Juris in the MR

PHILIPPINE NATIONAL BANK,

G.R. No. 181485

Petitioner,
Present:

CORONA, C.J.,
Chairperson,
LEONARDO-DE CASTRO,

- versus -

BERSAMIN,
DEL CASTILLO, and
VILLARAMA, JR., JJ.

GATEWAY
HOLDINGS, INC.,

PROPERTY
Promulgated:

Respondent.

February 15, 2012

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

LEONARDO DE CASTRO, J.:

Submitted for our consideration is a Petition for Review on Certiorari1

under Rule 45 of the Rules of Court, which seeks the reversal of the Decision 2
dated September 28, 2007 and the Resolution3 dated January 24, 2008 of the Court
of Appeals in CA-G.R. CV No. 75108. The appellate courts decision set aside the
Order4 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.

The antecedents of the case are as follows:

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

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On July 27, 2000, herein respondent Gateway Property Holdings, Inc.

(GPHI) filed a Complaint with Application for the Issuance of a Writ of
Preliminary Injunction5 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

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Thereafter, GEC allegedly encountered difficulties in paying its obligations to the

banks, including those owed to PNB. GEC then requested PNB to convert its
long-term 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.

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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
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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 Sale15 executed by the RTC Deputy Sheriff of Cavite, PNB was the sole
bidder and it thereby acquired the properties for a sale bid price of
P168,000,000.00.

Civil Case No. TM-1108 (Annulment of the Foreclosure 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

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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
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Default (as such term is hereinafter defined) and shall be subject to

the consequences herein provided.
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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.
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On December 20, 2001, the RTC ordered the dismissal of Civil Case No. TM1108. 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.

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(Emphasis ours.)

GPHI filed a Motion for Reconsideration20 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 Complaint25 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,

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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
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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. TM-1022 would
not be a bar to the prosecution of the present action.
WHEREFORE, the appeal is GRANTED and the assailed order is
hereby REVERSED and SET ASIDE. The case is ordered REMANDED to the
court a quo for further proceedings.27 (Emphases ours.)

PNB moved for the reconsideration28 of the above decision but the Court of
Appeals denied the same in the assailed Resolution dated January 24, 2008.

PNB, thus, instituted the instant petition.

The Ruling of the 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
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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.
TM-1022 (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
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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. TM-1022 (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:
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(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 Corporation33 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

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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 TM-1108, 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. Gernale35 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.

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Apropos, Carlet v. Court of Appeals37 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
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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
39
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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

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Be that as it may, while the appeal of the dismissal of Civil Case No. TM1108 (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. TM-1022 (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.

WHEREFORE, the petition is GRANTED. The Decision dated September

28, 2007 and the Resolution dated January 24, 2008 of the Court of Appeals in CAG.R. CV No. 75108 are hereby REVERSED and SET 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.
G.R. No. 197937

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April 3, 2013

FILM DEVELOPMENT COUNCIL OF THE PHILIPPINES, Petitioner,

vs.
SM PRIME HOLDINGS, INC., Respondent.
DECISION
VILLARAMA, JR., J.:
Petitioner appeals the Orders1 dated February 21, 2011 and July 25, 2011 of the Regional Trial Court (RTC) of Pasig
City, Branch 166 which granted respondent's motion to dismiss on the ground of litis pendentia.
The factual antecedents:
Respondent SM Prime Holdings, Inc. is the owner and operator of cinema houses at SM Cebu in Cebu City. Under
Republic Act (R.A.) No. 7160 otherwise known as the Local Government Code of 1991, owners, proprietors and
lessees of theaters and cinema houses are subject to amusement tax as provided in Section 140, Book II, Title One,
which reads:
SECTION 140. Amusement Tax(a) The province may levy an amusement tax to be collected from the proprietors, lessees, or operators of theaters,
cinemas, concert halls, circuses, boxing stadia, and other places of amusement at a rate of not more than thirty
percent (30%) of the gross receipts from admission fees.
(b) In the case of theaters or cinemas, the tax shall first be deducted and withheld by their proprietors, lessees, or
operators and paid to the provincial treasurer before the gross receipts are divided between said proprietors, lessees,
or operators and the distributors of the cinematographic films.
xxxx
(d) The sangguniang panlalawigan may prescribe the time, manner, terms and conditions for the payment of tax. In
case of fraud or failure to pay the tax, the sangguniang panlalawigan may impose such surcharges, interest and
penalties as it may deem appropriate.
On June 21, 1993, the Sangguniang Panglunsod of Cebu City approved City Tax Ordinance No. LXIX2 pursuant to
Section 140, in relation to Section 1513 of the Local Government Code of 1991. Chapter XI of said ordinance
provides:
CHAPTER XI
Amusement Tax
SECTION 42. Rate of Tax. There shall be paid to the Office of the City Treasurer by the proprietors, lessees, or
operators of theaters, cinemas, concert halls, circuses, boxing stadia and other places of amusement an amusement
tax at the rate of thirty percent (30%) of the gross receipts from admission fees.
SECTION 43. Manner of Payment. In the case of theaters or cinemas, the tax shall first be deducted and withheld
by their proprietors, lessee, or operators and paid to the city treasurer before the gross receipts are divided between
said proprietors, lessee, operators and the distributors of the cinematographic films.
xxxx

SECTION 45. Time of Payment. The tax shall be due and payable within the first twenty (20) days of the
succeeding month.
On June 7, 2002, Congress approved R.A. No. 91674 which created the Film Development Council of the Philippines,
herein petitioner. Petitioners mandate includes the development and implementation of "an incentive and reward
system for the producers based on merit to encourage the production of quality films."5 The Cinema Evaluation Board
(CEB) was established to review and grade films in accordance with criteria and standards and procedures it shall
formulate subject to the approval of petitioner.
Films reviewed and graded favorably by the CEB are given the following privileges:
Section 13. Privileges of Graded Films. - Films which have obtained an "A" or "B" grading from the Council pursuant
to Sections 11 and 12 of this Act shall be entitled to the following privileges:
a. Amusement tax reward. - A grade "A" or "B" film shall entitle its producer to an incentive equivalent to the
amusement tax imposed and collected on the graded films by cities and municipalities in Metro Manila and other
highly urbanized and independent component cities in the Philippines pursuant to Sections 140 and 151 of Republic
Act No. 7160 at the following rates:
1. For grade "A" films - 100% of the amusement tax collected on such films; and
2. For grade "B" films. - 65% of the amusement tax collected on such films. The remaining thirty-five (35%) shall
accrue to the funds of the Council.
For the purpose of implementing the above incentive system, R.A. No. 9167 mandates the remittance of the
proceeds of the amusement tax collected by the local government units (LGUs) to petitioner.
Section 14. Amusement Tax Deduction and Remittances. - All revenue from the amusement tax on the graded film
which may otherwise accrue to the cities and municipalities in Metropolitan Manila and highly urbanized and
independent component cities in the Philippines pursuant to Section 140 of Republic Act. No. 7160 during the period
the graded film is exhibited, shall be deducted and withheld by the proprietors, operators or lessees of theaters or
cinemas and remitted within thirty (30) days from the termination of the exhibition to the Council which shall reward
the corresponding amusement tax to the producers of the graded film within fifteen (15) days from receipt thereof.
Proprietors, operators and lessees of theaters or cinemas who fail to remit the amusement tax proceeds within the
prescribed period shall be liable to a surcharge equivalent to five percent (5%) of the amount due for each month of
delinquency which shall be paid to the Council. (Emphasis supplied.)
To ensure enforcement of the above provision, the law empowered petitioner not only to impose administrative fines
and penalties but also to cause or initiate criminal or administrative prosecution to the violators.6
On January 27, 2009, petitioner through the Office of the Solicitor General (OSG) sent a demand letter to respondent
for the payment of the sum of P76,836,807.08 representing the amusement tax rewards due to producers of 89 films
graded "A" and "B" which were shown at SM cinemas from September 11, 2003 to November 4, 2008.7
Sometime in May 2009, the City of Cebu filed in the RTC of Cebu City (Cebu City RTC) a petition 8 for declaratory
relief with application for a writ of preliminary injunction against the petitioner, docketed as Civil Case No. CEB-35529.
The City of Cebu sought to declare Section 14 of R.A. No. 9167 as invalid and unconstitutional on grounds that: (1) it
violates the basic policy on local autonomy; (2) it constitutes an undue limitation of the taxing power of LGUs; (3) it
unduly deprives LGUs of the revenue from the amusement tax imposed on theatre owners and operators; and (4) it
amounts to technical malversation since revenue from the collection of amusement taxes that would otherwise accrue
to and form part of the general fund of the LGU concerned would now be directly awarded to a private entity the

producers of graded films bypassing the budget process of the LGU and without the proper appropriation ordinance
from the sanggunian.9
A temporary restraining order (TRO) was issued by the Cebu City RTC enjoining petitioner and its duly constituted
agents from collecting the amusement tax incentive award from the owners, proprietors or lessees of theaters and
cinema houses within the City of Cebu; imposing surcharge on the unpaid amount; filing any case or suit of whatever
kind or nature due to or arising from the failure to deduct, withhold and remit the amusement tax incentives award on
the graded films of petitioner; and initiating administrative or criminal prosecution against the said owners, proprietors
or lessees.10
On October 16, 2009, petitioner sued the respondent for the payment of P76,836,807.08 representing the unpaid
amusement tax incentive reward (with 5% surcharge for each month of delinquency) due to the producers of 89
graded films which were shown at SM Cinemas in Cebu City from September 11, 2003 to November 4, 2008, plus a
5% surcharge for each month of delinquency until fully paid. Said collection suit was docketed as Civil Case No.
72238 of the RTC of Pasig City (Pasig City RTC), Branch 166.11
Petitioner filed a Comment (In Lieu of Answer)12 in Civil Case No. CEB-35529 praying for the dismissal of the petition
filed by the City of Cebu.
Meanwhile, respondent filed a Motion to Dismiss13 in Civil Case No. 72238 arguing that petitioners complaint merits
outright dismissal considering that its claim had already been extinguished by respondents prior payment or
remittance of the subject amusement taxes to the City of Cebu. Respondent called attention to Section 26 of the
Implementing Rules and Regulations (IRR) of R.A. No. 9167 which directed petitioner to execute a Memorandum of
Agreement (MOA) with proprietors, operators and lessees of theaters and cinemas as well as movie producers, on
the systems and procedures to be followed for the collection, remittance and monitoring of the amusement taxes
withheld on graded films. In the apparent absence of such MOA and the "general procedure/process" duly adopted by
all proprietors, operators and lessees of theaters or cinemas, respondent has been withholding such taxes and
remitting the same to the City of Cebu pursuant to Cebu City Tax Ordinance No. LXIX, as shown by the Certification14
dated February 5, 2009 issued by the Office of the Treasurer of Cebu City stating that respondent "had religiously
remitted their monthly amusement taxes due to the Cebu City Government." Respondent pointed out that even the
Cebu City Government recognizes that when it receives the amusement taxes collected or withheld by the owners,
operators and proprietors of theaters and cinema houses on graded films, it is mandated to forward the said taxes to
petitioner.
In its Comment15 on the motion to dismiss, petitioner argued that Section 14 of R.A. No. 9167 is valid and
constitutional. As to respondents defense of prior payment, petitioner asserted that the execution of a MOA with the
proprietors, owners and lessees of theaters and cinema houses is not a condition sine qua non for a valid
enforcement of the provisions of R.A. No. 9167. The IRR cited by respondent cannot prevail over the clear import of
the law on which it is based, and hence respondent cannot invoke it to excuse non-payment of the amusement tax
incentive rewards due to the producers of graded films which should have been remitted to petitioner in accordance
with Section 14 of R.A. No. 9167. Petitioner pointed out that from the time R.A. No. 9167 took effect up to the
present, all the cities and municipalities in Metropolitan Manila and highly urbanized and independent component
cities in the Philippines, with the sole exception of Cebu City and a number of theater establishments therein, have
unanimously acceded to and have faithfully complied with the mandate of said law notwithstanding the absence of a
MOA.
Respondent filed its Reply16 to petitioners Comment maintaining that its remittance of the amusement tax incentive
reward to the City of Cebu extinguished its obligation to petitioner, and arguing that the case should be dismissed on
the additional ground of litis pendentia.
On August 13, 2010, respondent filed in Civil Case No. CEB-35529 a Motion for Leave to File and Admit Attached
Comment-in-Intervention.17 In its Comment-in-Intervention With Interpleader, respondent prayed that the judgment on
the validity and constitutionality of Sections 13 and 14 of R.A. No. 9167 include a pronouncement on its rights and

duties as a consequence of such judgment, as it clearly has a legal interest in the success of either party in the
case.18 On October 21, 2010, the Cebu City RTC granted respondents motion for intervention.19
On February 21, 2011, the Pasig City RTC issued the assailed order granting the motion to dismiss, holding that the
action before the Cebu City RTC (Civil Case No. CEB-35529) is the appropriate vehicle for litigating the issues
between the parties in Civil Case No. 72238. Moreover, said court found all the elements of litis pendentia present
and accordingly dismissed the complaint. Petitioners motion for reconsideration was likewise denied. In a direct
recourse to this Court, petitioner advances the following questions of law:
I
THE RTC, BRANCH 166, OF PASIG CITY UTTERLY IGNORED AND DISREGARDED THE WELL-SETTLED RULE
THAT UNLESS AND UNTIL A SPECIFIC PROVISION OF LAW IS DECLARED INVALID AND UNCONSTITUTIONAL,
THE SAME IS ENTITLED TO OBEDIENCE AND RESPECT.
II
THE RTC, BRANCH 166, OF PASIG CITY ERRED IN DISMISSING THE COMPLAINT IN CIVIL CASE NO. 72238
ON THE GROUND OF LITIS PENDENTIA.20
Petitioner reiterates that every law has in its favor the presumption of constitutionality, and unless and until a specific
provision of law is declared invalid and unconstitutional, the same is valid and binding for all intents and purposes. In
dismissing the complaint, the Pasig City RTC abdicated its solemn duty and jurisdiction to rule on the constitutional
issues raised by respondent in Civil Case No. 72238 upon the mistaken assumption that only the Cebu City RTC in
Civil Case No. CEB-35529 can directly determine the constitutionality of Sections 13 and 14 of R.A. No. 9167 and the
indispensability of a MOA in the remittance to petitioner of amusement tax rewards due to the producers of graded
films. Petitioner further contends that, contrary to the ruling of the Pasig City RTC, the principle of judicial courtesy is
not applicable because a judgment in Civil Case No. CEB-35529 will not result in rendering moot the issues brought
before the Pasig City RTC in Civil Case No. 72238.
The petition has no merit.
We do not subscribe to petitioners view that the dismissal of the complaint in Civil Case No. 72238 amounts to an
abdication of the Pasig City RTCs concurrent jurisdiction to settle constitutional questions involving a statute or its
implementing rules. The 1997 Rules of Civil Procedure, as amended, provides for specific grounds for the dismissal
of any complaint in civil cases including those where the trial court has competence and authority to hear and decide
the issues raised and relief sought. One of these grounds is litis pendentia.
Litis pendentia, as a ground for the dismissal of a civil action, refers to a 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.21 It
is based on the policy against multiplicity of suits22 and authorizes a court to dismiss a case motu proprio.23
Section 1(e), Rule 16 of the 1997 Rules of Civil Procedure, as amended, thus provides:
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: SECTION 1. Grounds.
xxxx
(e) That there is another action pending between the same parties for the same cause.

The requisites in order that an action may be dismissed on the ground of litis pendentia are: (a) the identity of parties,
or at least such as representing the same interest in both actions; (b) the identity of rights asserted and relief prayed
for, the relief being founded on the same facts, and (c) the identity of the two cases such that judgment in one,
regardless of which party is successful, would amount to res judicata in the other.24
Petitioner submits that while there is identity of parties in Civil Case Nos. CEB-35529 and 72238, the second and
third requisites are absent. It points out that in the former, it is not claiming any monetary award but merely prayed for
the dismissal of the declaratory relief petition. Moreover, since the issues raised in the former case are purely legal,
petitioner is not necessarily called upon to present testimonial or documentary evidence to prove factual matters.
Petitioner thus concludes that the judgment in former case would not amount to res judicata in the latter case.
Petitioner further notes that when a judgment dismissing the former case is appealed and the assailed provisions of
R.A. No. 9167 are declared constitutional by this Court, petitioner will not be automatically awarded the unpaid
amusement taxes it is claiming against respondent in Civil Case No. 72238.
Petitioners submissions fail to persuade.
The underlying principle of litis pendentia is the theory that a party is not allowed to vex another more than once
regarding the same subject matter and for the same cause of action. This theory is founded on the public policy that
the same subject matter should not be the subject of controversy in courts more than once, in order that possible
conflicting judgments may be avoided for the sake of the stability of the rights and status of persons,25 and also to
avoid the costs and expenses incident to numerous suits.26
Among the several tests resorted to in ascertaining whether two suits relate to a single or common cause of action
are: (1) whether the same evidence would support and sustain both the first and second causes of action; and (2)
whether the defenses in one case may be used to substantiate the complaint in the other.27
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 sound
practice of including, in a single litigation, the disposition of all issues relating to a cause of action that is before a
court.28
In this case, what petitioner failed to take into account is that the Cebu City RTC allowed respondent to intervene in
Civil Case No. CEB-35529 by way of an interpleader action as to which government entity whether petitioner or the
Cebu City Government should have remitted the amusement taxes it collected from the admission fees of graded
films shown in respondents cinemas in Cebu City. It must be noted that since 1993 when City Tax Ordinance No.
LXIX was enforced, respondent had been faithfully remitting amusement taxes to the City of Cebu and because of the
collection suit filed by petitioner, such defense of prior payment and evidence to prove it which respondent could have
presented at the trial in Civil Case No. 72238 would be the same defense and evidence necessary to sustain
respondents interpleader action in Civil Case No. CEB-35529 before the Cebu City RTC. Also, in both cases,
respondent had raised the matter of conflicting provisions of R.A. No. 9167 and Local Government Code of 1991,
while petitioner pleaded and argued the constitutionality and validity of Sections 13 and 14 of R.A. No. 9167.
The interpleader action of respondent/intervenor, anchored on its defense of prior payment, would be considered by
the Cebu City RTC in its final determination of the parties rights and interests as it resolves the legal questions. The
Pasig City RTC is likewise confronted with the legal and constitutional issues in the collection suit, alongside with
respondents defense of prior payment. It is evident that petitioners claim against the respondent hinges on the
correct interpretation of the conflicting provisions of the Local Government Code of 1991 and R.A. No. 9167. There
could be no doubt that a judgment in either case would constitute res judicata to the other. Sound practice thus
dictates that the common factual and legal issues be resolved in a single proceeding.
We also find no reversible error in the Pasig City RTCs ruling that Civil Case No. CEB-35529 is the appropriate
vehicle for litigating the issues raised by petitioner and respondent in Civil Case No. 72238.

Under the established jurisprudence on litis pendentia, the following considerations predominate in the ascending
order of importance in determining which action should prevail: (1) the date of filing, with preference generally given
to the first action filed to be retained; (2) whether the action sought to be dismissed was filed merely to preempt the
later action or to anticipate its filing and lay the basis for its dismissal; and (3) whether the action is the appropriate
vehicle for litigating the issues between the parties.29
Moreover, considering the predicament of respondent, we also find relevant the criterion of the consideration of the
interest of justice we enunciated in Roa v. Magsaysay.30 In applying this standard, what was asked was which court
would be "in a better position to serve the interests of justice," taking into account (a) the nature of the controversy,
(b) the comparative accessibility of the court to the parties and (c) other similar factors.31
In this case, all things considered, there can be no doubt Civil Case No. CEB-35529 is the appropriate vehicle to
determine the rights of petitioner and respondent. In that declaratory relief case instituted by the City of Cebu, to
which respondent had been remitting the subject amusement taxes being claimed by petitioner in Civil Case No.
72238, the issue of validity or constitutionality of Sections 13 and 14 of R.A. No. 9167 was directly pleaded and
argued between petitioner and the City of Cebu, with subsequent inclusion of respondent as intervenor. Moreover, the
presence of City of Cebu as party plaintiff would afford proper relief to respondent in the event the Cebu City R TC
renders judgment sustaining the validity of the said provisions. Respondent had vigorously asserted in both courts
that it had remitted the amusement taxes in good faith to the City of Cebu which had threatened sanctions for noncompliance with City Tax Ordinance No. LXIX, and that it should not be made to pay once again the same taxes to
petitioner. As equally dire consequences for non-compliance with the demand for payment having been made by
petitioner, such defense of good faith is best ventilated in Civil Case No. CEB-35529 where the City of Cebu is a
party.
Petitioner's insistence that the Pasig City RTC proceed with trial notwithstanding the pendency of Civil Case No.
CEB-35529 before the Cebu City RTC is thus untenable. To allow the parties to litigate the same issues upon the
same evidence and defenses will only defeat the public policy reasons behind litis pendentia, which, like the rule on
forum shopping, aims to prevent the unnecessary burdening of our courts and undue taxing of the manpower and
financial resources of the judiciary; to avoid the situation where co-equal courts issue conflicting decisions over the
same cause; and to preclude one party from harassing the other party through the filing of an unnecessary or
vexatious suit.32
WHEREFORE, the petition for review on certiorari is DENIED. The Orders dated February 21, 2011 and July 25,
2011 of the Regional Trial Court of Pasig City, Branch 166 are hereby AFFIRMED.

EDGARDO V. GUEVARA,
Petitioner,

G.R. No. 159786

Present:

PANGANIBAN, C.J.
Chairperson,
YNARES-SANTIAGO,

- versus -

AUSTRIA-MARTINEZ,
CALLEJO, SR., and
CHICO-NAZARIO, JJ.

Promulgated:
BPI
CORPORATION,

SECURITIES
August 15, 2006

Respondent.

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CHICO-NAZARIO, J.:

Before the Court is a Petition for Review on Certiorari under Rule 45 of the
Rules of Court, as amended, seeking the reversal of the Decision of the Court of

Appeals in CA-G.R. SP No. 53379, dated 21 March 2003, 45 dismissing Civil Case No.
95-624, filed by herein petitioner, Edgardo V. Guevara, against herein respondent,
BPI Securities Corporation. Likewise assailed is the Resolution 46 dated 26 August
2003 of the Court of Appeals denying Guevaras Motion for Reconsideration of the
foregoing decision.

Culled from the records of the case are the following factual and procedural
antecedents:

Guevara was hired by Ayala Securities Corporation in 1958.

He was later detailed to the Philippine Investment Corporation
(PHILSEC, later named as BPI Securities Corporation), where he
acted as its president from 1 September 1980 to 31 December
1983. He thereafter served as vice-president of Ayala Corporation
until his voluntary retirement on 31 August 1997. 47

Meanwhile, a certain Ventura O. Ducat obtained separate loans

from Ayala International Finance Limited (AIFL) and PHILSEC in the
amount of US$2,500,000.0048 as of 15 January 1983. The same
45
46
47
48

was

secured

by

shares

of

stocks

in

different

Philippine

corporations, with market value of P14,088,995.00.

To satisfy the indebtedness, Ducat made arrangements with

1488, Inc. (1488), a United States (U.S.)-based corporation,
through its president, Drago Daic, to transfer by way of dacion en
pago, a 72.21-acre tract of land in Harris County, Texas, U.S.A.
(subject property), in favor of PHILSEC and AIFL. Ducat, in turn,
was to convey to 1488 the same shares of stocks used as security
for his loans with PHILSEC and AIFL. The latter, however, had no
desire to purchase the land; but they were willing to extend a loan
to Athona Holdings, N.V. (ATHONA), a corporation based in
Netherlands, with the subject property as mortgage. 49

In an agreement50 executed in Makati City on 27 January

1983 (the Agreement), 1488 sold the subject property to ATHONA
at US$2,807,209.02. PHILSEC and AIFL loaned US$2,500,000.00
to ATHONA to subsidize the purchase price of the subject property.
The balance of US$307,209.02 was to be paid by means of a
promissory

note

Subsequently,
49
50

executed

PHILSEC

and

by

ATHONA

AIFL

in

favor

of

1488.

released

Ducat

from

his

indebtedness and delivered to 1488 all the shares of stocks in

their possession used before by Ducat as security. 51

Sometime thereafter, ATHONA failed to pay the interest on

the balance of US$307,209.02, hence, the entire amount covered
by

the

promissory

note

became

due

and

demandable.

Consequently, 1488 filed a collection suit in the U.S. against

PHILSEC, AIFL and ATHONA for payment of the balance of
US$307,209.02, and damages for breach of contract and for fraud
in misrepresenting the marketability of the shares of stocks
delivered to 1488 under the Agreement. 52 The case was originally
filed with the U.S. District Court of Texas, 165th Judicial District,
where it was docketed as Civil Case No. 85-57746, but the venue
of the action was later transferred to the U.S. District Court for the
Southern District of Texas as Civil Case No. H-86-440. ATHONA
filed an Answer with counterclaim, impleading Guevara as
counter-defendant for allegedly conspiring with Daic, Ducat and
the appraiser, Michael Craig, in selling the subject property at an
overvalued price.53

51
52
53

While the case was pending before the U.S. courts, PHILSEC, AIFL
and ATHONA filed, on 10 April 1987, a civil suit against 1488,
Daic, Ducat and Craig for the annulment of the Agreement due to
fraud. The case was docketed as Civil Case No. 16563 at the
Regional Trial Court (RTC) of Makati City, Branch 61.

They

demanded payment of Ducats indebtedness of US$2,500,000.00

and for the other defendants to pay the amount of P8,000,000.00
representing the value of stocks liquidated and remitted to 1488,
plus litigation expenses and attorneys fees. Ducat filed a Motion
to Dismiss on the grounds of litis pendentia and forum non
conveniens54 due to the pendency of Civil Action No. H-86-440
before the U.S. District Court.

The trial court, on 26 January 1988, dismissed the Complaint

against Ducat on the ground of forum non conveniens and
likewise dismissed, on 9 March 1988, the case against 1488 and
Daic based on litis pendentia, forum non conveniens and lack of
jurisdiction over the person of the defendants. Plaintiffs elevated
the case to the Court of Appeals, docketed as CA-G.R. CV No.
26761.55 The Court of Appeals, in 6 January 1992, affirmed the
decision of the lower court dismissing the case. Consequently, a
Petition for Review on Certiorari was filed by the aggrieved parties
54
55

before

this

Court

in

G.R.

No.

103493

entitled,

Philsec

Investment Corporation v. Court of Appeals.56

On 13 March 1990, the U.S. District Court ruled in favor of

1488, and motu proprio dismissed the counter-complaint against
Guevara on the ground that he was impleaded simply to humiliate
and embarrass him.57 The U.S. District Court also imposed jointly
and

severally

against

PHILSEC

and

AIFL

penalty

of

US$49,450.00 in favor of Guevara in accordance with Rule 11 of

the Federal Rules of Court. 58 PHILSEC and AIFL elevated the
matter to the U.S. Court of Appeals for the Fifth Circuit which
remanded the case to the U.S. District Court for further
proceedings, but finally affirmed, on 30 December 1991, the order
of the U.S. District Court imposing the penalty, and the same
became final and executory.59

On 8 April 1992, PHILSEC, AIFL and ATHONA, filed with the Makati
City RTC, Branch 61, an amended Complaint in Civil Case No.
16563, impleading Guevara as one of the party-defendants. The
56
57
58
59

plaintiff corporations alleged that Guevara together with Ducat

and Daic conspired and agreed to overvalue the subject property
in excess of 400 percent of its actual price. To induce the sale of
the subject property at an overvalued amount, Guevara made
representations to the plaintiff corporations that the appraisal was
obtained from a reliable and independent source, and the
plaintiffs,

relying

on

Guevaras

loyalty

and

representation,

accepted the appraisal and entered into the Agreement. It was

later found out, however, that the appraiser, Craig, was neither an
independent nor a reliable appraiser but rather a close associate
of Daic, whose interest Guevara knew were adverse to that of the
plaintiff corporations.60

A Motion to Dismiss the amended Complaint was later filed

by 1488, Ducat and Daic. The Resolution of the said Motion was,
however, deferred pending the resolution by the Supreme Court
of G.R. No. 10349361 which involved Ducats earlier Motion to
Dismiss the original complaint in Civil Case No. 16563.

60
61

On 22 April 1992, while G.R. No. 103493 62 was still pending

with this Court, 1488 and Daic filed a Petition for the enforcement
of the judgment of the U.S. District Court with the Makati City RTC,
Branch 134, docketed as Civil Case No. 92-1070.63

On 28 May 1992, Guevara filed a case against BPI Securities

Corp. (PHILSEC was already renamed), for enforcement of the
judgment of the U.S. District Court ordering PHILSEC and AIFL to
pay him US$49,450.00 as penalty in accordance with Rule 11 of
the Federal Rules of Court. The case was docketed as Civil Case
No. 92-1445 with the Makati City RTC, Branch 137.64

On 24 April 1995, Guevara filed another Complaint against

BPI Securities Corp. seeking the recovery of actual, moral and
exemplary damages, and attorneys fees in the aggregate amount
of P11,900,000.00 as indemnity for the expenses and annoyance
of litigation, arising from his being wrongly impleaded as a partydefendant in the U.S. case. Guevara banked on the ruling of the
U.S. District Court that the counter-complaint filed by PHILSEC,

62
63
64

AIFL and ATHONA was frivolous and dilatory. 65

This case was

docketed as Civil Case No. 95-624 with the Makati City RTC,
Branch 135.66

A Motion to Dismiss was filed by BPI Securities

Corp. alleging forum shopping for Civil Case No. 16563 was still
pending before the Makati City RTC, Branch 61.67 The Motion was
denied by the trial court in its Order dated 17 November 1995 68
and the Motion for Reconsideration was likewise denied by the
same court on 22 February 1996.69 On certiorari under Rule 65 to
the Court of Appeals, docketed as CA-G.R. SP No. 40303, the
appellate court affirmed, in a Decision dated 26
January 1998, the ruling of the trial court. 70 The said Decision
thereafter became final and executory.

Subsequently, BPI Securities Corp. filed another Motion to

Dismiss Civil Case No. 95-624 based on prescription. It alleged
that the summons from the U.S. District Court was received by
65
66
67
68
69
70

Guevara on 22 September 1988.

Although he learned of the

tortuous act when the summons was served on him in 1988,

Guevara filed the case only on 24 April 1995, so the case had
already prescribed.

In the meantime, G.R. No. 103493,71 which involved Ducats

Motion to Dismiss the original complaint in Civil Case No. 16563,
was finally resolved. In a Decision dated 19 June 1997, 72 this Court
reversed the Court of Appeals and remanded the case to the trial
court for continuance and consolidation of Civil Case No. 16563
with Civil Case No. 92-1070, then pending with the Makati City
RTC, Branch 134. In the same Decision, this Court also allowed
Civil Case No. 92-1445, pending with the Makati City RTC, Branch
137, to proceed as the judgment sought to be enforced therein is
severable from the main judgment under consideration in Civil
Case No. 16563.

Consequently, in a Resolution of the Makati City RTC, Branch

134, dated 1 July 1998, Civil Cases No. 16563 and No. 92-1070
were consolidated and the pending Motion to Dismiss the

71
72

amended Complaint in Civil Case No. 16563 filed by 1488, Daic

and Ducat was denied.

73

As to the second Motion to Dismiss filed by BPI Securities Corp. in

Civil Case No. 95-624, the Makati RTC, Branch 135, found the
action as having prescribed and granted the said Motion in an
Order dated 12 October
1998.74 In a Motion for Reconsideration of the foregoing order filed
by Guevara, he argued that the prescriptive period of the action
should be counted from the date of finality of the Decision of the
U.S. District Court, following the ruling in Drilon v. Court of
Appeals.75 Acting favorably on Guevaras Motion, the trial court in
an Order dated 18 February 1999, 76 set aside its earlier Order
dated 12 October 1998 and calendared Civil Case No. 95-624 for
pre-trial.77

73
74
75
76
77

BPI Securities Corp. filed a Motion for Reconsideration of the

Order, dated 18 February 1999, of the Makati RTC, Branch 135,
again raising the arguments of res judicata and forum shopping.
The said Motion was denied by the trial court in another Order
dated 3 June 1999.78 Thus, BPI Securities Corp. filed before the
Court of Appeals a Petition for Certiorari under Rule 65, with a
prayer for temporary restraining order, docketed as CA-G.R. SP
No. 53379.79

In its Petition, BPI Securities Corp. not only

questioned the propriety of the ruling of the trial court on

prescription, but again raised the issue of litis pendentia and
forum shopping. The legal issues that BPI Securities Corp.
submitted for the resolution of the Court of Appeals were as
follows:

4.01. Whether or not the pendency of the [Civil Case No. 95-624]
before respondent court is barred by the principles of litis pendentia or
forum shopping due to the pendency of the [Civil Case No. 16563] and
the [Civil Case No. 92-1445]?

4.02. Whether or not the [Civil Case No. 95-624] is barred by

prescription? Stated in a slightly different matter the issue is: Whether
or not the public respondent erred in ruling that the complaint in the
[Civil Case No. 95-624] was for malicious prosecution (not quasidelict as contended by petitioner) so that the prescriptive period for
such action started to run only after the judgment in the Houston Case
became final (and because of this the action was filed on a timely
basis)?
78
79

BPI Securities Corp. submitted that Civil Case. No. 16563 bars the
filing of Civil Case No. 95-624 under the principle of litis
pendentia.

It is noteworthy, BPI Securities Corp. asserted, that

the consolidated Cases No. 16563 and No. 90-1070 would

determine whether the judgment rendered by the U.S. District
Court is enforceable in the Philippines. Since the allegations in
Civil Case No. 95-624 are anchored on the U.S. Court Decision,
then consequently, the pendency of the consolidated Civil Cases
No. 16563 and No. 90-1070 bars Civil Case No. 95-624. 80
Furthermore, BPI Securities Corp. reiterated that the continuance
of Civil Case No. 95-624 was proscribed by the principle of forum
shopping as Guevaras counterclaim in Civil Case No. 16563
involved the very same issues he pleaded in Civil Case No. 95624.

Although the Court of Appeals, in its Decision dated 21

March 2003, denied the Petition of BPI Securities Corp. in CA-G.R.
SP No. 53379, it still ruled to dismiss Guevaras claim for damages
in Civil Case No. 95-624. The dispositive portion of the said
Decision reads:

80

WHEREFORE, the instant petition is hereby denied and the

assailed Order of the Regional Trial Court of Makati City, Branch 135, is
hereby affirmed with the modification that the claim for damages due
to the suit filed against Guevara in the United States is DISMISSED due
to the existence of another action pending between the same parties
involving the same cause of action in Civil Case No. 92-1445. Costs
against petitioner.81

Aggrieved by the Decision of the Court of Appeals in CA-G.R. SP

No. 53379, Guevara filed a partial motion for reconsideration and
in a Resolution,82 issued on 26 August 2003, the Court of Appeals
denied his Motion.

Guevara, thus, filed before this Court the instant Petition for
Review on Certiorari

83

under Rule 45 of the Rules of Court, based

on the following assignment of errors:

I.

THE COURT OF APPEALS ERRED IN REFUSING TO DISMISS THE

PETITION CONSIDERING THAT THE ISSUE RAISED THEREIN WAS
ALREADY PASSED UPON IN CA-G.R. NO. 40303
81
82
83

II.

THE COURT OF APPEALS ERRED IN RULING THAT CIVIL CASE NO.

624 (SIC) SHOULD BE DISMISSED BASED ON THE GROUND OF LITIS
PENDENTIA.

On one hand, petitioner Guevara argues that the Court of

Appeals should have dismissed the Petition of BPI Securities Corp.
in CA-G.R. SP No. 53379 as the issue of litis pendentia and forum
shopping was already passed upon by the same court in CA-G.R.
SP No. 40303.

In its Decision in the latter case, the Court of

Appeals made the following pronouncements:

8. And, finally, Civil Case 95-624 is not similar to Civil Case

16563, and forum-shopping does not exist, in line with International
Container Terminal Services, Inc. vs. Court of Appeals, 249 SCRA 389,
holding that forum-shopping exists when both actions involve the same
parties, the same subject matter, the same essential facts and
circumstances, and the same identical issues. Civil Case 16563 and
Civil Case 95-264 do not have the same parties as Edgardo V. Guevara
is not a party in Civil Case 16563 and that the two cases do not have
the same facts nor do they raise the same identical causes of action. 84

84

According to Guevara, since the Court of Appeals had ruled

before on the issue of litis pendentia and forum shopping in a
decision that had become final and executory, the judgment
therein constitutes the law of the case between the parties. Also,
the cause of action in Civil Case No. 95-624 is not the same as
that in Civil Case No. 92-1445 and therefore, there can be no litis
pendentia. Civil Case No. 95-624 involves claims for actual, moral
and exemplary damages arising out of the malicious inclusion by
BPI Securities Corp. of Guevara in a counter-complaint filed in the
U.S. District Court; while Civil Case No. 92-1445 involves the
enforcement of a Decision of the U.S. District Court awarding in
his favor penalty in accordance with Rule 11 of the Federal Rules
of Procedure.

The former is based on the Civil Code of the

Philippines, while the latter one is based on a U.S. decision. The

causes of action of these two cases are thus separate and distinct
from each other.85

On the other hand, respondent BPI Securities Corp., in its

Comment,86 contends that when the Makati City RTC, Branch 61,
admitted the amended Complaint in Civil Case No. 16563, which
impleaded Guevara as an additional defendant, and Guevara filed
his Answer thereto, there became legal ground for BPI Securities
Corp. to raise the issue of litis pendentia in Civil Case No. 95-624.
85
86

The ruling in CA-G.R. SP No. 40303 could not be applied as the

law of the case herein because when that case was decided,
Guevara was not yet a party in Civil Case No. 16563. The ruling in
CA-G.R. SP No. 40303,87 thus, relied on a different factual premise
from the case presently before this Court. 88

BPI Securities Corp. further argues that the filing by Guevara

of Civil Case No. 92-1445 also barred him from filing Civil Case No.
95-624, again on the principle of litis pendentia.89 Both cases are
based on the single fact that Guevara was wrongly impleaded as
a defendant in the U.S. case.

BPI also argues that Guevaras

claim had already prescribed, having been filed only on 24 April

1995, almost seven years after he learned of the tortuous act. 90

In sum, the issues raised before this Court for resolution are
as follows: (1) whether or not the final and executory ruling in CAG.R. SP No. 40303 serves as the law of the case herein; (b)
whether or not Civil Case No. 95-624 should be dismissed on the
87
88
89
90

ground of litis pendentia; and (c) whether or not Guevaras cause

of action in Civil Case No. 95-624 has already prescribed.

We rule to dismiss the Petition.

Petitioner Guevara argues that the decision of the Court of

Appeals in CA-G.R. SP No. 40303 constitutes the law of the case
between the parties herein and cannot anymore be altered by any
court as the same had already attained finality. 91

Let it be

recalled that in the said decision, the Court of Appeals ruled that
the elements of litis pendentia are not present in Civil Case No.
16563 and Civil Case No. 95-624. Therefore, the two cases can
co-exist.

It is a basic legal principle that whatever is once irrevocably

established as the controlling legal rule or decision between the
same parties in the case continues to be the law of the case,
whether correct on general principles or not, so long as the
facts on which such decision was predicated continue to
be the facts of the case before the court.
91
92

92

This principle

generally finds application in cases where an appellate court

passes on a question and remands the case to the lower court for
further proceedings. The question there settled becomes the law
of the case upon subsequent appeal. Consequently, the court
reviewing the succeeding appeal will not re-litigate the case but
instead apply the ruling in the previous appeal. This enables the
appellate court to perform its duties satisfactorily and efficiently
which would be impossible if a question, once considered and
decided by it, were to be litigated anew in the same case and
upon any and subsequent appeal.93

Clearly, the principle of law of the case cannot be applied

herein. The facts from which the ruling in CA-G.R. SP No. 40303
was predicated no longer holds true in this case.

When Civil Case No. 95-624 was filed by Guevara on 24 April

1995, respondent BPI Securities Corp.s amended Complaint,
impleading him as party-defendant in Civil Case No. 16563, was
not yet acted upon by the trial court as proceedings therein were
suspended pending resolution by this Court of G.R. No. 103493
involving the Motion to Dismiss the original complaint in Civil
Case No. 16563. When BPI Securities Corp. then filed its first
Motion to Dismiss Civil Case No. 95-624, on 2 June 1995, alleging
93

the pendency of Civil Case No. 16563, Guevara was not yet
impleaded as party-defendant in the latter case. Similarly, when
the trial court denied BPI Securities Corp.s first Motion to Dismiss
Civil Case No. 95-624 and its resolution to do so was assailed on
certiorari before the Court of Appeals in CA-G.R. SP No. 40303,
Guevara was still not yet a party in Civil Case No. 16563.

Guevara only became a party in Civil Case No. 16563 on 1

July 1998 when Civil Cases No. 16563 and No. 92-1070 were
consolidated by the Makati City RTC, Branch 134 (pursuant
to this courts ruling in G.R. No. 103493), and the Motion to
Dismiss the amended Complaint was denied.

When respondent BPI Securities Corp. therefore filed its second

Motion to Dismiss Civil Case No. 95-624 based again on litis
pendentia, Guevara has already become a party in Civil Case No.
16563. With this significant change in the factual scenario, the
ruling in CA-G.R. SP No. 40303 cannot serve as the law of the case
in CA-G.R. SP No. 53379, subject of the instant appeal.

Will the pendency then of Civil Case No. 16563, where

Guevara is now one of the defendants, bar him from filing Civil
Case No. 95-624?

We rule in the negative.

There 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. 94

Civil Case No. 16563 is for the annulment of the 27 January

1983 Agreement of PHILSEC, AIFL, ATHONA, 1488, Daic and
Ducat. The complainants therein (which includes BPI Securities
Corp.) also demanded for the payment of Ducats indebtedness of
US$2,500,000.00 and for the other defendants to pay the amount
of P8,000,000.00 representing the value of stocks liquidated and
remitted to 1488, plus litigation expenses and attorneys fees.
Meanwhile, Civil Case No. 95-624 is for Guevaras recovery of
actual, moral and exemplary damages and attorneys fees in the
aggregate amount of P11,900,000.00 as indemnity for the
94

expenses and annoyance of litigation, arising from Guevaras

being maliciously and wrongly impleaded as a party-defendant in
the U.S. case.

Consequently, Guevaras compulsory counterclaim in Civil

Case No. 16563 could not be the same as his cause of action in
Civil Case No. 95-624. The wrongful acts committed by the BPI
Securities Corp. which gave rise to Guevaras cause of action
were different in the two cases. A compulsory counterclaim is one
which arises out of or is connected with the transaction or
occurrence constituting the subject matter of the opposing partys
claim.95

Guevaras compulsory counterclaim in Civil Case No.

16563 arises out of his being impleaded in the annulment of

contract case. In comparison, Guevaras cause of action in Civil
Case

No.

95-624

springs

from

his

being

maliciously

erroneously impleaded as a defendant in the U.S. case.

and
There

being no similarity of interests, nor identity of rights asserted or

reliefs prayed for by Guevara in his compulsory counterclaim in
Civil Case No. 16563 and in his cause of action in Civil Case No.
95-624, litis pendentia cannot effectively preclude him from filing
the latter case.

95

Although the pendency of Civil Case No. 16563 does not

constitute litis pendentia and cannot preclude the filing by
Guevara of Civil Case No. 95-624; nevertheless, this Court states
and so rules that Civil Case No. 95-624 is barred by Civil Case No.
92-1445 on the ground of litis pendentia.

Guevara tried to convince this Court that the causes of

action in Civil Cases No. 92-1445 and 95-624 are different and
distinct from each other.

While the former was for the

enforcement of a foreign judgment, the latter was a suit purely for

damages. A perusal, however, of the records reveals that the
award by the U.S. District Court based on Rule 11 of the Federal
Rules on Civil Procedure sought to be enforced in the Philippine
courts by Guevara in Civil Case No. 92-1445, was founded on the
same set of facts that were alleged as the basis for the prayer for
damages in Civil Case No. 95-624. They are both founded on the
U.S. Courts determination that BPI Securities Corp. erroneously
and maliciously impleaded Guevara as a party-defendant in the
U.S. case.

A reading of the allegations of the respective complaints in

both actions shows that the asserted rights are founded on an
identical set of facts which gave rise to one basic issue in both
cases, that is, whether or not Guevara may recover damages out

of his involvement in U.S. case.

In Civil Case No. 92-1445, Guevara averred in his Complaint

that the judgment of the U.S. court based on his erroneous and
malicious prosecution in the U.S. case be enforced and prayed
that damages be awarded in his favor, in this wise:

3. Prior to the said merger on December 14, 1987, Philsec was

one of the defendants in Civil Action No. H-86-440 entitled 1488, Inc.
vs. Philsec Investment Corporation, Ayala International Finance Limited
and Athona Holdings, Inc. in the United States District Court of Texas,
Houston Division in the U.S.A. On August 29, 1988, Philsec impleaded
plaintiff, a resident of the Philippines, by filing together with Ayala
International, a counter-complaint in said Action No. H-86-440 against
plaintiff and other persons, alleging that plaintiff and the other persons
had committed improper or illegal acts, including conspiracy in
overvaluing the land involved in Action No. H-86-440 in order to induce
Athona Holdings, Inc. to purchase the land to its damage and
prejudice.

4. Plaintiff filed his Answer in the above case, specifically

denying all the allegations in the counter-complaint, assailing them as
deliberate falsehoods, and stating the true facts. Plaintiff further
alleged that Philsec clearly had no cause of action against him as it
should have been only Athona Holdings, Inc., which purchased the
land, that could properly allege the cause of action against him.

5. After due hearing before the District Court, the said Court
dropped the plaintiff as counter-defendant and dismissed the
case against him. Plaintiff then made an oral motion in open
court and filed the proper affidavit of expenses under Rule 11
of the Federal Rules of Civil Procedure. After some thirty (30)
days from the date of the oral motion by plaintiff, the said

court imposed sanction on Philsec Investment Corporation

a.k.a BPI Securities Corporation and Ayala International
Finance Ltd. in its Order dated March 13, 1990, ordering the
latter to pay herein plaintiff, jointly and severally, the sum of
US$49,450 as sanction or penalty. A photocopy of a certified true
copy of the said Order is hereto attached and made an integral part
hereof as Annex A.

6. Rule 11 of the US Federal Rules of Civil Procedure provides:

Rule 11. Signing of Pleadings, Motions and Other Papers,

Sanctions:

Every pleading, motion, and other paper of a party represented

by an attorney shall be signed by at least one attorney of record in the
attorneys individual name, whose address shall be stated. A party
who is not represented by an attorney shall sign the partys pleading,
motion or other paper and state the partys address. Except when
otherwise specifically provided by rule or statute, pleadings need not
be verified or accompanied by affidavit. The rule in equity that the
averments of an answer under oath must be overcome by the
testimony of two witnesses or of one witness sustained by
corroborating circumstances is abolished. The signature of an attorney
or party, constitutes a certificate by the signer that the signer has read
the pleadings, motion, or other paper; that to the best of the signers
knowledge, information, and belief formed after reasonable inquiry it is
well grounded in fact and is warranted by existing law or a good faith
argument for the extension, modification, or reversal of existing law,
and that it is not interposed for any improper purpose, such as to
harass or to cause unnecessary delay or needless increase in the cost
of litigation. If a pleading, motion, or other paper is not signed, it shall
be stricken unless it is signed promptly after the omission is called to
the attention of the pleader or movant. If a pleading, motion or other
paper is signed in violation of this rule, the court, upon motion or upon
its own initiative, shall impose upon the person who signed it, a
represented party or both, an appropriate sanction, which may include
an order to pay to the other party or parties the amount of the
reasonable expenses incurred because of the filing of the pleading,
motion or other paper, including a reasonable attorneys fee.

7. Philsec/BPI Securities Corporation appealed said Order of

March 13, 1990 (Annex A) to the United States Court of Appeals for
the Fifth Circuit, which after due hearing remanded the issue to the
District Court to give the latter another opportunity to respond to
herein plaintiffs motion for the Rule 11 sanction.

8. After proper proceedings with due notice by the District Court,

where Philsec/BPI Securities Corporation was given full opportunity to
be heard and submit its brief, as directed by the Court of Appeals, the
District Court issued an Order dated December 30, 1991 concluding
that the judgment previously entered was appropriate and reinstating
the judgment of March 13, 1990. A photocopy of a certified true copy
of the said Order is hereto attached and made an integral part hereof
as Annex B.

9. Philsec/BPI Securities Corporation did not appeal the said

Order (Annex B) dated December 30, 1991, and the same has
become final and executory.

10. Plaintiff made written demands upon defendant for

the latter to comply with the above judgment by paying to the
plaintiff the amount of US$49,450.00 or its equivalent in
Philippine pesos. However, defendant failed and refused and
continues to fail and refuse to pay said amount without any
valid reason whatsoever. A photocopy of a demand letter sent
by the plaintiff is attached hereto and made an integral part
hereof as Annex C.

11. Plaintiff is therefore constrained to file the instant

case thru counsel and to incur attorneys fees and expenses of
litigation of some P250,000.00. That for its refusal to pay its
just and clear obligation, defendant should be ordered to pay
plaintiff exemplary damages of P200,000.0096 (Emphases
supplied.)
96

In the same vein, Guevara, in Civil Case No. 95-624 claimed

actual, moral and exemplary damages as indemnity on the
account of his frivolous and malicious inclusion as a partydefendant in the U.S. case, and particularly asserted the following
causes of action:

14.
Plaintiff repleads and incorporates herein all the foregoing
allegations.

15.
Because of the malicious filing of the baseless
counter-complaint in Houston-Texas by Philsec, plaintiff was
compelled to spend time, effort and money to prepare for and
pursue his defense.

16. In April, 1989, plaintiff had to go to Honolulu, Hawaii to give

his deposition in connection with the Houston court case and his wife
had to accompany him because he was essentially hypertensive and
he found it risky to travel alone.

17. Plaintiff then proceeded with his wife to Houston, Texas to

examine the records of the court case and meet with people who could
help him prepare for his defense. And because he was hypersensitive
and very much depressed because of the case, he underwent a
medical check-up, he was found to have a mass in his pancreas which
forced him to undergo an emergency operation and hospitalized for
almost one month.

18. Thereafter, plaintiff was compelled to go to Houston, Texas

to protect his interest and handle his defense in the court case, which
was heard continuously from January 29 to February 14, 1990. In his

trip, his wife and son had to accompany him because he was still weak
and had not fully recovered from his operation.

19. For all his above travel to Hawaii and Houston, Texas and for
preparing his case and handling his defense, plaintiff incurred
expenses of at least P300,000.00, which defendant should reimburse
to him.

20. Plaintiff repleads and incorporates herein all the above

allegations.

21. Plaintiff is a member of the Philippine Bar, he has a good

reputation in the community, and is respected by his colleagues as a
lawyer and businessman.

22. Plaintiff served Ayala Corporation and its subsidiaries,

including defendant, from 1958 until his voluntarily retirement on
August 30, 1987. He served the Ayala Group faithfully and well; and as
above alleged, for his satisfactory performance in the settlement of the
account of Ventura Ducat, he was give[n] a letter commendation by
the chairman of the Ayala Group, Mr. Enrique Zobel.

23. After his retirement from Ayala Corporation, he organized

Intra-Invest Securities, Inc., which is engaged in stock brokerage. He
became a member and Governor of the Manila Stock Exchange, and he
enjoys a high reputation in the stock brokerage industry.

24. Despite his physical weakness, as a result of his operation

(which were known by defendant and its lawyer) he was forced to
travel to Hawaii and Texas because of the court case there, and was
exposed to the unaccustomed wet and cold winter weather in Texas.
These could have been avoided if defendant was not included as a
defendant in the counter-complaint or had plaintiff dropped the case
after the taking of plaintiffs deposition and that of Mr. Gomez in
Honolulu, Hawaii.

25. In filing and presenting its counter-complaint in Houston,

Texas against plaintiff and including him in Civil Case 16563 (RTCMakati) as above alleged, and in forcing him to defend himself and
protect his rights and interest, defendant caused plaintiff and his
family great embarrassment, mental and physical suffering, anxiety
and anguish, besmirched reputation, wounded feelings, moral shock
and social humiliation, for which defendant should pay him moral
damages of at least P10,000,000.00.

26. Plaintiff repleads and incorporates herein all the foregoing

allegations.

27.
Defendant has acted against plaintiff viciously and
maliciously in utter disregard of the true facts obvious and known to it
and of the past services rendered by the plaintiff to Philsec and the
Ayala Group of which defendant is a member.

28. For recklessly trifling with the good name, honor and
feelings of plaintiff, and as an example for the public good, defendant
should be ordered to pay plaintiff exemplary damages of at least
P1,000,000.00.

In the handling of this case, plaintiff has been forced to engage

the services of counsel and to pay them P400,000,00 as attorneys
fees.97

Considering that two actions are rooted in the same

transgression committed by BPI Securities Corp. against Guevara,
to allow these two cases to proceed separately could give rise to
97

a situation where there would be two conflicting decisions on one

cause of action arising from the same set of facts. Thus, should
the Makati City, RTC Branch 137 in Civil Case No. 92-1445, allow
the enforcement of the foreign judgment based on malicious
inclusion of Guevara in the U.S. case, then a finding by the Makati
City, RTC Branch 135, in Civil Case No. 95-624 that Guevara
should not be entitled to an award for damages because he was
not maliciously prosecuted in the U.S. case, would undoubtedly be
conflicting and irreconcilable. Conversely, should the Makati City,
RTC Branch 137, repel the foreign judgment sought to be enforced
herein by evidence of clear mistake of law or fact 98 committed by
the U.S. courts, and instead find that Guevara was not maliciously
impleaded as a party-defendant in the U.S. case; then it would
necessarily be inconsistent with a decision by the Makati City, RTC
Branch 135, finding malice and bad faith in the inclusion of
Guevara in the same U.S. case.

Litis pendentia as a ground for the dismissal of a civil action

refers to that situation wherein another action is pending between
the same parties for the same cause of action, such that the
second action becomes unnecessary and vexatious. 99 Indeed, the
elements of litis pendentia are obviously present in Civil Cases No.
92-1445 and 95-624. The parties are the same; the reliefs prayed
98
99

for by Guevara are likewise the same; and the award or nonaward in the first case will bar by res judicata the award in the
second case.

Guevara is even guilty of forum shopping by filing these two

cases successively. The facts reveal that on 28 May 1992,
Guevara filed Civil Case No. 92-1445 against BPI Securities Corp.
for the enforcement of the Rule 11 award.

Around three years

later or on 24 April 1995, Guevara filed another complaint against

BPI Securities Corp. seeking for the recovery of actual, moral and
exemplary damages.

Forum shopping is a deplorable practice of litigants of

resorting to two different fora for the purpose of obtaining the
same relief, to increase his or her chances of obtaining a
favorable judgment.

What is pivotal to consider in determining

whether forum shopping exists or not is the vexation caused to

the courts and the parties-litigants by a person who asks
appellate courts and/or administrative entities to rule on the same
related causes and/or to grant the same or substantially the same
relief, in the process creating the possibility of conflicting
decisions by the different courts or fora upon the same issues.
There is forum shopping where the elements of litis pendentia are

present and where a final judgment in one case will amount to res
judicata in the other.100

The grave evil sought to be avoided by the rule against

forum shopping is the rendition by two competent tribunals of two
separate, and contradictory decisions.

Unscrupulous party

litigants, taking advantage of a variety of competent tribunals,

may repeatedly try their luck in several different fora until a
favorable result is reached. To avoid the resultant confusion, this
Court adhere strictly to the rules against forum shopping, and any
violation of these rules results in the dismissal of a case. 101

Considering that Civil Case No. 95-624 has already been

dismissed on the ground of litis pendentia, this Court no longer
finds it necessary to rule on the issue of prescription.

WHEREFORE, premises considered, the instant Petition is

hereby DENIED, and the Decision of the Court of Appeals in CAG.R. SP No. 53379, dated 21 March 2003, dismissing Civil Case
No. 95-624 is hereby AFFIRMED. Costs against the petitioner.

100
101