Uy vs. Court of Appeals

The presence of indispensable parties is required for a judgment to attain real finality; an alleged surviving spouse and child claiming legal interest in an estate may intervene in a partition case notwithstanding a prior compromise judgment, and that judgment cannot bind them.

Natividad Calaunan-Uy was the common-law wife of the late Menilo B. Uy, Sr. for about thirty-six years, and their union produced four children, all surnamed Uy. Tshiate L. Uy claimed to be the surviving legal spouse of Menilo, Sr. by virtue of a Hong Kong marriage, and Ramon Uy joined her as petitioner. Menilo, Sr. died on 27 September 1990, after Executive Order No. 209 (The Family Code of the Philippines) took effect on 03 August 1988; consequently, Articles 147 and 148 of the Family Code supply the governing property regime for the union. The dispute thus concerns the property acquired during that common-law relationship and the estate of Menilo, Sr.

Natividad Calaunan-Uy lived with the late Menilo B. Uy, Sr. as his common-law wife for about thirty-six years. Their union produced four children — Melito, Jr., Nilda, Melvin, and Merlito — all surnamed Uy. Menilo, Sr. died on 27 September 1990. Tshiate L. Uy and Ramon Uy, the petitioners, later asserted a legal interest in his estate; Tshiate claimed that a Hong Kong marriage made her the surviving legal spouse of Menilo, Sr.

Soon after Menilo, Sr.'s death, on 31 October 1990, Tshiate and Ramon initiated Special Proceedings No. M-2606 before the Regional Trial Court, Branch 65, Makati, Metro Manila, entitled "In the Matter of the Petition for Letters of Administration of the Estate of Menilo B. Uy, Sr." On 27 February 1991, Natividad filed with the Regional Trial Court, Branch 58, Makati, Civil Case No. 91-573 for "Partition of Properties Under Co-ownership" against the Estate of Menilo B. Uy, Sr., supposedly represented by her four children. The next day, 28 February 1991, Natividad filed a motion to hold the special proceedings in abeyance.

On 23 April 1991, the day of trial in Civil Case No. 91-573, the parties, upon the suggestion of the trial court, submitted a Compromise Agreement. A judgment based on that compromise was rendered on 24 April 1991, and a writ of execution was issued on 15 May 1991.

On 24 May 1991, Tshiate filed an omnibus motion alleging that, by virtue of a Hong Kong marriage, she was the surviving legal spouse of Menilo, Sr. She prayed that she and her son Ramon Uy be allowed to intervene in the civil case, and she submitted an answer in intervention. The intervenors contended, among other things, that the judgment upon the compromise was a patent nullity. On 10 June 1991, the trial court issued an order allowing the intervention and setting aside the compromise judgment; it stated that the intervenors had legal interest in the matter in litigation. Natividad filed a motion for reconsideration, which the trial court denied in its order of 08 July 1991.

Natividad then filed a petition for certiorari with the Court of Appeals. On 23 September 1991, the Court of Appeals promulgated a decision granting the petition and setting aside the trial court's orders dated 10 June 1991 and 08 July 1991. The appellate court denied petitioners' motion for reconsideration in its resolution of 06 November 1991. On 02 January 1992, Tshiate and Ramon filed the instant petition for review on certiorari with the Supreme Court.

• Nullity of Compromise Judgment: Petitioners asserted that the Court of Appeals' finding that the trial court erred in setting aside the compromise judgment because it was already final and partly executed was contrary to law and jurisprudence; a judgment void ab initio is non-existent and cannot acquire finality.
• Timeliness of Intervention: Petitioners argued that the Court of Appeals' conclusion that their intervention came too late was contrary to Director of Lands vs. Court of Appeals, et al., 93 SCRA 238.
• Legal Interest and Indispensable Party Status: Petitioners claimed that Tshiate was the surviving legal spouse of Menilo, Sr. by virtue of a Hong Kong marriage and that Ramon was her son; they sought intervention on the ground that they had legal interest in the estate and the partition case, and that the compromise judgment was a patent nullity.

• Cure by Intervention: Private respondents argued that their failure to implead petitioners in the complaint for partition was cured by petitioners' filing of an omnibus motion asking leave to intervene and attaching an answer in intervention.
• Late Intervention and Finality: Respondent Court of Appeals ruled that intervention came too late under Section 2, Rule 12, of the Revised Rules of Court, and that the trial court ignored the rule on finality of judgments.

• Timeliness of Intervention: Whether petitioners' intervention in Civil Case No. 91-573 came too late under Section 2, Rule 12, of the Revised Rules of Court.
• Finality of Compromise Judgment: Whether the compromise judgment in Civil Case No. 91-573 could attain finality and be partly executed despite the absence of petitioners, who claimed a legal interest in the estate and the property.
• Indispensable Parties: Whether petitioners are indispensable parties whose inclusion in the partition action is essential for a final determination.
• Governing Property Regime: Whether Articles 147 and 148 of the Family Code govern the property relations of Natividad and Menilo, Sr., given his death after the Family Code's effectivity.

• Timeliness of Intervention: No. Intervention was not too late; Section 2, Rule 12 is a procedural rule to be liberally construed, and petitioners had legal interest and were indispensable parties.
• Finality of Compromise Judgment: No. The compromise judgment could not attain real finality as to petitioners because they were not impleaded and are indispensable parties; a judgment without indispensable parties cannot attain real finality.
• Indispensable Parties: Yes. Petitioners are indispensable parties; private respondents acknowledged their claim of interest, and the trial court found they had legal interest.
• Governing Property Regime: Yes. Articles 147 and 148 of the Family Code govern because Menilo, Sr. died on 27 September 1990, after Executive Order No. 209 took effect on 03 August 1988.

• Timeliness of Intervention: Section 2, Rule 12 permits intervention before or during trial by a person with legal interest. The Court of Appeals held intervention too late, but the Court found that Rule 12, like all rules of procedure, is a means to an end; its purpose is not to thwart justice but to facilitate it. Citing Director of Lands vs. Court of Appeals, the Court noted that strict denial of intervention due to alleged lack of notice or failure to act seasonably could commit injustice to movants, successors-in-interest, and purchasers for value and good faith, and open the door to fraud, falsehood, and misrepresentation. The trial court itself found that the intervenors had legal interest. Given the circumstances, petitioners' inclusion in the partition action was not only preferable but rightly essential.
• Finality of Compromise Judgment: Section 7, Rule 3 defines indispensable parties as parties in interest without whom no final determination can be had. Private respondents themselves acknowledged in their complaint that petitioners claimed some interest in the Estate of Menilo B. Uy, Sr. The trial court also stated that the intervenors had legal interest. It is a settled rule that without the presence of indispensable parties, a judgment cannot attain real finality. The compromise judgment was entered among private respondents themselves and did not include petitioners; it therefore cannot bind them. Private respondents' argument that the failure to implead petitioners was cured by the omnibus motion fails because the motion was filed after the compromise judgment.
• Indispensable Parties: The same facts establish that petitioners are indispensable parties. Their claim to legal interest in the estate and the property, acknowledged by private respondents and found by the trial court, means no final determination of the partition action can be had without them. Their exclusion rendered the compromise judgment incapable of real finality and justified the trial court's order setting it aside.
• Governing Property Regime: The partition action is predicated on an alleged co-ownership between Natividad and Menilo, Sr. over property acquired during their common-law relationship. Because Menilo, Sr. died on 27 September 1990, after Executive Order No. 209 (The Family Code of the Philippines) took effect on 03 August 1988, Articles 147 and 148 of the Family Code govern. Article 147 applies when a man and a woman capacitated to marry each other live exclusively as husband and wife without marriage or under a void marriage; it makes wages and salaries equally owned and property acquired through work or industry subject to co-ownership, with a presumption of joint efforts and restrictions on encumbrance or disposition. Article 148 applies to cohabitation not falling under Article 147; it provides that only properties acquired through actual joint contribution are owned in common in proportion to contributions, with a presumption of equal shares, and addresses the share of a party validly married to another and forfeiture for bad faith. The Court noted that factual issues intertwined with these legal questions remain to be determined in Special Proceedings No. M-2606.

• Indispensable Parties and Real Finality — Section 7, Rule 3 defines indispensable parties as parties in interest without whom no final determination can be had. A judgment rendered without indispensable parties cannot attain real finality. In this case, petitioners claimed legal interest in the estate and property; private respondents acknowledged that claim, and the trial court found legal interest. The compromise judgment, entered only among private respondents, could not bind petitioners.
• Liberal Construction of Rules of Procedure in Intervention — Section 2, Rule 12 allows a person with legal interest in the matter in litigation, or in the success of either party, or against both, or who may be adversely affected by a distribution or disposition of property in custodia legis, to intervene before or during trial. Rules of procedure are means to an end and must not thwart justice. The Court applied this to allow intervention despite the prior compromise judgment, because denying it would cause injustice and multiplicity of suits.
• Property Relations of Common-Law Spouses under the Family Code — Articles 147 and 148 of the Family Code govern property acquired during cohabitation. Article 147 covers a man and woman capacitated to marry each other who live exclusively as husband and wife without marriage or under a void marriage; it provides equal ownership of wages and salaries, co-ownership of property acquired through work or industry, a presumption of joint efforts, restrictions on encumbrance or disposition of shares, and forfeiture for bad faith. Article 148 covers cohabitation not under Article 147; it provides that properties acquired through actual joint contribution are owned in common in proportion to contributions, presumes equal shares, and addresses the share of a party validly married to another and forfeiture for bad faith. Because Menilo, Sr. died after the Family Code's effectivity, these provisions govern the partition action.
• Compromise Judgment Cannot Bind Non-Parties — A compromise judgment among private respondents that did not include petitioners cannot bind petitioners. The filing of a motion to intervene after the compromise judgment does not cure the failure to implead them. This doctrine was applied to reject private respondents' argument that the defect had been cured.

• "It is a settled rule that without the presence of indispensable parties to a suit or proceeding, a judgment of the court cannot attain real finality." — This states the ratio decidendi on indispensable parties and explains why the compromise judgment could not bind petitioners.
• "The purpose of procedure is not to thwart justice. Its proper aim is to facilitate the application of justice to the rival claims of contending parties." — This articulates the rationale for liberally construing Rule 12 and allowing intervention despite its timing.
• "Private respondents overlook the fact that the motion has been filed subsequent to the judgment based upon the compromise agreement (among private respondents themselves) that did not include, and thereby cannot be held to bind, petitioners" — This rejects the argument that the failure to implead petitioners was cured by their motion to intervene.
• "The governing provisions, applicable to their case, are now found in Article 147 and Article 148 of the Family Code, considering that Menilo Uy, Sr., died on 27 September 1990, well after the effectivity of Executive Order No. 209 (The Family Code of the Philippines) on 03 August 1988." — This identifies the applicable property regime for the common-law relationship.

• Director of Lands vs. Court of Appeals, et al., 93 SCRA 238 — The Court found it not on all fours but adopted its rationale: intervention may be allowed despite the late stage because rules of procedure are designed to promote justice, not thwart it.
• Manila Railroad Co. vs. Attorney-General, 20 Phil. 523 — Cited in Director of Lands for the principle that while intervention after trial and judgment is late under Rule 12, the rule is procedural and must not defeat justice.
• Lozano vs. Ballesteros, 195 SCRA 681 — Cited for the settled rule that without indispensable parties, a judgment cannot attain real finality.
• Filamer Christian Institute vs. Court of Appeals, 190 SCRA 485 — Cited for the proposition that a compromise judgment that did not include petitioners cannot bind them.

• Section 2, Rule 12, Revised Rules of Court — Allows intervention before or during trial by a person with legal interest in the matter in litigation, or in the success of either party, or against both, or who may be adversely affected by a distribution or disposition of property in the custody of the court. Applied to allow petitioners to intervene despite the prior compromise judgment because they had legal interest and were indispensable.
• Section 7, Rule 3, Revised Rules of Court — Defines indispensable parties as parties in interest without whom no final determination can be had. Applied to hold that the compromise judgment could not attain real finality without petitioners.
• Article 147, Family Code (Executive Order No. 209) — Governs property relations when a man and woman capacitated to marry each other live exclusively as husband and wife without marriage or under a void marriage; provides equal ownership of wages and salaries, co-ownership of property acquired through work or industry, presumption of joint efforts, restrictions on encumbrance or disposition, and forfeiture for bad faith. Applied because Menilo, Sr. died after the Family Code's effectivity.
• Article 148, Family Code — Governs cohabitation not falling under Article 147; provides that properties acquired through actual joint contribution are owned in common in proportion to contributions, presumes equal shares, and addresses the share of a party validly married to another and forfeiture for bad faith. Applied as part of the governing property regime.
• Executive Order No. 209 (The Family Code of the Philippines) — Took effect on 03 August 1988. Applied because Menilo, Sr. died on 27 September 1990, making the Family Code the governing law.

Feliciano, Bidin, Romero, and Melo, JJ., concurred.