Philippine Supreme Court Jurisprudence > Year 2011 > September 2011 Decisions > [G.R. No. 183349 : September 14, 2011] F&E DE CASTRO CORPORATION, ELISA DE CASTRO AND FEDERICO DE CASTRO, PETITIONERS, VS. ERNESTO G. OLASO AND AMPARO M. OLASO, RESPONDENTS. :

Challenged in this petition for review on certiorari is the October 22, 2007 Decision^[[[1] of the Court of Appeals (CA), which annulled and set aside the January 5, 2006 Order of the Regional Trial Court, Branch 93, San Pedro, Laguna (RTC), suspending the proceedings in Civil Case No. SPL-0991 pending the final outcome of Civil Case No. SPL-0356, and its June 10, 2008 Resolution^[[[2] denying petitioners' motion for the reconsideration thereof.

The Facts

Forfom Development Corporation (Forfom) is the registered owner of the 114-hectare Villa Olympia Subdivision in Barrio San Vicente, San Pedro, Laguna.  On August 25, 1985, Forfom entered into a Subdivision Project Agreement with petitioner F&E De Castro Corporation (F&E Corporation) by which agreement the latter undertook to finance the development of Villa Olympia Subdivision into a first class residential subdivision. As consideration for the transaction, it was agreed that F&E Corporation would be entitled to 40% of the developed saleable subdivision lots while the remaining 60% would remain with Forfom.

On August 23, 1989, a Supplemental Agreement was further concluded between the parties whereby F&E Corporation undertook to complete the development of Phase I and I-A of the project within 120 days, in accordance with the original plan and amendments approved by the Housing and Land Use Regulatory Board (HLURB). With the development of said phases still ongoing, Forfom entered into yet another contract with F&E Corporation, this time for the development of Phase II of the same project. As F&E Corporation incurred delays in the completion of said phases of the project, Forfom decided to rescind the Subdivision Project Agreement, the Supplemental Agreement and the contract relative to the development of Phase II of the same subdivision project.

On March 22, 1990, at the instance of F&E Corporation, HLURB ordered Forfom, in a cease and desist order, from further selling the lots/units within the subdivision project until and unless expressly permitted to do so. Pending the investigation of the conflict between the parties, however, Forfom was able to secure an order dated June 6, 1990 from the Enforcement Office of the HLURB directing F&E Corporation to cease and desist from further developing the subject subdivision project. Over the vigorous opposition interposed by F&E Corporation, Forfom eventually took over the development and completion of Phases I, I-A and II of the Villa Olympia Subdivision.

In view of said developments, F&E Corporation demanded payment from Forfom for the expenses it purportedly incurred in the development of the subdivision project, including its 40% share in the price of the 407 developed lots already sold as well as 37 more lots as its share in the remaining 94 lots then unsold. Charging that Forfom refused to heed its demands, F&E Corporation instituted an action for "Delivery of Lot Titles, Sum of Money and Damages" which was docketed as Civil Case No. SPL-0356.

During the pendency of the case, Elisa De Castro, F&E Corporation's Vice-President and Treasurer, requested the Register of Deeds of Laguna for the annotation of an Affidavit of Adverse Claim as well as a notice of lis pendens on the certificates of title covering subdivision lots which were still registered in Forfom's name. Forfom sought the lifting of the notice of lis pendens but it was denied. Similar efforts for the cancellation of said encumbrances were exerted by individual lot buyers, among them respondents Ernesto and Amparo Olaso (Olasos), but they were opposed by F&E Corporation and rejected by the Register of Deeds of Laguna.

On November 18, 2003, as buyers of Lot 10, Block 30, Phase IV of the Villa Olympia Subdivision which had already been registered in their names under Transfer Certificate of Title No. 164843, the Olasos filed a complaint for "Damages, Cancellation of Lis Pendens and Writ of Preliminary Injunction" against F&E Corporation, Elisa De Castro and her husband, Federico De Castro, as well as the Register of Deeds of Calamba, Laguna, which was docketed as Civil Case No. SPL-0991.

F&E Corporation filed a motion to dismiss for non-exhaustion of administrative remedies, failure to implead Forfom as an indispensable party to the controversy, forum shopping, and litis pendentia in view of the pendency of Civil Case No. SPL-0356.

Citing the pendency of Civil Case No. SPL-0356, F&E Corporation moved for the suspension of the proceedings in Civil Case No. SPL-0991 on the ground that the issues in the former case partook the nature of a "prejudicial question" and are determinative of those proffered in the latter.

Decision of the RTC

On January 5, 2006, the RTC issued the assailed order^[3] granting F&E Corporation's motion to suspend proceedings in Civil Case No. SPL-0991. The pertinent portion of its order reads:

The actions involved in this case and Civil Case No. SPL-0356 being civil in nature, it is quite apparent that technically, there is no prejudicial question to speak of. Equally apparent, however, is the intimate correlation between the said two civil actions as indeed, the right of herein plaintiffs to the cancellation of the lis pendens or any lien or encumbrance of any kind annotated in TCT No. T-166472 depends primarily on the resolution of SPL-0356. The Court is of the view that where the rights of plaintiffs in this case cannot be properly determined until the questions raised in Civil Case No. SPL-0356 are settled, the more prudent course is to hold the instant case in abeyance until after a determination of SPL-0356. Indeed, in the interest of good order, the Court can very well suspend on one case pending the final outcome of another case closely interrelated or linked to the first. It cannot be denied that SPL-0356 is closely interrelated or linked to the instant case considering that the outcome in SPL-0356 will definitely affect the proceedings in this case.

Consequently, the Court hereby orders the suspension of the proceedings in the instant case pending the final outcome of Civil Case No. SPL-0356.

SO ORDERED.

Decision of the CA

On October 22, 2007, the CA rendered its decision nullifying and setting aside the assailed order of the RTC. The CA ruled, among others, that the issues litigated in Civil Case No. SPL-0356 had no bearing on Civil Case No. SPL-0991 as to warrant the RTC's suspension of the proceedings in the latter. The CA ruled that, in Civil Case No. SPL-0991, the Olasos sought the cancellation of the notice of lis pendens annotated on their certificate of title over the parcel of land denominated as Lot 10, Block 30, Phase IV of the Villa Olympia Subdivision which they bought from F&E Corporation.

The CA stated that although F&E Corporation earlier sued the subdivision owner, Forfom, the RTC lost sight of the fact that, in addition to the collection of sum of money and damages, the cause of action in Civil Case No. SPL-0356 was for the delivery of the certificates of title over 37 lots situated in Phases I and I-A of the same subdivision project. Therefore, it would appear that the matter of cancellation of the notice of lis pendens on the title of the Olasos can proceed independently of Civil Case No. SPL-0356.

It added that in primarily seeking to collect its 40% share in the sold and unsold lots in Phases I and I-A of the Villa Olympia Subdivision, F&E Corporation clearly did not assert a claim of possession or ownership over the same in Civil Case No. SPL-0356. Said action was clearly a personal action that only incidentally affected the 37 lot titles on which the corresponding notices of lis pendens were annotated. Hence, it would logically follow that any judgment rendered in Civil Case No. 0356 would bind Forfom but not necessarily the Olasos.  The RTC's suspension of the proceedings for the cancellation of the annotation of the notice of lis pendens on the Olasos' title was derogatory to the purpose for which Presidential Decree (P.D.) No. 957, otherwise known as "Subdivision and Condominium Buyers' Protective Decree" had been issued.

F&E Corporation's motion for reconsideration was denied prompting the latter to file this petition anchored on the following

GROUNDS

THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN NOT DISMISSING THE PETITION FILED BY SPOUSES OLASO, CONSIDERING THAT NO LIS PENDENS WAS EVER ANNOTATED ON THEIR TITLE. HENCE, THE PREMISE OF THEIR CAUSE OF ACTION IS NON-EXISTENT.

THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN NOT UPHOLDING THE ORDER DATED JANUARY 5, 2006 OF THE HONORABLE TRIAL JUDGE FRANCISCO PAÑO SUSPENDING CIVIL CASE NO. SPL-0991, WHICH ORDER OF SUSPENSION IS IN ACCORDANCE WITH THE DOCTRINE LAID DOWN BY THE SUPREME COURT IN THE CASE OF QUIAMBAO VS. OSORIO (G.R. NO. 48157, MARCH 16, 1988).

THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN NOT UPHOLDING THE ORDER DATED JANUARY 5, 2006 OF THE RTC BRANCH 93 OF SAN PEDRO, LAGUNA PRESIDED OVER BY HONORABLE JUDGE FRANCISCO PAÑO IN SUSPENDING THE PROCEEDINGS CONSIDERING THAT FORFOM DEVELOPMENT CORPORATION, [WHICH] IS THE PREDECESSOR-IN-INTEREST OF SPOUSES OLASO, [HAS] ACCEPTED AS LAW OF THE CASE THE DENIAL OF ITS MOTION TO LIFT LIS PENDENS IN CIVIL CASE NO. SPL-0356.

In sum, the crucial issue to be resolved in this case is whether or not the CA abused its discretion in ruling against the suspension of the proceedings in Civil Case No. SPL-0991 (action for damages, cancellation of notice of lis pendens and writ of preliminary injunction between the Olasos and F&E Corporation) pending the litigation of Civil Case No. SPL-0356 (action for delivery of titles, sum of money and damages between F&E Corporation and Forfom).

F&E Corporation's Position

F&E Corporation claims that the Olasos in Civil Case No. SPL-0991 did not show any proof that a Notice of Lis Pendens had been annotated on their title. Thus, it prays that the case should be remanded to the CA or RTC to determine factually whether or not a Notice of Lis Pendens has been annotated on the subject title. It further argues that the complaint of the Olasos should have been filed with the HLURB, and not with the courts. It insists that the CA should have dismissed the petition outright for violating the rules on forum shopping and litis pendentia.

The Olasos' Position

The Olasos argue that this petition for review on certiorari filed under Rule 45 of the Revised Rules of Court should be dismissed because it raises questions of jurisdiction, and not questions of law. They likewise allege that F&E Corporation submitted a false affidavit of non-forum shopping because it had knowledge of several other cases where it is involved based on the same facts and issues and that this petition is but a clone of several others previously decided by the Court of Appeals.

The Olasos lament that they would be denied their constitutional right to speedy justice should they be required to wait for the outcome of Civil Case No. SPL-0356 before they could seek relief in Civil Case No. SPL- 0991. They assert that the subject matter or res involved in the two cases are distinct, separate and different considering that F&E Corporation seeks to recover lots located in Phase 1 and 1-A of Forfom's subdivision while their fully paid lot is located in Phase 6. The Olasos add that the parties in Civil Case No. SPL-0356 are F&E Corporation as subdivision developer and Forfom as subdivision owner, while in Civil Case No. SPL-0991 they are the plaintiffs, as fully paid subdivision lot buyers, and F&E Corporation is the defendant, as the annotator of the notice of lis pendens.

Moreover, the Olasos call the attention of the Court to the fact that Presidential Decree No. 957 mandates the subdivision owner and developer to deliver a clean title, free from all liens and encumbrances, to a fully paid lot buyer. Hence, the annotation of a notice of lis pendens in their title must be deleted.

Finally, the Olasos point out that Civil Case No. SPL-0356 was filed on September 1, 1998 and Forfom has not rested its case to this date despite the lapse of several years

The Court's Ruling

The Court finds no merit in the petition.

A stay in the proceedings in Civil Case No. SPL-0991 in order to give way to the proceedings in Civil Case No. SPL-0356 is not judicious as there is no prejudicial question.

First, the subject matter or res involved in Civil Case No. SPL-0991 is different from those in Civil Case No. SPL-0356. F&E Corporation seeks to recover subdivision lots located in Phase 1 and 1-A of Forfom's subdivision while the Olasos seek to recover their fully paid lot in Phase VI of the same subdivision.

Second, the parties in both cases are different. The litigation in Civil Case No. SPL-0356 is between the developer, F&E Corporation, and the subdivision owner, Forfom, while the parties in the proceedings in Civil Case No. SPL-0991 are F&E Corporation, as annotator of the Notice of Lis Pendens and the Olasos, as fully paid lot buyers.

Third, the prayers are different. In Civil Case No. SPL-0991, the Olasos want to cancel the annotation of the Notice of Lis Pendens stamped on their certificate of title over the piece of property described as Lot 10, Block 30, Phase VI of the Villa Olympia Subdivision, which they bought from Forfom. In Civil Case No. SPL-0356, the prayer was for the delivery of the certificates of title over 37 lots situated in Phase 1 and 1-A of the same subdivision and the payment of a sum of money and damages.

For said reasons, the proceedings in Civil Case No. SPL-0991 can continue independently of Civil Case No. SPL-0356.

As the CA aptly observed, F&E Corporation does not assert a claim of possession or ownership over the sold and unsold lots in Phase 1 and 1-A of the Villa Olympia Subdivision when it primarily sought to collect its 40% share in the price of the development of the subdivision. F&E Corporation's action was clearly a personal action that only incidentally affected the 37 lot titles on which the corresponding notices of lis pendens were annotated. Hence, any judgment in Civil Case No. SPL-0356 would only affect F&E Corporation but not necessarily the Olasos. In the same manner, a cancellation of the notice of lis pendens in Civil Case No. SPL- 0991would have no effect on the merits of the case in Civil Case No. SPL-0356.

WHEREFORE, the petition is DENIED.

SO ORDERED.

Velasco, Jr., (Chairperson), Peralta, Abad, and  Sereno,^* JJ., concur.

Endnotes:

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^* Designated as additional member of the Third Division per Special Order No. 1028 dated June 21, 2011.

^[1] Rollo, pp. 32-48. Penned by Associate Justice Rebecca De Guia-Salvador  and concurred in by Associate Justices Magdangal M. De Leon and Ricardo R. Rosario.

^[2] Rollo, pp. 47-48.

^[3] Id. at 71-73.