CIVIL PROCEDURE RULE 3 CASE #3

G.R. No. 191667, April 22, 2015

LAND BANK OF THE PHILIPPINES VS EDUARDO M. CACAYURAN
MUNICIPALITY OF AGOO, LA UNION INTERVENOR
This is an amended decision by Justice Perlas-Bernabe
This case is a Motion for Reconsideration filed by LBP.
Facts:
The Municipality of Agoo entered into two loans with LBP in order to finance a
Redevelopment Plan of the Agoo Public Plaza. The Sangguniang Bayan of the
Municipality authorized the mayor Eufranio Eriguel to enter into a P4M loan
with LBP for the Public Plaza and again for the amount of P28M to construct a
commercial center called Agoo Peoples Center within the Plazas premises.
The Municipality used as collateral a 2,323.75 sqm lot at the south-eastern
portion of the Plaza.
Cacayuran and other residents opposed the redevelopment of the Plaza as
well as the means of the funding. They claim that these are highly irregular,
violative of the law, and detrimental to public interest resulting in the
desecration of the public plaza. Cacayurans request for the documents
relating to the plazas redevelopment was not granted. Cacayuran invokes
his taxpayer right and files a complaint against LBP and officers of the
municipality but does not include the municipality itself as party-defendant.
He questioned the validity of the loan agreements and prays that the
redevelopment is enjoined.
The municipal officers moved for the dismissal but were denied. LBP asserted
that Cacayuran did not have any cause of action because he was not privy to
the loan agreements.
RTC Ruling:
Subject loans are null and void. Resolutions approving the procurement were
passed irregularly and are thus ultra vires. Municipality is not bound so it is
the officers that will be held liable. Plaza lot is property for public use and not
valid as collateral.
LBP and the officers appealed to the CA. The municipal officers appeal is
deemed abandoned for failing to file an appellants brief. LBP was given due
course.
CA Ruling:
RTC decision affirmed with modification: Vice-Mayor Antonio Eslao is free
from personal liability. Cacayuran has locus standi as resident and the issue
is of transcendental importance to public interest. Resolutions approving the
loan are invalidly passed. Plaza lot is invalid as collateral. Procurement is
ultra vires
LBP files petition for certiorari with SC.

Proceedings Before the SC:

LBP petition is denied and CA decision affirmed. LBP moves for
reconsideration, Municipality of Agoo files a Motion for Leave to Intervene
with Pleading-In-Intervention Attached praying to be included as party
litigant. It contends that being a contracting party to the subject loans, it is
an indispensable party. Cacayuran insists that they are not real party in
interest because the complaint is against the municipal officers in their
personal capacity for their ultra vires acts not binding to the municipality.
Issue Before the SC:
WON the Municipality of Agoo should be deemed an indaspensible party to
the case and thus be ordered impleaded herein. YES it is an indispensable
party under Sec 7, Rule 3 of the Rules of Court.
SC Ruling:
Sec 7, Rule 3 mandates that all indispensable parties are to be joined in a
suit as it is the party whose interest will be affected by the courts action and
without whom no final determination of the case can be had. His legal
presence is an absolute necessity. Absence of the indispensable party
renders all subsequent actions of the court null and void for want of authority
to act.
Failure to implead any indispensable party is not a ground for the dismissal
of the complaint. The proper remedy is to implead them. In this case,
Cacayuran failed to implead the Municipality, a real party in interest and an
indispensable party that stands to be directly affected by any judicial
resolution. It is the contracting party and the owner of the public plaza. It
stands to be benefited or injured by the judgment of the case.
The decision of the RTC, affirmed with modification by the CA, and finally
affirmed by the SC is not binding upon the Municipality as it was not
impleaded as defendant in the case.
Subject motions are PARTLY GRANTED. Previous decisions are SET ASIDE.
Instant case is REMANDED to the RTC and Cacayuran is DIRECTED to implead
all indispensable parties.