CASE No.

2, Rule 3

Magallanes vs. Palmer Asia

Date: July 18,

G. R. No: G.R. No. 205179
2014

Petitioners : GERVE MAGALLANES

vs

Respondents : PALMER ASIA, INC.

DOCTRINE

Sec. 2. Parties in interest. 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 provision has two requirements: 1) to institute an action, the plaintiff must be the real party in interest; and 2)
the action must be prosecuted in the name of the real party in interest. Interest within the meaning of the Rules of
Court means material interest or an interest in issue to be affected by the decree or judgment of the case, as
distinguished from mere curiosity about the question involved. One having no material interest to protect cannot
invoke the jurisdiction of the court as the plaintiff in an action.

FACTS

Date Details

Gerve Magallanes (Petitioner) was employed as a Sales Agent in Andrews

: International Product, Inc. (Andrews), a domestic corporation that manufactures and
sells fire extinguishers.

Magallanes negotiated with three prospective buyers of Andrews fire extinguishers

:
who all issued checks payable to Andrews. These checks, however, bounced.

Angel Palmiery (Palmiery), the President of Andrews, returned the bum checks to
Magallanes. Eager to obtain his accrued commissions, and upon the advice of
: Palmiery, Magallanes signed Sales Invoices covering the fire extinguishers that were
intended to be sold to the prospective buyers, and also issued five (5) checks covering
the purchase price of the item with the total of P148,800.20.

: However, the checks were dishonored upon presentment to the bank.

Andrews later entered into an agreement with Palmer Asia, Inc. (Palmer), wherein
Sometime in 1995 :
Palmer took over the business operations of Andrews.

According to Magallanes, Andrews demanded payment of the value of the checks.

Since the demands were unheeded, Magallanes was charged with several counts of
:
violation of BP 22 under several informations all dated March 28, 1997 and were
docketed at MeTC Branch 62.

November 13, 1997, : Upon being arraigned, Magallanes pled not guilty.
 Escudero Marasigan Sta. Ana & E.H. Villareal (EMSAVILL), the counsel of Andrews,
entered its appearance as counsel for Palmer.

March 16, 1998 : However, there are discrepancies noted: the docket numbers in the Entry of
Appearance do not match those of Andrews' cases, it was filed in a different branch
(Branch 67) from where the cases were initially filed (Branch 62), and the document
does not specify the relationship between Andrews and Palmer. Lastly, there was no
registry receipt or stamp or signature or any other mark that could indicate that
Magallanes was furnished a copy of the document.

Palmiery appeared before the MeTC Branch 62 and explained that Andrews
August 10, 2003 :
transferred its assets, and relinquished control of its operations to Palmer.

Magallanes filed an Omnibus Motion to Disqualify Private Prosecutor and to Strike Out
Testimony of Angel Palmiery. According to him, since the assets and credits of
Andrews were transferred to Palmer, the real party in interest in this case is Palmer
September 16, 2004 : and not Andrews. Therefore, the criminal case should have been instituted by Palmer.
Magallanes also asserted that Palmer has no right to participate in the present case ‒
as the recitals of the information refer to Andrews. Hence, the private prosecutor
should be thereupon disqualified.

Palmer filed its Opposition, claiming that Palmer Asia can be seen as an agent of
Andrews International.

MeTC Branch 62 denied the motion filed by Magallanes for lack of merit. It also
acquitted Magallanes, but held him civilly liable for the corresponding face value of the
March 8, 2005
checks subject with 12% interest per annum counted from June 10, 1994, until the
amount shall have been paid and other fees.

Magallanes filed a Partial Appeal before RTC Branch 61, contending that checks were
not issued for valuable consideration since the Sales Invoices, as well as the
transactions reflected in the invoices were simulated and fictitious.

Andrews, as the private complainant mentioned in the Joint Decision of MeTC Branch
62, did not file any appeal. When the parties were required by the RTC Branch 61 to
submit their respective memoranda, the memorandum for the complainant was filed by
Palmer, and not Andrews.

RTC Ruling (please site the basis of decision)

RTC Branch 61 held that Magallanes was not civilly liable for the value of the checks
May 25, 2009 : because “the complaining juridical entity has not fully established the existence of a
debt by Mr. Magallanes in its favor.

Palmer filed a motion for reconsideration and petition for review under Rule 42,
alleging that the RTC erred in reversing the decision of the MeTC Branch 62 and
absolving Magallanes from civil liability. Andrews did not file a motion for
reconsideration nor review with the CA.

Magallanes then filed his Comments to Petition for Review with Motion to Dismiss Due
to Finality of Judgment, wherein he alleged that the RTC’s decision holding him not
civilly liable has already attained finality there being no appeal interposed by Andrews
International Products, Inc. He further contends that Petitioner Palmer Asia, Inc. is not,
can not, and has never been a party plaintiff litigant in the civil aspect of the case.
Court of Appeals Ruling (please site the basis of decision)

The CA ruled against Magallanes and denied his motion to dismiss. It held that
Magallanes issued the checks for consideration because he derived pecuniary benefit
from it.
:

Aggrieved, Magallanes then filed the instant petition before this Court.

SUPREME COURT

ISSUE/S:

Whether or not CA erred in not dismissing Palmer’s petition for review based on lack of jurisdiction and finality of
the RTC’s judgment and in ruling that Magallanes failed to rebut the presumption of consideration in the issuance
of the checks

RULING:

The Court grants the petition. The RTC Decision absolving Magallanes from civil liability has attained finality,
since no appeal was interposed by the private complainant, Andrews. While Palmer filed a petition for review
before the CA, it is not the real party in interest; it was never a party to the proceedings at the trial court.

Under procedural rules, case is dismissible for lack of personality to sue upon proof that the plaintiff is not the real
party-in-interest, hence grounded on failure to state a cause of action. The real party in this case is Andrews, not
Palmer. Parties who are not the real parties in interest may be included in a suit in accordance with the provisions
of Section 3 of Rule 3 of the Rules of Court:

Sec. 3. Representatives as parties. Where the action is allowed to be

prosecuted or defended by a representative or someone acting in a
fiduciary capacity, the beneficiary shall be included in the title of the case
and shall be deemed to be the real party in interest. A representative may
be a trustee of an express trust, a guardian, an executor or administrator,
or a party authorized by law or these Rules. An agent acting in his own
name and for the benefit of an undisclosed principal may sue or be sued
without joining the principal except when the contract involves things
belonging to the principal.

The CA erred in stating that Palmer and Andrews are the same entity. These are two separate and distinct
entities claiming civil liability against Magallanes. Andrews was the payee of the bum checks, and the former
employer of Magallanes. It filed the complaint for B.P. 22 before MeTC Branch 62. Thus when the MeTC Branch
62 ordered Magallanes to pay the private complainant the corresponding face value of the checks, it was referring
to Andrews, not Palmer.

Although Andrews relinquished control of its business to Palmer, it was never dissolved and thus remained
existing as stated by Palmer’s Comment and Opposition about Andrews International:

“No complaint was also filed with the Securities and Exchange Commission to involuntarily terminate the same,
thus, for all intents and purposes, it is still existing although not operational.”

Given the foregoing facts, it is clear that the real party in interest here is Andrews. Following the Rules of Court,
the action should be in the name of Andrews. As previously mentioned, Andrews instituted the action before the
MeTC Branch 62 but it was Palmer which filed a petition for review before the CA.

The corporation that initiated the complaint for B.P. 22 is different from the corporation that filed the memorandum
at the RTC and the petition for review before the CA. It appears that Palmer is suing Magallanes in its own right,
not as agent of Andrews, the real party in interest. Even assuming arguendo that Palmer is correct in asserting
that it is the agent of Andrews, the latter should have been included in the title of the case, in accordance with
procedural rules.

DISPOSITIVE PORTION:

WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals dated 17 September 2012 and
the Resolution dated 14 January 2013 are hereby REVERSED and SET ASIDE. The Decision of the Makati
Regional Trial Court, Branch 61, is hereby REINSTATED.