Excellent apparel v.

win multi builders

Facts:

In 1996, petitioner Excellent Quality Apparel entered into a

contract with Multi-Rich Builders, a registered sole
proprietorship, for the construction of a garment factory. In
1997, herein respondent Win Multi Rich Builders was
incorporated with the SEC. It then filed a complaint for
sum of money against petitioner. In a hearing held, the
counsel of respondent Win moved that that its name in the
case be changed to that of Multi Rich Builders. Petitioner
noticing the variance in the name moved to dismiss the case
asserting Win was not the contractor neither a party to the
contract, thus it cannot institute the case.

Issue:

Whether or not Win has legal personality to institute the

case.

Ruling: NO.

Win admitted that the contract was executed between

Multi-Rich and petitioner. It further admitted that Multi-
Rich was a sole proprietorship with a business permit
issued by the Office of the Mayor of Manila. A sole
proprietorship is the oldest, simplest, and most prevalent
form of business enterprise. It is an unorganized business
owned by one person. The sole proprietor is personally
liable for all the debts and obligations of the business. A
sole proprietorship does not possess a juridical personality
separate and distinct from the personality of the owner of
the enterprise. The law does not vest a separate legal
personality on the sole proprietorship or empower it to file
or defend an action in court.

The original petition was instituted by Win, which is a

SEC-registered corporation. It filed a collection of sum of
money suit which involved a construction contract entered
into by petitioner and Multi-Rich, a sole proprietorship.
The counsel of Win wanted to change the name of the
plaintiff in the suit to Multi-Rich. The change cannot be
countenanced. The plaintiff in the collection suit is a
corporation. The name cannot be changed to that of a sole
proprietorship. Again, a sole proprietorship is not vested
with juridical personality to file or defend an action.

In order for a corporation to be able to file suit and claim

the receivables of its predecessor in business, in this case a
sole proprietorship, it must show proof that the corporation
had acquired the assets and liabilities of the sole
proprietorship. Win could have easily presented or attached
any document e.g., deed of assignment which will show
whether the assets, liabilities and receivables of Multi-Rich
were acquired by Win. Having been given the opportunity
to rebut the allegations made by petitioner, Win failed to
use that opportunity. Thus, we cannot presume that Multi-
Rich is the predecessor-in-business of Win and hold that
the latter has standing to institute the collection suit
 Alliance of Quezon city Homeowners v. QC

FACTS : In 2010, the Department of Interior and Local

Government and the Department of Finance (DOF) issued
Joint Memorandum Circular No. 2010-01, directing all
local government units to implement Section 219 of the
LGC, which requires assessors to revise the real property
assessments in their respective jurisdictions every three (3)
years. On December 5, 2016, the Sangguniang Panlungsod
of QC enacted the assailed 2016 Ordinance, which: (a)
approved the revised schedule of FMVs of all lands and
Basic Unit Construction Cost for buildings and other
structures, whether for residential, commercial, and
industrial uses;[9] and (b) set the new assessment levels at
five percent (5%) for residential and fourteen percent
(14%) for commercial and industrial classifications.[10]
The revised schedule increased the FMVs indicated in the
1995 Ordinance to supposedly reflect the prevailing market
price of real properties in QC. On April 7, 2017, Alliance
of Quezon City Homeowners' Association, Inc. (Alliance),
allegedly a non-stock, non-profit corporation, filed the
present petition. Alliance argued that the 2016 Ordinance
should be declared unconstitutional for violating
substantive due process, considering that the increase in
FMVs, which resulted in an increase in the taxpayer's base,
and ultimately, the taxes to be paid, was unjust, excessive,
oppressive, arbitrary, and confiscatory as proscribed under
Section 130 of the LGC.
 Moreover, it averred that the hike in the FMVs up to
500% of the previous values was arbitrary and has no
factual basis because the 2016 Ordinance contains no
standard or explanation on how the QC Assessor arrived at
the new amounts in the Schedule of FMVs.

ISSUES : WoN Alliance has legal capacity to sue

NO. In this case, Alliance admitted that it has no juridical

personality, considering the revocation of its SEC
Certificate of Registration and its failure to register with the
HLURB as a homeowner's association. Nevertheless,
Alliance insists that the petition should not be dismissed
because it was filed by the members of the Board of
Trustees in their own personal capacities, as evidenced by a
letter dated March 10, 2017 (Authorization Letter)
authorizing its ostensible Treasurer, Danilo Liwanag, to file
the petition in their behalf.

The Court disagrees. A perusal of the petition readily

shows that it was filed by Alliance, and not by the
individual members of its Board of Trustees in their
personal capacities.

In fact, even assuming that the trustees intended to file the

case in their own behalf, Section 3, Rule 3 of the Rules of
Court requires that their names as beneficiaries must be
included in the title of the case, which was, however, not
done here.

For another, Alliance argued that the status of its authorized

representative, Liwanag, as a taxpayer and resident of QC,
is sufficient to correct the procedural lapse.

This contention is erroneous. In Association of Flood

Victims (AFV) v. Commission on Elections , the Court
dismissed the petition for certiorari and/or mandamus
because the petitioner therein – being an unincorporated
association – had no capacity to sue in its own name and
accordingly, its representative who filed the petition in its
behalf, had no personality to bring an action in court.
Moreover, in Dueñas v. Santos Subdivision Homeowners
Association , the Court held that the complaint filed by an
unregistered association cannot be treated as a suit by the
persons who signed it.
 Navarro v. Escobido

FACTS: Respondent Karen T. Go filed two

complaints before the RTC for replevin and/or sum of
money with damages against Navarro. In these complaints,
Karen Go prayed that the RTC issue writs of replevin for
the seizure of two (2) motor vehicles in Navarro’s
possession. In his Answers, Navarro alleged as a special
affirmative defense that the two complaints stated no cause
of action, since Karen Go was not a party to the Lease
Agreements with Option to Purchase (collectively, the lease
agreements) — the actionable documents on which the
complaints were based. RTC dismissed the case but set
aside the dismissal on the presumption that Glenn Go’s
(husband) leasing business is a conjugal property and thus
ordered Karen Go to file a motion for the inclusion of
Glenn Go as co-plaintiff as per Rule 4, Section 3 of the
Rules of Court. Navarro filed a petition for certiorari with
the CA. According to Navarro, a complaint which failed to
state a cause of action could not be converted into one with
a cause of action by mere amendment or supplemental
pleading. CA denied petition.
ISSUE: Whether or not Karen Go is a real party in interest.
HELD: YES. Karen Go is the registered owner of the
business name Kargo Enterprises, as the registered owner
of Kargo Enterprises, Karen Go is the party who will
directly benefit from or be injured by a judgment in this
case. Thus, contrary to Navarro’s contention, Karen Go is
the real party-in-interest, and it is legally incorrect to say
that her Complaint does not state a cause of action because
her name did not appear in the Lease Agreement that her
husband signed in behalf of Kargo Enterprises.
Glenn and Karen Go are effectively co-owners of Kargo
Enterprises and the properties registered under this name;
hence, both have an equal right to seek possession of these
properties. Therefore, only one of the co-owners, namely
the co-owner who filed the suit for the recovery of the co-
owned property, is an indispensable party thereto. The
other co-owners are not indispensable parties. They are not
even necessary parties, for a complete relief can be
accorded in the suit even without their participation, since
the suit is presumed to have been filed for the benefit of all
co-owners.
We hold that since Glenn Go is not strictly an indispensable
party in the action to recover possession of the leased
vehicles, he only needs to be impleaded as a pro-forma
party to the suit, based on Section 4, Rule 4 of the Rules,
which states:
Section 4.Spouses as parties. — Husband and wife shall
sue or be sued jointly, except as provided by law.
Even assuming that Glenn Go is an indispensable party to
the action, misjoinder or non-joinder of indispensable
parties in a complaint is not a ground for dismissal of
action as per Rule 3, Section 11 of the Rules of Court.
 Carandang v. De guzman

FACTS: Spouses Carandang and the decedent Quirino de

Guzman were stockholders and corporate officers of
Mabuhay Broadcasting System (MBS). The Carandangs
have equities at 54 % while Quirino has 46%.

When the capital stock of MBS was increased on

November 26, 1983, the Carandangs subscribed P345,000
from it, P293,250 from the said amount was loaned by
Quirino to the Carandangs. In the subsequent increase in
MBS’ capital stock on March 3, 1989, the Carandangs
subscribed again to the increase in the amount of P93,750.
But, P43,125 out of the mentioned amount was again
loaned by Quirino.

When Quirino sent a demand letter to the Carandangs

for the payment of the loan, the Carandangs refused to pay.
They contend that a pre-incorporation agreement was
executed between Arcadio Carandang and Quirino,
whereby Quirino promised to pay for the stock
subscriptions of the Arcadio without cost, in consideration
for Arcadio’s technical expertise, his newly purchased
equipment, and his skill in repairing and upgrading
radio/communication equipment therefore, there is no
indebtedness on the part of the Carandangs.

Thereafter, Quirino filed a complaint seeking to

recover the P336,375 total amount of the loan together with
damages. The RTC ruled in favor of Quirino and ordered
the Carandangs to pay the loan plus interest, attorney’s
fees, and costs of suit. The Carandangs appealed the trial
court’s decision to the CA, but the CA affirmed the same.
The subsequent Motion for Reconsideration filed by the
Carandangs were also denied. Hence, this appeal to the SC.

SPOUSES CARANDANG: Three of the four checks used

to pay their stock subscriptions were issued in the name of
Milagros de Guzman, the decedent’s wife. Thus, Milagros
should be considered as an indispensable party in the
complaint. Being such, the failure to join Milagros as a
party in the case should cause the dismissal of the action by
reason of a jurisprudence stating that: “(i)f a suit is not
brought in the name of or against the real party in interest, a
motion to dismiss may be filed on the ground that the
complaint states no cause of action."

ISSUE: Whether or not the RTC should have dismissed the

case for failure to state a cause of action, considering that
Milagros de Guzman, allegedly an indispensable party, was
not included as a party-plaintiff.

HELD: No. Although the spouses Carandang were correct

in invoking the aforementioned doctrine, the ground set
forth entails an examination of “whether the parties
presently pleaded are interested in the outcome of the
litigation, and not whether all persons interested in such
outcome are actually pleaded.” The first query seeks to
answer the question of whether Milagros is a real party in
interest, while the latter query is asking if she is an
indispensable party. Since the issue of this case calls for the
definition of an indispensable party, invoking the
abovementioned doctrine is irrelevant to the case because
the doctrine talks about a ‘real party in interest’ and not an
‘indispensable party’. Although it is important to take note
that an indispensable party is also a real party in interest.

*Definitions:
> Real party in interest – the party who stands to be
benefited or injured by the judgment of the suit, or the party
entitled to the avails of the suit.
> Indispensable party – a party in interest without whom no
final determination can be had of an action
> Necessary party – one who is not indispensable but who
ought to be joined as a party if complete relief is to be
accorded as to those already parties, or for a complete
determination or settlement of the claim subject of the
action
> Pro-forma parties – those who are required to be joined
as co-parties in suits by or against another party as may be
provided by the applicable substantive law or procedural
rule.
An example is provided by Section 4, Rule 3 of the
Rules of Court:
Sec. 4. Spouses as parties. – Husband and wife shall
sue or be sued jointly, except as provided by law.
Pro-forma parties can either be indispensable,
necessary or neither indispensable nor necessary. The third
case occurs if, for example, a husband files an action to
recover a property which he claims to be part of his
exclusive property. The wife may have no legal interest in
such property, but the rules nevertheless require that she be
joined as a party.
 Borromeo v. Pogoy

Facts:
Deceased Vito Borromeo was the original owner of
the building, which was, leased to herein petitioner Petra
Vda. De Borromeo for P500 per month payable within the
first five days of the month. The estate of the deceased is
intestate.
On August 28, 1982, Atty Ricardo Reyes, administrator of
the estate, served upon petitioner a letter demanding that
she pay the overdue rentals corresponding to the period
from March to September (1982), and thereafter vacate the
premises. Petitioner failed to do so, thus the respondent
instituted an ejectment case against the former. Petitioner
Moved to dismiss for want of jurisdiction. She points out
that the parties are from the same cities and as such they
must refer the dispute to the barangay Court or Lupon
before going through the judicial courts. Respondent’s
defense was that it was danger of prescribing under the
statute of limitations. The motion was dismissed thus this
case.
Since the petitioner was unable to secure a reconsideration
of said order, petitioner came to this Court through this
petition for certiorari. In both his comment and
memorandum, private respondent admitted not having
availed himself of the barangay conciliation process, but
justified such omission by citing paragraph 4, section 6 of
PD 1508 which allows the direct filing of an action in court
where the same may otherwise be barred by the Statute of
Limitations, as applying to the case at bar.
Issue:
Whether or not referral to a Barangay Lupon is
required in cases regarding an intestate estate under
administration.
(Atty Famador: When can an intestate estate of a deceased
person have a separate and distinct personality similar to
corporations?)

Ruling:
PD 1508 makes the conciliation process at the
Barangay level a condition precedent for filing of actions in
those instances where said law applies but it is subject to
certain exceptions. One of the exceptions is stated in Sec. 1,
Rule VI, Katarungang Pambarangay Rules: “Any
complaint by or against corporations, partnership or
juridical entities, since only individuals shall be parties to
Barangay conciliation proceedings either as complainants
or respondents (Sec. 1, Rule VI, Katarungang Pambarangay
Rules); Under Section 4(a) of PD No. 1508, referral of a
dispute to the Barangay Lupon is required only where the
parties thereto are "individuals." An "individual" means "a
single human being as contrasted with a social group or
institution." Obviously, the law applies only to cases
involving natural persons, and not where any of the parties
is a juridical person such as a corporation, partnership,
corporation sole, testate or intestate, estate, etc. In Civil
Case No. R-239l5, plaintiff Ricardo Reyes is a mere
nominal party who is suing in behalf of the Intestate Estate
of Vito Borromeo. while it is true that Section 3, Rule 3 of
the Rules of Court allows the administrator of an estate to
sue or be sued without joining the party for whose benefit
the action is presented or defended, it is indisputable that
the real party in interest in Civil Case No. R-23915 is the
intestate estate under administration. Since the said estate is
a juridical person (Limjoco v. Intestate of Fragante, 80 Phil.
776) plaintiff administrator may file the complaint directly
in court, without the same being coursed to the Barangay
Lupon for arbitration
Boston Equity v. CA

FACTS:

Petitioner filed a complaint for sum of money with a prayer

for the issuance of a writ of preliminary attachment against
the spouses Manuel and Lolita Toledo. Upon the death of
Manuel, he was substituted by his children as party-
defendants.

During trial, the reception of evidence for herein

respondent was cancelled upon agreement of the parties.
Counsel for herein respondent was given a period of fifteen
days within which to file a demurrer to evidence. However,
respondent instead filed a motion to dismiss the complaint,
which was denied for having been filed out of time.

Respondent’s motion for reconsideration of the order of

denial was likewise denied on the ground that “defendants’
attack on the jurisdiction of this Court is now barred by
estoppel by laches” since respondent failed to raise the
issue despite several chances to do so.

Aggrieved, respondent filed a petition for certiorari before

the CA.

The CA granted the petition, and denied petitioner’s

motion for reconsideration.
ISSUE:

Whether or not the CA is correct in granting herein

respondent’s petition for certiorari upon a finding that the
trial court committed grave abuse of discretion in denying
respondent’s motion to dismiss the complaint against her.

RULING:

We find merit in the petition.

The CA erred in granting the writ of certiorari in favor of

respondent.

Well settled is the rule that the special civil action for
certiorari is not the proper remedy to assail the denial by
the trial court of a motion to dismiss.

The order of the trial court denying a motion to dismiss is

merely interlocutory, as it neither terminates nor finally
disposes of a case and still leaves something to be done by
the court before a case is finally decided on the merits.
Therefore, “the proper remedy in such a case is to appeal
after a decision has been rendered.”
As the Supreme Court held in Indiana Aerospace
University v. Comm. on Higher Education:

A writ of certiorari is not intended to correct every

controversial interlocutory ruling; it is resorted only to
correct a grave abuse of discretion or a whimsical exercise
of judgment equivalent to lack of jurisdiction. Its function
is limited to keeping an inferior court within its jurisdiction
and to relieve persons from arbitrary acts – acts which
courts or judges have no power or authority in law to
perform. It is not designed to correct erroneous findings
and conclusions made by the courts.

Even assuming that certiorari is the proper remedy, the trial

court did not commit grave abuse of discretion in denying
respondent’s motion to dismiss. It, in fact, acted correctly
when it issued the questioned orders as respondent’s
motion to dismiss was filed SIX YEARS AND FIVE
MONTHS AFTER SHE FILED HER AMENDED
ANSWER. This circumstance alone already warranted the
outright dismissal of the motion for having been filed in
clear contravention of the express mandate of Section 1,
Rule 16, of the Revised Rules of Court. Under this
provision, a motion to dismiss shall be filed within the time
for but before the filing of an answer to the complaint or
pleading asserting a claim.
Sepulveda v. Pelaez

FACTS:
In1972, Atty. Pacifico Pelaez filed a complaint against
his grand uncle, Pedro Sepulveda, Sr.,with the then Court
of First Instance (CFI) of Cebu, for the recovery of
possession and ownership of his one-half (1/2) undivided
share of several parcels of land covered by
TaxDeclaration (T.D.) Nos. 28199, 18197, 18193 and
28316; his undivided one-third (1/3) share in several other
lots covered by T.D. Nos. 28304, 35090, 18228, 28310,
26308, 28714, 28311,28312 and 28299 (all located in
Danao, Cebu); and for the partition thereof among the co-
owners.

The eleven (11) lots were among the twenty-five (25)

parcels of land which the private respondent’s mother,
Dulce Sepulveda, inherited from her grandmother,
Dionisia Sepulveda under the Project of Partition dated
April 16, 1937 submitted by Pedro Sepulveda, Sr. as the
administrator of the former’s estate, duly approved
by the then CFI of Cebu in SpecialProceeding No.
778-0.Under the said deed, Pedro Sepulveda, Sr. appeared
to be the owner of an undivided portion ofLot No. 28199,
while his brother and Dulce’s uncle Santiago Sepulveda,
was the undividedowner of one-half (1/2) of the parcels of
land covered by T.D. Nos. 18197, 18193 and 28316.Dulce
and her uncles, Pedro and Santiago, were likewise indicated
therein as the co-owners ofthe eleven other parcels of land,
each with an undivided one-third (1/3) share thereof.Private
respondent alleged that his mother Dulce died intestate on
March 2, 1944, and aside from himself, was survived by
her husband Rodolfo Pelaez and her mother Carlota
Sepulveda. Despite repeated demands by Dulce, her mother
Carlota, and respondent Pelaez, the petitioner allegedly
refused to give Dulce’s share in the eleven parcels of land.
The private respondent further narrated that his granduncle
executed an affidavit stating that he was the sole heir of
Dionisia when she died intestate when, in fact, the latter
was survived by her three sons, Santiago, Pedro and
Vicente. Pedro Sepulveda, Sr. also executed a Deed of
Absolute Sale in 1968 over the property covered by T.D.
No. 19804 (T.D. No. 35090) in favor of the City of Danao
for P7,492.00 without his (private respondent’s)
knowledge. In his answer to the complaint, Pedro
Sepulveda, Sr. admitted having executed a deed of sale
over the parcel of land covered by T.D. No. 19804 in favor
of Danao City, but averred that thelatter failed to pay the
purchase price thereof; besides, the private respondent had
no right to share in the proceeds of the said sale. He
likewise denied having received any demand for the
delivery of Dulce’s share. During the trial, Pedro
Sepulveda, Sr. died intestate. His daughter, Socorro
Sepulveda Lawas, was appointed administratrix of
his estate. According to the petitioner, Dulce and
Pedro Sepulveda, Sr. had a verbal agreement wherein the
eleven parcels of land covered by the complaint would
serve as the latter’s compensation for his services as
administrator of Dionisia’s estate. Thus, upon the
termination of Special Proceeding No. 778-0,and
subsequent to the distribution of the shares of Dionisia’s
heirs, Pedro Sepulveda, Sr. then became the sole owner of
Dulce’s shares. The trial court rendered judgment in favor
of the private respondent. It ruled that the private
respondent’s action for reconveyance based on constructive
trust had not yet prescribed when the complaint was filed;
that he was entitled to a share in the proceeds of the sale
of the property to Danao City; and that the partition of the
subject property among the adjudicates thereof was in
order. Petitioner appealed the decision to the CA, which
rendered judgment on January 31, 2002,affirming the
appealed decision with modification. The petitioner now
comes to the Court via a petition for review on certiorari.

ISSUE: Will the private respondent’s action prosper?

RULING:
The petition is granted for the sole reason that the
respondent failed to implead as parties, all the
indispensable parties in his complaint. When his mother
Dulce Pelaez died intestate on March 2, 1944, she was
survived by her husband Rodolfo and their son, the
private respondent. when his mother Dulce Pelaez on
March 2, 1944, she was survived by her husband Rodolfo
and their son, the private respondent.Thus, all the co-heirs
and persons having an interest in the property are
indispensable parties; as such, an action for partition will
not lie without the joinder of the said parties. The mere fact
that Pedro Sepulveda, Sr. has repudiated the co-ownership
between him and the respondent does not deprive the trial
court of jurisdiction to take cognizance of the action for
partition, for, in a complaint for partition, the plaintiff
seeks, first, a declaration that he is a co-owner of the
subject property; and, second, the conveyance of his lawful
shares. In the present action, the private respondent, as the
plaintiff in the trial court, failed to implead the following
indispensable parties: his father, Rodolfo Pelaez; the heirs
of Santiago Sepulveda, namely, Paz Sepulveda and their
children; and the City of Danao which purchased the
property covered by T.D. 19804 (T.D. No. 35090) from
Pedro Sepulveda, Sr. and maintained that it had failed to
pay for the purchase price of the property. Rodolfo Pelaez
is an indispensable party he being entitled to a share in
usufruct, equal to the share of the respondent in the subject
properties. There is no showing that Rodolfo Pelaez had
waived his right to usufruct.

SEC. 7. Compulsory joinder of indispensable parties. –

Parties in interest without whom no final determination can
be had of an action shall be joined either as plaintiffs or
defendants. The presence of all indispensable parties is a
condition sine qua non for the exercise of judicial power. It
is precisely when an indispensable party is not before the
court that the action should be dismissed. The trial court
should have ordered the dismissal of the complaint.
 CELEDONIO MOLDES, vs. TIBURCIO
VILLANUEVA,

FACTS: The spouses Juan Mollet and Silvina Del Monte

were the owners of three parcels of land. Their daughter,
Josefa, died intestate on November 24, 1918 at the age of
25. Juan Mollet died intestate on January 30, 1934 and his
widow died also, intestate, on March 22, 1948. They were
survived by their daughter Romana Mollet, who married
Andres Gelardo.3 Romana and Andres were blessed with
five children, namely, Flaviana, Brigida, Maria, Isaac and
Leonila, all surnamed Gelardo.4 Flaviana married Manuel
Villanueva, and their marriage produced four offsprings,
namely, Apolinario, Tiburcio, Manuel and Juanita (now
deceased), all surnamed Villanueva.5 Juanita married
Cornelio Maritana. The couple begot five children, namely,
Luis, Orlando, Normita, Diego, and Julieta, all surnamed
Maritima.
Brigida married Mariano Dullavin and they had two
children, Rolando and Teodora, both surnamed
Dullavin.6 Maria married Primo Tolentino and the couple
had two children, Hermino and Carolyn.7 Leonila married
Delfin Malacca and they had two sons, Gelardo and
Marcial.8 Isaac died a bachelor and without any issue.9
A document denominated as Deed of Extrajudicial
Settlement with Quitclaim10 covering Lot Nos. 589, 590
and 591 were executed by Maria and Leonila, surnamed
Gelardo, Mariano Dullavin, Manuel, Juanita, Tiburcio and
Apolonio, all surnamed Villanueva, and Emeterio,
Celedonio, Domingo, Rosita and Carolina, all surnamed
Moldes.
Manuel Villanueva and his children, namely, Tiburio and
Apolonio, and Mariano Dullavin and his children, namely,
Rolando and Teodora, filed a Complaint with the Regional
Trial Court (RTC) of Makati against Celedonio, Rosita and
Carolina Cedia, all surnamed Moldes, to annul the Deed of
Extrajudicial Settlement with Quitclaim.

RTC: rendered a decision declaring that the Deed of

Extrajudicial Settlement with Quitclaim was void. The
RTC held that the Deed of Extrajudicial Settlement with
Quitclaim was a sham. Through deceit and machinations,
the plaintiffs, being illiterate at that, were “mislead, duped,
railroaded and bamboozled” by the defendants in signing
the deed and waiving their respective shares.

CA: affirmed with modification the decision of the RTC.

RULING: The Court grants the petition on the sole ground

that the respondents, who were the plaintiffs in the trial
court, failed to implead indispensable parties.
Section 7, Rule 3 of the Rules of Court provides:

SEC. 7. Compulsory joinder of indispensable parties. –

Parties-in-interest without whom no final determination can
be had of an action shall be joined either as plaintiffs or
defendants.
In Commissioner Andrea D. Domingo v. Herbert Markus
Emil Scheer,27 the Court held that the joinder of
indispensable parties is mandatory. Without the presence of
indispensable parties to the suit, the judgment of the court
cannot attain real finality. Strangers to a case are not bound
by the judgment rendered by the court. The absence of an
indispensable party renders all subsequent actions of the
court null and void, with no authority to act not only as to
the absent party but also as to those present. The
responsibility of impleading all the indispensable parties
rests on the petitioner/plaintiff.
In this case, the respondents herein, who were the plaintiffs
in the court a quo, alleged in their complaint that, as heirs
of the spouses Mollet, they were co-owners of the subject
property together with the heirs of Maria and Leonila,
namely, Primo Tolentino and their children, Hermino and
Carolyn, and Delfin Malacca and their sons Gelardo and
Marcial. With the death of the respondent’s sister Juanita
Maritana, her heirs, (Cornelio Maritana and their children
Luis, Orlando, Normita, Diego, and Julieta) retained their
right to inherit despite her death.23 However, the
respondents failed to implead the aforementioned heirs as
parties-plaintiffs. The respondents also failed to implead
the other signatories of the deed, namely, Emeterio and
Domingo, surnamed Moldes, who, under the deed, were
deeded shares in the property.
This is fatal to the complaint. All heirs of the deceased are
indispensable parties to the respondents’ action to nullify
the deed and the partition of the subject property among the
signatories therein.24 All the parties to the deed are,
likewise, indispensable parties.
China Bank v. Oliver

Facts: On April 7, 1997, Chinabank filed with the Court of

Appeals a petition for certiorari On June 30, 1997,
respondent Oliver Two moved to declare petitioner
Chinabank in default However,... until the filing of the
motion for default, no answer had been filed yet. The trial
court granted the motion and declared petitioner in default
in its order dated July 17, 1997 Consequently, petitioner
Chinabank filed a supplemental petition... seeking
annulment of the July 17, 1997 order. On June 1, 1998, the
Court of Appeals found... no grave abuse of discretion
committed by the trial judge in ruling that the Rules of
Court provided the manner of impleading parties to a case
and in suggesting that petitioner file an... appropriate action
to bring the mortgagor within the court's jurisdiction. The
Court of Appeals denied petitioner's motion for
reconsideration. Hence, this petition
Issues:
Is the mortgagor who goes by the name of Mercedes
M. Oliver, herein called Oliver One, an indispensable party
in Civil Case No. 96219? Should Section 7 Rule 3 of the
1997 Rules of Civil Procedure... apply in this case?

Ruling:
Petitioner's contention is far from tenable. An
indispensable party is a party in interest, without whom no
final determination can be had of an action. It is true that
mortgagor Oliver One is a party in interest, for she will be
affected by the... outcome of the case. She stands to be
benefited in case the mortgage is declared valid, or injured
in case her title is declared fake. However, mortgagor
Oliver One's absence from the case does not hamper the
trial court in resolving the dispute between... respondent
Oliver Two and petitioner. A perusal of Oliver Two's
allegations in the complaint below shows that it was for
annulment of mortgage due to petitioner's negligence in not
determining the actual ownership of the property, resulting
in the mortgage's annotation on TCT No. S-50195 in the
Registry of Deeds' custody. To support said allegations,
respondent Oliver Two had to prove (1) that she is the real
Mercedes M. Oliver referred to in the TCT, and (2) that she
is not the same person using that name who entered into a
deed of mortgage with the... petitioner. This, respondent
Oliver Two can do in her complaint without necessarily
impleading the mortgagor Oliver One. Hence, Oliver One
is not an indispensable party in the case filed by Oliver
Two. In Noceda vs. Court of Appeals, et al., 313 SCRA
504 (1999), we held that a party is not indispensable to the
suit if his interest in the controversy or subject matter is
distinct and divisible from the interest of the other parties
and will not necessarily be... prejudiced by a judgment
which does complete justice to the parties in court. In this
case, Chinabank has interest in the loan which, however, is
distinct and divisible from the mortgagor's interest, which
involves the land used as collateral for the loan. A party is
also not... indispensable if his presence would merely
permit complete relief between him and those already
parties to the action, or will simply avoid multiple
litigation, as in the case of Chinabank and mortgagor Oliver
One. The latter's participation in this... case will simply
enable petitioner Chinabank to make its claim against her
in this case, and hence, avoid the institution of another
action. Thus, it was the bank who should have filed a third-
party complaint or other action versus the mortgagor Oliver
One. As to the second issue, since mortgagor Oliver One is
not an indispensable party, Section 7, Rule 3 of the 1997
Rules of Civil Procedure, which requires compulsory
joinder of indispensable parties in a case, does not apply.
Instead, it is Section 11, Rule 3, that... applies. Non-joinder
of parties is not a ground for dismissal of an action. Parties
may be added by order of the court, either on its own
initiative or on motion of the parties. Hence, the Court of
Appeals committed no error... when it found no abuse of
discretion on the part of the trial court for denying
Chinabank's motion to dismiss and, instead, suggested that
petitioner file an appropriate action against mortgagor
Oliver One. A person who is not a party to an action may
be impleaded by the... defendant either on the basis of
liability to himself or on the ground of direct liability to the
plaintiff.