Land Bank of the Philippines vs Eduardo Cacayuran CASE DIGEST - Civil Procedure - Real Party in Interest - Indispensable Party

LAND BANK OF THE PHILIPPINES VS EDUARDO M. CACAYURAN

TOPIC: Indispensable party

Facts: Municipality of Agoo entered into 2 loans with LBP in order to finance a Redevelopment Plan of the Agoo Public Plaza. The Sangguniang Bayan of the Municipality authorized the Mayor  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. 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. Cacayuran’s request for the documents relating to the plaza’s 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.

LBP asserted that Cacayuran did not have any cause of action because he was not privy to the loan agreements.

RTC held the Subject loans are null and void. Resolutions approving the loanwere passed irregularly and are thus ultra vires. Plaza lot is property for public use and not valid as collateral.

CA affirmed RTC with modification. Cacayuran has locus standi as resident and the issue is of transcendental importance to public interest.

Issue: WON the Municipality of Agoo should be deemed an indispensable party to the case

Held: YES, it is an indispensable party under Sec 7, Rule 3 which mandates that all indispensable parties are to be joined in a suit as it is the party whose interest will be affected by the court’s 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, CA, and SC is not binding upon the Municipality as it was not impleaded as defendant in the case. Case is REMANDED to the RTC and Cacayuran is DIRECTED to implead all indispensable parties.