LAND BANK OF THE PHILIPPINES vs. EDUARDO M.
CACAYURAN
Does cacayuran have personality to sue, what is a tax payers suit?
Taxpayer’s Suits; For a taxpayer’s suit to prosper, two requisites must be met namely, (1) public
funds derived from taxation are disbursed by a political subdivision or instrumentality and in
doing so, a law is violated or some irregularity is committed; and (2) the petitioner is directly
affected by the alleged act.—It is hornbook principle that a taxpayer is allowed to sue where
there is a claim that public funds are illegally disbursed, or that public money is being deflected
to any improper purpose, or that there is wastage of public funds through the enforcement of
an invalid or unconstitutional law. A person suing as a taxpayer, however, must show that the
act complained of directly involves the illegal disbursement of public funds derived from
taxation. In other words, for a taxpayer’s suit to prosper, two requisites must be met namely, (1)
public funds derived from taxation are disbursed by a political subdivision or instrumentality and
in doing so, a law is violated or some irregularity is committed; and (2) the petitioner is directly
affected by the alleged act.
Land Bank of the Philippines vs. Cacayuran, 696 SCRA 861, G.R. No. 191667 April 17, 2013
This case is a Motion for Reconsideration filed by LBP.
Facts:
The Municipality of Agoo entered into two loans with LBP in order to finance a
Redevelopment Plan of the Agoo Public Plaza. The Sangguniang Bayan of the
Municipality authorized the mayor Eufranio Eriguel to enter into a P4M loan with LBP
for the Public Plaza and again for the amount of P28M to construct a commercial center
called Agoo People’s Center within the Plaza’s premises. The Municipality used as
collateral a 2,323.75 sqm lot at the south-eastern portion of the Plaza.
Cacayuran and other residents opposed the redevelopment of the Plaza as well as the
means of the funding. They claim that these are highly irregular, violative of the law, and
detrimental to public interest resulting in the desecration of the public plaza.
Cacayuran’s request for the documents relating to the plaza’s redevelopment was not
granted. Cacayuran invokes his taxpayer right and files a complaint against LBP and
officers of the municipality but does not include the municipality itself as party-
defendant. He questioned the validity of the loan agreements and prays that the
redevelopment is enjoined.
The municipal officers moved for the dismissal but were denied. LBP asserted that
Cacayuran did not have any cause of action because he was not privy to the loan
agreements.
RTC Ruling:
Subject loans are null and void. Resolutions approving the procurement were passed
irregularly and are thus ultra vires. Municipality is not bound so it is the officers that will
be held liable. Plaza lot is property for public use and not valid as collateral.
LBP and the officers appealed to the CA. The municipal officers’ appeal is deemed
abandoned for failing to file an appellants’ brief. LBP was given due course.
CA Ruling:
RTC decision affirmed with modification: Vice-Mayor Antonio Eslao is free from personal
liability. Cacayuran has locus standi as resident and the issue is of transcendental
importance to public interest. Resolutions approving the loan are invalidly passed. Plaza
lot is invalid as collateral. Procurement is ultra vires
LBP files petition for certiorari with SC.
Proceedings Before the SC:
LBP petition is denied and CA decision affirmed. LBP moves for reconsideration,
Municipality of Agoo files a Motion for Leave to Intervene with Pleading-In-Intervention
Attached praying to be included as party litigant. It contends that being a contracting
party to the subject loans, it is an indispensable party. Cacayuran insists that they are
not real party in interest because the complaint is against the municipal officers in their
personal capacity for their ultra vires acts not binding to the municipality.
Issue Before the SC:
WON the Municipality of Agoo should be deemed an indaspensible party to the case
and thus be ordered impleaded herein. – YES it is an indispensable party under Sec 7,
Rule 3 of the Rules of Court.
SC Ruling:
Sec 7, Rule 3 mandates that all indispensable parties are to be joined in a suit as it is the
party whose interest will be affected by the court’s action and without whom no final
determination of the case can be had. His legal presence is an absolute necessity.
Absence of the indispensable party renders all subsequent actions of the court null and
void for want of authority to act.
Failure to implead any indispensable party is not a ground for the dismissal of the
complaint. The proper remedy is to implead them. In this case, Cacayuran failed to
implead the Municipality, a real party in interest and an indispensable party that stands
to be directly affected by any judicial resolution. It is the contracting party and the
owner of the public plaza. It stands to be benefited or injured by the judgment of the
case.
The decision of the RTC, affirmed with modification by the CA, and finally affirmed by
the SC is not binding upon the Municipality as it was not impleaded as defendant in the
case.
Subject motions are PARTLY GRANTED. Previous decisions are SET ASIDE. Instant case is
REMANDED to the RTC and Cacayuran is DIRECTED to implead all indispensable parties.
