Marquez vs. Varela

A person who has a material interest in the subject of an action and in obtaining the relief demanded may join as a plaintiff even in the absence of direct privity of contract with the defendant, provided the claim arises out of the same transaction or series of transactions.

Z. Gutierrez Lora was authorized by defendants Francisco Varela and Carmen Varela to negotiate the sale of their share or interest in a parcel of land located on Plaza Goiti, Manila. In the course of looking for a buyer, Lora met L. G. Marquez, a real estate broker, and both agreed to work together for the sale of the defendants' property. The two eventually found a ready, willing, and able buyer who accepted the defendants' price and terms. However, the defendants, without any justifiable reason, refused to carry out the sale and execute the necessary deed therefor. As a consequence, the plaintiffs failed to receive the commission to which they claimed they were entitled.

Thereafter, both Lora and Marquez filed a complaint against the defendants to recover the unpaid commission. The defendants presented a motion to dismiss the complaint as to Marquez, arguing that the authority to sell was given only to Lora and that Marquez was a stranger to them. The defendants asserted that Marquez's action, if any, should be against Lora and not against them. The Court of First Instance of Manila granted the motion and dismissed the complaint as to Marquez, prompting the latter to appeal.

• Lack of Cause of Action: Respondents argued that the authority to sell was given exclusively to Lora, not Marquez, as evidenced by the use of the singular term "plaintiff" in the relevant paragraph of the complaint.
• Absence of Privity: Respondents maintained that Marquez was a stranger to the defendants, rendered services at his own risk without their authority, and therefore any action he might have should be against his co-plaintiff Lora, not against the defendants.

• Cause of Action: Whether the complaint states a cause of action in favor of Marquez against the defendants.
• Joinder of Parties: Whether Marquez may join as a party plaintiff in the action against the defendants despite the absence of direct privity of contract between them.

• Cause of Action: Yes. The complaint alleges a primary right in favor of Marquez to be paid for his services and a corresponding duty on the defendants to pay, which when breached constitutes a complete cause of action.
• Joinder of Parties: Yes. Under the Rules of Court, all persons having an interest in the subject of the action and in obtaining the relief demanded may join as plaintiffs, dispensing with the common-law requirement of privity of contract.

• Cause of Action: A cause of action consists of a primary right and duty and the delict or wrong. The complaint alleges that Marquez and Lora jointly rendered services to the defendants. A broker is entitled to a commission for services rendered. There is no legal prohibition or public policy against a broker employing a companion to help find a buyer. Since the defendants refused to pay, Marquez has a right to enforce his claim for compensation.
• Joinder of Parties: The defendants' objection is based on the common-law doctrine of privity of contract, which requires a direct contractual relation before one can sue for breach. However, the Philippines adopted a code pleading system (Act 190, based on California and New York codes) which allows "all persons having an interest in the subject of the action and in obtaining the relief demanded" to join as plaintiffs. This principle was retained in the Rules of Court (Section 6, Rule 3). Marquez has a material interest in the broker's commission to be paid to Lora under the latter's contract, arising from the same transaction. Thus, privity of contract between Marquez and the defendants is not required for his joinder as a plaintiff.

• Real Party in Interest and Joinder of Plaintiffs — Under the Rules of Court, specifically Section 6 of Rule 3, all persons in whom any right to relief in respect to or arising out of the same transaction is alleged to exist, whether jointly, severally, or in the alternative, may join as plaintiffs. This replaces the common-law doctrine of privity of contract, requiring only that the plaintiff has a material interest in the subject of the action and in obtaining the relief demanded.

• "The rules do not require the existence of privity of contract between Marquez and the defendants as required under the common law; all that they demand is that Marquez has a material interest in the subject of the action, the right to share in the broker's commission to be paid Lora under the latter's contract, which right Lora does not deny." — This passage articulates the ratio decidendi, establishing that material interest in the subject matter, not direct privity of contract, is sufficient for joinder under the Rules of Court.

• Henry vs. Velasco, 34 Phil. 587 — Cited to support the proposition that a broker is entitled to a commission for services rendered.
• Perez de Tagle vs. Luzon Surety Co., 38 Off. Gaz. 1213 — Cited alongside Henry vs. Velasco regarding a broker's right to compensation under Article 277 of the Code of Commerce.

• Section 6, Rule 3, Rules of Court — Allows all persons having a right to relief arising out of the same transaction to join as plaintiffs. Applied to allow Marquez to join the suit despite no direct contract with the defendants.
• Section 114, Act 190 (Code of Civil Procedure) — The former code provision requiring actions to be prosecuted in the name of the real party in interest and allowing joinder of all persons with an interest in the relief demanded. Cited to show the historical basis of the joinder rule.
• Article 277, Code of Commerce — Cited as the substantive basis for a broker's entitlement to a commission.

• Pablo, J.
• Bengzon, J.
• Jugo, J.
• Bautista Angelo, J.
• Paras, C.J. (concurring: For all practical purposes Marquez may be considered an intervenor.)

• Montemayor, J. — Dissented on the ground that there was absolutely no contractual relation or privity of contract between Marquez and the defendants. The dissent argued that Marquez's services were rendered for the benefit of Lora, and his right of action lies against Lora, not the defendants. It emphasized that a party should be protected from being harassed by a suit brought by a total stranger with whom they never dealt.