A.L.

ANG
NETWORK,
vs.
EMMA
MONDEJAR,
accompanied
by
MONDEJAR, Respondent.PERLAS-BERNABE, J.:

INC., Petitioner,
her

husband,

EFREN

This is a direct recourse1 to the Court from the Decision2 dated November 23,
2011and Order3 dated February 16, 2012 of the Regional Trial Court of Bacolod
City, Branch 45 (RTC) in RTC Case No. 11-13833 which dismissed, on the ground of
improper remedy, petitioner A.L. Ang Network, Inc.'s (petitioner) petition for
certiorari from the Decision4 dated June 10, 2011 of the Municipal Trial Court in
Cities of Bacolod City, Branch 4 (MTCC) in Civil Case No. SCC-1436, a small claims
case for sum of money against respondent Emma Mondejar (respondent).
On March 23, 2011, petitioner filed a complaint 5 for sum of money under the Rule
of Procedure for Small Claims Cases 6 before the MTCC, seeking to collect from
respondent the amount of P23,111.71 which represented her unpaid water bills for
the period June 1, 2002 to September 30, 2005.7
Petitioner claimed that it was duly authorized to supply water to and collect
payment therefor from the homeowners of Regent Pearl Subdivision, one of whom
is respondent who owns and occupies Lot 8, Block 3 of said subdivision. From June
1, 2002 until September 30, 2005, respondent and her family consumed a total of
1,150 cubic meters (cu. m.) of water, which upon application of the agreed rate
of P113.00 for every 10 cu. m. of water, plus an additional charge of P11.60 for
every additional cu. m. of water, amounted to P28,580.09.8 However, respondent
only paid the amount of P5,468.38, thus, leaving a balance of P23,111.71 which
was left unpaid despite petitioners repeated demands. 9
In defense, respondent contended that since April 1998 up to February 2003, she
religiously paid petitioner the agreed monthly flat rate of P75.00 for her water
consumption. Notwithstanding their agreement that the same would be adjusted
only upon prior notice to the homeowners, petitioner unilaterally charged her
unreasonable and excessive adjustments (at the average of 40 cu. m. of water per
month or 1.3 cu. m. of water a day) far above the average daily water consumption
for a household of only 3 persons. She also questioned the propriety and/or basis
of the aforesaid P23,111.71 claim.10
In the interim, petitioner disconnected respondents water line for not paying the
adjusted water charges since March 2003 up to August 2005. 11

The MTCC Ruling

On June 10, 2011, the MTCC rendered a Decision 12 holding that since petitioner was
issued a Certificate of Public Convenience (CPC)13 by the National Water
Resources Board (NWRB) only on August 7, 2003, then, it can only charge
respondent the agreed flat rate of P75.00 per month prior thereto or the sum
of P1,050.00 for the period June 1, 2002 to August 7, 2003. Thus, given that
respondent had made total payments equivalent to P1,685.99 for the same period,
she should be considered to have fully paid petitioner. 14
The MTCC disregarded petitioners reliance on the Housing and Land Use
Regulatory Boards (HLURB) Decision15dated August 17, 2000 in HLURB Case No.
REM C6-00-001 entitled Nollie B. Apura, et al. v. Dona Carmen I Subdivision, et al.,
as source of its authority to impose new water consumption rates for water
consumed from June 1, 2002 to August 7, 2003 in the absence of proof (a) that
petitioner complied with the directive to inform the HLURB of the result of its
consultation with the concerned homeowners as regards the rates to be charged,
and (b) that the HLURB approved of the same.16
Moreover, the MTCC noted that petitioner failed to submit evidence showing (a) the
exact date when it actually began imposing the NWRB approved rates; and (b) that
the parties had a formal agreement containing the terms and conditions thereof,
without
which
it
cannot
establish
with
certainty
respondents
obligation.17 Accordingly, it ruled that the earlier agreed rate of P75.00 per month
should still be the basis for respondents water consumption charges for the period
August 8, 2003 to September 30, 2005.18 Based on petitioners computation,
respondent had only paidP300.00 of her P1,500.00 obligation for said period. Thus,
it ordered respondent to pay petitioner the balance thereof, equivalent
to P1,200.00 with legal interest at the rate of 6% per annum from date of receipt of
the extrajudicial demand on October 14, 2010 until fully paid. 19
Aggrieved, petitioner filed a petition for certiorari 20 under Rule 65 of the Rules of
Court before the RTC, ascribing grave abuse of discretion on the part of the MTCC
in finding that it (petitioner) failed to establish with certainty respondents
obligation, and in not ordering the latter to pay the full amount sought to be
collected.
The RTC Ruling

On November 23, 2011, the RTC issued a Decision 21 dismissing the petition for
certiorari, finding that the said petition was only filed to circumvent the nonappealable nature of small claims cases as provided under Section 23 22of the Rule
of Procedure on Small Claims Cases. To this end, the RTC ruled that it cannot
supplant the decision of the MTCC with another decision directing respondent to
pay petitioner a bigger sum than that which has been awarded.
Petitioner moved for reconsideration23 but was denied in an Order24 dated February
16, 2012, hence, the instant petition.
The Issue Before the Court
The sole issue in this case is whether or not the RTC erred in dismissing petitioners
recourse under Rule 65 of the Rules of Court assailing the propriety of the MTCC
Decision in the subject small claims case.
The Courts Ruling
The petition is meritorious.
Section 23 of the Rule of Procedure for Small Claims Cases states that:
SEC. 23. Decision. After the hearing, the court shall render its decision on the
same day, based on the facts established by the evidence (Form 13-SCC). The
decision shall immediately be entered by the Clerk of Court in the court docket for
civil cases and a copy thereof forthwith served on the parties.
The decision shall be final and unappealable.
Considering the final nature of a small claims case decision under the above-stated
rule, the remedy of appeal is not allowed, and the prevailing party may, thus,
immediately move for its execution. 25 Nevertheless, the proscription on appeals in
small claims cases, similar to other proceedings where appeal is not an available
remedy,26 does not preclude the aggrieved party from filing a petition for certiorari
under Rule 65 of the Rules of Court. This general rule has been enunciated in the
case of Okada v. Security Pacific Assurance Corporation, 27 wherein it was held that:
In a long line of cases, the Court has consistently ruled that "the extraordinary writ
of certiorari is always available where there is no appeal or any other plain, speedy

and adequate remedy in the ordinary course of law." In Jaca v. Davao Lumber Co.,
the Court ruled:
x x x Although Section 1, Rule 65 of the Rules of Court provides that the special
civil action of certiorari may only be invoked when "there is no appeal, nor any
plain, speedy and adequate remedy in the course of law," this rule is not without
exception. The availability of the ordinary course of appeal does not constitute
sufficient ground to prevent a party from making use of the extraordinary remedy
of certiorari where appeal is not an adequate remedy or equally beneficial, speedy
and sufficient. It is the inadequacy not the mere absence of all other legal
remedies and the danger of failure of justice without the writ that usually
determines the propriety of certiorari.
This ruling was reiterated in Conti v. Court of Appeals:
Truly, an essential requisite for the availability of the extraordinary remedies under
the Rules is an absence of an appeal nor any "plain, speedy and adequate remedy"
in the ordinary course of law, one which has been so defined as a "remedy which
(would) equally (be) beneficial, speedy and sufficient not merely a remedy which at
some time in the future will bring about a revival of the judgment x x x complained
of in the certiorari proceeding, but a remedy which will promptly relieve the
petitioner from the injurious effects of that judgment and the acts of the inferior
court or tribunal" concerned. x x x (Emphasis supplied)
In this relation, it may not be amiss to placate the RTCs apprehension that
respondents recourse before it (was only filed to circumvent the non-appealable
nature of [small claims cases], because it asks [the court] to supplant the decision
of the lower [c]ourt with another decision directing the private respondent to pay
the petitioner a bigger sum than what has been awarded." 28 Verily, a petition for
certiorari, unlike an appeal, is an original action 29 designed to correct only errors of
jurisdiction and not of judgment. Owing to its nature, it is therefore incumbent
upon petitioner to establish that jurisdictional errors tainted the MTCC Decision.
The RTC, in turn, could either grant or dismiss the petition based on an evaluation
of whether or not the MTCC gravely abused its discretion by capriciously,
whimsically, or arbitrarily disregarding evidence that is material to the
controversy.30
In view of the foregoing, the Court thus finds that petitioner correctly availed of the
remedy of certiorari to assail the propriety of the MTCC Decision in the subject
small claims case, contrary to the RTCs ruling.

Likewise, the Court finds that petitioner filed the said petition before the proper
forum (i.e., the RTC).1wphi1 To be sure, the Court, the Court of Appeals and the
Regional Trial Courts have concurrent jurisdiction to issue a writ of certiorari. 31 Such
concurrence of jurisdiction, however, does not give a party unbridled freedom to
choose the venue of his action lest he ran afoul of the doctrine of hierarchy of
courts. Instead, a becoming regard for judicial hierarchy dictates that petitions for
the issuance of writs of certiorari against first level courts should be filed with the
Regional Trial Court, and those against the latter, with the Court of Appeals, before
resort may be had before the Court. 32 This procedure is also in consonance with
Section 4, Rule 65 of the Rules of Court.33
Hence, considering that small claims cases are exclusively within the jurisdiction of
the Metropolitan Trial Courts, Municipal Trial Courts in Cities, Municipal Trial Courts,
and Municipal Circuit Trial Courts, 34 certiorari petitions assailing its dispositions
should be filed before their corresponding Regional Trial Courts. This petitioner
complied with when it instituted its petition for certiorari before the RTC which, as
previously mentioned, has jurisdiction over the same. In fine, the RTC erred in
dismissing the said petition on the ground that it was an improper remedy, and, as
such, RTC Case No. 11-13833 must be reinstated and remanded thereto for its
proper disposition.
WHEREFORE, the petition is GRANTED. The Decision dated November 23, 2011 and
Resolution dated February 16, 2012 of the Regional Trial Court of Bacolod City,
Branch 45 are REVERSED and SET ASIDE. RTC Case No. 11-13833 is hereby
REINSTATED and the court a quo is ordered to resolve the same with dispatch.
SO ORDERED.

REMEDIO
V.
FLORES, petitioner,
vs.
HON. JUDGE HEILIA S. MALLARE-PHILLIPPS, IGNACIO BINONGCAL &
FERNANDO CALION, respondents.
Lucio A. Dixon for respondent F. Calion.

FERIA, J.:
The Court rules that the application of the totality rule under Section 33(l) of Batas
Pambansa Blg. 129 and Section 11 of the Interim Rules is subject to the
requirements for the permissive joinder of parties under Section 6 of Rule 3 which
provides as follows:
Permissive joinder of parties.-All persons in whom or against whom
any right to relief in respect to or arising out of the same
transaction or series of transactions is alleged to exist, whether
jointly, severally, or in the alternative, may, except as otherwise
provided in these rules, join as plaintiffs or be joined as defendants
in one complaint, where any question of law or fact common to all
such plaintiffs or to all such defendants may arise in the action; but
the court may make such orders as may be just to prevent any
plaintiff or defendant from being embarrassed or put to expense in
connection with any proceedings in which he may have no interest.
Petitioner has appealed by certiorari from the order of Judge Heilia S. MallarePhillipps of the Regional Trial Court of Baguio City and Benguet Province which
dismissed his complaint for lack of jurisdiction. Petitioner did not attach to his
petition a copy of his complaint in the erroneous belief that the entire original
record of the case shall be transmitted to this Court pursuant to the second
paragraph of Section 39 of BP129. This provision applies only to ordinary appeals
from the regional trial court to the Court of Appeals (Section 20 of the Interim
Rules). Appeals to this Court by petition for review on certiorari are governed by
Rule 45 of the Rules of Court (Section 25 of the Interim Rules).
However, the order appealed from states that the first cause of action alleged in
the complaint was against respondent Ignacio Binongcal for refusing to pay the
amount of P11,643.00 representing cost of truck tires which he purchased on credit
from petitioner on various occasions from August to October, 1981; and the second
cause of action was against respondent Fernando Calion for allegedly refusing to
pay the amount of P10,212.00 representing cost of truck tires which he purchased
on credit from petitioner on several occasions from March, 1981 to January, 1982.
On December 15, 1983, counsel for respondent Binongcal filed a Motion to Dismiss
on the ground of lack of jurisdiction since the amount of the demand against said
respondent was only P11,643.00, and under Section 19(8) of BP129 the regional
trial court shall exercise exclusive original jurisdiction if the amount of the demand

is more than twenty thousand pesos (P20,000.00). It was further averred in said
motion that although another person, Fernando Calion, was allegedly indebted to
petitioner in the amount of P10,212.00, his obligation was separate and distinct
from that of the other respondent. At the hearing of said Motion to Dismiss,
counsel for respondent Calion joined in moving for the dismissal of the complaint
on the ground of lack of jurisdiction. Counsel for petitioner opposed the Motion to
Dismiss. As above stated, the trial court dismissed the complaint for lack of
jurisdiction.
Petitioner maintains that the lower court has jurisdiction over the case following
the "novel" totality rule introduced in Section 33(l) of BP129 and Section 11 of the
Interim Rules.
The pertinent portion of Section 33(l) of BP129 reads as follows:
... Provided,That where there are several claims or causes of action
between the same or different parties, embodied in the same
complaint, the amount of the demand shall be the totality of the
claims in all the causes of action, irrespective of whether the
causes of action arose out of the same or different transactions. ...
Section 11 of the Interim Rules provides thus:
Application of the totality rule.-In actions where the jurisdiction of
the court is dependent on the amount involved, the test of
jurisdiction shall be the aggregate sum of all the money demands,
exclusive only of interest and costs, irrespective of whether or not
the separate claims are owned by or due to different parties. If any
demand is for damages in a civil action, the amount thereof must
be specifically alleged.
Petitioner compares the above-quoted provisions with the pertinent portion of the
former rule under Section 88 of the Judiciary Act of 1948 as amended which reads
as follows:
... Where there are several claims or causes of action between the
same parties embodied in the same complaint, the amount of the
demand shall be the totality of the demand in all the causes of
action, irrespective of whether the causes of action arose out of the

same or different transactions; but where the claims or causes of

action joined in a single complaint are separately owned by or due
to different parties, each separate claim shall furnish the
jurisdictional test. ...
and argues that with the deletion of the proviso in the former rule, the totality rule
was reduced to clarity and brevity and the jurisdictional test is the totality of the
claims in all, not in each, of the causes of action, irrespective of whether the
causes of action arose out of the same or different transactions.
This argument is partly correct. There is no difference between the former and
present rules in cases where a plaintiff sues a defendant on two or more separate
causes of action. In such cases, the amount of the demand shall be the totality of
the claims in all the causes of action irrespective of whether the causes of action
arose out of the same or different transactions. If the total demand exceeds twenty
thousand pesos, then the regional trial court has jurisdiction. Needless to state, if
the causes of action are separate and independent, their joinder in one complaint
is permissive and not mandatory, and any cause of action where the amount of the
demand is twenty thousand pesos or less may be the subject of a separate
complaint filed with a metropolitan or municipal trial court.
On the other hand, there is a difference between the former and present rules in
cases where two or more plaintiffs having separate causes of action against a
defendant join in a single complaint. Under the former rule, "where the claims or
causes of action joined in a single complaint are separately owned by or due to
different parties, each separate claim shall furnish the jurisdictional test" (Section
88 of the Judiciary Act of 1948 as amended, supra). This was based on the ruling in
the case of Vda. de Rosario vs. Justice of the Peace, 99 Phil. 693. As worded, the
former rule applied only to cases of permissive joinder of parties plaintiff. However,
it was also applicable to cases of permissive joinder of parties defendant, as may
be deduced from the ruling in the case of Brillo vs. Buklatan, thus:
Furthermore, the first cause of action is composed of separate
claims against several defendants of different amounts each of
which is not more than P2,000 and falls under the jurisdiction of
the justice of the peace court under section 88 of Republic Act No,
296. The several claims do not seem to arise from the same
transaction or series of transactions and there seem to be no
questions of law or of fact common to all the defendants as may
warrant their joinder under Rule 3, section 6. Therefore, if new

complaints are to be filed in the name of the real party in interest

they should be filed in the justice of the peace court. (87 Phil. 519,
520, reiterated in Gacula vs. Martinez, 88 Phil. 142, 146)
Under the present law, the totality rule is applied also to cases where two or more
plaintiffs having separate causes of action against a defendant join in a single
complaint, as well as to cases where a plaintiff has separate causes of action
against two or more defendants joined in a single complaint. However, the causes
of action in favor of the two or more plaintiffs or against the two or more
defendants should arise out of the same transaction or series of transactions and
there should be a common question of law or fact, as provided in Section 6 of Rule
3.
The difference between the former and present rules in cases of permissive joinder
of parties may be illustrated by the two cases which were cited in the case of Vda.
de Rosario vs. Justice of the Peace (supra) as exceptions to the totality rule. In the
case of Soriano y Cia vs. Jose (86 Phil. 523), where twenty-nine dismissed
employees joined in a complaint against the defendant to collect their respective
claims, each of which was within the jurisdiction of the municipal court although
the total exceeded the jurisdictional amount, this Court held that under the law
then the municipal court had jurisdiction. In said case, although the plaintiffs'
demands were separate, distinct and independent of one another, their joint suit
was authorized under Section 6 of Rule 3 and each separate claim furnished the
jurisdictional test. In the case of International Colleges, Inc. vs. Argonza (90 Phil.
470), where twenty-five dismissed teachers jointly sued the defendant for unpaid
salaries, this Court also held that the municipal court had jurisdiction because the
amount of each claim was within, although the total exceeded, its jurisdiction and
it was a case of permissive joinder of parties plaintiff under Section 6 of Rule 3.
Under the present law, the two cases above cited (assuming they do not fall under
the Labor Code) would be under the jurisdiction of the regional trial court.
Similarly, in the abovecited cases of Brillo vs. Buklatan and Gacula vs.
Martinez (supra), if the separate claims against the several defendants arose out of
the same transaction or series of transactions and there is a common question of
law or fact, they would now be under the jurisdiction of the regional trial court.
In other words, in cases of permissive joinder of parties, whether as plaintiffs or as
defendants, under Section 6 of Rule 3, the total of all the claims shall now furnish
the jurisdictional test. Needless to state also, if instead of joining or being joined in

one complaint separate actions are filed by or against the parties, the amount
demanded in each complaint shall furnish the jurisdictional test.
In the case at bar, the lower court correctly held that the jurisdictional test is
subject to the rules on joinder of parties pursuant to Section 5 of Rule 2 and
Section 6 of Rule 3 of the Rules of Court and that, after a careful scrutiny of the
complaint, it appears that there is a misjoinder of parties for the reason that the
claims against respondents Binongcal and Calion are separate and distinct and
neither of which falls within its jurisdiction.
WHEREFORE, the order appealed from is affirmed, without pronouncement as to
costs.
SO ORDERED.

[G.R.

No.

195546

March

14,

2012]

GOODLAND COMPANY, INC., PETITIONER, VS. ASIA UNITED BANK,

CHRISTINE T. CHAN, FLORANTE DEL MUNDO, ENGRACIO M. ESCASINAS,
JR., IN HIS OFFICIAL CAPACITY AS CLERK OF COURT & EX-OFFICIO SHERIFF
IN THE REGIONAL TRIAL COURT OF MAKATI CITY, NORBERTO B. MAGSAJO,
IN HIS OFFICIAL CAPACITY AS SHERIFF IV OF THE REGIONAL TRIAL COURT
OF MAKATI CITY, AND RONALD A. ORTILE, IN HIS OFFICIAL CAPACITY AS
THE
REGISTER
OF
DEEDS
FOR
MAKATI
CITY,
RESPONDENTS.
[G.R.

NO.

195561]

GOODLAND COMPANY, INC., PETITIONER, VS. ASIA UNITED BANK,

ABRAHAM CO, ATTY. JOEL T. PELICANO AND THE REGISTER OF DEEDS OF
MAKATI
CITY,
RESPONDENTS.

sale, AUB emerged as the highest bidder and was issued a Certificate of Sale which
was registered with the Registry of Deeds of Calamba on November 23, 2006.

DECISION
VILLARAMA, JR., J.:
These consolidated petitions for review on certiorari filed under Rule 45 by one and
the same party (Goodland Company, Inc.) both assail the Decision [1] dated
September 15, 2010 and Resolution[2]dated January 31, 2011 of the Court of
Appeals (CA) in CA-G.R. CV No. 90418.cralaw
Factual Antecedents
Sometime in July 1999, petitioner Goodland Company, Inc. (petitioner) mortgaged
its two parcels of land situated in Sta. Rosa, Laguna and covered by Transfer
Certificate of Title (TCT) Nos. 321672 and 321673 (Laguna Properties). The
Third Party Real Estate Mortgage (REM) secured the loans extended by respondent
Asia United Bank (AUB) to Radio Marine Network (Smartnet), Inc. (RMNSI), doing
business as Smartnet Philippines, [3] under the latters Php250 million Omnibus
Credit
Line
with
AUB.
In addition to the aforesaid collaterals, petitioner executed a Third Party REM over
its 5,801-square meter property located at Pasong Tamo St., Makati City (Makati
Property) covered by TCT No. 114645. The REMs, both signed by Gilbert G. Guy,
President of Goodland Company, Inc., were duly registered by AUB with the
Registry of Deeds for Calamba, Laguna and Registry of Deeds for Makati City, and
annotated
on
the
said
titles.
Subsequently, however, petitioner repudiated the REMs by claiming that AUB and
its officers unlawfully filled up the blank mortgage forms and falsified the entries
therein. The Laguna properties were the subject of two suits filed by petitioner to
forestall their imminent foreclosure, and similar actions were likewise instituted by
petitioner involving the Makati property which is the subject of the present case.
Laguna

Properties[4]

On January 16, 2003, petitioner filed a complaint for annulment of mortgage before
the Regional Trial Court (RTC) of Bian, Laguna, Branch 25, docketed as Civil Case
No. B-6242, on the ground that said REM was falsified and in contravention of the
parties agreement that the blank mortgage form would merely serve as comfort
document and not to be registered by AUB. While said case was pending,
RMNSI/Smartnet defaulted on its loan obligation, which prompted AUB to exercise
its right under the REM by filing on October 19, 2006 an application for
extrajudicial foreclosure of real estate mortgage under Act 3135, as amended, with
the Office of the Executive Judge of the RTC of Bian, Laguna. In the public auction

Prior to the consolidation of title in the foreclosing mortgagee (AUB), petitioner

commenced a second suit on November 28, 2006 in the RTC of Bian, Branch 25,
docketed as Civil Case No. B-7110. The complaint sought to annul the
foreclosure sale and enjoin the consolidation of title in favor of AUB, on the ground
of
alleged
falsification
of
the
REM.
On December 11, 2006, respondents moved to dismiss Civil Case No. B-7110,
calling the attention of the RTC to petitioners forum shopping in view of the
pendency of Civil Case No. B-6242. They argued that the two cases were anchored
on the alleged falsification of the REM as basis for the reliefs sought. The RTC
granted the said motion on March 15, 2007 and dismissed with prejudice Civil Case
No. B-7110 on grounds of forum shopping and litis pendentia. Said court explained
that the injunction case (B-7110) and annulment case (B-6242) were founded on
the same transactions, same essential facts and circumstances, and raise
substantially the same issues. That petitioner additionally prayed for a writ of
preliminary injunction did not affect the similarity of the two cases; petitioner could
have prayed for injunctive relief as ancillary remedy in the annulment case. It was
also stated that the judgment in the annulment case on the validity of the REM
would
constitute res
judicata on
the
injunction
case.
On March 15, 2007, the RTC granted AUB a writ of possession over the foreclosed
properties. The writ was issued on March 26, 2007 and AUB obtained possession
of
the
properties
on
April
2,
2007.
On August 16, 2007, the RTC dismissed Civil Case No. B-6242 on motion of
respondents. Said court likewise noted that the allegations and reliefs sought by
petitioner were identical with those in Civil Case No. B-7110, and that petitioner did
not
inform
the
court
that
it
filed
Civil
Case
No.
B-7110.
Petitioner appealed both dismissals to the CA, the separate appeals it filed were
docketed as CA-G.R. CV No. 90114 (injunction case) and CA-G.R. CV No.
91269 (annulment
case).
On June 5, 2009, the CA granted the appeal in CA-G.R. CV No. 90114 and reversed
the RTCs order dated March 15, 2007. It ordered the reinstatement of petitioners
complaint in Civil Case No. B-7110.[5] Respondents filed a motion for
reconsideration which was denied in a resolution [6] dated February 17, 2010.
In a decision dated August 11, 2009, petitioners appeal in CA-G.R. CV No. 91269
was likewise granted, which effectively reinstated Civil Case No. B-6242.
Respondents moved for reconsideration but the same was denied in a resolution

dated

November

10,

2009.

Respondents elevated to this Court the CAs reversal of the RTCs dismissal orders,
in separate petitions for review under Rule 45, docketed as G.R. No. 190231 (CAG.R. CV No. 91269) and G.R. No. 191388 (CA-G.R. CV No. 90114).
On December 8, 2010, this Courts First Division granted the petition in G.R. No.
190231, reversing and setting aside the decision dated August 11, 2009 and
resolution dated November 10, 2009 of the CA, and reinstating the August 16,
2007 and December 5, 2007 orders of the RTC which dismissed Civil Case No. B6242. Petitioner filed a motion for reconsideration but the same was denied with
finality
in
the
Courts
Resolution [7] dated
January
19,
2011.
On March 9, 2011, this Courts First Division likewise granted the petition in G.R.
No. 191388 (CA-G.R. CV No. 90114), reversing and setting aside the decision
dated June 5, 2009 and resolution dated February 17, 2010 of the CA. The Court
ordered the reinstatement of the March 15, 2007 order of the RTC dismissing Civil
Case
No.
B-7110.
Makati

Property

Petitioner filed the first suit assailing the REM over its property covered by TCT No.
114645 on January 17, 2003, docketed as Civil Case No. 03-045 of the RTC of
Makati City, Branch 56. The Complaint[8] against AUB, Abraham Co (AUB
President), Atty. Joel T. Pelicano and the Register of Deeds of Makati City alleged
that sometime in March 2000, in compliance with the requirements of AUB, and by
way of accommodation as security for the loan of Smartnet Philippines, Inc. (SPI),
Mr. Gilbert G. Guy signed the blank REM deed with the understanding that the
document shall not be completed and not to be registered with the Register of
Deeds as it would only serve as comfort document to prove petitioners willingness
to execute a REM in the future if so demanded by AUB and agreed upon by
Smartnet. In contravention of such agreement and despite the fact that no notary
public was present when Mr. Guy signed the REM, AUB and its officers made it
appear that the REM dated February 29, 2000 with the stated consideration of
Php202 million was duly completed and notarized, and was subsequently
registered with the Register of Deeds. Disparities in the copy of the REM on file
with the Office of the Clerk of Court of Pasig City were likewise discovered by
petitioner (community tax certificates used were issued in 2001). On January 29,
2002, petitioner sent its written objections to the spurious REM and demanded
from AUB its immediate cancellation. Upon request of petitioner, the National
Bureau of Investigation also investigated the falsification and found forgery in the
signature
of
respondent
Pelicano
(Notary
Public).
Petitioner further claimed that it learned from Smartnet that the latter never

obtained any peso-denominated loan from AUB, as all its loans for working capital
were in clean Japanese Yen loans. Being a falsified document, the subsequent
annotation of the REM on the title of petitioner subjected the latter to an
encumbrance never intended nor consented to by petitioner as owner, and
consequently to the risk of foreclosure at the behest of AUB. Petitioner also
alleged bad faith on the part of AUB and Co in the fraudulent execution and
registration of the REM without its knowledge and consent, while respondent
Pelicanos acknowledgment on the spurious REM is a violation of his duties as a
notary
public
and
made
him
a
party
to
the
fraudulent
act.
Petitioner thus prayed for the following reliefs:
1. the Deed of Real Estate Mortgage dated February 29, 2000 be declared null and
void,
and
accordingly
cancelled;
2. the annotation of real estate mortgage on TCT-114645 under Entry No. 53584
be cancelled, and that defendants AUB and Co be ordered to surrender the said
titles
to
plaintiff
Goodland;
3. defendants AUB, Abraham Co, and Joel T. Pelicano be adjudged jointly and
severally liable to plaintiff Goodland the sum of PhP5,000,000.00 as actual
damages, PhP1,000,000.00 as attorneys fees and PhP1,000,000.00 as expenses of
litigation;
4. defendants AUB and Abraham Co be adjudged jointly and severally liable to pay
plaintiff Goodland the sum of PhP2,000,000.00 as exemplary damages; and
5. defendant Joel T. Pelicano, be adjudged liable to pay plaintiff Goodland the sum
of
P1,000,000.00
as
exemplary
damages;
Plaintiff prays for cost of suit and for such further or other reliefs and remedies just
or equitable under the premises.[9]
On November 30, 2006, petitioner filed the second case against herein
respondents AUB and its officers Christine T. Chan, Florante Del Mundo, Engracio
M. Escasinas, Jr. (RTC of Makati City Clerk of Court and Ex-Officio Sheriff), Norberto
B. Magsajo (Sheriff IV) and Ronald A. Ortile (Register of Deeds for Makati City),
docketed as Civil Case No. 06-1032 of RTC of Makati City, Branch 145. Whereas
the earlier case (Civil Case No. 03-045) sought the annulment of the REM based on
alleged irregularities in its execution, Civil Case No. 06-1032 prayed for injunctive
relief and/or nullification of the extrajudicial foreclosure sale which petitioner
alleged to be procedurally and legally defective on account of the following:

1.

The annotation of the falsified Third Party MORTGAGE was contrary

to and in violation of the express agreement of defendant AUB and
plaintiff GOODLAND;

preliminary injunction to be made permanent after trial, petitioner specifically

prayed that judgment be rendered in its favor and against the respondents, as
follows:

2.

The Extra-Judicial Foreclosure is null and void as it is based on a

null and void registration/annotation of a falsified Real Estate
Mortgage;

(1) Declaring the annotation and registration of the subject Third Party MORTGAGE
with the Registry of Deeds of Makati City as null and void and of no legal force
and effect;

3.

Defendant AUBs insistence on conducting the foreclosure despite

the pendency of the annulment case betrays the utter bad faith
and malicious intent of defendant AUB;

(2) In the event that a valid and legal auction sale be already conducted, declaring
that the foreclosure proceeding/sale of the subject mortgaged property and/or
the Certificate of Sale issued in favor of the winning bidder, as null and void
and of no legal force and effect;

4.

The foreclosure is for an alleged unpaid obligation of RMNI which

is not secured by the subject Third Party MORTGAGE;

5.

No demands for payment were made by defendant AUB on SPI;

6.

The publication of the subject Notice of Sheriffs Sale in The

Foreign Post, which is not a newspaper of general circulation,
is null and void as it does not comply with the strict and
mandatory requirements of the law (Section 3 Act No. 3135, as
amended).

7.

The provision on redemption in the General Banking Law of 2000

(R.A. No. 8791), that is, Section 47 (par. 2) thereof, is
unconstitutional on the ground that it violates the constitutional
right of plaintiff GOODLAND to equal protection of the laws under
Sec. 1, Art. III of the Constitution. It also violates the prohibition
against impairment of the obligations of contracts stipulated in
Sec. 10, Art. III of the Constitution because it takes away from
plaintiff GOODLAND the vested one-year redemption period under
the existing law (Sec. 6 of Act No. 3135) at the time of the delivery
of the subject Third Party MORTGAGE to defendant AUB in June
1999. The one (1) year redemption period of plaintiff GOODLAND
under Sec. 6 of Act No. 3135 was drastically reduced to a
maximum of three (3) months only to as short as twenty-four (24)
hours, as what happened in the other foreclosure conducted by
defendant AUB on the Sta. Rosa, Laguna properties of plaintiff
GOODLAND.[10] (Emphasis and italics in the original.)

In addition to the issuance of a temporary restraining order (TRO) and writ of

(3) In the event that plaintiff GOODLANDs title to the subject property be already
cancelled and the title was already consolidated or a new title already issued
in favor of the winning bidder, declaring the said cancellation of title and
consolidation of title and issuance of new title in the name of the winning
bidder, as null and void, and ordering the cancellation of the said invalidly
issued new title in the name of the winning bidder and likewise ordering the
issuance of new title in the name of plaintiff GOODLAND;
(3) In the alternative, in the event that the Honorable Court finds the foreclosure
proceedings as proper, valid and legal, declaring that Section 47 (par. 2) of the
General Banking Law of 2000 (R.A. No. 8791) is unconstitutional, and granting
plaintiff GOODLAND the right to redeem the mortgaged properties in
accordance with the provisions of Sec. 6 of Act No. 3135;
(4) Ordering defendants AUB, Christine T. Chan and Florante del Mundo to, jointly
and severally, pay plaintiff GOODLAND the following amounts, to wit:
(A) Actual and compensatory damages in the amount of not less than Four
Million Pesos (P4,000,000.00);
(B) Exemplary damages in the amount of not less than One Million Pesos
(P1,000,000.00);
Attorneys fees
(C) (P500,000.00);

in

the

(D) Litigation expenses; and,

(E) Costs of suit.[11]

amount

of

Five

Hundred

Thousand

Pesos

On December 13, 2006, the RTC issued an Order [12] denying petitioners application
for the issuance of a writ of preliminary injunction, as well as respondents motion
to dismiss based on forum shopping, non-payment of correct docket fees and
failure to state a cause of action. However, the court reserved the issuance of the
corresponding order requiring petitioner to pay the appropriate docket fees after
respondents shall have submitted what they believed should have been the correct
computation
thereof.
Respondents filed their Answer Ad Cautelam[13] denying the allegations of the
complaint regarding the fraudulent execution and registration of the REM and the
loan obligation it secured, irregularities in the conduct of the extrajudicial
foreclosure sale, and that their acts were done in bad faith. They asserted that:
(1) Based on representations by Mr. Gilbert Guy, RMNSI, Smartnet Philippines and
SPI operate under one and the same entity, all being businesses of Mr. Guy and
hence, Smartnet Philippines undoubtedly refers to RMNSI which has an
authorized capital stock of Php400 million and an Omnibus Credit Line with AUB,
while SPI, a corporate shell created by Mr. Guy, has an authorized capital stock of
only Php1 million and has not been granted any credit facility by AUB; (2) the
mortgage deed states that the debtor is Smartnet Philippines, the DTI-registered
name of RMNSI, as also with the Secretarys Certificate of petitioner in connection
with the authority to use the Makati property as security for the loan obligation of
RMNSI, and the promissory notes involved in the foreclosure application; (3) There
was never any understanding not to complete or register the REM document as
AUB would not have approved the loans if not for the security offered by petitioner;
Mr. Guy himself transmitted the REM he signed, which was not a blank document,
and petitioner knew from the start the registration of the REM was forthcoming
after its due execution by Mr. Guy, as the same would be in the normal course of
business of AUB; (4) The same facts obtain in connection with the mortgage of
petitioners Laguna Properties; (5) The REM was valid and binding, the property
covered thereby may be validly foreclosed; respondents have not performed any
irregularity or violation of law, and have neither engaged in any fraudulent,
malicious and abusive conduct or transaction; it was petitioner and Mr. Guy who
had conspired to defraud AUB by, among others, denying the validity and due
execution of the REM; (6) AUB complied with the legal requirements for the
extrajudicial foreclosure of the subject property including the public auction held
on December 4, 2006 conducted by Sheriff Magsajo in the presence of a
representative of petitioner who did not bid, and accordingly AUB consolidated its
ownership over the foreclosed property sold to it as the highest bidder, with the
issuance of TCT No. 223120 in its name as the new absolute owner; and (7)
Considering that the extrajudicial foreclosure was admittedly an exercise by AUB of
its right as an unpaid and aggrieved creditor-mortgagee, the same may not legally
rise to any liability for damages in favor of petitioner, in the exercise of such right,
AUB committed no irregularity, bad faith, fraud or malicious action.

Respondents contended that petitioner is guilty of forum shopping, as it has

previously filed a case for the annulment of the REM (Civil Case No. 03-045) which
is pending before Branch 56. Said case was based on the same cause of action,
that is, petitioners perceived irregularities in the execution and registration of the
REM. The injunctive relief sought by petitioner against the foreclosure is properly a
provisional and ancillary remedy in the annulment case; the institution of the
injunction case was therefore not compelled by respondents acts but by
petitioners
own
negligence
and
contempt.
The following affirmative and special defenses were likewise raised by
respondents: (1) the RTC has no jurisdiction over the subject matter considering
petitioners fraudulent failure to pay the correct amount of docket fees, as it
deliberately concealed the fair market value of the subject property; (2) without
prejudice to other sanctions, the complaint should be summarily dismissed
considering that petitioner engaged in a willful, deliberate and contumacious act of
forum shopping; the certificate of non-forum shopping it submitted was false and
perjurious; (3) the case should also be dismissed on the ground of litis
pendentia as the issues herein are already subsumed in the annulment case
pending with another branch; (4) the court has not validly acquired jurisdiction
over the persons of respondents for lack of service of summons, the Officers
Return dated December 4, 2006 clearly stated that the summons were unserved
and which failed to state the facts and circumstances showing the impossibility of
personal service of summons upon the respondents, and neither did petitioner
seek the issuance of an alias summons; (5) the case is already moot because title
had already been consolidated in the name of AUB which may no longer be
restrained from exercising rights of ownership over the foreclosed property; the
pendency of a civil case for the nullity of the mortgage document is not a legal bar
to foreclosure by the creditor-mortgagee upon the default of the debtor-mortgagor;
(6) even assuming there was a defect in the notarization of the REM, it is not a
ground to invalidate the foreclosure sale or hold in abeyance the consolidation of
title in favor of AUB; (7) based on the facts alleged in the complaint, it is clear that
AUB did not act in bad faith nor abused its rights when it caused the foreclosure of
the subject property; (8) petitioners claims that the unpaid obligations of RMNSI is
not secured by the REM and that no demand for payment was made on SPI, are
both irrelevant and downright perjurious and misleading; and (9) even on the basis
of the allegations in the complaint and its annexes, the same fail to state a cause
of action, individual respondents cannot be held liable for damages as they have
not acted with bad faith or fraud in connection with the REM; in any event, apart
from the demand letter sent to RMNSI, a demand letter was also sent to SPI at the
address indicated by petitioner itself in the complaint, a copy of said demand letter
addressed to Radiomarine Network (Smartnet), Inc. doing business as Smartnet
Philippines and Smartnet Philippines, Inc. at Building 8359, Zambales Hi-way cor.
Bataan
Rd.,
Upper
Cubi,
Subic
Bay
Freeport
Zone.

hence
Respondents further averred that contrary to petitioners allegation, The Foreign
Post is a newspaper of general circulation, having been accredited as such by the
Office of the Executive Judge in the Order dated June 17, 2002 issued by Executive
Judge Leticia P. Morales. Mr. Dante Ofianga, Circulation Manager of The Foreign
Post, also testified during the hearing held on December 8, 2006, that said
publication is a weekly newspaper of general circulation, printed and published in
the
City
of
Manila,
Philippines.
Finally, respondents argued that the three (3) months period prescribed by the
General Banking Law of 2000 is a valid limitation on the right of redemption, which
is the exception rather than the general rule. This Court has already upheld the
restriction on the exercise of the right of redemption inLandrito, Jr. v. Court of
Appeals[14].
On motion of respondents, Civil Case No. 06-1032 was consolidated with Civil Case
No. 03-045. Prior to the consolidation, respondents moved to dismiss [15] with
prejudice the two cases on the grounds of forum shopping, and that no jurisdiction
was acquired by the RTC in Civil Case No. 03-045 for failure to pay the proper
docket
and
other
legal
fees.

case

of

plain

and

simple

forum

shopping.

The CA also concurred with the RTC Branch 56 in finding that petitioner
inexplicably failed to inform said court of petitioners subsequent filing of Civil Case
No. 06-1032 despite its undertaking to do so in the first case (Civil Case No. 03045), which fatal omission similarly reeks of forum shopping which is deliberate
and malicious. The appellate court further said that the supervening event of the
extrajudicial foreclosure did not justify the filing of a separate case, which on its
face simply reiterated the same facts. The foreclosure of the mortgage was a mere
continuation of the material facts presented in the first case, and thus petitioners
remedy arising therefrom is deemed subsumed in its prayer for nullification of the
REM in the first case because such nullity of the mortgage contract invalidates
everything else including the extrajudicial foreclosure. The CA opined that
petitioner should have just amended its first complaint for the purpose of pleading
the supervening event of extrajudicial foreclosure and perhaps adding in its prayer
the
nullification
of
the
said
foreclosure.
Petitioner filed two separate motions for reconsideration which the CA likewise
denied in its Resolution[19] dated January 31, 2011. The CA further noted this
Courts decision in G.R. No. 190231 which reinstated the dismissal of Civil Case No.
B-6242 involving exactly the same parties, issues and subject matter.

In a Joint Order[16] dated July 10, 2007, the RTC (Branch 56) dismissed with
prejudice the complaints in both cases. Petitioner filed two separate motions for
reconsideration, which the RTC likewise denied on October 16, 2007. [17]

The Consolidated Petitions and Parties Arguments

Petitioner again filed separate appeals before the CA, which were docketed under
only
one
case
(CA-G.R.
CV
No.
90418).

Petitioner filed before this Court two separate petitions through different counsels
assailing the same CA decision dismissing their two appeals and resolution denying
their
twin
motions
for
reconsideration.

By Decision[18] dated September 15, 2010, the CAs Fifth Division dismissed
petitioners appeal. While the CA disagreed with the RTCs dismissal of Civil Case
No. 06-1032 on the ground of non-payment of correct docket fees, it nevertheless
sustained the dismissal with prejudice of both Civil Case No. 03-045 and Civil Case
No.
06-1032
on
the
ground
of
forum
shopping.
The CA found that the twin complaints asked for a common relief: nullification of
the REM over the Makati property, cancellation of its annotation, and return of the
property to petitioner. It also ruled that a decision in either Civil Case No. 03-045
and Civil Case No. 06-1032 will certainly amount to res judicata in the other; both
courts were called upon to rule on the issue of whether the REM was falsified, thus
rendering it and all related transactions and proceedings invalid. The court to
render a later judgment will find itself in an awkward predicament whether to
decide on said issue in the same way the court which first ruled on the same issue,
or to decide it the other way. The CA concluded that a malicious situation
therefore presents itself because the twin fora are being pitted against each other,

The core issue presented is whether petitioner was guilty of forum shopping when
it successively filed Civil Case No. 03-045 and Civil Case No. 06-1032.
Petitioner argues that there was no forum shopping involved because contrary to
the CAs view, a judgment in either of the two cases will not amount to res
judicata in the other, stating that there are two probable outcomes for each case;
thus, the REM may be declared either null and void or valid, and the extrajudicial
foreclosure may likewise be declared either null and void or valid. Petitioner then
posits that a judgment in Civil Case No. 03-045 that the REM is valid will not
preclude it from filing a separate case for the annulment of the foreclosure
proceeding; petitioners claims on the irregularities in the extrajudicial foreclosure
when proven would still result in its nullification, even if the REM is declared valid
in the first case. Similarly, a judgment annulling the extrajudicial foreclosure would
not bar a separate complaint for the annulment of a spurious and falsified
mortgage.

Petitioner further notes that it did not fail to disclose as in fact it asserted the
pendency of Civil Case No. 03-045 in Civil Case No. 06-1032 when it alleged the
surreptitious foreclosure by the respondents during the pendency of Civil Case No.
03-045. The first case (Civil Case No. 03-045) was also disclosed by petitioner in
the Certificate of Non-Forum Shopping appended to its complaint in Civil Case No.
06-1032. Moreover, petitioner pointed out that the consolidation of the two cases
has eliminated the possibility of conflicting decisions. The filing of the second case
to enjoin the foreclosure was justified since petitioner has no other sufficient and
effective remedy under the circumstances. In the absence of malicious intent in
the mere filing of Civil Case No. 06-1032, petitioner contends that the CA erred in
finding
it
guilty
of
forum
shopping.

There is forum shopping when the following elements are present: (a) identity of
parties, or at least such parties as represent the same interests in both actions[;]
(b) identity of rights asserted and relief prayed for, the relief being founded on the
same facts[;] and (c) the identity of the two preceding particulars[,] such that any
judgment rendered in the other action will, regardless of which party is successful,
amount to res judicata in the action under consideration; said requisites [are] also
constitutive of the requisites for auter action pendant or lis pendens.[23] The
essence of forum shopping is the filing of multiple suits involving the same parties
for the same cause of action, either simultaneously or successively, for the
purpose of obtaining a favorable judgment, through means other than by appeal
or certiorari.[24]

On the other hand, respondents maintain that the CA was correct in holding that
petitioner is guilty of forum shopping as any ruling of either court on the identical
issue of falsity of the REM would amount to res judicata in the other case. They
also stress that forum shopping already exists when the cases involve the same or
related causes and the same or substantially the same reliefs. Invoking stare
decisis, respondents cite the final judgment rendered by this Court in G.R. No.
190231 involving the Laguna Properties which also involved the same parties and
transactions as in the instant case. But even before the said ruling, respondents
point out that it was already settled that there is forum shopping if two actions boil
down to a single issue, although the issues and reliefs prayed for were stated
differently, because the final disposition of one would constitute res judicata in the
other, citingPrubankers Association v. Prudential Bank & Trust Company [20].
Another case[21] was cited by respondents holding that there is forum shopping
when the remedies sought by the petitioner had the possibility of resulting in
conflicting
rulings,
which
supports
the
CAs
observations.

All

Respondents underscore the deliberate and contumacious forum shopping

committed by petitioner not only before the trial courts but also before the CA
and this Court. They called attention to petitioners filing of two notices of appeal,
institution of two appeals and submission of two appeal briefs from one and the
same RTC decision; two motions for reconsideration and; now, the herein identical
petitions filed in this Court against the same principal party, AUB. Just like in the
identical actions before the RTC, petitioner did not seasonably report the second
petition in G.R. No. 195561. In fact, G.R. No. 195546 was consolidated with G.R.
No. 195561 because this Court already found that they arose from the same
essential facts and assail the same decision and resolution of the Court of Appeals
to avoid conflicting decisions.[22]
The Courts Ruling
The

petitions

must

fail.

the

foregoing

elements

are

present

in

this

case.

There can be no dispute that the prayer for relief in the two cases was based on
the same attendant facts in the execution of REMs over petitioners properties in
favor of AUB. While the extrajudicial foreclosure of mortgage, consolidation of
ownership in AUB and issuance of title in the latters name were set forth only in
the second case (Civil Case No. 06-1032), these were simply the expected
consequences of the REM transaction in the first case (Civil Case No. 03-045).
These eventualities are precisely what petitioner sought to avert when it filed the
first case. Undeniably then, the injunctive relief sought against the extrajudicial
foreclosure, as well as the cancellation of the new title in the name of the creditormortgagee AUB, were all premised on the alleged nullity of the REM due to its
allegedly fraudulent and irregular execution and registration the same facts set
forth in the first case. In both cases, petitioner asserted its right as owner of the
property subject of the REM, while AUB invoked the rights of a foreclosing creditormortgagee.
There is also identity of parties notwithstanding that in the first case, only one
bank officer (Co), the notary public (Pelicano) and the Register of Deeds were
impleaded along with AUB as defendants, whereas in the second case, AUB and its
two officers (Chan and Del Mundo), along with the RTC Clerk of Court (Escasinas,
Jr.), Sheriff (Magsajo) and the Register of Deeds of Makati City (Ortile) were the
named defendants. The parties in both cases are substantially the same as they
represent the same interests and offices/positions, and who were impleaded in
their respective capacities with corresponding liabilities/duties under the claims
asserted.
With respect to identity of cause of action, a cause of action is defined in Section 2,
Rule 2 of the Rules of Court as the act or omission by which a party violates the
right of another. This Court has laid down the test in determining whether or not
the causes of action in the first and second cases are identical, to wit: would the
same evidence support and establish both the present and former cause of action?

If so, the former recovery is a bar; if otherwise, it does not stand in the way of the
former
action.[25]
In the first case, petitioner alleged the fraudulent and irregular execution and
registration of the REM which violated its right as owner who did not consent
thereto, while in the second case petitioner cited further violation of its right as
owner when AUB foreclosed the property, consolidated its ownership and obtained
a new TCT in its name. Considering that the aforesaid violations of petitioners
right as owner in the two cases both hinge on the binding effect of the REM, i.e.,
both cases will rise or fall on the issue of the validity of the REM, it follows that the
same evidence will support and establish the first and second causes of action.
The procedural infirmities or non-compliance with legal requirements for
extrajudicial foreclosure raised in the second case were but additional grounds in
support of the injunctive relief sought against the foreclosure which was, in the first
place, illegal on account of the mortgage contracts nullity. Evidently, petitioner
never relied solely on the alleged procedural irregularities in the extrajudicial
foreclosure
when
it
sought
the
reliefs
in
the
second
case.
On this point, it is relevant to quote similar findings of this Court in G.R. No.
191388, which case involved, contrary to petitioners asseveration and as clearly
shown in the factual antecedents herein set forth, the same parties, issues and
causes of action founded on the same real estate mortgage transaction albeit
covering properties of petitioner located in another province (Laguna), to wit:
The cause of action in the earlier Annulment Case is the alleged nullity of the REM
(due to its allegedly falsified or spurious nature) which is allegedly violative of
Goodlands right to the mortgaged property. It serves as the basis for the prayer
for the nullification of the REM. The Injunction Case involves the same cause of
action, inasmuch as it also invokes the nullity of the REM as the basis for the
prayer for the nullification of the extrajudicial foreclosure and for injunction against
consolidation of title. While the main relief sought in the Annulment Case
(nullification of the REM) is ostensibly different from the main relief
sought in the Injunction Case (nullification of the extrajudicial foreclosure
and injunction against consolidation of title), the cause of action which
serves as the basis for the said reliefs remains the same the alleged
nullity of the REM. Thus, what is involved here is the third way of committing
forum shopping, i.e., filing multiple cases based on the same cause of action, but
with different prayers. As previously held by the Court, there is still forum shopping
even if the reliefs prayed for in the two cases are different, so long as both cases
raise
substantially
the
same
issues.
There can be no determination of the validity of the extrajudicial
foreclosure and the propriety of injunction in the Injunction Case without
necessarily ruling on the validity of the REM, which is already the subject

of the Annulment Case. The identity of the causes of action in the two cases
entails that the validity of the mortgage will be ruled upon in both, and creates a
possibility that the two rulings will conflict with each other. This is precisely what is
sought
to
be
avoided
by
the
rule
against
forum
shopping.
The substantial identity of the two cases remains even if the parties
should add different grounds or legal theories for the nullity of the REM
or should alter the designation or form of the action. The well-entrenched
rule is that a party cannot, by varying the form of action, or adopting a different
method of presenting his case, escape the operation of the principle that one and
the same cause of action shall not be twice litigated. [26] (Emphasis supplied.)
In the above-cited case, the Court also called attention to its earlier ruling in G.R.
No. 190231 which involved substantially the same parties, and which constitutes
another reason why the petition must fail, stating that [t]he issue that Goodland
committed deliberate forum shopping when it successively filed the Annulment
and Injunction Cases against AUB and its officer was decided with finality therein.
This ruling is conclusive on the petitioners and Goodland considering that they are
substantially
the
same
parties
in
that
earlier
case. [27]
Given the similar factual circumstances in the institution by herein petitioner of
Civil Case Nos. 03-045 and 06-1032 (Makati Property case) before the RTC, with
those two cases (Civil Case Nos. B-6242 and B-7110) subject of the petitions in
G.R. Nos. 190231 and 191388 involving the Laguna Properties covered by the
same real estate mortgage transaction between AUB and petitioner, the findings
and conclusion of this Court in G.R. No.190231 on the factual issue of whether the
petitioner engaged in willful and deliberate forum shopping should be controlling,
to wit:
Rule 7, Section 5 of the Rules of Court requires every litigant to notify the court of
the filing or pendency of a complaint involving the same or similar action or claim
within five days of learning of that fact. While both Civil Case Nos. B-6242 and B7110 were raffled to the same court, the RTC of Bian, Laguna, Branch
25, respondent did not report the filing of Civil Case No. B-7110 in the
proceedings of Civil Case No. 6242. This fact clearly established
respondents furtive intent to conceal the filing of Civil Case No. B-7110
for the purpose of securing a favorable judgment. For this reason, Civil Case
No. 6242 was correctly dismissed with prejudice. [28] (Emphasis supplied.)
Petitioner, however, insists that the above ruling is inapplicable to it considering
that the pendency of Civil Case No. 06-1032 was in fact disclosed in the Verification
and Certification of Non-Forum Shopping appended to its complaint in Civil Case
No. 06-1032. The said certification reads:

3. The plaintiff has not heretofore commenced any other action or filed any
claim, involving the same issues in any court, tribunal or quasi-judicial
agency and, to the best of my knowledge, no such other action or claim is pending
therein. There are however pending cases related to the instant case,
namely: Goodland Company, Inc. vs. Asia United Bank, et al. , Civil Case No. 03045, Regional Trial Court, Branch 133, Makati City; Goodland Company, Inc. vs.
Asia United Bank, et al.. Civil Case No. B-6242, Regional Trial Court, Branch
25,Bian, Laguna, People of the Philippines vs. Christine Chan, et al., Crim. Case
No. 332313 , Metropolitan Trial Court, Branch 64, Makati City; and Rafael H.
Galvez vs. Christine Chan, et al. , I.S. No. 03-73, Department of Justice, Manila.
x x x x[29]
We find that the above certification still fell short of the requirement of the rule on
forum shopping. While petitioner disclosed the pendency of Civil Case No. 03-045
it filed earlier, it qualified the nature of the said case by lumping it together with
other pending related cases. Petitioners simultaneous attestation that it has not
commenced any other action or filed any claim, involving the same issues in
any court implies that the pending related cases mentioned therein do not involve
the same issues as those raised by it in the subsequently filed Civil Case No. 061032.
Consequently, petitioner has filed a certificate that is partly
false and misleading because Civil Case No. 06-1032 squarely raised the issue of
the nullity of the REM, which was in fact the principal issue in Civil Case No. 03045.
Moreover, there was no showing that petitioner promptly reported to the RTC
Branch 133 in which Civil Case No. 03-045 was pending, its subsequent filing of
Civil Case No. 06-1032, as required by the Rules. It was at the instance of AUB that
the two cases were consolidated. This fact did not escape the attention of the RTC
which also found petitioners act of forum shopping willful and deliberate, as stated
in its Joint Order dated July 10, 2007, to wit:
On a last note, the Court cannot countenance plaintiffs violation of its undertaking
as regards compliance of the prohibition against forum shopping. In plaintiffs
Certification as to Non-Forum Shopping embodied in its Complaint in Civil Case No.
03-045, plaintiff is duty bound to report, within five days from knowledge, the fact
that a similar action or proceeding involving the same issues have been filed or is
pending. The records are barren of any showing that plaintiff reported in
Civil Case No. 03-045 the fact that it subsequently filed Civil Case No. 061032. Under Section 5, Rule 7 of the 1997 Rules of Civil Procedure, the plaintiff is
required under oath to certify, among others, his undertaking to report to the court

the fact of filing of a similar case, failing which shall be cause for the dismissal of
the case, to wit:
(c) if he should thereafter learn that the same or similar action or claim has been
filed or is pending, he shall report that fact within five (5) days therefrom to the
court wherein his aforesaid complaint or initiatory pleading has been filed.
non-compliance with any of the undertakings therein shall constitute indirect
contempt of court, without prejudice to the corresponding administrative and
criminal actions. If the acts of the party or his counsel clearly constitute willful
and deliberate forum shopping, the same shall be ground for summary dismissal
with prejudice and shall constitute direct contempt, as well as a cause for
administrative sanctions.
The totality of circumstances considered, plaintiffs forum shopping
committed in multifarious fashion cannot but be willful and deliberate.
Hence, consistent with established rule and jurisprudence, the same is punishable
by and results in the summary dismissal of the actions filed. Both Civil Case No.
03-045 and Civil Case No.06-1032 are therefore dismissed with prejudice.
x x x[30] (Emphasis supplied.)
The CA concurred with the RTC that petitioners act of forum shopping was
deliberate and malicious considering that it knowingly filed Civil Case No. 06-1032
despite the pendency of Civil Case No. 03-045. The appellate court said that
petitioner unscrupulously took advantage of the availability of competent tribunals
and
tried
its
luck
in
different
fora
for
a
favorable
result.
We concur with the CAs finding that a decision in either case will amount to res
judicata in the other considering that both courts were called upon to rule on the
same issue of whether the REM was falsified. Indeed, the possibility of conflicting
rulings or decisions rendered by different courts on such issue militates against
petitioners posture that it never intended to conceal the subsequent filing of Civil
Case
No.
06-1032.
Forum shopping exists where the elements of litis pendentia are present or where
a final judgment in one case will amount to res judicata in the action under
consideration.[31] Litis pendentia is a Latin term, which literally means a pending
suit and is variously referred to in some decisions as lis pendens and auter action
pendant. As a ground for the dismissal of a civil action, it refers to the situation
where two actions are pending between the same parties for the same cause of
action, so that one of them becomes unnecessary and vexatious. It is based on the
policy against multiplicity of suits. [32] Litis pendentia requires the concurrence of
the following requisites: (1) identity of parties, or at least such parties as those

representing the same interests in both actions; (2) identity of rights asserted and
reliefs prayed for, the reliefs being founded on the same facts; and (3) identity with
respect to the two preceding particulars in the two cases, such that any judgment
that may be rendered in the pending case, regardless of which party is successful,
would
amount
to res
judicata in
the
other
case.[33]
All the elements of litis pendentia are present in this case. As correctly found by
both RTC and CA, any judgment rendered either in Civil Case No. 03-045 or Civil
Case No. 06-1032 on the principal issue regarding the validity of the REM would
amount to res judicata on the other. Contrary to petitioners submissions, a
determination by the RTC of whether petitioner is entitled to the injunctive relief in
Civil Case No. 06-1032 necessarily entails a ruling on the validity of the REM raised
therein by petitioner, which pronouncement may run counter to the separate
findings and conclusion in Civil Case No. 03-045 on the same issue. In the same
manner, the reliefs prayed for in Civil Case No. 03-045 for the cancellation of the
REM and its registration cannot be granted without the court first ruling on the
validity of the REM; if the court rules in the affirmative, it would in turn defeat the
injunctive
relief
sought
in
Civil
Case
No.
06-1032.
The foregoing scenario is precisely what the prohibition on forum shopping seeks
to avoid. What is truly important to consider in determining whether forum
shopping exists or not is the vexation caused the courts and parties-litigants by a
party who asks different courts and/or administrative agencies to rule on the same
or related causes and/or grant the same or substantially the same reliefs, in the
process creating the possibility of conflicting decisions being rendered by the
differentfora upon
the
same
issues.[34]
The Court need not say more. Petitioners brazen and deliberate acts
of repeated forum shopping in all stages of litigation are written all over this case,
as well as in the two other identical cases already decided by this Court. No
reversible error was thus committed by the CA when it affirmed the RTCs joint
order
of
dismissal
with
prejudice.cralaw
WHEREFORE, the petitions for review on certiorari in G.R. Nos. 195546 and
195561 are bothDENIED. The Decision dated September 15, 2010 and Resolution
dated January 31, 2011 of the Court of Appeals in CA-G.R. CV No. 90418 are
hereby AFFIRMED.

FIRST

With

[G.R.

double

SO ORDERED.

costs

against

the

petitioner.

PHILIPPINE
HOLDINGS,

DIVISION
No.

181485

NATIONAL

DECISION

BANK,

February

PETITIONER,
INC.,

VS.

15,

2012]

GATEWAY PROPERTY
RESPONDENT.

LEONARDO-DE CASTRO, J.:

Submitted for our consideration is a Petition for Review on Certiorari[1] under Rule
45 of the Rules of Court, which seeks the reversal of the Decision [2] dated
September 28, 2007 and the Resolution [3]dated January 24, 2008 of the Court of
Appeals in CA-G.R. CV No. 75108. The appellate courts decision set aside the
Order[4] dated December 20, 2001 of the Regional Trial Court (RTC) of Trece
Martires City, Branch 23, in Civil Case No. TM-1108; while the appellate courts
resolution denied the motion for reconsideration of said courts September 28,
2007
decision.cralaw
The

antecedents

of

the

case

are

as

follows:

Civil Case No. TM-1022 (Annulment of the Real Estate Mortgage)

On July 27, 2000, herein respondent Gateway Property Holdings, Inc. (GPHI) filed a
Complaint with Application for the Issuance of a Writ of Preliminary
Injunction[5] against herein petitioner Philippine National Bank (PNB). The case was
docketed as Civil Case No. TM-1022 in the RTC of Trece Martires City, Branch 23.
According to the complaint, GPHI was a subsidiary company of Gateway Electronics
Company (GEC). In 1995 and 1996, GEC obtained long term loans from the Land
Bank of the Philippines (LBP) in the amount of P600,000,000.00. The loans were
secured by mortgages executed by GEC over its various properties. Subsequently,
LBP offered to provide additional funds to GEC by inviting other banking
institutions to lend money therefor. LBP allegedly agreed to submit the properties
mortgaged to it by GEC as part of the latters assets that will be covered by a
Mortgage Trust Indenture (MTI), ensuring that all participating banks in the loan
syndicate will have equal security position.[6] Before the formal execution of an
MTI, LBP and a consortium of banks entered into a Memorandum of Understanding
(MOU), whereby LBP agreed to release the mortgaged properties to the consortium
of banks on the basis of an MTI. Relying on the said undertaking, the participating
banks released funds in favor of GEC. PNB later became part of this consortium of
creditor
banks.[7]
Thereafter, GEC allegedly encountered difficulties in paying its obligations to the
banks, including those owed to PNB. GEC then requested PNB to convert its longterm loans into a Convertible Omnibus Credit Line. In a letter[8] dated August 13,
1997 addressed to Israel F. Maducdoc, the Senior Vice President of GEC, PNB
approved such a conversion subject to certain conditions. As part of the
requirements of PNB, GPHI was made a co-borrower in the agreement and was
obligated to execute in favor of PNB a real estate mortgage over two parcels of
land covered by Transfer Certificates of Title (TCT) Nos. T-636816 and T-636817. [9]

The letter likewise provided that PNB shall hold physical possession of the said
titles until GPHI shall have made the assignment of the sales proceeds of the
aforementioned real properties, up to a minimum of P112 million, to be applied
towards the repayment of GECs outstanding obligations with PNB. Furthermore,
the letter stated that the real estate mortgage shall be registered with the
Registry
of
Deeds
in
an
event
of
default. [10]
In March 1998, LBP allegedly refused to abide by its undertaking to share the
mortgaged properties of GEC with the consortium of creditor banks. GEC, thus,
filed a complaint for specific performance against LBP, which was docketed as Civil
Case
No.
98-782.
On or about June 19, 2000, PNB purportedly demanded from GEC the full payment
of the latters obligations. Thereafter, GPHI learned of PNBs supposedly
underhanded registration of the real estate mortgage with intent to foreclose the
same.
GPHI principally alleged in its complaint that [t]he understanding between GEC
and PNB is that the GPHI properties would stand merely as a temporary security
pending the outcome of Civil Case No. 98-782 which was filed by GEC against LBP.
The GPHI Property was never contemplated at any time as a collateral for GECs
loan obligations to PNB.[11] Also, GPHI argued that [t]he execution of a Real
Estate Mortgage in favor of [PNB] over the GPHI Property did not reflect the true
intention of the parties thereto, GEC and PNB. The documents attached as
Annexes to [the complaint] clearly show the interim or temporary nature of the
mortgage arrangement.[12] GPHI contended that PNB had no legal right to effect
the
foreclosure
of
the
mortgaged
properties.
GPHI, thus, prayed that upon receipt of the complaint by the trial court, a
temporary restraining order (TRO) be issued to enjoin PNB from foreclosing on the
properties of GPHI covered by TCT Nos. T-636816 and T-636817, as well as from
registering the fact of foreclosure or performing any act that would deprive GPHI of
its ownership of the said properties. GPHI likewise prayed that, after trial on the
merits, judgment be issued declaring that: (1) the real estate mortgage involving
the properties of GPHI and executed in favor of PNB is null and void; (2) PNB be
enjoined from foreclosing on the aforementioned properties of GPHI and from
registering the same; and (3) PNB be ordered to pay to GPHI the amount of
P500,000.00
as
attorneys
fees
and
litigation
expenses. [13]
It appears that the RTC did not issue a TRO in favor of GPHI in the above case such
that, on May 3, 2001, PNB initiated extrajudicial foreclosure proceedings on the
properties covered by TCT Nos. T-636816 and T-636817. [14] The properties were
sold at a public auction on June 20, 2001. According to the Minutes of Public
Auction Sale[15] executed by the RTC Deputy Sheriff of Cavite, PNB was the sole

bidder and it thereby

P168,000,000.00.
Civil

Case

No.

acquired

TM-1108

the

properties

(Annulment

of

for
the

sale

bid

price

Foreclosure

of

Sale)

On August 14, 2001, GPHI filed a Petition for Annulment of Foreclosure of Mortgage
with Application for the Issuance of a Temporary Restraining Order and/or Writ of
Preliminary Injunction.[16] Docketed as Civil Case No. TM-1108, the petition was
also
raffled
in
Branch
23
of
the
RTC
of
Trece
Martires
City.
GPHI argued that, in conducting the foreclosure proceedings, the sheriff failed to
observe the requirement of Section 4 of Act No. 3135 that the sale shall be made
at public auction. The entries in the minutes of the foreclosure sale allegedly did
not indicate that a valid public auction was carried out in keeping with the
requirements of the law. More importantly, among its causes of action, GPHI
contended that:
17. [PNB] should not have proceeded in registering as well as in foreclosing
[GPHIs] mortgaged assets since the latter cannot yet be considered in default in
accordance with the Amendment to Credit Agreement executed by [GEC],
petitioner GPHI and respondent PNB on November 28, 1997. Moreover, [PNB]
knows all along that the subject real properties was never intended to be used as
permanent collateral for GEC, but one which was simply used as an unregistered
security until [GPHI] incurs in default if sold and the proceeds of which should be
used
in
payment
for
the
obligation
of
GEC.
Section 5.(5.01) of said Amendment to Credit Agreement states that:
5.01. Undertaking to Sell and Assignment. The borrowers hereby undertake to
sell the Mortgaged Properties to third parties and apply the proceeds thereof to the
payment of the Seven-Year Term Loan up to the extent of PESOS: ONE HUNDRED
TWELVE MILLION (P112,000,000.00). Any shortfall in such amount shall be funded
by GEC. For this purpose, the Borrowers hereby assign, transfer and convey unto
and in favor of the Bank the said amount of P112,000,000.00 out of the proceeds
of
the
sale
of
the
Mortgaged
Properties.
The Borrowers failure to remit to the Bank the amount of P112,000,000.00 within
three (3) banking days reckoned from the sale of the Mortgaged Properties shall be
considered an Event of Default (as such term is hereinafter defined) and shall be
subject
to
the
consequences
herein
provided.
xxxx

19. Moreover, it was clearly provided in [PNBs] letter dated August 13, 1997 that
the [real estate mortgage] shall be unregistered and will be registered with the
Registry of Deeds only in an event of default. It is also clear in the said letter
that [PNB] shall only hold physical possession of said TCT Nos. 636817 and 636816
x x x until the condition of assigning the sales proceeds of the mentioned real
properties up to a minimum of US$ equivalent of PhP112,000,000.00 to [PNB] is
complied with.[17]
GPHI, thereafter, sought for a judgment: (1) perpetually prohibiting PNB from
divesting GPHI of its possession and ownership of the mortgaged properties, as
well as taking possession, administration and ownership thereof; (2) declaring the
foreclosure sale conducted on June 20, 2001 as null and void; (3) ordering PNB to
pay GPHI P2,000,000.00 as moral damages, P1,000,000.00 as exemplary damages,
P500,000.00
as
attorneys
fees
and
costs
of
suit.
On September 11, 2001, PNB filed a Motion to Dismiss [18] the above petition, and
contended that there was another action pending between the same parties for the
same cause of action. Essentially, PNB argued that GPHI resorted to a splitting of a
cause of action by first filing a complaint for the annulment of the contract of real
estate mortgage and then filing a petition for the annulment of the subsequent
foreclosure of the mortgage. PNB further alleged that the subsequent petition of
GPHI
failed
to
state
a
cause
of
action.
On December 20, 2001, the RTC ordered the dismissal of Civil Case No. TM-1108.
The trial court elucidated thus:
Prior to the filing of the above-entitled case, [GPHI] filed against [PNB] an action for
annulment of Mortgage with Application for Temporary Restraining Order and Writ
of Preliminary Injunction docketed as Civil Case No. TM-1022. While the first action
was filed on July 27, 2001, above-entitled case was filed on August 14, 2001
because there was no Temporary Restraining Order or Writ of Preliminary Injunction
issued in the first case, the foreclosure sale of the [mortgage] sought to be
enjoined by [GPHI] as against [PNB] from this Court, proceeded in the ordinary
course of law and a certificate of sale was issued in favor of the bank. Not
obtaining the relief desired, [GPHI] endeavored the remedy of filing this case;
Annulment of Foreclosure of Mortgage with Application for the issuance of a
Temporary Restraining Order [and/or] writ of Preliminary Injunction thinking it to be
the right resources instead of pursuing to attack [PNB] in the first case thus filed.
Both cases, Civil Case No. TM-1022 and TM-1108 practically involved the
same parties, substantially identical causes of action and reliefs prayed
for, the reliefs being founded on the same facts. Ironically, these cases

are

now

both

filed

in

this

Court.

Considering the foregoing circumstances where a single cause of action has been
split and pursuant to Rule 16, Section 1(e) of the 1997 Rules on Civil Procedure, the
Motion to Dismiss filed by [PNB] through counsel, on the ground that there is
another action pending between the same parties for the same cause, or [litis
pendentia],
is
proper.
Suffice to state that the Court deemed no longer necessary to discuss the second
ground
relied
upon
in
[PNBs]
pleading.
ACCORDINGLY, this case is DISMISSED.

[19]

(Emphasis ours.)

GPHI filed a Motion for Reconsideration [20] of the above ruling, but the trial court
denied the motion in an Order[21] dated March 14, 2002. GPHI, thus, filed a Notice
of
Appeal,[22] which
was
given
due
course
by
the
trial
court. [23]
In the interregnum, after the parties presented their respective evidence in Civil
Case No. TM-1022 (Annulment of the Real Estate Mortgage), GPHI filed a Motion for
Leave to Amend Complaint to Conform to the Evidence [24] on November 24, 2006.
In the Amended Complaint[25] attached therein, GPHI made mention of the
foreclosure sale conducted on June 20, 2001 and the fact that the mortgaged
properties were sold to PNB for P168 million. Since GPHIs liability was allegedly
limited only to P112 million in accordance with the letter of PNB dated August 13,
1997 and the Amendment to the Credit Agreement between GEC, GPHI and PNB,
GPHI claimed that it should be refunded the amount of P56 million. GPHI then
prayed for a judgment declaring the real estate mortgage, the foreclosure and the
sale of the mortgaged properties null and void; or, alternatively, for a judgment
ordering PNB to return to GPHI the amount of P56 million, plus interest. [26]
The

Judgment

of

the

Court

of

Appeals

GPHIs appeal in Civil Case No. TM-1108 (Annulment of the Foreclosure Sale) was
docketed in the Court of Appeals as CA-G.R. CV No. 75108. GPHI primarily argued
that the causes of action in the two cases filed before the RTC were separate and
distinct such that a decision in one case would not necessarily be determinative of
the
issue
in
the
other
case.
On September 28, 2007, the Court of Appeals rendered the assailed decision
granting the appeal of GPHI. The relevant portions of the appellate courts ruling
stated:

For litis pendentia to be a ground for the dismissal of an action, the following
requisites must concur: (a) identity of parties; (b) identity of rights asserted and
relief prayed for, the relief being founded on the same facts; and (c) the identity in
the two cases should be such that the judgment that may be rendered in one
would, regardless of which party is successful, amount to res adjudicata to the
other.
While it is true that there is an identity of parties and subject matter, the
third
requisite
of litis
pendentia is
not
present.
x
x
x
x
The former suit is for the annulment of the real estate mortgage while the present
case is one for the annulment of the foreclosure of the mortgage. It may be
conceded that if the final judgment in the former action is for the annulment of the
mortgage, such an adjudication will deny the right of the bank to foreclose on the
properties. Following the above doctrine, the immediate question would thus be:
Will a decree holding the mortgage contract valid prevent a party from challenging
the propriety of the foreclosure and the conduct of its proceedings?
Verily, an adjudication holding the real estate mortgage valid does not
preclude an action predicated on or involving an issue questioning the
validity of the foreclosure. In this respect, the test of identity fails. The
answer being in the negative, the judgment in Civil Case No. TM1022 would not be a bar to the prosecution of the present action.
WHEREFORE,
the
appeal
is GRANTED and
the
assailed
order
is
hereby REVERSEDand SET ASIDE. The case is ordered REMANDED to the
court a quo for further proceedings.[27] (Emphases ours.)

PNB moved for the reconsideration[28] of the above decision but the Court of
Appeals denied the same in the assailed Resolution dated January 24, 2008.
PNB,
The

thus,

instituted
Ruling

the
of

instant
the

petition.
Court

In its Memorandum before this Court, PNB averred that [t]he central issue in this
case is whether or not the requisites of litis pendentia exist to warrant the
dismissal of Civil Case No. TM-1108 [Annulment of the Foreclosure Sale]. Stated
otherwise, the primary issue is whether or not there is an identity of parties and
causes of action in the two subject cases, such that judgment that may be
rendered
in
one
would
amount
to res
judicata to
the
other.[29]
PNB asserts that the validity of the extra-judicial foreclosure proceedings and the

incidents thereto were primary issues tried in Civil Case No. TM-1022 (Annulment
of the Real Estate Mortgage). PNB points out that GPHI even filed a Motion for
Leave to Amend Complaint to Conform to the Evidence [30] dated November 23,
2006 to incorporate the issue of the validity of the foreclosure proceedings. Also,
one of the reliefs prayed for in the amended complaint of GPHI in Civil Case No.
TM-1022 (Annulment of the Real Estate Mortgage) is for the declaration of the
nullity of the foreclosure sale. PNB insists that the validity of the foreclosure sale
was squarely put in issue during the trial of Civil Case No. TM-1022 (Annulment of
the Real Estate Mortgage) wherein GPHI prayed for the nullity of both the real
estate mortgage and the subsequent foreclosure sale and the certificate of sale
issued
in
favor
of
PNB.
For its part, GPHI counters that the causes of action in the two cases filed before
the court a quo are not the same. GPHI explains that it filed Civil Case No. TM1022 (Annulment of the Real Estate Mortgage) inasmuch as the real estate
mortgage executed in favor of PNB did not reflect the true intention of the parties
thereto. GPHI reiterates that the properties covered by TCT Nos. T-636816 and T636817 merely served as temporary securities for the loan of GEC from PNB. On
the other hand, GPHI maintains that it filed Civil Case No. TM-1108 (Annulment of
the Foreclosure Sale) in view of the failure of the sheriff to comply with the
requirement of Section 4 of Act No. 3135 that foreclosure proceedings shall be
conducted
through
a
public
auction.
GPHI further elaborates that should the RTC grant the prayer in Civil Case No. TM1022 (Annulment of the Real Estate Mortgage), it would follow that the subsequent
foreclosure proceedings involving the mortgaged properties will likewise be
rendered null and void. Even so, GPHI opines that if the trial court declares the
validity of the real estate mortgage in Civil Case No. TM-1022 (Annulment of the
Real Estate Mortgage), the same will not automatically render valid the ensuing
foreclosure
proceedings.
We

grant

the

petition

of

PNB.

As a ground for a motion to dismiss a complaint or any other pleading asserting a

claim, litis pendentia is provided for under Section 1(e), Rule 16 of the Rules of
Court, which reads:

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:
x

(e) That there is another action pending between the same parties for the same
cause.
As we held in Dotmatrix Trading v. Legaspi,[31] [l]itis pendentia is a Latin term,
which literally means a pending suit and is variously referred to in some decisions
as lis pendens and auter action pendant. As a ground for the dismissal of a civil
action, it refers to the situation where two actions are pending between the same
parties for the same cause of action, so that one of them becomes unnecessary
and
vexatious.[32]
We further emphasized in Guevara v. BPI Securities Corporation[33] that [t]here
is litis pendentia or another action pendente lite if the following requisites are
present: (a) identity of parties, or at least such parties as represent the same
interests in both actions; (b) identity of rights asserted and relief prayed for, the
relief being founded on the same facts; and (c) the identity of the two preceding
particulars is such that any judgment rendered in the other action, will, regardless
of which party is successful, amount to res judicata in the action under
consideration.[34]
With respect to the first requirement of litis pendentia, the same is undisputedly
present in this case. GPHI is the plaintiff in both Civil Case Nos. TM-1022 and TM1108, while PNB is the party against whom GPHI is asserting a claim. That the
Registry of Deeds for the Province of Cavite was named as an additional
respondent in Civil Case No. TM-1108 (Annulment of the Foreclosure Sale) bears
little significance. The Court has clarified in Villarica Pawnshop, Inc. v.
Gernale[35] that identity of parties does not mean total identity of parties in both
cases. It is enough that there is substantial identity of parties. The inclusion of
new parties in the second action does not remove the case from the operation of
the
rule
of litis
pendentia.[36]
The crux of the controversy in the instant case is whether there is an identity of
causes
of
action
in
Civil
Case
Nos.
TM-1022
and
TM-1108.
Section 2, Rule 2 of the Rules of Court defines a cause of action as the act or
omission by which a party violates a right of another. Section 3 of Rule 2 provides
that [a] party may not institute more than one suit for a single cause of action.
Anent the act of splitting a single cause of action, Section 4 of Rule 2 explicitly
states that [i]f two or more suits are instituted on the basis of the same cause of

action, the filing of one or a judgment upon the merits in any one is available as a
ground
for
the
dismissal
of
the
others.
Apropos, Carlet v. Court of Appeals[37] states that:
As regards identity of causes of action, the test often used in determining whether
causes of action are identical is to ascertain whether the same evidence which is
necessary to sustain the second action would have been sufficient to authorize a
recovery in the first, even if the forms or nature of the two actions be different. If
the same facts or evidence would sustain both actions, the two actions are
considered the same within the rule that the judgment in the former is a bar to the
subsequent action; otherwise, it is not.[38]
In the case at bar, a perusal of the allegations in Civil Case Nos. TM-1022
(Annulment of the Real Estate Mortgage) and TM-1108 (Annulment of the
Foreclosure Sale) reveal that the said cases invoke the same fundamental
issue, i.e., the temporary nature of the security that was to be provided by the
mortgaged
properties
of
GPHI.
To repeat, in the original complaint in Civil Case No. TM-1022 (Annulment of the
Real Estate Mortgage), GPHIs main argument was that the agreement between
GEC and PNB was that the mortgaged properties of GPHI would merely stand as
temporary securities pending the outcome of Civil Case No. 98-782, the case filed
by GEC against LBP. The mortgaged properties were never contemplated to stand
as bona fide collateral for the loan obligations of GEC to PNB. Also, GPHI claimed
that the execution of the real estate mortgage over the properties of GPHI did not
reflect the true intention of GEC and PNB. As such, GPHI concluded that PNB had
no legal right to pursue the remedy of foreclosure of the mortgaged properties in
light of the inability of GEC to pay its loan obligations to PNB.
On the other hand, in its petition in Civil Case No. TM-1108 (Annulment of the
Foreclosure Sale), GPHI asserted that PNB knew that the mortgaged properties
were never intended to be used as permanent collateral for GEC, but one which
was simply used as an unregistered security until [GPHI] incurs in default if sold
and the proceeds of which should be used in payment for the obligation of
GEC.[39] In addition, GPHI argued that the letter of PNB dated August 13, 1997
was clear in that the real estate mortgage was to remain unregistered until an
event of default occurs and PNB shall possess the titles covering the properties
until the condition of assigning the sales proceeds of the mentioned real
properties up to a minimum of US$ equivalent of PhP112,000,000.00 to [PNB] is
complied
with.[40]
Therefore, in essence, the cause of action of GPHI in both cases is the alleged act

of PNB of reneging on a prior agreement or understanding with GEC and GPHI vis-vis the constitution, purpose and consequences of the real estate mortgage over
the properties of GPHI. While the reliefs sought in Civil Case Nos. TM-1022
(Annulment of the Real Estate Mortgage) and TM-1108 (Annulment of the
Foreclosure Sale) are seemingly different, the ultimate question that the trial court
would have to resolve in both cases is whether the real estate mortgage over the
properties of GPHI was actually intended to secure the loan obligations of GEC to
PNB so much so that PNB can legally foreclose on the mortgaged properties should
GEC fail to settle its loan obligations. In this regard, GPHI made reference to the
letter of PNB dated August 13, 1997 and the Amendment to the Credit Agreement
between GEC, GPHI and PNB as the primary documents upon which GPHI based its
arguments regarding the supposed intention of the parties in both Civil Case Nos.
TM-1022 (Annulment of the Real Estate Mortgage) and TM-1108 (Annulment of the
Foreclosure Sale).[41] Thus, the same documentary evidence would necessarily
sustain
both
cases.
That GPHI put forward additional grounds in Civil Case No. TM-1108 (Annulment of
the Foreclosure Sale), i.e., that the auction sale was not conducted at a public
place in contravention of the requirement of Section 4 of Act No. 3135 and that the
foreclosure was prematurely resorted to given that GPHI cannot yet be considered
in default, does not alter the fact that there exists an identity of causes of action in
the two cases. In Asia United Bank v. Goodland Company, Inc.,[42] the Court held
that [t]he well-entrenched rule is that a party cannot, by varying the form of
action, or adopting a different method of presenting his case, escape the operation
of the principle that one and the same cause of action shall not be twice
litigated.[43]
Be that as it may, while the appeal of the dismissal of Civil Case No. TM-1108
(Annulment of the Foreclosure Sale) was still pending with the Court of Appeals,
GPHI filed on November 23, 2006 a Motion for Leave to Amend Complaint to
Conform to the Evidence in Civil Case No. TM-1022 (Annulment of the Real Estate
Mortgage). GPHI stated therein that after the parties presented their evidence, the
fact of foreclosure and the acquisition of the mortgaged properties by PNB were
duly established.[44] In the accompanying Amended Complaint in Civil Case No. TM1022 (Annulment of the Real Estate Mortgage), GPHI prayed, inter alia, for the
declaration of the nullity of the foreclosure and auction sale of the mortgaged
properties. As a consequence of such an action, the two cases that GPHI filed
before the court a quo henceforth contained an identity of rights asserted and
reliefs prayed for, the relief being founded on the same factual allegations. Thus,
any doubt as to the act of GPHI of splitting its cause of action has since been
removed.cralaw
WHEREFORE, the petition is GRANTED. The Decision dated September 28, 2007
and the Resolution dated January 24, 2008 of the Court of Appeals in CA-G.R. CV

No. 75108 are hereby REVERSED andSET ASIDE. The Order dated December 20,
2001 of the Regional Trial Court of Trece Martires City, Branch 23, in Civil Case No.
TM-1108
is
hereby REINSTATED.
No
costs.
SO ORDERED.

G.R. No. 152272

March 5, 2012

JUANA COMPLEX I HOMEOWNERS ASSOCIATION, INC., ANDRES C.

BAUTISTA, BRIGIDO DIMACULANGAN, DOLORES P. PRADO, IMELDA DE LA
CRUZ, EDITHA C. DY, FLORENCIA M. MERCADO, LEOVINO C. DATARIO, AIDA
A. ABAYON, NAPOLEON M. DIMAANO, ROSITA G. ESTIGOY and NELSON A.
LOYOLA,Petitioners,
vs.
FIL-ESTATE LAND, INC., FIL ESTATE ECOCENTRUM CORPORATION, LA PAZ
HOUSING AND DEVELOPMENT CORPORATION, WARBIRD SECURITY
AGENCY, ENRIQUE RIVILLA, MICHAEL E. JETHMAL and MICHAEL
ALUNAN, Respondents.
x-----------------------x
G. R. No. 152397
FIL-ESTATE LAND, INC., FIL ESTATE ECOCENTRUM CORPORATION, LA PAZ
HOUSING AND DEVELOPMENT CORPORATION, WARBIRD SECURITY
AGENCY, ENRIQUE RIVILLA, MICHAEL E. JETHMAL and MICHAEL
ALUNAN, Petitioners,
vs.
JUANA COMPLEX I HOMEOWNERS ASSOCIATION, INC., ANDRES C.
BAUTISTA, BRIGIDO DIMACULANGAN, DOLORES P. PRADO, IMELDA DE LA
CRUZ, EDITHA C. DY, FLORENCIA M. MERCADO, LEOVINO C. DATARIO, AIDA

A. ABAYON, NAPOLEON M. DIMAANO, ROSITA G. ESTIGOY and NELSON A.

LOYOLA,Respondents.

Accordingly, JCHA, et al. also prayed for the immediate issuance of a Temporary
Restraining Order (TRO) or a writ of preliminary injunction (WPI) to enjoin Fil-Estate,
et al. from stopping and intimidating them in their use of La Paz Road.

DECISION
MENDOZA, J.:
Before the Court are two (2) consolidated petitions assailing the July 31, 2001
Decision1 and February 21, 2002 Resolution2 of the Court of Appeals (CA) in CA-G.R.
SP No. 60543, which annulled and set aside the March 3, 1999 Order 3 of the
Regional Trial Court, Branch 25, Bian, Laguna (RTC), granting the application for
the issuance of a writ of preliminary injunction, and upheld the June 16, 2000
Omnibus Order4 denying the motion to dismiss.
The Facts:

On February 10, 1999, a TRO was issued ordering Fil-Estate, et al, for a period of
twenty (20) days, to stop preventing, coercing, intimidating or harassing the
commuters and motorists from using the La Paz Road. 6
Subsequently, the RTC conducted several hearings to determine the propriety of
the issuance of a WPI.
On February 26, 1999, Fil-Estate, et al. filed a motion to dismiss 7 arguing that the
complaint failed to state a cause of action and that it was improperly filed as a
class suit. On March 5, 1999, JCHA, et al. filed their comment 8 on the motion to
dismiss to which respondents filed a reply.9

On January 20, 1999, Juana Complex I Homeowners Association, Inc. (JCHA),

together with individual residents of Juana Complex I and other neighboring
subdivisions (collectively referred as JCHA, et. al.), instituted a complaint5for
damages, in its own behalf and as a class suit representing the regular commuters
and motorists of Juana Complex I and neighboring subdivisions who were deprived
of the use of La Paz Road, against Fil-Estate Land, Inc.(Fil-Estate), Fil-estate
Ecocentrum Corporation (FEEC), La Paz Housing & Development Corporation (La
Paz), and Warbird Security Agency and their respective officers (collectively
referred as Fil-Estate, et al.).

On March 3, 1999, the RTC issued an Order

et al. to post a bond.

The complaint alleged that JCHA, et al. were regular commuters and motorists who
constantly travelled towards the direction of Manila and Calamba; that they used
the entry and exit toll gates of South Luzon Expressway (SLEX) by passing through
right-of-way public road known as La Paz Road; that they had been using La Paz
Road for more than ten (10) years; that in August 1998, Fil-estate excavated, broke
and deliberately ruined La Paz Road that led to SLEX so JCHA, et al. would not be
able to pass through the said road; that La Paz Road was restored by the residents
to make it passable but Fil-estate excavated the road again; that JCHA reported the
matter to the Municipal Government and the Office of the Municipal Engineer but
the latter failed to repair the road to make it passable and safe to motorists and
pedestrians; that the act of Fil-estate in excavating La Paz Road caused damage,
prejudice, inconvenience, annoyance, and loss of precious hours to them, to the
commuters and motorists because traffic was re-routed to narrow streets that
caused terrible traffic congestion and hazard; and that its permanent closure would
not only prejudice their right to free and unhampered use of the property but
would also cause great damage and irreparable injury.

Not satisfied, Fil-Estate, et al. filed a petition for certiorari and prohibition before
the CA to annul (1) the Order dated March 3, 1999 and (2) the Omnibus Order
dated June 16, 2000. They contended that the complaint failed to state a cause of
action and that it was improperly filed as a class suit. With regard to the issuance
of the WPI, the defendants averred that JCHA, et al. failed to show that they had a
clear and unmistakable right to the use of La Paz Road; and further claimed that La
Paz Road was a torrens registered private road and there was neither a voluntary
nor legal easement constituted over it.13

10

granting the WPI and required JCHA,

On March 19, 1999, Fil-Estate, et al. filed a motion for reconsideration 11 arguing,
among others, that JCHA, et al. failed to satisfy the requirements for the issuance
of a WPI. On March 23, 1999, JCHA, et al. filed their opposition to the motion. 12
The RTC then issued its June 16, 2000 Omnibus Order, denying both the motion to
dismiss and the motion for reconsideration filed by Fil-Estate, et al.

On July 31, 2001, the CA rendered the decision partially granting the petition, the
dispositive portion of which reads:
WHEREFORE, the petition is hereby partially GRANTED. The Order dated March 3,
1999 granting the writ of preliminary injunction is hereby ANNULLED and SET

ASIDE but the portion of the Omnibus Order dated June 16, 2000 denying the
motion to dismiss is upheld.
SO ORDERED.14
The CA ruled that the complaint sufficiently stated a cause of action when JCHA, et
al. alleged in their complaint that they had been using La Paz Road for more than
ten (10) years and that their right was violated when Fil-Estate closed and
excavated the road. It sustained the RTC ruling that the complaint was properly
filed as a class suit as it was shown that the case was of common interest and that
the individuals sought to be represented were so numerous that it was impractical
to include all of them as parties. The CA, however, annulled the WPI for failure of
JCHA, et al. to prove their clear and present right over La Paz Road. The CA ordered
the remand of the case to the RTC for a full-blown trial on the merits.
Hence, these petitions for review.
In G.R. No. 152272, JCHA, et al. come to this Court, raising the following issues:
(A)
THE HONORABLE COURT OF APPEALS, IN HOLDING THAT A FULL-BLOWN TRIAL ON
THE MERITS IS REQUIRED TO DETERMINE THE NATURE OF THE LA PAZ ROAD, HAD
DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS
AS TO CALL FOR AN EXERCISE OF THE POWER OF SUPERVISION.
(B)
THE HONORABLE COURT OF APPEALS, IN HOLDING THAT THE PETITIONERS FAILED
TO SATISFY THE REQUIREMENTS FOR THE ISSUANCE OF A WRIT OF PRELIMINARY
INJUNCTION, HAD DECIDED NOT IN ACCORD WITH LAW AND WITH THE APPLICABLE
DECISIONS OF THE SUPREME COURT.15
In G.R. No. 152397, on the other hand, Fil-Estate, et al. anchor their petition on the
following issues:
I.
The Court of Appeals declaration that respondents Complaint states a
cause of action is contrary to existing law and jurisprudence.

II.
The Court of Appeals pronouncement that respondents complaint was
properly filed as a class suit is contrary to existing law and jurisprudence.
III.
The Court of Appeals conclusion that full blown trial on the merits is
required to determine the nature of the La Paz Road is contrary to existing
laws and jurisprudence.16
JCHA, et al. concur with the CA that the complaint sufficiently stated a cause of
action. They, however, disagree with the CAs pronouncement that a full-blown trial
on the merits was necessary. They claim that during the hearing on the application
of the writ of injunction, they had sufficiently proven that La Paz Road was a public
road and that commuters and motorists of their neighboring villages had used this
road as their means of access to the San Agustin Church, Colegio De San Agustin
and to SLEX in going to Metro Manila and to Southern Tagalog particularly during
the rush hours when traffic at Carmona Entry/Exit and Susana Heights Entry/Exit
was at its worst.
JCHA, et al. argue that La Paz Road has attained the status and character of a
public road or burdened by an apparent easement of public right of way. They point
out that La Paz Road is the widest road in the neighborhood used by motorists in
going to Halang Road and in entering the SLEX-Halang toll gate and that there is
no other road as wide as La Paz Road existing in the vicinity. For residents of San
Pedro, Laguna, the shortest, convenient and safe route towards SLEX Halang is
along Rosario Avenue joining La Paz Road.
Finally, JCHA, et al. argue that the CA erred when it voided the WPI because the
public nature of La Paz Road had been sufficiently proven and, as residents of San
Pedro and Bian, Laguna, their right to use La Paz Road is undeniable.
In their Memorandum,17 Fil-Estate, et al. explain that La Paz Road is included in the
parcels of land covered by Transfer Certificates of Title (TCT) Nos. T-120008, T90321 and T-90607, all registered in the name of La Paz. The purpose of
constructing La Paz Road was to provide a passageway for La Paz to its intended
projects to the south, one of which was the Juana Complex I. When Juana Complex I
was completed, La Paz donated the open spaces, drainage, canal, and lighting
facilities inside the Juana Complex I to the Municipality of Bian. The streets within
the subdivisions were then converted to public roads and were opened for use of
the general public. The La Paz Road, not being part of the Juana Complex I, was

excluded from the donation. Subsequently, La Paz became a shareholder of FEEC,

a consortium formed to develop several real properties in Bian, Laguna, known as
Ecocentrum Project. In exchange for shares of stock, La Paz contributed some of its
real properties to the Municipality of Bian, including the properties constituting La
Paz Road, to form part of the Ecocentrum Project.
Fil-Estate, et al. agree with the CA that the annulment of the WPI was proper since
JCHA, et al. failed to prove that they have a clear right over La Paz Road. Fil-Estate,
et al. assert that JCHA, et al. failed to prove the existence of a right of way or a
right to pass over La Paz Road and that the closure of the said road constituted an
injury to such right. According to them, La Paz Road is a torrens registered private
road and there is neither a voluntary nor legal easement constituted over it. They
claim that La Paz Road is a private property registered under the name of La Paz
and the beneficial ownership thereof was transferred to FEEC when La Paz joined
the consortium for the Ecocentrum Project.
Fil-Estate, et al., however, insist that the complaint did not sufficiently contain the
ultimate facts to show a cause of action. They aver the bare allegation that one is
entitled to something is an allegation of a conclusion which adds nothing to the
pleading.
They likewise argue that the complaint was improperly filed as a class suit for it
failed to show that JCHA, et al. and the commuters and motorists they are
representing have a well-defined community of interest over La Paz Road. They
claim that the excavation of La Paz Road would not necessarily give rise to a
common right or cause of action for JCHA, et al. against them since each of them
has a separate and distinct purpose and each may be affected differently than the
others.
The Courts Ruling
The issues for the Courts resolution are: (1) whether or not the complaint states a
cause of action; (2) whether the complaint has been properly filed as a class suit;
and (2) whether or not a WPI is warranted.

(2) the correlative obligation of the defendant, and

(3) the act or omission of the defendant in violation of said legal right. 18
The question of whether the complaint states a cause of action is determined by its
averments regarding the acts committed by the defendant. 19 Thus, it must contain
a concise statement of the ultimate or essential facts constituting the plaintiffs
cause of action.20 To be taken into account are only the material allegations in the
complaint; extraneous facts and circumstances or other matters aliunde are not
considered.21
The test of sufficiency of facts alleged in the complaint as constituting a cause of
action is whether or not admitting the facts alleged, the court could render a valid
verdict in accordance with the prayer of said complaint. 22 Stated differently, if the
allegations in the complaint furnish sufficient basis by which the complaint can be
maintained, the same should not be dismissed regardless of the defense that may
be asserted by the defendant.23
In the present case, the Court finds the allegations in the complaint sufficient to
establish a cause of action. First,JCHA, et al.s averments in the complaint show a
demandable right over La Paz Road. These are: (1) their right to use the road on
the basis of their allegation that they had been using the road for more than 10
years; and (2) an easement of a right of way has been constituted over the said
roads. There is no other road as wide as La Paz Road existing in the vicinity and it
is the shortest, convenient and safe route towards SLEX Halang that the
commuters and motorists may use. Second, there is an alleged violation of such
right committed by Fil-Estate, et al. when they excavated the road and prevented
the commuters and motorists from using the same. Third, JCHA, et al.
consequently suffered injury and that a valid judgment could have been rendered
in accordance with the relief sought therein.
With respect to the issue that the case was improperly instituted as a class suit,
the Court finds the opposition without merit.
Section 12, Rule 3 of the Rules of Court defines a class suit, as follows:

Section 2, Rule 2 of the Rules of Court defines a cause of action as an act or

omission by which a party violates the right of another. A complaint states a cause
of action when it contains three (3) essential elements of a cause of action,
namely:
(1) the legal right of the plaintiff,

Sec. 12. Class suit. When the subject matter of the controversy is one of common
or general interest to many persons so numerous that it is impracticable to join all
as parties, a number of them which the court finds to be sufficiently numerous and
representative as to fully protect the interests of all concerned may sue or defend
for the benefit of all. Any party in interest shall have the right to intervene to
protect his individual interest.

The necessary elements for the maintenance of a class suit are: 1) the subject
matter of controversy is one of common or general interest to many persons; 2)
the parties affected are so numerous that it is impracticable to bring them all to
court; and 3) the parties bringing the class suit are sufficiently numerous or
representative of the class and can fully protect the interests of all concerned. 24

necessity for the writ to prevent serious damage. 26 For the writ to issue, the right
sought to be protected must be a present right, a legal right which must be shown
to be clear and positive.27 This means that the persons applying for the writ must
show that they have an ostensible right to the final relief prayed for in their
complaint.28

In this case, the suit is clearly one that benefits all commuters and motorists who
use La Paz Road. As succinctly stated by the CA:

In the case at bench, JCHA, et al. failed to establish a prima facie proof of violation
of their right to justify the issuance of a WPI. Their right to the use of La Paz Road is
disputable since they have no clear legal right therein. As correctly ruled by the
CA:

The subject matter of the instant case, i.e., the closure and excavation of the La
Paz Road, is initially shown to be of common or general interest to many persons.
The records reveal that numerous individuals have filed manifestations with the
lower court, conveying their intention to join private respondents in the suit and
claiming that they are similarly situated with private respondents for they were
also prejudiced by the acts of petitioners in closing and excavating the La Paz
Road. Moreover, the individuals sought to be represented by private respondents in
the suit are so numerous that it is impracticable to join them all as parties and be
named individually as plaintiffs in the complaint. These individuals claim to be
residents of various barangays in Bian, Laguna and other barangays in San Pedro,
Laguna.

Here, contrary to the ruling of respondent Judge, private respondents failed to

prove as yet that they have a clear and unmistakable right over the La Paz Road
which was sought to be protected by the injunctive writ. They merely anchor their
purported right over the La Paz Road on the bare allegation that they have been
using the same as public road right-of-way for more than ten years. A mere
allegation does not meet the standard of proof that would warrant the issuance of
the injunctive writ. Failure to establish the existence of a clear right which should
be judicially protected through the writ of injunction is a sufficient ground for
denying the injunction.

Anent the issue on the propriety of the WPI, Section 3, Rule 58 of the Rules of Court
lays down the rules for the issuance thereof. Thus:

Consequently, the case should be further heard by the RTC so that the parties can
fully prove their respective positions on the issues.1wphi1

(a) That the applicant is entitled to the relief demanded, and the whole or
part of such relief consists in restraining the commission or continuance of
the acts complained of, or in the performance of an act or acts, either for a
limited period or perpetually;

Due process considerations dictate that the assailed injunctive writ is not a
judgment on the merits but merely an order for the grant of a provisional and
ancillary remedy to preserve the status quo until the merits of the case can be
heard. The hearing on the application for issuance of a writ of preliminary
injunction is separate and distinct from the trial on the merits of the main
case. 29 The evidence submitted during the hearing of the incident is not conclusive
or complete for only a "sampling" is needed to give the trial court an idea of the
justification for the preliminary injunction pending the decision of the case on the
merits.30 There are vital facts that have yet to be presented during the trial which
may not be obtained or presented during the hearing on the application for the
injunctive writ.31 Moreover, the quantum of evidence required for one is different
from that for the other.32

(b) That the commission, continuance or non-performance of the act or

acts complained of during the litigation would probably work injustice to
the applicant; or
(c) That a party, court, or agency or a person is doing, threatening, or
attempting to do, or is procuring or suffering to be done, some act or acts
probably in violation of the rights of the applicant respecting the subject of
the action or proceeding, and tending to render the judgment ineffectual.
A writ of preliminary injunction is available to prevent a threatened or continuous
irremediable injury to parties before their claims can be thoroughly studied and
adjudicated.25 The requisites for its issuance are: (1) the existence of a clear and
unmistakable right that must be protected; and (2) an urgent and paramount

WHEREFORE, the petitions are DENIED. Accordingly, the July 31, 2001 Decision and
February 21, 2002 Resolution of the Court of Appeals in CA-G.R. SP No. 60543 are
AFFIRMED.
SO ORDERED.

G.R. No. L-20761

July 27, 1966

LA
MALLORCA, petitioner,
vs.
HONORABLE COURT OF APPEALS, MARIANO BELTRAN, ET AL., respondents.
G.
E.
Yabut,
R.
Monterey
Ahmed Garcia for respondents.

and

M.C.

Lagman

for

After about an hour's trip, the bus reached Anao whereat it stopped to
allow the passengers bound therefor, among whom were the plaintiffs and
their children to get off. With respect to the group of the plaintiffs, Mariano
Beltran, then carrying some of their baggages, was the first to get down
the bus, followed by his wife and his children. Mariano led his companions
to a shaded spot on the left pedestrians side of the road about four or five
meters away from the vehicle. Afterwards, he returned to the bus in
controversy to get his otherbayong, which he had left behind, but in so
doing, his daughter Raquel followed him, unnoticed by her father. While
said Mariano Beltran was on the running board of the bus waiting for the
conductor to hand him hisbayong which he left under one of its seats near
the door, the bus, whose motor was not shut off while unloading, suddenly
started moving forward, evidently to resume its trip, notwithstanding the
fact that the conductor has not given the driver the customary signal to
start, since said conductor was still attending to the baggage left behind by
Mariano Beltran. Incidentally, when the bus was again placed into a
complete stop, it had travelled about ten meters from the point where the
plaintiffs had gotten off.

petitioner.

BARRERA, J.:
La Mallorca seeks the review of the decision of the Court of Appeals in CA-G.R. No.
23267-R, holding it liable for quasi-delict and ordering it to pay to respondents
Mariano Beltran, et al., P6,000.00 for the death of his minor daughter Raquel
Beltran, plus P400.00 as actual damages.
The facts of the case as found by the Court of Appeals, briefly are:
On December 20, 1953, at about noontime, plaintiffs, husband and wife,
together with their minor daughters, namely, Milagros, 13 years old,
Raquel, about 4 years old, and Fe, over 2 years old, boarded the
Pambusco Bus No. 352, bearing plate TPU No. 757 (1953 Pampanga),
owned and operated by the defendant, at San Fernando, Pampanga, bound
for Anao, Mexico, Pampanga. At the time, they were carrying with them
four pieces of baggages containing their personal belonging. The
conductor of the bus, who happened to be a half-brother of plaintiff
Mariano Beltran, issued three tickets (Exhs. A, B, & C) covering the full
fares of the plaintiff and their eldest child, Milagros. No fare was charged
on Raquel and Fe, since both were below the height at which fare is
charged in accordance with the appellant's rules and regulations.

Sensing that the bus was again in motion, Mariano Beltran immediately
jumped from the running board without getting his bayong from the
conductor. He landed on the side of the road almost in front of the shaded
place where he left his wife and children. At that precise time, he saw
people beginning to gather around the body of a child lying prostrate on
the ground, her skull crushed, and without life. The child was none other
than his daughter Raquel, who was run over by the bus in which she rode
earlier together with her parents.
For the death of their said child, the plaintiffs commenced the present suit
against the defendant seeking to recover from the latter an aggregate
amount of P16,000 to cover moral damages and actual damages sustained
as a result thereof and attorney's fees. After trial on the merits, the court
below rendered the judgment in question.
On the basis of these facts, the trial court found defendant liable for breach of
contract of carriage and sentenced it to pay P3,000.00 for the death of the child
and P400.00 as compensatory damages representing burial expenses and costs.
On appeal to the Court of Appeals, La Mallorca claimed that there could not be a
breach of contract in the case, for the reason that when the child met her death,
she was no longer a passenger of the bus involved in the incident and, therefore,
the contract of carriage had already terminated. Although the Court of Appeals
sustained this theory, it nevertheless found the defendant-appellant guilty

of quasi-delict and held the latter liable for damages, for the negligence of its
driver, in accordance with Article 2180 of the Civil Code. And, the Court of Appeals
did not only find the petitioner liable, but increased the damages awarded the
plaintiffs-appellees to P6,000.00, instead of P3,000.00 granted by the trial court.
In its brief before us, La Mallorca contends that the Court of Appeals erred (1) in
holding it liable for quasi-delict, considering that respondents complaint was one
for breach of contract, and (2) in raising the award of damages from P3,000.00 to
P6,000.00 although respondents did not appeal from the decision of the lower
court.
Under the facts as found by the Court of Appeals, we have to sustain the
judgement holding petitioner liable for damages for the death of the child, Raquel
Beltran. It may be pointed out that although it is true that respondent Mariano
Beltran, his wife, and their children (including the deceased child) had alighted
from the bus at a place designated for disembarking or unloading of passengers, it
was also established that the father had to return to the vehicle (which was still at
a stop) to get one of his bags or bayong that was left under one of the seats of the
bus. There can be no controversy that as far as the father is concerned, when he
returned to the bus for his bayongwhich was not unloaded, the relation of
passenger and carrier between him and the petitioner remained subsisting. For,
the relation of carrier and passenger does not necessarily cease where the latter,
after alighting from the car, aids the carrier's servant or employee in removing his
baggage from the car.1 The issue to be determined here is whether as to the child,
who was already led by the father to a place about 5 meters away from the bus,
the liability of the carrier for her safety under the contract of carriage also
persisted.
It has been recognized as a rule that the relation of carrier and passenger does not
cease at the moment the passenger alights from the carrier's vehicle at a place
selected by the carrier at the point of destination, but continues until the
passenger has had a reasonable time or a reasonable opportunity to leave the
carrier's premises. And, what is a reasonable time or a reasonable delay within this
rule is to be determined from all the circumstances. Thus, a person who, after
alighting from a train, walks along the station platform is considered still a
passenger.2 So also, where a passenger has alighted at his destination and is
proceeding by the usual way to leave the company's premises, but before actually
doing so is halted by the report that his brother, a fellow passenger, has been shot,
and he in good faith and without intent of engaging in the difficulty, returns to
relieve his brother, he is deemed reasonably and necessarily delayed and thus
continues to be a passenger entitled as such to the protection of the railroad and
company and its agents.3

In the present case, the father returned to the bus to get one of his baggages
which was not unloaded when they alighted from the bus. Raquel, the child that
she was, must have followed the father. However, although the father was still on
the running board of the bus awaiting for the conductor to hand him the bag
or bayong, the bus started to run, so that even he (the father) had to jump down
from the moving vehicle. It was at this instance that the child, who must be near
the bus, was run over and killed. In the circumstances, it cannot be claimed that
the carrier's agent had exercised the "utmost diligence" of a "very cautions
person" required by Article 1755 of the Civil Code to be observed by a common
carrier in the discharge of its obligation to transport safely its passengers. In the
first place, the driver, although stopping the bus, nevertheless did not put off the
engine. Secondly, he started to run the bus even before the bus conductor gave
him the signal to go and while the latter was still unloading part of the baggages of
the passengers Mariano Beltran and family. The presence of said passengers near
the bus was not unreasonable and they are, therefore, to be considered still as
passengers of the carrier, entitled to the protection under their contract of
carriage.
But even assuming arguendo that the contract of carriage has already terminated,
herein petitioner can be held liable for the negligence of its driver, as ruled by the
Court of Appeals, pursuant to Article 2180 of the Civil Code. Paragraph 7 of the
complaint, which reads
That aside from the aforesaid breach of contract, the death of Raquel
Beltran, plaintiffs' daughter, was caused by the negligence and want of
exercise of the utmost diligence of a very cautious person on the part of
the defendants and their agent, necessary to transport plaintiffs and their
daughter safely as far as human care and foresight can provide in the
operation of their vehicle.
is clearly an allegation for quasi-delict. The inclusion of this averment for quasidelict, while incompatible with the other claim under the contract of carriage, is
permissible under Section 2 of Rule 8 of the New Rules of Court, which allows a
plaintiff to allege causes of action in the alternative, be they compatible with each
other or not, to the end that the real matter in controversy may be resolved and
determined.4
The plaintiffs sufficiently pleaded the culpa or negligence upon which the claim
was predicated when it was alleged in the complaint that "the death of Raquel
Beltran, plaintiffs' daughter, was caused by the negligence and want of exercise of
the utmost diligence of a very cautious person on the part of the defendants and
their agent." This allegation was also proved when it was established during the
trial that the driver, even before receiving the proper signal from the conductor,

and while there were still persons on the running board of the bus and near it,
started to run off the vehicle. The presentation of proof of the negligence of its
employee gave rise to the presumption that the defendant employer did not
exercise the diligence of a good father of the family in the selection and
supervision of its employees. And this presumption, as the Court of Appeals found,
petitioner had failed to overcome. Consequently, petitioner must be adjudged
peculiarily liable for the death of the child Raquel Beltran.

Court of Appeals committed error in raising the amount of the award for damages
is, evidently, meritorious.1wph1.t

The increase of the award of damages from P3,000.00 to P6,000.00 by the Court of
Appeals, however, cannot be sustained. Generally, the appellate court can only
pass upon and consider questions or issues raised and argued in appellant's brief.
Plaintiffs did not appeal from that portion of the judgment of the trial court
awarding them on P3,000.00 damages for the death of their daughter. Neither
does it appear that, as appellees in the Court of Appeals, plaintiffs have pointed
out in their brief the inadequacy of the award, or that the inclusion of the figure
P3,000.00 was merely a clerical error, in order that the matter may be treated as
an exception to the general rule. 5Herein petitioner's contention, therefore, that the

Concepcion, C.J., Reyes, J.B.L., Dizon, Regala, Bengzon, J.P., Zaldivar, Sanchez and
Castro,
JJ.,
concur.
Makalintal, J., concurs in the result.

Wherefore, the decision of the Court of Appeals is hereby modified by sentencing,

the petitioner to pay to the respondents Mariano Beltran, et al., the sum of
P3,000.00 for the death of the child, Raquel Beltran, and the amount of P400.00 as
actual damages. No costs in this instance. So ordered.

Footnotes