Obligations of Principal: Solidary Liability

G.R. No. 115838 – De Castro v. CA

PONENTE

De Castros who co-owned lots authorized Artigo to act as broker with 5% commission. Despite finding a buyer and
consummating the sale, Artigo was given less than the 5% commission. De Castros argue that there were other agents who
successfully brokered the sale thus Artigo is not entitled to full payment. They further argue that failure to implead their other
co-owners was fatal to Artigo’s complaint. SC ruled that mandatory impleader of indispensable parties does not apply here
since Constante signed the contract of agency as owner and representative of his other siblings and that the De Castros
admit that the other co-owners are solidarily liable under the contract of agency. Thus, agent may recover from any one of
the co-principals.

DOCTRINE
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 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.

IMPORTANT PEOPLE
Constante Amor De Castro and Corazon Amor De Castro – petitioners, principals
Francisco Artigo – private respondent, agent

FACTS
1. The De Castros co-owned 4 lots in Cubao. In a handwritten letter, Artigo was authorized by De Castros to act as real
estate broker and sell the properties for 23M, with 5% commission.
2. Artigo found Times Transit Corporation as a prospective buyer of 2 of the lots. Sale was consummated but Artigo was
given only P48,893 as commission, instead of P352,500, which is 5% of the agreed price P7.05M paid by Times.
3. Artigo sued the De Castros for collection of the unpaid balance of his broker’s commission (P303,606).
4. De Castros argue that the first negotiation with Times by Artigo failed and it was the 18 other agents who successfully
brokered in the 2nd negotiation; Purchase price was actually P3.6M as appearing in the DoS.
5. RTC ruled in favor of Artigo; found De Castros solidarily liable for the balance + moral damages + atty’s fees.
6. CA affirmed RTC, ruling that:
1) there was contract of agency, Artigo entitled to 5% commission;
2) complaint not dismissible for failure to implead as indispensable parties the other co-owners of the 2 lots
since action is based on the contract of agency;
3) Parol evidence regarding purchase price is admissible since Artigo is not party to DoS
7. Hence this Petition for Review.

ISSUE with HOLDING

1. W/N the complaint merits dismissal for failure to implead other co-owners as indispensable parties? NO.
 De Castros claim that Artigo always knew that lots were co-owned by Constante and Corazon with sibling Jose and
Carmela whom Constante merely represented and failure to implead them was fatal.
 SC: Rule on mandatory joinder of indispensable parties not applicable here.
 Constante signed the note as owner and as representative of the other co-owners. A contract of agency was
clearly constituted between Constante and Artigo. The De Castros admit that the other co-owners are solidarily
liable under the contract of agency citing Art. 1915:
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 militates against the De Castro’s theory that the other co-owners should
be impleaded as indispensable parties.
 Tolentino explains:
- “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.

1
 - The parties 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.
 Also, under Art 1216, a creditor may sue any of the solidary debtors, thus solidarity does not make a solidary obligor
an indispensable party in a suit filed by the creditor.

2. W/N Artigo’s claim has been extinguished by full payment, waiver or abandonment? NO.
 The mere fact that other agents intervened in the consummation of the sale cannot vary the terms of the contract
of agency granting Artigo a 5% percent commission based on the selling price, especially as it turned out that these
“other” agents were employees of Times. Accepting this would open the floodgates to fraud and deceit.
 De Castros also cited Art. 1235 in arguing that Artigo’s acceptance of the partial payment amounts to a waiver.
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
 But the word “accept”, as used in Art 1235, means to take as satisfactory or sufficient, or agree to an incomplete or
irregular performance. Mere receipt of a partial payment is not equivalent to the required acceptance of performance
as would extinguish the whole obligation.
 Laches would neither apply since the prescription period for actions upon a written contract, such as a contract of
agency is 10 years and Artigo’s complaint was well within the period (4 years).

3. W/N the determination of the purchase price was made in violation of Rules on Evidence?
 The Court is not the proper venue to consider a factual issue as it is not a trier of facts. Findings of the trial court
are affirmed.

DISPOSITIVE PORTION
Petition denied. CA affirmed.

OTHER NOTES
Authorization Letter by Constante to Artigo:
This is to state that Mr. Francisco Artigo is authorized as our real estate broker in connection with the sale of our propert y
located at Edsa Corner New York & Denver, Cubao, Quezon City.

Asking price P23,000,000.00 with

5% commission as agents fee.
C.C. de Castro
owner & representing
co-owners
This authority is on a first-come
First serve basis CAC

DIGESTER: Sophia Sy