.

384, 18, 2002 607

De Castro vs. Court of Appeals
*
G.R. No. 115838. Jul 18, 2002.

CONSTANTE AMOR DE CASTRO and CORAZON AMOR DE

CASTRO, petitioners, . COURT OF APPEALS and FRANCISCO
ARTIGO, respondents.

Ci il La ; Ac i ; Pa ie ; The j i de f i di e able a ie i
a da a d c ca ceed i h hei e e ce. An
indispensable part is one hose interest ill be affected b the court s
action in the litigation, and ithout hom no nal determination of the case
can be had. The joinder of indispensable parties is mandator and courts
cannot proceed ithout their presence. Whene er it appears to the court in
the course of a proceeding that an indispensable part has not been joined, it
is the dut of the court to stop the trial and order the inclusion of such part .

______________

* THIRD DIVISION.

608

608 E EC E A A ED

De Castro vs. Court of Appeals

Sa e; Sa e; Sa e; S lida i d e ake a lida blig a

i di e able a i a i led b he c edi . Thus, the Court has ruled
in O e a I c a ed . A e ica Bi c i C ., I c. that
lida i d e ake a lida blig a i di e able a i a i
led b he c edi . Article 1216 of the Ci il Code sa s that the creditor
ma proceed against an one of the solidar debtors or some or all of them
simultaneousl .
Sa e; Sa e; Sa e; Whe he la e e l ide f lida i f
he bliga i , a i he liabili f c - i ci al i a c ac f age c ,
each blig a be c elled a he e i e bliga i . When the la
e pressl pro ides for solidarit of the obligation, as in the liabilit of
coprincipals in a contract of agenc , each obligor ma be compelled to pa
the entire obligation. The agent ma reco er the hole compensation from
an one of the co-principals, as in this case.
 Sa e; C ac ; Age c ; A c ac f age c hich i c a
la , blic de , blic lic , al g d c i a alid
c ac , a d c i e he la be ee he a ie . A contract of agenc
hich is not contrar to la , public order, public polic , morals or good
custom is a alid contract, and constitutes the la bet een the parties. The
contract of agenc entered into b Constante ith Artigo is the la bet een
them and both are bound to compl ith its terms and conditions in good
faith.
Sa e; Ac i ; Lache ; Lache i eglige ce i i a e a
igh i hi a ea able i e, a a i g a e i ha he a
e i led a e i ei he ha aba d ed i decli ed a e i . Laches
means the failure or neglect, for an unreasonable and une plained length of
time, to do that hich b e ercising due diligence could or should ha e
been done earlier. It is negligence or omission to assert a right ithin a
reasonable time, arranting a presumption that the part entitled to assert it
either has abandoned it or declined to assert it.
Sa e; Sa e; Sa e; Ac i a i e c ac , ch a a
c ac f age c , be b gh i hi e ea f he i e he igh
f ac i acc e . Actions upon a ritten contract, such as a contract of
agenc , must be brought ithin ten ears from the time the right of action
accrues. The right of action accrues from the moment the breach of right or
dut occurs. From this moment, the creditor can institute the action e en as
the ten- ear prescripti e period begins to run.

609

. 384, J 18, 2002 609

De Castro vs. Court of Appeals

Sa e; Sa e; Sa e; A dela i hi he eci i e ei d i
a c i ed b la a d i c ide ed be a dela ha ld ba elief.
Laches does not appl because onl four ears had lapsed from the time
of the sale in June 1985. Artigo made a demand in Jul 1985 and led the
action in court on Ma 29, 1989, ell ithin the ten- ear prescripti e
period. This does not constitute an unreasonable dela in asserting one s
right. The Court has ruled, a dela i hi he e c i i e e i d i
a c i ed b la a d i c ide ed be a dela ha ld ba
elief. In e plaining that laches applies onl in the absence of a statutor
prescripti e period, the Court has stated Laches is recourse in equit .
E i , h e e , i a lied l i he ab e ce, e e i c a e i , f
a la . Th , lache , ca , a a le, be ed aba e a c llec i
i led i hi he e c i i e e i d a da ed b he Ci il C de.
Sa e; Da age ; The a a d f da age a d a e fee i lef
he d di c e i f he c , a d if ch di c e i i ell e e ci ed, i
ill be di bed a eal; M al da age a be a a ded he i a
b each f c ac he defe da ac ed i bad fai h, i a di ega d
f hi c ac al bliga i . La and jurisprudence support the a ard of
moral damages and attorne s fees in fa or of Artigo. The a ard of damages
and attorne s fees is left to the sound discretion of the court, and if such
discretion is ell e ercised, as in this case, it ill not be disturbed on
appeal. Moral damages ma be a arded hen in a breach of contract the
defendant acted in bad faith, or i a di ega d f hi c ac al
bliga i . On the other hand, attorne s fees are a arded in instances
here the defendant acted in gross and e ident bad faith in refusing to
satisf the plaintiff s plainl alid, just and demandable claim.

PETITION for re ie on certiorari of a decision of the Court of

Appeals.

The facts are stated in the opinion of the Court.

Bacobo, Rondain, Mendiola, C & Fo mo o for petitioner.
Inocen e and A ocia e La Of ce for pri ate respondent.

610

610 C A A D
De Castro vs. Court of Appeals

CARPIO, J.:

The Case
1

Before us is a Petition for Re ie on2 Certiorari seeking to annul the

Decision of the Court of Appeals dated Ma 4, 1994 3 in CA-G.R.
CV No. 37996, hich af rmed in o o the decision of the Regional
Trial Court of Que on Cit , Branch 80, in Ci il Case No. Q-89-
2631. The trial court disposed as follo s:

WHEREFORE, the Court nds defendants Constante and Cora on Amor

de Castro jointl and solidaril liable to plaintiff the sum of:

a) P303,606.24 representing unpaid commission;

b) P25,000.00 for and b a of moral damages;
c) P45,000.00 for and b a of attorne s fees;
d) To pa the cost of this suit.

Que on Cit , Metro Manila, December 20, 1991.

The Antecedent Facts

On Ma 29, 1989, pri ate respondent Francisco Artigo ( Artigo for

bre it ) sued petitioners Constante A. De Castro ( Constante for
bre it ) and Cora on A. De Castro ( Cora on for bre it ) to collect4
the unpaid balance of his broker s commission from the De Castros.
The Court of Appeals summari ed the facts in this ise:
5
. Appellants ere co-o ners of four (4) lots located at EDSA corner
Ne York and Den er Streets in Cubao, Que on Cit . In 6 a letter dated
Januar 24, 1984 (E hibit A-1, p. 144, Records), appellee as authori ed
b appellants to act as real estate broker in the sale of these properties for
the amount of P23,000,000.00, e percent (5%) of hich

______________

1 U de R e 45 f eR e fC .
2 Se e D c ed f J ce R ca d J. F a c c (C a a a d P e e);
Sa e A. M a a d Ra A. Ba ce a (Me be ).
3 Pe ed b J d e Be T. Da a .
4W e efe ed c ec e .
5 Refe e De Ca .
6 Refe A .

611

. 384, J 18, 2002 611

De Castro vs. Court of Appeals

ill be gi en to the agent as commission. It as appellee ho rst found

Times Transit Corporation, represented b its president Mr. Rondaris, as
prospecti e bu er hich desired to bu t o (2) lots onl , speci call lots 14
and 15. E entuall , sometime in Ma of 1985, the sale of lots 14 and 15 as
consummated. Appellee recei ed from appellants P48,893.76 as
commission.
It as then that the rift bet een the contending parties soon emerged.
Appellee apparentl felt short changed because according to him, his total
commission should be P352,500.00 hich is e percent (5%) of the agreed
price of P7,050,000.00 paid b Times Transit Corporation to appellants for
the t o (2) lots, and that it as he ho introduced the bu er to appellants
and unceasingl facilitated the negotiation hich ultimatel led to the
consummation of the sale. Hence, he sued belo to collect the balance of
P303,606.24 after ha ing recei ed P48,893.76 in ad ance.
On the other hand, appellants completel tra erse appellee s claims and
essentiall argue that appellee is sel shl asking for more than hat he trul
deser ed as commission to the prejudice of other agents ho ere more
instrumental in the consummation of the sale. Although appellants readil
concede that it as appellee ho rst introduced Times Transit Corp. to
them, appellee as not designated b them as their e clusi e real estate
agent but that in fact there ere more or less eighteen (18) others hose
collecti e efforts in the long run d arfed those of appellee s, considering
that the rst negotiation for the sale here appellee took acti e participation
failed and it as these other agents ho successfull brokered in the second
negotiation. But despite this and out of appellants pure liberalit ,
bene cence and magnanimit , appellee ne ertheless as gi en the largest
cut in the commission (P48,893.76), although on the principle of a
e i he ould ha e certainl been entitled to less. So appellee should not
ha e been heard to complain of getting onl a pittance hen he actuall got
the lion s share of the commission and orse, he should not ha e been
allo ed to get the entire commission. Furthermore, the purchase price for
the t o lots as onl P3.6 million as appearing in the deed of sale and not
P7.05 million as alleged b appellee. Thus, e en assuming that appellee is
entitled to the entire commission, he ould onl be getting 5% of the P3.6
million, or P180,000.00.

Ruling of the Court of Appeals

The Court of Appeals af rmed in o o the decision of the trial court.

Fi . The Court of Appeals found that Constante authori ed
Artigo to act as agent in the sale of t o lots in Cubao, Que on Cit .
612

612 C A A D
De Castro vs. Court of Appeals

The hand ritten authori ation letter signed b Constante clearl

established a contract of agenc bet een Constante and Artigo.
Thus, Artigo sought prospecti e bu ers and found Times Transit
Corporation ( Times Transit for bre it ). Artigo facilitated the
negotiations hich e entuall led to the sale of the t o lots.
Therefore, the Court of Appeals decided that Artigo is entitled to the
5% commission on the purchase price as pro ided in the contract of
agenc .
Second. The Court of Appeals ruled that Artigo s complaint is not
dismissible for failure to implead as indispensable parties the other
co-o ners of the t o lots. The Court of Appeals e plained that it is
not necessar to implead the other co-o ners since the action is
e clusi el based on a contract of agenc bet een Artigo and
Constante.
Thi d. The Court of Appeals like ise declared that the trial court
did not err in admitting parol e idence to pro e the true amount paid
b Times Transit to the De Castros for the t o lots. The Court of
Appeals ruled that e idence ali nde could be presented to pro e that
the actual purchase price as P7.05 million and not P3.6 million as
appearing in the deed of sale. E idence ali nde is admissible
considering that Artigo is not a part , but a mere itness in the deed
of sale bet een the De Castros and Times Transit. The Court of
Appeals e plained that, the rule that oral e idence is inadmissible
to ar the terms of ritten instruments is generall applied onl in
suits bet een parties to the instrument and strangers to the contract
are not bound b it. Besides, Artigo as not suing under the deed
of sale, but solel under the contract of agenc . Thus, the Court of
Appeals upheld the trial court s nding that the purchase price as
P7.05 million and not P3.6 million.
Hence, the instant petition.

The Issues

According to petitioners, the Court of Appeals erred in

I. NOT ORDERING THE DISMISSAL OF THE COMPLAINT FOR
FAILURE TO IMPLEAD INDISPENSABLE PARTIES-IN-INTEREST;

613

. 384, J 18, 2002 613

De Castro vs. Court of Appeals

II. NOT ORDERING THE DISMISSAL OF THE COMPLAINT ON

THE GROUND THAT ARTIGO S CLAIM HAS BEEN
EXTINGUISHED BY FULL PAYMENT, WAIVER, OR
ABANDONMENT;
III. CONSIDERING INCOMPETENT EVIDENCE;
IV. GIVING CREDENCE TO PATENTLY PERJURED TESTIMONY;
V. SANCTIONING AN AWARD OF MORAL DAMAGES AND
ATTORNEY S FEES;
VI. NOT AWARDING THE DE CASTRO S MORAL AND
EXEMPLARY DAMAGES, AND ATTORNEY S FEES.

The Court s Ruling

The petition is bereft of merit.

First Issue: whether the complaint merits dismissal for failure to

implead other co-owners as indispensable parties

The De Castros argue that Artigo s complaint should ha e been

dismissed for failure to implead all the co-o ners of the t o lots.
The De Castros claim that Artigo al a s kne that the t o lots ere
co-o ned b Constante and Cora on ith their other siblings Jose
and Carmela hom Constante merel represented. The De Castros
contend that failure to implead such indispensable parties is fatal to
the complaint since Artigo, as agent of all the four coo ners, ould
be paid ith funds co-o ned b the four co-o ners.
The De Castros contentions are de oid of legal basis.
An indispensable part is one hose interest ill be affected b
the court s action in the litigation, and ithout hom no nal
determination of the case can be had. The joinder of indispensable
parties is mandator and courts cannot proceed ithout their
presence. Whene er it appears to the court in the course of a
proceed-

______________

R 3, S 7 R C ; Seno s. Mang ba , 156 SCRA 113

(1987); Q is mbing s. Co r of Appeals, 189 SCRA 325 (1990); Lo ano s.
Balles eros, 195 SCRA 681 (1991).
Ibid.
 614

614 C A A D
De Castro vs. Court of Appeals

ing that an indispensable part has not been joined, it is the dut of
the court to stop the trial and order the inclusion of such part .
Ho e er, the rule on mandator joinder of indispensable parties
is not applicable to the instant case.
There is no dispute that Constante appointed Artigo in a
hand ritten note dated Januar 24, 1984 to sell the properties of the
De Castros for P23 million at a 5 percent commission. The authorit
as on a rst come, rst ser e basis. The authorit reads in full:

24 Jan. 84

To Whom It Ma Concern:

This is to state that Mr. Francisco Artigo is authori ed as our

real estate broker in connection ith the sale of our propert
located at Edsa Corner Ne York & Den er, Cubao, Que on
Cit .
Asking price P23,000,000.00 ith
5% commission as agent s fee.
C.C. de Castro
o ner & representing
co-o ners
This authorit is on a rst-come
First ser e basis CAC

Constante signed the note as o ner and as representati e of the

other co-o ners. Under this note, a contract of agenc as clearl
constituted bet een Constante and Artigo. Whether Constante
appointed Artigo as agent, in Constante s indi idual or
representati e capacit , or both, the De Castros cannot seek the
dismissal of the case for failure to implead the other co-o ners as
indispensable parties. The De Ca o admi ha he o 10he co-
o ne a e olida il liable nde he con ac of agenc , citing
Article 1915 of the Ci il Code, hich reads:

______________

V J. F a , The Re ised R les of Co r , V . 1, . 271, 1973 .

10 M a P a A 23, 1997, . 8; R , . 175.

615

. 384, 18, 2002 615

De Castro vs. Court of Appeals
Art. 1915. If t o or more persons ha e appointed an agent for a
common transaction or undertaking, the shall be solidaril liable to
the agent for all the consequences of the agenc .
The solidar liabilit of the four co-o ners, ho e er, militates
against the De Castros theor that the other co-o ners should be
impleaded as indispensable parties. A noted commentator e plained
Article 1915 thus

The rule in this article applies e en hen the appointments ere made b
the principals in separate acts, pro ided that the are for the same
transaction. The lida i a i e f he c i e e f he i ci al ,
a d f he ac f c i i g he age c . B i e f hi lida i ,
he age ca ec e f a i ci al he h le c e ai a d
i de i i g hi b he he . The parties, ho e er, ma , b e press
agreement, negate this solidar responsibilit . The solidarit does not
disappear b the mere partition effected b the principals after the
accomplishment of the agenc .

If he de aki g i ei hich e e a a e i e e ed, b e c ea e he

age c , he a e a e ida i iab e, ih ej dice he effec f
nego ior m ge io i h e ec he he . A d if he e g a ed i c de
ai a ac i e f hich a e c 11 a d he ae , h e
i e e ed i each a ac i ha be iab e f i.

When the la e pressl pro ides for solidarit of the obligation, as

in the liabilit of co-principals in a contract of agenc
12 , each obligor
ma be compelled to pa the entire obligation. The agent ma
reco er the hole compensation from an one of the co-principals,
as in this case.

______________

11 A M. T , Commen aries and J rispr dence on he Ci il Code of he

Philippines, V . 5, . 428-429, 1992 .
12 A . 1207 C C a : A . 1207. T
a a a
a a a a a , a a
a , a a . T a
a a a , a a
a a .

616

616 C A A D
De Castro vs. Court of Appeals

Indeed, Article 1216 of the Ci il Code pro ides that a creditor ma

sue an of the solidar debtors. This article reads:

Art. 1216. The creditor ma proceed against an one of the solidar debtors
or some or all of them simultaneousl . The demand made against one of
them shall not be an obstacle to those hich ma subsequentl be directed
against the others, so long as the debt has not been full collected.

Thus, the Court13has ruled in Ope a o Inco po a ed . Ame ican

Bi c i Co., Inc. that

lida i d e ake a lida blig a i di e able a i

a i led b he c edi . Article 1216 of the Ci il Code sa s that the
creditor ma proceed against an one of the solidar debtors or some or all
of them simultaneousl . (Emphasis supplied)

Second Issue: whether Artigo s claim has been extinguished b

full pa ment, waiver or abandonment

The De Castros claim that Artigo as full paid on June 14, 1985,
that is, Artigo as gi en his proportionate share and no longer
entitled to an balance. According to them, Artigo as just one of
the agents in ol ed in the sale and entitled to a proportionate
share in the commission. The assert that Artigo did absolutel
nothing during the second negotiation but to sign as a itness in the
deed of sale. He did not e en prepare the documents for the
transaction as an acti e real estate broker usuall does.
The De Castros arguments are ims .
A contract of agenc hich is not contrar to la , public order,
public polic , morals or good custom 14is a alid contract, and
constitutes the la bet een the parties. The contract of agenc
entered into b Constante ith Artigo is the la bet een them and
both are bound to compl ith its terms and conditions in good
faith.
The mere fact that other agents inter ened in the
consummation of the sale and ere paid their respecti e
commissions cannot

______________

13 154 SCRA 738 (1987), a Rep blic s. Sandiganba an, 173 SCRA 72
(1989).
14 San Andres s. Rodrig e , 332 SCRA 769 (2000).

617

. 384, 18, 2002 617

De Castro vs. Court of Appeals

ar the terms of the contract of agenc granting Artigo a 5 percent

commission based on the selling price. These other agents turned
out to be emplo ees of Times Transit, the bu er Artigo introduced to
the De Castros. This prompted the trial court to obser e:

The alleged second group of agents came into the picture onl during the
so-called second negotiation and it is amusing to note that these (sic)
second group, prominent among hom are Att . Del Castillo and Ms.
Prudencio, happened to be emplo ees of Times Transit, the bu er of the
properties. And their efforts ere limited to con incing Constante to part
a a ith the properties because the redemption period of the foreclosed
properties is around the corner, so to speak. (tsn, June 6, 1991).

To accept Constante s ersion of the stor is to open the oodgates of

fraud and deceit. A seller could al a s pretend rejection of the offer and
ait for sometime for others to rene it ho are much illing to accept a
commission far less than the original broker. The i ali i he i a
ca e ea il ee i elf if e ha c ide ha he alleged ec d
g a e he e l ee f he b e , Ti e T a i a d he ha e
be e ed he ffe ec ed b M . A ig f P7 illi .
It is to be noted also that hile Constante as too particular about the
unrene ed real estate broker s license of Mr. Artigo, he did not bother at all
to inquire as15to the licenses of Prudencio and Castillo. (tsn, April 11, 1991,
pp. 39-40). (Emphasis supplied)

In an e ent, e nd that the 5 percent real estate broker s

commission is reasonable and ithin the standard practice in the real
estate industr for transactions of this nature.
The De Castros also contend that Artigo s inaction as ell as
failure to protest estops him from reco ering more than hat as
actuall paid him. The De Castros cite Article 1235 of the Ci il
Code hich reads:

Art. 1235. When the obligee accepts the performance, kno ing its
incompleteness and irregularit , and ithout e pressing an protest or
objection, the obligation is deemed full complied ith.

______________

15 D a D 20, 1991 RTC J B T. Da a , R , .

33-34.

61

618 C A A D
De Castro vs. Court of Appeals

De Castros reliance on Article 1235 of the Ci il Code is misplaced.

Artigo s acceptance of partial pa ment of his commission neither
amounts to a ai er of the balance nor puts him in estoppel. This is
the import of Article 1235 hich as e plained in this ise:

The ord acce , as used in Article 1235 of the Ci il Code, means to take
as satisfactor or suf cient, or agree to an incomplete or irregular
performance. He ce, he e e ecei f a a ial a e i e i ale
he e i16ed acce a ce f e f a ce a ld e i g i h he h le
bliga i . (Emphasis supplied)
There is thus a clear distinction bet een acceptance and mere
receipt. In this case, it is e ident that Artigo merel recei ed the
partial pa ment ithout ai ing the balance. Thus, there is no
estoppel to speak of.
The De Castros further argue that laches should appl because
Artigo did not le his complaint in court until Ma 29, 1989, or
almost four ears later. Hence, Artigo s claim for the balance of his
commission is barred b laches.
Laches means the failure or neglect, for an unreasonable and
une plained length of time, to do that hich b e ercising due
diligence could or should ha e been done earlier. It is negligence or
omission to assert a right ithin a reasonable time, arranting a
presumption that the part1 entitled to assert it either has abandoned
it or declined to assert it.
Artigo disputes the claim that he neglected to assert his rights. He
as appointed as agent on Januar 24, 1984. The t o lots ere
nall sold in June 1985. As found b the trial court, Artigo
demanded in April and Jul of 1985 the pa ment of his commission
b Constante on the basis of the selling1 price of P7.05 million but
there as no response from Constante. After it became clear that
his demands for pa ment ha e fallen on deaf ears, Artigo decided to
sue on Ma 29, 1989.

______________

16 T , s pra, 11, V . 4, . 279.

1 Rep blic s. Co r of Appeals, 301 SCRA 366 (1999); Ochagabia s. Co r of
Appeals, 304 SCRA 587 (1999).
1 RTC D , . 7; R , . 20-36, . 35.

61

. 384, 18, 2002 619

De Castro vs. Court of Appeals

Actions upon a ritten contract, such as a contract of agenc , must

be brought
1 ithin ten ears from the time the right of action
accrues. The right of action accrues from the moment the breach of
right or dut occurs. From this moment, the creditor can institute
20 the
action e en as the ten- ear prescripti e period begins to run.
The De Castros admit that Artigo s claim as led ithin the
ten- ear prescripti e period. The De Castros, ho e er, still maintain
that Artigo s cause of action is barred b laches. Laches does not
appl because onl four ears had lapsed from the time of the sale in
June 1985. Artigo made a demand in Jul 1985 and led the action
in court on Ma 29, 1989, ell ithin the ten- ear prescripti e
period. This does not constitute an unreasonable dela in asserting
one s right. The Court has ruled, a dela i hin he p e c ip i e
pe iod i anc ioned 21 b la and i no con ide ed o be a dela ha
o ld ba elief. In e plaining that laches applies onl in the
absence of a statutor prescripti e period, the Court has stated
 Lache i ec e i e i . Equit , ho e er, is applied onl in the
absence, ne er in contra ention, of statutor la . Thus, laches, cannot, as a
rule, be used to abate a collection
22 suit led ithin the prescripti e period
mandated b the Ci il Code.

Clearl , the De Castros defense of laches nds no support in la ,

equit or jurisprudence.

C g 2023 Ce a B S , I c. A g e e ed.