De Galicia v. Mercado
REITERATIONFacts
The Antecedents: Petitioner Robert G. de Galicia was a business partner in RCL Enterprises. On December 15, 1997, his partner, Carmen Arciaga, asked him to co-sign a Philbank check for P50,000 payable to cash. Allegedly without petitioner's knowledge and consent, Arciaga rediscounted the check with respondent Mely Mercado at 8% interest, receiving P46,000. When the check was dishonored for insufficiency of funds, respondent filed a complaint for estafa and violation of Batas Pambansa Blg. 22 (BP 22) against petitioner and Arciaga. Procedural History: Petitioner filed a case for the declaration of nullity of the agreement to pay interest between respondent and Arciaga, and to declare the rediscounted check void. The Regional Trial Court (RTC) of Manila, Branch 32, dismissed petitioner's case for lack of jurisdiction, treating it as a case for recovery of a sum of money with an amount below the jurisdictional threshold. The RTC also denied petitioner's motion for reconsideration. The Petition: Petitioner filed a petition for review on a pure question of law, arguing that the RTC erred in dismissing the complaint for lack of jurisdiction, as the action was for the nullification of an agreement and not for recovery of a sum of money, making it incapable of pecuniary estimation. Respondent contended that the dismissal was warranted because the action essentially involved the nullification of a P50,000 check, which was outside the RTC's jurisdiction, and because Arciaga, an indispensable party, was not impleaded.
Issue(s)
Whether the Regional Trial Court (RTC) has jurisdiction over a complaint for the declaration of nullity of an interest agreement and a check as an action incapable of pecuniary estimation. Whether the failure to implead a co-signatory to a check and party to an interest agreement as an indispensable party warrants the dismissal of the civil action.
Ruling
The petition is denied. The Supreme Court sustained the dismissal of the complaint, not for lack of jurisdiction, but for failure to implead an indispensable party.
Ratio Decidendi
On Issue 1: The Supreme Court held that the subject of the action was indeed incapable of pecuniary estimation and therefore cognizable by the Regional Trial Court (RTC). Applying the criterion from Singsong v. Isabella Sawmill, the Court must ascertain the nature of the principal action or remedy sought. If the basic issue is something other than the right to recover a sum of money, the action is considered incapable of pecuniary estimation. In this case, petitioner sought to annul the agreement for interest and the check itself, not to recover the amount of the check. Since the principal relief was the nullification of a legal instrument rather than a demand for payment, the RTC erroneously characterized the case as a simple money claim. On Issue 2: Despite the RTC having jurisdiction, the Supreme Court sustained the dismissal because petitioner failed to implead Carmen Arciaga, who is an indispensable party. Under Rule 3, Section 7 of the 1997 Rules of Civil Procedure, an indispensable party is a party-in-interest without whom there can be no final determination of an action. Arciaga's interest was intrinsically linked to the case because she was a co-signatory of the check and a direct party to the interest agreement with Mercado. Any judgment rendered would necessarily affect her legal rights and obligations, making her presence a requirement for the court's exercise of judicial power. Following the doctrine in Aracelona v. Court of Appeals, the Court affirmed that when an indispensable party is not before the court, the action must be dismissed as no valid judgment can be rendered.
Main Doctrine
While an action for declaration of nullity of an agreement to pay interest may be an action incapable of pecuniary estimation and thus within the RTC's jurisdiction, the failure to implead an indispensable party, such as the co-signatory privy to the agreement, warrants the dismissal of the case.