De Castro vs. Court of Appeals

A solidary co-obligor is not an indispensable party in a suit filed by the creditor, pursuant to Article 1216 of the Civil Code, which allows the creditor to proceed against any one of the solidary debtors. Furthermore, the mere receipt of partial payment does not amount to acceptance of incomplete performance that extinguishes the entire obligation under Article 1235 of the Civil Code, as there is a clear distinction between acceptance and mere receipt.

Constante De Castro authorized Francisco Artigo via a handwritten note dated January 24, 1984, to act as a real estate broker for the sale of properties co-owned by Constante and his siblings at EDSA corner New York and Denver Streets, Cubao, Quezon City. Artigo introduced Times Transit Corporation as a prospective buyer. Although the initial negotiation failed, a subsequent negotiation resulted in the sale of two of the lots in May 1985. A dispute arose when Artigo received P48,893.76 as commission, which he claimed was only a partial payment of the 5% commission due on the actual selling price of P7.05 million. The De Castros contended that the purchase price was only P3.6 million as stated in the deed of sale, and that Artigo was merely one of several agents and thus only entitled to a proportionate share.

• The Authorization: On January 24, 1984, Constante De Castro executed a handwritten note authorizing Francisco Artigo to act as real estate broker for the sale of properties at EDSA corner New York and Denver Streets, Cubao, Quezon City. The note specified an asking price of P23,000,000.00 with a 5% commission as the agent's fee. Constante signed as "owner & representing co-owners," indicating the authority was on a first-come, first-serve basis.
• The Sale: Artigo introduced Times Transit Corporation, represented by its president Mr. Rondaris, as a prospective buyer for lots 14 and 15. The initial negotiation failed, but a second negotiation eventually led to the sale of the two lots in May 1985. Artigo signed as a witness to the deed of sale, which stated a purchase price of P3.6 million.
• The Dispute: Artigo claimed that the actual purchase price was P7.05 million, entitling him to a 5% commission of P352,500.00. The De Castros paid Artigo P48,893.76, asserting that he was only one of approximately eighteen agents involved in the sale and was thus only entitled to a proportionate share. The De Castros maintained that the purchase price was P3.6 million as stated in the deed of sale, and that the other agents, who were employees of the buyer, were more instrumental in consummating the sale during the second negotiation.
• The Demand: Artigo demanded payment of the balance of his commission in April and July 1985, but Constante did not respond. Artigo subsequently filed the collection suit on May 29, 1989.

• Failure to Implead Indispensable Parties: Petitioners argued that the complaint should be dismissed for failure to implead the other co-owners (Constante's siblings) as indispensable parties, since the commission would be paid from co-owned funds.
• Extinguishment of Obligation: Petitioners maintained that Artigo's claim was extinguished by full payment, waiver, or abandonment. They asserted that Artigo was fully paid his proportionate share on June 14, 1985, and his inaction and failure to protest estopped him from claiming more under Article 1235 of the Civil Code. They also invoked laches, given the nearly four-year delay before filing suit.
• Incompetent Evidence: Petitioners contended that the lower courts erred in considering photocopies of correspondences that violated the best evidence rule and in admitting parol evidence to vary the terms of the deed of sale. They argued that the price must be P3.6 million as stated in the deed, and that Artigo, having signed as a witness, benefited from any undervaluation and should be left where he stands.
• Perjured Testimony: Petitioners argued that Artigo's testimony should be entirely rejected as perjured because he falsely claimed to be a licensed real estate broker.
• Impropriety of Damages: Petitioners claimed that the award of moral damages and attorney's fees to Artigo was improper, and that they were the ones entitled to such damages since the suit was filed to harass and extort money from them.

• No Indispensable Parties: Respondent countered that the other co-owners were not indispensable parties because the action was exclusively based on the contract of agency between Artigo and Constante, who signed as representative of the co-owners.
• Validity of Claim: Respondent argued that he was the procuring cause of the sale, having introduced the buyer, and that the "other agents" were merely employees of the buyer who did not secure a better offer. The partial payment received did not constitute a waiver of the balance, and the suit was filed well within the ten-year prescriptive period for written contracts.
• Admissibility of Evidence: Respondent maintained that evidence aliunde was admissible to prove the actual purchase price of P7.05 million because he was not a party to the deed of sale, but merely a witness, and was suing under the contract of agency, not the deed of sale.

• Indispensable Parties: Whether the complaint merits dismissal for failure to implead the other co-owners as indispensable parties.
• Extinguishment of Obligation: Whether Artigo's claim has been extinguished by full payment, waiver, abandonment, or laches.
• Admissibility of Evidence: Whether the lower courts erred in admitting evidence aliunde to determine the actual purchase price in violation of the Rules on Evidence.
• Damages: Whether the award of moral damages and attorney's fees in favor of Artigo is proper.

• Indispensable Parties: Dismissal for failure to implead the other co-owners was unwarranted. Constante signed the authorization as owner and representative of the co-owners, constituting a contract of agency. Because the co-owners are solidarily liable under Article 1915 of the Civil Code, the agent may recover the entire compensation from any one of the co-principals. Solidarity does not make a solidary obligor an indispensable party in a suit filed by the creditor, pursuant to Article 1216 of the Civil Code.
• Extinguishment of Obligation: The claim was not extinguished. The contract of agency is the law between the parties, and the intervention of "other agents"—who turned out to be employees of the buyer—cannot vary the terms granting Artigo a 5% commission. The mere receipt of partial payment does not equate to acceptance of incomplete performance under Article 1235 of the Civil Code; there is a distinction between acceptance and mere receipt, and Artigo's receipt of a partial payment did not waive the balance. Laches does not apply because the suit was filed within the ten-year prescriptive period for actions upon a written contract, and a delay within the prescriptive period is sanctioned by law and cannot bar relief.
• Admissibility of Evidence: The determination of the actual purchase price is a question of fact that cannot be reviewed in a Petition for Review on Certiorari under Rule 45, which allows only questions of law. The Supreme Court is not a trier of facts and will not re-examine the evidence. The factual findings of the trial and appellate courts, which determined the purchase price to be P7.05 million, must stand in the absence of a showing that they are totally devoid of support or glaringly erroneous.
• Damages: The award of moral damages and attorney's fees was proper. Moral damages may be awarded when a defendant acts in bad faith or in wanton disregard of a contractual obligation, and attorney's fees are proper when the defendant acts in gross and evident bad faith in refusing to satisfy a plainly valid claim. The De Castros' lack of good faith and unkind treatment in refusing to pay the due commission warranted the awards.

• Solidary Obligations and Indispensable Parties — When the law expressly provides for solidarity of the obligation, as in the liability of co-principals in a contract of agency under Article 1915 of the Civil Code, each obligor may be compelled to pay the entire obligation. Consequently, a solidary co-obligor is not an indispensable party in a suit filed by the creditor, who may proceed against any one of the solidary debtors under Article 1216.
• Acceptance vs. Receipt of Partial Payment — Under Article 1235 of the Civil Code, the word "accept" means to take as satisfactory or sufficient, or to agree to an incomplete or irregular performance. The mere receipt of a partial payment is not equivalent to the required acceptance of performance as would extinguish the whole obligation. There is a clear distinction between acceptance and mere receipt.
• Laches vs. Prescription — Laches is recourse in equity, and equity is applied only in the absence, never in contravention, of statutory law. Laches cannot be used to abate a collection suit filed within the prescriptive period mandated by the Civil Code. A delay within the prescriptive period is sanctioned by law and is not considered an unreasonable delay that would bar relief.

• "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.'"
• "the mere receipt of a partial payment is not equivalent to the required acceptance of performance as would extinguish the whole obligation."
• "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."

• Operators Incorporated vs. American Biscuit Co., Inc., 154 SCRA 738 (1987) — Followed. Established the principle that solidarity does not make a solidary obligor an indispensable party in a suit filed by the creditor.
• Cormero vs. Court of Appeals, 247 SCRA 291 (1995) — Followed. Reiterated the rule that the Supreme Court cannot review factual issues in a Petition for Review on Certiorari under Rule 45, as it is not a trier of facts.
• Agra vs. Philippine National Bank, 309 SCRA 509 (1999) — Followed. Affirmed that a delay within the prescriptive period is sanctioned by law and is not considered a delay that would bar relief on the ground of laches.

• Article 1915, Civil Code — Provides that 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. Applied to hold that the co-owners were solidarily liable for the broker's commission, negating the necessity of impleading all of them.
• Article 1216, Civil Code — Provides that the creditor may proceed against any one of the solidary debtors or some or all of them simultaneously. Applied to justify the agent's suit against only one of the co-principals.
• Article 1235, Civil Code — Provides that 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. Interpreted to distinguish mere receipt of partial payment from acceptance of incomplete performance.
• Article 1144, Civil Code — Prescribes a ten-year period for actions upon a written contract. Applied to determine that the collection suit was filed within the prescriptive period.
• Article 2208, Civil Code — Enumerates the instances when attorney's fees may be awarded, including when the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff's plainly valid, just and demandable claim. Applied to uphold the award of attorney's fees.
• Rule 3, Section 7, Rules of Court — Defines an indispensable party as 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. Found inapplicable to the co-owners due to their solidary liability.
• Rule 45, Rules of Court — Governs appeals by certiorari to the Supreme Court, limiting the review to questions of law. Applied to decline the review of the lower courts' factual findings on the actual purchase price.

Puno, and Panganiban, JJ., concur.