G.R. No. L-44339. December 2, 1987.
CRISANTA F. SENO, et al., plaintiffs, vs. MARCOS MANGUBAT, et al., defendants.
FACTS
Plaintiff Crisanta Seno negotiated with defendant Marcos Mangubat, a lawyer, for a mortgage over her land to pay a debt. They allegedly agreed on a P15,000 loan with 2% monthly interest, with the understanding that the property would not be foreclosed as long as interest was paid. Relying on Mangubat’s assurance, Seno executed a Deed of Absolute Sale dated July 17, 1961, purportedly selling the property to Mangubat and two others, Andres Evangelista and Bienvenido Mangubat, for only P5,000. Seno continued paying interest. Later, Evangelista and Bienvenido Mangubat sold their shares to Marcos Mangubat. In 1969, Mangubat sold the property to spouses Francisco Luzame and Vergita Penaflor. Seno and her co-plaintiffs filed an action for reformation of the 1961 deed (to reflect a mortgage) and annulment of the subsequent sale.
The trial court initially dismissed the case only against Evangelista and Bienvenido Mangubat on grounds of prescription. Upon motion of the other defendants, it reconsidered and dismissed the entire case, reasoning that it could no longer grant reformation. The Court of Appeals certified the appeal to the Supreme Court, raising pure questions of law.
ISSUE
The primary issue is whether defendants Andres Evangelista and Bienvenido Mangubat are indispensable parties, such that the action cannot proceed without them, and whether the dismissal against them warranted dismissal of the entire case.
RULING
The Supreme Court reversed the trial court’s orders and remanded the case for further proceedings. The Court held that Evangelista and Bienvenido Mangubat were not indispensable parties under Section 7, Rule 3 of the Rules of Court. An indispensable party is one without whom no final determination of the action can be had. The complaint alleged they were mere dummies of Marcos Mangubat. The cause of action for reformation and annulment was primarily against Mangubat and the subsequent buyers. A complete determination of the rights between the plaintiffs and the principal defendant Mangubat could be had without their presence. They were, at most, proper parties under Section 8, Rule 3. Consequently, the dismissal of the action against them on the ground of prescription did not justify the dismissal of the complaint against the other defendants. The trial court erred in dismissing the entire case without a hearing on the merits. The case was reinstated for trial to determine the truth of the allegations regarding the equitable mortgage and the good faith of the subsequent buyers.