MIGUEL RAÑESES, EUSTAQUIA RAÑESES, MARCIANO RAÑESES, EUSEBIO ECHANO, PEDRO ECHANO, FAUSTO ORA, CLAUDIO GALUWA, BONIFACIA CABUGSAN, DELFINA DAYNOS, RUSTICO CABUGSAN, JOSE YAMIT, …

Rañeses versus Udalbe

The Case

This is a petition for certiorari and prohibition filed by the Rañeses heirs and their co-plaintiffs against Judge Bernardo Teves of the Court of First Instance of Misamis Oriental, Cagayan de Oro City, Branch IV, and against the nine relatives of Crispina Udalbe who had sued them for partition. The petitioners ask the Supreme Court to undo two interlocutory orders denying them leave to file a third-party complaint against Romualdo Udalbe. The case matters because it is the Supreme Court's clearest statement that a compromise judgment which purports to settle an entire estate without joining all the persons interested in it is not truly final, and that the Rules of Court on third-party complaints are broad enough to bring in an indispensable party so that justice may be done to all.

Procedural History

The original action, a suit for recovery of properties belonging to the estate of Martin Yamit, was docketed as Civil Case No. 2389 before the Court of First Instance of Misamis Oriental. It was never tried on the merits. The parties instead executed a compromise agreement, which Judge Bernardo Teves approved in a judgment dated November 14, 1964. When the petitioners later moved to set aside that judgment, Judge Teves at first granted the motion and directed them to amend their complaint to implead the relatives of Romualdo Udalbe. On motion for reconsideration by Romualdo Udalbe, however, Judge Teves revoked that order and maintained the compromise judgment. The petitioners did not appeal that ruling.

About six months later, nine relatives of Crispina Udalbe sued the seventeen original plaintiffs for partition in Civil Case No. 19-C, also before Branch IV. The petitioners then sought leave to file a third-party complaint against Romualdo Udalbe. Judge Teves denied the motion in his order of August 15, 1966, and denied reconsideration in his order of October 4, 1966. The petitioners went directly to the Supreme Court by certiorari and prohibition, and the Court decided the matter in March 1976.

Facts

Martin Yamit died intestate on June 20, 1964. On August 1, 1964, seventeen persons claiming to be his legal heirs sued Romualdo Udalbe in Civil Case No. 2389 for the recovery of fifteen thousand pesos in cash and eighteen parcels of land in Mahinog, Camiguin, Misamis Oriental, alleging that Udalbe possessed them although he was not an heir of Martin Yamit. Udalbe answered that some parcels had been donated to him, that some had been donated to Asuncion Udalbe, that some were the paraphernal properties of Crispina Udalbe, and that the rest were conjugal properties of the spouses Martin Yamit and Crispina Udalbe. He claimed to be a nephew and therefore an heir of Crispina Udalbe.

Rather than go to trial, the parties executed a compromise agreement which the trial court approved on November 14, 1964. Under it, two parcels of land and a house of mixed materials were assigned to Romualdo Udalbe as his share of the estate of Martin Yamit, and sixteen parcels were conveyed to the seventeen plaintiffs as their shares. But only five of the seventeen plaintiffs actually signed the agreement. Several persons who were not plaintiffs signed on behalf of others, and the record showed no powers of attorney. Three plaintiffs, Delfina Daynos, Rustico Cabugsan and Felina Yamit, did not sign at all and were not represented.

When the petitioners tried to take possession of their shares, they were allegedly prevented by the aunts, uncles and cousins of Romualdo Udalbe, who claimed to be the heirs of Crispina Udalbe. The petitioners moved to set aside the compromise judgment, and the trial court at first granted the motion but later reversed itself and maintained the judgment. Then the nine relatives of Crispina Udalbe, represented by the same lawyer who had been counsel for Romualdo Udalbe and who had signed the compromise, sued the seventeen plaintiffs for partition in Civil Case No. 19-C, claiming one-half of ten conjugal parcels and all of Crispina's paraphernal properties. The petitioners then moved for leave to file a third-party complaint against Romualdo Udalbe, which the trial court denied.

Issues

• Whether or not the trial court acted with grave abuse of discretion in denying the petitioners leave to file a third-party complaint against Romualdo Udalbe in Civil Case No. 19-C.
• Whether or not the judgment in Civil Case No. 2389, being final and executory, barred the admission of the third-party complaint under the doctrine of res judicata.
• Whether or not Romualdo Udalbe is an indispensable party in Civil Case No. 19-C without whose joinder no final determination of that case can be had.
• Whether or not certiorari lies to correct an interlocutory order denying leave to file a third-party complaint.

Applicable Provisions

Section 12, Rule 6 of the Rules of Court, as it then stood, governs third-party complaints and provides:

A third-party complaint is a claim that a defending party may, with leave of court, file against a person not a party to the action, called the third-party defendant, for contribution, indemnity, subrogation or any other relief, in respect to his opponent's claim.

The Court read the phrase "or any other relief" expansively so as to cover the petitioners' claim against Romualdo Udalbe for collation and indemnity, and held that he could be joined as a third-party defendant.

Article 1874 of the Civil Code, cited by the Court in noting the absence of powers of attorney from the plaintiffs who did not sign the compromise, provides:

When a sale of a piece of land or any interest therein is through an agent, the authority of the latter shall be in writing; otherwise, the sale shall be void.

The Court's reference to this article underscores that the persons who signed the compromise for others exhibited no written authority, which is one reason the compromise could not be regarded as a complete and final settlement.

Ruling

On the first issue, the Court held that the trial court erred in denying leave to file the third-party complaint. What the petitioners really intended, the Court said, was to annul on the ground of fraud the partition or judgment in Civil Case No. 2389 insofar as Romualdo Udalbe was concerned, and that issue could not be tried without joining him, a beneficiary of that judgment.

On the second issue, the Court held that res judicata did not bar the third-party complaint. Civil Case No. 2389 did not completely and finally settle the estates of the spouses Martin Yamit and Crispina Udalbe, because not all the interested parties were joined. The trial court never ascertained which properties were conjugal, which were paraphernal, and which were the exclusive capital of the husband, and it never passed upon the validity of the donation mortis causa in favor of Romualdo Udalbe. The Court also observed that not all the plaintiffs signed the compromise and that those who signed for others showed no valid authority, and it reminded the bench that a trial judge must examine a compromise agreement with the utmost attention and caution, adopting what Justice Barredo called an activist attitude.

On the third issue, the Court held that Romualdo Udalbe is an indispensable party in Civil Case No. 19-C. Since that case embraces the entire estates of the deceased spouses, the properties already assigned to him must be taken into account in the partition, and without his joinder no final determination of the case could be effected with justice to all concerned. The Court noted that the private respondents' opposition to his joinder might confirm the petitioners' view that there was collusion to defraud them.

On the fourth issue, the Court held that although it will not ordinarily entertain certiorari against an interlocutory order, certiorari lies where grave abuse of discretion has been palpably committed or the broader interests of justice require an exception and the petitioners' contention appears clearly tenable.

Doctrine

A compromise judgment that purports to settle an entire estate without joining all the persons interested in it does not completely and finally settle that estate, and it cannot be used as res judicata to bar the joinder of an omitted indispensable party. The terms "contribution, indemnity, subrogation or any other relief" in Section 12, Rule 6 of the Rules of Court are comprehensive enough to authorize a third-party complaint against a person who has received properties from the estate and who must be brought in so that the partition may be complete. A trial court has the duty to scrutinize a compromise agreement with the utmost attention and caution, and a casual or superficial perusal of it must be avoided. Certiorari may correct an interlocutory order where grave abuse of discretion is palpable or the broader interests of justice require it.

Disposition

The Supreme Court set aside the orders of August 15 and October 4, 1966, directed the lower court to admit the petitioners' third-party complaint and to issue summons to Romualdo Udalbe, and taxed the costs against the private respondents.

Remember This

The single line worth memorizing is that a compromise cannot finally settle an estate when an indispensable party is not joined, and the broad language of the third-party complaint rule exists precisely to bring that party in. Examiners use this case to test the requisites of a third-party complaint, the limits of res judicata over compromise judgments, and the availability of certiorari against interlocutory orders.