FIRST DIVISION
INTRAMUROS
ADMINISTRATION,
Petitioner,
G.R.
No.
152576
May 5, 2003
-versus-
YVETTE CONTACTOAND GREGORIO
LUIS
C. CONTACTO III,
Respondents.
D E C I S I
O N
DAVIDE,
JR., C.J.:chanroblesvirtuallawlibrary
In its Petition for Review
on
Certiorari in this case,
petitioner Intramuros Administration seeks
the review and reversal of the 28 February 2002 Decision of the Court
of
Appeals in CA-G.R. SP No. 63815, which set aside the orders of the
Regional
Trial Court of Manila, Branch 9, in Civil Case No. 98-90835 and granted
respondent’s motion to dismiss on the ground of litis pendentia.
On 21 January 1993,
the petitioner and respondent Yvette Contacto entered into a contract[1]
for the lease of petitioner’s premises known as "Cantinas de Aduana"
(Cantinas)
to the latter to establish a fastfood and restaurant business.
The
lease was for a period of five years, from 1 February 1993 to 31
January
1998, at a monthly rental of P36,000. Yvette was to assume the payment
of water and other utility expenses, and secure appropriate licenses
and
permits.cralaw:red
Shortly after the lease
contract went into effect, Yvette began complaining of the petitioner’s
failure to make good its alleged representations made prior to and
during
the execution of the lease contract that it would evict the sidewalk
vendors
outside the leased premises.[2]
She also alleged to have suffered losses in income due to the presence
of the sidewalk vendors.cralaw:red
In the next two years
of the contract, Yvette additionally complained of inadequate
facilities
of the Cantinas, which allegedly resulted in the suspension of her
license
and denial of her permit applications by the Manila Health
Department.
She further claimed that in August 1995, she was constrained to
rehabilitate
the
Cantinas on her own, resulting in the significant increase in her food
sales. During this time, however, Yvette did not pay the
stipulated
rent. Thus, between 1994 and 1995, the petitioner and Yvette entered
into
three agreements allowing the latter to restructure her outstanding
obligations.[3]
Still, Yvette failed to pay the accrued rentals.cralaw:red
On 16 January 1996,
Yvette received a letter from the petitioner requiring her to pay her
unsettled
accounts and to vacate the premises under threat of closure, within
five
days from receipt of the letter. With the advise of then
Secretary
of the Department of Tourism Eduardo Pilapil, she attempted to hold a
conference
with the petitioner in order to prevent the closure, but this attempt
failed.[4]
On 22 January 1996, the scheduled date of the closure, Yvette hurriedly
filed with the Regional Trial Court (RTC) of Manila a complaint for
preliminary
injunction, with a prayer for specific performance and damages.
She
prayed that the petitioner be ordered to (1) desist from enforcing the
closure order; (2) offset all the expenses that she incurred or might
incur
as a result of assuming petitioner’s obligation to make the leased
premises
fit for its intended use; (3) reduce the monthly rental from P36,000 to
P18,000, retroactive 1 February 1993 up to the expiration of the
contract
in 1998; and (4) pay her actual and exemplary damages, attorney’s fees,
and cost of suit.cralaw:red
The complaint was docketed
as Civil Case No. 96-767-44 and assigned to Branch 26 of the
court.
In its order of 23 January 1996, the court granted the prayer for a
temporary
restraining order.[5]
On 15 February 1996, it issued a writ of preliminary mandatory
injunction
ordering the petitioner to reopen the leased premises, reconnect the
water
and electrical services in the leased premises,[6]
and allow Yvette to operate the Cantinas.cralaw:red
On 17 September 1998,
pending the resolution of Civil Case No. 96-767-44 but after the
expiration
of the lease contract, the petitioner filed with the RTC of Manila a
complaint[7]
against respondent spouses Yvette and Gregorio Contacto. It
alleged
that the respondents occupied the leased premises for the entire five
years
stipulated in the contract; however, they defaulted in the payment not
only of their monthly rentals from May 1995 until 31 January 1998 when
they vacated the leased premises but also the water bills and electric
bills. It then prayed that the respondents be ordered to pay (1)
P3,069,225.13,[8]
representing unpaid rentals, penalty, surcharges and interest, and
electric
and water bills after deducting their deposit of P72,000; (2) P500,000
as exemplary damages; (3) attorneys fees equivalent to 20 percent of
the
total award; and (4) interest on the monetary claims. The
complaint
was docketed as Civil Case No. 98-90835 and assigned to Branch 9 of
said
court.cralaw:red
On 12 March 1999, the
respondents filed in Civil Case No. 98-90835 a Motion to Dismiss on the
ground of litis pendentia,[9]
i.e., the pendency of Civil Case No. 96-767-44 in Branch 26 of the RTC
of Manila.cralaw:red
In its order of 2 December
1999, Branch 9 of the RTC denied[10]
the motion to dismiss. It also denied the motion for
reconsideration[11]
in its order of 8 September 2000. Hence, the respondents filed
with
the Court of Appeals a special civil action for certiorari, docketed as
CA-G.R. SP No. 63815.chanrobles virtual law library
After due proceedings,
the Court of Appeals rendered a decision dated 28 February 2002
granting
the petition; declaring as null and void the 2 December 1999 and 8
September
2000 orders of Branch 9 of the RTC of Manila; and dismissing Civil Case
No. 98-90835 on the ground of litis pendentia.[12]
Unsatisfied with the
Decision, the petitioner filed the petition in this case. It
alleges
that (a) the Court of Appeals erred in holding that Civil Case No.
98-90835
is barred by litis pendentia; and (b) even assuming that the trial
court
erred in perfunctorily denying respondents’ motion to dismiss, the
error
would not change the fact that there is no litis pendentia in the cases
below, and hence, in the interest of substantial justice, the complaint
in Civil Case No. 98-90835 should be reinstated.cralaw:red
On the other hand, the
respondents allege that the petition does not raise a substantial issue
or question. The Court of Appeals correctly ruled (1) that the orders
denying
the motion to dismiss and the motion for reconsideration were
perfunctory
in nature, since they did not clearly and distinctly state the reason
for
such denial; and (2) that the filing of Civil Case No. 98-90835 is
barred
by the pendency of Civil Case No. 96-767-44 because both cases flow
from
the same contract of lease and are based on the demand of both parties
against each other to perform their obligations under the contract.cralaw:red
We agree with the Court
of Appeals and the respondents that the trial court’s order denying the
motion to dismiss was perfunctory in nature. The order reads:
For
resolution
of this Court is a Motion to Dismiss filed by defendant through
counsel,
on grounds that there is another action pending between the same
parties
for the same cause.
Finding no merit
therein,
the Motion to Dismiss is hereby Denied.
SO ORDERED.
The aforequoted order
did
not state clearly and distinctly the reason for denying the motion to
dismiss,
thereby violating the mandate in Section 3, Rule 16 of the 1997 Rules
of
Civil Procedure, which provides:
Sec
3.
Resolution of motion.- After the hearing, the court may dismiss
the
action or claim, deny the motion, or order the amendment of the
pleading.
The court shall
not
defer the resolution of the motion for the reason that the ground
relied
upon is not indubitable.
In every case, the
resolution
shall state clearly and distinctly the reasons therefor.
The reason "no merit"
stated
in the order is not sufficient compliance with the abovequoted
rule.
It has been frowned upon by the Court, for it "often creates difficulty
and misunderstanding on the part of the aggrieved party in taking
recourse
therefrom and likewise in the higher court called upon to resolve the
issue."[13]
Nonetheless, respondents’
motion to dismiss on the ground of litis pendentia cannot prosper.cralaw:red
In order to grant a
motion to dismiss on the ground of litis pendentia, the following
requisites
must concur: (a) there must be an identity of parties, or at
least
such parties as representing the same interests in both actions; (b)
there
must be an identity of rights asserted and reliefs prayed for, the
reliefs
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
other.[14]chanrobles virtual law library
The identity of the
parties being apparent and uncontroverted, we proceed to the second and
third requisites.cralaw:red
There are several tests
of ascertaining whether two suits relate to a single or common cause of
action, such as (1) whether the same evidence would support and sustain
both the first and second causes of action;[15]
or (2) whether the defenses in one case maybe used to substantiate the
complaint in the other.[16]
The determination of
whether there is an identity of causes of action for purposes of litis
pendentia is inextricably linked with that of res judicata, each
constituting
an element of the other. In either case, both relate to the
desire
to include, in a single litigation, the settlement of all issues
relating
to a cause of action that is before a court.[17]
This is the reason for their invocation in cases where one party splits
a cause of action by, for example, filing separate cases to recover
separate
reliefs for a single cause of action, or in cases where a defendant
files
another case arising from what should have been pleaded in a compulsory
counterclaim. In sum, it is a matter of policy, for efficient
justice,
"to prevent repeated litigation between the same parties in regard to
the
same subject of controversy; to protect defendant from unnecessary
vexation;
and to avoid the costs and expenses incident to numerous suits."[18]
In the first case, Civil
Case No. 96-767-44, respondent Yvette Contacto, as a lessee, asserts
her
right under the lease contract to occupy the leased premises and to use
the same for the purpose for which it was intended. On the other
hand, in the second case, Civil Case No. 98-90835, the petitioner
asserts
its right as a former lessor to demand payment from the respondents, as
former lessees, of the stipulated rentals, penalty, and surcharges, as
well as water and electric bills.cralaw:red
As regards the reliefs
sought, Yvette prays in the first case for (1) the issuance of an
injunction
ordering the petitioner to desist from closing the leased premises; (2)
the set-off of her accountabilities against the expenses she incurred
or
might incur in assuming petitioner’s obligations under the contract;
(3)
the reduction of the monthly rental from P36,000 to P18,000; and (4)
the
payment of actual and exemplary damages, attorney’s fees, and cost of
the
suit. In the second case, the petitioner prays for the payment by
the respondents of back rentals from May 1995 until 31 January 1998,
water
and electric bills, penalty and interests, exemplary damages, and
attorney’s
fees.chanrobles virtual law library
The reliefs prayed for
in the first case are anchored on the then impending closure of the
leased
premises, as well as the alleged failure or refusal of the petitioner
to
evict the sidewalk vendors in the area and improve the facilities in
the
leased premises. The second case is based on the refusal of the
respondents
to pay the monthly rentals from May 1995 up to 31 January 1998 when
they
vacated the leased premises, as well as the water and electric bills.cralaw:red
From the foregoing,
it is clear that there is as between the two actions no identity of
rights
asserted and reliefs prayed for, as well as of the facts from which the
reliefs are founded. It is not therefore likely that petitioner’s
defense in the first case, which was filed by the respondents, would be
in pursuit of its theory as plaintiff in the second case.[19]
Applying our pronouncement
in Cruz v. Court of Appeals,[20]
the Court of Appeals concluded that the causes of action in Civil Cases
Nos. 96-767-44 and 98-90835 are identical because both parties claimed
a breach of an obligation under the same lease contract:
There is substantial
identity in the cause of action in the two cases. Both cases are
based on the demand of both parties against each other to perform their
obligations under the same contract.cralaw:red
The Complaint instituted
by the respondent Intramuros Administration against the herein
petitioners
as lessees are [sic] based on the same contract of lease. The
Intramuros
Administration lodged said Complaint in the respondent Court to demand
payment for rentals and utility bills [that] accrued during the
existence
of the contract of lease.cralaw:red
On the other hand, in
the earlier case filed by herein petitioners against Intramuros
Administration
as lessors [sic] which was given due course in RTC, Branch 26, Manila,
was also for specific performance and damages with prayer for
preliminary
injunction under the same contract.cralaw:red
The motion to dismiss
has shown that these elements for litis pendentia to apply are
present.
The basic issue of the controversy in both cases is the determination
of
the compliance by the parties of the terms and conditions of their
contract.
The parties in both actions will be relying on the same contract which
is the fountain of the controversy in Civil Case No. 98-9835 and Civil
Case No. 96-767-44.[21]chanrobles virtual law library
The Court of Appeals,
however, overlooked the fact that there is more to determining the
identity
of the causes of action than an identity of contract. More
fundamental
is whether the cause of action in the second case existed at the time
of
the filing of the complaint or answer with counterclaim, as the case
may
be.[22]
We have held that when
a lease provides for the payment of the rent in installments, each
failure
to pay an installment is a separate cause of action. However, in
an action upon such a lease for the recovery of rent, all installments
due and demandable at the time the action is brought should be pleaded,
and failure to do so will constitute a bar to a subsequent action for
the
payment of that rent.[23]
The lessor is not, therefore, barred from claiming installments that
were
not paid thereafter, for the simple reason that that the cause of
action
did not exist at the time. This is especially true in this case
in
light of the admissions by both parties to this case.cralaw:red
Although Civil Case
No. 96-767-44 was filed after the contract had been in force for two
years,
the respondents continued to occupy the leased premises until the
expiration
of the contracted term. Since the obligations of the parties
under
that contract and other supplementary agreements still existed, there
also
existed a relief for any further breach of the rights or obligations
under
the contract. This further breach of rights or obligations cannot
be deemed to have been necessarily included in the issues raised in
Civil
Case No. 96-767-44.cralaw:red
What could be barred
by litis pendentia are the rentals which were due and demandable at the
time of the filing of petitioner’s answer, since they could be pleaded
as counterclaims. It has been held that lis pendens may also be
interposed
even if the claim is set forth by way of a counterclaim, since the
latter
partakes of the nature of a complaint by the defendant against the
plaintiff.
To interpose a cause of action in a counterclaim and again advance the
same in a complaint against the same party would be violative of the
rule
against splitting a cause of action.[24]
However, petitioner’s claims of back rentals after its filing of an
answer
with counterclaim in the first case constituted distinct causes of
action
and cannot be barred by litis pendentia.chanrobles virtual law library
Prudence and efficiency
dictate that the petitioner should have, with the permission of the
court,
filed a supplemental pleading, like a supplemental answer with
additional
counterclaim, in the first case to cover those rentals and claims that
matured after it filed its answer. This would be in accordance
with
Section 6 of Rule 10 and Section 9 of Rule 11 of the 1997 Rules of
Civil
Procedure, which provides:
Sec. 6.
Supplemental
pleadings.- Upon motion of a party the court may, upon reasonable
notice and upon such terms as are just, permit him to serve a
supplemental
pleading setting forth transactions, occurrences or events which have
happened
since the date of the pleading sought to be supplemented. The
adverse
party may plead thereto within ten (10) days from notice of the order
admitting
the supplemental pleadings.
The adverse party
should
file an answer to a supplemental complaint inasmuch as his original
answer
does not ordinarily cover the subsequent events.
Sec. 9.
Counterclaim
or cross-claim arising after answer.- A counterclaim or a
cross-claim
which either matured or was acquired by a party after serving his
pleading
may, with the permission of the court, be presented as a counterclaim
or
a cross-claim by supplemental pleading before judgment.chanrobles virtual law library
Such a counterclaim or
cross-claim is not, however, compulsory.[25]
Thus, a party who fails to interpose a counterclaim although arising
out
of, or is necessarily connected with, the transaction or occurrence of
the plaintiff’s suit but which did not exist or mature at the time said
party files his answer is not thereby barred from interposing such
claim
in a future litigation.[26]
As for the third requisite
of litis pendentia, we likewise find it absent in this case. Again, we
first refer to the findings of the Court of Appeals:
The result of the case
filed by herein petitioner against Intramuros Administration in Civil
Case
No. 96-767-44 at any event is determinative of the rights of Intramuros
Administration to properly institute Civil Case No. 98-90835.cralaw:red
If the Intramuros Administration
[would] be found for breach of its obligations under the same contract
and the reliefs sought by herein petitioners in the first civil case
[would
be]s upheld to offset the expenses she incurred with the payments of
rentals
and utility bills under the contract of lease, the petitioner could not
be held liable for the payment of the accrued rentals as alleged by the
Intramuros Administration.[27]
It should be noted that
the Court of Appeals only considered the applicability of res judicata
in the event the respondents prevailed. However, for the third
requisite
of litis pendentia to apply, there should be res judicata regardless of
which party is successful.chanrobles virtual law library
In this case, it cannot
be said that a judgment in Civil Case No. 96-767-44 would have settled
all matters concerning the rights and obligations of the parties under
the contract. Regardless of which party prevails, the judgment
therein
would not necessarily resolve petitioner’s claim for subsequent back
rentals,
and would not therefore constitute res judicata as to the second
case.
As earlier stated, litis pendentia would operate to bar only those
which
were were due and demandable at the time of the filing of its
answer.
Conversely, litis pendentia would be inapplicable for obligations
subsequently
incurred.cralaw:red
WHEREFORE, IN VIEW OF
ALL THE FOREGOING, judgment is hereby rendered REVERSING and SETTING
ASIDE
the decision of the Court of Appeals in C.A.-G.R. SP No. 63815 insofar
as all causes of action or claims arising after the filing by the
petitioner
of an answer with counterclaim in Civil Case No. 96-767-44 are
concerned.
The Regional Trial Court of Manila, Branch 9, is directed to act on
Civil
Case No. 98-90835 with deliberate dispatch.cralaw:red
Costs against respondents.cralaw:red
SO ORDERED.cralaw:red
Vitug, Ynares-Santiago,
Carpio, and Azcuna, JJ.,
concur.
____________________________
Endnotes:
[1]
Rollo, 45.
[2]
Rollo, 70-72.
[3]
Id., 83.
[4]
Id., 72-73.
[5]
Rollo, 76.
[6]
Id., 80.
[7]
Id.,57.
[8]
Id.,56.
[9]
Rollo 64.
[10]
Id., 87.
[11]
Id., 88.
[12]
Id., 36.chanrobles virtual law library
[13]
Pefianco vs. Moral, G.R. No. 132248, 19 January 2000, 322 SCRA 439, 446.
[14]
Victronics Computers, Inc. vs. RTC, Branch 63, Makati, G.R. No. 104019,
25 January 1993, 217 SCRA 517, 529; Compania General de Tabacos de
Filipinas,
G.R. Nos. 130326 & 137868, 29 November 2001.chanrobles virtual law library
[15]
Peñalosa v. Tuason, 22 Phil 303, 322 (112);Pagsisihan v. Court
of
Appeals, L-34885, 28 January 1980, 95 SCRA 540, 549; Feliciano v. Court
of Appeals, G.R. No. 123293, 5 March 1998, 287 SCRA 61, 68;chanrobles virtual law library
[16]
Victronics Computers, Inc. v. RTC, Branch 63, Makati, supra note 14, at
530.
[17]
See 2 Jose Y. Feria and Maria Concepcion S. Noche, Civil Procedure
Annotated
126 (2001) [hereinafter Feria & Noche]; 1 MANUEL V. Moran, Comments
on the Rules of Court 598-599 (1995).
[18]
1 Feria and Noche 213.chanrobles virtual law library
[19]
See Peñalosa v. Tuason, supra note 15, at 322; Victronics
Computers,
Inc. v. RTC, Branch 63, Makati, supra note 14, at 530.
[20]
G.R. No. 135101, 31 May 2000, 332 SCRA 747.
[21]
Rollo, 42-44.chanrobles virtual law library
[22]
National Marketing Corporation v. Federation of United Namarco
Distributors,
Inc., G.R. No. L-22578, 31
January
1973, 49 SCRA 238, 268.
[23]
Rubio de Larena v. Villanueva, 53 Phil 923, 927-928 (1928).chanrobles virtual law library
[24]
Arceo vs. Oliveros, 219 Phil. 279 (1985).chanrobles virtual law library
[25]
Jose Y. Feria, 1997 Rules of Civil Procedure as Amended 42 (1997).
[26]
National Marketing Corporation vs. Federation of United Namarco
Distributors,
Inc., supra note 22, at 269.
[27]
Rollo, 43. |