Stronghold Insurance Co v. Cuenca

Facts:

Marañon filed a complaint in the RTC against the Cuencas for the collection of a sum of money and damages, including an application for the issuance of a writ of preliminary attachment. RTC granted the application in favor of the Cuencas. Less than a month later, Marañon amended the complaint to implead Tayactac as a defendant.

Marañon posted a bond issued by Stronghold Insurance. Two days later, the RTC issued the writ of preliminary attachment. The sheriff served the writ, the summons and a copy of the complaint on the Cuencas on the same day. The service of the writ, summons and copy of the complaint were made on Tayactac after 5 days.

Enforcing the writ of preliminary attachment, the sheriff levied upon the equipment, supplies, materials and various other personal property belonging to Arc Cuisine, Inc. that were found in the leased corporate office-cum-commissary or kitchen of the corporation. Then, sheriff submitted a report on his proceedings, and filed an ex parte motion seeking the transfer of the levied properties to a safe place. The RTC granted the ex parte motion.

Cuencas and Tayactac presented in the RTC a Motion to Dismiss and to Quash Writ of Preliminary Attachment which the RTC denied.

Cuencas and Tayactac moved for the reconsideration of the denial of their Motion to Dismiss and to Quash Writ of Preliminary Attachment, but the RTC denied their motion for reconsideration.

Cuencas and Tayactac went to the CA on certiorari and prohibition. The CA granted the petition. 

Cuencas and Tayactac filed a Motion to Require Sheriff to Deliver Attached Properties and to Set Case for Hearing. RTC rendered its judgment holding Marañon and Stronghold jointly and solidarily liable for damages to the Cuencas and Tayactac. Only Stronghold appealed to the CA who found no reversible error. Stronghold filed an MR but was denied.

Issue:

Whether or not Cuenca, et. al., are not the owners of the properties attached and this, are not the proper parties to claim any purported damages arising therefrom.

Held:

Yes.

To ensure the observance of the mandate of the Constitution, Section 2, Rule 3 of the Rules of Court requires that unless otherwise authorized by law or the Rules of Court every action must be prosecuted or defended in the name of the real party in interest. Under the same rule, a real party in interest is one who stands to be benefited or injured by the judgment in the suit, or one who is entitled to the avails of the suit. Accordingly, a person, to be a real party in interest in whose name an action must be prosecuted, should appear to be the present real owner of the right sought to be enforced, that is, his interest must be a present substantial interest, not a mere expectancy, or a future, contingent, subordinate, or consequential interest.

Where the plaintiff is not the real party in interest, the ground for the motion to dismiss is lack of cause of action. The reason for this is that the courts ought not to pass upon questions not derived from any actual controversy.

The purposes of the requirement for the real party in interest prosecuting or defending an action at law are: (a) to prevent the prosecution of actions by persons without any right, title or interest in the case; (b) to require that the actual party entitled to legal relief be the one to prosecute the action; (c) to avoid a multiplicity of suits; and (d) to discourage litigation and keep it within certain bounds, pursuant to sound public policy. Indeed, considering that all civil actions must be based on a cause of action, defined as the act or omission by which a party violates the right of another, the former as the defendant must be allowed to insist upon being opposed by the real party in interest so that he is protected from further suits regarding the same claim.

The rule on real party in interest ensures  that the party with the legal right to sue brings the action, and this interest ends when a judgment involving the nominal plaintiff will protect the defendant from a subsequent identical action.

There is no dispute that the properties subject to the levy on attachment belonged to Arc Cuisine, Inc. alone, not to the Cuencas and Tayactac in their own right. They were only stockholders of Arc Cuisine, Inc., which had a personality distinct and separate from that of any or all of them. The damages occasioned to the properties by the levy on attachment, wrongful or not, prejudiced Arc Cuisine, Inc., not them. As such, only Arc Cuisine, Inc. had the right under the substantive law to claim and recover such damages. This right could not also be asserted by the Cuencas and Tayactac unless they did so in the name of the corporation itself. But that did not happen herein, because Arc Cuisine, Inc. was not even joined in the action either as an original party or as an intervenor.