View full case

HEIRS OF JUAN M. DINGLASAN v. AYALA CORPORATION

FACTS:

The case involves a dispute over the ownership of certain properties located in Batangas City. The petitioners filed a complaint against Ayala Land, Inc., Shell Philippines Exploration B.V., and Omniport Service, Inc., claiming that they are the rightful owners of the said properties based on a title issued in their favor. On the other hand, the defendants denied the allegations and raised various defenses such as being purchasers in good faith, prescription of the cause of action, and lack of legal capacity to sue.

During the proceedings, the Register of Deeds of Batangas City did not file an answer to the complaint. The trial court proceeded to consolidate the cases and rendered a decision in favor of the defendants, ruling that the plaintiffs failed to present sufficient evidence to declare the titles as fraudulently issued. The trial court also held the plaintiffs guilty of laches for not asserting their rights earlier.

The plaintiffs filed an appeal with the Court of Appeals, but in the meantime, they withdrew their appeal against Shell Petroleum. The Court of Appeals affirmed the trial court’s decision, ruling that the plaintiffs’ failure to implead an indispensable party violated her right to due process. Despite this ruling, the Court of Appeals also ruled on the merits of the case, concluding that the plaintiffs did not establish any right over the subject properties.

Aggrieved, the plaintiffs filed a motion for reconsideration, which was denied by the Court of Appeals. Hence, they filed a petition for review on certiorari with the Supreme Court, raising various grounds for their appeal.

The case involves disputed ownership of Lot No. 11808 of the Batangas Cadastre. Petitioners claim that they are the registered owners of the said lot, which is covered by their Plan AP 04-8100 issued by the Department of Environment and Natural Resources (DENR), Region IV. Respondents, on the other hand, assert their ownership based on the records of the Batangas City Assessor's Office and the Batangas City Treasurer's Office.

The Court of Appeals (CA) ruled in favor of the respondents and held that petitioners' plan issued by DENR was defective. The CA also ruled that the cancellation of petitioners' plan invalidated the data covered by it. Furthermore, the CA held that petitioners were not possessors in good faith of the lot, and that Ayala Corporation, one of the respondents, was a buyer in good faith. The CA also declared the spouses Orosa as indispensable parties to the case.

Petitioners argue that the CA erred in giving more weight to the records of the Batangas City offices over the records of the Surveys Division of DENR. They also contend that their plan issued by DENR was not defective, and that the cancellation of the plan did not affect the validity of the data covered by it. Petitioners assert that they are possessors in good faith of the lot and that Ayala Corporation was not a buyer in good faith. They also argue that the spouses Orosa were not indispensable parties to the case. Finally, petitioners contend that they have not slept on their rights and are not guilty of laches.

ISSUES:

  1. Whether Ayala Corporation was a buyer in good faith because the question of good faith of the buyer is considered only when the property in litigation is covered by the Torrens system.

  2. Whether the spouses Orosa are indispensable parties to the case.

  3. Whether the petitioners had slept on their rights and are guilty of laches.

  4. Whether the verification and certification against forum shopping executed by only one petitioner constitutes substantial compliance.

  5. Whether the failure to implead an indispensable party warrants the dismissal of the case.

  6. Whether or not the absence of the Spouses Orosa as parties to the case violates their right to due process of law.

  7. Whether or not the Complaints should be dismissed due to the non-joinder of indispensable parties.

  8. Whether or not the Court of Appeals erred in reversing the trial court’s decision and dismissing the complaint for reconveyance of title and damages.

  9. Whether or not the Court of Appeals erred in ruling that the complaint should have been dismissed on the ground of litis pendentia.

RULING:

  1. The Court held that the question of good faith of the buyer is not limited to properties covered by the Torrens system. Ayala Corporation's claim of being a buyer in good faith should be subject to scrutiny and evaluation based on the circumstances of the case.

  2. The Court concluded that the spouses Orosa are not indispensable parties to the case. The rights and interests of the parties can be fully adjudicated even without their participation.

  3. The Court found that the petitioners did not sleep on their rights and are not guilty of laches. Compelling circumstances, such as the substantial amount of property involved and the merit of the petition, justify the relaxation of procedural rules to serve the ends of justice.

  4. The verification and certification against forum shopping executed by only one petitioner constitutes substantial compliance. In cases where all the petitioners share a common interest and invoke a common cause of action or defense, the signature of only one petitioner in the certification against forum shopping substantially complies with the rule.

  5. The failure to implead an indispensable party warrants the dismissal of the case. An indispensable party is one who stands to be injured or benefited by the outcome of the petition and has an interest in the controversy that a final decree would necessarily affect his rights. The joinder of all indispensable parties is mandatory, and courts cannot proceed without their presence.

  6. The absence of the Spouses Orosa in the Complaints filed by the petitioners renders all subsequent actions of both the RTC and the CA null and void for want of authority to act. The inclusion of the Spouses Orosa and all other persons whose titles are derived from OCT 18989 is necessary for the effective and final resolution of the parties' rights in the case, in order to accord all parties the benefit of due process and fair play.

  7. The non-joinder of indispensable parties is not a ground for the dismissal of an action. Parties may be added by order of the court at any stage of the action and/or at such times as are just. Therefore, the remedy is to implead the non-party claimed to be indispensable.

  8. The Court reversed and set aside the decision of the Court of Appeals. The case was remanded to the Regional Trial Court for further proceedings. The trial court was ordered to implead Severina Luna Orosa and all other persons whose titles are derived from Original Certificate of Title No. 18989 as party-defendants. The Court also directed the trial court to proceed with the resolution of the case on the merits with dispatch.

PRINCIPLES:

  • Rules of procedure should be viewed as tools to facilitate the attainment of justice and should be relaxed when necessary to serve the interests of substantial justice.

  • The strict enforcement of procedural rules must be balanced with the guarantee that every litigant is given a full opportunity for the just and proper disposition of their cause.

  • Factual findings of the lower courts are generally conclusive, but exceptions apply when the findings are not supported by the evidence on record or when there is a grave abuse of discretion.

  • Verification and certification against forum shopping must be complied with, but there are recognized exceptions to the strict application of this requirement.

  • Non-compliance or defect in verification does not necessarily render the pleading fatally defective, and the court may order its submission or correction if the attending circumstances are such that strict compliance may be dispensed with.

  • Non-compliance or defect in certification against forum shopping is generally not curable, unless there is substantial compliance or special circumstances or compelling reasons.

  • The certification against forum shopping must be signed by all plaintiffs or petitioners, unless they share a common interest and invoke a common cause of action or defense.

  • The certification against forum shopping must be executed by the party-pleader, not by counsel, unless the party-pleader is unable to sign and executes a Special Power of Attorney designating counsel to sign instead.

  • The joinder of indispensable parties is mandatory and necessary for the court to have jurisdiction to hear and determine a cause. Without their presence, the court's actions are null and void.

  • The non-joinder of indispensable parties is not a ground for dismissal of an action; the remedy is to implead them.

  • All parties whose titles are derived from the same certificate of title must be impleaded in order to effectively and finally resolve the parties' rights in a case.

  • Failure to implead indispensable parties renders all subsequent actions null and void, not only as to the absent parties but also as to those present.

  • The inclusion of indispensable parties is necessary to uphold the principles of due process and fair play in a judicial proceeding.

  • The court may order the inclusion of indispensable parties even if they were not impleaded in the complaint, and remand the case for further proceedings.

  • The court should resolve the case on the merits with dispatch once all the necessary parties are already impleaded.