De Leon v. Asombrado-Llacuna
REITERATIONFacts
The Antecedents: Lourdes S. Asombrado-Llacuna (Lourdes) purchased a lot from Provident Securities Corporation (Prosecor) in 1983, receiving a Deed of Absolute Sale in 1986 but failing to receive the title, which remained under the name of the original owner, Eusebio L. Lopez, Jr. Prosecor was later dissolved. In 1993, an Assignment of Mortgage involving the subject property was executed by Provident Savings Bank (PSB), represented by its President, Atty. Roberto F. De Leon (Atty. De Leon), in favor of J.M. Tuason & Co., Inc. Lourdes discovered an annotation of this assignment in 2012. Procedural History: Lourdes filed a complaint before the Housing and Land Use Regulatory Board (HLURB) against Atty. De Leon and PSB, praying for the delivery of the title and damages. The HLURB Arbiter dismissed the complaint for failure to implead Prosecor as an indispensable party and lack of evidence that PSB was Prosecor's successor-in-interest. The HLURB Board of Commissioners denied Lourdes' appeal. The Court of Appeals (CA) set aside the HLURB rulings, remanding the case for the inclusion of Prosecor as an indispensable party, holding that the failure to implead an indispensable party is a curable error and that the issue of exhaustion of administrative remedies was a pure question of law. The CA denied Atty. De Leon's motion for reconsideration. The Petition: Atty. De Leon filed a Petition for Review on Certiorari before the Supreme Court, arguing that the CA erred in disregarding the doctrine of exhaustion of administrative remedies and in setting aside the HLURB's dismissal for failure to implead an indispensable party. He contended that Prosecor, as the seller and developer, is the indispensable party responsible for delivering the title, and that there was no privity of contract between Lourdes and PSB, nor evidence of PSB being Prosecor's successor-in-interest. He also argued that the cause of action had prescribed and was barred by laches.
Issue(s)
Whether the Court of Appeals erred in disregarding the doctrine of exhaustion of administrative remedies. Whether the Court of Appeals erred in setting aside the HLURB's dismissal of the complaint for failure to implead an indispensable party. Whether Lourdes has a cause of action against Atty. De Leon and PSB for the delivery of the title, and whether prescription and laches bar such action.
Ruling
The Petition for Review on Certiorari filed by Atty. Roberto F. De Leon is GRANTED. The Decision of the Court of Appeals is SET ASIDE, and the Decision of the Housing and Land Use Regulatory Board Board of Commissioners, insofar as it dismissed the complaint filed by Lourdes S. Asombrado-Llacuna against Atty. Roberto F. De Leon and Provident Savings Bank, is REINSTATED.
Ratio Decidendi
On the Doctrine of Exhaustion of Administrative Remedies: The Supreme Court agreed with the CA that the doctrine of exhaustion of administrative remedies admits exceptions, particularly when the issue involved is purely legal. In this case, the core issue of whether the HLURB's dismissal for failure to implead an indispensable party was correct was a question of law, justifying Lourdes' direct recourse to the CA. Therefore, the CA did not err in not dismissing Lourdes' petition for review on this ground. On the Failure to Implead Indispensable Parties: The Court reiterated the ruling in Collao, Jr. v. Albania that the non-joinder of indispensable parties is not a ground for dismissal, but rather the remedy is to implead them. However, the Court found that the CA erred in ordering the remand of the case for the inclusion of Prosecor. This is because Prosecor had already been dissolved and lost its juridical personality, making it impossible to implead it as a party. The HLURB Rules of Procedure require parties to be natural or juridical persons, and a dissolved corporation can no longer be impleaded or held liable. On the Cause of Action against PSB and Atty. De Leon, and Prescription and Laches: The Court found no evidence that PSB was the successor-in-interest of Prosecor, meaning PSB did not inherit Prosecor's obligation to deliver the title. Consequently, Lourdes had no cause of action against PSB. Furthermore, as PSB itself had no obligation, its former President, Atty. De Leon, could not be held personally liable for Prosecor's failure, adhering to the principle that corporate officers are generally not personally liable for corporate obligations unless the corporate fiction is used to perpetrate fraud or evade obligations. The Court also noted that PSB had also been dissolved. While Atty. De Leon raised the issues of prescription and laches, the Court found that these issues would be better resolved in appropriate proceedings, implying that the HLURB case, as structured, was not the proper venue to resolve them given the findings on the lack of cause of action against the named respondents.
Main Doctrine
The non-joinder of an indispensable party is not a ground for dismissal, but the failure to implead a dissolved corporation as a party, which can no longer be impleaded, renders the case dismissible for lack of cause of action against the remaining parties, especially when no successor-in-interest can be established.