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TOPIC: CAUSE OF ACTION title; GSIS' right to foreclose

had prescribed.
1. MERCENE V. GSIS  GSIS assailed that the complaint
failed to state a cause of action and
G.R. No. 192971 | January 10, 2018 | that prescription does not run
Martires against it because it is a government
entity.
Digested by: Ong, Janet Vylle T.  During the pre-trial conference,
Mercene manifested that he would
DOCTRINE/S: file a motion for judgment on the
 In order for cause of action to arise, pleadings. There being no objection,
the following elements must be the RTC granted the motion for
present: (1) a right in favor of the judgment on the pleadings.
plaintiff by whatever means and  RTC RULING: granted Mercene's
under whatever law it arises or is complaint and ordered the
created; (2) an obligation on the part cancellation of the mortgages
of the named defendant to respect annotated on the title.
or not to violate such right; and (3)  GSIS appealed with the CA
an act or omission on the part of
 CA RULING: reversed the RTC
such defendant violative of the right
Ruling
of the plaintiff or constituting a
breach of obligation of the defendant
ISSUE/S: Whether or not Mercene’s
to the plaintiff.
complaint failed to state a cause of
action.
FACTS:
HELD:
 Petitioner Floro Mercene (Mercene)
Yes. The complaint failed to state a cause
obtained a loan from respondent
of action.
Government Service Insurance
 In its answer, GSIS raised the
System (GSIS) in the amount of
affirmative defense, among others,
P29,500.00.
that the complaint failed to state a
o As security, a real estate
cause of action. In turn, the CA ruled
mortgage was executed
that Mercene's complaint did not
over Mercene's property in
state a cause of action because the
Quezon City. The mortgage
maturity date of the loans, or the
was registered and
demand for the satisfaction of the
annotated on the title.
obligation, was never alleged.
 Mercene contracted another loan
 In order for cause of action to arise,
with GSIS for the amount of
the following elements must be
P14,500.00.
present: (1) a right in favor of the
o The loan was secured by a
plaintiff by whatever means and
real estate mortgage on the under whatever law it arises or is
same parcel of land. created; (2) an obligation on the part
o The following day, the loan of the named defendant to respect
was registered and duly or not to violate such right; and (3)
annotated on the title. an act or omission on the part of
 Mercene filed a complaint for such defendant violative of the right
Quieting of Title against GSIS. of the plaintiff or constituting a
o He alleged that: since 1968 breach of obligation of the defendant
until the time the complaint to the plaintiff.
was filed, GSIS never  The Court finds that the CA did not
exercised its rights as a err in concluding that Mercene's
mortgagee; the real estate complaint failed to state a cause of
mortgage over his property action. It is undisputed that his
constituted a cloud on the complaint merely stated the dates
when the loan was contracted and
when the mortgages were annotated
on the title of the lot used as a FACTS:
security. Conspicuously lacking  Team Sual Corp. (TSC) is a
were allegations concerning: the domestic corporation principal office
maturity date of the loan contracted at Pangasinan.
and whether demand was o It is principally engaged in
necessary under the terms and the business of power
conditions of the loan. generation and subsequent
 As such, the RTC erred in ruling that sale thereof to the National
GSIS' right to foreclose had Power Corporation (NPC)
prescribed because the allegations under aBuild, Operate, and
in Mercene's complaint were Transfer scheme.
insu�cient to establish prescription  TSC was originally registered with
against GSIS. The only information the Securities and Exchange
the trial court had were the dates of Commission under the name
the execution of the loan, and the "Pangasinan Electric Corporation." It
annotation of the mortgages on the changed its name to "Southern
title. As elucidated in the above- Energy Pangasinan, Inc.," which
mentioned decisions, prescription of was then changed to "Mirant Sual
the right to foreclose mortgages is Corporation" and �finally to "Team
not reckoned from the date of Sual".
execution of the contract. Rather,  As a seller of services, TSC is
prescription commences from the registered with the Bureau of
time the cause of action accrues; in Internal Revenue (BIR) as a VAT
other words, from the time the taxpayer with Certificate of
obligation becomes due and Registration.
demandable, or upon demand by  TSC filed with the BIR Revenue
the creditor/mortgagor, as the case District Office an application for
may be. zero-rating arising from its sale of
 WHEREFORE, the petition is power generation services to NPC
DENIED. The 29 April 2010 for the taxable year 2001.
Decision and 20 July 2010 o The same was
Resolution of the Court of subsequently approved.
Appeals (CA) in CA-G.R. CV No. o As a result, TSC filed its
86615 are AFFIRMED in toto. VAT returns covering the
four quarters of taxable year
TOPIC: CAUSE OF ACTION 2001.
2. TEAM SUAL CORP V. CIR  For the first, second, third, and
fourth quarters of 2001, TSC
G.R. Nos. 201225-26 | April 18, 2018 | reported excess input VAT
Reyes amounting. The total excess input
Digested by: Ong, Janet Vylle T. VAT claimed by TSC for the taxable
year amounted to P166,720,367.79.
DOCTRINE/S:  On March 20, 2003, TSC �led with
Failure to comply with the 120-day waiting the BIR an administrative claim for
period violates a mandatory provision of law. refund in the aggregate amount of
It violates the doctrine of exhaustion of P166,720,367.79 for its unutilized
administrative remedies and renders the input VAT for taxable year 2001.
petition premature and thus without a  On March 31, 2003, without waiting
cause of action, with the effect that the for the resolution of its
CTA does not acquire jurisdiction over administrative claim for refund or tax
the taxpayer's petition. Philippine credit, TSC filed with the CTA
jurisprudence is replete with cases Division a petition for review.
upholding and reiterating these doctrinal o It prayed for the refund or
principles. issuance of a tax credit
certicate for its alleged taxable year 2001 amounting to
unutilized input VAT for the P123,110,001.68.
�first quarter of taxable year o Insofar as the refund of the
2001 in the amount of input VAT for the first
P37,985,009.25. quarter of taxable year 2001
 On July 23, 2003, TSC �led another is concerned, the CTA En
petition for review before the CTA Banc ruled that the CTA did
seeking the refund or issuance of a not acquire jurisdiction over
tax credit certicate for its alleged it as it had been led
unutilized input VAT for the second, prematurely.
third, and fourth quarters of taxable  TSC filed a Motion for
year 2001 in the amount of Reconsideration.
P128,735,358.54. Both cases were  The CTA En Banc dismissed.
consolidated.  Hence, this present petition on
 CTA RULING: The CTA Division review on certiorari.
partially granted TSC's claim. ISSUE/S: Whether or not the non-
o It allowed the refund of compliance of the 120-day waiting period
unutilized input VAT for the makes a petition before the CTA
first, third, and fourth premature.
quarters of taxable year
2001, but disallowed the Held:
refund for the second Yes. The petition filed before the CTA is
quarter. premature and thus without a cause of
o The CTA Division ruled that action.
the claim for the second
quarter did not fall within the Failure to comply with the 120-day waiting
two-year prescriptive period. period violates a mandatory provision of law.
 TSC filed a Petition for Review It violates the doctrine of exhaustion of
before the CTA En Banc. administrative remedies and renders the
o It posits that the CTA petition premature and thus without a cause
Division erred in disallowing of action, with the effect that the CTA does
the amount of not acquire jurisdiction over the taxpayer's
P12,761,224.50 for input petition. Philippine jurisprudence is replete
VAT on local purchases of with cases upholding and reiterating these
goods and services on the doctrinal principles.
mere fact that the pertinent
supporting documents were In the instant case, TSC �led its
issued under TSC's former administrative claim for refund for taxable
name. year 2001 on March 20, 2003, well within
o TSC argues that a the two-year period provided for by law. TSC
corporation's change of then �filed two separate judicial claims for
name does not affect its refund: one on March 31, 2003 for the first
identity or rights. Thus, it quarter of 2001, and the other on July 23,
should still be entitled to 2003 for the second, third, and fourth
claim the said input VAT. quarters of the same year.
 The CIR also �filed a petition for Given the fact that TSC's administrative
review praying that the Decision be claim was �filed on March 20, 2003, the CIR
reversed and set aside and another had 120 days or until July 18, 2003 to act on
one be rendered denying the entire it. Thus, the first judicial claim was
claim for refund. premature because TSC filed it a mere 11
 CTA En Banc Ruling: rendered a days after filing its administrative claim.
decision granting petitioner's claim On the other hand, the second judicial claim
for refund of input VAT for the filed by TSC was filed on time because it
second, third, and fourth quarters of was �filed on July 23, 2003 or �five days
after the lapse of the 120-day period.
Accordingly, it is clear that the second G.R. No. 190432 | April 25, 2017 | SERENO
judicial claim complied with the mandatory
waiting period of 120 days and was �filed Digested by: Ong, Janet Vylle T.
within the prescriptive period of 30 days
from the CIR's action or inaction. Therefore, DOCTRINE/S:
the CTA division only acquired jurisdiction  Failure to state a cause of action is
over TSC's second judicial claim for refund not the same as lack of cause of
covering its second, third, and fourth action; the terms are not
quarters of taxable year 2001. interchangeable. It may be observed
Nevertheless, TSC insists that assuming that lack of cause of action is not
arguendo that the 120-day period was among the grounds that may be
indeed mandatory and jurisdictional, the raised in a motion to dismiss under
issue of its non-compliance with said period, Rule 16 of the Rules of Court. The
as a ground to deny its claim, was already dismissal of a Complaint for lack of
waived since the CIR did not raise it in the cause of action is based on Section
proceedings before the CTA Division. It 1 of Rule 33.
claims that non-compliance with the 120-day  If the Complaint fails to state a
period prior to the �ling of a judicial claim cause of action, a motion to dismiss
with the CTA merely results in a lack of must be made before a responsive
cause of action, a ground which may be pleading is filed; and the issue can
waived for failure to timely invoke the same. be resolved only on the basis of the
allegations in the initiatory pleading.
However, it is apparent from the records that On the other hand, if the Complaint
the issue of TSC's non-compliance with the lacks a cause of action, the motion
120-day waiting period has been raised by to dismiss must be filed after the
the CIR throughout the pendency of the plaintiff has rested its case.
entire case. In fact, the records reveal that  The test to determine whether a
the CIR raised it at the earliest possible complaint states a cause of action
opportunity, when it �led its motion for partial against the defendants is this:
reconsideration with the CTA Division dated admitting hypothetically the truth of
July 3, 2009. the allegations of fact made in the
In any case, even if the CIR failed to raise complaint, may a judge validly grant
the issue of TSC's non-compliance with the the relief demanded in the
120-day waiting period at the frst instance, complaint?
such failure would not operate to vest the FACTS:
CTA with jurisdiction over TSC's judicial  Within the period of September
claims for refund. The Court has already 1996 to July 1998, 10 checks and
settled that a judicial claim for refund which 16 demand drafts (collectively,
does not comply with the 120-day "instruments") were issued in the
mandatory waiting period renders the same name of Charlie Go.
void. As such, no right can be claimed or  The instruments, with a total value
acquired from it, notwithstanding the failure of P3,785,257.38, bore the
of a party to raise it as a ground for annotation "endorsed by PCI Bank,
dismissal. Ayala Branch, All Prior Endorsement
and/or Lack of Endorsement
WHEREFORE, premises considered, the Guaranteed."
instant petitions are DENIED. The  All the demand drafts, except those
Consolidated Decision dated September 15, issued by the Lucena City and
2011 and the Resolution dated March 21, Ozamis branches of Allied Bank,
2012 of the Court of Tax Appeals En Banc in were crossed.
CTA EB No. 649 and CTA EB No. 651 are  In their Complaint, petitioners
hereby AFFIRMED in toto. narrate:
10. None of the above
TOPIC: CAUSE OF ACTION checks and demand drafts
set out under the First,
3. ASIA BREWERY V. EQUITABLE
Second, Third, Fourth, Fifth, claims were only enforceable
and Sixth Causes of Action against the drawers of the checks
reached payee, co-plaintiff and the purchasers of the demand
Charlie S. Go. drafts, and not against it as a mere
11. All of the above checks "presentor bank," because the
and demand drafts fell into nondelivery to Go was analogous to
the hands of a certain payment to a wrong party.
Raymond U. Keh, then a  Respondent argued that
Sales Accounting Manager Development Bank of Rizal v. Sima
of plaintiff Asia Brewery, Wei was squarely applicable to the
Inc., who falsely, willfully, case and cited these portions of the
and maliciously pretending Decision therein:
to be the payee, co-plaintiff o Thus, the payee of a
Charlie S. Go, succeeded in negotiable instrument
opening accounts with acquires no interest with
defendant Equitable PCI respect thereto until its
Bank in the name of Charlie delivery to him. Delivery of
Go and thereafter deposited an instrument means
the said checks and transfer of possession,
demand drafts in said actual or constructive, from
accounts and withdrew the one person to another.
proceeds thereof to the Without the initial delivery of
damage and prejudice of the instrument from the
plaintiff Asia Brewery, Inc. drawer to the payee, there
 Raymond Keh was allegedly can be no liability on the
charged with and convicted of theft instrument. Moreover, such
and ordered to pay the value of the delivery must be intended to
checks, but not a single centavo give effect to the instrument.
was collected, because he jumped o The allegations of the
bail and left the country while the petitioner in the original
cases were still being tried. complaint show that the two
 In demanding payment from (2) China Bank checks,
respondent, petitioners relied on were not delivered to the
Associated Bank v. CA, in which this payee, the petitioner herein.
Court held "the possession of check Without the delivery of said
on a forged or unauthorized checks to petitioner-payee,
indorsement is wrongful, and when the former did not acquire
the money is collected on the check, any right or interest therein
the bank can be held for moneys and cannot therefore assert
had and received." any cause of action,
 In its Answer, respondent interpreted founded on said checks,
paragraphs 10 and 11 of the whether against the drawer
Complaint as an admission that the Sima Wei or against the
instruments had not been delivered Producers Bank or any of
to the payee, petitioner Go. It the other respondents.
argued that the Complaint failed to xxx xxx xxx
state a cause of action and that o However, insofar as the
petitioners had no cause of action other respondents are
against it, because 1) the Complaint concerned, petitioner Bank
failed to indicate that ABI was a has no privity with them.
party to any of the instruments; and Since petitioner Bank never
2) Go never became the holder or received the checks on
owner of the instruments due to which it based its action
nondelivery and, hence, did not against said respondents, it
acquire any right or interest. never owned them (the
Respondent also opined that the checks) nor did it acquire
any interest therein. Thus, evidence. (Emphasis
anything which the supplied)
respondents may have done  If the Complaint fails to state a
with respect to said checks cause of action, a motion to dismiss
could not have prejudiced must be made before a responsive
petitioner Bank. It had no pleading is filed; and the issue can
right or interest in the be resolved only on the basis of the
checks which could have allegations in the initiatory pleading.
been violated by said On the other hand, if the Complaint
respondents. Petitioner lacks a cause of action, the motion
Bank has therefore no to dismiss must be filed after the
cause of action against said plaintiff has rested its case.
respondents, in the  In the first situation, the veracity of
alternative or otherwise. If at the allegations is immaterial;
all, it is Sima Wei, the however, in the second situation, the
drawer, who would have a judge must determine the veracity of
cause of action against her the allegations based on the
co- respondents, if the evidence presented.
allegations in the complaint  Hence, in order to resolve whether
are found to be true. the Complaint lacked a cause of
 RTC RULING: dismissed the action, respondent must have
complaint on the ground of lack presented evidence to dispute the
of cause of action presumption that the signatories
ISSUE/S: Whether the trial court validly and intentionally delivered
seriously erred in dismissing their the instrument.
Complaint for lack of cause of action.  Even assuming that the trial court
Yes. The RTC erred. merely used the wrong terminology,
Held: that it intended to dismiss the
 Failure to state a cause of action is Complaint on the ground of failure to
not the same as lack of cause of state a cause of action, the
action; the terms are not Complaint would still have to be
interchangeable. It may be observed reinstated.
that lack of cause of action is not  The test to determine whether a
among the grounds that may be complaint states a cause of action
raised in a motion to dismiss under against the defendants is this:
Rule 16 of the Rules of Court. The admitting hypothetically the truth of
dismissal of a Complaint for lack of the allegations of fact made in the
cause of action is based on Section complaint, may a judge validly grant
1 of Rule 33, which provides: the relief demanded in the
o Section 1. Demurrer to complaint?
evidence. — After the  We believe that petitioner met this
plaintiff has completed the test.
presentation of his  A cause of action has three
evidence, the defendant elements: 1) the legal right of the
may move for dismissal on plaintiff; 2) the correlative obligation
the ground that upon the of the defendant not to violate the
facts and the law the plaintiff right; and 3) the act or omission of
has shown no right to relief. the defendant in violation of that
If his motion is denied he legal right.
shall have the right to  In the case at bar, petitioners
present evidence. If the alleged in their Complaint as follows:
motion is granted but on o 1) They have a legal right to
appeal the order of be paid for the value of the
dismissal is reversed he instruments.
shall be deemed to have
waived the right to present
o 2) Respondent has a electric supply, even though the
correlative obligation to pay, service contract with Meralco was
having guaranteed all prior registered in the name of another
endorsements. HEITAD person.
o 3) Respondent refused to FACTS:
pay despite demand.  Manila Electric Company (Meralco)
 It is of no moment that respondent was contracted to supply electricity
denies that it has any obligation to to Marvex Industrial Corporation
pay. In determining the presence of (Marvex) under an Agreement for
the elements, the inquiry is con�ned Sale of Electric Energy. It installed
to the four corners of the complaint. metering devices at Marvex's
In fact, even if some of the premises on January 18, 1985.
allegations are in the form of Marvex was billed according to the
conclusions of law, the elements of monthly electric consumption
a cause of action may still be recorded in its meter.
present.  Meralco service inspectors
 WHEREFORE, the petition is inspected Marvex's electric metering
GRANTED. The Order dated 30 facilities and found that the main
January 2008 issued by Judge meter terminal and cover seals had
Benjamin T. Pozon and the Order been tampered with. During a
dated 23 November 2009 issued by second inspection, Meralco found
Judge Winlove Dumayas in Civil that the metering devices were
Case No. 04-336 are REVERSED tampered with again. Subsequently,
and SET ASIDE. The Complaint is Meralco assessed Marvex a
REINSTATED, and the case is differential billing of P371,919.58 for
ordered REMANDED to the January 18, 1985 to May 29, 1985,
Regional Trial Court of Makati City and P124,466.71 for June 17, 1985
for further proceedings. Let the to September 18, 1985, in the total
records of the case be likewise amount of P496,386.29.
remanded to the court a quo.  Meralco sent demand letters and
TOPIC: CAUSE OF ACTION disconnected Marvex's electric
service when it did not pay.
4. MANILA ELECTRIC CO. V NORDEC  Nordec, the new owner of Marvex,
PHIL. sued Meralco for damages with
prayer for preliminary mandatory
G.R. No. 196020 | April 18, 2018 | Leonen injunction before the RTC.
 The RTC issued a writ of preliminary
Digested by: Ong, Janet Vylle T. injunction directing Meralco to
restore Nordec's electric supply.
DOCTRINE/S:  Meralco conducted another
 A cause of action "is the act or inspection of Nordec's premises in
omission by which a party violates a the presence of Nordec's president,
right of another." For a cause of Dr. Malvar.
action to exist, there must be, first, a o The inspecting group
plaintiff's legal right; second, observed that there were
defendant's correlative obligation; irregularities in Nordec's
and third, an injury to the plaintiff as metering devices, as they
a result of the defendant's violation continued to register power
of plaintiff's right. consumption even though
 The beneficial users of an electric its entire power supply
service have a cause of action equipment was turned off.
against this distribution utility. In Meralco offered to
Manila Electric Company v. Spouses reimburse Nordec's excess
Chua, it was the beneficial users bill of P5,625.10, but Nordec
who were awarded damages due to rejected this offer.
the unjust disconnection of the
 Nordec�filed a second supplemental Further, Meralco is deemed to have
complaint praying that Meralco be knowledge of the fact that Nordec was the
declared guilty of tampering, and be beneficial user of Marvex's service contract
made to refund its excess bill of not with Meralco. It admits that the inspections
less than P5,625.10. of the metering devices were conducted in
 RTC Ruling: dismissed Nordec's the presence of Nordec's maintenance
original complaint and second personnel and with the consent of its
supplemental complaint. The trial manager. It further admits that it
court found that there was sufficient corresponded with Nordec regarding the
evidence to prove that the electric differential billing, and entertained Nordec's
meter and metering installation at demand for an explanation on the �finding of
Marvex premises had been tampering and the recomputation of the
tampered with. It found that Nordec amount to be paid by Nordec. Clearly,
did not dispute that the inspections Meralco knew that it was dealing with
of its premises were conducted with Nordec as the beneficial user of the
the consent and in the presence of electricity supply.
its representatives. Moreover, WHEREFORE, the Petitions for Review on
Nordec failed to prove that Certiorari in G.R. Nos. 196020 and 196116
Meralco's inspectors had ill motives are DENIED. The Court of Appeals January
to falsify their �findings regarding 21, 2011 Decision and March 9, 2011
the tampered meter, or that the Resolution in CA-G.R. CV No. 85564 are
inspectors were responsible for the AFFIRMED with MODIFICATION. Manila
tampering. Electric Company is ordered to pay Nordec
 Nordec appealed before the CA Philippines P5,625.00, representing
 CA Ruling: reversed the RTC. overbilling for November 23, 1987;
 Meralco filed a Motion for P30,000.00 in nominal damages; and costs
Reconsideration but was denied. of suit. The awards for exemplary damages
 Hence, this present case. and attorney's fees are deleted.
ISSUE/S: Whether or not Nordec Philippines
has a cause of action against Manila Electric TOPIC: CAUSE OF ACTION
Company
5. HBD PARTNERS HOLDINGS V. MED
Held: CENTRAL INC.
Yes.
A cause of action "is the act or omission by G.R. No. 218071| September 6, 2017
which a party violates a right of another."
For a cause of action to exist, there must be, Digested by: Ong, Janet Vylle T.
first, a plaintiff's legal right; second,
defendant's correlative obligation; and third, DOCTRINE/S:
an injury to the plaintiff as a result of the FACTS:
defendant's violation of plaintiff's right. Here,  MCI is a domestic corporation which
the Regional Trial Court found that Nordec used to operate a medical clinic in
had no cause of action against Meralco Robinsons Galleria Mall in Ortigas,
since they had no contractual relationship, Quezon City.
as Meralco's service contract was with o Respondent David is a
Marvex.
stockholder, member of the
The beneficial users of an electric service
board of directors and then
have a cause of action against this
President of MCI.
distribution utility. In Manila Electric
o Respondents Warren and
Company v. Spouses Chua, it was the
Antonio are stockholders,
beneficial users who were awarded
members of the board of
damages due to the unjust disconnection of
directors and elected Vice-
the electric supply, even though the service
Presidents of MCI.
contract with Meralco was registered in the
name of another person. o Respondents Henry and
Jerold are stockholders and
members of the board of
directors of MCI, while mutual obligations, but the same did
respondents Johnny and not materialize.
Zeno are nominee  HBD Partners Holdings, Inc. (HBD),
stockholders of MCI. through Delizo, filed a Complaint
 The owners and stockholders of against respondents for the
MCI decided to sell their shares in issuance of a writ of preliminary
the business along with the medical attachment, confirmation of the
clinic and its equipment. alleged unilateral rescission of the
 Aissa was appointed by MCI as its MOA, and the return of the P3
attorney-in-fact to negotiate with million as partial payment for the
potential buyers. purchase of MCI's business and
 One of those interested was Dr. shares.
Hernando Delizo (Delizo) who  The RTC granted the prayer for the
claimed to represent Healthcare issuance of a writ of preliminary
Business Development Partners attachment upon the payment of a
Holdings, Inc. bond of P3 million.
 A Memorandum of Agreement  Respondents filed Motions to
(MOA) was entered into by and Dismiss on the ground of failure to
between Healthcare and MCI state a cause of action since
wherein both parties confirmed the petitioner HBD is not a real party in
purchase price for the sale of MCI at interest.
P15 million payable in four o According to respondents,
installments. HBD is not a party to the
 Upon payment of the first installment MOA and HBD came into
on 13 February 2009, Delizo took existence only a month after
possession and control of MCI's the execution of the MOA.
medical clinic and operated it. Aissa filed a separate
 All the equipment were turned over motion to dismiss alleging
to Delizo, who changed the name of additionally that she is not a
the clinic to "Clinica Medcentral." stockholder of MCI and
Thereafter, Healthcare reneged on does not have any interest
its obligation to pay the agreed in the MOA. Aissa merely
installment payments. Of the entire represented MCI and its
obligation, only P3 million was paid stockholders when she
to MCI. executed the MOA on their
 Delizo requested for a renegotiation behalf. Johnny and Zeno
for the payment of the balance. The jointly �led a separate
parties, however, failed to reach an motion to dismiss claiming
agreement. additionally that they were
 Meanwhile, as the lease on the not stockholders of MCI in
premises occupied by Clinica their own right but merely
Medcentral was about to expire, the nominee stockholders of
stockholders of MCI pulled out all Warren.
the equipment, vacated the  RTC RULING: The RTC denied the
premises, and returned the same to motions to dismiss. The motion for
its original condition pursuant to the reconsideration was likewise denied.
lease agreement with Robinsons  CA RULING: On Petition for
Land Corporation. An inventory was Certiorari, the CA partially granted
conducted which revealed that some the petition for certiorari. The Court
of the equipment turned over to of Appeals dismissed the complaint
Delizo were still in the latter's against Aissa for being merely a
possession. The stockholders of representative of MCI; and against
MCI requested for a meeting with David, Warren, Henry, Jerold,
Delizo for an accounting of their Antonio, Johnny, and Zeno for being
merely stockholders of MCI.
ISSUE/S: whether the Court of Appeals
committed reversible error in dismissing the
complaint against Aissa and the
stockholders of MCI.

Held:

The MOA was executed only by and


between HBD and MCI. Clearly, only HBD
and MCI are the parties to the MOA. The
parties' respective rights and obligations
arise out of the MOA, and are governed by
its terms. Therefore, the persons who stand
to be bene�ted or injured by the judgment in
the suit — the real parties in interest — are
the parties to the contract, namely, HBD and
MCI.
Section 2, Rule 3 of the Rules of Court
defines a real party in interest, as follows:
Parties in interest. — A real party in interest
is the party who stands to be bene�ted or
injured by the judgment in the suit, or the
party entitled to the avails of the suit. Unless
otherwise authorized by law or these Rules,
every action must be prosecuted or
defended in the name of the real party in
interest.
Aissa signed the MOA as a representative of
MCI. Meanwhile, the respondent MCI
stockholders are not parties to the MOA.
Consequently, Aissa and the respondent
stockholders are not real parties in interest
in HBD's suit against MCI. Therefore, the
complaint should be dismissed against them
for failure to state a cause of 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.

WHEREFORE, the petition is DENIED. The


assailed Decision and Resolution of the
Court of Appeals are AFFIRMED.