L. G. MARQUEZ AND Z. GUTIERREZ LORA, PLAINTIFFS. L. G. MARQUEZ, PLAINTIFF AND APPELLANT, VS. FRANCISCO VARELA AND CARMEN VARELA, DEFENDANTS AND APPELLEES.

This is an appeal against an order of the Court of First
Instance of Manila dismissing the complaint as to plaintiff L. G. Marquez. The
pertinent allegations of the complaint are as follows: that plaintiff Gutierrez
Lora was authorized by defendants to negotiate the gale of their share or
interest in a parcel of land on Plaza Goiti, Manila, and having met his
co-plaintiff L. G. Marquez, a real estate broker, both of them agreed to work
together for the sale of defendant’s property; that they found a ready, willing,
and able buyer, which accepted defendants’ price and terms, but that thereafter
defendants, without any jusifiable reason, refused to carry out the sale and
execute the necessary deed therefor; and that as a consequence plaintiffs failed
to receive the commission which they were entitled to receive. The defendants
presented a motion to dismiss the complaint as to L. G. Marquez on the ground
that he has no cause of action against defendants, and this motion having been
granted, plaintiff L. G. Marquez has prosecuted this appeal.

The complaint was dismissed on «the alleged ground that it
states no cause of action against the defendants. Is this objection to the
complaint justified? The term “cause of action” has been held to be synonymous
with “right of action” (37 Words and Phrases, 642), but in the law of pleading
(Code Pleading) one is distinguished from the other in that a right of action is
a remedial right belonging to some person, while a cause of action is a formal
statement of the operative facts that give rise to such remedial right. The one
is a matter of right and depends on the substantive law, while the other is a
matter of statement and is governed by the law of procedure. (Phillips, Code
Pleading, section 189, page 170.)

It is not denied that Lora, if he rendered the service alleged
in the complaint, would have a right to be paid compensation for the service he
rendered jointly with Marquez. He acted as a broker, and a broker is entitled to
a commission for his services. (Article 277, Code of Commerce; Henry vs.
Velasco, 34 Phil, 587; Perez de Tagle vs. Luzon Surety Co., 38 Off. Gaz., 1213.)
There is no prohibition in law against the employment of a companion to look for
a buyer; neither is it against public policy. Neither was there even any implied
understanding between Lora and the defendants that no part of the compensation
to which Lora would be entitled to receive could be paid to any companion or
helper of Lora. Marquez’s right to compensation can not, therefore, be disputed
under the operative facts set forth in the complaint.

The next issue is, is there a cause of action in favor of
Marquez against the defendants? From the facts alleged in the complaint, it is
clear that there is a primary right in favor of Marquez (to be paid for his
services even through Lora only) and a corresponding duty devolving upon the
defendants (to pay for said services). Since (as alleged) defendants refuse to
comply with their duty, Marquez now is entitled to enforce his legal right by an
action in court. The complaint in the case at bar, therefore, contains both the
primary right and duty and the delict or wrong combined which constitute the
cause of action in the legal sense as used in Code Pleading (Pomeroy, Code
Remedies, section 347), and the cause of action is full and complete.

Objection to the complaint, however, is not that Marquez has no
right to share in the compensation to be paid Lora, whom defendants had directly
engaged, but that Marquez can not join in this action and enforce therein his
rights directly against the defendants, evidently because defendants never dealt
with Marquez, directly or indirectly, or, in other words, that both Marquez and
his services were not known to them. The following parts of defendants’ motion
to dismiss show that such in fact was the objection:

This paragraph clearly shows that the authority to sell was
only given to plaintiff Z, Gutierrez Lora and not to the other plaintiff L. G.
Marquez. Attention is respectfully called to the word “plaintiff” used in said
paragraph III and expressed in singular form to the exclusion of the other
plaintiff L. G. Marquez. If the plaintiff L. G. Marquez had worked at all for
the sale of the property at the instance of an invitation of his co-plaintiff Z.
Gutierrez Lora, we maintain that his action if there is any is against his
co-plaintiff and not against the defendants herein.

As far as the defendants are concerned in this case, plaintiff
L. G. Marquez is not only a stranger in this case hut also unknown to the
defendants; and if he had worked at all for the sale of the defendants’ share
and participation in the parcels of lands referred to in the complaint, the same
was made not only at his own lookout, risk and responsibility but also with no
authority whatsoever. (Record on Appeal, pages 16, 17.)

The principle underlying defendants’ objection is one of
procedure, not of substantive law, recognized under the common law, where no one
could sue for the breach of a contract who was not a party thereto, and the
action allowed to be brought only in the name of the one holding the legal
title. The requirement was based upon the doctrine of privity of contract.

SEC. 234. Plaintiffs in Action ex Contractu.—When an action of
contract concerns only the original parties to the instrument, it is not
difficult to determine who should be the plaintiff. Obviously the one seeking to
enforce it is the real party in interest. At common law, no one could sue for
tha breach of a contract who was not a party thereto. Hence an action on
contract, whether express or implied, was required to be brought in the name of
the one who held the legal interest. This requirement was based upon the
doctrine of privity of contract. * * * (Phillips, Code Pleading, page 226.)

SEC. 235. Privity of Contract.—When Necessary.—It was a rule
of the common law that before one may complain of another for breach of
contract, there must be some direct contractual relation, or privity, between
them; and this, with only a few exceptions, is a requirement of the law today. *
* * (Phillips, Code Pleading, page 227.)

At common law, in order that two or more persons may join in an
action upon a contract, there must be community of interest between them; that
is, they must be parties to the contract and jointly interested therein. (47 C.
J., 54.)

Persons subsequently admitted to the benefit of a contract,
without the privity or assent of the promisor, can not join in a suit on the
contract. (47 C. J., 55.)

But we did not import into this jurisdiction the common law
procedure. Our original Code of Civil Procedure (Act 190) was taken mainly from
the Code of Civil Procedure of California, and this in turn was based upon the
Code of Civil Procedure of New York adopted in that stated in 1948. Our system
of pleading is Code Pleading, that system used in the states of the Union that
had adopted codes of procedure. The code system of pleading adopted in substance
the rules of equity practice as to parties, under which “air persons having an
interest in the subject of the action, and in obtaining the relief demanded, may
be joined as plaintiffs.” (Phillips, Code Pleading, section 251, page 247.) In New York and California interest in the subject matter, or
in any relief growing out of the same transaction or series of transactions is
sufficient to allow joinder. (Ibid., Footnote 10a, page 247.)

Under the former
Code of Civil Procedure “every action must be prosecuted in the name of the real
party in interest,” and “all persons having an interest in the subject of the
action and in obtaining the relief demanded shall be joined as plaintiffs,” and
“if any person having an interest and in obtaining the relief demanded refuses
to join as plaintiff, he may be made a defendant and the fact of his interest
and refusal to join to be stated in the com plaint.” (Section 114, Act 190.) The
principle under lying the rule is that all persons having a material interest
under the substantive law should be made parties, as distinguished from that of
the common law which allowed only a two-sided controversy, each party to be
opposed to the other. Phillips, Code Pleading, 2d ed., section 228, page
216.)

The above principles have not been changed by the reforms in
the rules in 1940 and 1941. The action is still to be prosecuted in the name of
the real party in interest. Under 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 * * *, where any question of law or fact comment to all such
plaintiffs * * * may arise in the action; * * *” Plaintiff Marquez, in the case
at bar, clearly falls under the above rule. He is entitled to be paid his
commission out of the very contract of agency between Lora and the defendants;
Lora and he acted jointly in rendering services to defendants under Lora’s
contract, and the same questions of law and fact govern their claims. 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 is sufficient to justify the joinder of Marquez
as a party plaintiff, even in the absence of privity of contract between him and
the defendants.

We find, therefore, that the complaint of Marquez was
improperly dismissed. The order of dismissal is hereby reversed, with costs
against defendants.

Pablo, Bengzon, Jugo, and Bautista Angelo, JJ., concur.

PARAS, C. J.:

I concur. For all practical purposes Marquez may be considered
an intervenor.

---

DISSENTING

MONTEMAYOR, J.:

With all due respect to the learned majority opinion with its
plausible arguments and citations of authorities, I believe that the complaint
of Marquez against the defendants-appellees was properly dismissed. There was
absolutely no contractual relation or privity of contract between Marquez and
the defendants, and as far as the latter are concerned, Marquez never rendered
service to them, was never authorized to render said service, and he did no’t
exist in their realm of contracts and obligations. I reproduce with favor the
two paragraphs contained in defendant’s motion to dismiss and also reproduced in
the majority opinion and which for purposes of reference I quote below:

“This paragraph clearly shows that the authority to sell was
only given to plaintiff Z. Gutierrez Lora and not to the other plaintiff L. G.
Marquez. Attention is respectfully called to the word ‘plaintiff’ used in said
paragraph III and expressed in singular form to the exclusion of the other
plaintiff L. G. Marquez. If the plaintiff L. G. Marquez had worked at all for
the sale of the property at the instance of an invitation of his co-plaintiff Z.
Gutierrez Lora, we maintain that his action if there is any is against his
co-plaintiff and not against the defendants herein.

“As far as the defendants are concerned in this case, plaintiff
L. G. Marquez is not only a stranger in this case but also unknown to the
defendant; and if he had worked at all for the sale of the defendants’ share and
participation in the parcels of lands referred to in the complaint, the same was
made not only at his own lookout, risk and responsibility but also with no
authority whatsoever. (Record on Appeal, pages 16, 17.)”

Marquez may have rendered some service in connection with the
offer for sale and the supposed acceptance of said offer by the alleged
prospective buyer of the property; but such service was clearly rendered at the
instance of and for the benefit of his co-plaintiff Z. Gutierrez Lora. His
possible interest in this case would be a share in any money that may be
obtained or received by Gutierrez from the defendants as compensation for his
services as broker by virtue of the contract of employment between him and the
defendants, Marquez may possibly intervene in this case for he is obviously
interested in the success of Gutierrez in obtaining a favorable judgment, but lo
proceed directly and file the claim against the defendants with whom he never
contracted, who never saw him, much less employed him, he may not, in my
opinion, do legally.

To sustain a litigation or defend one’s self against a suit in
court involves embarrassment, expenditure of time and money and vexation. A
party has a right to be protected from being harassed, troubled and otherwise
vexed by an action in court brought by total stranger with whom the party made
defendant has never dealt with, much less had any contractual relation. In the
field of torts, offenses, or violations of property rights such as forcible
entry or detainer, etc. it is proper that all the persons having an interest in
obtaining damages for the tort or offense committed or for any other relief
should all be included as parties plaintiff against the tortfeasor, offender or
the illegal occupant despite the absence of any previous contract. But in the
present case the relief sought is the performance of a contract. Consequently,
only those who were parties or privies to the contract can bring the action
against the alleged violator of the agreement. Marquez in this case is
attempting to enforce a contract entered into not between him and the defendants
but between him, his co-plaintiff and defendants. To me, he has no right to do
so. His right or cause of action lies against his co-plaintiff and not against
the defendants. Consequently, I hold that the dismissal of the complaint as to
Marquez was warranted.

Order reversed.