[G.R. NO. 178271 : October 31, 2008]
BANCO DE ORO-EPCI, INC. (formerly known as EQUITABLE PCI BANK INC.*Petitioner, v. HON. ZENAIDA R. DAGUNA, in her capacity as Presiding Judge, Regional Trial Court of Manila, Br. 19, AND PHILIPPINE DEVELOPMENT AND INDUSTRIAL CORPORATION, Respondents.
D E C I S I O N
CARPIO MORALES, J.:
Assailed in the present Petition for Review on Certiorari are two issuances of the Manila Regional Trial Court (RTC), Branch 19 in Civil Case No. 03-106886: Order of September 5, 20031 which denied petitioner's motion to dismiss, and Order of June 22, 20052 which denied the motion for reconsideration thereof.
In 1996, PCI Bank, Inc. (PCIB) approved the credit line application of Philippine Development and Industrial Corporation (respondent) consisting of secured and clean lines to fund the latter's townhouse project in Sta. Ana, Manila. As collateral for its secured line, respondent executed a real estate mortgage over the mother title of its townhouse project.3
Defaulting, however, in the payment of its obligations, respondent executed a Repayment Agreement4 wherein it secured all its obligations with real estate mortgages (REMs) over twenty nine (29) condominium units, and a titled real estate property located in Meycauayan, Bulacan. Again, respondent failed to meet its obligations under the repayment arrangement, compelling PCIB, which merged with Equitable Bank to form Equitable PCIBank (EPCIB), to initiate foreclosure proceedings before the RTC of Manila.
Respondent conversely filed a complaint on April 11, 2003 against EPCIB for "Cancellation of Mortgage, Restitution of Titles and Damages" before the Makati RTC, docketed as Civil Case No. 03-401. On even date, respondent filed an Amended Complaint5 modifying its complaint into one for "Release of Mortgage and Damages."
By Order of April 15, 2003, the Makati RTC Branch 63 dismissed the Amended Complaint without prejudice, for "lack of jurisdiction (sic)" "after a finding that the principal cause of action is for annulment (sic) of real estate mortgage contracted in the City of Manila over a real property located in Sta. Ana, Manila . . ., " the action being one in rem.6 Respondent moved to have the order of dismissal reconsidered. Later manifesting that EPCIB had already foreclosed its mortgages, it moved to withdraw its Amended Complaint for "Release of Mortgage," to thus limit its cause of action to one for "Damages" which was made the subject of its Second Amended Complaint,7 which it also moved to be admitted.8
Without awaiting the resolution by the Makati RTC of the foregoing incidents, respondent filed on June 16, 2003 before the Manila RTC a complaint for "Annulment of Mortgage and the Foreclosure Sale with Application for TRO and Preliminary Injunction"against EPCIB, the Manila Register of Deeds, and Manila RTC Sheriff Amor Dait.9 The Verification/Certification accomplished by respondent's representative stated that:
4. I, or the corporation that I represent, have not commenced any other action or proceeding involving the same issues in the Court of Appeals, Regional Trial Courts, or any other tribunal or agency, except an action for Damages which is presently pending with the Regional Trial Court of Makati, Branch 63, and docketed therein as Civil Case No. 03-401 entitled "Philippine Development [and] Industrial Corporation v. Equitable PCI Bank". The said case involves a separate and distinct cause of action and thus involves a different issue;10 (Emphasis, italics and underscoring supplied)
EPCIB moved for the dismissal of respondent's complaint lodged in the Manila RTC, contending that, inter alia, respondent is guilty of forum shopping,11 and that respondent's Verification/Certification therein is false, if not defective, since what was filed before the Makati RTC was an action for "Release of Mortgage and Damages," a complaint similar to the one pending before the Manila RTC â”€ for Annulment of Mortgage and Foreclosure Sale.
Branch 19 of the Manila RTC, in its first assailed order, denied petitioner's motion to dismiss on the ground that the case pending before it is "an action for annulment of mortgage while the [other] is one for damages."12 The other assailed order denied petitioner's motion for reconsideration.
In the meantime, the Makati RTC, by Order13 of June 9, 2004, granted respondent's motion to withdraw its action for "Release of Mortgage" admitted respondent's Second Amended Complaint for "Damages."
Respondent's Second Amended Complaint for "Damages" is predicated on the alleged malicious refusal of petitioner to release funds under the secured credit line, despite the fact that it (respondent) had put up sufficient collateral.14
Via certiorari, EPCIB brought the case to the Court of Appeals which sustained the decision of the Manila RTC by Decision of June 6, 2007.15
Hence, the present petition of EPCIB, which has, after its merger with Banco de Oro, became known as Banco de Oro-EPCI, Inc. (hereafter petitioner), which raises the sole issue of whether respondent resorted to forum shopping.
The Court holds in the negative.
It bears noting that respondent filed its complaint at the Manila RTC on June 16, 2003, before the issuance of the June 9, 2004 Order by the Makati RTC resolving respondent's Motion for Reconsideration of its Order dismissing respondent's Amended Complaint by reinstating respondent's complaint for "Damages" subject of respondent's Second Amended Complaint.
In other words, at the time respondent filed its complaint before the Manila RTC, the reinstatement of its complaint for "Damages" which was to become the subject of its Second Amended Complaint was still pending consideration by the Makati RTC.
As did the Manila RTC, the appellate court relied on respondent's statement in its Certification of Non-Forum Shopping about the pendency of an action for Damages. Thus the appellate court observed:
The cause of action and the relief sought in its complaint before the RTC of Makati is limited to a claim for damages, an action in personam, against the [petitioner] for unjustly refusing to turn over to the former the questioned certificates of title covering the condominium units, subject of the controversy. In contrast, the complaint lodged before the RTC of Manila, an action in rem[,] is for the annulment of the real estate mortgage (REM), constituted over the condominium units, subject of the controversy, based on PDIC's vitiated consent. (Emphasis and underscoring supplied)cralawlibrary
The statement of respondent was not exactly accurate because at the time the Certification of Non-Forum Shopping segment of respondent's complaint before the Manila RTC was accomplished, the reinstatement of its action for damages was still pending by the Makati RTC. At any rate, the Makati RTC eventually reinstated such action for "Damages."
A reading of the Complaint before the Manila RTC and the Amended Complaint and Second Amended Complaint before the Makati RTC shows that these pleadings allege the same factual circumstances as bases for the reliefs respectively prayed for. Thus, the Manila RTC complaint for "Annulment of Mortgage and Foreclosure Sale" reads:
2.1 x x x.
x x x
2.8 On or about January 1997, PDIC tried to draw on the secured credit line and requested the Bank to release funds therefrom as the clean line was already fully utilized. The additional drawdown was needed to complete the construction of the Project. Unfortunately, the Bank, without any justification or explanation, refused to release any amount in favor of PDIC from the PhP100.0M Secured Credit Line. This unjustified refusal of the Bank to release an amount which it earlier committed to grant PDIC, resulted in the delay in the construction as PDIC could not pay the progress billings of the contractor.
2.9 Subsequently, PDIC requested the Bank for the release of Pesos: Forty Five Million (PhP45.0M), an amount which was then sufficient to complete the Project, from the PhP100M Secured Credit Line. In a letter dated 15 October 1998, the Bank flatly refused the said request of PDIC.
x x x
2.11 Instead of releasing the funds requested by PDIC, the Bank, in a letter dated 12 November 1998, required the former to submit additional collateral in the form of a real estate mortgage notwithstanding the fact that the Secured Credit Line was amply collaterized by the Property.
2.12 Because of the unjustified and malicious refusal by the Bank to release the funds it committed to lend to PDIC, the construction of the Project was delayed resulting in gross losses and damages upon PDIC.
2.13 To minimize the losses and damages upon it, PDIC was constrained to resort to other sources of financing, regardless of additional costs. However, the arrogant refusal of the bank to release funds from the secured credit line it earlier approved, coupled with the period of time consumed by PDIC in finding alternative financing sources, substantially delayed the completion of the Project. Instead of the estimated one (1) year completion, the Project eventually took five (5) years to be completed.
x x x
2.15 As it was mandatory for PDIC to cancel the mortgage over the title to the property in order to be able to sell the townhouse units, PDIC literally begged the Bank to release the title. PDIC argued that no loans were ever released by the Bank from the Secured Credit Line; thus, there is absolutely no reason for the bank to hold on to the title.
x x x
2.17 Owing to the urgent need for the cancellation of the mortgage in order to complete the Project and considering that certain buyers have threatened to file civil and criminal cases against PDIC and its officers, PDIC was left with no choice but to accede, albeit involuntarily, to the capricious demand of the Bank. Unless the mortgage on TCT No. 230861 was cancelled, PDIC could not sell the units of the Project and without any sales, PDIC faced the grim prospect of bankruptcy. PDIC was thus literally forced and hostage [sic] into agreeing to execute a substitute real estate mortgage. Thus, PDIC with all its objections was constrained to turn over to the Bank, the TCTs for twenty nine (29) units of the Project in exchange for the mother title (TCT No. 230861). x x x.
(Emphasis and underscoring supplied)cralawlibrary
On the other hand, the Amended Complaint in the Makati RTC repleaded the same common allegations in above-quoted paragraphs 2.1 to 2.17. The Second Amended Complaint likewise reproduced verbatim these allegations as factual antecedents. The parallelisms end there, however.
The test of identity of causes of action lies on whether the same evidence would support and establish the former and present causes of action.16 If the same body of evidence would sustain both actions, the two actions unmistakably descend from the same cause of action.
While the Second Amended Complaint pending before the Makati RTC and the Complaint pending before the Manila RTC have significantly similar factual antecedents, the causes of action proceed from different grounds calling for different bodies of evidence to support the parties' respective positions in each action.
Thus, the Makati RTC Amended Complaint sought the release of the mortgage over the same condominium units and damages brought about by petitioner's alleged failure to provide funds under the secured credit line. The Manila RTC complaint sought the annulment of the mortgage constituted over the 29 condominium units and the foreclosure sale on the basis of alleged flaws and irregularities attendant to it.
The Manila RTC Complaint would thus have to rely on specific instances of supposed vitiated consent, fraud, lack of consideration and irregularities in the foreclosure sale, while the Makati RTC action would have to specifically dwell on evidence relating to the willful refusal of petitioner to release funds in the secured credit line and the losses incurred thereby by respondent.
Prior to foreclosure sale, an action for the release of the mortgage is a personal action, following the doctrine laid down in Hernandez v. Rural Bank of Lucena,17 possession and ownership over the properties subject of the mortgage having remained with, in this case respondent-mortgagor.Ï‚Î·Î±Ã±rÎ¿blÎµÅ¡ Î½Î¹râ€ Ï…Î±l lÎ±Ï‰ lÎ¹brÎ±rÃ¿
Since petitioner had, in the interregnum, foreclosed the mortgage, respondent had to withdraw its action for release of mortgage and file the appropriate action for annulment of the foreclosure in the proper venue, which is Manila where the mortgaged properties are located.
As the Makati RTC still retained jurisdiction over the complaint for damages, which is a personal action, it properly reinstated it as the subject of respondent's Second Amended Complaint.
There is no gainsaying then that the action in Makati is different and distinct from the action in Manila, involving different periods of time, subject matter, and issues.
While respondent did not ask for damages in its Manila RTC action despite allegations of losses and damages that it suffered, this should not be taken to mean that it split its cause of action, venues of the two actions having been properly laid.18
Splitting a cause of action is the act of dividing a single cause of action, claim or demand into two or more parts, and bringing suit for one of such parts only, intending to reserve the rest for another separate action.19
In fine, respondent did not resort to forum shopping.
WHEREFORE, the petition is DENIED.
Costs against petitioner.
* Equitable PCI Bank, Inc. merged with Banco De Oro Universal Bank forming a new entity, Banco De Oro-EPCI, Inc.
1 II Records, pp. 57-59.
2 Id. at 97-98.
3 Annex "C," CA rollo, p. 180.
4 Annex "A," rollo, pp. 169-175.
5 Id. at 190-209.
6 CA rollo, Annex "J," p. 101.
7 Rollo, pp. 210-226.
8 Vide: Urgent Manifestation dated May 28, 2003, I Records, pp. 299-303.
9 Rollo, pp. 227-243.
10 CA rollo, p. 149.
11 Id. at 154-166.
12 Supra note 1.
13 Rollo, pp. 247-249.
14 Id. at 264.
15 Id. at 141-159. Penned by Associate Justice Normande B. Pizarro with the concurrence of Associate Justices Edgardo P. Cruz and Fernanda Lampas Peralta.
16 Serdoncillo v. Spouses Benolirao, 358 Phil. 83, 103.
17 171 Phil. 70 (1978); 81 SCRA 75; Go v. United Coconut Planters Bank, G.R. No. 156187, November 11, 2004, 442 SCRA 264, 273; Vide: Carandang v. Court of Appeals, G.R. No. L-44932, 15 April 1988, 160 SCRA 266.
18 Section 6 of Rule 2 of the Rules of Court states: Misjoinder of causes of action. - Misjoinder of causes of action is not a ground for dismissal of an action. A misjoined cause of action may, on motion of a party or on the initiative of the court, be severed and proceeded with separately.
19 Mallion v. Alcantara, G.R. No. 141528, October 31, 2006, 506 SCRA 336, 343-344; Perez v. Court of Appeals, G.R. No. 157616, July 22, 2005, 464 SCRA 89, 104; Spouses Romero v. Tan, 468 Phil. 224, 239 (2004); Sta. Lucia Realty and Development, Inc. v. Cabrigas, 411 Phil. 369, 386 (2001).