Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 160347 November 29, 2006

ARCADIO and MARIA LUISA CARANDANG, Petitioners,

vs.
HEIRS OF QUIRINO A. DE GUZMAN, namely: MILAGROS DE GUZMAN, VICTOR DE GUZMAN, REYNALDO DE GUZMAN,
CYNTHIA G. RAGASA and QUIRINO DE GUZMAN, JR., Respondents.

DECISION

CHICO-NAZARIO, J.:

This is a Petition for Review on Certiorari assailing the Court of Appeals Decision 1 and Resolution affirming the Regional Trial Court
(RTC) Decision rendering herein petitioners Arcadio and Luisa Carandang [hereinafter referred to as spouses Carandang] jointly
and severally liable for their loan to Quirino A. de Guzman.

The Court of Appeals summarized the facts as follows:

[Quirino de Guzman] and [the Spouses Carandang] are stockholders as well as corporate officers of Mabuhay Broadcasting System
(MBS for brevity), with equities at fifty four percent (54%) and forty six percent (46%) respectively.

On November 26, 1983, the capital stock of MBS was increased, from P500,000 to P1.5 million and P345,000 of this increase was
subscribed by [the spouses Carandang]. Thereafter, on March 3, 1989, MBS again increased its capital stock, from P1.5 million
to P3 million, [the spouses Carandang] yet again subscribed to the increase. They subscribed to P93,750 worth of newly issued
capital stock.

[De Guzman] claims that, part of the payment for these subscriptions were paid by him, P293,250 for the November 26, 1983 capital
stock increase and P43,125 for the March 3, 1989 Capital Stock increase or a total of P336,375. Thus, on March 31, 1992, [de
Guzman] sent a demand letter to [the spouses Carandang] for the payment of said total amount.

[The spouses Carandang] refused to pay the amount, contending that a pre-incorporation agreement was executed between
[Arcadio Carandang] and [de Guzman], whereby the latter promised to pay for the stock subscriptions of the former without cost, in
consideration for [Arcadio Carandangs] technical expertise, his newly purchased equipment, and his skill in repairing and upgrading
radio/communication equipment therefore, there is no indebtedness on their part [sic].

On June 5, 1992, [de Guzman] filed his complaint, seeking to recover the P336,375 together with damages. After trial on the merits,
the trial court disposed of the case in this wise:

"WHEREFORE, premises considered, judgment is hereby rendered in favor of [de Guzman]. Accordingly, [the spouses Carandang]
are ordered to jointly and severally pay [de Guzman], to wit:

(1) P336,375.00 representing [the spouses Carandangs] loan to de Guzman;

(2) interest on the preceding amount at the rate of twelve percent (12%) per annum from June 5, 1992 when this
complaint was filed until the principal amount shall have been fully paid;

(3) P20,000.00 as attorneys fees;

(4) Costs of suit.

The spouses Carandang appealed the RTC Decision to the Court of Appeals, which affirmed the same in the 22 April 2003 assailed
Decision:

WHEREFORE, in view of all the foregoing the assailed Decision is hereby AFFIRMED. No costs.2
The Motion for Reconsideration filed by the spouses Carandang was similarly denied by the Court of Appeals in the 6 October 2003
assailed Resolution:

WHEREFORE, in view thereof, the motion for reconsideration is hereby DENIED and our Decision of April 22, 2003, which is based
on applicable law and jurisprudence on the matter is hereby AFFIRMED and REITERATED. 3

The spouses Carandang then filed before this Court the instant Petition for Review on Certiorari, bringing forth the following issues:

I.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED MANIFEST ERROR IN FAILING TO STRICTLY
COMPLY WITH SECTION 16, RULE 3 OF THE 1997 RULES OF CIVIL PROCEDURE.

II.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN ITS FINDING THAT THERE IS AN
ALLEGED LOAN FOR WHICH PETITIONERS ARE LIABLE, CONTRARY TO EXPRESS PROVISIONS OF BOOK IV, TITLE XI, OF
THE NEW CIVIL CODE PERTAINING TO LOANS.

III.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN FINDING THAT THE RESPONDENTS
WERE ABLE TO DISCHARGE THEIR BURDEN OF PROOF, IN COMPLETE DISREGARD OF THE REVISED RULES ON
EVIDENCE.

IV.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT FAILED TO APPLY
SECTIONS 2 AND 7, RULE 3 OF THE 1997 RULES OF CIVIL PROCEDURE.

V.

WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN FINDING THAT THE PURPORTED
LIABILITY OF PETITIONERS ARE JOINT AND SOLIDARY, IN VIOLATION OF ARTICLE 1207 OF THE NEW CIVIL CODE. 4

Whether or not the RTC Decision is void for failing to comply with Section 16, Rule 3 of the Rules of Court

The spouses Carandang claims that the Decision of the RTC, having been rendered after the death of Quirino de Guzman, is void
for failing to comply with Section 16, Rule 3 of the Rules of Court, which provides:

SEC. 16. Death of party; duty of counsel. Whenever a party to a pending action dies, and the claim is not thereby extinguished, it
shall be the duty of his counsel to inform the court within thirty (30) days after such death of the fact thereof, and to give the name
and address of his legal representative or representatives. Failure of counsel to comply with this duty shall be a ground for
disciplinary action.

The heirs of the deceased may be allowed to be substituted for the deceased, without requiring the appointment of an executor or
administrator and the court may appoint a guardian ad litem for the minor heirs.

The court shall forthwith order the legal representative or representatives to appear and be substituted within a period of thirty (30)
days from notice.

If no legal representative is named by the counsel for the deceased party, or if the one so named shall fail to appear within the
specified period, the court may order the opposing party, within a specified time, to procure the appointment of an executor or
administrator for the estate of the deceased and the latter shall immediately appear for and on behalf of the deceased. The court
charges in procuring such appointment, if defrayed by the opposing party, may be recovered as costs.

The spouses Carandang posits that such failure to comply with the above rule renders void the decision of the RTC, in adherence to
the following pronouncements in Vda. de Haberer v. Court of Appeals5 and Ferreria v. Vda. de Gonzales6 :
Thus, it has been held that when a party dies in an action that survives and no order is issued by the court for the appearance of the
legal representative or of the heirs of the deceased in substitution of the deceased, and as a matter of fact no substitution has ever
been effected, the trial held by the court without such legal representatives or heirs and the judgment rendered after such trial are
null and void because the court acquired no jurisdiction over the persons of the legal representatives or of the heirs upon whom the
trial and judgment would be binding.7

In the present case, there had been no court order for the legal representative of the deceased to appear, nor had any such legal
representative appeared in court to be substituted for the deceased; neither had the complainant ever procured the appointment of
such legal representative of the deceased, including appellant, ever asked to be substituted for the deceased. As a result, no valid
substitution was effected, consequently, the court never acquired jurisdiction over appellant for the purpose of making her a party to
the case and making the decision binding upon her, either personally or as a representative of the estate of her deceased mother.8

However, unlike jurisdiction over the subject matter which is conferred by law and is not subject to the discretion of the
parties,9 jurisdiction over the person of the parties to the case may be waived either expressly or impliedly.10Implied waiver comes in
the form of either voluntary appearance or a failure to object.11

In the cases cited by the spouses Carandang, we held that there had been no valid substitution by the heirs of the deceased party,
and therefore the judgment cannot be made binding upon them. In the case at bar, not only do the heirs of de Guzman interpose no
objection to the jurisdiction of the court over their persons; they are actually claiming and embracing such jurisdiction. In doing so,
their waiver is not even merely implied (by their participation in the appeal of said Decision), but express (by their explicit espousal
of such view in both the Court of Appeals and in this Court). The heirs of de Guzman had no objection to being bound by the
Decision of the RTC.

Thus, lack of jurisdiction over the person, being subject to waiver, is a personal defense which can only be asserted by the party
who can thereby waive it by silence.

It also pays to look into the spirit behind the general rule requiring a formal substitution of heirs. The underlying principle therefor is
not really because substitution of heirs is a jurisdictional requirement, but because non-compliance therewith results in the
undeniable violation of the right to due process of those who, though not duly notified of the proceedings, are substantially affected
by the decision rendered therein.12 Such violation of due process can only be asserted by the persons whose rights are claimed to
have been violated, namely the heirs to whom the adverse judgment is sought to be enforced.

Care should, however, be taken in applying the foregoing conclusions. In People v. Florendo, 13 where we likewise held that the
proceedings that took place after the death of the party are void, we gave another reason for such nullity: "the attorneys for the
offended party ceased to be the attorneys for the deceased upon the death of the latter, the principal x x x." Nevertheless, the case
at bar had already been submitted for decision before the RTC on 4 June 1998, several months before the passing away of de
Guzman on 19 February 1999. Hence, no further proceedings requiring the appearance of de Guzmans counsel were conducted
before the promulgation of the RTC Decision. Consequently, de Guzmans counsel cannot be said to have no authority to appear in
trial, as trial had already ceased upon the death of de Guzman.

In sum, the RTC Decision is valid despite the failure to comply with Section 16, Rule 3 of the Rules of Court, because of the express
waiver of the heirs to the jurisdiction over their persons, and because there had been, before the promulgation of the RTC Decision,
no further proceedings requiring the appearance of de Guzmans counsel.

Before proceeding with the substantive aspects of the case, however, there is still one more procedural issue to tackle, the fourth
issue presented by the spouses Carandang on the non-inclusion in the complaint of an indispensable party.

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

The spouses Carandang claim that, since three of the four checks used to pay their stock subscriptions were issued in the name of
Milagros de Guzman, the latter should be considered an indispensable party. Being such, the spouses Carandang claim, the failure
to join Mrs. de Guzman as a party-plaintiff should cause the dismissal of the action because "(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." 14

The Court of Appeals held:

We disagree. The joint account of spouses Quirino A de Guzman and Milagros de Guzman from which the four (4) checks were
drawn is part of their conjugal property and under both the Civil Code and the Family Code the husband alone may institute an
action for the recovery or protection of the spouses conjugal property.

Thus, in Docena v. Lapesura [355 SCRA 658], the Supreme Court held that "x x x Under the New Civil Code, the husband is the
administrator of the conjugal partnership. In fact, he is the sole administrator, and the wife is not entitled as a matter of right to join
him in this endeavor. The husband may defend the conjugal partnership in a suit or action without being joined by the wife. x x x
Under the Family Code, the administration of the conjugal property belongs to the husband and the wife jointly. However, unlike an
act of alienation or encumbrance where the consent of both spouses is required, joint management or administration does not
require that the husband and wife always act together. Each spouse may validly exercise full power of management alone, subject
to the intervention of the court in proper cases as provided under Article 124 of the Family Code. x x x."

The Court of Appeals is correct. Petitioners erroneously interchange the terms "real party in interest" and "indispensable party." A
real party in interest is 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.15 On the other hand, an indispensable party is a party in interest without whom no final determination can be had of an
action,16 in contrast to a necessary party, which is 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. 17

The spouses Carandang are indeed correct 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." 18 However, what dismissal on this ground entails
is 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 latter query is relevant in discussions concerning indispensable and
necessary parties, but not in discussions concerning real parties in interest. Both indispensable and necessary parties are
considered as real parties in interest, since both classes of parties stand to be benefited or injured by the judgment of the suit.

Quirino and Milagros de Guzman were married before the effectivity of the Family Code on 3 August 1988. As they did not execute
any marriage settlement, the regime of conjugal partnership of gains govern their property relations. 19

All property acquired during the marriage, whether the acquisition appears to have been made, contracted or registered in the name
of one or both spouses, is presumed to be conjugal unless the contrary is proved. 20 Credits are personal properties,21 acquired
during the time the loan or other credit transaction was executed. Therefore, credits loaned during the time of the marriage are
presumed to be conjugal property.

Consequently, assuming that the four checks created a debt for which the spouses Carandang are liable, such credits are presumed
to be conjugal property. There being no evidence to the contrary, such presumption subsists. As such, Quirino de Guzman, being a
co-owner of specific partnership property,22 is certainly a real party in interest. Dismissal on the ground of failure to state a cause of
action, by reason that the suit was allegedly not brought by a real party in interest, is therefore unwarranted.

So now we come to the discussion concerning indispensable and necessary parties. When an indispensable party is not before the
court, the action should likewise be dismissed. 23 The absence of an indispensable party renders all subsequent actuations of the
court void, for want of authority to act, not only as to the absent parties but even as to those present. 24 On the other hand, the non-
joinder of necessary parties do not result in the dismissal of the case. Instead, Section 9, Rule 3 of the Rules of Court provides for
the consequences of such non-joinder:

Sec. 9. Non-joinder of necessary parties to be pleaded. Whenever in any pleading in which a claim is asserted a necessary party
is not joined, the pleader shall set forth his name, if known, and shall state why he is omitted. Should the court find the reason for
the omission unmeritorious, it may order the inclusion of the omitted necessary party if jurisdiction over his person may be obtained.

The failure to comply with the order for his inclusion, without justifiable cause, shall be deemed a waiver of the claim against such
party.

The non-inclusion of a necessary party does not prevent the court from proceeding in the action, and the judgment rendered therein
shall be without prejudice to the rights of such necessary party.

Non-compliance with the order for the inclusion of a necessary party would not warrant the dismissal of the complaint. This is an
exception to Section 3, Rule 17 which allows the dismissal of the complaint for failure to comply with an order of the court, as
Section 9, Rule 3 specifically provides for the effect of such non-inclusion: it shall not prevent the court from proceeding in the
action, and the judgment rendered therein shall be without prejudice to the rights of such necessary party. Section 11, Rule 3
likewise provides that the non-joinder of parties is not a ground for the dismissal of the action.

Other than the indispensable and necessary parties, there is a third set of parties: the pro-forma parties, which are 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.25 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.
In cases of pro-forma parties who are neither indispensable nor necessary, the general rule under Section 11, Rule 3 must be
followed: such non-joinder is not a ground for dismissal. Hence, in a case concerning an action to recover a sum of money, we held
that the failure to join the spouse in that case was not a jurisdictional defect. 26 The non-joinder of a spouse does not warrant
dismissal as it is merely a formal requirement which may be cured by amendment.27

Conversely, in the instances that the pro-forma parties are also indispensable or necessary parties, the rules concerning
indispensable or necessary parties, as the case may be, should be applied. Thus, dismissal is warranted only if the pro-forma party
not joined in the complaint is an indispensable party.

Milagros de Guzman, being presumed to be a co-owner of the credits allegedly extended to the spouses Carandang, seems to be
either an indispensable or a necessary party. If she is an indispensable party, dismissal would be proper. If she is merely a
necessary party, dismissal is not warranted, whether or not there was an order for her inclusion in the complaint pursuant to Section
9, Rule 3.

Article 108 of the Family Code provides:

Art. 108. The conjugal partnership shall be governed by the rules on the contract of partnership in all that is not in conflict with what
is expressly determined in this Chapter or by the spouses in their marriage settlements.

This provision is practically the same as the Civil Code provision it superceded:

Art. 147. The conjugal partnership shall be governed by the rules on the contract of partnership in all that is not in conflict with what
is expressly determined in this Chapter.

In this connection, Article 1811 of the Civil Code provides that "[a] partner is a co-owner with the other partners of specific
partnership property." Taken with the presumption of the conjugal nature of the funds used to finance the four checks used to pay for
petitioners stock subscriptions, and with the presumption that the credits themselves are part of conjugal funds, Article 1811 makes
Quirino and Milagros de Guzman co-owners of the alleged credit.

Being co-owners of the alleged credit, Quirino and Milagros de Guzman may separately bring an action for the recovery thereof. In
the fairly recent cases of Baloloy v. Hular28 and Adlawan v. Adlawan,29 we held that, in a co-ownership, co-owners may bring actions
for the recovery of co-owned property without the necessity of joining all the other co-owners as co-plaintiffs because the suit is
presumed to have been filed for the benefit of his co-owners. In the latter case and in that of De Guia v. Court of Appeals,30 we also
held that Article 487 of the Civil Code, which provides that any of the co-owners may bring an action for ejectment, covers all kinds
of action for the recovery of possession.31

In sum, in suits to recover properties, all co-owners are real parties in interest. However, pursuant to Article 487 of the Civil Code
and relevant jurisprudence, any one of them may bring an action, any kind of action, for the recovery of co-owned 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.32

We therefore hold that Milagros de Guzman is not an indispensable party in the action for the recovery of the allegedly loaned
money to the spouses Carandang. As such, she need not have been impleaded in said suit, and dismissal of the suit is not
warranted by her not being a party thereto.

Whether or not respondents were able to prove the loan sought to be collected from petitioners

In the second and third issues presented by the spouses Carandang, they claim that the de Guzmans failed to prove the alleged
loan for which the spouses Carandang were held liable. As previously stated, spouses Quirino and Milagros de Guzman paid for the
stock subscriptions of the spouses Carandang, amounting to P336,375.00. The de Guzmans claim that these payments were in the
form of loans and/or advances and it was agreed upon between the late Quirino de Guzman, Sr. and the spouses Carandang that
the latter would repay him. Petitioners, on the other hand, argue that there was an oral pre-incorporation agreement wherein it was
agreed that Arcardio Carandang would always maintain his 46% equity participation in the corporation even if the capital structures
were increased, and that Quirino de Guzman would personally pay the equity shares/stock subscriptions of Arcardio Carandang with
no cost to the latter.

On this main issue, the Court of Appeals held:

[The spouses Carandang] aver in its ninth assigned error that [the de Guzmans] failed to prove by preponderance of evidence,
either the existence of the purported loan or the non-payment thereof.
Simply put, preponderance of evidence means that the evidence as a whole adduced by one side is superior to that of the other.
The concept of preponderance of evidence refers to evidence that is of greater weight, or more convincing, than that which is
offered in opposition to it; it means probability of truth.

[The spouses Carandang] admitted that it was indeed [the de Guzmans] who paid their stock subscriptions and their reason for not
reimbursing the latter is the alleged pre-incorporation agreement, to which they offer no clear proof as to its existence.

It is a basic rule in evidence that each party must prove his affirmative allegation. Thus, the plaintiff or complainant has to prove his
affirmative allegations in the complaints and the defendant or respondent has to prove the affirmative allegations in his affirmative
defenses and counterclaims.33

The spouses Carandang, however, insist that the de Guzmans have not proven the loan itself, having presented evidence only of
the payment in favor of the Carandangs. They claim:

It is an undeniable fact that payment is not equivalent to a loan. For instance, if Mr. "A" decides to pay for Mr. "Bs" obligation, that
payment by Mr. "A" cannot, by any stretch of imagination, possibly mean that there is now a loan by Mr. "B" to Mr. "A". There is a
possibility that such payment by Mr. "A" is purely out of generosity or that there is a mutual agreement between them. As applied to
the instant case, that mutual agreement is the pre-incorporation agreement (supra) existing between Mr. de Guzman and the
petitioners --- to the effect that the former shall be responsible for paying stock subscriptions of the latter. Thus, when Mr. de
Guzman paid for the stock subscriptions of the petitioners, there was no loan to speak of, but only a compliance with the pre-
incorporation agreement.34

The spouses Carandang are mistaken. If indeed a Mr. "A" decides to pay for a Mr. "Bs" obligation, the presumption is that Mr. "B" is
indebted to Mr. "A" for such amount that has been paid. This is pursuant to Articles 1236 and 1237 of the Civil Code, which provide:

Art. 1236. The creditor is not bound to accept payment or performance by a third person who has no interest in the fulfillment of the
obligation, unless there is a stipulation to the contrary.

Whoever pays for another may demand from the debtor what he has paid, except that if he paid without the knowledge or
against the will of the debtor, he can recover only insofar as the payment has been beneficial to the debtor.

Art. 1237. Whoever pays on behalf of the debtor without the knowledge or against the will of the latter, cannot compel the creditor to
subrogate him in his rights, such as those arising from a mortgage, guarantee, or penalty.

Articles 1236 and 1237 are clear that, even in cases where the debtor has no knowledge of payment by a third person, and even in
cases where the third person paid against the will of the debtor, such payment would produce a debt in favor of the paying third
person. In fact, the only consequences for the failure to inform or get the consent of the debtor are the following: (1) the third person
can recover only insofar as the payment has been beneficial to the debtor; and (2) the third person is not subrogated to the rights of
the creditor, such as those arising from a mortgage, guarantee or penalty.35

We say, however, that this is merely a presumption. By virtue of the parties freedom to contract, the parties could stipulate
otherwise and thus, as suggested by the spouses Carandang, there is indeed a possibility that such payment by Mr. "A" was purely
out of generosity or that there was a mutual agreement between them. But such mutual agreement, being an exception to presumed
course of events as laid down by Articles 1236 and 1237, must be adequately proven.

The de Guzmans have successfully proven their payment of the spouses Carandangs stock subscriptions. These payments were,
in fact, admitted by the spouses Carandang. Consequently, it is now up to the spouses Carandang to prove the existence of the pre-
incorporation agreement that was their defense to the purported loan.

Unfortunately for the spouses Carandang, the only testimony which touched on the existence and substance of the pre-
incorporation agreement, that of petitioner Arcardio Carandang, was stricken off the record because he did not submit himself to a
cross-examination of the opposing party. On the other hand, the testimonies of Romeo Saavedra, 36 Roberto S.
Carandang,37 Gertrudes Z. Esteban,38 Ceferino Basilio,39 and Ma. Luisa Carandang40touched on matters other than the existence
and substance of the pre-incorporation agreement. So aside from the fact that these witnesses had no personal knowledge as to the
alleged existence of the pre-incorporation agreement, the testimonies of these witnesses did not even mention the existence of a
pre-incorporation agreement.

Worse, the testimonies of petitioners Arcadio Carandang and Ma. Luisa Carandang even contradicted the existence of a pre-
incorporation agreement because when they were asked by their counsel regarding the matter of the check payments made by the
late Quirino A. de Guzman, Sr. in their behalf, they said that they had already paid for it thereby negating their own defense that
there was a pre-incorporation agreement excusing themselves from paying Mr. de Guzman the amounts he advanced or loaned to
them. This basic and irrefutable fact can be gleaned from their testimonies which the private respondents are quoting for easy
reference:
a. With respect to the testimony of Ma. Luisa Carandang

Q: Now, can you tell this Honorable Court how do you feel with respect to the Complaint of the plaintiff in this case charging you that
you paid for this year and asking enough to paid (sic) your tax?

A: We have paid already, so, we are not liable for anything payment (sic).41

b. With respect to the testimony of Arcadio Carandang

"Q: How much?

A: P40,000.00 to P50,000.00 per month.

Q: The plaintiff also claimed thru witness Edgar Ragasa, that there were receipts issued for the payment of your shares; which
receipts were marked as Exhibits "G" to "L" (Plaintiff).

Im showing to you these receipts so marked by the plaintiff as their exhibits which were issued in the name of Ma. Luisa
Carandang, your wife; and also, Arcadio M. Carandang. Will you please go over this Official Receipt and state for the records, who
made for the payment stated in these receipts in your name?

A: I paid for those shares."42

There being no testimony or documentary evidence proving the existence of the pre-incorporation agreement, the spouses
Carandang are forced to rely upon an alleged admission by the original plaintiff of the existence of the pre-incorporation agreement.

Petitioners claim that the late Quirino A. de Guzman, Sr. had admitted the existence of the pre-incorporation agreement by virtue of
paragraphs 13 and 14 of their Answer and paragraph 4 of private respondents Reply.

Paragraphs 13 and 14 of petitioners Answer dated 7 July 1992 state in full:

13. Sometime in November, 1973 or thereabout, herein plaintiff invited defendant Arcadio M. Carandang to a joint venture by pooling
together their technical expertise, equipments, financial resources and franchise. Plaintiff proposed to defendant and mutually
agreed on the following:

1. That they would organize a corporation known as Mabuhay Broadcasting Systems, Inc.

2. Considering the technical expertise and talent of defendant Arcadio M. Carandang and his new equipments he bought,
and his skill in repairing and modifying radio/communication equipments into high proficiency, said defendant would have
an equity participation in the corporation of 46%, and plaintiff 54% because of his financial resources and franchise.

3. That defendant would always maintain his 46% equity participation in the corporation even if the capital structures are
increased, and that plaintiff would personally pay the equity shares/stock subscriptions of defendant with no cost to the
latter.

4. That because of defendants expertise in the trade including the marketing aspects, he would be the President and
General Manager, and plaintiff the Chairman of the Board.

5. That considering their past and trustworthy relations, they would maintain such relations in the joint venture without any
mental reservation for their common benefit and success of the business.

14. Having mutually agreed on the above arrangements, the single proprietorship of plaintiff was immediately spun-off into
a corporation now known as Mabuhay Broadcasting System, Inc. The incorporators are plaintiff and his family
members/nominees controlling jointly 54% of the stocks and defendant Arcadio M. Carandang controlling singly 46% as
previously agreed.43

Meanwhile, paragraphs 3 and 4 of private respondents Reply dated 29 July 1992 state in full:

3. Plaintiffs admits the allegation in paragraph 13.1 of the Answer only insofar the plaintiff and defendant Arcadio M. Carandang
organized a corporation known as Mabuhay Broadcasting Systems, Inc. Plaintiff specifically denies the other allegations in
paragraph 13 of the Answer, the same being devoid of any legal or factual bases. The truth of the matter is that defendant Arcadio
M. Carandang was not able to pay plaintiff the agreed amount of the lease for a number of months forcing the plaintiff to terminate
lease. Additionally, the records would show that it was the defendant Arcadio M. Carandang who proposed a joint venture with the
plaintiff.

It appears that plaintiff agreed to the formation of the corporation principally because of a directive of then President Marcos
indicating the need to broaden the ownership of radio broadcasting stations. The plaintiff owned the franchise, the radio transmitter,
the antenna tower, the building containing the radio transmitter and other equipment. Verily, he would be placed in a great
disadvantage if he would still have to personally pay for the shares of defendant Arcadio M. Carandang.

4. Plaintiff admits the allegations in paragraph 14 of the Answer.44

In effect, the spouses Carandang are relying on the fact that Quirino de Guzman stated that he admitted paragraph 14 of the
Answer, which incidentally contained the opening clause "(h)aving mutually agreed on the above arrangements, x x x."

Admissions, however, should be clear and unambiguous. This purported admission by Quirino de Guzman reeks of ambiguity, as
the clause "(h)aving mutually agreed on the above arrangements," seems to be a mere introduction to the statement that the single
proprietorship of Quirino de Guzman had been converted into a corporation. If Quirino de Guzman had meant to admit paragraph
13.3, he could have easily said so, as he did the other paragraphs he categorically admitted. Instead, Quirino de Guzman expressly
stated the opposite: that "(p)laintiff specifically denies the other allegations of paragraph 13 of the Answer." 45 The Reply furthermore
states that the only portion of paragraph 13 which Quirino de Guzman had admitted is paragraph 13.1, and only insofar as it said
that Quirino de Guzman and Arcardio Carandang organized Mabuhay Broadcasting Systems, Inc.46

All the foregoing considered, we hold that Quirino de Guzman had not admitted the alleged pre-incorporation agreement. As there
was no admission, and as the testimony of Arcardio Carandang was stricken off the record, we are constrained to rule that there
was no pre-incorporation agreement rendering Quirino de Guzman liable for the spouses Carandangs stock subscription. The
payment by the spouses de Guzman of the stock subscriptions of the spouses Carandang are therefore by way of loan which the
spouses Carandang are liable to pay.1wphi1

Whether or not the liability of the spouses Carandang is joint and solidary

Finally, the Court of Appeals also upheld the RTC Decision insofar as it decreed a solidary liability. According to the Court of
Appeals:

With regards (sic) the tenth assigned error, [the spouses Carandang] contend that:

"There is absolutely no evidence, testimonial or documentary, showing that the purported obligation of [the spouses Carandang] is
joint and solidary. x x x

"Furthermore, the purported obligation of [the spouses Carandang] does not at all qualify as one of the obligations required by law to
be solidary x x x."

It is apparent from the facts of the case that [the spouses Carandang] were married way before the effectivity of the Family Code
hence; their property regime is conjugal partnership under the Civil Code.

It must be noted that for marriages governed by the rules of conjugal partnership of gains, an obligation entered into by the husband
and wife is chargeable against their conjugal partnership and it is the partnership, which is primarily bound for its repayment. Thus,
when the spouses are sued for the enforcement of the obligation entered into by them, they are being impleaded in their capacity as
representatives of the conjugal partnership and not as independent debtors, such that the concept of joint and solidary liability, as
between them, does not apply.47

The Court of Appeals is correct insofar as it held that when the spouses are sued for the enforcement of the obligation entered into
by them, they are being impleaded in their capacity as representatives of the conjugal partnership and not as independent debtors.
Hence, either of them may be sued for the whole amount, similar to that of a solidary liability, although the amount is chargeable
against their conjugal partnership property. Thus, in the case cited by the Court of Appeals, Alipio v. Court of Appeals, 48 the two sets
of defendant-spouses therein were held liable for P25,300.00 each, chargeable to their respective conjugal partnerships.

WHEREFORE, the Decision of the Court of Appeals, affirming the judgment rendered against the spouses Carandang, is hereby
AFFIRMED with the following MODIFICATION: The spouses Carandang are ORDERED to pay the following amounts from their
conjugal partnership properties:

(1) P336,375.00 representing the spouses Carandangs loan to Quirino de Guzman; and
 (2) Interest on the preceding amount at the rate of twelve percent (12%) per annum from 5 June 1992 when the complaint
was filed until the principal amount can be fully paid; and

(3) P20,000.00 as attorneys fees.

No costs.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-66620 September 24, 1986

REMEDIO V. FLORES, petitioner,

vs.
HON. JUDGE HEILIA S. MALLARE-PHILLIPPS, IGNACIO BINONGCAL & FERNANDO CALION, respondents.

Lucio A. Dixon for respondent F. Calion.

FERIA, J.:
The Court rules that the application of the totality rule under Section 33(l) of Batas Pambansa Blg. 129 and Section 11 of the Interim
Rules is subject to the requirements for the permissive joinder of parties under Section 6 of Rule 3 which provides as follows:

Permissive joinder of parties.-All persons in whom or against whom any right to relief in respect to or arising out
of the same transaction or series of transactions is alleged to exist, whether jointly, severally, or in the
alternative, may, except as otherwise provided in these rules, join as plaintiffs or be joined as defendants in one
complaint, where any question of law or fact common to all such plaintiffs or to all such defendants may arise in
the action; but the court may make such orders as may be just to prevent any plaintiff or defendant from being
embarrassed or put to expense in connection with any proceedings in which he may have no interest.

Petitioner has appealed by certiorari from the order of Judge Heilia S. Mallare-Phillipps of the Regional Trial Court of Baguio City
and Benguet Province which dismissed his complaint for lack of jurisdiction. Petitioner did not attach to his petition a copy of his
complaint in the erroneous belief that the entire original record of the case shall be transmitted to this Court pursuant to the second
paragraph of Section 39 of BP129. This provision applies only to ordinary appeals from the regional trial court to the Court of
Appeals (Section 20 of the Interim Rules). Appeals to this Court by petition for review on certiorari are governed by Rule 45 of the
Rules of Court (Section 25 of the Interim Rules).

However, the order appealed from states that the first cause of action alleged in the complaint was against respondent Ignacio
Binongcal for refusing to pay the amount of P11,643.00 representing cost of truck tires which he purchased on credit from petitioner
on various occasions from August to October, 1981; and the second cause of action was against respondent Fernando Calion for
allegedly refusing to pay the amount of P10,212.00 representing cost of truck tires which he purchased on credit from petitioner on
several occasions from March, 1981 to January, 1982.

On December 15, 1983, counsel for respondent Binongcal filed a Motion to Dismiss on the ground of lack of jurisdiction since the
amount of the demand against said respondent was only P11,643.00, and under Section 19(8) of BP129 the regional trial court shall
exercise exclusive original jurisdiction if the amount of the demand is more than twenty thousand pesos (P20,000.00). It was further
averred in said motion that although another person, Fernando Calion, was allegedly indebted to petitioner in the amount of
P10,212.00, his obligation was separate and distinct from that of the other respondent. At the hearing of said Motion to Dismiss,
counsel for respondent Calion joined in moving for the dismissal of the complaint on the ground of lack of jurisdiction. Counsel for
petitioner opposed the Motion to Dismiss. As above stated, the trial court dismissed the complaint for lack of jurisdiction.

Petitioner maintains that the lower court has jurisdiction over the case following the "novel" totality rule introduced in Section 33(l) of
BP129 and Section 11 of the Interim Rules.

The pertinent portion of Section 33(l) of BP129 reads as follows:

... Provided,That where there are several claims or causes of action between the same or different parties,
embodied in the same complaint, the amount of the demand shall be the totality of the claims in all the causes
of action, irrespective of whether the causes of action arose out of the same or different transactions. ...

Section 11 of the Interim Rules provides thus:

Application of the totality rule.-In actions where the jurisdiction of the court is dependent on the amount
involved, the test of jurisdiction shall be the aggregate sum of all the money demands, exclusive only of interest
and costs, irrespective of whether or not the separate claims are owned by or due to different parties. If any
demand is for damages in a civil action, the amount thereof must be specifically alleged.

Petitioner compares the above-quoted provisions with the pertinent portion of the former rule under Section 88 of the Judiciary Act of
1948 as amended which reads as follows:

... Where there are several claims or causes of action between the same parties embodied in the same
complaint, the amount of the demand shall be the totality of the demand in all the causes of action, irrespective
of whether the causes of action arose out of the same or different transactions; but where the claims or causes
of action joined in a single complaint are separately owned by or due to different parties, each separate claim
shall furnish the jurisdictional test. ...

and argues that with the deletion of the proviso in the former rule, the totality rule was reduced to clarity and brevity and the
jurisdictional test is the totality of the claims in all, not in each, of the causes of action, irrespective of whether the causes of action
arose out of the same or different transactions.

This argument is partly correct. There is no difference between the former and present rules in cases where a plaintiff sues a
defendant on two or more separate causes of action. In such cases, the amount of the demand shall be the totality of the claims in
all the causes of action irrespective of whether the causes of action arose out of the same or different transactions. If the total
demand exceeds twenty thousand pesos, then the regional trial court has jurisdiction. Needless to state, if the causes of action are
separate and independent, their joinder in one complaint is permissive and not mandatory, and any cause of action where the
amount of the demand is twenty thousand pesos or less may be the subject of a separate complaint filed with a metropolitan or
municipal trial court.

On the other hand, there is a difference between the former and present rules in cases where two or more plaintiffs having separate
causes of action against a defendant join in a single complaint. Under the former rule, "where the claims or causes of action joined
in a single complaint are separately owned by or due to different parties, each separate claim shall furnish the jurisdictional test"
(Section 88 of the Judiciary Act of 1948 as amended, supra). This was based on the ruling in the case of Vda. de Rosario vs. Justice
of the Peace, 99 Phil. 693. As worded, the former rule applied only to cases of permissive joinder of parties plaintiff. However, it was
also applicable to cases of permissive joinder of parties defendant, as may be deduced from the ruling in the case of Brillo vs.
Buklatan, thus:

Furthermore, the first cause of action is composed of separate claims against several defendants of different
amounts each of which is not more than P2,000 and falls under the jurisdiction of the justice of the peace court
under section 88 of Republic Act No, 296. The several claims do not seem to arise from the same transaction or
series of transactions and there seem to be no questions of law or of fact common to all the defendants as may
warrant their joinder under Rule 3, section 6. Therefore, if new complaints are to be filed in the name of the real
party in interest they should be filed in the justice of the peace court. (87 Phil. 519, 520, reiterated in Gacula vs.
Martinez, 88 Phil. 142, 146)

Under the present law, the totality rule is applied also to cases where two or more plaintiffs having separate causes of action against
a defendant join in a single complaint, as well as to cases where a plaintiff has separate causes of action against two or more
defendants joined in a single complaint. However, the causes of action in favor of the two or more plaintiffs or against the two or
more defendants should arise out of the same transaction or series of transactions and there should be a common question of law
or fact, as provided in Section 6 of Rule 3.

The difference between the former and present rules in cases of permissive joinder of parties may be illustrated by the two cases
which were cited in the case of Vda. de Rosario vs. Justice of the Peace (supra) as exceptions to the totality rule. In the case of
Soriano y Cia vs. Jose (86 Phil. 523), where twenty-nine dismissed employees joined in a complaint against the defendant to collect
their respective claims, each of which was within the jurisdiction of the municipal court although the total exceeded the jurisdictional
amount, this Court held that under the law then the municipal court had jurisdiction. In said case, although the plaintiffs' demands
were separate, distinct and independent of one another, their joint suit was authorized under Section 6 of Rule 3 and each separate
claim furnished the jurisdictional test. In the case of International Colleges, Inc. vs. Argonza (90 Phil. 470), where twenty-five
dismissed teachers jointly sued the defendant for unpaid salaries, this Court also held that the municipal court had jurisdiction
because the amount of each claim was within, although the total exceeded, its jurisdiction and it was a case of permissive joinder of
parties plaintiff under Section 6 of Rule 3.

Under the present law, the two cases above cited (assuming they do not fall under the Labor Code) would be under the jurisdiction
of the regional trial court. Similarly, in the abovecited cases of Brillo vs. Buklatan and Gacula vs. Martinez (supra), if the separate
claims against the several defendants arose out of the same transaction or series of transactions and there is a common question of
law or fact, they would now be under the jurisdiction of the regional trial court.

In other words, in cases of permissive joinder of parties, whether as plaintiffs or as defendants, under Section 6 of Rule 3, the total
of all the claims shall now furnish the jurisdictional test. Needless to state also, if instead of joining or being joined in one complaint
separate actions are filed by or against the parties, the amount demanded in each complaint shall furnish the jurisdictional test.

In the case at bar, the lower court correctly held that the jurisdictional test is subject to the rules on joinder of parties pursuant to
Section 5 of Rule 2 and Section 6 of Rule 3 of the Rules of Court and that, after a careful scrutiny of the complaint, it appears that
there is a misjoinder of parties for the reason that the claims against respondents Binongcal and Calion are separate and distinct
and neither of which falls within its jurisdiction.

WHEREFORE, the order appealed from is affirmed, without pronouncement as to costs.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 173946 June 19, 2013

BOSTON EQUITY RESOURCES, INC., Petitioner,

vs.
COURT OF APPEALS AND LOLITA G. TOLEDO, Respondents.

DECISION

PEREZ, J.:

Before the Court is a Petition for Review on Certiorari seeking to reverse and set aside: (1) the Decision, 1 dated 28 February 2006
and (2) the Resolution,2 dated 1 August 2006 of the Court of Appeals in CA-G.R. SP No. 88586. The challenged decision granted
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.3 Based on this finding, the Court of Appeals reversed and set aside the
Orders, dated 8 November 20044 and 22 December 2004,5respectively, of the Regional Trial Court (RTC) of Manila, Branch 24.

The Facts
On 24 December 1997, 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. 6 Herein respondent filed an Answer dated 19 March 1998 but on 7 May
1998, she filed a Motion for Leave to Admit Amended Answer 7 in which she alleged, among others, that her husband and co-
defendant, Manuel Toledo (Manuel), is already dead.8 The death certificate9 of Manuel states "13 July 1995" as the date of death. As
a result, petitioner filed a motion, dated 5 August 1999, to require respondent to disclose the heirs of Manuel. 10 In compliance with
the verbal order of the court during the 11 October 1999 hearing of the case, respondent submitted the required names and
addresses of the heirs.11 Petitioner then filed a Motion for Substitution, 12 dated 18 January 2000, praying that Manuel be substituted
by his children as party-defendants. It appears that this motion was granted by the trial court in an Order dated 9 October 2000. 13

Pre-trial thereafter ensued and on 18 July 2001, the trial court issued its pre-trial order containing, among others, the dates of
hearing of the case.14

The trial of the case then proceeded. Herein petitioner, as plaintiff, presented its evidence and its exhibits were thereafter admitted.

On 26 May 2004, the reception of evidence for herein respondent was cancelled upon agreement of the parties. On 24 September
2004, counsel for herein respondent was given a period of fifteen days within which to file a demurrer to evidence. 15 However, on 7
October 2004, respondent instead filed a motion to dismiss the complaint, citing the following as grounds: (1) that the complaint
failed to implead an indispensable party or a real party in interest; hence, the case must be dismissed for failure to state a cause of
action; (2) that the trial court did not acquire jurisdiction over the person of Manuel pursuant to Section 5, Rule 86 of the Revised
Rules of Court; (3) that the trial court erred in ordering the substitution of the deceased Manuel by his heirs; and (4) that the court
must also dismiss the case against Lolita Toledo in accordance with Section 6, Rule 86 of the Rules of Court. 16

The trial court, in an Order dated 8 November 2004, denied the motion to dismiss for having been filed out of time, citing Section 1,
Rule 16 of the 1997 Rules of Court which states that: "Within the time for but before filing the answer to the complaint or pleading
asserting a claim, a motion to dismiss may be made x x x." 17 Respondents 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.18

Aggrieved, respondent filed a petition for certiorari with the Court of Appeals alleging that the trial court seriously erred and gravely
abused its discretion in denying her motion to dismiss despite discovery, during the trial of the case, of evidence that would
constitute a ground for dismissal of the case.19

The Court of Appeals granted the petition based on the following grounds:

It is elementary that courts acquire jurisdiction over the person of the defendant x x x only when the latter voluntarily appeared or
submitted to the court or by coercive process issued by the court to him, x x x. In this case, it is undisputed that when petitioner
Boston filed the complaint on December 24, 1997, defendant Manuel S. Toledo was already dead, x x x. Such being the case, the
court a quo could not have acquired jurisdiction over the person of defendant Manuel S. Toledo.

x x x the court a quos denial of respondents motion to dismiss was based on its finding that respondents attack on the jurisdiction
of the court was already barred by laches as respondent failed to raise the said ground in its [sic] amended answer and during the
pre-trial, despite her active participation in the proceedings.

However, x x x it is well-settled that issue on jurisdiction may be raised at any stage of the proceeding, even for the first time on
appeal. By timely raising the issue on jurisdiction in her motion to dismiss x x x respondent is not estopped from raising the question
on jurisdiction.

Moreover, when issue on jurisdiction was raised by respondent, the court a quo had not yet decided the case, hence, there is no
basis for the court a quo to invoke estoppel to justify its denial of the motion for reconsideration;

It should be stressed that when the complaint was filed, defendant Manuel S. Toledo was already dead. The complaint should have
impleaded the estate of Manuel S. Toledo as defendant, not only the wife, considering that the estate of Manuel S. Toledo is an
indispensable party, which stands to be benefited or be injured in the outcome of the case. x x x

xxxx

Respondents motion to dismiss the complaint should have been granted by public respondent judge as the same was in order.
Considering that the obligation of Manuel S. Toledo is solidary with another debtor, x x x, the claim x x x should be filed against the
estate of Manuel S. Toledo, in conformity with the provision of Section 6, Rule 86 of the Rules of Court, x x x. 20

The Court of Appeals denied petitioners motion for reconsideration. Hence, this petition.
The Issues

Petitioner claims that the Court of Appeals erred in not holding that:

1. Respondent is already estopped from questioning the trial courts jurisdiction;

2. Petitioner never failed to implead an indispensable party as the estate of Manuel is not an indispensable party;

3. The inclusion of Manuel as party-defendant is a mere misjoinder of party not warranting the dismissal of the case
before the lower court; and

4. Since the estate of Manuel is not an indispensable party, it is not necessary that petitioner file its claim against the
estate of Manuel.

In essence, what is at issue here is the correctness of the trial courts orders denying respondents motion to dismiss.

The Ruling of the Court

We find merit in the petition.

Motion to dismiss filed out of time

To begin with, the Court of Appeals 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. 21 Therefore, "the proper remedy in such a case is
to appeal after a decision has been rendered."22

As the Supreme Court held in Indiana Aerospace University v. Comm. on Higher Education: 23

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. (Emphasis supplied)

Even assuming that certiorari is the proper remedy, the trial court did not commit grave abuse of discretion in denying respondents
motion to dismiss. It, in fact, acted correctly when it issued the questioned orders as respondents 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.24

More importantly, respondents motion to dismiss was filed after petitioner has completed the presentation of its evidence in the trial
court, giving credence to petitioners and the trial courts conclusion that the filing of the motion to dismiss was a mere ploy on the
part of respondent to delay the prompt resolution of the case against her.

Also worth mentioning is the fact that respondents motion to dismiss under consideration herein is not the first motion to dismiss
she filed in the trial court. It appears that she had filed an earlier motion to dismiss 26 on the sole ground of the unenforceability of
petitioners claim under the Statute of Frauds, which motion was denied by the trial court. More telling is the following narration of
the trial court in its Order denying respondents motion for reconsideration of the denial of her motion to dismiss:

As can be gleaned from the records, with the admission of plaintiffs exhibits, reception of defendants evidence was set on March
31, and April 23, 2004 x x x . On motion of the defendants, the hearing on March 31, 2004 was cancelled.

On April 14, 2004, defendants sought the issuance of subpoena ad testificandum and duces tecum to one Gina M. Madulid, to
appear and testify for the defendants on April 23, 2004. Reception of defendants evidence was again deferred to May 26, June 2
and June 30, 2004, x x x.

On May 13, 2004, defendants sought again the issuance of a subpoena duces tecum and ad testificandum to the said Gina
Madulid. On May 26, 2004, reception of defendants [sic] evidence was cancelled upon the agreement of the parties. On July 28,
2004, in the absence of defendants witness, hearing was reset to September 24 and October 8, 2004 x x x.
On September 24, 2004, counsel for defendants was given a period of fifteen (15) days to file a demurrer to evidence. On October
7, 2004, defendants filed instead a Motion to Dismiss x x x.27

Respondents act of filing multiple motions, such as the first and earlier motion to dismiss and then the motion to dismiss at issue
here, as well as several motions for postponement, lends credibility to the position taken by petitioner, which is shared by the trial
court, that respondent is

deliberately impeding the early disposition of this case. The filing of the second motion to dismiss was, therefore, "not only improper
but also dilatory."28 Thus, the trial court, "far from deviating or straying off course from established jurisprudence on the matter, x x x
had in fact faithfully observed the law and legal precedents in this case." 29 The Court of Appeals, therefore, erred not only in
entertaining respondents petition for certiorari, it likewise erred in ruling that the trial court committed grave abuse of discretion
when it denied respondents motion to dismiss.

On whether or not respondent is estopped from

questioning the jurisdiction of the trial court

At the outset, it must be here stated that, as the succeeding discussions will demonstrate, jurisdiction over the person of Manuel
should not be an issue in this case. A protracted discourse on jurisdiction is, nevertheless, demanded by the fact that jurisdiction has
been raised as an issue from the lower court, to the Court of Appeals and, finally, before this Court. For the sake of clarity, and in
order to finally settle the controversy and fully dispose of all the issues in this case, it was deemed imperative to resolve the issue of
jurisdiction.

1. Aspects of Jurisdiction

Petitioner calls attention to the fact that respondents motion to dismiss questioning the trial courts jurisdiction was filed more than
six years after her amended answer was filed. According to petitioner, respondent had several opportunities, at various stages of the
proceedings, to assail the trial courts jurisdiction but never did so for six straight years. Citing the doctrine laid down in the case of
Tijam, et al. v. Sibonghanoy, et al. 30 petitioner claimed that respondents failure to raise the question of jurisdiction at an earlier stage
bars her from later questioning it, especially since she actively participated in the proceedings conducted by the trial court.

Petitioners argument is misplaced, in that, it failed to consider that the concept of jurisdiction has several aspects, namely: (1)
jurisdiction over the subject matter; (2) jurisdiction over the parties; (3) jurisdiction over the issues of the case; and (4) in cases
involving property, jurisdiction over the res or the thing which is the subject of the litigation. 31

The aspect of jurisdiction which may be barred from being assailed as a result of estoppel by laches is jurisdiction over the subject
matter. Thus, in Tijam, the case relied upon by petitioner, the issue involved was the authority of the then Court of First Instance to
hear a case for the collection of a sum of money in the amount of P1,908.00 which amount was, at that time, within the exclusive
original jurisdiction of the municipal courts.

In subsequent cases citing the ruling of the Court in Tijam, what was likewise at issue was the jurisdiction of the trial court over the
subject matter of the case. Accordingly, in Spouses Gonzaga v. Court of Appeals, 32 the issue for consideration was the authority of
the regional trial court to hear and decide an action for reformation of contract and damages involving a subdivision lot, it being
argued therein that jurisdiction is vested in the Housing and Land Use Regulatory Board pursuant to PD 957 (The Subdivision and
Condominium Buyers Protective Decree). In Lee v. Presiding Judge, MTC, Legaspi City,33 petitioners argued that the respondent
municipal trial court had no jurisdiction over the complaint for ejectment because the issue of ownership was raised in the pleadings.
Finally, in People v. Casuga, 34 accused-appellant claimed that the crime of grave slander, of which she was charged, falls within the
concurrent jurisdiction of municipal courts or city courts and the then courts of first instance, and that the judgment of the court of
first instance, to which she had appealed the municipal court's conviction, should be deemed null and void for want of jurisdiction as
her appeal should have been filed with the Court of Appeals or the Supreme Court.

In all of these cases, the Supreme Court barred the attack on the jurisdiction of the respective courts concerned over the subject
matter of the case based on estoppel by laches, declaring that parties cannot be allowed to belatedly adopt an inconsistent posture
by attacking the jurisdiction of a court to which they submitted their cause voluntarily.35

Here, what respondent was questioning in her motion to dismiss before the trial court was that courts jurisdiction over the person of
defendant Manuel. Thus, the principle of estoppel by laches finds no application in this case. Instead, the principles relating to
jurisdiction over the person of the parties are pertinent herein.

The Rules of Court provide:

RULE 9
EFFECT OF FAILURE TO PLEAD
Section 1. Defenses and objections not pleaded. Defenses and objections not pleaded either in a motion to dismiss or in the
answer are deemed waived. However, when it appears from the pleadings or the evidence on record that the court has no
jurisdiction over the subject matter, that there is another action pending between the same parties for the same cause, or that the
action is barred by a prior judgment or by statute of limitations, the court shall dismiss the claim.

RULE 15
MOTIONS

Sec. 8. Omnibus motion. Subject to the provisions of Section 1 of Rule 9, a motion attacking a pleading, order, judgment, or
proceeding shall include all objections then available, and all objections not so included shall be deemed waived.

Based on the foregoing provisions, the "objection on jurisdictional grounds which is not waived even if not alleged in a motion to
dismiss or the answer is lack of jurisdiction over the subject matter. x x x Lack of jurisdiction over the subject matter can always be
raised anytime, even for the first time on appeal, since jurisdictional issues cannot be waived x x x subject, however, to the principle
of estoppel by laches."36

Since the defense of lack of jurisdiction over the person of a party to a case is not one of those defenses which are not deemed
waived under Section 1 of Rule 9, such defense must be invoked when an answer or a motion to dismiss is filed in order to prevent
a waiver of the defense.37 If the objection is not raised either in a motion to dismiss or in the answer, the objection to the jurisdiction
over the person of the plaintiff or the defendant is deemed waived by virtue of the first sentence of the above-quoted Section 1 of
Rule 9 of the Rules of Court.38

The Court of Appeals, therefore, erred when it made a sweeping pronouncement in its questioned decision, stating that "issue on
jurisdiction may be raised at any stage of the proceeding, even for the first time on appeal" and that, therefore, respondent timely
raised the issue in her motion to dismiss and is, consequently, not estopped from raising the question of jurisdiction. As the question
of jurisdiction involved here is that over the person of the defendant Manuel, the same is deemed waived if not raised in the answer
or a motion to dismiss. In any case, respondent cannot claim the defense since "lack of jurisdiction over the person, being subject to
waiver, is a personal defense which can only be asserted by the party who can thereby waive it by silence." 39

2. Jurisdiction over the person of a defendant is acquired through a valid service of summons; trial court did not acquire jurisdiction
over the person of Manuel Toledo

In the first place, jurisdiction over the person of Manuel was never acquired by the trial court. A defendant is informed of a case
against him when he receives summons. "Summons is a writ by which the defendant is notified of the action brought against him.
Service of such writ is the means by which the court acquires jurisdiction over his person." 40

In the case at bar, the trial court did not acquire jurisdiction over the person of Manuel since there was no valid service of summons
upon him, precisely because he was already dead even before the complaint against him and his wife was filed in the trial court. The
issues presented in this case are similar to those in the case of Sarsaba v. Vda. de Te.41

In Sarsaba, the NLRC rendered a decision declaring that Patricio Sereno was illegally dismissed from employment and ordering the
payment of his monetary claims. To satisfy the claim, a truck in the possession of Serenos employer was levied upon by a sheriff of
the NLRC, accompanied by Sereno and his lawyer, Rogelio Sarsaba, the petitioner in that case. A complaint for recovery of motor
vehicle and damages, with prayer for the delivery of the truck pendente lite was eventually filed against Sarsaba, Sereno, the NLRC
sheriff and the NLRC by the registered owner of the truck. After his motion to dismiss was denied by the trial court, petitioner
Sarsaba filed his answer. Later on, however, he filed an omnibus motion to dismiss citing, as one of the grounds, lack of jurisdiction
over one of the principal defendants, in view of the fact that Sereno was already dead when the complaint for recovery of
possession was filed.

Although the factual milieu of the present case is not exactly similar to that of Sarsaba, one of the issues submitted for resolution in
both cases is similar: whether or not a case, where one of the named defendants was already dead at the time of its filing, should be
dismissed so that the claim may be pursued instead in the proceedings for the settlement of the estate of the deceased defendant.
The petitioner in the Sarsaba Case claimed, as did respondent herein, that since one of the defendants died before summons was
served on him, the trial court should have dismissed the complaint against all the defendants and the claim should be filed against
the estate of the deceased defendant. The petitioner in Sarsaba, therefore, prayed that the complaint be dismissed, not only against
Sereno, but as to all the defendants, considering that the RTC did not acquire jurisdiction over the person of Sereno. 42 This is
exactly the same prayer made by respondent herein in her motion to dismiss.

The Court, in the Sarsaba Case, resolved the issue in this wise:

x x x We cannot countenance petitioners argument that the complaint against the other defendants should have been dismissed,
considering that the RTC never acquired jurisdiction over the person of Sereno. The courts failure to acquire jurisdiction over ones
person is a defense which is personal to the person claiming it. Obviously, it is now impossible for Sereno to invoke the same in
view of his death. Neither can petitioner invoke such ground, on behalf of Sereno, so as to reap the benefit of having the case
dismissed against all of the defendants. Failure to serve summons on Serenos person will not be a cause for the dismissal of the
complaint against the other defendants, considering that they have been served with copies of the summons and complaints and
have long submitted their respective responsive pleadings. In fact, the other defendants in the complaint were given the chance to
raise all possible defenses and objections personal to them in their respective motions to dismiss and their subsequent
answers.43 (Emphasis supplied.)

Hence, the Supreme Court affirmed the dismissal by the trial court of the complaint against Sereno only.

Based on the foregoing pronouncements, there is no basis for dismissing the complaint against respondent herein. Thus, as already
emphasized above, the trial court correctly denied her motion to dismiss.

On whether or not the estate of Manuel

Toledo is an indispensable party

Rule 3, Section 7 of the 1997 Rules of Court states:

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 who has such an interest in the controversy or subject matter of a case that a final adjudication cannot
be made in his or her absence, without injuring or affecting that interest. He or she is a party who has not only an interest in the
subject matter of the controversy, but "an interest of such nature that a final decree cannot be made without affecting that interest or
leaving the controversy in such a condition that its final determination may be wholly inconsistent with equity and good conscience.
It has also been considered that an indispensable party is a person in whose absence there cannot be a determination between the
parties already before the court which is effective, complete or equitable." Further, an indispensable party is one who must be
included in an action before it may properly proceed.44

On the other hand, a "person is not an indispensable party if his interest in the controversy or subject matter is separable from the
interest of the other parties, so that it will not necessarily be directly or injuriously affected by a decree which does complete justice
between them. Also, a person is not an indispensable party if his presence would merely permit complete relief between him or her
and those already parties to the action, or if he or she has no interest in the subject matter of the action." It is not a sufficient reason
to declare a person to be an indispensable party simply because his or her presence will avoid multiple litigations. 45

Applying the foregoing pronouncements to the case at bar, it is clear that the estate of Manuel is not an indispensable party to the
collection case, for the simple reason that the obligation of Manuel and his wife, respondent herein, is solidary.

The contract between petitioner, on the one hand and respondent and respondents husband, on the other, states:

FOR VALUE RECEIVED, I/We jointly and severally46 (in solemn) promise to pay BOSTON EQUITY RESOURCES, INC. x x x the
sum of PESOS: [ONE MILLION FOUR HUNDRED (P1,400,000.00)] x x x.47

The provisions and stipulations of the contract were then followed by the respective signatures of respondent as "MAKER" and her
husband as "CO-MAKER."48 Thus, pursuant to Article 1216 of the Civil Code, petitioner may collect the entire amount of the
obligation from respondent only. The aforementioned provision states: "The creditor may proceed against any one of the solidary
debtors or some or all of them simultaneously. The demand made against one of them shall not be an obstacle to those which may
subsequently be directed against the others, so long as the debt has not been fully collected."

In other words, the collection case can proceed and the demands of petitioner can be satisfied by respondent only, even without
impleading the estate of Manuel. Consequently, the estate of Manuel is not an indispensable party to petitioners complaint for sum
of money.

However, the Court of Appeals, agreeing with the contention of respondent, held that the claim of petitioner should have been filed
against the estate of Manuel in accordance with Sections 5 and 6 of Rule 86 of the Rules of Court. The aforementioned provisions
provide:

SEC. 5. Claims which must be filed under the notice. If not filed, barred; exceptions. All claims for money against the decedent,
arising from contract, express or implied, whether the same be due, not due, or contingent, all claims for funeral expenses and
judgment for money against the decedent, must be filed within the time limited in the notice; otherwise, they are barred forever,
except that they may be set forth as counterclaims in any action that the executor or administrator may bring against the claimants.
x x x.
SEC. 6. Solidary obligation of decedent. Where the obligation of the decedent is solidary with another debtor, the claim shall be filed
against the decedent as if he were the only debtor, without prejudice to the right of the estate to recover contribution from the other
debtor. x x x.

The Court of Appeals erred in its interpretation of the above-quoted provisions.

In construing Section 6, Rule 87 of the old Rules of Court, the precursor of Section 6, Rule 86 of the Revised Rules of Court, which
latter provision has been retained in the present Rules of Court without any revisions, the Supreme Court, in the case of Manila
Surety & Fidelity Co., Inc. v. Villarama, et. al.,49 held:50

Construing Section 698 of the Code of Civil Procedure from whence [Section 6, Rule 87] was taken, this Court held that where two
persons are bound in solidum for the same debt and one of them dies, the whole indebtedness can be proved against the estate of
the latter, the decedents liability being absolute and primary; x x x. It is evident from the foregoing that Section 6 of Rule 87 provides
the procedure should the creditor desire to go against the deceased debtor, but there is certainly nothing in the said provision
making compliance with such procedure a condition precedent before an ordinary action against the surviving solidary debtors,
should the creditor choose to demand payment from the latter, could be entertained to the extent that failure to observe the same
would deprive the court jurisdiction to take cognizance of the action against the surviving debtors. Upon the other hand, the Civil
Code expressly allows the creditor to proceed against any one of the solidary debtors or some or all of them simultaneously. There
is, therefore, nothing improper in the creditors filing of an action against the surviving solidary debtors alone, instead of instituting a
proceeding for the settlement of the estate of the deceased debtor wherein his claim could be filed.

The foregoing ruling was reiterated and expounded in the later case of Philippine National Bank v. Asuncion 51where the Supreme
Court pronounced:

A cursory perusal of Section 6, Rule 86 of the Revised Rules of Court reveals that nothing therein prevents a creditor from
proceeding against the surviving solidary debtors. Said provision merely sets up the procedure in enforcing collection in case a
creditor chooses to pursue his claim against the estate of the deceased solidary debtor. The rule has been set forth that a creditor
(in a solidary obligation) has the option whether to file or not to file a claim against the estate of the solidary debtor. x x x

xxxx

It is crystal clear that Article 1216 of the New Civil Code is the applicable provision in this matter. Said provision gives the creditor
the right to "proceed against anyone of the solidary debtors or some or all of them simultaneously." The choice is undoubtedly left to
the solidary creditor to determine against whom he will enforce collection. In case of the death of one of the solidary debtors, he (the
creditor) may, if he so chooses, proceed against the surviving solidary debtors without necessity of filing a claim in the estate of the
deceased debtors. It is not mandatory for him to have the case dismissed as against the surviving debtors and file its claim against
the estate of the deceased solidary debtor, x x x. For to require the creditor to proceed against the estate, making it a condition
precedent for any collection action against the surviving debtors to prosper, would deprive him of his substantive rightsprovided by
Article 1216 of the New Civil Code. (Emphasis supplied.)

As correctly argued by petitioner, if Section 6, Rule 86 of the Revised Rules of Court were applied literally, Article 1216 of the New
Civil Code would, in effect, be repealed since under the Rules of Court, petitioner has no choice but to proceed against the estate of
[the deceased debtor] only. Obviously, this provision diminishes the [creditors] right under the New Civil Code to proceed against
any one, some or all of the solidary debtors. Such a construction is not sanctioned by principle, which is too well settled to require
citation, that a substantive law cannot be amended by a procedural rule. Otherwise stated, Section 6, Rule 86 of the Revised Rules
of Court cannot be made to prevail over Article 1216 of the New Civil Code, the former being merely procedural, while the latter,
substantive.

Based on the foregoing, the estate of Manuel is not an indispensable party and the case can proceed as against respondent only.
That petitioner opted to collect from respondent and not from the estate of Manuel is evidenced by its opposition to respondents
motion to dismiss asserting that the case, as against her, should be dismissed so that petitioner can proceed against the estate of
Manuel.

On whether or not the inclusion of Manuel as

party defendant is a misjoinder of party

Section 11 of Rule 3 of the Rules of Court states that "neither misjoinder nor non-joinder of parties is ground for dismissal of an
action. Parties may be dropped or added by order of the court on motion of any party or on its own initiative at any stage of the
action and on such terms as are just. Any claim against a misjoined party may be severed and proceeded with separately."

Based on the last sentence of the afore-quoted provision of law, a misjoined party must have the capacity to sue or be sued in the
event that the claim by or against the misjoined party is pursued in a separate case. In this case, therefore, the inclusion of Manuel
in the complaint cannot be considered a misjoinder, as in fact, the action would have proceeded against him had he been alive at
the time the collection case was filed by petitioner. This being the case, the remedy provided by Section 11 of Rule 3 does not obtain
here. The name of Manuel as party-defendant cannot simply be dropped from the case. Instead, the procedure taken by the Court in
Sarsaba v. Vda. de Te,52whose facts, as mentioned earlier, resemble those of this case, should be followed herein. There, the
Supreme Court agreed with the trial court when it resolved the issue of jurisdiction over the person of the deceased Sereno in this
wise:

As correctly pointed by defendants, the Honorable Court has not acquired jurisdiction over the person of Patricio Sereno since there
was indeed no valid service of summons insofar as Patricio Sereno is concerned. Patricio Sereno died before the summons,
together with a copy of the complaint and its annexes, could be served upon him.

However, the failure to effect service of summons unto Patricio Sereno, one of the defendants herein, does not render the action
DISMISSIBLE, considering that the three (3) other defendants, x x x, were validly served with summons and the case with respect to
the answering defendants may still proceed independently. Be it recalled that the three (3) answering defendants have previously
filed a Motion to Dismiss the Complaint which was denied by the Court.

Hence, only the case against Patricio Sereno will be DISMISSED and the same may be filed as a claim against the estate of Patricio
Sereno, but the case with respect to the three (3) other accused [sic] will proceed. (Emphasis supplied.) 53

As a result, the case, as against Manuel, must be dismissed.

In addition, the dismissal of the case against Manuel is further warranted by Section 1 of Rule 3 of the Rules of Court, which states
that: only natural or juridical persons, or entities authorized by law may be parties in a civil action." Applying this provision of law, the
Court, in the case of Ventura v. Militante,54 held:

Parties may be either plaintiffs or defendants. x x x. In order to maintain an action in a court of justice, the plaintiff must have an
actual legal existence, that is, he, she or it must be a person in law and possessed of a legal entity as either a natural or an artificial
person, and no suit can be lawfully prosecuted save in the name of such a person.

The rule is no different as regards party defendants. It is incumbent upon a plaintiff, when he institutes a judicial proceeding, to
name the proper party defendant to his cause of action. In a suit or proceeding in personam of an adversary character, the court can
acquire no jurisdiction for the purpose of trial or judgment until a party defendant who actually or legally exists and is legally capable
of being sued, is brought before it. It has even been held that the question of the legal personality of a party defendant is a question
of substance going to the jurisdiction of the court and not one of procedure.

The original complaint of petitioner named the "estate of Carlos Ngo as represented by surviving spouse Ms. Sulpicia Ventura" as
the defendant.1wphi1 Petitioner moved to dismiss the same on the ground that the defendant as named in the complaint had no
legal personality. We agree.

x x x. Considering that capacity to be sued is a correlative of the capacity to sue, to the same extent, a decedent does not have the
capacity to be sued and may not be named a party defendant in a court action. (Emphases supplied.)

Indeed, where the defendant is neither a natural nor a juridical person or an entity authorized by law, the complaint may be
dismissed on the ground that the pleading asserting the claim states no cause of action or for failure to state a cause of action
pursuant to Section 1(g) of Rule 16 of the Rules of Court, because a complaint cannot possibly state a cause of action against one
who cannot be a party to a civil action.55

Since the proper course of action against the wrongful inclusion of Manuel as party-defendant is the dismissal of the case as against
him, thus did the trial court err when it ordered the substitution of Manuel by his heirs. Substitution is proper only where the party to
be substituted died during the pendency of the case, as expressly provided for by Section 16, Rule 3 of the Rules of Court, which
states:

Death of party;duty of counsel. Whenever a party to a pending action dies, and the claim is not thereby extinguished, it shall be
the duty of his counsel to inform the court within thirty (30) days after such death of the fact thereof, and to give the name and
address of his legal representative or representatives. x x x

The heirs of the deceased may be allowed to be substituted for the deceased, without requiring the appointment of an executor or
administrator x x x.

The court shall forthwith order said legal representative or representatives to appear and be substituted within a period of thirty (30)
days from notice. (Emphasis supplied.)

Here, since Manuel was already dead at the time of the filing of the complaint, the court never acquired jurisdiction over his person
and, in effect, there was no party to be substituted.
WHEREFORE, the petition is GRANTED. The Decision dated 28 February 2006 and the Resolution dated 1 August 2006 of the
Court of Appeals in CA-G.R. SP No. 88586 are REVERSED and SET ASIDE. The Orders of the Regional Trial Court dated 8
November 2004 and 22 December 2004, respectively, in Civil Case No. 97-86672, are REINSTATED. The Regional Trial Court,
Branch 24, Manila is hereby DIRECTED to proceed with the trial of Civil Case No. 97-86672 against respondent Lolita G. Toledo
only, in accordance with the above pronouncements of the Court, and to decide the case with dispatch.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 166519 March 31, 2009

NIEVES PLASABAS and MARCOS MALAZARTE, Petitioners,

vs.
COURT OF APPEALS (Special Former Ninth Division), DOMINADOR LUMEN, and AURORA AUNZO,Respondents.

DECISION

NACHURA, J.:

Assailed in this petition for review on certiorari under Rule 45 of the Rules of Court are the May 12, 2004 Decision 1of the Court of
Appeals (CA) in CA-G.R. CV No. 43085 and the December 1, 2004 Resolution 2 denying reconsideration of the challenged decision.

The pertinent facts and proceedings follow.

In 1974, petitioners3 filed a complaint for recovery of title to property with damages before the Court of First Instance (now, Regional
Trial Court [RTC]) of Maasin, Southern Leyte against respondents. The case was docketed as Civil Case No. R-1949. The property
subject of the case was a parcel of coconut land in Canturing, Maasin, Southern Leyte, declared under Tax Declaration No. 3587 in
the name of petitioner Nieves with an area of 2.6360 hectares. 4In their complaint, petitioners prayed that judgment be rendered
confirming their rights and legal title to the subject property and ordering the defendants to vacate the occupied portion and to pay
damages.5

Respondents, for their part, denied petitioners allegation of ownership and possession of the premises, and interposed, as their
main defense, that the subject land was inherited by all the parties from their common ancestor, Francisco Plasabas. 6

Revealed in the course of the trial was that petitioner Nieves, contrary to her allegations in the complaint, was not the sole and
absolute owner of the land. Based on the testimonies of petitioners witnesses, the property passed on from Francisco to his son,
Leoncio; then to Jovita Talam, petitioner Nieves grandmother; then to Antonina Talam, her mother; and then to her and her siblings
Jose, Victor and Victoria.7

After resting their case, respondents raised in their memorandum the argument that the case should have been terminated at
inception for petitioners failure to implead indispensable parties, the other co-owners Jose, Victor and Victoria.

In its April 19, 1993 Order,8 the trial court, without ruling on the merits, dismissed the case without prejudice, thus:

This Court, much as it wants to decide the instant case on the merits, being one of the old inherited cases left behind, finds difficulty
if not impossibility of doing so at this stage of the proceedings when both parties have already rested their cases. Reluctantly, it
agrees with the defendants in the observation that some important indispensable consideration is conspicuously wanting or missing.

It is not the Courts wish to turn its back on the crucial part of the case, which is the pronouncement of the judgment to settle the
issues raised in the pleadings of the parties once and for all, after all the time, effort and expense spent in going through the trial
process.

But, rules are rules. They have to be followed, to arrive at a fair and just verdict. Section 7, Rule 3 of the Rules of Court provides:
"x x x 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."

What the Court wants to say here is that the instant case should have been dismissed without prejudice a long time ago for lack of
cause of action as the plaintiffs spouses Marcos Malazarte and Nieves Plasabas Malazarte have no complete legal personality to
sue by themselves alone without joining the brothers and sisters of Nieves who are as INDISPENSABLE as the latter in the final
determination of the case. Not impleading them, any judgment would have no effectiveness.

They are that indispensable that a final decree would necessarily affect their rights, so that the Court cannot proceed without their
presence. There are abundant authorities in this regard. Thus

"The general rule with reference to the making of parties in a civil action requires the joinder of all indispensable parties under any
and all conditions, their presence being a sine qua non of the exercise of judicial power. (Borlasa v. Polistico, 47 Phil. 345, 348) For
this reason, our Supreme Court has held that when it appears of record that there are other persons interested in the subject matter
of the litigation, who are not made parties to the action, it is the duty of the court to suspend the trial until such parties are made
either plaintiffs or defendants. (Pobre, et al. v. Blanco, 17 Phil. 156). x x x Where the petition failed to join as party defendant the
person interested in sustaining the proceeding in the court, the same should be dismissed. x x x When an indispensable party is not
before the court, the action should be dismissed. (People, et al. v. Rodriguez, et al., G.R. Nos. L-14059-62, September 30, 1959)
(sic)

"Parties in interest without whom no final determination can be had of an action shall be joined either as plaintiffs or defendants.
(Sec. 7, Rule 3, Rules of Court). The burden of procuring the presence of all indispensable parties is on the plaintiff. (39 Amjur [sic]
885). The evident purpose of the rule is to prevent the multiplicity of suits by requiring the person arresting a right against the
defendant to include with him, either as co-plaintiffs or as co-defendants, all persons standing in the same position, so that the
whole matter in dispute may be determined once and for all in one litigation. (Palarca v. Baginsi, 38 Phil. 177, 178).

"An indispensable party is a party who has such an interest in the controversy or subject matter that a final adjudication cannot be
made, in his absence, without inquiring or affecting such interest; a party who has not only an interest of such a nature that a final
decree cannot be made without affecting his interest or leaving the controversy in such a condition that its final determination may
be wholly inconsistent with equity and good conscience. (67 C.J.S. 892). Indispensable parties are those without whom no action
can be finally determined." (Sanidad v. Cabataje, 5 Phil. 204)

WHEREFORE, IN VIEW OF ALL THE FOREGOING CONSIDERATIONS, both the complaint and the counterclaim in the instant
case are ordered DISMISSED without prejudice. No pronouncement as to costs.

SO ORDERED.9

Aggrieved, petitioners elevated the case to the CA. In the challenged May 12, 2004 Decision, 10 the appellate court affirmed the
ruling of the trial court. The CA, further, declared that the non-joinder of the indispensable parties would violate the principle of due
process, and that Article 487 of the Civil Code could not be applied considering that the complaint was not for ejectment, but for
recovery of title or a reivindicatory action.11

With their motion for reconsideration denied in the further assailed December 1, 2004 Resolution, 12 petitioners filed the instant
petition.

The Court grants the petition and remands the case to the trial court for disposition on the merits.

Article 487 of the Civil Code provides that any one of the co-owners may bring an action for ejectment.1avvphi1.zw+ The article
covers all kinds of actions for the recovery of possession, including an accion publiciana and a reivindicatory action. A co-owner may
file suit without necessarily joining all the other co-owners as co-plaintiffs because the suit is deemed to be instituted for the benefit
of all. Any judgment of the court in favor of the plaintiff will benefit the other co-owners, but if the judgment is adverse, the same
cannot prejudice the rights of the unimpleaded co-owners.13

With this disquisition, there is no need to determine whether petitioners complaint is one for ejectment or for recovery of title. To
repeat, Article 487 of the Civil Code applies to both actions.

Thus, petitioners, in their complaint, do not have to implead their co-owners as parties. The only exception to this rule is when the
action is for the benefit of the plaintiff alone who claims to be the sole owner and is, thus, entitled to the possession thereof. In such
a case, the action will not prosper unless the plaintiff impleads the other co-owners who are indispensable parties. 14

Here, the allegation of petitioners in their complaint that they are the sole owners of the property in litigation is immaterial,
considering that they acknowledged during the trial that the property is co-owned by Nieves and her siblings, and that petitioners
have been authorized by the co-owners to pursue the case on the latters behalf. 15Impleading the other co-owners is, therefore, not
mandatory, because, as mentioned earlier, the suit is deemed to be instituted for the benefit of all.

In any event, the trial and appellate courts committed reversible error when they summarily dismissed the case, after both parties
had rested their cases following a protracted trial commencing in 1974, on the sole ground of failure to implead indispensable
parties. The rule is settled that the non-joinder of indispensable parties is not a ground for the dismissal of an action. The remedy is
to implead the non-party claimed to be indispensable. Parties may be added by order of the court on motion of the party or on its
own initiative at any stage of the action and/or at such times as are just. If petitioner refuses to implead an indispensable party
despite the order of the court, the latter may dismiss the complaint/petition for the plaintiffs/petitioner's failure to comply therewith. 16

WHEREFORE, premises considered, the instant petition is GRANTED, and the case is REMANDED to the trial court for appropriate
proceedings. The trial court is further DIRECTED to decide on the merits of the civil case WITH DISPATCH.

SO ORDERED.