G.R. No. L-13273, December 29, 1959
EDILIO L. BALUYOT, petitioner, vs. COURT OF APPEALS, ET AL., respondents.

FACTS

Simeon Salvador filed an action in the Court of First Instance of Rizal against Oscar Pajares to recover P2,500.00, plus interest, for extra labor and materials used in constructing Pajares’ house due to changes ordered during construction. Pajares admitted deviations from the original plan but claimed the changes were made at the instance of Edilio L. Baluyot, whom he alleged was the real contractor. Pajares filed a third-party complaint against Baluyot, which was admitted over Salvador’s opposition. The trial court rendered a decision in favor of Pajares against both Salvador and Baluyot, ordering them to pay jointly and severally various amounts, including P700.00 for cement foundation expenses, P1,390.00 for completion costs, P2,000.00 for attorney’s fees, P5.00 daily penalty for delay, and P2,000.00 for moral and exemplary damages. The Court of Appeals affirmed the decision in toto. Baluyot filed a petition for review, raising several errors.

ISSUE

1. Whether the admission of the third-party complaint against Baluyot was proper.
2. Whether Baluyot was deprived of his day in court.
3. Whether the awards for expenses (P700.00 and P1,390.00) were justified.
4. Whether the awards for attorney’s fees, penalty, and moral and exemplary damages were proper.

RULING

1. Yes, the admission of the third-party complaint was proper. The Court held that since there was only one contract for the construction of Pajares’ house, it was convenient to thresh out all related claims in one case to avoid multiplicity of actions. Although the Rules of Court require that a third-party defendant might be liable for the plaintiff’s claim against the defendant, the test is not exclusive. The court has discretion to allow a third-party complaint when the third party is a necessary party without whom the real issue cannot be fully determined. Baluyot, as the alleged real contractor, was properly joined.
2. No, Baluyot was not deprived of his day in court. The Court found that the trial court’s ruling preventing Baluyot’s counsel from objecting during Pajares’ cross-examination of Salvador was not improper, as it was Salvador’s turn to present evidence. Baluyot’s counsel was allowed to participate when Pajares offered evidence against Baluyot, and Baluyot was given the opportunity to be heard and cross-examined.
3. The awards for expenses (P700.00 and P1,390.00) were justified. The Court of Appeals, based on the evidence, found that the construction was defective and incomplete. A building inspector’s report and a commissioner’s findings detailed poor workmanship and necessary repairs, justifying the awards. As these are factual findings, the Supreme Court declined to re-evaluate them.
4. The award for attorney’s fees (P2,000.00) and the daily penalty (P5.00) were proper, but the award for moral and exemplary damages (P2,000.00) was not. The attorney’s fees were justified because Pajares was forced to litigate due to Baluyot’s failure to complete the job. The daily penalty was expressly stipulated in the contract. However, there was no clear evidence of bad faith, fraud, or wanton conduct by Baluyot to justify moral and exemplary damages under the Civil Code. The attorney’s fees and penalty were deemed sufficient retribution.
DISPOSITIVE:
The decision of the Court of Appeals was affirmed with the modification that petitioner Edilio L. Baluyot should not be made to pay moral and exemplary damages in the amount of P2,000.00. No costs were awarded.