Robert De Galicia vs. Mercado

Robert De Galicia vs. Mercado 

G.R. 146744

Facts

Case Background

·         Petitioner Robert G. de Galicia was a business partner in RCL Enterprises. He was asked by his partner Carmen Arciaga to co-sign with her a Philbank check for P50,000 payable to cash.

·         Allegedly without his knowledge and consent, Arciaga rediscounted the check with respondent Mely Mercado at 8% interest, thus, only the sum of P46,000 was given.

·         Checks were dishonored for insufficiency of funds. Mercado then filed a complaint for estafa and for violation BP 221 against petitioner and Carmen Arciaga.

·         Petitioner countered by filing in the RTC Manila, a case for the declaration of nullity of the agreement to pay interest between respondent and his partner, Arciaga. He prayed that the agreement, together with the rediscounted check, be declared void for being contrary to public policy.

Lower Court Rulings

·         RTC: dismissed petitioner’s case for lack of jurisdiction. Motion for reconsideration was denied.

o    Arciaga, one of the parties in the so-called agreement, was not a party to the present case.

o    The subject check amounting to P50,000 was way below the jurisdictional amount vested in the Regional Trial Court.

·        Since this is a pure question of law, the petitioner filed a petition for review under Rule 45 of the 1997 Rules of Civil Procedure before the SC.

Issues:

Procedural Issue:

·         Whether RTC did not err in dismissing the complaint because Arciaga, as an indispensable party, was not impleaded;

Substantial Issue

·         Whether the trial court erred in dismissing the complaint for lack of jurisdiction over its subject matter simply because the amount involve was only P50,000.

Held and Ratio

Procedural Issue

·         Yes, this Court sustains the dismissal of the subject complaint for its failure to implead an indispensable party.

o    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.

o    The interests of such indispensable party in the subject matter of the suit and the relief are so bound with those of the other parties that his legal presence as a party to the proceeding is an absolute necessity; such that a complete and efficient determination of the equities and rights of the parties is not possible if he is not joined.

§  Arciaga, being a co-signatory of the re-discounted check and being privy to the assailed agreement, was an indispensable party to the suit. Her interest in the suit was intertwined with the rights and interest of both petitioner and respondent.

Substantial Issue

·         Yes, the subject of the action before the trial court was incapable of pecuniary estimation and therefore cognizable by the RTC.

o    Under BP 129, the RTC shall exercise exclusive jurisdiction in all civil actions in which the subject of the litigation is incapable of pecuniary estimation.

§  If it is primarily for the recovery of a sum of money, the claim is considered capable of pecuniary estimation, and jurisdiction lies in the municipal courts or in RTC depending on the amount involved.

§  However, if the issue is something other than the right to recover a sum of money, where the money claim is purely incidental to, or a consequence of, the principal relief sought, jurisdiction lies with the RTC.

In this case, what was being assailed was the payment of interest, not the recovery of a sum of money as found by the trial court.