ATP Page |1

G.R. No. 94050 November 21, 1991
SYLVIA H. BEDIA and HONTIVEROS & ASSOCIATED PRODUCERS PHILS.
YIELDS,
vs.
EMILY A. WHITE and HOLMAN T. WHITE, respondents.
Ramon A. Gonzales for petitioner of the Court.
Renato S. Corpuz for private respondents.
I/We further understand that this participation contract shall be
deemed non-cancellable after payment of the said down payment,
and that any intention on our part to cancel the same shall render
INC., petitioners, whatever amount we have paid forfeited in favor of HONTIVEROS &
ASSOCIATED PRODUCERS PHILIPPINE YIELDS, INC.
FOR THE ABOVE CONSIDERATION, I/We understand the
HONTIVEROS & ASSOCIATED PRODUCERS PHIL. YIELDS, INC. shall:
Reserve said booth for our exclusive perusal; We also understand
that the above cost includes overall exterior booth decoration and
materials but does not include interior designs which will be per our
specifications and expenses.

PARTICIPANT'S PARTICIPATION
CRUZ, J.: AUTHORIZED SIGNATURE: ACCEPTED BY:

The basic issue before us is the capacity in which petitioner Sylvia H. Bedia (SGD.) EMILY WHITE (SGD.) SYLVIA H. BEDIA
entered into the subject contract with private respondent Emily A. White. DATE: 8/13/80 DATE: Aug. 1, 1980
Both the trial court and the respondent court held she was acting in her own
personal behalf. She faults this finding as reversible error and insists that On August 10, 1986, White and her husband filed a complaint in the
she was merely acting as an agent. Regional Trial Court of Pasay City for damages against Bedia and Hontiveros
& Associated Producers Phil. Yields, Inc. for damages caused by their
The case arose when Bedia and White entered into a Participation fraudulent violation of their agreement. She averred that Bedia had
Contract 1 reading in full as follows: approached her and persuaded her to participate in the State of Texas Fair,
and that she made a down payment of $500.00 to Bedia on the agreed
THE STATE FAIR OF TEXAS '80 display space. In due time, she enplaned for Dallas with her merchandise
PARTICIPATION CONTRACT but was dismayed to learn later that the defendants had not paid for or
registered any display space in her name, nor were they authorized by the
PARTICIPANT (COMPANY NAME) EMILY WHITE state fair director to recruit participants. She said she incurred losses as a
ENTERPRISES result for which the defendants should be held solidarily liable. 2

I/We, the abovementioned company hereby agrees to participate in
the 1980 Dallas 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 their joint answer, the defendants denied the plaintiff's allegation that
they had deceived her and explained that no display space was registered in
her name as she 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 $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 plaintiff.
The defendants filed their own counterclaim and complained of malice on
the part of the plaintiffs. 3
In the course of the trial, the complaint against Hontiveros was dismissed on
motion of the plaintiffs. 4
I
n his decision dated May 29, 1986, Judge Fermin Martin, Jr. found Bedia
liable for fraud and awarded the plaintiffs actual and moral damages plus
attorney's fees and the costs. The court said:
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 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 of another
without being authorized by the latter, or unless she has by law a
right to represent her. (Art. 1347, new Civil Code)
Sustaining the trail court on this point, the respondent court  5 declared in
its decision dated March 30, 1990:
The evidence, on the whole, shows that she definitely acted on her
own. She represented herself as authorized by the State of Texas to
solicit and assign booths at 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 right of
action against the persons with whom the agent had contracted.
We do not share these views.
ATP Page |2
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.
 ATP Page |3

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
them against the agent.

WHEREFORE, the appealed decision dated March 30, 1990, of the

respondent court is REVERSED and a new judgment is rendered dismissing
Civil Case No. 9246-P in the Regional Trial Court of Pasay City.

SO ORDERED.

G.R. No. 159489             February 4, 2008
FILIPINAS LIFE ASSURANCE COMPANY (now AYALA LIFE ASSURANCE,
INC.), petitioner,
vs.
CLEMENTE N. PEDROSO, TERESITA O. PEDROSO and JENNIFER N. PALACIO
thru her Attorney-in-Fact PONCIANO C. MARQUEZ, respondents.
DECISION
QUISUMBING, J.:
This petition for review on certiorari seeks the reversal of the Decision 1 and
Resolution,2 dated November 29, 2002 and August 5, 2003, respectively, of
the Court of Appeals in CA-G.R. CV No. 33568. The appellate court had
affirmed the Decision3 dated October 10, 1989 of the Regional Trial Court
(RTC) of Manila, Branch 3, finding petitioner as defendant and the co-
defendants below jointly and severally liable to the plaintiffs, now herein
respondents.
The antecedent facts are as follows:
Respondent Teresita O. Pedroso is a policyholder of a 20-year endowment
life insurance issued by petitioner Filipinas Life Assurance Company
(Filipinas Life). Pedroso claims Renato Valle was her insurance agent since
1972 and Valle collected her monthly premiums. In the first week of January
1977, Valle told her that the Filipinas Life Escolta Office was holding a
promotional investment program for policyholders. It was offering 8%
prepaid interest a month for certain amounts deposited on a monthly basis.
Enticed, she initially invested and issued a post-dated check dated January
7, 1977 for P10,000.4 In return, Valle issued Pedroso his personal check
for P800 for the 8%5 prepaid interest and a Filipinas Life "Agent’s Receipt"
No. 807838.6
Subsequently, she called the Escolta office and talked to Francisco
Alcantara, the administrative assistant, who referred her to the branch
ATP Page |4
manager, Angel Apetrior. Pedroso inquired about the promotional
investment and Apetrior confirmed that there was such a promotion. She
was even told she could "push through with the check" she issued. From the
records, the check, with the endorsement of Alcantara at the back, was
deposited in the account of Filipinas Life with the Commercial Bank and
Trust Company (CBTC), Escolta Branch.
Relying on the representations made by the petitioner’s duly authorized
representatives Apetrior and Alcantara, as well as having known agent Valle
for quite some time, Pedroso waited for the maturity of her initial
investment. A month after, her investment of P10,000 was returned to her
after she made a written request for its refund. The formal written request,
dated February 3, 1977, was written on an inter-office memorandum form
of Filipinas Life prepared by Alcantara. 7 To collect the amount, Pedroso
personally went to the Escolta branch where Alcantara gave her the P10,000
in cash. After a second investment, she made 7 to 8 more investments in
varying amounts, totaling P37,000 but at a lower rate of 5% 8 prepaid
interest a month. Upon maturity of Pedroso’s subsequent investments,
Valle would take back from Pedroso the corresponding yellow-colored
agent’s receipt he issued to the latter.
Pedroso told respondent Jennifer N. Palacio, also a Filipinas Life insurance
policyholder, about the investment plan. Palacio made a total investment
of P49,5509 but at only 5% prepaid interest. However, when Pedroso tried
to withdraw her investment, Valle did not want to return some P17,000
worth of it. Palacio also tried to withdraw hers, but Filipinas Life, despite
demands, refused to return her money. With the assistance of their lawyer,
they went to Filipinas Life Escolta Office to collect their respective
investments, and to inquire why they had not seen Valle for quite some
time. But their attempts were futile. Hence, respondents filed an action for
the recovery of a sum of money.
After trial, the RTC, Branch 3, Manila, held Filipinas Life and its co-
defendants Valle, Apetrior and Alcantara jointly and solidarily liable to the
respondents.

On appeal, the Court of Appeals affirmed the trial court’s ruling and
subsequently denied the motion for reconsideration.
Petitioner now comes before us raising a single issue:
WHETHER OR NOT THE COURT OF APPEALS COMMITTED A
REVERSIBLE ERROR AND GRAVELY ABUSED ITS DISCRETION IN
AFFIRMING THE DECISION OF THE LOWER COURT HOLDING FLAC
[FILIPINAS LIFE] TO BE JOINTLY AND SEVERALLY LIABLE WITH ITS CO-
DEFENDANTS ON THE CLAIM OF RESPONDENTS INSTEAD OF
HOLDING ITS AGENT, RENATO VALLE, SOLELY LIABLE TO THE
RESPONDENTS.10
Simply put, did the Court of Appeals err in holding petitioner and its co-
defendants jointly and severally liable to the herein respondents?
Filipinas Life does not dispute that Valle was its agent, but claims that it was
only a life insurance company and was not engaged in the business of
collecting investment money. It contends that the investment scheme
offered to respondents by Valle, Apetrior and Alcantara was outside the
scope of their authority as agents of Filipinas Life such that, it cannot be
held liable to the respondents.11
On the other hand, respondents contend that Filipinas Life authorized Valle
to solicit investments from them. In fact, Filipinas Life’s official documents
and facilities were used in consummating the transactions. These
transactions, according to respondents, were confirmed by its officers
Apetrior and Alcantara. Respondents assert they exercised all the diligence
required of them in ascertaining the authority of petitioner’s agents; and it
is Filipinas Life that failed in its duty to ensure that its agents act within the
scope of their authority.
Considering the issue raised in the light of the submissions of the parties, we
find that the petition lacks merit. The Court of Appeals committed no
reversible error nor abused gravely its discretion in rendering the assailed
decision and resolution.
ATP Page |5
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 Life’s official receipts, whose
authenticity were not disputed. Valle’s 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 agent’s 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. 12 The general rule is that the principal
is responsible for the acts of its agent done within the scope of its authority,
and should bear the damage caused to third persons. 13 When the agent
exceeds his authority, the agent becomes personally liable for the
damage.14 But even when the 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. 15 In other words, the acts
of an agent beyond the scope of his authority do not bind the principal,
unless the principal ratifies them, expressly or impliedly. 16 Ratification in
agency is the adoption or confirmation by one person of an act performed
on his behalf by another without authority. 17
Filipinas Life cannot profess ignorance of Valle’s acts. Even if Valle’s
representations were beyond his authority as a debit/insurance agent,
Filipinas Life thru Alcantara and Apetrior expressly and knowingly ratified
Valle’s acts. It cannot even be denied that Filipinas Life benefited from the
investments deposited by Valle in the account of Filipinas Life. In our
considered view, Filipinas Life had clothed Valle with apparent authority;
hence, it is now estopped to deny said authority. Innocent third persons
should not be prejudiced if the principal failed to adopt the needed
measures to prevent misrepresentation, much more so if the principal
ratified his agent’s acts beyond the latter’s authority. The act of the agent is
considered that of the principal itself. Qui per alium facit per seipsum facere
 ATP Page |6

videtur. "He who does a thing by an agent is considered as doing it

himself."18

WHEREFORE, the petition is DENIED for lack of merit. The Decision and

Resolution, dated November 29, 2002 and August 5, 2003, respectively, of
the Court of Appeals in CA-G.R. CV No. 33568 are AFFIRMED.

Costs against the petitioner.

SO ORDERED.

G.R. No. 199990               February 4, 2015
SPOUSES ROLANDO and HERMINIA SALVADOR, Petitioners,
vs.
SPOUSES ROGELIO AND ELIZABETH RABAJA and ROSARIO
GONZALES, Respondents.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari seeking to reverse and set aside the
August 22, 2011 Decision1 and the January 5, 2012 Resolution2 of the Court
of Appeals (CA) in CA-G.R. CV No. 90296 which affirmed with modification
the March 29, 2007 Decision of the Regional Trial Court Branch 214 (RTC-
Branch 214), Mandaluyong City in Civil Case No. MC-03-2175, for rescission
of a contract (rescission case).
The Facts
This case stemmed from a dispute involving the sellers, petitioner spouses
Rolando and Herminia Salvador (Spouses Salvador); the sellers' agent,
Rosario Gonzales (Gonzales),· and the buyers, respondent Spouses Rogelio
and Elizabeth Rabaja (Spouses Rabaja), over a parcel of land situated at No.
25, Merryland Village, 375 Jose Rizal Street, Mandaluyong City (subject
property),covered by Transfer Certificate of Title (TCT) No. 13426 and
registered in the names of Spouses Salvador. From 1994 until 2002, Spouses
Rabaja were leasing an apartment in the subject lot.
Sometime in July 1998, Spouses Rabaja learned that Spouses Salvador were
looking for a buyer of the subject property. Petitioner Herminia Salvador
(Herminia)personally introduced Gonzales to them as the administrator of
the said property. Spouses Salvador even handed to Gonzales the owner’s
duplicate certificate of title over the subject property. On July, 3, 1998,
Spouses Rabaja made an initial payment of ₱48,000.00 to Gonzales in the
presence of Herminia. Gonzales then presented the Special Power of
ATP Page |7
Attorney3 (SPA),executed by Rolando Salvador (Rolando) and dated July 24,
1998. On the same day, the parties executed the Contract to Sell 4 which
stipulated that for a consideration of ₱5,000,000.00, Spouses Salvador sold,
transferred and conveyed in favor of Spouses Rabaja the subject property.
Spouses Rabaja made several payments totalling ₱950,000.00, which were
received by Gonzales pursuant to the SPA provided earlier as evidenced by
the check vouchers signed by Gonzales and the improvised receiptssigned
by Herminia.
Sometime in June 1999, however, Spouses Salvador complained to Spouses
Rabaja that they did not receive any payment from Gonzales. This prompted
Spouses Rabaja to suspend further payment of the purchase price; and as a
consequence, they received a notice to vacate the subject property from
Spouses Salvador for non-payment of rentals.
Thereafter, Spouses Salvador instituted an action for ejectment against
Spouses Rabaja. In turn, Spouses Rabaja filed an action for rescission of
contract against Spouses Salvador and Gonzales, the subject matter of the
present petition.
In the action for ejectment, the complaint was filed before the Metropolitan
Trial Court of Mandaluyong City, Branch 60 (MeTC),where it was docketed
as Civil Case No. 17344. In its August 14, 2002 Decision, 5 the MeTC ruled in
favor of Spouses Salvador finding that valid grounds existed for the eviction
of Spouses Rabaja from the subject property and ordering them to pay back
rentals. Spouses Salvador were able to garnish the amount of
₱593,400.006 from Spouses Rabaja’s time deposit account pursuant to a writ
of execution issued by the MeTC.7 Spouses Rabaja appealed to the Regional
Trial Court, Branch 212, Mandaluyong City (RTC-Br. 212)which reversed the
MeTC ruling in its March 1, 2005 decision. 8 The RTC-Br. 212 found that no
lease agreement existed between the parties. Thereafter, Spouses Salvador
filed an appeal with the CA which was docketed as CAG.R. SP No. 89259. On
March 31, 2006, the CA ruled in favor of Spouses Salvador and reinstated
the MeTC ruling ejecting Spouses Rabaja. 9 Not having been appealed, the CA
decision in CA-G.R. SP No. 89259 became final and executory on May 12,
2006.10

Meanwhile, the rescission case filed by Spouses Rabaja against Spouses
Salvador and Gonzales and docketed as Civil Case No. MC No. 03-2175 was
also raffled to RTC-Br. 212. In their complaint, 11 dated July 7, 2003, Spouses
Rabaja demanded the rescission of the contract to sell praying that the
amount of ₱950,000.00 they previously paid to Spouses Salvador be
returned to them. They likewise prayed that damages be awarded due to
the contractual breach committed by Spouses Salvador.
Spouses Salvador filed their answer with counterclaim and cross-
claim12 contending that there was no meeting of the minds between the
parties and that the SPA in favor of Gonzales was falsified. In fact, they filed
a case for falsification against Gonzales, but it was dismissed because the
original of the alleged falsified SPAcould not be produced. They further
averred that they did not receive any payment from Spouses Rabaja through
Gonzales. In her defense, Gonzales filed her answer 13 stating that the SPA
was not falsified and that the payments of Spouses Rabaja amounting to
₱950,000.00 were all handed over to Spouses Salvador.
The pre-trial conference began but attempts to amicably settle the case
were unsuccessful. It was formally reset to February 4, 2005, but Spouses
Salvador and their counsel failed to attend. Consequently, the RTC issued
the pre-trial order14 declaring Spouses Salvador in default and allowing
Spouses Rabaja to present their evidence ex parte against Spouses Salvador
and Gonzales to present evidence in her favor.
A motion for reconsideration,15 dated March 28, 2005, was filed by Spouses
Salvador on the said pre-trial order beseeching the liberality of the court.
The rescission case was then re-raffled to RTC-Br. 214 after the Presiding
Judge of RTC-Br. 212 inhibited herself. In the Order, 16 dated October 24,
2005, the RTC-Br. 214 denied the motion for reconsideration because
Spouses Salvador provided a flimsy excuse for their non-appearance in the
pre-trial conference. Thereafter, trial proceeded and Spouses Rabaja and
Gonzales presented their respective testimonial and documentary evidence.
RTC Ruling
ATP Page |8
On March 29, 2007, the RTC-Br. 214 rendered a decision 17 in favor of
Spouses Rabaja. It held that the signature of Spouses Salvador affixed in the
contract to sell appeared to be authentic. It also held that the contract,
although denominated as "contract to sell," was actually a contract of sale
because Spouses Salvador, as vendors, did not reserve their title to the
property until the vendees had fully paid the purchase price. Since the
contract entered into was a reciprocal contract, it could bevalidly rescinded
by Spouses Rabaja, and in the process, they could recover the amount of
₱950,000.00 jointly and severally from Spouses Salvador and Gonzales. The
RTC stated that Gonzales was undoubtedly the attorney-in-fact of Spouses
Salvador absent any taint of irregularity. Spouses Rabaja could not be
faulted in dealing with Gonzales who was duly equipped with the SPA from
Spouses Salvador.
The RTC-Br. 214 then ruled that the amount of ₱593,400.00 garnished from
the time deposit account of Spouses Rabaja, representing the award of
rental arrearages in the separate ejectment suit, should be returned by
Spouses Salvador.18 The court viewed that such amount was part of the
purchase price of the subject property which must be returned. It also
awarded moral and exemplary damages in favor of Spouses Rabaja and
attorney’s fees in favor of Gonzales. The dispositive portion of the said
decision reads:
WHEREFORE, this court renders judgment as follows:
a. Ordering the "Contract to Sell" entered into by the plaintiff and
defendant spouses Rolando and Herminia Salvador on July 24, 1998
as RESCINDED;
b. Ordering defendant spouses Rolando and Herminia Salvador and
defendant Rosario S. Gonzales jointly and severally liable to pay
plaintiffs:
1. the amount of NINE HUNDRED FIFTY THOUSAND PESOS
(₱950,000.00), representing the payments made by the
latter for the purchase of subject property;

2. the amount of TWENTY THOUSAND PESOS (₱20,000.00),
as moral damages;
3. the amount of TWENTY THOUSAND PESOS (₱20,000.00),
as exemplary damages;
4. the amount of ONE HUNDRED THOUSAND PESOS
(₱100,000.00), as attorney’s fees;
5. the cost of suit.
c. Ordering defendant Spouses Rolando and Herminia Salvador to
pay plaintiffs the amount of FIVE HUNDRED NINETY THREE
THOUSAND PESOS (₱593,000.00) (sic), representing the amount
garnished from the Metrobank deposit of plaintiffs as payment for
their alleged back rentals;
d. Ordering the defendant Spouses Rolando and Herminia Salvador
to pay defendant Rosario Gonzales on her cross-claim in the amount
of ONE HUNDRED THOUSAND PESOS (₱100,000.00);
e. Dismissing the counterclaims of the defendants against the
plaintiff.
SO ORDERED.19
Gonzales filed a motion for partial reconsideration, but it was denied by the
RTC-Br. 114 in its Order,20 dated September 12, 2007. Undaunted, Spouses
Salvador and Gonzales filed an appeal before the CA.
CA Ruling
On March 29, 2007, the CA affirmed the decision of the RTC-Br. 114 with
modifications. It ruled that the "contract to sell" was indeed a contract of
sale and that Gonzales was armed with an SPA and was, in fact, introduced
to Spouses Rabaja by Spouses Salvador as the administrator of the property.
Spouses Rabaja could not be blamed if they had transacted with Gonzales.
ATP Page |9
The CA then held that Spouses Salvador should return the amount of
₱593,400.00 pursuant to a separate ejectment case, reasoning that Spouses
Salvador misled the court because an examination of CA-G.R. SP No.
89260showed that Spouses Rabaja were not involved in that case. CA-G.R.
SP No. 59260 was an action between Spouses Salvador and Gonzales only
and involved a completely different residential apartment located at 302-C
Jupiter Street, Dreamland Subdivision, Mandaluyong City.
The CA, however, ruled that Gonzales was not solidarily liable with Spouses
Salvador. The agent must expressly bind himself or exceed the limit of his
authority in order to be solidarily liable. It was not shown that Gonzales as
agent of Spouses Salvador exceeded her authority or expressly bound
herself to be solidarily liable. The decretal portion of the CA decision reads:
WHEREFORE, the appeal is PARTLY GRANTED. The assailed Decision dated
March 29, 2007 and the Order dated September 12, 2007, of the Regional
Trial Court, Branch 214, Mandaluyong City, in Civil Case No. MC-03-2175,
are AFFIRMED with MODIFICATION in that Rosario Gonzalez is not jointly
and severally liable to pay Spouses Rabaja the amounts enumerated in
paragraph (b) of the Decision dated March 29, 2007.
SO ORDERED.21
Spouses Salvador filed a motion for reconsideration but it was denied by the
CA in its January 5, 2012 Resolution.
Hence, this petition.
ASSIGNMENT OF ERRORS
I
THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE LOWER COURT
GRAVELY ABUSED ITS DISCRETION IN DECLARING PETITIONERS IN DEFAULT
AND IN DEPRIVING THEM OF THE OPPORTUNITY TO CROSS-EXAMINE
RESPONDENTS SPS. RABAJA AS WELL AS TO PRESENT EVIDENCE FOR AND IN
THEIR BEHALF, GIVEN THE MERITORIOUS DEFENSES RAISED IN THEIR

ANSWER THAT CATEGORICALLY AND DIRECTLY DISPUTE RESPONDENTS SPS.
RABAJA’S CAUSE OF ACTION.
II
THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE TRIAL COURT
GRAVELY ERRED IN GIVING CREDENCE TO THE TESTIMONY OF RESPONDENT
GONZALES THAT PAYMENTS WERE INDEED REMITTED TO AND RECEIVED BY
PETITIONER HERMINIA SALVADOR EVEN AS THE IMPROVISED RECEIPTS
WEREEVIDENTLY MADE UP AND FALSIFIED BY RESPONDENT GONZALES.
III
THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE TRIAL COURT
GRAVELY ERRED IN RESCINDING THE CONTRACT TO SELL WHENTHERE IS
NOTHING TO RESCIND AS NO VALID CONTRACT TO SELL WAS ENTERED
INTO, AND IN DIRECTING THE REFUND OF THE AMOUNT OF ₱950,000.00
WHEN THE EVIDENCECLEARLY SHOWS THAT SAID AMOUNT WAS PAIDTO
AND RECEIVED BY RESPONDENT GONZALES ALONE WHO
MISAPPROPRIATED THE SAME.
IV
THE COURT OF APPEALS ERRED IN AFFIRMING THE TRIAL COURT’S DECISION
FOR PETITIONERS TO RETURN THE AMOUNT OF ₱543,400.00
REPRESENTING RENTALS IN ARREARS GARNISHED OR WITHDRAWN BY
VIRTUE OF A WRIT OF EXECUTION ISSUED IN AN EJECTMENT CASE WHICH
WAS TRIED AND DECIDED BY ANOTHER COURT.
V the present petition is a mere rehash of the previous arguments of Spouses
THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE LOWER COURT
GRAVELY ERRED IN AWARDING DAMAGES TO RESPONDENTS SPS. RABAJA,
THERE BEING NO FACTUAL AND LEGAL BASES FOR SUCH AWARD. VI THE
COURT OF APPEALS ERRED IN NOT HOLDING THAT THE TRIAL COURT
GRAVELY ERRED IN AWARDING ₱100,000.00 TO RESPONDENT GONZALES AS
ATTORNEY’S FEES WHEN RESPONDENT GONZALES, IN FACT, COMMITTED
A T P P a g e | 10
FORGERY AND FALSIFICATION IN DEALING WITH THE PROPERTY OF
PETITIONERS AND MISAPPROPRIATED THE MONIES PAID TO HER BY
RESPONDENTS SPS. RABAJA, THUS GIVING PREMIUM TO HER FRAUDULENT
ACTS.22
The foregoing can be synthesized into three main issues. First, Spouses
Salvador contend that the order of default must be lifted because
reasonable grounds exist to justify their failure to attend the pre-trial
conference on February 4, 2005. Second, Spouses Salvador raise in issue the
veracity of the receipts given by Gonzales, the SPA and the validity of the
contract to sell. They claim that the improvised receipts should not be given
credence because these were crude and suspicious, measuring only by 2 x 2
inches which showed that Gonzales misappropriated the payments of
Spouses Rabaja for herself and did not remit the amount of ₱950,000.00 to
them. As there was no consideration, then no valid contract to sell existed.
Third, Spouses Salvador argue that the ejectment case, from which the
amount of ₱593,400.00 was garnished, already became final and executory
and could not anymore be disturbed. Lastly, the award of damages in favor
of Spouses Rabaja and Gonzales was improper absent any legal and factual
bases.
On January 21, 2013, Spouses Salvador filed their supplemental
petition23 informing the Court that RTC-Br. 213 had rendered a decision in
Civil Case No. MC00-1082, an action for rescission of the SPA. The said
decision held that Spouses Salvador properly revoked the SPA in favor of
Gonzales due to loss of trust and confidence. On September 11, 2013,
Gonzales filed her comment to the supplemental petition, 24 contending that
the RTC-Branch 213 decision had no bearing because it had not yet attained
finality. On even date, Spouses Rabaja filed their Comment, 25 asserting that
Salvador before the CA. On November 15, 2013, Spouses Salvador replied
that they merely wanted to show that the findings by the RTC-Br. 213
should be given weight as a full-blown trial was conducted therein. 26
The Court’s Ruling
 A T P P a g e | 11

As a general rule, the Court’s jurisdiction in a Rule 45 petition is limited to Sec. 5. Effect of failure to appear.
the review of pure questions of law. A question of law arises when the
doubt or difference exists as to what the law is on a certain state of facts. The failure of the plaintiff to appear when so required pursuant to the next
Negatively put, Rule 45 does not allow the review of questions of fact. A preceding section shall be cause for dismissal of the action. The dismissal
question of fact exists when the doubt or difference arises as to the truth or shall be with prejudice, unless otherwise ordered by the court. A similar
falsity of the allegations.27 failure on the part of the defendant shall be cause to allow the plaintiff to
present his evidence ex parteand the court to render judgment on the basis
The present petition presents questions of fact because it requires the Court thereof.
to examine the veracity of the evidence presented during the trial, such as
the improvised receipts, the SPA given to Gonzales and the contract to sell. [Emphasis supplied]
Even the petitioner spouses themselves concede and ask the Court to
consider questions of fact,28 but the Court finds no reason to disturb the The case of Philippine American Life & General Insurance Company v.
findings of fact of the lower courts absent any compelling reason to the Joseph Enario30 discussed the difference between the non-appearance of a
contrary. defendant in a pre-trial conference and the declaration of a defendant in
default in the present Rules of Civil Procedure. The decision instructs:
The failure of Spouses Salvador
to attend pre-trial conference Prior to the 1997 Revised Rules of Civil Procedure, the phrase "as in default"
warrants the presentation of was initially included in Rule 20 of the old rules, and which read as follows:
evidence ex parte by Spouses
Rabaja Sec. 2. A party who fails to appear at a pre-trial conference may be non-
suited or considered as in default.
On the procedural aspect, the Court reiterates the rule that the failure to
attend the pre-trial conference does not result in the default of an absent It was, however, amended in the 1997 Revised Rules of Civil Procedure.
party. Under the 1997 Rules of Civil Procedure, a defendant is only declared Justice Regalado, in his book, REMEDIAL LAW COMPENDIUM, explained the
in default if he fails to file his Answer within the reglementary period. 29 On rationale for the deletion of the phrase "as in default" in the amended
the other hand, if a defendant fails to attend the pre-trial conference, the provision, to wit:
plaintiff can present his evidence ex parte. Sections 4 and 5, Rule 18 of the
Rules of Court provide: 1. This is a substantial reproduction of Section 2 of the former Rule 20 with
the change that, instead of defendant being declared "as in default" by
Sec. 4. Appearance of parties. reason of his non-appearance, this section now spells out that the
procedure will be to allow the ex parte presentation of plaintiff’s evidence
It shall be the duty of the parties and their counsel to appear at the pre-trial. and the rendition of judgment on the basis thereof. While actually the
The non-appearance of a party may be excused only if a valid cause is procedure remains the same, the purpose is one of semantical propriety or
shown therefor or if a representative shall appear in his behalf fully terminological accuracy as there were criticisms on the use of the word
authorized in writing to enter into an amicable settlement, to submit to "default" in the former provision since that term is identified with the failure
alternative modes of dispute resolution, and to enter into stipulations or to file a required answer, not appearance in court.
admissions of facts and of documents.

Still, in the same book, Justice Regalado clarified that while the order of
default no longer obtained, its effects were retained, thus:
Failure to file a responsive pleading within the reglementary period, and not
failure to appear at the hearing, is the sole ground for an order of default,
except the failure to appear at a pre-trial conference wherein the effects of
a default on the part of the defendant are followed, that is, the plaintiff shall
be allowed to present evidence ex parte and a judgment based thereon may
be rendered against defendant.
From the foregoing, the failure of a party to appear at the pre-trial has
indeed adverse consequences. If the absent party is the plaintiff, then his
case shall be dismissed. If it is the defendant who fails to appear, then the
plaintiff is allowed to present his evidence ex parte and the court shall
render judgment based on the evidence presented. Thus, the plaintiff is
given the privilege to present his evidence without objection from the
defendant, the likelihood being that the court will decide in favor of the
plaintiff, the defendant having forfeited the opportunity to rebut or present
its own evidence.31 The stringent application of the rules on pre-trial is
necessitated from the significant role of the pre-trial stage in the litigation
process. Pretrial is an answer to the clarion call for the speedy disposition of
cases. Although it was discretionary under the 1940 Rules of Court, it was
made mandatory under the 1964 Rules and the subsequent amendments in
1997.32 "The importance of pre-trial in civil actions cannot be
overemphasized."33
There is no dispute that Spouses Salvador and their counsel failed to attend
the pre-trial conference set on February 4, 2005 despite proper notice.
Spouses Salvador aver that their non-attendance was due to the fault of
their counsel as he forgot to update his calendar. 34 This excuse smacks of
carelessness, and indifference to the pre-trial stage. It simply cannot be
considered as a justifiable excuse by the Court. As a result of their
inattentiveness, Spouses Salvador could no longer present any evidence in
their favor. Spouses Rabaja, as plaintiffs, were properly allowed by the RTC
to present evidence ex parte against Spouses Salvador as defendants.
Considering that Gonzales as co-defendant was able to attend the pre-trial
A T P P a g e | 12
conference, she was allowed to present her evidence. The RTC could only
render judgment based on the evidence presented during the trial.
Gonzales, as agent of Spouses
Salvador, could validly receive
the payments of Spouses
Rabaja
Even on the substantial aspect, the petition does not warrant consideration.
The Court agrees with the courts below in finding that the contract entered
into by the parties was essentially a contract of sale which could be validly
rescinded. Spouses Salvador insist that they did not receive the payments
made by Spouses Rabaja from Gonzales which totalled ₱950,000.00 and
that Gonzales was not their duly authorized agent. These contentions,
however, must fail in light of the applicable provisions of the New Civil Code
which state:
Art. 1900. So far as third persons are concerned, an act is deemed to have
been performed within the scope of the agent's authority, if such act is
within the terms of the power of attorney, as written, even if the agent has
in fact exceeded the limits of his authority according to an understanding
between the principal and the agent.
xxxx
Art. 1902. A third person with whom the agent wishes to contract on behalf
of the principal may require the presentation of the power of attorney, or
the instructions as regards the agency. Private or secret orders and
instructions of the principal do not prejudice third persons who have relied
upon the power of attorney or instructions shown them.
xxxx
Art. 1910. The principal must comply with all the obligations which the
agent may have contracted within the scope of his authority.

Persons dealing with an agent must ascertain not only the fact of agency,
but also the nature and extent of the agent’s authority. A third person with
whom the agent wishes to contract on behalf of the principal may require
the presentation of the power of attorney, or the instructions as regards the
agency. The basis for agency is representation and a person dealing with an
agent is put upon inquiry and must discover on his own peril the authority
of the agent.35
According to Article 1990 of the New Civil Code, insofar as third persons are
concerned, an act is deemed to have been performed within the scope of
the agent's authority, if such act is within the terms of the power of
attorney, as written. In this case, Spouses Rabaja did not recklessly enter
into a contract to sell with Gonzales. They required her presentation of the
power of attorney before they transacted with her principal. And when
Gonzales presented the SPA to Spouses Rabaja, the latter had no reason not
to rely on it.
The law mandates an agent to act within the scope of his authority which
what appears in the written terms of the power of attorney granted upon
him.36 The Court holds that, indeed, Gonzales acted within the scope of her
authority. The SPA precisely stated that she could administer the property,
negotiate the sale and collect any document and all payments related to the
subject property.37 As the agent acted within the scope of his authority, the
principal must comply with all the obligations. 38 As correctly held by the CA,
considering that it was not shown that Gonzales exceeded her authority or
that she expressly bound herself to be liable, then she could not be
considered personally and solidarily liable with the principal, Spouses
Salvador.39
Perhaps the most significant point which defeats the petition would be the
fact that it was Herminia herself who personally introduced Gonzalez to
Spouses Rabaja as the administrator of the subject property. By their own
ostensible acts, Spouses Salvador made third persons believe that Gonzales
was duly authorized to administer, negotiate and sell the subject property.
This fact was even affirmed by Spouses Salvador themselves in their petition
where they stated that they had authorized Gonzales to look for a buyer of
A T P P a g e | 13
their property.40 It is already too late in the day for Spouses Salvador to
retract the representation to unjustifiably escape their principal obligation.
As correctly held by the CA and the RTC, considering that there was a valid
SPA, then Spouses Rabaja properly made payments to Gonzales, as agent of
Spouses Salvador; and it was as if they paid to Spouses Salvador. It is of no
moment, insofar as Spouses Rabaja are concerned, whether or not the
payments were actually remitted to Spouses Salvador. Any internal matter,
arrangement, grievance or strife between the principal and the agent is
theirs alone and should not affect third persons. If Spouses Salvador did not
receive the payments or they wish to specifically revoke the SPA, then their
recourse is to institute a separate action against Gonzales. Such action,
however, is not any more covered by the present proceeding.
The amount of ₱593,400.00
should not be returned by
Spouses Salvador
Nevertheless, the assailed decision of the CA must be modified with respect
to the amount of ₱593,400.00 garnished by Spouses Salvador and ordered
returned to Spouses Rabaja. The RTC ordered the return of the amount
garnished holding that it constituted a part of the purchase price. The CA
ruled that Spouses Salvador misled the Court when they improperly cited
CA-G.R. SP No. 89260 to prove their entitlement to the said amount. Both
courts erred in their ruling. First, the garnishment of the amount of
₱593,400.00 against Spouses Rabaja was pursuant to the CA decision in CA-
G.R. SP No. 89259, an entirely different case involving an action for
ejectment, and it does not concern the rescission case which is on appeal
before this Court. Moreover, the decision on the ejectment case is final and
executory and an entry of judgment has already been made. 41 Nothing is
more settled in law than that when a final judgment is executory, it thereby
becomes immutable and unalterable. The judgment may no longer be
modified in any respect, even if the modification is meant to correct what is
perceived to be an erroneous conclusion of fact or law, and regardless of
whether the modification is attempted to be made by the court which
rendered it or by the highest Court of the land. The doctrine is founded on
consideration of public policy and sound practice that, at the risk of

occasional errors, judgments must become final at some definite point in
time.42
The March 31, 2006 CA decision43 in CA-G.R. SP No. 89259has long been
final and executory and cannot any more be disturbed by the Court. Public
policy dictates that once a judgment becomes final, executory and
unappealable, the prevailing party should not be denied the fruits of his
victory by some subterfuge devised by the losing party. Unjustified delay in
the enforcement of a judgment sets at naught the role and purpose of the
courts to resolve justiciable controversies with finality. 44
Meanwhile, in ruling that the garnishment was improper and thus ordering
the return of the garnished amount, the CA referred to its decision in CA-
G.R. SP No. 89260. Spouses Salvador, however, clarified in its motion for
reconsideration45 before the CA and in the present petition 46 that the
garnishment was pursuant to CA-G.R. SP No. 89259, and not CA-G.R. SP No.
89260, another ejectment case involving another property. A perusal of the
records reveals that indeed the garnishment was pursuant to the ejectment
case in the MeTC, docketed as Civil Case No. 17344, 47 where Spouses Rabaja
were the defendants. The MeTC decision was then reinstated by the CA in
CA-G.R. SP No. 89259, not CA-G.R. SP No. 89260. There, a writ of
execution48 and notice of pay49 were issued against Spouses Rabaja in the
amount of ₱591,900.00.
Second, Spouses Rabaja’s appeal with the RTC never sought relief in
returning the garnished amount.50 Such issue simply emerged in the RTC
decision. This is highly improper because the court’s grant of relief is limited
only to what has been prayed for in the complaint or related thereto,
supported by evidence, and covered by the party’s cause of action. 51
If Spouses Rabaja would have any objection on the manner and propriety of
the execution, then they must institute their opposition to the execution
proceeding a separate case. Spouses Rabaja can invoke the Civil Code
provisions on legal compensation or set-off under Articles 1278, 1279 and
1270.52 The two obligations appear to have respectively offset each other,
compensation having taken effectby operation of law pursuant to the said
A T P P a g e | 14
provisions of the Civil Code, since all the requisites provided in Art. 1279 of
the said Code for automatic compensation are duly present.
No award of actual, moral and
exemplary damages
The award of damages to Spouses Rabaja cannot be sustained by this Court.
The filing alone of a civil action should not be a ground for an award of
moral damages in the same way that a clearly unfounded civil action is not
among the grounds for moral damages. 53 Article 2220 of the New Civil Code
provides that to award moral damages in a breach of contract, the
defendant must act fraudulently or in bad faith. In this case, Spouses Rabaja
failed to sufficiently show that Spouses Salvador acted in a fraudulent
manner or with bad faith when it breached the contract of sale. Thus, the
award of moral damages cannot be warranted.
As to the award of exemplary damages, Article 2229 of the New Civil Code
provides that exemplary damages may be imposed by way of example or
correction for the public good, in addition to the moral, temperate,
liquidated or compensatory damages. 54 The claimant must first establish his
right to moral, temperate, liquidated or compensatory damages. In this
case, considering that Spouses Rabaja failed to prove moral or
compensatory damages, then there could be no award of exemplary
damages.
With regard to attorney’s fees, neither Spouses Rabaja nor Gonzales is
entitled to the award.1âwphi1 The settled rule is that no premium should be
placed on the right to litigate and that not every winning party is entitled to
an automatic grant of attorney’s fees. 55 The RTC reasoned that Gonzales was
forced to litigate due to the acts of Spouses Salvador. The Court does not
agree. Gonzales, as agent of Spouses Salvador, should have expected that
she would be called to litigation in connection with her fiduciary duties to
the principal.
In view of all the foregoing, the CA decision should be affirmed with the
following modifications:
 A T P P a g e | 15

1. The order requiring defendant Spouses Rolando and Herminia 2. The cost of suit;
Salvador to pay plaintiffs the amount of Five Hundred Ninety Three
Thousand (₱593,000.00) Pesos, representing the amount garnished c. Dismissing the counterclaims of Spouses Rolando and Herminia
from the Metrobank deposit of plaintiffs as for their back rentals Salvador and Rosario Gonzales against Spouses Rogelio and
should be deleted; Elizabeth Rabaja.

2. The award of moral damages in the amount of Twenty Thousand
(₱20,000.00) Pesos; exemplary damages in the amount of Twenty
Thousand (₱20,000.00) Pesos, and attorney’s fees in the amount of
One Hundred Thousand (₱100,000.00) Pesos in favor of Spouses
Rabaja should be deleted; and
3. The award of attorney’s fees in amount of One Hundred
Thousand (₱100,000.00) Pesos in favor of Gonzales should be
deleted.
The amounts awarded are subject to interest at the legal rate of 6% per
annum to be reckoned from the date of finality of this judgment until fully
paid."
As aforestated, this is without prejudice to the invocation by either party of
the Civil Code provisions on legal compensation or set-off under Articles
1278, 1279 and 1270.
SO ORDERED.

The other amounts awarded are subject to interest at the legal rate of 6%
per annum, to be reckoned from the date of finality of this judgment until
fully paid.

WHEREFORE, the petition is PARTLY GRANTED. The March 29, 2007 Decision
of the Regional Trial Court, Branch 214, Mandaluyong City, in Civil Case No.
MC-03-2175, is MODIFIED to read as follows:

"WHEREFORE, this Court renders judgment as follows:

a. Ordering the "Contract to Sell" entered into by Spouses Rogelio

and Elizabeth Rabaja and Spouses Rolando and Herminia Salvador
on July 24, 1998 as RESCINDED;

b. Ordering Spouses Rolando and Herminia Salvador to pay Spouses

Rogelio and Elizabeth Rabaja:

1. The amount of Nine Hundred Fifty Thousand

(₱950,000.00) Pesos, representing the payments made by
the latter for the purchase of the subject property; and

[G.R. No. 82978. November 22, 1990.]
THE MANILA REMNANT CO., INC., Petitioner, v. THE HONORABLE COURT
OF APPEALS and OSCAR VENTANILLA, JR. and CARMEN GLORIA
DIAZ, Respondents.
Bede S. Talingcos, for Petitioners.
Augusto Gatmaytan for Private Respondent.
SYLLABUS
1. CIVIL LAW; AGENCY; FAILURE OF THE PRINCIPAL TO CORRECT AN
IRREGULARITY DESPITE KOWLEDGE THEREOF, DEEMED A RATIFICATION OF
THE ACT OF THE AGENT. — In the case at bar, the Valencia realty firm had
clearly overstepped the bounds of its authority as agent — and for that
matter, even the law — when it undertook the double sale of the disputed
lots. Such being the case, the principal, Manila Remnant, would have been
in the clear pursuant to Article 1897 of the Civil Code which states that"
(t)he agent who acts as such is not personally liable to that party with whom
he contracts, unless he expressly binds himself or exceeds the limits of his
authority without giving such party sufficient notice of his powers."
However, the unique relationship existing between the principal and the
agent at the time of the dual sale must be underscored. Bear in mind that
the president then of both firms was Artemio U. Valencia, the individual
directly responsible for the sale scam. Hence, despite the fact that the
double sale was beyond the power of the agent, Manila Remnant as
principal was chargeable with the knowledge or constructive notice of that
fact and not having done anything to correct such an irregularity was
deemed to have ratified the same. (See Art. 1910, Civil Code.)
2. ID.; ID.; PRINCIPLE OF ESTOPPEL; REASON AND EFFECT THEREOF; CASE AT
BAR. — More in point, we find that by the principle of estoppel, Manila
Remnant is deemed to have allowed its agent to act as though it had
plenary powers. Article 1911 of the Civil Code provides: "Even when the
agent has exceeded his authority, the principal is solidarily liable with the
A T P P a g e | 16
agent if the former allowed the latter to act as though he had full powers."
The above-quoted article is new. It is intended to protect the rights of
innocent persons. In such a situation, both the principal and the agent may
be considered as joint feasors whose liability is joint and solidary (Verzosa v.
Lim, 45 Phil. 416). Authority by estoppel has arisen in the instant case
because by its negligence, the principal, Manila Remnant, has permitted its
agent, A.U. Valencia and Co., to exercise powers not granted to it. That the
principal might not have had actual knowledge of the agent’s misdeed is of
no moment.
DECISION
FERNAN, J.:
Like any other couple, Oscar Ventanilla and his wife Carmen, both faculty
members of the University of the Philippines and renting a faculty unit,
dreamed of someday owning a house and lot. Instead of attaining this
dream, they became innocent victims of deceit and found themselves in the
midst of an ensuing squabble between a subdivision owner and its real
estate agent.
The facts as found by the trial court and adopted by the Appellate Court are
as follows:chanrob1es virtual 1aw library
Petitioner Manila Remnant Co., Inc. is the owner of the parcels of land
situated in Quezon City covered by Transfer Certificates of Title Nos. 26400,
26401, 30783 and 31986 and constituting the subdivision known as Capital
Homes Subdivision Nos. I and II. On July 25, 1972, Manila Remnant and A.U.
Valencia & Co. Inc. entered into a written agreement entitled "Confirmation
of Land Development and Sales Contract" to formalize an earlier verbal
agreement whereby for a consideration of 17 and 1/2% fee, including sales
commission and management fee, A.U. Valencia and Co., Inc. was to
develop the aforesaid subdivision with authority to manage the sales
thereof, execute contracts to sell to lot buyers and issue official receipts. 1

At that time the President of both A.U. Valencia and Co. Inc. and Manila
Remnant Co., Inc. was Artemio U. Valencia.cralawnad
On March 3, 1970, Manila Remnant thru A.U. Valencia and Co. executed two
"contracts to sell" covering Lots 1 and 2 of Block 17 in favor of Oscar C.
Ventanilla and Carmen Gloria Diaz for the combined contract price of
P66,571.00 payable monthly for ten years. 2 As thus agreed in the contracts
to sell, the Ventanillas paid the down payments on the two lots even before
the formal contract was signed on March 3, 1970.
Ten (10) days after the signing of the contracts with the Ventanillas or on
March 13, 1970, Artemio U. Valencia, as President of Manila Remnant, and
without the knowledge of the Ventanilla couple, sold Lots 1 and 2 of Block
17 again, this time in favor of Carlos Crisostomo, one of his sales agents
without any consideration. 3 Artemio Valencia then transmitted the
fictitious Crisostomo contracts to Manila Remnant while he kept in his files
the contracts to sell in favor of the Ventanillas. All the amounts paid by the
Ventanillas were deposited in Valencia’s bank account.
Beginning March 13, 1970, upon orders of Artemio Valencia, the monthly
payments of the Ventanillas were remitted to Manila Remnant as payments
of Crisostomo for which the former issued receipts in favor of Crisostomo.
Since Valencia kept the receipts in his files and never transmitted the same
to Crisostomo, the latter and the Ventanillas remained ignorant of
Valencia’s scheme. Thus, the Ventanillas continued paying their monthly
installments.chanrobles virtual lawlibrary
Subsequently, the harmonious business relationship between Artemio
Valencia and Manila Remnant ended. On May 30, 1973, Manila Remnant,
through its General Manager Karl Landahl, wrote Artemio Valencia
informing him that Manila Remnant was terminating its existing collection
agreement with his firm on account of the considerable amount of
discrepancies and irregularities discovered in its collections and remittances
by virtue of confirmations received from lot buyers. 4 As a consequence, on
June 6, 1973, Artemio Valencia was removed as President by the Board of
Directors of Manila Remnant. Therefore, from May of 1973, Valencia
stopped transmitting Ventanilla’s monthly installments which at that time
A T P P a g e | 17
had already amounted to P17,925.40 for Lot 1 and P18,141.95 for Lot 2,
(which appeared in Manila Remnant’s record as credited in the name of
Crisostomo). 5
On June 8, 1973, A.U. Valencia and Co. sued Manila Remnant before Branch
19 of the then Court of First Instance of Manila 6 to impugn the abrogation
of their agency agreement. On June 10 and July 10, 1973, said court ordered
all lot buyers to deposit their monthly amortizations with the court. 7 But on
July 17, 1973, A.U. Valencia and Co. wrote the Ventanillas that it was still
authorized by the court to collect the monthly amortizations and requested
them to continue remitting their amortizations with the assurance that said
payments would be deposited later in court. 8 On May 22, 1974, the trial
court issued an order prohibiting A.U. Valencia and Co. from collecting the
monthly installments. 9 On July 22, 1974 and February 6, 1976 the same
court ordered the Valencia firm to furnish the court with a complete list of
all lot buyers who had already made down payments to Manila Remnant
before December 1972. 10 Valencia complied with the court’s order on
August 6, 1974 by submitting a list which excluded the name of the
Ventanillas. 11
Since A.U. Valencia and Co. failed to forward its collections after May 1973,
Manila Remnant caused on August 20, 1976 the publication in the Times
Journal of a notice cancelling the contracts to sell of some lot buyers
including that of Carlos Crisostomo in whose name the payments of the
Ventanillas had been credited. 12
To prevent the effective cancellation of their contracts, Artemio Valencia
instigated on September 22, 1976 the filing by Carlos Crisostomo and
seventeen (17) other lot vendees of a complaint for specific performance
with damages against Manila Remnant before the Court of First Instance of
Quezon City. The complaint alleged that Crisostomo had already paid a total
of P17,922.40 and P18,136.85 on Lots 1 and 2, respectively. 13
It was not until March 1978 when the Ventanillas, after learning of the
termination of the agency agreement between Manila Remnant and A.U.
Valencia & Co., decided to stop paying their amortizations to the latter. The
Ventanillas, believing that they had already remitted P37,007.00 for Lot 1
and P36,911.00 for Lot 2 or a grand total, inclusive of interest, of P73,122.35

for the two lots, thereby leaving a balance of P13,531.58 for Lot 1 and
P13,540.22 for Lot 2, went directly to Manila Remnant and offered to pay
the entire outstanding balance of the purchase price. 14 To their shock and
utter consternation, they discovered from Gloria Caballes, an accountant of
Manila Remnant, that their names did not appear in the records of A.U.
Valencia and Co. as lot buyers. Caballes showed the Ventanillas copies of the
contracts to sell in favor of Carlos Crisostomo, duly signed by Artemio U.
Valencia as President of Manila Remnant. 15 Whereupon, Manila Remnant
refused the offer of the Ventanillas to pay for the remainder of the contract
price because they did not have the personality to do so. Furthermore, they
were shown the published Notice of Cancellation in the January 29, 1978
issue of the Times Journal rescinding the contracts of delinquent buyers
including Crisostomo.
Thus, on November 21, 1978, the Ventanillas commenced an action for
specific performance, annulment of deeds and damages against Manila
Remnant, A.U. Valencia and Co. and Carlos Crisostomo before the Court of
First Instance of Quezon City, Branch 17-B. 16 Crisostomo was declared in
default for failure to file an answer.
On November 17, 1980, the trial court rendered a decision 1) declaring the
contracts to sell issued in favor of the Ventanillas valid and subsisting and
annulling the contracts to sell in Crisostomo’s favor; 2) ordering Manila
Remnant to execute in favor of the Ventanillas an Absolute Deed of Sale
free from all liens and encumbrances; and 3) condemning defendants A.U.
Valencia and Co. Inc., Manila Remnant and Carlos Crisostomo jointly and
severally to pay the Ventanillas the amount of P100,000.00 as moral
damages, P100,000.00 as exemplary damages, and P100,000.00 as
attorney’s fees. The lower court also added that if, for any legal reason, the
transfer of the lots could no longer be effected, the defendants should
reimburse jointly and severally to the Ventanillas the total amount of
P73,122.35 representing the total amount paid for the two lots plus legal
interest thereon from March 1970 plus damages as aforestated. With regard
to the cross claim of Manila Remnant against Valencia, the court found that
Manila Remnant could have not been dragged into this suit without the
fraudulent manipulations of Valencia. Hence, it adjudged A.U. Valencia and
Co. to pay the Manila Remnant P5,000.00 as moral damages and exemplary
damages and P5,000.00 as attorney’s fees. 17
A T P P a g e | 18
Subsequently, Manila Remnant and A.U. Valencia and Co. elevated the
lower court’s decision to the Court of Appeals through separate appeals. On
October 13, 1987, the Appellate Court affirmed in toto the decision of the
lower court. Reconsideration sought by petitioner Manila Remnant was
denied, hence the instant petition.
There is no question that the contracts to sell in favor of the Ventanilla
spouses are valid and subsisting. The only issue remaining is whether or not
petitioner Manila Remnant should be held solidarily liable together with
A.U. Valencia and Co. and Carlos Crisostomo for the payment of moral,
exemplary damages and attorney’s fees in favor of the Ventanillas. 18
While petitioner Manila Remnant has not refuted the legality of the award
of damages per se, it believes that it cannot be made jointly and severally
liable with its agent A.U. Valencia and Co. since it was not aware of the
illegal acts perpetrated nor did it consent or ratify said acts of its agent.
The argument is devoid of merit.
In the case at bar, the Valencia realty firm had clearly overstepped the
bounds of its authority as agent — and for that matter, even the law —
when it undertook the double sale of the disputed lots. Such being the case,
the principal, Manila Remnant, would have been in the clear pursuant to
Article 1897 of the Civil Code which states that" (t)he agent who acts as such
is not personally liable to that party with whom he contracts, unless he
expressly binds himself or exceeds the limits of his authority without giving
such party sufficient notice of his powers." 
However, the unique relationship existing between the principal and the
agent at the time of the dual sale must be underscored. Bear in mind that
the president then of both firms was Artemio U. Valencia, the individual
directly responsible for the sale scam. Hence, despite the fact that the
double sale was beyond the power of the agent, Manila Remnant as
principal was chargeable with the knowledge or constructive notice of that
fact and not having done anything to correct such an irregularity was
deemed to have ratified the same. 19
More in point, we find that by the principle of estoppel, Manila Remnant is
deemed to have allowed its agent to act as though it had plenary powers.

Article 1911 of the Civil Code provides:jgc:chanrobles.com.ph
"Even when the agent has exceeded his authority, the principal is solidarily
liable with the agent if the former allowed the latter to act as though he had
full powers." (Emphasis supplied)
The above-quoted article is new. It is intended to protect the rights of
innocent persons. In such a situation, both the principal and the agent may
be considered as joint feasors whose liability is joint and solidary. 20
Authority by estoppel has arisen in the instant case because by its
negligence, the principal, Manila Remnant, has permitted its agent, A.U.
Valencia and Co., to exercise powers not granted to it. That the principal
might not have had actual knowledge of the agent’s misdeed is of no
moment. Consider the following circumstances:chanrob1es virtual 1aw
library
Firstly, Manila Remnant literally gave carte blanche to its agent A.U.
Valencia and Co. in the sale and disposition of the subdivision lots. As a
disclosed principal in the contracts to sell in favor of the Ventanilla couple,
there was no doubt that they were in fact contracting with the principal.
Section 7 of the Ventanillas’ contracts to sell states:jgc:chanrobles.com.ph
"7. That all payments whether deposits, down payment and monthly
installment agreed to be made by the vendee shall be payable to A.U.
Valencia and Co., Inc. It is hereby expressly understood that unauthorized
payments made to real estate brokers or agents shall be the sole and
exclusive responsibility and at the risk of the vendee and any and all such
payments shall not be recognized by the vendors unless the official receipts
therefor shall have been duly signed by the vendors’ duly authorized agent,
A.U. Valencia and Co., Inc." (Emphasis supplied)
Indeed, once Manila Remnant had been furnished with the usual copies of
the contracts to sell, its only participation then was to accept the collections
and pay the commissions to the agent. The latter had complete control of
the business arrangement. 21
Secondly, it is evident from the records that Manila Remnant was less than
A T P P a g e | 19
prudent in the conduct of its business as a subdivision owner. For instance,
Manila Remnant failed to take immediate steps to avert any damage that
might be incurred by the lot buyers as a result of its unilateral abrogation of
the agency contract. The publication of the cancelled contracts to sell in the
Times Journal came three years after Manila Remnant had revoked its
agreement with A.U. Valencia and Co.chanrobles virtual lawlibrary
Moreover, Manila Remnant also failed to check the records of its agent
immediately after the revocation of the agency contract despite the fact
that such revocation was due to reported anomalies in Valencia’s
collections. Altogether, as pointed out by the counsel for the Ventanillas,
Manila Remnant could and should have devised a system whereby it could
monitor and require a regular accounting from A.U. Valencia and Co., its
agent. Not having done so, Manila Remnant has made itself liable to those
who have relied on its agent and the representation that such agent was
clothed with sufficient powers to act on behalf of the principal.
Even assuming that Manila Remnant was as much a victim as the other
innocent lot buyers, it cannot be gainsaid that it was precisely its negligence
and laxity in the day to day operations of the real estate business which
made it possible for the agent to deceive unsuspecting vendees like the
Ventanillas.
In essence, therefore, the basis for Manila Remnant’s solidary liability is
estoppel which, in turn, is rooted in the principal’s neglectfulness in failing
to properly supervise and control the affairs of its agent and to adopt the
needed measures to prevent further misrepresentation. As a consequence,
Manila Remnant is considered estopped from pleading the truth that it had
no direct hand in the deception employed by its agent. 22
A final word. The Court cannot help but be alarmed over the reported
practice of supposedly reputable real estate brokers of manipulating prices
by allowing their own agents to "buy" lots in their names in the hope of
reselling the same at a higher price to the prejudice of bona fide lot buyers,
as precisely what the agent had intended to happen in the present case.
This is a serious matter that must be looked into by the appropriate
government housing authority.chanrobles.com.ph : virtual law library

WHEREFORE, in view of the foregoing, the appealed decision of the Court of
Appeals dated October 13, 1987 sustaining the decision of the Quezon City
trial court dated November 17, 1980 is AFFIRMED. This judgment is
immediately executory. Costs against petitioner.
SO ORDERED.
G.R. No. 79688. February 1, 1996.*
PLEASANTVILLE DEVELOPMENT CORPORATION, petitioner, vs. COURT OF
APPEALS, WILSON KEE, C.T. TORRES ENTERPRISES, INC. and ELDRED
JARDINICO, respondents.
Civil Law; Property; Builder in Good Faith; Court agrees with the findings and
conclusions of the Court of Appeals that Kee was a builder in good faith.—
Petitioner fails to persuade this Court to abandon the findings and
conclusions of the Court of Appeals that Kee was a builder in good faith.
Same; Same; Same; Good faith consists in the belief of the builder that the
land he is building on is his and his ignorance of any defect or flaw in his
title.—Good faith consists in the belief of the builder that the land he is
building on is his and his ignorance of any defect or flaw in his title. And as
good faith is presumed, petitioner has the burden of proving bad faith on
the part of Kee. 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. Thus, Kee’s good faith. Petitioner failed
to prove otherwise.
Same; Same; Same; Violation of the Contract of Sale on Installment may not
be the basis to negate the presumption that Kee was a builder in good faith.
—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
improvements on Lot 9. These alleged violations may give rise to
petitioner’s cause of action against Kee under the said contract (contractual
breach), but may not be bases to negate the presumption that Kee was a
builder in good faith.
Same; Same; Waiver; Rights may be waived unless the waiver is contrary to
law, public order, public policy, morals or good customs or prejudicial to a
A T P P a g e | 20
third person with a right recognized by law.—We do not agree with the
interpretation of petitioner that Kee contracted away his right to recover
damages resulting from petitioner’s negligence. Such waiver would be
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.”
Same; Agency; Damages; 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.—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. On the other hand,
the agent who exceeds his authority is personally liable for the damage.
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
     Mirano, Mirano & Associates Law Offices for petitioner.
     Federico T. Tabino, Jr. for C.T. Torres Enterprises, Inc.
Abraham D. Caña for Wilson Kee. Pleasantville Development Corporation vs.
Court of Appeals, 253 SCRA 10, G.R. No. 79688 February 1, 1996
DECISION
PANGANIBAN, J.:
Is a lot buyer who constructs improvements on the wrong property
erroneously delivered by the owner's agent, a builder in good faith? This is
the main issue resolved in this petition for review on certiorari  to reverse
the Decision1 of the Court of Appeals2 in CA-G.R. No. 11040, promulgated on
August 20, 1987.
By resolution dated November 13, 1995, the First Division of this Court
resolved to 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.
The Facts
The facts, as found by respondent Court, are as follows:
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, respondent Eldred Jardinico bought the rights to the lot from
Robillo. At that time, Lot 9 was vacant.
Upon completing all payments, Jardinico secured from the Register of Deeds
of Bacolod City on December 19, 1978 Transfer Certificate of Title No.
106367 in his name. It was then that he discovered that improvements had
been introduced on Lot 9 by respondent Wilson Kee, who had taken
possession thereof.
It appears that on March 26, 1974, Kee bought on installment Lot 8 of the
same subdivision from C.T. Torres Enterprises, Inc. (CTTEI), the exclusive real
estate agent 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 the preparation of the lot plan.
These amounts were paid prior to Kee's taking actual possession of Lot 8.
After the preparation of the lot plan and a copy thereof given to Kee, CTTEI
through its employee, Zenaida Octaviano, accompanied Kee's wife,
Donabelle Kee, to inspect Lot 8. Unfortunately, the parcel of land pointed by
Octaviano was Lot 9. Thereafter, Kee proceeded to construct his residence,
a store, an auto repair shop and other improvements on the lot.
After discovering that Lot 9 was occupied by Kee, Jardinico confronted him.
The parties tried to reach an amicable settlement, but failed.
On January 30, 1981, Jardinico's lawyer wrote Kee, demanding that the
latter remove all improvements and vacate Lot 9. When Kee refused to
A T P P a g e | 21
vacate Lot 9, Jardinico filed with the Municipal Trial Court in Cities, Branch 3,
Bacolod City (MTCC), a complaint for ejectment with damages against Kee.
Kee, in turn, filed a third-party complaint against petitioner and CTTEI.
The MTCC held that the erroneous delivery of Lot 9 to Kee was attributable
to CTTEI. It further ruled that petitioner and CTTEI could not successfully
invoke as a defense the failure of Kee to give notice of his intention to begin
construction required under 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 type of
improvements to be constructed on the Lot. 3
However, the MTCC found that petitioner had already rescinded its contract
with Kee over Lot 8 for the latter's failure to pay the installments due, and
that Kee had not contested the rescission. The rescission was effected in
1979, before the complaint 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 reasonable rentals for the use of Lot
9, and, furthermore, he cannot claim reimbursement for the improvements
he introduced on said lot.
The MTCC thus disposed:
IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered as
follows:
1. Defendant Wilson Kee is ordered to vacate the premises of Lot 9,
covered by TCT No. 106367 and to remove all structures and
improvements he introduced thereon;
2. Defendant Wilson Kee is ordered to pay to the plaintiff rentals at
the rate of P15.00 a day computed from the time this suit was filed
on March 12, 1981 until he actually vacates the premises. This
amount shall bear interests (sic) at the rate of 12 per cent (sic) per
annum.

3. Third-Party Defendant C.T. Torres Enterprises, Inc. and
Pleasantville Subdivision are ordered to pay the plaintiff jointly and
severally the sum of P3,000.00 as attorney's fees and P700.00 as
cost and litigation expenses.4
On appeal, the Regional Trial Court, Branch 48, Bacolod City (RTC) ruled that
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 to Kee 5 . It found Kee a builder in bad faith. It further ruled
that even assuming arguendo that Kee was acting in good faith, he was,
nonetheless, 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.
The RTC thus disposed:
WHEREFORE, the decision appealed from is affirmed with respect to
the order against the defendant to vacate the premises of Lot No. 9
covered by Transfer 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
to plaintiff (sic) the sum of Fifteen (P15.00) Pesos a day as
reasonable rental to be computed from January 30, 1981, the date
of the demand, and not from the date of the filing of the complaint,
until he had vacated (sic) the premises, with interest thereon at 12%
per annum. This Court further renders judgment against the
defendant to pay the plaintiff the sum of Three Thousand
(P3,000.00) Pesos as attorney's fees, plus costs of litigation.
The third-party complaint against Third-Party Defendants
Pleasantville Development Corporation and C.T. Torres Enterprises,
Inc. is dismissed. The order against Third-Party Defendants to pay
attorney's fees to plaintiff and costs of litigation is reversed. 6
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 Appeals.
A T P P a g e | 22
The appellate court ruled that Kee was a builder in good faith, as he was
unaware of 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 wrong delivery was likewise imputable to
its principal, petitioner herein. The appellate court also ruled that the award
of rentals was without basis.
Thus, the Court of Appeals disposed:
WHEREFORE, the petition is GRANTED, the appealed decision is
REVERSED, and judgment is rendered as follows:
1. Wilson Kee is declared a builder in good faith with respect to the
improvements he introduced on Lot 9, and is entitled to the rights
granted him under Articles 448, 546 and 548 of the New Civil Code.
2. Third-party defendants C.T. Torres Enterprises, Inc. and
Pleasantville Development Corporation are solidarily liable under
the following circumstances:
A.       If Eldred Jardinico decides to appropriate the
improvements and, thereafter, remove these structures, the
third-party defendants shall answer for all demolition
expenses and the value of the improvements thus
destroyed or rendered useless;
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.
3. Third-party defendants C.T. Torres Enterprises, Inc. and
Pleasantville Development Corporation are ordered to pay in
solidum the amount of P3,000.00 to Jardinico as attorney's fees, as
well as litigation expenses.
4. The award of rentals to Jardinico is dispensed with.

Furthermore, the case is REMANDED to the court of origin for the
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. 7
Petitioner then filed the instant petition against Kee, Jardinico and CTTEI.
The Issues
The petition submitted the following grounds to justify a review of the
respondent Court's Decision, as follows:
1. The Court of Appeals has decided the case in a way probably not
in accord with 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 price of the land;
2. The Court of Appeals has so far departed from the accepted
course of judicial proceedings, by granting to private respondent-
Kee the rights of a builder in good faith in excess of what the law
provides, thus enriching private respondent Kee at the expense of
the petitioner;
3. In the light of the subsequent events or circumstances which
changed the rights of the parties, it becomes imperative to set aside
or at least modify the judgment of the Court of Appeals to
harmonize with justice and the facts;
4. Private respondent-Kee in accordance with the findings of facts of
the lower court is clearly a builder in bad faith, having violated
several provisions of the contract to sell on installments;
5. The decision of the Court of Appeals, holding the principal,
Pleasantville 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;
A T P P a g e | 23
6. The award of attorney's fees is clearly without basis and is
equivalent to putting a premium in (sic) court litigation.
From these grounds, the issues could be re-stated as follows:
(1) Was Kee a builder in good faith?
(2) What is the liability, if any, of petitioner and its agent, C.T. Torres
Enterprises, Inc.? and
(3) Is the award of attorney's fees proper?
The First Issue: Good Faith
Petitioner contends that the Court of Appeals erred in reversing the RTC's
ruling that Kee was a builder in bad faith.
Petitioner fails to persuade this Court to abandon the findings and
conclusions of the Court of Appeals that Kee was a builder in good faith. We
agree with the following observation of the Court of Appeals:
The roots of the controversy can be traced directly to the errors
committed by CTTEI, when it pointed the wrong property to Wilson
Kee and his wife. It is highly improbable that a purchaser of a lot
would knowingly and willingly build his residence 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 social humiliation that would follow.
Under the circumstances, Kee had acted in the manner of a prudent
man in ascertaining the identity of his property. Lot 8 is covered by
Transfer Certificate of Title No. T-69561, while Lot 9 is identified in
Transfer Certificate of Title No. T-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. . . .
xxx       xxx       xxx

But as Kee is a layman not versed in the technical description of his
property, he had to find a way to ascertain that what was described
in TCT No. 69561 matched Lot 8. Thus, he went to the subdivision
developer's agent and applied and paid for the relocation of the lot,
as well as for the production of a lot plan by CTTEI's geodetic
engineer. Upon Kee's receipt of the map, his wife went to the
subdivision site accompanied by CTTEI's employee, Octaviano, who
authoritatively declared that the land she was pointing to was
indeed Lot 8. Having full faith and confidence in the reputation of
CTTEI, and because of the company's positive identification of the
property, Kee saw no reason to suspect that there had been a
misdelivery. The steps Kee had taken to protect his interests were
reasonable. There was no need for him to have acted ex-
abundantia cautela, such as being present during the geodetic
engineer's relocation survey or hiring an independent geodetic
engineer to 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 CTTEI's blunder, what Kee
had hoped to forestall did in fact transpire. Kee's efforts all went to
naught.8
Good faith consists in the belief of the builder that the land he is building on
is his and his ignorance of any defect or flaw in his title 9 . And as good faith
is presumed, petitioner has the burden of proving bad faith on the part of
Kee 10 .
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. Thus, Kee's good faith. Petitioner failed to prove
otherwise.
To demonstrate Kee's bad faith, petitioner points to Kee's violation of
paragraphs 22 and 26 of the Contract of Sale on Installment.
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 improvements on Lot 9. These alleged violations may give rise to
A T P P a g e | 24
petitioner's cause of action against Kee under the said contract (contractual
breach), but may not be bases to negate the presumption that Kee was a
builder in good faith.
Petitioner also points out that, as found by the trial court, the Contract of
Sale on 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 does not negate the negligence of its
agent in pointing out the wrong lot. to Kee. Such circumstance is relevant
only as it gives Jardinico a cause of action for unlawful detainer against Kee.
Petitioner next contends that Kee cannot "claim that another lot was
erroneously pointed out to him" because the latter agreed to the following
provision in the Contract of Sale on installment, to wit:
13. The Vendee hereby declares that prior to the execution of his
contract he/she has personally examined or inspected the property
made subject-matter hereof, as to its location, contours, as well as
the natural condition of the lots and from the date hereof whatever
consequential change therein made due to erosion, the said Vendee
shall bear the expenses of the necessary fillings, when the same is
so desired by him/her. 11
The subject matter of this provision of the contract is the change of the
location, contour and condition of the lot due to erosion. It merely provides
that the vendee, having examined the property prior to the execution of the
contract, agrees to shoulder the expenses resulting from such change.
We do not agree with the interpretation of petitioner that Kee contracted
away his right to recover damages resulting from petitioner's negligence.
Such waiver would be 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." 12
The Second Issue:  Petitioner's Liability

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 found CTTEI negligent for the erroneous
delivery of the lot by Octaviano, its employee.
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 its authority, and consequently, CTTEI I alone should be
liable. It asserts that "while [CTTEI] was authorized to sell the lot belonging
to the herein petitioner, it was never authorized to deliver the wrong lot to
Kee" 13 .
Petitioner's contention is without merit.
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 14 . On the other hand, the agent who exceeds his authority is
personally liable for the damage 15
CTTEI was acting within its authority as the sole real estate representative of
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
petitioner's liability, as principal of CTTEI, per Articles 1909 and 1910 of the
Civil Code.
Pending resolution of the case before the Court of Appeals, Jardinico and
Kee on July 24, 1987 entered into a deed of sale, wherein the former sold
Lot 9 to Kee. Jardinico and Kee did not inform the Court of Appeals of such
deal.
The deed of sale contained the following provision:
1. That Civil Case No. 3815 entitled "Jardinico vs. Kee" which is now
pending appeal with the Court of Appeals, regardless of the
outcome of the decision shall be mutually disregarded and shall not
A T P P a g e | 25
be pursued by the parties herein and shall be considered dismissed
and without effect whatso-ever; 16
Kee asserts though that the "terms and conditions in said deed of sale are
strictly for 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 Appeals may make in their favor against
herein petitioner Pleasantville Development Corporation and/or private
respondent C.T. Torres Enterprises; Inc." 17
Obviously, the deed of sale can have no effect on the liability of petitioner.
As we have earlier stated, petitioner's liability is grounded on the negligence
of its agent. On 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.
Petitioner further assails the following holding of the Court of Appeals:
2. Third-party defendants C.T. Torres Enterprises, Inc. and
Pleasantville Development Corporation are solidarily liable under
the following circumstances:
a. If Eldred Jardinico decides to appropriate the
improvements and, thereafter, remove these structures, the
third-party defendants shall answer for all demolition
expenses and the value of the improvements thus
destroyed or rendered useless;
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. 18
Petitioner contends that if the above holding would be carried out, Kee
would be unjustly enriched at its expense. In other words, Kee would be
able to own the lot, as buyer, without having to pay anything on it, because

the aforequoted portion of respondent Court's Decision would require
petitioner and CTTEI jointly and solidarily to "answer" or reimburse Kee
therefor.
We agree with petitioner.
Petitioner' s liability lies in the negligence of its agent CTTEI. For such
negligence, the petitioner should be held liable for damages. Now, the
extent and/or amount of damages to be awarded is a factual issue which
should be determined after evidence is adduced. However, there is no
showing that such evidence was actually presented in the trial court; hence
no damages could flow be awarded.
The rights of Kee and Jardinico vis-a-vis  each other, as builder in good faith
and owner in good faith, respectively, are regulated by law (i.e., Arts. 448,
546 and 548 of the Civil Code). It was error for the Court of Appeals to make
a "slight modification" in the application of such law, on the ground of
"equity". At any rate, as it stands now, 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 petitioner and
CTTEI solidarily liable.
The Third Issue:  Attorney's Fees
The MTCC awarded Jardinico attorney's 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
attorney's fees after ruling that petitioner was liable for its agent's
negligence.
The award of attorney's fees lies within the discretion of the court and
depends upon the circumstances of each case  19 . We shall not interfere with
the discretion of the Court of Appeals. Jardinico was compelled to litigate
A T P P a g e | 26
for the protection of his interests and for the recovery of damages sustained
as a result of the negligence of petitioner's agent 20 .
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. Torres 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 Development Corporation and
respondent C.T. Torres Enterprises, Inc. are ordered to pay in
solidum  the amount of P3,000.00 to Jardinico as attorney's fees, as
well as litigation expenses; and
(4) The award of rentals to Jardinico is dispensed with.
SO ORDERED.
Navasa, C.J., Davide, Jr. and Melo, JJ., concur.
Francisco, J., took no part.
A T P P a g e | 27

G.R. No. 115838           July 18, 2002
CONSTANTE AMOR DE CASTRO and CORAZON AMOR DE
CASTRO, petitioners,
vs.
COURT OF APPEALS and FRANCISCO ARTIGO, respondents.
CARPIO, J.:
The Case
Before us is a Petition for Review on Certiorari 1 seeking to annul the
Decision of the Court of Appeals2 dated May 4, 1994 in CA-G.R. CV No.
37996, which affirmed in toto the decision3 of the Regional Trial Court of
Quezon City, Branch 80, in Civil Case No. Q-89-2631. The trial court disposed
as follows:
"WHEREFORE, the Court finds defendants Constante and Corazon
Amor de Castro jointly and solidarily liable to plaintiff the sum of:
a) P303,606.24 representing unpaid commission;
b) P25,000.00 for and by way of moral damages;
c) P45,000.00 for and by way of attorney's fees;
d) To pay the cost of this suit.
Quezon City, Metro Manila, December 20, 1991."
The Antecedent Facts
On May 29, 1989, private respondent Francisco Artigo ("Artigo" for brevity)
sued petitioners Constante A. De Castro ("Constante" for brevity) and
Corazon A. De Castro ("Corazon" for brevity) to collect the unpaid balance of
A T P P a g e | 28
his broker's commission from the De Castros. 4 The Court of Appeals
summarized the facts in this wise:
"x x x. Appellants5 were co-owners of four (4) lots located at EDSA
corner New York and Denver Streets in Cubao, Quezon City. In a
letter dated January 24, 1984 (Exhibit "A-1, p. 144, Records),
appellee6 was authorized by appellants to act as real 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 first found Times Transit Corporation,
represented by its president Mr. Rondaris, as prospective buyer
which desired to buy two (2) lots only, specifically lots 14 and 15.
Eventually, sometime in May of 1985, the sale of lots 14 and 15 was
consummated. Appellee received from appellants P48,893.76 as
commission.
It was then that the rift between the contending parties soon
emerged. Appellee apparently felt short changed because according
to him, his total commission should be P352,500.00 which is five
percent (5%) of the agreed price of P7,050,000.00 paid by Times
Transit Corporation to appellants for the two (2) lots, and that it was
he who introduced the buyer to appellants and unceasingly
facilitated the negotiation which ultimately led to the
consummation of the sale. Hence, he sued below to collect the
balance of P303,606.24 after having received P48,893.76 in
advance.1âwphi1.nêt
On the other hand, appellants completely traverse appellee's claims
and essentially argue that appellee is selfishly asking for more than
what he truly deserved as commission to the prejudice of other
agents who were more instrumental in the consummation of the
sale. Although appellants readily concede that it was appellee who
first introduced Times Transit Corp. to them, appellee was not
designated by them as their exclusive real estate agent but that in
fact there were more or less eighteen (18) others whose collective
efforts in the long run dwarfed those of appellee's, considering that

the first negotiation for the sale where appellee took active
participation failed and it was these other agents who successfully
brokered in the second negotiation. But despite this and out of
appellants' "pure liberality, beneficence and magnanimity", appellee
nevertheless was given the largest cut in the commission
(P48,893.76), although on the principle of quantum meruit he would
have certainly been entitled to less. So appellee should not have
been heard to complain of getting only a pittance when he actually
got the lion's share of the commission and worse, he should not
have been allowed to get the entire commission. Furthermore, the
purchase price for the two lots was only P3.6 million as appearing in
the deed of sale and not P7.05 million as alleged by appellee. Thus,
even assuming that appellee is entitled to the entire commission, he
would only be getting 5% of the P3.6 million, or P180,000.00."
Ruling of the Court of Appeals
The Court of Appeals affirmed in toto the decision of the trial court.
First. The Court of Appeals found that Constante authorized Artigo to act as
agent in the sale of two lots in Cubao, Quezon City. The handwritten
authorization letter signed by Constante clearly established a contract of
agency between Constante and Artigo. Thus, Artigo sought prospective
buyers and found Times Transit Corporation ("Times Transit" for brevity).
Artigo facilitated the negotiations which eventually led to the sale of the
two lots. Therefore, the Court of Appeals decided that Artigo is entitled to
the 5% commission on the purchase price as provided in the contract of
agency.
Second. The Court of Appeals ruled that Artigo's complaint is not dismissible
for failure to implead as indispensable parties the other co-owners of the
two lots. The Court of Appeals explained that it is not necessary to implead
the other co-owners since the action is exclusively based on a contract of
agency between Artigo and Constante.
Third. The Court of Appeals likewise declared that the trial court did not err
in admitting parol evidence to prove the true amount paid by Times Transit
A T P P a g e | 29
to the De Castros for the two lots. The Court of Appeals ruled that
evidence aliunde could be presented to prove that the actual purchase price
was P7.05 million and not P3.6 million as appearing in the deed of sale.
Evidence aliunde is admissible considering that Artigo is not a party, but a
mere witness in the deed of sale between the De Castros and Times Transit.
The Court of Appeals explained that, "the rule that oral evidence is
inadmissible to vary the terms of written instruments is generally applied
only in suits between parties to the instrument and strangers to the
contract are not bound by it." Besides, Artigo was not suing under the deed
of sale, but solely under the contract of agency. Thus, the Court of Appeals
upheld the trial court's finding that the purchase price was P7.05 million and
not P3.6 million.
Hence, the instant petition.
The Issues
According to petitioners, the Court of Appeals erred in -
I. NOT ORDERING THE DISMISSAL OF THE COMPLAINT FOR FAILURE
TO IMPLEAD INDISPENSABLE PARTIES-IN-INTEREST;
II. NOT ORDERING THE DISMISSAL OF THE COMPLAINT ON THE
GROUND THAT ARTIGO'S CLAIM HAS BEEN EXTINGUISHED BY FULL
PAYMENT, WAIVER, OR ABANDONMENT;
III. CONSIDERING INCOMPETENT EVIDENCE;
IV. GIVING CREDENCE TO PATENTLY PERJURED TESTIMONY;
V. SANCTIONING AN AWARD OF MORAL DAMAGES AND
ATTORNEY'S FEES;
VI. NOT AWARDING THE DE CASTRO'S MORAL AND EXEMPLARY
DAMAGES, AND ATTORNEY'S FEES.
The Court's Ruling

The petition is bereft of merit.
First Issue: whether the complaint merits dismissal for failure to implead
other co-owners as indispensable parties
The De Castros argue that Artigo's complaint should have been dismissed
for failure to implead all the co-owners of the two lots. The De Castros claim
that Artigo always knew that the two lots were co-owned by Constante and
Corazon with their other siblings Jose and Carmela whom Constante merely
represented. The De Castros contend that failure to implead such
indispensable parties is fatal to the complaint since Artigo, as agent of all
the four co-owners, would be paid with funds co-owned by the four co-
owners.
The De Castros' contentions are devoid of legal basis.
An indispensable party is one whose interest will be affected by the court's
action in the litigation, and without whom no final determination of the case
can be had.7 The joinder of indispensable parties is mandatory and courts
cannot proceed without their presence. 8 Whenever it appears to the court
in the course of a proceeding that an indispensable party has not been
joined, it is the duty of the court to stop the trial and order the inclusion of
such party.9
However, the rule on mandatory joinder of indispensable parties is not
applicable to the instant case.
There is no dispute that Constante appointed Artigo in a handwritten note
dated January 24, 1984 to sell the properties of the De Castros for P23
million at a 5 percent commission. The authority was on a first come, first
serve basis. The authority reads in full:
"24 Jan. 84
To Whom It May Concern:
A T P P a g e | 30
This is to state that Mr. Francisco Artigo is authorized as our real
estate broker in connection with the sale of our property located at
Edsa Corner New York & Denver, Cubao, Quezon City.
Asking price P 23,000,000.00 with 5% commission as agent's fee.
C.C. de Castro
owner & representing
co-owners
This authority is on a first-come
First serve basis –CAC"
Constante signed the note as owner and as representative of the other co-
owners. Under this note, a contract of agency was clearly constituted
between Constante and Artigo. Whether Constante appointed Artigo as
agent, in Constante's individual or representative capacity, or both, the De
Castros cannot seek the dismissal of the case for failure to implead the
other co-owners as indispensable parties. The De Castros admit that the
other co-owners are solidarily liable under the contract of agency,10 citing
Article 1915 of the Civil Code, which reads:
Art. 1915. If two or more persons have appointed an agent for a
common transaction or undertaking, they shall be solidarily liable to
the agent for all the consequences of the agency.
The solidary liability of the four co-owners, however, militates against the
De Castros' theory that the other co-owners should be impleaded as
indispensable parties. A noted commentator explained Article 1915 thus –
"The rule in this article applies even when the appointments were
made by the principals in separate acts, provided that they are for
the same transaction. The solidarity arises from the common
interest of the principals, and not from the act of constituting the
agency. By virtue of this solidarity, the agent can recover from any

principal the whole compensation and indemnity owing to him by
the others. The parties, however, may, by express agreement,
negate this solidary responsibility. The solidarity does not disappear
by the mere partition effected by the principals after the
accomplishment of the agency.
If the undertaking is one in which several are interested, but only
some create the agency, only the latter are solidarily liable, without
prejudice to the effects of negotiorum gestio  with respect to the
others. And if the power granted includes various transactions some
of which are common and others are not, only those interested in
each transaction shall be liable for it."11
When the law expressly provides for solidarity of the obligation, as in the
liability of co-principals in a contract of agency, each obligor may be
compelled to pay the entire obligation.12 The agent may recover the whole
compensation from any one of the co-principals, as in this case.
Indeed, Article 1216 of the Civil Code provides that a creditor may
sue any of the solidary debtors. This article reads:
Art. 1216. The creditor may proceed against any one of the solidary
debtors or some or all of them simultaneously. The demand made
against one of them shall not be an obstacle to those which may
subsequently be directed against the others, so long as the debt has
not been fully collected.
Thus, the Court has ruled in Operators Incorporated vs. American Biscuit
Co., Inc.13 that –
"x x x solidarity does not make a solidary obligor an indispensable
party in a suit filed by the creditor. Article 1216 of the Civil Code
says that the creditor `may proceed against anyone of the solidary
debtors or some or all of them simultaneously'." (Emphasis
supplied)
A T P P a g e | 31
Second Issue: whether Artigo's claim has been extinguished by full
payment, waiver or abandonment
The De Castros claim that Artigo was fully paid on June 14, 1985, that is,
Artigo was given "his proportionate share and no longer entitled to any
balance." According to them, Artigo was just one of the agents involved in
the sale and entitled to a "proportionate share" in the commission. They
assert that Artigo did absolutely nothing during the second negotiation but
to sign as a witness in the deed of sale. He did not even prepare the
documents for the transaction as an active real estate broker usually does.
The De Castros' arguments are flimsy.
A contract of agency which is not contrary to law, public order, public policy,
morals or good custom is a valid contract, and constitutes the law between
the parties.14 The contract of agency entered into by Constante with Artigo
is the law between them and both are bound to comply with its terms and
conditions in good faith.
The mere fact that "other agents" intervened in the consummation of the
sale and were paid their respective commissions cannot vary the terms of
the contract of agency granting Artigo a 5 percent commission based on the
selling price. These "other agents" turned out to be employees of Times
Transit, the buyer Artigo introduced to the De Castros. This prompted the
trial court to observe:
"The alleged `second group' of agents came into the picture only
during the so-called `second negotiation' and it is amusing to note
that these (sic) second group, prominent among whom are Atty. Del
Castillo and Ms. Prudencio, happened to be employees of Times
Transit, the buyer of the properties. And their efforts were limited
to convincing Constante to 'part away' with the properties because
the redemption period of the foreclosed properties is around the
corner, so to speak. (tsn. June 6, 1991).
xxx

To accept Constante's version of the story is to open the floodgates
of fraud and deceit. A seller could always pretend rejection of the
offer and wait for sometime for others to renew it who are much
willing to accept a commission far less than the original broker. The
immorality in the instant case easily presents itself if one has to
consider that the alleged `second group' are the employees of the
buyer, Times Transit and they have not bettered the offer secured
by Mr. Artigo for  P7 million.
It is to be noted also that while Constante was too particular about
the unrenewed real estate broker's license of Mr. Artigo, he did not
bother at all to inquire as to the licenses of Prudencio and Castillo.
(tsn, April 11, 1991, pp. 39-40)."15 (Emphasis supplied)
In any event, we find that the 5 percent real estate broker's commission is
reasonable and within the standard practice in the real estate industry for
transactions of this nature.
The De Castros also contend that Artigo's inaction as well as failure to
protest estops him from recovering more than what was actually paid him.
The De Castros cite Article 1235 of the Civil Code which reads:
Art. 1235. When the obligee accepts the performance, knowing its
incompleteness and irregularity, and without expressing any protest
or objection, the obligation is deemed fully complied with.
The De Castros' reliance on Article 1235 of the Civil Code is misplaced.
Artigo's acceptance of partial payment of his commission neither amounts
to a waiver of the balance nor puts him in estoppel. This is the import of
Article 1235 which was explained in this wise:
"The word accept, as used in Article 1235 of the Civil Code, means
to take as satisfactory or sufficient, or agree to an incomplete or
irregular performance. Hence, the mere receipt of a partial
payment is not equivalent to the required acceptance of
performance as would extinguish the whole
obligation."16  (Emphasis supplied)
A T P P a g e | 32
There is thus a clear distinction between acceptance and mere  receipt.  In
this case, it is evident that Artigo merely received the partial payment
without waiving the balance. Thus, there is no estoppel to speak of.
The De Castros further argue that laches should apply because Artigo did
not file his complaint in court until May 29, 1989, or almost four years later.
Hence, Artigo's claim for the balance of his commission is barred by laches.
Laches means the failure or neglect, for an unreasonable and unexplained
length of time, to do that which by exercising due diligence could or should
have been done earlier. It is negligence or omission to assert a right within a
reasonable time, warranting a presumption that the party entitled to assert
it either has abandoned it or declined to assert it. 17
Artigo disputes the claim that he neglected to assert his rights. He was
appointed as agent on January 24, 1984. The two lots were finally sold in
June 1985. As found by the trial court, Artigo demanded in April and July of
1985 the payment of his commission by Constante on the basis of the selling
price of P7.05 million but there was no response from Constante. 18 After it
became clear that his demands for payment have fallen on deaf ears, Artigo
decided to sue on May 29, 1989.
Actions upon a written contract, such as a contract of agency, must be
brought within ten years from the time the right of action accrues. 19 The
right of action accrues from the moment the breach of right or duty occurs.
From this moment, the creditor can institute the action even as the ten-year
prescriptive period begins to run.20
The De Castros admit that Artigo's claim was filed within the ten-year
prescriptive period. The De Castros, however, still maintain that Artigo's
cause of action is barred by laches. Laches does not apply because only four
years had lapsed from the time of the sale in June 1985. Artigo made a
demand in July 1985 and filed the action in court on May 29, 1989, well
within the ten-year prescriptive period. This does not constitute an
unreasonable delay in asserting one's right. The Court has ruled, "a delay
within the prescriptive period is sanctioned by law and is not considered to

be a delay that would bar relief." 21 In explaining that laches applies only in
the absence of a statutory prescriptive period, the Court has stated -
"Laches is recourse in equity. Equity, however, is applied only in the
absence, never in contravention, of statutory law. Thus, laches,
cannot, as a rule, be used to abate a collection suit filed within the
prescriptive period mandated by the Civil Code."22
Clearly, the De Castros' defense of laches finds no support in law, equity or
jurisprudence.
Third issue: whether the determination of the purchase price was made in
violation of the Rules on Evidence
The De Castros want the Court to re-examine the probative value of the
evidence adduced in the trial court to determine whether the actual selling
price of the two lots was P7.05 million and not P3.6 million. The De Castros
contend that it is erroneous to base the 5 percent commission on a
purchase price of P7.05 million as ordered by the trial court and the
appellate court. The De Castros insist that the purchase price is P3.6 million
as expressly stated in the deed of sale, the due execution and authenticity of
which was admitted during the trial.
The De Castros believe that the trial and appellate courts committed a
mistake in considering incompetent evidence and disregarding the best
evidence and parole evidence rules. They claim that the Court of Appeals
erroneously affirmed sub silentio the trial court's reliance on the various
correspondences between Constante and Times Transit which were mere
photocopies that do not satisfy the best evidence rule. Further, these letters
covered only the first negotiations between Constante and Times Transit
which failed; hence, these are immaterial in determining the final purchase
price.
The De Castros further argue that if there was an undervaluation, Artigo
who signed as witness benefited therefrom, and being equally guilty, should
be left where he presently stands. They likewise claim that the Court of
Appeals erred in relying on evidence which were not offered for the purpose
A T P P a g e | 33
considered by the trial court. Specifically, Exhibits "B", "C", "D" and "E" were
not offered to prove that the purchase price was P7.05 Million. Finally, they
argue that  the courts a quo erred in giving credence to the perjured
testimony of Artigo. They want the entire testimony of Artigo rejected as a
falsehood because he was lying when he claimed at the outset that he was a
licensed real estate broker when he was not.
Whether the actual purchase price was P7.05 Million as found by the trial
court and affirmed by the Court of Appeals, or P3.6 Million as claimed by the
De Castros, is a question of fact and not of law. Inevitably, this calls for an
inquiry into the facts and evidence on record. This we can not do.
It is not the function of this Court to re-examine the evidence submitted by
the parties, or analyze or weigh the evidence again. 23 This Court is not the
proper venue to consider a factual issue as it is not a trier of facts. In
petitions for review on certiorari as a mode of appeal under Rule 45, a
petitioner can only raise questions of law. Our pronouncement in the case
of Cormero vs. Court of Appeals24  bears reiteration:
"At the outset, it is evident from the errors assigned that the
petition is anchored on a plea to review the factual conclusion
reached by the respondent court. Such task however is foreclosed
by the rule that in petitions for certiorari as a mode of appeal, like
this one, only questions of law distinctly set forth may be raised.
These questions have been defined as those that do not call for any
examination of the probative value of the evidence presented by
the parties. (Uniland Resources vs. Development Bank of the
Philippines, 200 SCRA 751 [1991] citing Goduco vs. Court 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
 A T P P a g e | 34

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])."
WHEREFORE, the petition is denied for lack of merit. The Decision of the
Court of Appeals dated May 4, 1994 in CA-G.R. CV No. 37996
is AFFIRMED in toto.
SO ORDERED.

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.1âwphi1.nêt

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

proper

The De Castros claim that Artigo failed to prove that he is entitled to moral
damages and attorney's fees. The De Castros, however, cite no concrete
reason except to say that they are the ones entitled to damages since the
case was filed to harass and extort money from them.

Law and jurisprudence support the award of moral damages and attorney's
fees in favor of Artigo. The award of damages and attorney's fees is left to
the sound discretion of the court, and if such discretion is well exercised, as
in this case, it will not be disturbed on appeal. 25 Moral damages may be
awarded when in a breach of contract the defendant acted in bad faith,
or in wanton disregard of his contractual obligation.26 On the other hand,
attorney's fees are awarded in instances where "the defendant acted in
gross and evident bad faith in refusing to satisfy the plaintiff's plainly valid,
just and demandable claim."27 There is no reason to disturb the trial court's
finding that "the defendants' lack of good faith and unkind treatment of the
plaintiff in refusing to give his due commission deserve censure." This
warrants the award of P25,000.00 in moral damages and P 45,000.00 in
attorney's fees. The amounts are, in our view, fair and reasonable. Having
found a buyer for the two lots, Artigo had already performed his part of the
bargain under the contract of agency. The De Castros should have exercised
fairness and good judgment in dealing with Artigo by fulfilling their own part
of the bargain - paying Artigo his 5 percent broker's commission based on
the actual purchase price of the two lots.