G.R. No. 146744 ; March 6, 2006
ROBERT G. DE GALICIA, Petitioner, vs. MELY MERCADO, Respondent.

FACTS

Petitioner Robert de Galicia co-signed a P50,000 check with his business partner, Carmen Arciaga. Arciaga, allegedly without de Galicia’s knowledge, rediscounted the check with respondent Mely Mercado for P46,000, net of an 8% interest. Upon presentment, the check was dishonored. Mercado filed criminal complaints for estafa and violation of B.P. 22 against de Galicia and Arciaga. In response, de Galicia filed a civil complaint in the Regional Trial Court (RTC) seeking the declaration of nullity of the interest agreement between Mercado and Arciaga and the check itself, arguing it was contrary to public policy.
The RTC dismissed the complaint for lack of jurisdiction. It treated the action as one for recovery of a sum of money, noting the principal amount was only P50,000, which was below its jurisdictional threshold. The RTC also pointed out that Arciaga, a party to the assailed agreement, was not impleaded. De Galicia elevated the case, contending his action was not for money recovery but for nullification, which is incapable of pecuniary estimation and thus within RTC jurisdiction.

ISSUE

Whether the RTC correctly dismissed the complaint for (1) lack of jurisdiction over the subject matter and (2) failure to implead an indispensable party.

RULING

The Supreme Court denied the petition, sustaining the dismissal but on a different ground. First, the Court clarified the jurisdictional issue. Applying the criterion from Singsong v. Isabella Sawmill, the nature of the principal relief sought determines if an action is capable of pecuniary estimation. De Galicia’s complaint primarily sought to annul the interest agreement and the check, not to recover a sum of money. The monetary value of the check was merely incidental to the primary relief of nullity. Therefore, the action was incapable of pecuniary estimation and fell within the exclusive original jurisdiction of the RTC under B.P. 129.
However, the dismissal was ultimately upheld due to the failure to implead an indispensable party. Under Rule 3, Section 7 of the Rules of Civil Procedure, an indispensable party is one without whom no final determination of the action can be had. Carmen Arciaga was an indispensable party because she was a co-signatory to the check and a direct party to the very agreement sought to be annulled. Her interests were so intertwined with the rights of both de Galicia and Mercado that any judgment without her participation would be ineffectual and could not bind her. The joinder of indispensable parties is mandatory, and the absence of such a party is a fatal defect warranting dismissal. Consequently, the RTC’s order of dismissal was affirmed.