Topic: Parties

LAND BANK v. CACAYURAN

G.R. No. 191667, April 22, 2015, J. Perlas-Bernabe
An indispensable party is one whose interest will be affected by the court’s action in the litigation, and
without whom no final determination of the case can be had. The absence of an indispensable party
renders all subsequent actions of the court null and void, for want of authority to act, not only as to
absent parties but even as to those present.

Facts: The Municipality of Agoo, La Union, through its then Mayor Eufranio Eriguel, obtained 2 loans
from Land Bank for the Redevelopment Plan of the Agoo Public Plaza – 1)P4Million for the
construction of 10 kiosks and 2)P28Million for the construction of a commercial center. Both projects
were to be constructed on a 2,323.75 sq.m. lot at the south eastern portion of the Public Plaza lot.
Eduardo Cacayuran, a resident of Agoo, and invoking his right as a taxpayer, filed a complaint
against Land Bank and various officers of the Municipality, including Mayor Eriguel (but excluding
the Municipality itself), assailing the validity of the loans and praying that the commercialization of
the Plaza be enjoined.
Land Bank asserted that Cacayuran did not have any cause of action since he was not privy to
the loan agreements entered into between Land Bank and the Municipality.
On April 10, 2007, the RTC declared the loans null and void, finding that the resolutions
approving them were issued irregularly and thus ultra vires, and that since the Municipality is not
bound, the officers should be held personally liable for the same. It likewise ruled that the Plaza lot
cannot be used as collateral for the loans since it is property for public use.
On March 26, 2010, the CA affirmed the RTC declaring a) that Cacayuran had locus standi; b)
that the Resolutions approving the loans were invalidly passed due to non-compliance with the Local
Government Code; c) that the Plaza lot is property of public dominion; and d) the procurement of the
loans were ultra vires acts. Land Bank filed a Petition for Review on Certiorari before the SC.
On April 17, 2013, the Supreme Court denied Land Bank’s Petition and affirmed the CA.
On July 8, 2013, the Municipality filed a Motion for Leave to Intervene with Pleading-in-
intervention attach, and a Motion for Reconsideration-in-intervention, praying that it be included as
an indispensable party, and as such, there cannot be any “real disposition” of the case by reason of
its exclusion.
Issue: Whether or not the Municipality is an indispensable party.
Ruling: Yes. An indispensable party is one whose interest will be affected by the court’s action in the
litigation, and without whom no final determination of the case can be had. The absence of an
indispensable party renders all subsequent actions of the court null and void, for want of authority
to act, not only as to absent parties but even as to those present.
The Municipality is an indispensable party in this case since Cacayuran’s complaint primarily
prays that the commercialization of the Plaza be enjoined and the subject loans be declared null and
void, and it is the Municipality which is the contracting party to the loan obtained from Land Bank,
and it is the owner of the Public Plaza where the projects would be built.