Narciso v. Garcia - GR No. 196877 - November 21, 2012 - Third Division - Ponente: Abad, J.

Gist:

When a motion to dismiss is filed before the filing of an answer, the running of the period during which the rules required a party to file his answer is deemed suspended. If, however, the motion to dismiss is denied, he has the balance of his period for filing an answer within which to file the same but in no case shall be less than five (5) days, to be computed from her receipt of notice of denial of his motion to dismiss.


Facts:

Garcia filed a complaint for damages against Narciso before the RTC of San Fernando, Pampanga. Defendant subsequently filed a motion to dismiss the complaint on the ground that the RTC had no jurisdiction over the subject matter of the complaint since it averred facts constitutive of forcible entry – of which the acts complained of were committed in Angeles City.

Petitioner opposed motion to dismiss and sought to have defendant declared in default. He cited a Supreme Court administrative circular that discouraged the filing of a motion to dismiss in lieu of an answer.

The RTC denied petitioner’s motion to dismiss and declared her in default for failing to file an answer. The defendant filed a motion for reconsideration which plaintiff opposed. The latter sought to present her evidence ex parte. Meanwhile, the presiding judge retired and a new acting judge replaced him.

The new presiding judge referred the case for mediation but it failed. The court then set the case for judicial dispute resolution (JDR) as a component of pre-trial. However, such JDR  failed.

The RTC denied Narciso’s motion for reconsideration and declared her in default as early as November 2004. It held that since she had not filed any motion to lift the order of default within an allowable time, Narciso could no longer assail such default order.

Defendant filed motion to lift the order of default against her. The protracted resolution of her motion for reconsideration and referral of the case for mediation prevented her from filing an answer. This motion was denied as well as the motion for reconsideration filed later.

Issue:

Did the CA gravely abuse its discretion in affirming the order of default that the RTC issued against petitioner Narciso (propriety of declaring a defendant in default when the time for filing the answer has not yet elapsed)?

Ruling:

Yes, the CA gravely abused its discretion in affirming the order of default that the RTC issued.

Sec. 3, Rule 9 provides that a defending party may be declared in default upon motion of the claiming party with notice to the defending party, and proof of failure to file an answer within the time allowed for it.

In this case, defendant Narciso filed the motion to dismiss the complaint before filing an answer. Sec. 1, Rule 16 allows her this remedy.

As a consequence of the motion to dismiss that defendant Narciso filed, the running of the period during which the rules required her to file her answer was deemed suspended.

When the trial court denied her motion to dismiss, she had the balance of her period for filing an answer under Sec. 4, Rule 16 within which to file the same but in no case less than five (5) days, computed from her receipt of notice of denial of her motion to dismiss.

Hence, Narciso was not yet in default when the trial court denied her motion to dismiss. She had at least five (5) days within which to file her answer to the complaint. Narciso had the right to file a motion for reconsideration of the trial court’s order denying her motion to dismiss. No rule prohibits the filing of such motion.

Rebecca Pacana-Contreras and Rosalie Pacana v. Rovila Water Supply, Inc., Earl U. Kokseng, Lilia Torres, Dalia P. Romanillos and Marisa Gabuya - G.R. No. 168979 - December 2, 2013 - Second Division - Ponente: Brion, J.

Gist:
Upon death of the parents, the ownership and rights over the properties shall be transmitted to their heirs. Hence, the heirs are deemed to be real parties in interest.

Facts:

Petitioners filed a case against defendants for accounting and damages. They are engaged in the water supply business and operated the “Rovila Water Supply” from their family residence in Cebu City.

Respondent Lilia Torres was a former trusted employee in the family business who later on allegedly barred the members of Pacana family from operating their business. She then claimed ownership over the family business through a corporation named “Rovila Water Supply, Inc.” which, upon inquiry to the SEC, was surreptitiously formed with respondents as majority shareholders.

Respondents allegedly used the name of petitioners’ mother, Lourdes, as one of the incorporators. They then used the Pacana family’s receipts and the deliveries and sales were made to appear as those of Rovila Water Supply, Inc. Using this scheme, respondents fraudulently appropriated the collections and payments.

Petitioners filed the complaint in their own names although Rosalie was authorized by her mother through a sworn declaration and SPA.

When Lourdes died, petitioners amended their complaint with leave of court and still attached the sworn declaration to the amended complaint but the caption of such complaint was unchanged.

In the pre-trial, respondents manifested to the RTC that a substitution of parties was necessary. They sought the dismissal of the complaint as petitioners are not the real parties in interest.

The RTC denied their motion to dismiss as the ground invoked by respondents may only be filed within the time for, but before, the filing of their answer to the amended complaint. Such motion to dismiss was filed out of time as it was filed only after conclusion of the pre-trial conference. Respondents elevated the case to the CA after denial of their motion for reconsideration.

The CA granted the petition as it found that the petitioners filed the complaint and amended complaint as attorneys-in-fact of their parents. Accordingly, pursuant to jurisprudence, petitioners should first be declared as heirs in a special proceeding before they can be considered as real parties in interest.



Issues:

1. Whether the CA unjustly allowed the motion to dismiss in annulling the interlocutory orders which did not conform to the rules;
2. Whether the remedy of a non-joinder and misjoinder of parties or that the suit is not brought in the name of the real party in interest is its annulment to include the real parties in interest;
3. Whether the petitioners’ declaration as heirs in a special proceeding is necessary

Ruling:

1. Petition for certiorari under Rule 65 is a proper remedy for a denial of a motion to dismiss attended by grave abuse of discretion.

In Barrazona v. RTC, it was held that while an order denying a motion to dismiss is interlocutory and non-appealable, certiorari and prohibition are proper remedies to address an order of denial made without or in excess of jurisdiction.

The rule is failure to invoke a cause of action in a motion to dismiss or in the answer would result in its waiver. According to Herrera, the reason for deletion is that failure to state a cause of action may be cured under Sec. 5, Rule 10 or an amendment to conform to or authorize presentation of evidence. When issues not raised by the pleadings are tried with the express/implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings.

2. The motion to dismiss based on failure to state a cause of action was not timely filed and was thus waived.

Defenses and objections not pleaded wither in a motion to dismiss or in the answer are deemed waived, except for the following grounds: (1) no jurisdiction over the subject matter; (2) litis pendentia; (3) res judicata; and (4) prescription. Grounds not falling under these four exceptions may be considered as waived in the event that they are not timely invoked.

The motion to dismiss was filed after the filing of the answer and after the pre-trial conference had been concluded. Because there was no motion to dismiss before filing of their answer, the respondents should have at least raised these grounds as affirmative defenses in their answer.

The pre-trial is primarily intended to make certain that all issues necessary to the disposition of a case are properly raised. Its purpose is to obviate the element of surprise. It is also expected to disclose at the pre-trial conference all issues of law and fact which they intend to raise at the trial, except if it may involve privileged or impeaching matters. In sum, the issues submitted during the pre-trial conference are the issues that would govern the trial proper.

3. Failure to state a cause of action versus a lack of cause of action

Failure to state a cause of action refers to the insufficiency of the pleasing which is a ground for dismissal under Rule 16. The proper remedy for this ground is to move for dismissal of the pleading.

Meanwhile, a lack of cause of action pertains to the evidence which does not prove the cause of action alleged in the pleading. The proper remedy for this ground is to demur to the evidence. In the motion to dismiss on grounds of lack of cause of action where questions of fact are involved, the court hesitates to declare a plaintiff as lacking a cause of action. Such declaration is postponed until insufficiency of cause is apparent from a preponderance of evidence. To dismiss a case based on lack of cause of action would require at least a preponderance of evidence.

4. Other heirs of spouses Pacana to be impleaded in the case

In Carandang v. Heirs of De Guzman, et. Al., the Court distinguished between a real party in interest, an indispensable party, and a necessary party.

A real party in interest is a party who stands to be benefited or injured by the judgment of the suit or the party entitled to the avails of the suit.

An indispensable party is the party in interest without whom no final determination can be had of an action.

A necessary party is one who is not indispensable but who ought to be joined as a party if complete relief is to be accorded as to those already parties, or for a complete determination or settlement of the claim subject of the action.

If a suit is not brought in the name of or against the real party in interest, a motion to dismiss may be filed on the ground that the complaint states no cause of action.

The test is when the parties presently pleaded are interested in the outcome of the litigation, they are real parties in interest. Otherwise, when all persons interested in such outcome are actually pleaded, they are indispensable and necessary parties.

Non-joinder of indispensable parties is not a ground for dismissal of an action. The remedy of this is to implead the non-party claimed to be indispensable.

In RP v. Sandiganbayan, it was held that failure to implead an indispensable party is a curable error which can be remedied by Sec. 10, Rule 5. Amendments of complaint in order to implead them should be freely allowed, even on appeal.

The proper remedy in this case is to implead the indispensable parties especially when their non-inclusion is merely a technical defect.

According to Sec. 9, Rule 3, parties may be added by order of the court on motion of the party or on its own initiative at any stage of the action. If plaintiff refuses to implead an indispensable party despite the order of the court then the court may dismiss the complaint for plaintiff’s failure to comply with a lawful court order.

The deceased Pacanas cannot be impleaded as indispensable parties. Upon death, ownership and rights over their properties shall be transmitted to their heirs. Hence, petitioners are real parties in interest.

Zuniga-Santos v. Santos-Gran - G.R. No. 197380 - October 8, 2014 - First Division - Ponente: Perlas-Bernabe, J.

Gist: Failure to state cause of action and lack of cause of action are distinct grounds to dismiss an action.

Facts:

Petitioner Zuniga-Santos, through her authorized representative, filed a complaint for annulment of sale and revocation of title against respondent Santos-Gran and the Register of Deeds of Marikina before the Regional Trial Court. Later, she filed an amended complaint and alleged that the three (3) parcels of land registered in her name were successfully transferred by Lamberto, her second husband, to his daughter Santos-Gran through void and voidable documents.

Santos-Gran filed a motion to dismiss on the grounds that the action has prescribed for an action upon a written contract prescribes within ten (10) years from the time the cause of action accrues or from the time of registration of questioned documents before the Registry of Deeds.

The Regional Trial Court (RTC) granted Santos-Gran’s motion to dismiss and dismissed the amended complaint of Zuniga-Santos for failure to state a cause of action. The Court of Appeals (CA) affirmed the ruling of the lower court.

Issue:

Should the dismissal of petitioner’s amended complaint be sustained?

Ruling:

Yes, the dismissal of petitioner’s amended complaint should be sustained.

Failure to state a cause of action and lack of cause of action are two distinct grounds to dismiss an action.

Failure to state a cause of action refers to the insufficiency of allegations in a pleading in which a motion to dismiss is proper. Dismissal based on this ground may be raised at the earliest stages of proceedings, through a motion to dismiss under Rule 16.

On the other hand, lack of cause of action denotes insufficiency of factual basis which can be remedied by a demurrer to evidence which may be taken only after plaintiff’s presentation of evidence. Dismissal based on this ground may be raised any time after the questions of fact have been resolved on the basis of stipulations, admissions, or evidence presented by the plaintiff.

In this case, the RTC and CA differed in their findings of the basis for dismissal. The RTC found that the amended complaint failed to state a cause of action while the CA suggested that such complaint lacked a cause of action.

The RTC correctly held that the amended complaint was still dismissible on the ground of failure to state a cause of action.

Generally, a complaint has a cause of action if the three elements of a cause of action exist. If the allegations of the complaint are wanting in any of the elements, a motion to dismiss may be raised for failure to state a cause of action.

The plaintiff’s cause of action was sufficiently stated. The test in a motion to dismiss on such ground is whether or not the complaint alleges facts which if true would justify the relief demanded. The complaint should contain only ultimate or essential facts. A fact is essential if it cannot be stricken out without leaving the statement of cause of action inadequate.

A hypothetical admission extends only to the relevant and material facts well pleaded in the complaint. The rule of hypothetical admission does not apply to: (1) legally impossible facts; (2) facts inadmissible in evidence; or (3) facts that appear to be unfounded by record or document included in pleadings.

Void and voidable documents are mere conclusions of law. By presenting a legal conclusion, the amended complaint presented no sufficient allegation upon which the court could grant the relief prayed for.

Land Bank of the Philippines v. Eduardo M. Cacayuran (Respondent) and Municipality of Agoo, La Union (Intervenor) - G.R. No. 191667 - April 22, 2015 - Special Second Division – Amended Decision - Ponente: Perlas-Bernabe, J.

All indispensable parties should be joined in a suit.

Facts:

Two (2) loans were entered into by the Municipality with Land Bank of the Philippines (LBP) in order to finance the Redevelopment Plan of the Agoo Public Plaza. As security for the loans, the Municipality used as collateral a lot situated at the plaza.

A group of residents led by Mr. Cacayuran opposed the redevelopment of the public plaza. He invoked his right as a taxpayer and filed a complaint against LBP and various officers of the Municipality but excluded the Municipality itself as party-defendant.

LBP asserted that Mr. Cacayuran did not have any cause of action since he was not privy to the loan agreements entered into by LBP and the Municipality.

In proceedings before the Supreme Court, the Municipality filed a motion for leave that it be included as party-litigant in the case. It contends that as a contracting party to the subject loans, it is an indispensable party to the action filed by Mr. Cacayuran.

Issue:

Should the municipality be deemed as an indispensable party and be ordered impleaded in the case?

Ruling:

Yes, the municipality should be deemed as an indispensable party and should be impleaded in the case.

Sec. 7 states:

Compulsory joinder of indispensable parties. Parties-in-interest without whom final determination can be had of an action shall be joined either as plaintiffs or defendants.

An indispensable party is one whose interest will be affected by the court’s action in the litigation and without whom no final determination of the case can be had. The party’s interest in the subject matter of the suit and in the relief sought are so inextricably intertwined with the other parties that his legal presence as a party to the proceeding is an absolute necessity. In his absence, there cannot be a resolution of the dispute of the parties before the court which is effective, complete, or equitable. Absence of an indispensable party renders all subsequent actions of the court void, for want of authority to act, not only as to the absent parties but even as to those present.

Failure to implead any indispensable party to a suit does not necessarily result in the outright dismissal of the complaint (Heirs of Mesina v. Heirs of Fian, Sr.).

The Municipality on whose land stands and is found the Agoo Public Plaza stands to be benefited or injured in the judgment in the case so filed or the party entitled to the avails of the case and is therefore, a real party-in-interest.

The presence of the indispensable party is necessary to vest the court with jurisdiction. Impleading such party may be raised at any stage of the proceedings.

The case was remanded back to the RTC to include the indispensable parties and its immediate disposition on the merits.

Alex Raul B. Blay v. Cynthia B. Bana - G.R. No. 232189 - March 7, 2018 - Second Division - Ponente: Perlas-Bernabe, J.

A dismissal of an action is different from a mere dismissal of complaint. Since only the complaint and not the action is dismissed, the defendant inspite of said dismissal may still prosecute his counterclaim in the same action.

Facts:

On September 17, 2014, Mr. Blay filed before the Regional Trial Court (RTC) a petition for declaration of nullity of marriage on grounds of psychological incapacity. Three months later, Ms. Bana filed her answer with compulsory counterclaim.

On March 11, 2015, Mr. Blay filed a motion to withdraw his petition. On March 26, 2015, Ms. Bana then invoked Sec. 2, Rule 17 and prayed that her counterclaims be declared as remaining for the court’s independent adjudication. Four days later, she filed her Manifestation. Mr. Blay filed a reply averring that Ms. Bana’s counterclaims are barred from being prosecuted in the same action due to her failure to file a manifestation within fifteen (15) days from the notice of motion to withdraw.

The RTC granted Mr. Blay’s motion to withdraw and declared Ms. Bana’s counterclaim as “remaining for independent adjudication”. The Court of Appeals affirmed the decision of the lower court.

Issue:

Is the respondent’s counterclaim for independent adjudication before the same trial court valid?

Ruling:

No. The RTC should have granted only Mr. Blay’s motion to withdraw and hence, dismissed his petition for declaration of nullity of marriage, without prejudice to the prosecution of Ms. Bana’s counterclaim in a separate action.

When the plaintiff moves for dismissal of complaint to which a counterclaim has been interposed, the dismissal shall be limited to the complaint only. Such dismissal shall be without prejudice to the right of the defendant: (i) to prosecute the counterclaim in a separate action or (ii) to have the counterclaim resolved in the same action.

If the plaintiff elects to prosecute in a separate action, the Court should render the corresponding order granting and reserving the right to prosecute his claim in a separate complaint.

However, if the plaintiff opts to resolve it in the same action wherein the complaint had been dismissed, he must manifest within fifteen (15) days from notice to him of the plaintiff’s motion to dismiss. Failure to manifest within the prescribed time renders the counterclaim to be prosecuted only in a separate action.

The passing of the 15-day period triggers the finality of the court’s dismissal of the complaint and bars the conduct of further proceedings, i.e. the prosecution of respondent’s counterclaim in the same action.