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.
