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SUPREME COURT REPORTS ANNOTATED VOLUME 711 1/16/18, 12:25
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 MARISA GABUYA, respondents.
Remedial Law; Civil Procedure; Dismissal of Actions; Actions;

Interlocutory Orders; 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.·In Barrazona v. RTC, Branch 61, Baguio
City, 486 SCRA 555 (2006), the Court held that while an order
denying a motion to dismiss is interlocutory and nonappealable,
certiorari and prohibition are proper remedies to address an order
of denial made without or in excess of jurisdiction. The writ of
certiorari is granted to keep an inferior court within the bounds of
its jurisdiction or to prevent it from committing grave abuse of
discretion amounting to lack or excess of jurisdiction.
Same; Same; Same; Same; Real Party-in-Interest; A suit that is
not brought in the name of the real party in interest is dismissible on
the ground that the complaint „fails to state a cause of action.‰·
Preliminarily, a suit that is not brought in the name of the real
party in interest is dismissible on the ground that the complaint
„fails to state a cause of action.‰ Pursuant to jurisprudence, this is
also the ground invoked when the respondents alleged that the
petitioners are not the real parties in interest because: 1) the
petitioners should not have filed the case in their own names, being
merely attorneys-in-fact of their mother; and 2) the petitioners
should first be declared as heirs. A review of the 1940, 1964 and the
present 1997 Rules of Court shows that the fundamentals of the
ground for dismissal based on „failure to state a cause of action‰
have drastically changed over time.
Same; Same; Same; Failure to State a Cause of Action; In the
present rules, there was a deletion of the ground of „failure to state a
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cause of action‰ from the list of those which may be waived if not
invoked either in a motion to dismiss or in the answer.·In the pre-
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* SECOND DIVISION.
220
sent rules, there was a deletion of the ground of „failure to state

a cause of action‰ from the list of those which may be waived if not
invoked either in a motion to dismiss or in the answer. Another
novelty introduced by the present Rules, which was totally absent
in its two precedents, is the addition of the period of time within
which a motion to dismiss should be filed as provided under Section
1, Rule 16 and we quote: Section 1. Grounds.·Within the time for
but before filing the answer to the complaint or pleading asserting a
claim, a motion to dismiss may be made on any of the following
grounds: xxx [underscoring supplied] All these considerations point
to the legal reality that the new Rules effectively restricted the
dismissal of complaints in general, especially when what is being
invoked is the ground of „failure to state a cause of action.‰ Thus,
jurisprudence governed by the 1940 and 1964 Rules of Court to the
effect that the ground for dismissal based on failure to state a cause
of action may be raised anytime during the proceedings, is already
inapplicable to cases already governed by the present Rules of
Court which took effect on July 1, 1997. As the rule now stands, the
failure to invoke this ground in a motion to dismiss or in the answer
would result in its waiver. According to Oscar M. Herrera, the
reason for the deletion is that failure to state a cause of action may
be cured under Section 5, Rule 10 and we quote: Section 5.
Amendment to conform to or authorize presentation of evidence.·
When issues not raised by the pleadings are tried with the express
or implied consent of the parties they shall be treated in all respects
as if they had been raised in the pleadings. Such amendment of the
pleadings as may be necessary to cause them to conform to the
evidence and to raise these issues may be made upon motion of any
party at any time, even after judgment; but failure to amend does
not effect the result of the trial of these issues. If evidence is
objected to at the trial on the ground that it is not within the issues
made by the pleadings, the court may allow the pleadings to be
amended and shall do so with liberality if the presentation of the
merits of the action and the ends of substantial justice will be

subserved thereby. The court may grant a continuance to enable the
amendment to be made.
Same; Same; Same; Same; Rule 16 of the Rules of Court
provides for the grounds for the dismissal of a civil case,
particularly, failure to state a cause of action and failure to comply
with a condition precedent (substitution of parties), respectively.·
Applying Rule 16 of the Rules of Court which provides for the
grounds for the dis-
221
missal of a civil case, the respondentsÊ grounds for dismissal fall

under Section 1(g) and (j), Rule 16 of the Rules of Court,
particularly, failure to state a cause of action and failure to comply
with a condition precedent (substitution of parties), respectively.
The first paragraph of Section 1, Rule 16 of the Rules of Court
provides for the period within which to file a motion to dismiss
under the grounds enumerated. Specifically, the motion should be
filed within the time for, but before the filing of, the answer to the
complaint or pleading asserting a claim. Equally important to this
provision is Section 1, Rule 9 of the Rules of Court which states that
defenses and objections not pleaded either in a motion to dismiss or
in the answer are deemed waived, except for the following grounds:
1) the court has no jurisdiction over the subject matter; 2) litis
pendencia; 3) res judicata; and 4) prescription. Therefore, the
grounds not falling under these four exceptions may be considered
as waived in the event that they are not timely invoked. As the
respondentsÊ motion to dismiss was based on the grounds which
should be timely invoked, material to the resolution of this case is
the period within which they were raised.
Same; Same; Same; Pursuant to Section 1, Rule 9 of the Rules
of Court, a motion to dismiss based on the grounds invoked by the
respondents may be waived if not raised in a motion to dismiss or
alleged in their answer.·The rules are clear and require no
interpretation. Pursuant to Section 1, Rule 9 of the Rules of Court,
a motion to dismiss based on the grounds invoked by the
respondents may be waived if not raised in a motion to dismiss or
alleged in their answer. On the other hand, „the pre-trial is
primarily intended to make certain that all issues necessary to the
disposition of a case are properly raised. The purpose is to obviate
the element of surprise, hence, the parties are expected to disclose

at the pre-trial conference all issues of law and fact which they
intend to raise at the trial, except such as may involve privileged or
impeaching matter.‰ The issues submitted during the pre-trial are
thus the issues that would govern the trial proper. The dismissal of
the case based on the grounds invoked by the respondents are
specifically covered by Rule 16 and Rule 9 of the Rules of Court
which set a period when they should be raised; otherwise, they are
deemed waived.
Same; Same; Parties; „Real Party-in-Interest‰ and
„Indispensable Party,‰ Distinguished.·A distinction between a real
party in interest and an indispensable party is in order. In
Carandang v.
222
Heirs of de Guzman, et al., 508 SCRA 469 (2006), the Court clarified
these two concepts and held that „[a] real party in interest is the
party who stands to be benefited or injured by the judgment of the
suit, or the party entitled to the avails of the suit. On the other
hand, an indispensable party is a party in interest without whom
no final determination can be had of an action, in contrast to a
necessary party, which 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. x x x 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. However, the dismissal on this ground entails an
examination of whether the parties presently pleaded are interested
in the outcome of the litigation, and not whether all persons
interested in such outcome are actually pleaded. The latter query is
relevant in discussions concerning indispensable and necessary
parties, but not in discussions concerning real parties in interest.
Both indispensable and necessary parties are considered as real
parties in interest, since both classes of parties stand to be
benefited or injured by the judgment of the suit.‰
Same; Same; Indispensable Parties; Without the inclusion of the
indispensable parties, there can be no final determination of the
case.·At the inception of the present case, both the spouses Pacaña
were not impleaded as parties-plaintiffs. The Court notes, however,
that they are indispensable parties to the case as the alleged

owners of Rovila Water Supply. Without their inclusion as parties,
there can be no final determination of the present case. They
possess such an interest in the controversy that a final decree would
necessarily affect their rights, so that the courts cannot proceed
without their presence. Their interest in the subject matter of the
suit and in the relief sought is inextricably intertwined with that of
the other parties.
Same; Same; Same; Pursuant to Section 9, Rule 3 of the Rules
of Court, 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.·The Court
is of the view that the proper remedy in the present case is to
implead the indispensable parties especially when their non-
inclusion is merely a technical defect. To do so would serve proper
administration of justice and prevent further delay and multiplicity
of suits. Pursuant to Section 9, Rule 3 of the Rules of Court, parties
may be
223
added by order of the court on motion of the party or on its own

initiative at any stage of the action. If the plaintiff refuses to
implead an indispensable party despite the order of the court, then
the court may dismiss the complaint for the plaintiff Ês failure to
comply with a lawful court order. The operative act that would lead
to the dismissal of the case would be the refusal to comply with the
directive of the court for the joinder of an indispensable party to the
case.
Same; Same; Same; In Orbeta, et al. v. Sendiong, 463 SCRA
180 (2005), the Supreme Court acknowledged that the heirs, whose
hereditary rights are to be affected by the case, are deemed
indispensable parties who should have been impleaded by the trial
court.·Obviously, in the present case, the deceased Pacañas can no
longer be included in the complaint as indispensable parties
because of their death during the pendency of the case. Upon their
death, however, their ownership and rights over their properties
were transmitted to their heirs, including herein petitioners,
pursuant to Article 774 in relation with Article 777 of the Civil
Code. In Orbeta, et al. v. Sendiong, 463 SCRA 180 (2005), the Court
acknowledged that the heirs, whose hereditary rights are to be
affected by the case, are deemed indispensable parties who should
have been impleaded by the trial court.
PETITION for review on certiorari of the decision and

resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
Mercado, Cordero, Bael, Acuna & Sepulveda for
petitioners.
Latras, Heyrosa, Alcazaren Reussora Law Offices for
respondents.
BRION, J.:
Before the Court is a petition for review on certiorari1
under Rule 45 of the Rules of Court seeking the reversal of
the
_______________
1 Rollo, pp. 9-30.
224
decision2 dated January 27, 2005 and the resolution3

dated June 6, 2005 of the Court of Appeals (CA) in CA-G.R.
SP No. 71551. The CA set aside the orders dated February
28, 20024 and April 1, 20025 of the Regional Trial Court
(RTC), Branch 8, Cebu City, which denied the motion to
dismiss and the motion for reconsideration, respectively, of
respondents Rovila Water Supply, Inc. (Rovila Inc.), Earl U.
Kokseng, Lilia Torres, Dalla P. Romanillos and Marisa
Gabuya.
The Factual Antecedents

Petitioners Rebecca Pacaña-Contreras and Rosalie
Pacaña, children of Lourdes Teves Pacaña and Luciano
Pacaña, filed the present case against Rovila Inc., Earl,
Lilia, Dalla and Marisa for accounting and damages.6 The
petitioners claimed that their family has long been known
in the community to be engaged in the water supply
business; they operated the „Rovila Water Supply‰ from
their family residence and were engaged in the distribution
of water to customers in Cebu City.
The petitioners alleged that Lilia was a former trusted
employee in the family business who hid business records
and burned and ransacked the family files. Lilia also

allegedly posted security guards and barred the members
of the Pacaña family from operating their business. She
then claimed ownership over the family business through a
corporation named „Rovila Water Supply, Inc.‰ (Rovila Inc.)
Upon inquiry with the Securities and Exchange
Commission (SEC), the petitioners claimed that Rovila Inc.
was surreptitiously formed with
_______________
2 Id., at pp. 31-43; penned by Associate Justice Isaias P. Dicdican, and
concurred in by Associate Justices Sesinando E. Villon and Ramon M.
Bato, Jr.
3 Id., at pp. 44-45.
4 Id., at pp. 58-60; penned by Presiding Judge Antonio T. Echavez.
5 Id., at pp. 66-67.
6 Docketed as Civil Case No. CEB-25327; Id., at p. 32.
225
the respondents as the majority stockholders. The

respondents did so by conspiring with one another and
forming the respondent corporation to takeover and
illegally usurp the family businessÊ registered name.7
In forming the respondent corporation, the respondents
allegedly used the name of Lourdes as one of the
incorporators and made it appear in the SEC documents
that the family business was operated in a place other than
the Pacaña residence. Thereafter, the respondents used the
Pacaña familyÊs receipts and the deliveries and sales were
made to appear as those of the respondent Rovila Inc.
Using this scheme, the respondents fraudulently
appropriated the collections and payments.8
The petitioners filed the complaint in their own names
although Rosalie was authorized by Lourdes through a
sworn declaration and special power of attorney (SPA). The
respondents filed a first motion to dismiss on the ground
that the RTC had no jurisdiction over an intra-corporate
controversy.9 The RTC denied the motion.
On September 26, 2000, Lourdes died10 and the
petitioners amended their complaint, with leave of court,
on October 2, 2000 to reflect this development.11 They still
attached to their amended complaint the sworn declaration

with SPA, but the caption of the amended complaint
remained the same.12 On October 10, 2000, Luciano also
died.13
The respondents filed their Answer on November 16,
2000.14 The petitionersÊ sister, Lagrimas Pacaña-Gonzales,
filed a motion for leave to intervene and her answer-in-
_______________
7 Id., at pp. 13-14.
8 Id., at p. 15.
9 Id., at p. 34.
10 Ibid.
11 Id., at p. 35.
12 Ibid.
13 Supra note 4.
14 Supra note 6.
226
intervention was granted by the trial court. At the

subsequent pre-trial, the respondents manifested to the
RTC that a substitution of the parties was necessary in
light of the deaths of Lourdes and Luciano. They further
stated that they would seek the dismissal of the complaint
because the petitioners are not the real parties in interest
to prosecute the case. The pre-trial pushed through as
scheduled and the RTC directed the respondents to put into
writing their earlier manifestation. The RTC issued a pre-
trial order where one of the issues submitted was whether
the complaint should be dismissed for failure to comply
with Section 2, Rule 3 of the Rules of Court which requires
that every action must be prosecuted in the name of the
real party in interest.15
On January 23, 2002,16 the respondents again filed a
motion to dismiss on the grounds, among others, that the
petitioners are not the real parties in interest to institute
and prosecute the case and that they have no valid cause of
action against the respondents.
The RTC Ruling

The RTC denied the respondentsÊ motion to dismiss. It
ruled that, save for the grounds for dismissal which may be
raised at any stage of the proceedings, a motion to dismiss
based on the grounds invoked by the respondents may only
be filed within the time for, but before, the filing of their
answer to the amended complaint. Thus, even granting
that the defenses invoked by the respondents are
meritorious, their motion was filed out of time as it was
filed only after the conclusion of the pre-trial conference.
Furthermore, the rule on substitution of parties only
applies when the parties to the case die, which is not what
happened in the present case.17
_______________
15 Rollo, pp. 35-36.
16 Id., at p. 83.
17 Id., at pp. 59, 66-67.
227
The RTC likewise denied the respondentsÊ motion for

reconsideration.18
The respondents filed a petition for certiorari under
Rule 65 of the Rules of Court with the CA, invoking grave
abuse of discretion in the denial of their motion to dismiss.
They argued that the deceased spouses Luciano and
Lourdes, not the petitioners, were the real parties in
interest. Thus, the petitioners violated Section 16, Rule 3 of
the Rules of Court on the substitution of parties.19
Furthermore, they seasonably moved for the dismissal of
the case20 and the RTC never acquired jurisdiction over the
persons of the petitioners as heirs of Lourdes and
Luciano.21
The CA Ruling
The CA granted the petition and ruled that the RTC
committed grave abuse of discretion as the petitioners filed
the complaint and the amended complaint as attorneys-in-
fact of their parents. As such, they are not the real parties
in interest and cannot bring an action in their own names;
thus, the complaint should be dismissed22 pursuant to the
CourtÊs ruling in Casimiro v. Roque and Gonzales.23
Neither are the petitioners suing as heirs of their
deceased parents. Pursuant to jurisprudence,24 the

petitioners should first be declared as heirs before they can
be considered as the real parties in interest. This cannot be
done in the present ordinary civil case but in a special
proceeding for that purpose.
_______________
18 Id., at p. 66.
19 CA Rollo, p. 10.
20 Id., at p. 11.
21 Ibid.
22 Rollo, pp. 37-39.
23 98 Phil. 880 (1956).
24 Heirs of Yaptinchay v. Hon. Del Rosario, 363 Phil. 393, 397-398; 304
SCRA 18, 22 (1999); Litam, etc., et al. v. Rivera, 100 Phil. 364, 378 (1956);
and Solivio v. Court of Appeals, 261 Phil. 231, 242; 182 SCRA 119, 128
(1990).
228
The CA agreed with the respondents that they alleged

the following issues as affirmative defenses in their
answer: 1) the petitioners are not the real parties in
interest; and 2) that they had no legal right to institute the
action in behalf of their parents.25 That the motion to
dismiss was filed after the period to file an answer has
lapsed is of no moment. The RTC judge entertained it and
passed upon its merit. He was correct in doing so because
in the pre-trial order, one of the submitted issues was
whether the case must be dismissed for failure to comply
with the requirements of the Rules of Court. Furthermore,
in Dabuco v. Court of Appeals,26 the Court held that the
ground of lack of cause of action may be raised in a motion
to dismiss at anytime.27
The CA further ruled that, in denying the motion to
dismiss, the RTC judge acted contrary to established rules
and jurisprudence which may be questioned via a petition
for certiorari. The phrase „grave abuse of discretion‰ which
was traditionally confined to „capricious and whimsical
exercise of judgment‰ has been expanded to include any
action done „contrary to the Constitution, the law or
jurisprudence[.]‰28
The PartiesÊ Arguments

The petitioners filed the present petition and argued
that, first, in annulling the interlocutory orders, the CA
unjustly allowed the motion to dismiss which did not
conform to the rules.29 Specifically, the motion was not filed
within the time for, but before the filing of, the answer to
the amended complaint, nor were the grounds raised in the
answer. Citing Section 1, Rule 9 of the Rules of Court, the
respondents are
_______________
25 Rollo, p. 35.
26 379 Phil. 939; 322 SCRA 853 (2000).
27 Rollo, p. 41.
28 Id., at p. 42.
29 Id., at pp. 20-21.
229
deemed to have waived these grounds, as correctly held by

the RTC.30
Second, even if there is non-joinder and misjoinder of
parties or that the suit is not brought in the name of the
real party in interest, the remedy is not outright dismissal
of the complaint, but its amendment to include the real
parties in interest.31
Third, the petitioners sued in their own right because
they have actual and substantial interest in the subject
matter of the action as heirs or co-owners, pursuant to
Section 2, Rule 3 of the Rules of Court.32 Their declaration
as heirs in a special proceeding is not necessary, pursuant
to the CourtÊs ruling in Marabilles, et al. v. Quito.33 Finally,
the sworn declaration is evidentiary in nature which
remains to be appreciated after the trial is completed.34
The respondents reiterated in their comment that the
petitioners are not the real parties in interest.35 They
likewise argued that they moved for the dismissal of the
case during the pre-trial conference due to the petitionersÊ
procedural lapse in refusing to comply with a condition
precedent, which is, to substitute the heirs as plaintiffs.
Besides, an administrator of the estates of Luciano and
Lourdes has already been appointed.36

The respondents also argued that the grounds invoked
in their motion to dismiss were timely raised, pursuant to
Section 2, paragraphs g and i, Rule 18 of the Rules of
Court. Specifically, the nature and purposes of the pre-trial
include, among others, the dismissal of the action, should a
valid
_______________
30 Id., at pp. 22, 126.
31 Id., at pp. 21, 26, 126.
32 Id., at p. 131.
33 100 Phil. 64 (1956).
34 Rollo, p. 130.
35 Id., at pp. 78-79.
36 Id., at pp. 79-80.
230
ground therefor be found to exist; and such other matters

as may aid in the prompt disposition of the action. Finally,
the special civil action of certiorari was the proper remedy
in assailing the order of the RTC.37
The CourtÊs Ruling

We find the petition meritorious.
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, Branch 61, Baguio City,38 the
Court held that while an order denying a motion to dismiss
is interlocutory and nonappealable, certiorari and
prohibition are proper remedies to address an order of
denial made without or in excess of jurisdiction. The writ of
certiorari is granted to keep an inferior court within the
bounds of its jurisdiction or to prevent it from committing
grave abuse of discretion amounting to lack or excess of
jurisdiction.
The history and development of the

ground „fails to state a cause of action‰
in the 1940, 1964 and the present 1997

Rules of Court
Preliminarily, a suit that is not brought in the name of
the real party in interest is dismissible on the ground that
the complaint „fails to state a cause of action.‰39 Pursuant
to ju-
_______________
37 Id., at pp. 75-76.
38 521 Phil. 53, 59-60; 486 SCRA 555, 562 (2006).
39 Carandang v. Heirs of De Guzman et al., 538 Phil. 326, 334; 508
SCRA 469, 481 (2006); Tankiko v. Cezar, 362 Phil. 184, 194-195; 302
SCRA 559, 570 (1999), citing Lucas v. Durian, 102 Phil. 1157-1158
(1957); Nebrada v. Heirs of Alivio, 104 Phil. 126, 128-129
231
risprudence,40 this is also the ground invoked when the

respondents alleged that the petitioners are not the real
parties in interest because: 1) the petitioners should not
have filed the case in their own names, being merely
attorneys-in-fact of their mother; and 2) the petitioners
should first be declared as heirs.
A review of the 1940, 1964 and the present 1997 Rules of
Court shows that the fundamentals of the ground for
dismissal based on „failure to state a cause of action‰ have
drastically changed over time. A historical background of
this particular ground is in order to preclude any confusion
or misapplication of jurisprudence decided prior to the
effectivity of the present Rules of Court.
The 1940 Rules of Court provides under Section 10, Rule
9 that:
Section 10. Waiver of defenses.·Defenses and objections not

pleaded either in a motion to dismiss or in the answer are deemed
waived; except the defense of failure to state a cause of action,
which may be alleged in a later pleading, if one is permitted, or by
motion for judgment on the pleadings, or at the trial on the merits;
but in the last instance, the motion shall be disposed of as provided
in section 5 of Rule 17 in the light of any evidence which may have
been received. Whenever it appears that the court has no
jurisdiction over the subject-matter, it shall dismiss the action.
[underscoring supplied]
This provision was essentially reproduced in Section 2,

Rule 9 of the 1964 Rules of Court, and we quote:
_______________
(1958); Gabila v. Barriga, 148-B Phil. 615, 618-619; 41 SCRA 131, 135
(1971); Travel Wide Associated Sales (Phils.), Inc. v. CA, 276 Phil. 219,
224; 199 SCRA 205, 209 (1991).
40 Heirs of Yaptinchay v. Hon. Del Rosario, supra note 23; and
Filipinas Industrial Corp., et al. v. Hon. San Diego, et al., 132 Phil. 195;
23 SCRA 706 (1968).
232
Section 2. Defenses and objections not pleaded deemed waived.·

Defenses and objections not pleaded either in a motion to dismiss or
in the answer are deemed waived; except the failure to state a cause
of action which may be alleged in a later pleading, if one is
permitted, or by motion for judgment on the pleadings, or at the
trial on the merits; but in the last instance, the motion shall be
disposed of as provided in section 5 of Rule 10 in the light of any
evidence which may have been received. Whenever it appears that
the court has no jurisdiction over the subject-matter, it shall
dismiss the action. [underscoring supplied]
Under the present Rules of Court, this provision was

reflected in Section 1, Rule 9, and we quote:
Section 1. Defenses and objections not pleaded.·Defenses and

objections not pleaded either in a motion to dismiss or in the answer
are deemed waived. However, when it appears from the pleadings
or the evidence on record that the court has no jurisdiction over the
subject matter, that there is another action pending between the
same parties for the same cause, or that the action is barred by a
prior judgment or by statute of limitations, the court shall dismiss
the claim. [underscoring supplied]
Notably, in the present rules, there was a deletion of the

ground of „failure to state a cause of action‰ from the list of
those which may be waived if not invoked either in a
motion to dismiss or in the answer.
Another novelty introduced by the present Rules, which
was totally absent in its two precedents, is the addition of

the period of time within which a motion to dismiss should
be filed as provided under Section 1, Rule 16 and we quote:
Section 1. Grounds.·Within the time for but before filing the

answer to the complaint or pleading asserting a claim, a motion to
dismiss may be made on any of the following grounds: xxx
[underscoring supplied]
233
All these considerations point to the legal reality that

the new Rules effectively restricted the dismissal of
complaints in general, especially when what is being
invoked is the ground of „failure to state a cause of action.‰
Thus, jurisprudence governed by the 1940 and 1964 Rules
of Court to the effect that the ground for dismissal based on
failure to state a cause of action may be raised anytime
during the proceedings, is already inapplicable to cases
already governed by the present Rules of Court which took
effect on July 1, 1997.
As the rule now stands, the failure to invoke this ground
in a motion to dismiss or in the answer would result in its
waiver. According to Oscar M. Herrera,41 the reason for the
deletion is that failure to state a cause of action may be
cured under Section 5, Rule 10 and we quote:
Section 5. Amendment to conform to or authorize presentation

of evidence.·When issues not raised by the pleadings are tried with
the express or implied consent of the parties they shall be treated in
all respects as if they had been raised in the pleadings. Such
amendment of the pleadings as may be necessary to cause them to
conform to the evidence and to raise these issues may be made upon
motion of any party at any time, even after judgment; but failure to
amend does not effect the result of the trial of these issues. If
evidence is objected to at the trial on the ground that it is not
within the issues made by the pleadings, the court may allow the
pleadings to be amended and shall do so with liberality if the
presentation of the merits of the action and the ends of substantial
justice will be subserved thereby. The court may grant a
continuance to enable the amendment to be made.
With this clarification, we now proceed to the
substantial issues of the petition.
_______________
41 Remedial Law, Volume I, 2007 Ed., pp. 794-795.
234
The motion to dismiss in the present

case based on failure to state a cause
of action was not timely filed and
was thus waived
Applying Rule 16 of the Rules of Court which provides
for the grounds for the dismissal of a civil case, the
respondentsÊ grounds for dismissal fall under Section 1(g)
and (j), Rule 16 of the Rules of Court, particularly, failure
to state a cause of action and failure to comply with a
condition precedent (substitution of parties), respectively.
The first paragraph of Section 1,42 Rule 16 of the Rules
of Court provides for the period within which to file a
motion to dismiss under the grounds enumerated.
Specifically, the motion should be filed within the time for,
but before the filing of, the answer to the complaint or
pleading asserting a claim. Equally important to this
provision is Section 1,43 Rule 9 of the Rules of Court which
states that defenses and objections not pleaded either in a
motion to dismiss or in the answer are deemed waived,
except for the following grounds: 1) the court has no
jurisdiction over the subject matter; 2) litis pendencia; 3)
res judicata; and 4) prescription.
Therefore, the grounds not falling under these four
exceptions may be considered as waived in the event that
they are not timely invoked. As the respondentsÊ motion to
dismiss was based on the grounds which should be timely
invoked, mate-
_______________
42 Section 1. Grounds.·Within the time for but before filing the
answer to the complaint or pleading asserting a claim, a motion to
dismiss may be made on any of the following grounds[.]
43 Section 1. Defenses and objections not pleaded.·Defenses and
objections not pleaded either in a motion to dismiss or in the answer are
deemed waived. However, when it appears from the pleadings or the
evidence on record that the court has no jurisdiction over the subject
matter, that there is another action pending between the same parties
for the same cause, or that the action is barred by a prior judgment or by
statute of limitations, the court shall dismiss the claim.
235
rial to the resolution of this case is the period within which

they were raised.
Both the RTC and the CA found that the motion to
dismiss was only filed after the filing of the answer and
after the pre-trial had been concluded. Because there was
no motion to dismiss before the filing of the answer, the
respondents should then have at least raised these grounds
as affirmative defenses in their answer. The RTCÊs assailed
orders did not touch on this particular issue but the CA
ruled that the respondents did, while the petitioners insist
that the respondents did not. In the present petition, the
petitioners reiterate that there was a blatant non-
observance of the rules when the respondents did not
amend their answer to invoke the grounds for dismissal
which were raised only during the pre-trial and,
subsequently, in the subject motion to dismiss.44
The divergent findings of the CA and the petitionersÊ
arguments are essentially factual issues. Time and again,
we have held that the jurisdiction of the Court in a petition
for review on certiorari under Rule 45, such as the present
case, is limited only to questions of law, save for certain
exceptions. One of these is attendant herein, which is,
when the findings are conclusions without citation of
specific evidence on which they are based.45
In the petition filed with the CA, the respondents made
a passing allegation that, as affirmative defenses in their
answer, they raised the issue that the petitioners are not
the real parties in interest.46 On the other hand, the
petitioners consistently argued otherwise in their
opposition47 to the mo-
_______________
44 Rollo, p. 22.
45 Insular Investment and Trust Corporation v. Capital One Equities
Corp., G.R. No. 183308, April 25, 2012, 671 SCRA 112, 125; and Conrada
O. Almagro v. Sps. Manuel Amaya, Sr., et al., G.R. No. 179685, June 19,
2013, 699 SCRA 61.
46 CA Rollo, p. 6.
47 Id., at p. 118.
236
tion to dismiss, and in their comment48 and in their

memorandum49 on the respondentsÊ petition before the CA.
Our examination of the records shows that the CA had
no basis in its finding that the respondents alleged the
grounds as affirmative defenses in their answer. The
respondents merely stated in their petition for certiorari
that they alleged the subject grounds in their answer.
However, nowhere in the petition did they support this
allegation; they did not even attach a copy of their answer
to the petition. It is basic that the respondents had the
duty to prove by substantial evidence their positive
assertions. Considering that the petition for certiorari is an
original and not an appellate action, the CA had no records
of the RTCÊs proceedings upon which the CA could refer to
in order to validate the respondentsÊ claim. Clearly, other
than the respondentsÊ bare allegations, the CA had no basis
to rule, without proof, that the respondents alleged the
grounds for dismissal as affirmative defenses in the
answer. The respondents, as the parties with the burden of
proving that they timely raised their grounds for dismissal,
could have at least attached a copy of their answer to the
petition. This simple task they failed to do.
That the respondents did not allege in their answer the
subject grounds is made more apparent through their
argument, both in their motion to dismiss50 and in their
comment,51 that it was only during the pre-trial stage that
they verbally manifested and invited the attention of the
lower court on their grounds for dismissal. In order to
justify such late invocation, they heavily relied on Section
2(g) and (i), Rule 1852 of the Rules of Court that the nature
and purpose of
_______________
48 Id., at p. 112.
49 Id., at pp. 133, 136.
50 Id., at p. 83.
51 Id., at pp. 73-77.
52 Section 2. Nature and purpose.·The pre-trial is mandatory. The
court shall consider: xxx (g) The propriety of rendering judgment on the
pleadings, or summary judgment, or of dismissing
237
the pre-trial include, among others, the propriety of

dismissing the action should there be a valid ground
therefor and matters which may aid in the prompt
disposition of the action.
The respondents are not correct. The rules are clear and
require no interpretation. Pursuant to Section 1, Rule 9 of
the Rules of Court, a motion to dismiss based on the
grounds invoked by the respondents may be waived if not
raised in a motion to dismiss or alleged in their answer. On
the other hand, „the pre-trial is primarily intended to make
certain that all issues necessary to the disposition of a case
are properly raised. The purpose is to obviate the element
of surprise, hence, the parties are expected to disclose at
the pre-trial conference all issues of law and fact which
they intend to raise at the trial, except such as may involve
privileged or impeaching matter.‰53 The issues submitted
during the pre-trial are thus the issues that would govern
the trial proper. The dismissal of the case based on the
grounds invoked by the respondents are specifically
covered by Rule 16 and Rule 9 of the Rules of Court which
set a period when they should be raised; otherwise, they
are deemed waived.
The Dabuco ruling is inapplicable in the
present case; the ground for dismissal
„failure to state a cause of action‰ distin-
guished from „lack of cause of action‰
To justify the belated filing of the motion to dismiss, the
CA reasoned out that the ground for dismissal of „lack of
cause of action‰ may be raised at any time during the
proceedings, pursuant to Dabuco v. Court of Appeals.54 This
is an
_______________
the action should a valid ground therefor be found to exist; xxx (i)
Such other matters as may aid in the prompt disposition of the action.
53 Sps. Mercader v. DevÊt Bank of the Phils. (Cebu Br.), 387 Phil. 828,
843; 332 SCRA 82, 95-96 (2000).
54 Supra note 25.
238
erroneous interpretation and application of Dabuco as will

be explained below.
First, in Dabuco, the grounds for dismissal were raised
as affirmative defenses in the answer which is in stark
contrast to the present case. Second, in Dabuco, the Court
distinguished between the dismissal of the complaint for
„failure to state a cause of action‰ and „lack of cause of
action.‰ The Court emphasized that in a dismissal of action
for lack of cause of action, „questions of fact are involved,
[therefore,] courts hesitate to declare a plaintiff as lacking
in cause of action. Such declaration is postponed until the
insufficiency of cause is apparent from a preponderance of
evidence. Usually, this is done only after the parties have
been given the opportunity to present all relevant evidence
on such questions of fact.‰55 In fact, in Dabuco, the Court
held that even the preliminary hearing on the propriety of
lifting the restraining order was declared insufficient for
purposes of dismissing the complaint for lack of cause of
action. This is so because the issues of fact had not yet been
adequately ventilated at that preliminary stage. For these
reasons, the Court declared in Dabuco that the dismissal
by the trial court of the complaint was premature.
In the case of Macaslang v. Zamora,56 the Court noted
that the incorrect appreciation by both the RTC and the CA
of the distinction between the dismissal of an action, based
on „failure to state a cause of action‰ and „lack of cause of
action,‰ prevented it from properly deciding the case, and
we quote:
Failure to state a cause of action and lack of cause of action are

really different from each other. On the one hand, failure to state a
cause of action refers to the insufficiency of the pleading, and is a
ground for dismissal un-
_______________
55 Id., at p. 946.
56 G.R. No. 156375, May 30, 2011, 649 SCRA 92, 106-107, citing Regalado,
Remedial Law Compendium, Volume I, Ninth Revised Ed. (2005), p. 182.
239
der Rule 16 of the Rules of Court. On the other hand, lack of cause
[of] action refers to a situation where the evidence does not prove
the cause of action alleged in the pleading. Justice Regalado, a
recognized commentator on remedial law, has explained the
distinction:
xxx What is contemplated, therefore, is a failure to state a
cause of action which is provided in Sec. 1(g) of Rule 16. This
is a matter of insufficiency of the pleading. Sec. 5 of Rule 10,
which was also included as the last mode for raising the issue
to the court, refers to the situation where the evidence does
not prove a cause of action. This is, therefore, a matter of
insufficiency of evidence. Failure to state a cause of action is
different from failure to prove a cause of action. The remedy
in the first is to move for dismissal of the pleading, while the
remedy in the second is to demur to the evidence, hence
reference to Sec. 5 of Rule 10 has been eliminated in this
section. The procedure would consequently be to require the
pleading to state a cause of action, by timely objection to its
deficiency; or, at the trial, to file a demurrer to evidence, if
such motion is warranted. [italics supplied]
Based on this discussion, the Court cannot uphold the

dismissal of the present case based on the grounds invoked
by the respondents which they have waived for failure to
invoke them within the period prescribed by the Rules. The
Court cannot also dismiss the case based on „lack of cause
of action‰ as this would require at least a preponderance of
evidence which is yet to be appreciated by the trial court.
Therefore, the RTC did not commit grave abuse of
discretion in issuing the assailed orders denying the
respondentsÊ motion to dismiss and motion for
reconsideration. The Court shall not resolve the merits of
the respondentsÊ grounds for dismissal which are
considered as waived.
240
Other heirs of the spouses Pacaña to

be impleaded in the case
It should be emphasized that insofar as the petitioners
are concerned, the respondents have waived the dismissal
of the complaint based on the ground of failure to state a
cause of action because the petitioners are not the real
parties in interest.
At this juncture, a distinction between a real party in
interest and an indispensable party is in order. In
Carandang v. Heirs of de Guzman, et al.,57 the Court
clarified these two concepts and held that „[a] real party
in interest is the party who stands to be benefited or
injured by the judgment of the suit, or the party entitled to
the avails of the suit. On the other hand, an
indispensable party is a party in interest without whom
no final determination can be had of an action, in contrast
to a necessary party, which 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. xxx 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. However, the dismissal on this
ground entails an examination of whether the parties
presently pleaded are interested in the outcome of the
litigation, and not whether all persons interested in such
outcome are actually pleaded. The latter query is relevant
in discussions concerning indispensable and necessary
parties, but not in discussions concerning real parties in
interest. Both indispensable and necessary parties are
considered as real parties in interest, since both classes of
parties stand to be benefited or injured by the judgment of
the suit.‰
_______________
57 538 Phil. 319, 333-334; 508 SCRA 469, 482 (2006).
241
At the inception of the present case, both the spouses

Pacaña were not impleaded as parties-plaintiffs. The Court
notes, however, that they are indispensable parties to the

case as the alleged owners of Rovila Water Supply. Without
their inclusion as parties, there can be no final
determination of the present case. They possess such an
interest in the controversy that a final decree would
necessarily affect their rights, so that the courts cannot
proceed without their presence. Their interest in the
subject matter of the suit and in the relief sought is
inextricably intertwined with that of the other parties.58
Jurisprudence on the procedural consequence of the
inclusion or non-inclusion of an indispensable party is
divided in our jurisdiction. Due to the non-inclusion of
indispensable parties, the Court dismissed the case in
Lucman v. Malawi, et al.59 and Go v. Distinction Properties
Development Construction, Inc.,60 while in Casals, et al. v.
Tayud Golf and Country Club et al.,61 the Court annulled
the judgment which was rendered without the inclusion of
the indispensable parties.
In Arcelona et al. v. Court of Appeals62 and Bulawan v.
Aquende,63 and Metropolitan Bank & Trust Company v.
Alejo et al.64 the Court ruled that the burden to implead or
order the impleading of an indispensable party rests on the
plaintiff and on the trial court, respectively. Thus, the non-
inclusion of the indispensable parties, despite notice of this
infirmity, resulted in the annulment of these cases.
_______________
58 Republic v. Marcos-Manotoc, G.R. No. 171701, February 8, 2012,
665 SCRA 367, 392.
59 540 Phil. 289, 301-303, 305-306; 511 SCRA 268, 279-280 (2006).
60 G.R. No. 194024, April 25, 2012, 671 SCRA 461, 475-478, 482.
61 G.R. No. 183105, July 22, 2009, 593 SCRA 468, 503.
62 345 Phil. 250, 275; 280 SCRA 20, 45 (1997).
63 G.R. No. 182819, June 22, 2011, 652 SCRA 585, 597.
64 417 Phil. 303, 318; 364 SCRA 812, 822 (2001).
242
In Plasabas, et al. v. Court of Appeals, et al.,65 the Court

held that the trial court and the CA committed reversible
error when they summarily dismissed the case, after both
parties had rested their cases following a protracted trial,
on the sole ground of failure to implead indispensable

parties. Non-joinder of indispensable parties is not a
ground for the dismissal of an action. The remedy is to
implead the non-party claimed to be indispensable.
However, in the cases of Quilatan, et al. v. Heirs of
Quilatan, et al.66 and Lagunilla, et al. v. Monis, et al.,67 the
Court remanded the case to the RTC for the impleading of
indispensable parties. On the other hand, in Lotte Phil. Co.,
Inc. v. Dela Cruz,68 PepsiCo, Inc. v. Emerald Pizza,69 and
Valdez-Tallorin v. Heirs of Tarona, et al.,70 the Court
directly ordered that the indispensable parties be
impleaded.
Mindful of the differing views of the Court as regards
the legal effects of the non-inclusion of indispensable
parties, the Court clarified in Republic of the Philippines v.
Sandiganbayan, et al.,71 that the failure to implead
indispensable parties is a curable error and the foreign
origin of our present rules on indispensable parties
permitted this corrective measure. This cited case held:
Even in those cases where it might reasonably be argued that the

failure of the Government to implead the sequestered corporations
as defendants is indeed a procedural aberration xxx, slight
reflection would nevertheless lead to the conclusion that the defect
is not fatal, but one correctible under applicable adjective rules ·
e.g., Sec-
_______________
65 G.R. No. 166519, March 31, 2009, 582 SCRA 686, 692-693.
66 G.R. No. 183059, August 28, 2009, 597 SCRA 519, 525.
67 G.R. No. 169276, June 16, 2009, 589 SCRA 224, 236.
68 502 Phil. 816, 822; 464 SCRA 591, 596 (2005).
69 556 Phil. 711, 720; 530 SCRA 58, 67 (2007).

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SUPREME COURT REPORTS ANNOTATED VOLUME 711 1/16/18, 12:25

G.R. No. 168979. December 2, 2013.*

Remedial Law; Civil Procedure; Dismissal of Actions; Actions;

sent rules, there was a deletion of the ground of „failure to state

merits of the action and the ends of substantial justice will be

missal of a civil case, the respondentsÊ grounds for dismissal fall

the element of surprise, hence, the parties are expected to disclose

that they are indispensable parties to the case as the alleged

added by order of the court on motion of the party or on its own

have been impleaded by the trial court.

PETITION for review on certiorari of the decision and

decision2 dated January 27, 2005 and the resolution3

The Factual Antecedents

and burned and ransacked the family files. Lilia also

the respondents as the majority stockholders. The

attached to their amended complaint the sworn declaration

intervention was granted by the trial court. At the

The RTC Ruling

The RTC likewise denied the respondentsÊ motion for

deceased parents. Pursuant to jurisprudence,24 the

The CA agreed with the respondents that they alleged

The PartiesÊ Arguments

deemed to have waived these grounds, as correctly held by

Lourdes has already been appointed.36

ground therefor be found to exist; and such other matters

The CourtÊs Ruling

The history and development of the

in the 1940, 1964 and the present 1997

risprudence,40 this is also the ground invoked when the

Section 10. Waiver of defenses.·Defenses and objections not

This provision was essentially reproduced in Section 2,

Section 2. Defenses and objections not pleaded deemed waived.·

Under the present Rules of Court, this provision was

Section 1. Defenses and objections not pleaded.·Defenses and

Notably, in the present rules, there was a deletion of the

was totally absent in its two precedents, is the addition of

Section 1. Grounds.·Within the time for but before filing the

All these considerations point to the legal reality that

Section 5. Amendment to conform to or authorize presentation

With this clarification, we now proceed to the

substantial issues of the petition.

The motion to dismiss in the present

rial to the resolution of this case is the period within which

tion to dismiss, and in their comment48 and in their

the pre-trial include, among others, the propriety of

erroneous interpretation and application of Dabuco as will

Failure to state a cause of action and lack of cause of action are

Based on this discussion, the Court cannot uphold the

Other heirs of the spouses Pacaña to

At the inception of the present case, both the spouses

notes, however, that they are indispensable parties to the

In Plasabas, et al. v. Court of Appeals, et al.,65 the Court

on the sole ground of failure to implead indispensable

Even in those cases where it might reasonably be argued that the

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