GR 168979; (December, 2013) (Digest)
G.R. No. 168979; December 2, 2013
REBECCA PACAÑA-CONTRERAS and ROSALIE PACAÑA, Petitioners, vs. ROVILA WATER SUPPLY, INC., EARL U KOKSENG, LILIA TORRES, DALLA P. ROMANILLOS and MARISSA GABUYA, Respondents.
FACTS
Petitioners Rebecca Pacaña-Contreras and Rosalie Pacaña filed a complaint for accounting and damages against respondents, alleging that respondents conspired to usurp their family’s water supply business by forming a corporation using their mother Lourdes’s name as an incorporator without consent. The petitioners initiated the suit in their own names, attaching a sworn declaration and special power of attorney from their mother, Lourdes. Subsequently, both Lourdes and their father, Luciano, died. The petitioners amended the complaint to note the deaths but did not change the caption or assert their status as heirs.
Respondents filed a motion to dismiss, arguing petitioners were not the real parties-in-interest, as they sued merely as attorneys-in-fact of their parents. The Regional Trial Court (RTC) denied the motion, ruling it was filed out of time after the answer and pre-trial. The Court of Appeals (CA) reversed the RTC, holding that the complaint was fatally defective for lack of a real party-in-interest.
ISSUE
Whether the Court of Appeals correctly ruled that the petitioners were not the real parties-in-interest, warranting the dismissal of the complaint.
RULING
Yes, the Supreme Court affirmed the CA’s decision. The core legal principle is that every action must be prosecuted in the name of the real party-in-interest. The petitioners filed the complaint and the amended complaint solely as attorneys-in-fact of their parents, Lourdes and Luciano. An attorney-in-fact is not the real party-in-interest and cannot sue in their own name. The authority of an agent is extinguished upon the death of the principal. Consequently, upon the death of Lourdes and Luciano, the petitioners’ authority to sue as agents terminated.
Critically, the petitioners did not sue as heirs in the amended complaint. The caption and allegations did not indicate they were representing the estate or suing in their capacity as successors. While rights to succession are transmitted by operation of law at the moment of death, heirs must assert their status as such in the judicial proceeding to be considered real parties-in-interest. The proper substitution of parties under Rule 3, Section 16, of the Rules of Court was not complied with. The RTC therefore never acquired jurisdiction over the persons of the deceased spouses’ lawful successors. The defense of lack of a real party-in-interest, being jurisdictional, can be raised at any time and is not waived by the filing of an answer or participation in pre-trial. The RTC’s denial of the motion to dismiss constituted grave abuse of discretion.