the Ventanillas. At
but opposed the reimbursement offered by MRCI in lieu of the execution of the the time of the sale to Marquez, the issue of the validity of the sale to the Ventanillas
absolute deed of sale. They contended that the alleged sale to Samuel Marquez was had not yet been resolved. Furthermore, there was no specific injunction against the
void, fraudulent, and in contempt of court and that no claim of ownership over the petitioner re-selling the property.
properties in question had ever been made by Marquez.
Lastly, the petitioner insists that Marquez was a buyer in good faith and had a right
On July 19, 1991, Judge Elsie Ligot-Telan issued the following order: to rely on the recitals in the certificate of title. The subject matter of the controversy
having passed to an innocent purchaser for value, the respondent court erred in
To ensure that there is enough amount to cover the value of the lots involved if ordering the execution of the absolute deed of sale in favor of the Ventanillas.
transfer thereof to plaintiff may no longer be effected, pending litigation of said issue,
the garnishment made by the Sheriff upon the bank account of Manila Remnant may For their part, the respondents argue that the validity of the sale to them had already
be lifted only upon the deposit to the Court of the amount of P500,000.00 in cash. been established even while the previous petition was still pending resolution. That
petition only questioned the solidary liability of MRCI to the Ventanillas. The portion
MRCI then filed a manifestation and motion for reconsideration praying that it be of the decision ordering the MRCI to execute an absolute deed of sale in favor of the
ordered to reimburse the Ventanillas in the amount of P263,074.10 and that the Ventanillas became final and executory when the petitioner failed to appeal it to the
garnishment of its bank deposit be lifted. This motion was denied by the trial court in Supreme Court. There was no need then for an order enjoining the petitioner from
its order dated September 30, 1991. A second manifestation and motion filed by re-selling the property in litigation.
MRCI was denied on December 18, 1991. The trial court also required MRCI to show
cause why it should not be cited for contempt for disobedience of its judgment. They also point to the unusual lack of interest of Marquez in protecting and asserting
his right to the disputed property, a clear indication that the alleged sale to him was
These orders were questioned by MRCI in a petition for certiorari before the merely a ploy of the petitioner to evade the execution of the absolute deed of sale in
respondent court on the ground that they were issued with grave abuse of discretion. their favor.

The Court of Appeals ruled that the contract to sell in favor of Marquez did not The petition must fail.
constitute a legal impediment to the immediate execution of the judgment.
Furthermore, the cash bond fixed by the trial court for the lifting of the garnishment The validity of the contract to sell in favor of the Ventanilla spouses is not disputed by
was fair and reasonable because the value of the lot in question had increased the parties. Even in the previous petition, the recognition of that contract was not
considerably. The appellate court also set aside the show-cause order and held that assigned as error of either the trial court or appellate court. The fact that the MRCI
the trial court should have proceeded under Section 10, Rule 39 of the Rules of Court did not question the legality of the award for damages to the Ventanillas also shows
and not Section 9 thereof.1 that it even then already acknowledged the validity of the contract to sell in favor of
the private respondents.
In the petition now before us, it is submitted that the trial court and the Court of
Appeals committed certain reversible errors to the prejudice of MRCI. On top of all this, there are other circumstances that cast suspicion on the validity,
not to say the very existence, of the contract with Marquez.
The petitioner contends that the trial court may not enforce it garnishment order
after the monetary judgment for damages had already been satisfied and the amount First, the contract to sell in favor of Marquez was entered into after the lapse of
for reimbursement had already been deposited with the sheriff. Garnishment as a almost ten years from the rendition of the judgment of the trial court upholding the
remedy is intended to secure the payment of a judgment debt when a well-founded sale to the Ventanillas.
belief exists that the erring party will abscond or deliberately render the execution of
the judgment nugatory. As there is no such situation in this case, there is no need for Second, the petitioner did not invoke the contract with Marquez during the hearing
a garnishment order. on the motion for the issuance of the writ of execution filed by the private
respondents. It disclosed the contract only after the writ of execution had been
It is also averred that the trial court gravely abused its discretion when it arbitrarily served upon it.
fixed the amount of the cash bond for the lifting of the garnishment order at
P500,000.00. Third, in its manifestation and motion dated December 21, 1990, the petitioner said it
was ready to deliver the titles to the Ventanillas provided that their counterclaims
MRCI further maintains that the sale to Samuel Marquez was valid and constitutes a against private respondents were paid or offset first. There was no mention of the
contract to sell with Marquez on February 7, 1990. (a) the party whose accounts have been garnished has posted a counterbond or has
made the requisite cash deposit;5
Fourth, Marquez has not intervened in any of these proceedings to assert and protect
his rights to the subject property as an alleged purchaser in good faith. (b) the order was improperly or irregularly issued 6 as where there is no ground for
garnishment7 or the affidavit and/or bond filed therefor are defective or insufficient;8
At any rate, even if it be assumed that the contract to sell in favor of Marquez is
valid, it cannot prevail over the final and executory judgment ordering MRCI to (c) the property attached is exempt from execution, hence exempt from preliminary
execute an absolute deed of sale in favor of the Ventanillas. No less importantly, the attachment9 or
records do not show that Marquez has already paid the supposed balance amounting
to P616,000.00 of the original price of over P800,000.00.2 (d) the judgment is rendered against the attaching or garnishing creditor.10

The Court notes that the petitioner stands to benefit more from the supposed Partial execution of the judgment is not included in the above enumeration of the
contract with Marquez than from the contract with the Ventanillas with the agreed legal grounds for the discharge of a garnishment order. Neither does the petitioner's
price of only P66,571.00. Even if it paid the P210,000.00 damages to the private willingness to reimburse render the garnishment order unnecessary. As for the
respondents as decreed by the trial court, the petitioner would still earn more profit if counterbond, the lower court did not err when it fixed the same at P500,000.00. As
the Marquez contract were to be sustained. correctly pointed out by the respondent court, that amount corresponds to the
current fair market value of the property in litigation and was a reasonable basis for
We come now to the order of the trial court requiring the posting of the sum of determining the amount of the counterbond.
P500,000.00 for the lifting of its garnishment order.
Regarding the refusal of the petitioner to execute the absolute deed of sale, Section
While the petitioners have readily complied with the order of the trial court for the 10 of Rule 39 of the Rules of Court reads as follows:
payment of damages to the Ventanillas, they have, however, refused to execute the
absolute deed of sale. It was for the purpose of ensuring their compliance with this Sec. 10. Judgment for specific act; vesting title If a judgment directs a party to
portion of the judgment that the trial court issued the garnishment order which by its execute a conveyance of land, or to deliver deeds or other documents, or to perform
term could be lifted only upon the filling of a cash bond of P500,000.00. any other specific act, and the party fails to comply within the time specified, the
court may direct the act to be done at the cost of the disobedient party by some
The petitioner questions the propriety of this order on the ground that it has already other person appointed by the court and the act when so done shall have like effect
partially complied with the judgment and that it has always expressed its willingness as if done by the party. If real or personal property is within the Philippines, the court
to reimburse the amount paid by the respondents. It says that there is no need for a in lieu of directing a conveyance thereof may enter judgment divesting the title of
garnishment order because it is willing to reimburse the Ventanillas in lieu of any party and vesting it in others and such judgment shall have the force and effect
execution of the absolute deed of sale. of a conveyance executed in due form of law.

The alternative judgment of reimbursement is applicable only if the conveyance of Against the unjustified refusal of the petitioner to accept payment of the balance of
the lots is not possible, but it has not been shown that there is an obstacle to such the contract price, the remedy of the respondents is consignation, conformably to the
conveyance. As the main obligation of the petitioner is to execute the absolute deed following provisions of the Civil Code:
of sale in favor of the Ventanillas, its unjustified refusal to do so warranted the
issuance of the garnishment order. Art. 1256. If the creditor to whom tender of payment has been made refuses without
just cause to accept it, the debtor shall be released from responsibility by the
Garnishment is a species of attachment for reaching credits belonging to the consignation of the thing or sum due. . .
judgment debtor and owing to him from a stranger to the litigation.3 It is an
attachment by means of which the plaintiff seeks to subject to his claim property of Art. 1258. Consignation shall be made by depositing the things due at the disposal of
the defendant in the hands of a third person or money owed by such third person or the judicial authority, before whom the tender of payment shall be proved, in a
garnishee to the defendant.4 The rules on attachment also apply to garnishment proper case, and the announcement of the consignation in other cases.
proceedings.
The consignation having been made, the interested parties shall also be notified
A garnishment order shall be lifted if it established that: thereof.
Art. 1260. Once the consignation has been duly made, the debtor may ask the judge
to order the cancellation of the obligation.

Accordingly, upon consignation by the Ventanillas of the sum due, the trial court may
enter judgment canceling the title of the petitioner over the property and transferring
the same to the respondents. This judgment shall have the same force and effect as
conveyance duly executed in accordance with the requirements of the law.

In sum, we find that:

1. No legal impediment exists to the execution, either by the petitioner or the trial
court, of an absolute deed of sale of the subject property in favor of the respondent
Ventanillas; and

2. The lower court did not abuse its discretion when it required the posting of a
P500,000.00 cash bond for the lifting of the garnishment order.

WHEREFORE, the petition is DENIED and the challenged decision of the Court of
Appeals is AFFIRMED in toto, with costs against the petitioner. It is so ordered.
 first found Times Transit Corporation, represented by its president Mr. Rondaris, as
G.R. No. 115838 July 18, 2002 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.
CONSTANTE AMOR DE CASTRO and CORAZON AMOR DE CASTRO,
petitioners,
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
vs.
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
COURT OF APPEALS and FRANCISCO ARTIGO, respondents. 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
CARPIO, J.: collect the balance of P303,606.24 after having received P48,893.76 in
advance.1wphi1.nt
The Case
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
Before us is a Petition for Review on Certiorari1 seeking to annul the Decision of the
commission to the prejudice of other agents who were more instrumental in the
Court of Appeals2 dated May 4, 1994 in CA-G.R. CV No. 37996, which affirmed in toto
consummation of the sale. Although appellants readily concede that it was appellee
the decision3 of the Regional Trial Court of Quezon City, Branch 80, in Civil Case No.
who first introduced Times Transit Corp. to them, appellee was not designated by
Q-89-2631. The trial court disposed as follows:
them as their exclusive real estate agent but that in fact there were more or less
eighteen (18) others whose collective efforts in the long run dwarfed those of
"WHEREFORE, the Court finds defendants Constante and Corazon Amor de Castro appellee's, considering that the first negotiation for the sale where appellee took
jointly and solidarily liable to plaintiff the sum of: 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,
a) P303,606.24 representing unpaid commission; beneficence and magnanimity", appellee nevertheless was given the largest cut in the
commission (P48,893.76), although on the principle of quantum meruit he would
b) P25,000.00 for and by way of moral damages; 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
c) P45,000.00 for and by way of attorney's fees; 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,
d) To pay the cost of this suit. even assuming that appellee is entitled to the entire commission, he would only be
getting 5% of the P3.6 million, or P180,000.00."
Quezon City, Metro Manila, December 20, 1991."
Ruling of the Court of Appeals
The Antecedent Facts
The Court of Appeals affirmed in toto the decision of the trial court.
On May 29, 1989, private respondent Francisco Artigo ("Artigo" for brevity) sued
petitioners Constante A. De Castro ("Constante" for brevity) and Corazon A. De First. The Court of Appeals found that Constante authorized Artigo to act as agent in
Castro ("Corazon" for brevity) to collect the unpaid balance of his broker's the sale of two lots in Cubao, Quezon City. The handwritten authorization letter
commission from the De Castros.4 The Court of Appeals summarized the facts in this signed by Constante clearly established a contract of agency between Constante and
wise: Artigo. Thus, Artigo sought prospective buyers and found Times Transit Corporation
("Times Transit" for brevity). Artigo facilitated the negotiations which eventually led
"x x x. Appellants5 were co-owners of four (4) lots located at EDSA corner New York to the sale of the two lots. Therefore, the Court of Appeals decided that Artigo is
and Denver Streets in Cubao, Quezon City. In a letter dated January 24, 1984 entitled to the 5% commission on the purchase price as provided in the contract of
(Exhibit "A-1, p. 144, Records), appellee6 was authorized by appellants to act as real agency.
estate broker in the sale of these properties for the amount of P23,000,000.00, five
percent (5%) of which will be given to the agent as commission. It was appellee who
Second. The Court of Appeals ruled that Artigo's complaint is not dismissible for First Issue: whether the complaint merits dismissal for failure to implead
failure to implead as indispensable parties the other co-owners of the two lots. The other co-owners as indispensable parties
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 between Artigo and The De Castros argue that Artigo's complaint should have been dismissed for failure
Constante. 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
Third. The Court of Appeals likewise declared that the trial court did not err in siblings Jose and Carmela whom Constante merely represented. The De Castros
admitting parol evidence to prove the true amount paid by Times Transit to the De contend that failure to implead such indispensable parties is fatal to the complaint
Castros for the two lots. The Court of Appeals ruled that evidence aliunde could be since Artigo, as agent of all the four co-owners, would be paid with funds co-owned
presented to prove that the actual purchase price was P7.05 million and not P3.6 by the four co-owners.
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 The De Castros' contentions are devoid of legal basis.
Castros and Times Transit. The Court of Appeals explained that, "the rule that oral
evidence is inadmissible to vary the terms of written instruments is generally applied
An indispensable party is one whose interest will be affected by the court's action in
only in suits between parties to the instrument and strangers to the contract are not
the litigation, and without whom no final determination of the case can be had.7 The
bound by it." Besides, Artigo was not suing under the deed of sale, but solely under
joinder of indispensable parties is mandatory and courts cannot proceed without their
the contract of agency. Thus, the Court of Appeals upheld the trial court's finding that
presence.8 Whenever it appears to the court in the course of a proceeding that an
the purchase price was P7.05 million and not P3.6 million.
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
Hence, the instant petition.
However, the rule on mandatory joinder of indispensable parties is not applicable to
The Issues the instant case.

According to petitioners, the Court of Appeals erred in - 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
I. NOT ORDERING THE DISMISSAL OF THE COMPLAINT FOR FAILURE TO IMPLEAD percent commission. The authority was on a first come, first serve basis. The
INDISPENSABLE PARTIES-IN-INTEREST; authority reads in full:
"24 Jan. 84
II. NOT ORDERING THE DISMISSAL OF THE COMPLAINT ON THE GROUND THAT
ARTIGO'S CLAIM HAS BEEN EXTINGUISHED BY FULL PAYMENT, WAIVER, OR To Whom It May Concern:
ABANDONMENT;
This is to state that Mr. Francisco Artigo is authorized as our real estate broker in
III. CONSIDERING INCOMPETENT EVIDENCE; connection with the sale of our property located at Edsa Corner New York & Denver,
Cubao, Quezon City.
IV. GIVING CREDENCE TO PATENTLY PERJURED TESTIMONY;
Asking price P 23,000,000.00 with 5% commission as agent's fee.
V. SANCTIONING AN AWARD OF MORAL DAMAGES AND ATTORNEY'S FEES; C.C. de Castro

VI. NOT AWARDING THE DE CASTRO'S MORAL AND EXEMPLARY DAMAGES, AND owner & representing
ATTORNEY'S FEES.
co-owners
The Court's Ruling
This authority is on a first-come
The petition is bereft of merit.
First serve basis CAC"
Constante signed the note as owner and as representative of the other co-owners. "x x x solidarity does not make a solidary obligor an indispensable party in a
Under this note, a contract of agency was clearly constituted between Constante and suit filed by the creditor. Article 1216 of the Civil Code says that the creditor `may
Artigo. Whether Constante appointed Artigo as agent, in Constante's individual or proceed against anyone of the solidary debtors or some or all of them
representative capacity, or both, the De Castros cannot seek the dismissal of the case simultaneously'." (Emphasis supplied)
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 Second Issue: whether Artigo's claim has been extinguished by full
agency,10 citing Article 1915 of the Civil Code, which reads: payment, waiver or abandonment

Art. 1915. If two or more persons have appointed an agent for a common transaction The De Castros claim that Artigo was fully paid on June 14, 1985, that is, Artigo was
or undertaking, they shall be solidarily liable to the agent for all the consequences of given "his proportionate share and no longer entitled to any balance." According to
the agency. 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
The solidary liability of the four co-owners, however, militates against the De Castros' nothing during the second negotiation but to sign as a witness in the deed of sale. He
theory that the other co-owners should be impleaded as indispensable parties. A did not even prepare the documents for the transaction as an active real estate
noted commentator explained Article 1915 thus broker usually does.

"The rule in this article applies even when the appointments were made by the The De Castros' arguments are flimsy.
principals in separate acts, provided that they are for the same transaction. The
solidarity arises from the common interest of the principals, and not from A contract of agency which is not contrary to law, public order, public policy, morals
the act of constituting the agency. By virtue of this solidarity, the agent can or good custom is a valid contract, and constitutes the law between the parties.14 The
recover from any principal the whole compensation and indemnity owing contract of agency entered into by Constante with Artigo is the law between them
to him by the others. The parties, however, may, by express agreement, negate and both are bound to comply with its terms and conditions in good faith.
this solidary responsibility. The solidarity does not disappear by the mere partition
effected by the principals after the accomplishment of the agency.
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
If the undertaking is one in which several are interested, but only some create the agency granting Artigo a 5 percent commission based on the selling price. These
agency, only the latter are solidarily liable, without prejudice to the effects of "other agents" turned out to be employees of Times Transit, the buyer Artigo
negotiorum gestio with respect to the others. And if the power granted includes introduced to the De Castros. This prompted the trial court to observe:
various transactions some of which are common and others are not, only those
interested in each transaction shall be liable for it."11
"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,
When the law expressly provides for solidarity of the obligation, as in the liability of prominent among whom are Atty. Del Castillo and Ms. Prudencio, happened to be
co-principals in a contract of agency, each obligor may be compelled to pay the entire employees of Times Transit, the buyer of the properties. And their efforts were
obligation.12 The agent may recover the whole compensation from any one of the co- limited to convincing Constante to 'part away' with the properties because the
principals, as in this case. redemption period of the foreclosed properties is around the corner, so to speak.
(tsn. June 6, 1991).
Indeed, Article 1216 of the Civil Code provides that a creditor may sue any of the
solidary debtors. This article reads: xxx

Art. 1216. The creditor may proceed against any one of the solidary debtors or some To accept Constante's version of the story is to open the floodgates of fraud and
or all of them simultaneously. The demand made against one of them shall not be an deceit. A seller could always pretend rejection of the offer and wait for sometime for
obstacle to those which may subsequently be directed against the others, so long as others to renew it who are much willing to accept a commission far less than the
the debt has not been fully collected. 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
Thus, the Court has ruled in Operators Incorporated vs. American Biscuit Co., Inc.13 buyer, Times Transit and they have not bettered the offer secured by Mr.
that Artigo for P7 million.
It is to be noted also that while Constante was too particular about the unrenewed payment have fallen on deaf ears, Artigo decided to sue on May 29, 1989.
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 Actions upon a written contract, such as a contract of agency, must be brought within
supplied) 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, the creditor can
In any event, we find that the 5 percent real estate broker's commission is institute the action even as the ten-year prescriptive period begins to run.20
reasonable and within the standard practice in the real estate industry for
transactions of this nature. 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 is barred
The De Castros also contend that Artigo's inaction as well as failure to protest estops by laches. Laches does not apply because only four years had lapsed from the time of
him from recovering more than what was actually paid him. The De Castros cite the sale in June 1985. Artigo made a demand in July 1985 and filed the action in
Article 1235 of the Civil Code which reads: 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
Art. 1235. When the obligee accepts the performance, knowing its incompleteness delay within the prescriptive period is sanctioned by law and is not
and irregularity, and without expressing any protest or objection, the obligation is considered to be a delay that would bar relief."21 In explaining that laches
deemed fully complied with. applies only in the absence of a statutory prescriptive period, the Court has stated -

The De Castros' reliance on Article 1235 of the Civil Code is misplaced. Artigo's "Laches is recourse in equity. Equity, however, is applied only in the absence,
acceptance of partial payment of his commission neither amounts to a waiver of the never in contravention, of statutory law. Thus, laches, cannot, as a rule, be
balance nor puts him in estoppel. This is the import of Article 1235 which was used to abate a collection suit filed within the prescriptive period
explained in this wise: mandated by the Civil Code."22

"The word accept, as used in Article 1235 of the Civil Code, means to take as Clearly, the De Castros' defense of laches finds no support in law, equity or
satisfactory or sufficient, or agree to an incomplete or irregular performance. Hence, jurisprudence.
the mere receipt of a partial payment is not equivalent to the required
acceptance of performance as would extinguish the whole obligation." 16 Third issue: whether the determination of the purchase price was made in
(Emphasis supplied) violation of the Rules on Evidence

There is thus a clear distinction between acceptance and mere receipt. In this case, it The De Castros want the Court to re-examine the probative value of the evidence
is evident that Artigo merely received the partial payment without waiving the adduced in the trial court to determine whether the actual selling price of the two lots
balance. Thus, there is no estoppel to speak of. 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
The De Castros further argue that laches should apply because Artigo did not file his trial court and the appellate court. The De Castros insist that the purchase price is
complaint in court until May 29, 1989, or almost four years later. Hence, Artigo's P3.6 million as expressly stated in the deed of sale, the due execution and
claim for the balance of his commission is barred by laches. authenticity of which was admitted during the trial.

Laches means the failure or neglect, for an unreasonable and unexplained length of The De Castros believe that the trial and appellate courts committed a mistake in
time, to do that which by exercising due diligence could or should have been done considering incompetent evidence and disregarding the best evidence and parole
earlier. It is negligence or omission to assert a right within a reasonable time, evidence rules. They claim that the Court of Appeals erroneously affirmed sub silentio
warranting a presumption that the party entitled to assert it either has abandoned it the trial court's reliance on the various correspondences between Constante and
or declined to assert it.17 Times Transit which were mere photocopies that do not satisfy the best evidence
rule. Further, these letters covered only the first negotiations between Constante and
Times Transit which failed; hence, these are immaterial in determining the final
Artigo disputes the claim that he neglected to assert his rights. He was appointed as
purchase price.
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 but there The De Castros further argue that if there was an undervaluation, Artigo who signed
was no response from Constante.18 After it became clear that his demands for as witness benefited therefrom, and being equally guilty, should be left where he
presently stands. They likewise claim that the Court of Appeals erred in relying on The De Castros claim that Artigo failed to prove that he is entitled to moral damages
evidence which were not offered for the purpose considered by the trial court. and attorney's fees. The De Castros, however, cite no concrete reason except to say
Specifically, Exhibits "B", "C", "D" and "E" were not offered to prove that the that they are the ones entitled to damages since the case was filed to harass and
purchase price was P7.05 Million. Finally, they argue that the courts a quo erred in extort money from them.
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 Law and jurisprudence support the award of moral damages and attorney's fees in
that he was a licensed real estate broker when he was not. 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, it will
Whether the actual purchase price was P7.05 Million as found by the trial court and not be disturbed on appeal.25 Moral damages may be awarded when in a breach of
affirmed by the Court of Appeals, or P3.6 Million as claimed by the De Castros, is a contract the defendant acted in bad faith, or in wanton disregard of his contractual
question of fact and not of law. Inevitably, this calls for an inquiry into the facts and obligation.26 On the other hand, attorney's fees are awarded in instances where "the
evidence on record. This we can not do. 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
It is not the function of this Court to re-examine the evidence submitted by the court's finding that "the defendants' lack of good faith and unkind treatment of the
parties, or analyze or weigh the evidence again.23 This Court is not the proper venue plaintiff in refusing to give his due commission deserve censure." This warrants the
to consider a factual issue as it is not a trier of facts. In petitions for review on award of P25,000.00 in moral damages and P 45,000.00 in attorney's fees. The
certiorari as a mode of appeal under Rule 45, a petitioner can only raise questions of amounts are, in our view, fair and reasonable. Having found a buyer for the two lots,
law. Our pronouncement in the case of Cormero vs. Court of Appeals24 bears Artigo had already performed his part of the bargain under the contract of agency.
reiteration: 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.
"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, WHEREFORE, the petition is denied for lack of merit. The Decision of the Court of
like this one, only questions of law distinctly set forth may be raised. These questions Appeals dated May 4, 1994 in CA-G.R. CV No. 37996 is AFFIRMED in toto.
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 SO ORDERED.
Bank of the Philippines, 200 SCRA 751 [1991] citing Goduco vs. Court of appeals, 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 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 expected or 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
 an auto repair shop and other improvements on the lot.
[G.R. No. 79688. February 1, 1996]
After discovering that Lot 9 was occupied by Kee, Jardinico confronted him. The
PLEASANTVILLE DEVELOPMENT CORPORATION, petitioner, vs. COURT OF parties tried to reach an amicable settlement, but failed.
APPEALS, WILSON KEE, C.T. TORRES ENTERPRISES, INC. and ELDRED
JARDINICO, respondents. On January 30, 1981, Jardinicos lawyer wrote Kee, demanding that the latter remove
all improvements and vacate Lot 9. When Kee refused to vacate Lot 9, Jardinico filed
DECISION with the Municipal Trial Court in Cities, Branch 3, Bacolod City (MTCC), a complaint
for ejectment with damages against Kee.
PANGANIBAN, J.:
Kee, in turn, filed a third-party complaint against petitioner and CTTEI.
Is a lot buyer who constructs improvements on the wrong property erroneously
delivered by the owners agent, a builder in good faith? This is the main issue The MTCC held that the erroneous delivery of Lot 9 to Kee was attributable to CTTEI.
resolved in this petition for review on certiorari to reverse the Decision [if It further ruled that petitioner and CTTEI could not successfully invoke as a defense
!supportFootnotes][1][endif] of the Court of Appeals[if !supportFootnotes][2][endif] in CA-G.R. SP No. the failure of Kee to give notice of his intention to begin construction required under
11040, promulgated on August 20, 1987. paragraph 22 of the Contract to Sell on Installment and his having built a sari-sari
store without. the prior approval of petitioner required under paragraph 26 of said
contract, saying that the purpose of these requirements was merely to regulate the
By resolution dated November 13, 1995, the First Division of this Court resolved to
type of improvements to be constructed on the lot[if !supportFootnotes][3][endif].
transfer this case (along with several others) to the Third Division. After due
deliberation and consultation, the Court assigned the writing of this Decision to the
undersigned ponente. However, the MTCC found that petitioner had already rescinded its contract with Kee
over Lot 8 for the latters failure to pay the installments due, and that Kee had not
contested the rescission. The rescission was effected in 1979, before the complaint
The Facts was instituted. The MTCC concluded that Kee no longer had any right over the lot
subject of the contract between him and petitioner. Consequently, Kee must pay
The facts, as found by respondent Court, are as follows: reasonable rentals for the use of Lot 9, and, furthermore, he cannot claim
reimbursement for the improvements he introduced on said lot.
Edith Robillo purchased from petitioner a parcel of land designated as Lot 9, Phase II
and located at Taculing Road, Pleasantville Subdivision, Bacolod City. In 1975, The MTCC thus disposed:
respondent Eldred Jardinico bought the rights to the lot from Robillo. At that time, Lot
9 was vacant.
IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered as follows:

Upon completing all payments, Jardinico secured from the Register of Deeds of
1. Defendant Wilson Kee is ordered to vacate tithe premises of Lot 9, covered by TCT
Bacolod City on December 19, 1978 Transfer Certificate of Title No. 106367 in his
No. 106367 and to remove all structures and improvements he introduced thereon;
name. It was then that he discovered that improvements had been introduced on Lot
9 by respondent Wilson Kee, who had taken possession thereof.
2. Defendant Wilson Kee is ordered to pay to the plaintiff rentals at the rate of P
15.00 a day computed from the time this suit was filed on March 12, 1981 until he
It appears that on March 26, 1974, Kee bought on installment Lot 8 of the same
actually vacates the premises. This amount shall bear interests (sic) at the rate of 12
subdivision from C.T. Torres Enterprises, Inc. (CTTEI), the exclusive real estate agent
per cent (sic) per annum.
of petitioner. Under the Contract to Sell on Installment, Kee could possess the lot
even before the completion of all installment payments. On January 20, 1975, Kee
paid CTTEI the relocation fee of P50.00 and another P50.00 on January 27, 1975, for 3. Third-Party Defendant CT. Torres Enterprises, Inc. and Pleasantville Subdivision
the preparation of the lot plan. These amounts were paid prior to Kees taking actual are ordered to pay the plaintiff jointly and severally the sum of P3,000.00 as
possession of Lot 8. After the preparation of the lot plan and a copy thereof given to attorneys fees and P700.00 as cost and litigation expenses.[if !supportFootnotes][4][endif]
Kee, CTTEI through its employee, Zenaida Octaviano, accompanied Kees wife,
Donabelle Kee, to inspect Lot 8. Unfortunately, the parcel of land pointed by On appeal, the Regional Trial Court, Branch 48, Bacolod City (RTC) ruled that
Octaviano was Lot 9. Thereafter, Kee proceeded to construct his residence, a store, petitioner and CTTEI were not at fault or were not negligent, there being no
preponderant evidence to show that they directly participated in the delivery of Lot 9 a. If Eldred Jardinico decides to appropriate the improvements and, thereafter,
to Kee.[if !supportFootnotes][5][endif] It found Kee a builder in bad faith. It further ruled that remove these structures, the third-party defendants shall answer for all demolition
even assuming arguendo that Kee was acting in good faith, he was, nonetheless, expenses and the value of the improvements thus destroyed or rendered useless;
guilty of unlawfully usurping the possessory right of Jardinico over Lot 9 from the
time he was served with notice to vacate said lot, and thus was liable for rental. b. If Jardinico prefers that Kee buy the land, the third-party defendants shall answer
for the amount representing the value of Lot 9 that Kee should pay to Jardinico.
The RTC thus disposed:
3. Third-party defendants C.T. Torres Enterprises, Inc. and Pleasantville Development
WHEREFORE, the decision appealed from is affirmed with respect to the order Corporation are ordered to pay in solidum the amount of P3,000.00 to Jardinico as
against the defendant to vacate the premises of Lot No. 9 covered by Transfer attorneys fees, as well as litigation expenses.
Certificate of Title No. T-106367 of the land records of Bacolod City; the removal of
all structures and improvements introduced thereon at his expense and the payment 4. The award of rentals to Jardinico is dispensed with.
to plaintiff (sic) the sum of Fifteen (P 15.00) Pesos a day as reasonable rental to be
computed from January 30, 1981, the date of the demand, and not from the date of
Furthermore, the case is REMANDED to the court of origin for the determination of
the filing of the complaint, until he had vacated (sic) the premises, with interest
the actual value of the improvements and the property (Lot 9), as well as for further
thereon at 12% per annum. This Court further renders judgment against the
proceedings in conformity with Article 448 of the New Civil Code.[if !supportFootnotes][7][endif]
defendant to pay the plaintiff the sum of Three Thousand (P3,000.00) Pesos as
attorneys fees, plus costs of litigation.
Petitioner then filed the instant petition against Kee, Jardinico and CTTEI.
The third-party complaint against Third-Party Defendants Pleasantville Development
Corporation and C.T. Torres Enterprises, Inc. is dismissed. The order against Third- The Issues
Party Defendants to pay attorneys fees to plaintiff and costs of litigation is reversed. [if
!supportFootnotes][6][endif]
The petition submitted the following grounds to justify a review of the respondent
Courts Decision, as follows:
Following the denial of his motion for reconsideration on October 20, 1986, Kee
appealed directly to the Supreme Court, which referred the matter to the Court of 1. The Court of Appeals has decided the case in a way probably not in accord with
Appeals. law or the the (sic) applicable decisions of the Supreme Court on third-party
complaints, by ordering third-party defendants to pay the demolition expenses and/or
The appellate court ruled that Kee was a builder in good faith, as he was unaware of price of the land;
the mix-up when he began construction of the improvements on Lot 8. It further
ruled that the erroneous delivery was due to the negligence of CTTEI, and that such 2. The Court of Appeals has so far departed from the accepted course of judicial
wrong delivery was likewise imputable to its principal, petitioner herein. The appellate proceedings, by granting to private respondent-Kee the rights of a builder in good
court also ruled that the award of rentals was without basis. faith in excess of what the law provides, thus enriching private respondent Kee at the
expense of the petitioner;
Thus, the Court of Appeals disposed:
3. In the light of the subsequent events or circumstances which changed the rights of
WHEREFORE, the petition is GRANTED, the appealed decision is REVERSED, and the parties, it becomes imperative to set aside or at least modify the judgment of the
judgment is rendered as follows: Court of Appeals to harmonize with justice and the facts;

1. Wilson Kee is declared a builder in good faith with respect to the improvements he 4. Private respondent-Kee in accordance with the findings of facts of the lower court
introduced on Lot 9, and is entitled to the rights granted him under Articles 448, 546 is clearly a builder in bad faith, having violated several provisions of the contract to
and 548 of the New Civil Code. sell on installments;

2. Third-party defendants C.T. Torres Enterprises, Inc. and Pleasantville Development 5. The decision of the Court of Appeals, holding the principal, Pleasantville
Corporation are solidarily liable under the following circumstances: Development Corporation (liable) for the acts made by the agent in excess of its
authority is clearly in violation of the provision of the law;
6. The award of attorneys fees is clearly without basis and is equivalent to putting a Kee had taken to protect his interests were reasonable. There was no need for him to
premium in (sic) court litigation. have acted ex-abundantia cautela, such as being present during the geodetic
engineers relocation survey or hiring an independent geodetic engineer to
From these grounds, the issues could be re-stated as follows: countercheck for errors, for the final delivery of subdivision lots to their owners is
part of the regular course of everyday business of CTTEI. Because of CTTEIs blunder,
what Kee had hoped to forestall did in fact transpire. Kees efforts all went to
(1) Was Kee a builder in good faith?
naught.[if !supportFootnotes][8][endif]

(2) What is the liability, if any, of petitioner and its agent, C.T. Torres Enterprises,
Good faith consists in the belief of the builder that the land he is building on is his
Inc.? and
and his ignorance of any defect or flaw in his title. [if !supportFootnotes][9][endif] And as good
faith is presumed, petitioner has the burden of proving bad faith on the part of Kee. [if
(3) Is the award of attorneys fees proper? !supportFootnotes][10][endif]

The First Issue: Good Faith At the time he built improvements on Lot 8, Kee believed that said lot was what he
bought from petitioner. He was not aware that the lot delivered to him was not Lot 8.
Petitioner contends that the Court of Appeals erred in reversing the RTCs ruling that Thus, Kees good faith. Petitioner failed to prove otherwise.
Kee was a builder in bad faith.
To demonstrate Kees bad faith, petitioner points to Kees violation of paragraphs 22
Petitioner fails to persuade this Court to abandon the findings and conclusions of the and 26 of the Contract of Sale on Installment.
Court of Appeals that Kee was a builder in good faith. We agree with the following
observation of the Court of Appeals: We disagree. Such violations have no bearing whatsoever on whether Kee was a
builder in good faith, that is, on his state of mind at the time he built the
The roots of the controversy can be traced directly to the errors committed by CTTEI, improvements on Lot 9. These alleged violations may give rise to petitioners cause of
when it pointed the wrong property to Wilson Kee and his wife. It is highly action against Kee under the said contract (contractual breach), but may not be
improbable that a purchaser of a lot would knowingly and willingly build his residence bases to negate the presumption that Kee was a builder in good faith.
on a lot owned by another, deliberately exposing himself and his family to the risk of
being ejected from the land and losing all improvements thereon, not to mention the Petitioner also points out that, as found by the trial court, the Contract of Sale on
social humiliation that would follow. Installment covering Lot 8 between it and Kee was rescinded long before the present
action was instituted. This has no relevance on the liability of petitioner, as such fact
Under the circumstances, Kee had acted in the manner of a prudent man in does not negate the negligence of its agent in pointing out the wrong lot to Kee.
ascertaining the identity of his property. Lot 8 is covered by Transfer Certificate of Such circumstance is relevant only as it gives Jardinico a cause of action for unlawful
Title No. T-69561, while Lot 9 is identified in Transfer Certificate of Title No. T- detainer against Kee.
106367. Hence, under the Torrens system of land registration, Kee is presumed to
have knowledge of the metes and bounds of the property with which he is dealing. x Petitioner next contends that Kee cannot claim that another lot was erroneously
xx pointed out to him because the latter agreed to the following provision in the
Contract of Sale on Installment, to wit:
xxx xxx xxx
13. The Vendee hereby declares that prior to the execution of his contract he/she has
But as Kee is a layman not versed in the technical description of his property, he had personally examined or inspected the property made subject-matter hereof, as to its
to find a way to ascertain that what was described in TCT No. 69561 matched Lot 8. location, contours, as well as the natural condition of the lots and from the date
Thus, he went to the subdivision developers agent and applied and paid for the hereof whatever consequential change therein made due to erosion, the said Vendee
relocation of the lot, as well as for the production of a lot plan by CTTEIs geodetic shall bear the expenses of the necessary fillings, when the same is so desired by
engineer. Upon Kees receipt of the map, his wife went to the subdivision site him/her.[if !supportFootnotes][11][endif]
accompanied by CTTEIs employee, Octaviano, who authoritatively declared that the
land she was pointing to was indeed Lot 8. Having full faith and confidence in the The subject matter of this provision of the contract is the change of the location,
reputation of CTTEI, and because of the companys positive identification of the contour and condition of the lot due to erosion. It merely provides that the vendee,
property, Kee saw no reason to suspect that there had been a misdelivery. The steps having examined the property prior to the execution of the contract, agrees to
shoulder the expenses resulting from such change. the parties thereto and that (t)here is no waiver made by either of the parties in said
deed of whatever favorable judgment or award the honorable respondent Court of
We do not agree with the interpretation of petitioner that Kee contracted away his Appeals may make in their favor against herein petitioner Pleasantville Development
right to recover damages resulting from petitioners negligence. Such waiver would be Corporation and/or private respondent C.T. Torres Enterprises, Inc. [if
!supportFootnotes][17][endif]
contrary to public policy and cannot be allowed. Rights may be waived, unless the
waiver is contrary to law, public order, public policy, morals, or good customs, or
prejudicial to a third person with a right recognized by law.[if !supportFootnotes][12][endif] Obviously, the deed of sale can have no effect on the liability of petitioner. As we
have earlier stated, petitioners liability is grounded on the negligence of its agent. On
The Second Issue: Petitioners Liability the other hand, what the deed of sale regulates are the reciprocal rights of Kee and
Jardinico; it stressed that they had reached an agreement independent of the
outcome of the case.
Kee filed a third-party complaint against petitioner and CTTEI, which was dismissed
by the RTC after ruling that there was no evidence from which fault or negligence on
the part of petitioner and CTTEI can be inferred. The Court of Appeals disagreed and Petitioner further assails the following holding of the Court of Appeals:
found CTTEI negligent for the erroneous delivery of the lot by Octaviano, its
employee. 2. Third-party defendants C.T. Torres Enterprises, Inc. and Pleasantville Development
Corporation are solidarily liable under the following circumstances:
Petitioner does not dispute the fact that CTTEI was its agent. But it contends that the
erroneous delivery of Lot 9 to Kee was an act which was clearly outside the scope of a. If Eldred Jardinico decides to appropriate the improvements and, thereafter,
its authority, and consequently, CTTEI alone should be liable. It asserts that while remove these structures, the third-party defendants shall answer for all demolition
[CTTEI] was authorized to sell the lot belonging to the herein petitioner, it was never expenses and the value of the improvements thus destroyed or rendered useless;
authorized to deliver the wrong lot to Kee.[if !supportFootnotes][13][endif]
b. If Jardinico prefers that Kee buy the land, the third-party defendants shall answer
Petitioners contention is without merit. for the amount representing the value of Lot 9 that Kee should pay to Jardinico. [if
!supportFootnotes][18][endif]

The rule is that the principal is responsible for the acts of the agent, done within the
scope of his authority, and should bear the damage caused to third persons. [if Petitioner contends that if the above holding would be carried out, Kee would be
!supportFootnotes][14][endif] On the other hand, the agent who exceeds his authority is unjustly enriched at its expense. In other words, Kee would be -able to own the lot,
personally liable for the damage.[if !supportFootnotes][15][endif] as buyer, without having to pay anything on it, because the aforequoted portion of
respondent Courts Decision would require petitioner and CTTEI jointly and solidarily
CTTEI was acting within its authority as the sole real estate representative of to answer or reimburse Kee there for.
petitioner when it made the delivery to Kee. In acting within its scope of authority, it
was, however, negligent. It is this negligence that is the basis of petitioners liability, We agree with petitioner.
as principal of CTTEI, per Articles 1909 and 1910 of the Civil Code.
Petitioners liability lies in the negligence of its agent CTTEI. For such negligence, the
Pending resolution of the case before the Court of Appeals, Jardinico and Kee on July petitioner should be held liable for damages. Now, the extent and/or amount of
24, 1987 entered into a deed of sale, wherein the former sold Lot 9 to Kee. Jardinico damages to be awarded is a factual issue which should be determined after evidence
and Kee did not inform the Court of Appeals of such deal. is adduced. However, there is no showing that such evidence was actually presented
in the trial court; hence no damages could now be awarded.
The deed of sale contained the following provision:
The rights of Kee and Jardinico vis-a-vis each other, as builder in good faith and
1. That Civil Case No. 3815 entitled Jardinico vs. Kee which is now pending appeal owner in good faith, respectively, are regulated by law (i.e., Arts. 448, 546 and 548
with the Court of Appeals, regardless of the outcome of the decision shall be mutually of the Civil Code). It was error for the Court of Appeals to make a slight modification
disregarded and shall not be pursued by the parties herein and shall be considered in the application of such law, on the ground of equity. At any rate, as it stands now,
dismissed and without effect whatsoever;[if !supportFootnotes][16][endif] Kee and Jardinico have amicably settled through their deed of sale their rights and
obligations with regards to Lot 9. Thus, we delete items 2 (a) and (b) of the
dispositive portion of the Court of Appeals Decision [as reproduced above] holding
Kee asserts though that the terms and conditions in said deed of sale are strictly for
petitioner and CTTEI solidarily liable.
The Third Issue: Attorneys Fees

The MTCC awarded Jardinico attorneys fees and costs in the amount of P3,000.00
and P700.00, respectively, as prayed for in his complaint. The RTC deleted the
award, consistent with its ruling that petitioner was without fault or negligence. The
Court of Appeals, however, reinstated the award of attorneys fees after ruling that
petitioner was liable for its agents negligence.

The award of attorneys fees lies within the discretion of the court and depends upon
the circumstances of each case.[if !supportFootnotes][19][endif] We shall not interfere with the
discretion of the Court of Appeals. Jardinico was compelled to litigate for the
protection of his interests and for the recovery of damages sustained as a result of
the negligence of petitioners agent.[if !supportFootnotes][20][endif]

In sum, we rule that Kee is a builder in good faith. The disposition of the Court of
Appeals that Kee is entitled to the rights granted him under Articles 448, 546 and 548
of the New Civil Code is deleted, in view of the deed of sale entered into by Kee and
Jardinico, which deed now governs the rights of Jardinico and Kee as to each other.
There is also no further need, as ruled by the appellate Court, to remand the case to
the court of origin for determination of the actual value of the improvements and the
property (Lot 9), as well as for further proceedings in conformity with Article 448 of
the New Civil Code.

WHEREFORE, the petition is partially GRANTED. The Decision of the Court of

Appeals is hereby MODIFIED as follows:

(1) Wilson Kee is declared a builder in good faith;

(2) Petitioner Pleasantville Development Corporation and respondent C.T. Tones

Enterprises, Inc. are declared solidarily liable for damages due to negligence;
however, since the amount and/or extent of such damages was not proven during
the trial, the same cannot now be quantified and awarded;

(3) Petitioner Pleasantville Develpment Corporation and respondent C.T. Torres

Enterprises, Inc. are ordered to pay in solidum the amount of P3,000.00 to Jardinico
as attorneys fees, as well as litigation expenses; and

(4) The award of rentals to Jardinico is dispensed with.

SO ORDERED.