G.R. No. L-2715; May 30, 1951
TERESA ALBERTO, IGNACIO RAMOS, MARIANO RAMOS, GREGORIO RAMOS, CECILIO RAMOS, EUSTAQUIO RAMOS and FAUSTA RAMOS, plaintiff-appellees, vs. CASIMIRO MANANGHALA, ISABEL FELICIANO, GREGORIO FELICIANO, ROMANA FELICIANO, TECLA FELICIANO, CATALINO FELICIANO, MAMERTA DANCEL and LUCIO DANCEL, defendant-appellants.

FACTS

On May 10, 1928, Arcadio Ramos executed a private document in favor of Vicenta Feliciano purporting to sell lot No. 1238 with a right to repurchase within two years, and possession was transferred. Arcadio Ramos died on March 9, 1929. One month later, his widow, Teresa Alberto, obtained an additional P60 from Vicenta Feliciano, increasing the total amount to P550. Vicenta Feliciano died on June 4, 1930, and the lot was adjudicated pro indiviso to his heirs (Catalino, Gregorio, Romana, and Teofila Feliciano, and Mamerta and Lucio Dancel) in intestate proceedings. In 1937, these heirs sold the lot to Casimiro Mananghala by a document ratified on June 15, 1943. Mananghala demanded the plaintiffs execute a direct sale, but they refused and instead filed an action to recover ownership and possession. The plaintiffs initially sued only Mananghala and his wife but later amended the complaint to include the Feliciano heirs as defendants. However, summons was not served on Teofila Feliciano, Catalino Feliciano, Mamerta Dancel, and Lucio Dancel. The trial court proceeded with the case and rendered a decision declaring the plaintiffs owners of the lot and ordering Mananghala to return possession, subject to the plaintiffs paying for his building or Mananghala paying for the land, at the plaintiffs’ choice.

ISSUE

Whether the trial court erred in proceeding with the trial and rendering judgment despite the non-joinder of some defendants (the unserved Feliciano heirs) who are claimed to be indispensable parties.

RULING

Yes. The Supreme Court set aside the appealed judgment and remanded the case to the court of origin. The Court held that the unserved heirs of Vicenta Feliciano are indispensable parties. The action seeks to recover ownership based on the claim that the original transaction was an equitable mortgage, not a pacto de retro sale. If the transaction is declared an equitable mortgage, the heirs’ right to sell the land to Mananghala would be defeated, and they would be liable for warranty and eviction. Therefore, their presence is indispensable to protect their interests and present any valid defenses. Their non-joinder violates Section 7, Rule 3 of the Rules of Court. The Court cited precedents (Ocejo, Perez and Co. vs. International Banking Corporation and Garcia vs. Reyes) stating that in actions affecting the validity of transfers, all persons involved in such transfers are indispensable parties who must be heard.