SUI MAN HUI CHAN v.

CA (Liezel) FACTS:

February 27, 2004 | Quisumbing, J. | Real party-in-interest 1. Napoleon C. Medalla (lessor) entered into a Contract of Lease with Ramon
Chan (lessee) over a hotel building in Baguio City. Medalla and Chan
agreed that:

PETITIONER: Sui Man Hui chan and Gonzalo Co a. Chan would use the leased premises as a restaurant named
“Cypress Inn.”
RESPONDENTS: Court of Appeals and Oscar D. Medalla b. The period of lease shall be for 10 years.
c. The payment of real taxes on the leased premises shall be for
the account of the lessee.
d. The agreement is binding upon the heirs and/or successors-in-
SUMMARY: Ramon Chan and Napoleon Madella entered into a Contract of Lease
interest of the lessor and the lessee.
where they agreed that their agreement is binding upon their heirs and/or
2. Petitioner Gonzalo Co was employed by Ramon chan as the general
successors-in-interest. Both of them died. Chan was succeeded by his wife, and Go
manager of the restaurant and acted as his agent in all his dealings with
as manager, while Madella was succeeded by his heirs. The lease agreement was
Napoleon Medalla.
continued and was not modified. Petitioners defaulted in their payment of the
3. Ramon Chan died as was survived by his wife, petitioner Sui Man Hui
rentals and realty taxes despite repeated demands. Hence, one of the heirs, Oscar
Chan, who continued to operate the restaurant.
Medalla filed a complaint for sum of money and damages. Petitioners’ main
4. Napoleon Medalla also died. Private respondent Oscar Medallla is among
argument was that they were not the real parties-in-interest because they were not
his heirs who succeeded him as owner and lessor of the leased premises.
privy nor were they signatories to the lease contract. Moreover, they asserted that
5. The contract was neither amended nor terminated after the death of the
any claim should be filed against the estate of Ramon Chan. The RTC ruled in
original parties but was continued by their respective successors-in-interest.
favor of Madella and the CA affirmed. The issue is whether the petitioners are the
6. Despite several demands, petitioners failed to pay the monthly rentals due
real parties-in-interest. The SC ruled in the affirmative and stated that the rights and
on the premises but nonetheless, continued to use and occupy the leased
obligations of the parties in a lease contract are transmissible. Moreover, there was
premises. Medalla also found out the petitioners had not paid the realty
an express stipulation in the lease contract that such agreement is binding on the
taxes due on the leased premises.
original lessor and lessee’s heirs and/or successors-in-interest. Chan is an heir of
7. Medalla then asked petitioners to settle the unpaid rentals, pay the unpaid
Ramon Chan and together with petitioner Co, was a successor-in-interest to
real estate taxes, and vacate the leased premises.
the restaurant business of the late Ramon Chan. Thus, they are real parties-in-
8. Petitioners vacated the premises but did not pay their unpaid rentals and
interest in the case filed by Medalla, notwithstanding the fact that they are not
realty taxes (outstanding balance is 4,147,900). Aggrieved by petitioners’
signatories to the Contract of Lease.
actions, Medallla filed a complaint for sum of money and damages against
petitioners in the RTC.
9. In their Answer, petitioners denied owing private respondent the amounts
DOCTRINE: Heirs and successors-in-interest can be the real parties-in-interest in claimed. They alleged that the late Ramon Chan had paid all the rentals due
a case notwithstanding the fact that they are not signatories to the contract up to March 15, 1998 and they need not pay any balance owing on the
(particularly to a contract that involves transmissible rights) where the cause of rentals as they were required to pay 2 months advance rentals upon signing
action arose. As defined in Section 2, Rule 2, a real party in interest is the party of the contract and make a guarantee deposit amounting to 220,000.
who stands to be benefited or injured by the judgment in the suit, or the party Regarding the realty taxes, petitioners alleged that Medalla should be the
entitled to the avails of the suit. one to settle such for he is the owner of the property, notwithstanding any
stipulations to the contrary in the contract.
10. Petitioners filed a Supplemental Answer with Motion to Dismiss alleging
 that they were neither parties nor privies to the Contract of Lease, hence, were neither parties nor were they privy to the Lease Contract between the
they are not the real parties-in-interest. late Ramon Chan and Napoleon Medalla. They assert any claim for unpaid
11. Medalla opposed petitioners’ supplemental answer and prayed for the denial rentals should be made against the estate of Ramon Chan.
of the Motion to Dismiss for having been belatedly filed in contravention of
the Rules. He also alleged that Chan and Co as owner and agent of Chan, 2. The Supreme Court ruled in favor of Medalla and found no merit to
respectively, are clearly real parties-in-interest in the case. Medalla pointed petitioners’ contention that they are not real parties-in-interest since they are
to their continuous dealings with him in all transactions relating to the not parties nor signatories to the contract. It is undeniable that Chan is an
contract after the death of Ramon Chan and even after the expiration of the heir of Ramon Chan and together with petitioner Co, was a successor-in-
Contract of Lease. interest to the restaurant business of the late Ramon Chan. Thus, they are
12. RTC denied petitioners’ motion to dismiss and ruled that petitioners real parties-in-interest in the case filed by Medalla, notwithstanding the fact
continued to transact with Medalla even after the death of Ramon Chan as that they are not signatories to the Contract of Lease.
shown by their communications. Moreover, the lower court stated that
3. The Court also stated that a lease contract is not essentially personal in
Medalla’s acquiescence to petitioners’ continued occupation and enjoyment
character which means that the rights and obligations therein are transmitted
of the leased premises and the latter’s recognition of the formers’ ownership
to the heirs. The general rule is that heirs are bound by contracts entered
of said remises reflected an oral agreement between the parties to continue
into by their predecessors-in-interest except when the rights and obligations
the Lease Contract.
arising therefrom are not transmissible by their nature, by stipulation, or by
13. Petitioners moved for reconsideration on the ground that any claim should
provision of law.
be filed against the estate of Ramon Chan in an estate proceeding pursuant
to Rule 86. 4. In the subject Lease Contract, not only were there no stipulations
14. The lower court denied said motion and pointed out that the unpaid rentals prohibiting were there no stipulations prohibiting any transmission of rights,
being claimed were those for the period April 1993-December 1997. These but its very terms and conditions explicitly provided for the transmission of
were incurred by petitioners and not by the late Ramon Chan, who died on the rights of the lessor and of the lessee to their respective heirs and
August 1989. successors. The contract is the law between the parties. the death of a party
15. Petitioners elevated the case to CA through a special civil action of does not excuse nonperformance of a contract, which involves a property
certiorari. CA affirmed the RTC ruling. Hence, the instant petition. right, and the rights and obligations thereunder pass to the successors or
representatives of the deceased.
ISSUE/s: 5. As to petitioners’ contention that any claim should have been filed before
the estate proceeding of Ramon Chan pursuant to Rule 86, the Court ruled
1. Whether petitioners are the real parties-in-interest. YES
that as found by the lower court, the unpaid rentals sought to be claimed
were for the period April 1993 to December 1998 while Ramon Chan died
in August 1989. Hence, the unpaid rentals did not accrue during the lifetime
RULING: The instant petition is DENIED and the Decision of the Court of Appeals of Ramon Chan, but well after his death, and consequently, his estate cannot
is AFFIRMED. be held liable for them.

RATIO: Other Civil Procedure Issues (just in case):

1. Petitioners argue that they are not real parties-in-interest and hence, were Re the Motion to Dismiss
improperly pleaded in the complaint as defendants. They insist that they
 1. The Supreme Court stressed that petitioners’ Motion to Dismiss was filed
after an Answer had already been filed. Such fact alone warranted an
outright dismissal of the motion for having been filed in contravention of
the clear and explicit mandate of Section, Rule 16, of the Rules which states
that a motion to dismiss shall be filed within the time for but before filing
the answer to the complaint or pleading asserting a claim.
2. In this case, petitioners filed their Supplemental Answer with Motion to
Dismiss almost two months after filing their Answer which is in
contravention of the above-stated rule.

Re motion to dismiss as a subject of a special civil action for certiorari

1. The Supreme Court agreed with the Court of Appeals which ruled that the
grant or denial of a Motion to Dismiss is an interlocutory order, hence, it
cannot be the subject of a special civil action for certiorari.
2. The proper remedy in such a case is to appeal a decision has been rendered.
3. A writ of certiorari is not intended to correct every controversial
interlocutory ruling. It is resorted only to correct a grave abuse of discretion
or a whimsical exercise of judgment equivalent to lack or excess of
jurisdiction.
4. Certiorari is not designed to correct erroneous findings and conclusions
made by the court.