In a contract of agency involving multiple principals, the Supreme Court affirmed that an agent is entitled to recover the full commission from any one of the co-principals, establishing their solidary liability. This ruling clarifies that the agent’s right to compensation is not diminished by the presence of other co-owners or agents, solidifying the agent’s position in receiving their due compensation. This decision ensures agents are protected and can claim their full commission from any of the principals, reinforcing the binding nature of agency agreements and the responsibilities of principals within such arrangements.

Commission Quest: Can an Agent Demand Full Payment from Just One Co-Principal?

The case revolves around Francisco Artigo, a real estate broker, and the De Castros, co-owners of a property. Artigo was engaged by Constante Amor De Castro to sell their property, with a promised 5% commission. After Artigo found a buyer and the sale was completed, a dispute arose over the full commission. Artigo claimed he was owed the balance of his commission, while the De Castros argued that other agents were involved and that the purchase price was lower than claimed. This led to a legal battle, ultimately reaching the Supreme Court, which focused on whether Artigo could claim the entire unpaid commission from only Constante and Corazon Amor De Castro, without involving the other co-owners.

The central legal question before the Supreme Court was whether the failure to include all co-owners of the property as indispensable parties warranted the dismissal of Artigo’s complaint. The De Castros argued that since the property was co-owned by four individuals, all of them should have been included in the lawsuit, as they were all responsible for paying the commission. However, the Court found this argument without legal basis, emphasizing the solidary nature of the co-owners’ obligations. An indispensable party is defined as someone whose interest would be affected by the court’s action, and without whom, no final determination can be made.

The Supreme Court anchored its decision on Article 1915 of the Civil Code, which explicitly addresses the liability of multiple principals in an agency agreement. This article states:

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.

Building on this principle, the Court highlighted that the solidary liability arises from the common interest of the principals, not merely from the act of constituting the agency. This means that each principal is individually liable for the entire obligation, and the agent can recover the full compensation from any one of them. The commentary on Article 1915 further clarifies this point:

“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.”

The Court also cited Article 1216 of the Civil Code, reinforcing the right of a creditor to proceed against any one of the solidary debtors:

Art. 1216. The creditor may proceed against any one of the solidary debtors or some or all of them simultaneously. The demand made against one of them shall not be an obstacle to those which may subsequently be directed against the others, so long as the debt has not been fully collected.

This provision solidifies the agent’s ability to pursue a claim against any co-principal without the necessity of including all others, as also stated in Operators Incorporated vs. American Biscuit Co., Inc., 154 SCRA 738 (1987):

“x x x solidarity does not make a solidary obligor an indispensable party in a suit filed by the creditor.”

The De Castros further argued that Artigo’s claim had been extinguished by full payment, waiver, or abandonment, asserting that Artigo was merely one of several agents involved in the sale. They contended that he was only entitled to a proportionate share of the commission and that his inaction and failure to protest estopped him from recovering more than what he had already received. However, the Court dismissed these arguments, emphasizing that the contract of agency between Constante and Artigo was the law between them, obligating both parties to comply with its terms in good faith. The Court noted that the intervention of other agents, some of whom were employees of the buyer, did not alter the original agreement granting Artigo a 5% commission.

The Court also addressed the defense of laches, which the De Castros raised based on Artigo’s delay in filing the complaint. The Court clarified that the action was filed within the ten-year prescriptive period for actions based on a written contract, as provided under Article 1144 of the Civil Code. Since the complaint was filed within this period, the defense of laches was deemed inapplicable. The Supreme Court emphasized that a delay within the prescriptive period is sanctioned by law and does not bar relief, citing Agra vs. Philippine National Bank, 309 SCRA 509 (1999).

Finally, the Court upheld the award of moral damages and attorney’s fees in favor of Artigo. The Court found that the De Castros acted in bad faith by refusing to pay Artigo his due commission, justifying the award of damages. The Court noted that such awards are within the sound discretion of the court and will not be disturbed on appeal unless there is a clear abuse of discretion.

In summary, this case underscores the importance of clearly defined agency agreements and the solidary liability of co-principals. It provides clarity on the rights of agents to claim their full commission from any one of the co-principals, safeguarding their interests and ensuring fair compensation for their services.

FAQs

What was the key issue in this case?	The key issue was whether an agent could claim the entire unpaid commission from only one or some of the co-principals in a contract of agency, without including all co-owners in the lawsuit.
What does solidary liability mean in this context?	Solidary liability means that each co-principal is individually responsible for the entire obligation, allowing the agent to recover the full commission from any one of them.
Why did the Court reject the argument that all co-owners were indispensable parties?	The Court rejected this argument because the law expressly provides for solidary liability among co-principals, meaning any one of them can be held liable for the entire debt.
What is the significance of Article 1915 of the Civil Code?	Article 1915 states that if multiple persons appoint an agent for a common transaction, they are solidarily liable to the agent for all consequences of the agency, securing the agent’s right to full compensation.
What was the basis for awarding moral damages to Artigo?	Moral damages were awarded because the De Castros acted in bad faith by refusing to pay Artigo his due commission, showing a wanton disregard of their contractual obligations.
How does this ruling affect real estate agents in similar situations?	This ruling protects real estate agents by ensuring they can claim their full commission from any one of the co-principals, reinforcing the binding nature of agency agreements.
What is the prescriptive period for filing an action based on a written contract?	The prescriptive period for filing an action based on a written contract, such as a contract of agency, is ten years from the time the right of action accrues.
Why did the Court reject the defense of laches in this case?	The Court rejected laches because Artigo filed the action within the ten-year prescriptive period, and the delay was not considered unreasonable given the circumstances.
Can other agents intervening in a sale affect the original agent’s commission?	The intervention of other agents, even if they contribute to the sale, does not diminish the original agent’s right to the agreed-upon commission.

The Supreme Court’s decision in this case provides critical guidance on the responsibilities of co-principals in agency agreements and the rights of agents to receive their full commission. This ruling emphasizes the importance of good faith and fair dealing in contractual relationships and ensures that agents are adequately protected under the law.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Constante Amor De Castro and Corazon Amor De Castro vs. Court of Appeals and Francisco Artigo, G.R. No. 115838, July 18, 2002