Boston Equity Resources, Inc. vs. Court of Appeals
G.R. No. 173946. June 19, 2013.
MAIN TOPIC – Different Kind Of Obligations
FACTS
In 1997, Boston Equity 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. Respondent (Lolita Toledo) filed an Answer and later filed a Motion for Leave to Admit Amended Answer in which she alleged, among others, that her husband and co-defendant, Manuel Toledo, is already dead. The death certificate of Manuel states “13 July 1995” as the date of death. As a result, petitioner filed a motion to require respondent to disclose the heirs of Manuel. In compliance, Toledo submitted the required names and addresses of the heirs.
Petitioner then filed a Motion for Substitution – praying that Manuel be substituted by his children as party-defendants. The motion was granted by the trial court.
The counsel was to file a demurrer of evidence but 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. The trial court denied the motion to dismiss for having been filed out of time.
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.
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. The Court of Appeals granted the petition ruled that that when the complaint was filed, defendant Manuel S.Toledo was already dead and the obligation is solidary with another debtor and the claim should be filed against the estate of Manuel S. Toledo.
The contract between petitioner, on the one hand and respondent and respondent’s 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.
ISSUE
- Whether or not respondent is estopped from questioning the jurisdiction of the trial court over defendant Manuel.
- Whether or not the estate of Manuel Toledo is an indispensable party.
HELD
(1) NO. If the objection to the jurisdiction 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.
(2) No. In 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. Article 1216 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.” That petitioner opted to collect from respondent and not from the estate of Manuel is evidenced by its opposition to respondent’s motion to dismiss asserting that the case, as against her, should be dismissed so that petitioner can proceed against the estate of Manuel. 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.
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.
Article 1216 of the New Civil Code 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.
(3) Yes. The case, as against Manuel, must be dismissed. 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.” Since 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. 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. 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.
DISPOSITIVE PORTION
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.
DOCTRINE
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. Further, an indispensable party is one who must be included in an action before it may properly proceed.
