Paraluman D. Barcelona vs. Metro Manila Transit Corp.

[SEC-AC NO. 286. August 20, 1990.] PARALUMAN D. BARCELONA, RICARDO L. CAMUA, AND PEDRO M. SAN JUAN, JR. , petitioners-appellants , vs .METRO MANILA TRANSIT CORPORATION (MMTC) , respondent-appellee . D E C I S I O N For resolution is the appeal of petitioners from the order of the hearing panel dated November 29, 1989 granting the respondent's motion to dismiss their petition and from the Order dated January 15, 1990 denying their motion for reconsideration. The records of the case show that 4 June 16, 1989 the petitioners, who are stockholders of CBL Transit, Inc., hereinafter referred to as CBLT filed with this Commission on behalf of the corporation a petition principally seeking the issuance of a writ of preliminary injunction to prevent the respondent METRO MANILA TRANSIT CORPORATION (MMTC) from continuing to manage CBLT and from repossessing the remaining buses leased to the latter under a lease purchase agreement. The petitioner alleged, among others, that the respondent took over the management of the business of CBLT by virtue of a voting trust agreement whereby it was empowered to elect five out of the seven directors of CBLT; that the respondent mismanaged the business of CBLT; and that the respondent unlawfully repossessed buses of the CBLT and negligently failed to enforce the supplier's warranty against body defects of the buses. The petitioners prayed for the restitution of the repossessed buses, accounting and relinquishment of the management of the CBLT, write-off of rentals, interests and penalties, and indemnification for damages. On August 4, 1989 the respondent MMTC moved for the dismissal of the petition on the following grounds: 1. That the petitioners are not the real parties in interest; that the real party in interest is CBLT which was not impleaded nor even mentioned as a party in the petition; 2. That the respondent is not the real party in interest; that the alleged acts of mismanagement of the business of CBLT should be attributed to its own board of directors in accordance with Section 23 of the Corporation Code; 3. That indispensable parties, namely, the Directors of CBLT, were not impleaded; and 4. That the alleged cause of action against the respondent, i.e.,failure to enforce the warranty against body defects of the buses, has either prescribed or is non-existent. On November 29, 1989, the hearing panel issued an order granting the motion to dismiss on the basis of the first three grounds raised by the respondent. On December 29, 1989, the petitioners filed a motion for reconsideration of the order of dismissal. Filed together with the motion was an amended petition which impleaded CBLT as additional petitioner and the directors and officers of CBLT who served in the management of the corporation during the period that it was under the management of the respondent MMTC as additional respondents by way of correcting the deficiency of the petition which was perceived by the hearing panel as non-joinder of indispensable parties. On January 15, 1990, the hearing panel issued an order denying the motion for reconsideration, thereby giving rise to the instant appeal. The appellants challenge the correctness of the hearing panel's orders dismissing their petition for alleged non-joinder of indispensable parties and misjoinder of a party and denying their motion for reconsideration despite the filing of an amended petition which remedied the alleged deficiencies of the original one. LibLex The well-established rule on the matter is clear and simple and is found in Section 11, Rule 3 of the Rules of Court which provides that misjoinder and non-joinder of parties is not a ground for dismissal of an action. The Supreme Court had occasion to apply this rule in the case of De los Santos vs. Provincial Sheriff of Rizal, G.R. No. 43412, March 12, 1937, 64 Phil. 193 wherein it held that "when objection is made to the non-joinder or misjoinder of parties and the court finds upon examination of the petition that the objection is well-founded, it is its duty not to dismiss but to order the inclusion in case of a non-joinder of parties and the exclusion in case of a misjoinder of parties". In the subsequent case of Cortez vs. Avila, G.R. No. L-9782, April 26, 1957, 101 Phil. 205 the High Tribunal further expounded on the rule by holding that "when a complaint is defective by reason of failure to include an indispensable party, reasonable opportunity to amend said pleading must be given and the action should not be dismissed except when plaintiff fails or refuses to include said party or the latter cannot be located". From the foregoing law and jurisprudence on the matter, therefore, what the hearing panel ought to have done in the case below was simply to order the inclusion of the party improperly omitted and/or the exclusion of the party improperly impleaded. This was not done. To make matters worse, the hearing panel totally ignored the amended petition filed by the appellants which was precisely aimed at rectifying the alleged defects of the original petition. As correctly argued by the appellants, the filing of the amended petition was done as a matter of right under Section 2, Rule 10 of the Rules of Court inasmuch as no responsive pleading has been filed by the respondent yet. With the filing of the amended petition, the alleged grounds for the dismissal of the petition which as earlier discussed are not valid grounds for dismissal of an action vanished and there should have been no other recourse but to admit the same. As to whether or not the respondent MMTC is a real party in interest, we find that this issue is best determined at the hearings on the merits of the case. The counter-allegations of respondent MMTC in its Motion to Dismiss, Reply Memorandum and Sur-Rejoinder constitute its defense which should properly be ventilated during the hearing of the case. It should be pointed out that the petition does not only allege mismanagement of CBLT but likewise failure to enforce the supplier's warranties against body defects of the buses, which right to enforce said warranties allegedly belonged solely and exclusively to respondent MMTC. At any rate, if it should be proven during the hearings that the respondent MMTC is not a real party in interest, it should simply be dropped as a party respondent at any stage of the action because such may be done pursuant to Section 11, Rule 3 of the Rules of Court. WHEREFORE, the order appealed from is hereby REVERSED, the amended petition is hereby ordered admitted and the case remanded to the hearing panel for hearings of the merits of the case. SO ORDERED. (SGD.) ROSARIO N. LOPEZ Chairman (did not participate) (SGD.) GONZALO T. SANTOS, JR. (SGD.) RODOLFO L. SAMARISTA Associate Commissioner Associate Commissioner (SGD.) ARMANDO Z. GONZALES (SGD.) MERLE O. MANUEL Associate Commissioner Associate Commissioner