WIGBERTO R. GONZALEZ, PETITIONER, VS. HONORABLE SERAFIN CRUZ IN HIS CAPACITY AS PRESIDING JUDGE OF THE REGIONAL TRIAL COURT THIRD JUDICIAL REGION, BRANCH 86 CABANATUAN, AND HEIR…

Gonzalez versus Cruz

The Case

This is a petition for certiorari filed by Wigberto Gonzalez against Judge Serafin Cruz of the Regional Trial Court of Cabanatuan City, Branch 86, and the Heirs of Paquito Chavez. Gonzalez asks the Supreme Court to reverse the trial court's refusal to drop him as a defendant in a civil case for injunction, annulment of sale and title, and damages. The case matters because it fixes, in plain terms, who is a real party-in-interest in an action to annul a contract — a point examiners test often, and one that turns on a single sentence of the Rules of Court.

Procedural History

Paquito Chavez, now deceased and represented by his heirs, filed an amended complaint before the Regional Trial Court of Cabanatuan City, Branch 86, seeking to annul two deeds of absolute sale over a parcel of land. Gonzalez and his co-defendant Serafin Ramirez, Jr. filed an omnibus motion asking either for separate trials or for their names to be dropped from the complaint. The trial court denied the motion in an order dated September 25, 2007. Gonzalez moved for reconsideration, and the trial court denied that motion in an order dated February 4, 2010. Gonzalez then went straight to the Supreme Court by petition for certiorari under Rule 65, raising grave abuse of discretion as his sole ground.

Facts

Chavez claimed to have been in actual and physical possession of a homelot since 1968. Over that land, Wigberto Gonzalez executed a deed of absolute sale dated June 6, 2003 in favor of Herminigildo Lopez, and another deed of absolute sale dated February 11, 2005 with Serafin Ramirez, Jr.

Chavez filed an amended complaint to annul both deeds. He alleged that Gonzalez, at the time of the sale, had no authority to sell the entire lot because he was not the sole registered owner; the registered owners also included Lilia Gonzalez de Ramirez and Gustavo Gonzalez. Chavez further alleged that the buyers were not innocent purchasers for value and that they conspired with Gonzalez, so that the derivative titles were null and void from the start. He impleaded Gonzalez and Ramirez as indispensable parties and prayed for moral damages.

Gonzalez argued that he should be dropped because the complaint's prayer sought no relief against his title, and because the allegations against him were already the subject of another pending case. The trial court disagreed, and Gonzalez brought the matter to the Supreme Court.

Issues

• Whether or not the trial court committed grave abuse of discretion amounting to excess of jurisdiction in refusing to drop Gonzalez from the complaint on the ground that he possesses no interest that can be prejudiced or injured by a judgment in the case.

Applicable Provisions

Section 2 of Rule 3 of the Rules of Court defines who may be a party, and it is the provision Gonzalez himself invoked:

Section 2. Parties in interest. — A real party in interest is the party who stands to be benefited 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.

This definition is the whole battleground: if Gonzalez stands to be injured by the judgment, he is a real party-in-interest and must remain a defendant.

Ruling

The Supreme Court denied the petition. Gonzalez was properly considered a real party-in-interest. The amended complaint itself showed that Chavez questioned Gonzalez's authority to execute the very deeds of sale sought to be annulled, and that Gonzalez was a party to those deeds. If the trial court should determine that Gonzalez had no authority to sell, he could be made liable to Chavez. His participation in the execution of the deeds was sufficiently shown by the complaint's own allegations, including the averment that he was impleaded as an indispensable party and that he had no authority to sell the entire lot.

The Court also held that the trial court's orders did not amount to grave abuse of discretion, which it described as capricious and whimsical exercise of judgment equivalent to an excess or lack of jurisdiction. On the governing principle, the Court quoted its earlier ruling in Buenaventura versus Court of Appeals:

In actions for the annulment of contracts, such as this action, the real parties are those who are parties to the agreement or are bound either principally or subsidiarily or are prejudiced in their rights with respect to one of the contracting parties and can show the detriment which would positively result to them from the contract even though they did not intervene in it.

Gonzalez was a party to the agreements. That alone made him a real party-in-interest.

Doctrine

A real party-in-interest is the party who stands to be benefited or injured by the judgment, or the party entitled to the avails of the suit. In an action for the annulment of a contract, the real parties are those who are parties to the agreement, or who are bound principally or subsidiarily, or who are prejudiced in their rights with respect to one of the contracting parties and can show the detriment that would positively result to them from the contract even though they did not intervene in it. A seller who executed the deed sought to be annulled is therefore a real party-in-interest and cannot be dropped from the complaint merely because the prayer names no relief against his title. Grave abuse of discretion means capricious and whimsical exercise of judgment equivalent to an excess or lack of jurisdiction.

Disposition

The petition for certiorari was denied; the trial court's orders stood, and Gonzalez remained a defendant in the case below.

Remember This

Memorize this line: in an action to annul a contract, the parties to that contract are real parties-in-interest. Examiners use this case to test the definition of a real party-in-interest and the standard for grave abuse of discretion under Rule 65.