Land Bank vs. Cacayuran
Land Bank vs. Cacayuran
Petitioner,
v.
EDUARDO
M.
Initially, the municipal officers moved for the outright dismissal of the complaint,
which was denied, thus constraining them to file their respective answers. For its
part, LBP asserted, inter alia, that Cacayuran did not have any cause of action
since he was not privy to the loan agreements entered into by LBP and the
Municipality.16
During the pendency of the proceedings, the construction of the Agoo People's
Center was completed. Later on, the Sangguniang Bayan passed Municipal
Ordinance No. 02-200717 declaring the area where such building stood as
patrimonial property of the Municipality.18
The RTC Ruling
In a Decision19 dated April 10, 2007, the RTC declared the Subject Loans null and
void, finding that the resolutions approving the procurement of the same were
passed in a highly irregular manner and thus, ultra vires. As such, it pronounced
that the Municipality was not bound by the Subject Loans and that the municipal
officers should, instead, be held personally liable for the same. Further, it ruled
that since the Plaza Lot is a property for public use, it cannot be used as
collateral for the Subject Loans.20
Aggrieved, LBP and the municipal officers appealed21 to the CA. However, the
appeal of the municipal officers was deemed abandoned and dismissed for their
failure to file an appellants' brief despite due notice.22 Thus, only LBP's appeal
was given due course by the CA.23
The CA Ruling
In a Decision24 dated March 26, 2010, the CA affirmed the ruling of the RTC, with
modification excluding then-Vice Mayor Antonio Eslao from personal liability
arising from the Subject Loans. It held that: (a) Cacayuran had locus standi to
file the instant complaint, considering that he is a resident of the Municipality
and the issue at hand involved public interest of transcendental importance; (b)
Resolution Nos. 68-2005, 138-2005, 58-2006, 126-2006 were invalidly passed
due to non-compliance with certain provisions of Republic Act No. 7160, 25
otherwise known as the Local Government Code of 1991 (LGC); (c) the Plaza Lot
is property of public dominion, and thus, cannot be used as collateral; and (d)
the procurement of the Subject Loans were ultra vires acts for having been
entered into without proper authority and that the collaterals used therefor
constituted improper disbursement of public funds. 26
Dissatisfied, LBP filed a petition for review on certiorari27 before this Court.
Proceedings Before the Court
In a Decision28 dated April 17, 2013 the Court denied LBP's petition, and
accordingly, affirmed the ruling of the CA. Agreeing with the CA, the Court held
that: (a) Cacayuran had legal standing to institute a taxpayer's suit; 29 (b)
Resolution Nos. 68-2005, 139-2005, 58-2006, 126-2006 cannot be relied upon
to validate the Subject Loans, as the LGC requires the passing of an ordinance in
order for any loan agreement to be valid;30 and (c) the procurement of the
Subject Loans are ultra vires acts of the municipal officers who approved the
same, and thus, liability therefor shall devolve upon them.31
Undaunted, LBP moved for reconsideration, basically reiterating its earlier
position that Cacayuran had no legal standing to sue, and that Resolution Nos.
68-2005, 139-2005, 58-2006, and 126-2006 may be relied upon in validating
the Subject Loans.32
Meanwhile, the Municipality filed a Motion for Leave to Intervene with PleadingIn-Intervention Attached33 dated July 8, 2013 and a Motion for Reconsideration
in-Intervention34 of even date, praying that it be included as a party-litigant to
the instant case. It contends that as a contracting party to the Subject Loans, it
is an indispensable party to the action filed by Cacayuran. As such, there cannot
be any "real disposition" of the instant suit by reason of its exclusion from the
same.
In opposition,35 Cacayuran maintains that LBP did not raise any new matter to
warrant reconsideration of the April 17, 2013 Decision. Anent the Municipality's
motion to intervene, Cacayuran insists that the Municipality is not a real party-ininterest to the instant case as his complaint is against the municipal officers in
their personal capacity for their ultra vires acts which are not binding on the
Municipality.
Finally, in its Comment on the Motion for Leave to Intervene and Motion for
Reconsideration-in-Intervention36 dated May 6, 2014, LBP agrees with the
Municipality that the latter is an indispensable party to the instant case and as
such, should be included herein.
The Issue Before the Court
The core issue for the Court's resolution is whether or not the Municipality should
be deemed as an indispensable party to the instant case, and thus, be ordered
impleaded herein.
The Court's Ruling
The Court rules in the affirmative.
Section 7, Rule 3 of the Rules of Court mandates that all indispensable parties
should be joined in a suit, viz.:
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.
"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 party's interest in the subject matter of the suit and in the relief
sought are so inextricably intertwined with the other parties' that his legal
Indeed, [the Municipality! Ion whose lands stands and is found the Agoo
Public Plaza, where the Kiosks and Commercial Building were under
construction and which constructions were sought to be restrained]
stands to be benefited or injured by the judgment in the case so filed or
the party entitled to the avails of the case and is, therefore, the real
party-in-interest.
xxxx
3k. Without having to say so, the RTC dispositions as affirmed with
modification by the CA Decision which, in turn was affirmed by the SC
Decision must not be binding upon [the Municipality], the real party-ininterest, the indispensable party in fact, not impleaded as defendant in
this case.43 (Emphases and underscoring supplied).
The Court observes that it is only now that the issue of the Municipality's
exclusion from the instant case, despite its status as an indispensable party,
became apparent. This recent finding may be credited to the fact that the initial
parties before the Court, i.e., LBP and Cacayuran, have dissimilar interests from
that of the Municipality, and, hence, had no incentive to raise the issue of the
latter's status as an indispensable party. On the one hand, Cacayuran's interest
to the case is centered on the declaration of nullity of the Subject Loans, as well
as the enjoinment of the commercialization of the Public Plaza; and on the other
hand, LBP's interest to the case is anchored on its capacity as creditor to the
Subject Loans. To the mind of the Court, the municipal officers would have been
in the best position to raise this issue; however, they were unable to do so
because their appeal before the CA was deemed abandoned for their failure to
file an appellants' brief on time.
Be that as it may, the Court is not precluded from taking cognizance of the
Municipality's status as an indispensable party even at this stage of the
proceedings. Indeed, the presence of indispensable parties is necessary to vest
the court with jurisdiction44 and, corollarily, the issue on jurisdiction may be
raised at any stage of the proceedings. 45 Thus, as it has now come to the fore
that any resolution of this case would not be possible and, hence, not attain any
real finality due to the non-joinder of the Municipality, the Court is constrained to
set aside all subsequent actuations of the courts a quo in this case, including that
of the Court's, and remand the case all the way back to the RTC for the inclusion
of all indispensable parties to the case and its immediate disposition on the
merits.46 With this, the propriety of the Municipality's present intervention is now
mooted.
WHEREFORE, the subject motions are PARTLY GRANTED. The Decision dated
April 17, 2013 of the Court, which upheld the Decision dated March 26, 2010 of
the Court of Appeals in CA-G.R. CV. No. 89732 affirming with modification the
Decision dated April 10, 2007 of the Regional Trial Court of Agoo, La Union,
Branch 31 in Civil Case No. A-2473 is hereby SET ASIDE. Accordingly, the
instant case is REMANDED to the court a quo, which is hereby DIRECTED to
order respondent Eduardo M. Cacayuran to implead all indispensable parties and
thereafter, PROCEED with the resolution of the case on the merits WITH
DISPATCH.
SO ORDERED.
Carpio, (Chairperson), Brion, Del Castillo, and Perez, JJ., concur.