FIRST DIVISION

[G.R. No. 131471. January 22, 2003]

CARMELITA T. PANGANIBAN, petitioner, vs. PILIPINAS SHELL PETROLEUM CORPORATION, respondent.

D E C I S I O N

CARPIO, J.:

The Case

Before us is a petition for review assailing the Decision[1] of the Court of Appeals dated November 12, 1997 in CA-G.R. SP No. 44673 dismissing the appeal of petitioner. The questioned decision affirmed the order of the Regional Trial Court of Makati City, Branch 137, in Case No. 95-1010 dismissing petitioners petition for declaratory relief on the ground of litis pendentia.

The Antecedent Facts

On August 7, 1990, Carmelita Panganiban (petitioner for brevity) entered into a Sublease and Dealer Agreement (SLDA for brevity) with Pilipinas Shell Petroleum Corporation (private respondent for brevity). Through the SLDA, private respondent subleased to petitioner a gasoline station located at 427 Samson Road, EDSA, Caloocan City. The period of the sublease as stipulated in the SLDA is as follows:

5. Effectivity Date. Duration and Termination of Agreement.

This Agreement may be terminated by SHELL at any time during the first six (6) months from the date of approval by ERB of the application of the DEALER to operate this station, on any of the following grounds: failure of the DEALER to meet any of the conditions stipulated in this Agreement, lack of appropriate personal attention/presence in the operation of the station, or poor volume performance of the station, the evaluation and determination of which shall be at the exclusive discretion of SHELL. Such decision of termination by SHELL shall be accepted by the DEALER, who hereby agrees that another dealer shall be appointed by SHELL and approved by BEU or other appropriate government agency. If this agreement is not terminated during the first six (6) months, it shall continue to be in effect for another period of 4 years, unless otherwise terminated as herein provided in paragraph 5(3). The parties agree that this Agreement is, however, co-terminus with SHELLs lease on the site referred to under paragraph 1 of this Agreement notwithstanding the total 5-year period aforementioned.[2]

Private respondent is not the owner of the lot subject of the sublease. Private respondent was only leasing the lot from its owner, Serafin Vasquez, pursuant to a Lease Agreement dated February 27, 1987. The Lease Agreement was effective from January 1, 1987 to December 31, 2002 or for a period of 15 years.

In a letter dated June 14, 1995, private respondent notified petitioner that the SLDA was expiring on July 31, 1995. Private respondent then advised petitioner to wind up her business on or before July 31, 1995.

Believing that the SLDA had not yet expired and was still effective until December 31, 2002, petitioner continued to pay rentals for the gasoline station. Private respondent refused to accept the payments.

On July 10, 1995, petitioner filed a petition for declaratory relief with Branch 137 of the Regional Trial Court of Makati City. The case was docketed as Case No. 95-1010.

On August 30, 1995, private respondent filed its Answer.

On April 26, 1996, private respondent filed an unlawful detainer case against petitioner with the Metropolitan Trial Court of Caloocan City. The case was docketed as Civil Case No. 22645.

On April 30, 1996, or eight months after it submitted its Answer in Case No. 95-1010 with the Regional Trial Court, private respondent filed a Manifestation with Motion to Dismiss in the same case. Private respondent claimed that the issue of the renewal of the lease should be raised in the unlawful detainer case pending before the Metropolitan Trial Court.

On August 1, 1996, during the preliminary conference of the unlawful detainer case, petitioner moved for the suspension of the proceedings since the other case filed with the Regional Trial Court involved the same parties and issues. The Metropolitan Trial Court denied petitioners motion and the court ordered the parties to submit their position papers.

On September 25, 1996, the Metropolitan Trial Court issued its Decision in the unlawful detainer case in favor of private respondent, thus:

WHEREFORE, premises considered, judgment is hereby rendered, ordering:

1. the defendant and all persons or parties claiming rights under her to vacate the subject subleased premises and peacefully surrender possession thereof to the plaintiff;

2. the said defendant to pay the plaintiff as follows:

a) the amount of P52,500.00 per month from August 1, 1995 until the said premises is fully vacated by defendant and returned to plaintiff;

b) the amount of P20,000.00 as plaintiffs reduced attorneys fees; and

c) the costs of suit.

The counterclaim of the defendant is dismissed for lack of merit.

IT IS SO ORDERED.[3]

Petitioner appealed from the decision of the Metropolitan Trial Court. The appeal is now pending with the Regional Trial Court of Caloocan City, Branch 124, docketed as Civil Case No. C-17726.

On February 21, 1997, the Regional Trial Court ordered the dismissal of the petition for declaratory relief. The Order reads:

Considering that there has been a breach of the Sublease and Dealer Agreement (SLDA) on the part of the petitioner (lessee therein) as said lease had supposedly expired on 31 July 1995, and that, consequently, an ejectment has already been filed against petitioner by respondent before the Metropolitan Trial Court of Kalookan City, so that this petition is no longer proper under the circumstances, and considering further that the issue on possession can be threshed out in said ejectment case based on the jurisprudence in Rosales vs. CFI of Lanao del Norte, Br. III, 154 SCRA 153, this petition is dismissed.[4]

Petitioner filed a motion for reconsideration of the Order. Because of petitioners failure to appear at the hearing on her motion for reconsideration, the Regional Trial Court on April 11, 1997 denied the motion for reconsideration.

On May 13, 1997, petitioner filed a petition for review under Rule 45 of the Rules of Court with the Supreme Court. The petition assailed the February 21, 1997 Order of the Regional Trial Court dismissing Case No. 95-1010. The petition was docketed as G.R. No. 128984.

On June 25, 1997, the Supreme Court issued a Resolution referring the petition for certiorari to the Court of Appeals. The petition was referred to the Court of Appeals because the appellate court has concurrent jurisdiction with the Court and petitioner failed to cite a special or important reason for the Court to take immediate cognizance of the petition.

On November 12, 1997, the Court of Appeals denied the petition for certiorari. The dispositive portion of the Decision reads:

THE FOREGOING CONSIDERED, and not being sufficient in substance, herein Petition for Certiorari is hereby dismissed.[5]

The Ruling of the Court of Appeals

The Court of Appeals upheld the order of the trial court dismissing the petition for declaratory relief on the ground of litis pendentia. The appellate court ruled that in dismissing the petition for declaratory relief, the Regional Trial Court correctly applied the doctrine laid down in Rosales v. Court of First Instance of Lanao del Norte.[6] The Court of Appeals also considered University Physicians Services, Inc. v. Court of Appeals[7] as a case parallel to the present case. In ruling that the case for declaratory relief should be abated in favor of the case for unlawful detainer, the Court of Appeals quoted the pertinent portions of Rosales[8] and University Physicians Services, Inc.[9]

In disregarding petitioners contention that it is this Court that has jurisdiction over her petition, the Court of Appeals pointed out that it was merely yielding to this Courts June 25, 1997 Resolution ordering the appellate court to decide the case on the merits. This Court referred the petition to the Court of Appeals because the appellate court has concurrent jurisdiction with this Court and there is no special or important reason for this Court to take immediate cognizance of the case.

The Issues

The sole issue raised by petitioner in this case is:

THE COURT OF APPEALS ERRED IN AFFIRMING RTC-MAKATIS DISMISSAL OF CIVIL CASE NO. 95-1010 ON MOTION OF SHELL ON THE GROUND OF LITIS PENDENTIA WHICH WAS FILED LONG AFTER SHELL HAD FILED ITS ANSWER.[10]

The Ruling of the Court

We find no merit in the petition.

The Court of Appeals correctly applied Rosales[11] and University Physicians Services, Inc.[12] in sustaining the dismissal of the action for declaratory relief to give way to the ejectment suit.

In Rosales,[13] the real issue between the parties, the lessor and the lessee, was whether the contract of lease they entered into had already prescribed. The lessee filed an action for the continued enforcement of the lease contract and for damages with the Court of First Instance of Iligan City. The lessor in turn filed a case for unlawful detainer with the City Court of Iligan City. The lessor filed with the Court of First Instance a motion to dismiss the complaint of the lessee because of the pendency of the ejectment case. The lessee for his part moved for the dismissal of the ejectment suit also on the ground of litis pendentia contending that the case he had filed earlier should be decided first before the lessors complaint could be entertained. In deciding which case should take precedence, the Court cited the ruling in Pardo v. Encarnacion,[14] to wit:

At any rate, while the said case before the Court of First Instance of Cavite appears to be one for specific performance with damages, it cannot be denied that the real issue between the parties is whether or not the lessee should be allowed to continue occupying the land as lessee.

The situation is not novel to Us.

It has been settled in a number of cases that the right of a lessee to occupy the land leased as against the demand of the lessor should be decided under Rule 70 (formerly 72) of the Rules of Court.

There is no merit to the contention that the lessees supposed right to a renewal of the lease contract can not be decided in the ejectment suit. In the case of Teodoro v. Mirasol, supra, this Court held that if the plaintiff has any right to the extension of the lease at all, such right is a proper and legitimate issue that could be raised in the unlawful detainer case because it may be used as a defense to the action. In other words, the matter raised in the Court of First instance of Cavite may be threshed out in the ejectment suit, in consonance with the principle prohibiting multiplicity of suits. And the mere fact that the unlawful detainer case was filed later, would not change the situation to depart from the application of the foregoing rule.

It is to be noted that the Rules do not require as a ground for dismissal of a complaint that there is a prior pending action. They provide that there is pending action, not a pending prior action. The fact that the unlawful detainer suit was of a later date is no bar to the dismissal of the present action. (Teodoro, Jr. v. Mirasol, supra.)

In University Physicians Services, Inc.,[15] the Court also had to resolve which of two cases, one for damages and one for ejectment, filed in two different courts involving the same parties and subject matter, should take precedence over the other. In settling this issue, the Court also relied on Pardo v. Encarnacion, citing the discussion quoted above. The Court further declared in University Physicians Services, Inc. that:

The issue of whether private respondent had the right to occupy the subject apartment unit should therefore be properly threshed out in an ejectment suit and not in an action for damages where the question of possession is likewise the primary issue to be resolved.

We cannot simply ignore the fact that private respondent, after her unjustified refusal to vacate the premises, was aware that an ejectment case against her was forthcoming. It is therefore evident that the filing of the complaint for damages and preliminary injunction was but a canny and preemptive maneuver intended to block the action for ejectment which petitioner was to take against private respondent.

The matter raised in the Regional Trial Court of Manila may be properly determined in the ejectment suit before the Metropolitan Trial Court, in consonance with the rule prohibiting multiplicity of suits. And the mere fact that the unlawful detainer suit was filed later than the one for damages does not change the situation of the parties (Rosales vs. CFI, 154 SCRA 153 [1987]).

Petitioner insists that the doctrine laid down in Rosales and University Physicians Services, Inc. is not applicable to this case. Rather, the case law applicable is that laid down in J.M. Tuason & Co., Inc. v. Rafor,[16] Ruiz, Jr. v. Court of Appeals[17] and Heirs of Mariano Lagutan v. Icao[18] which essentially establish the doctrine that a motion to dismiss must be filed within the time to answer. Petitioner further points out that private respondent filed the motion to dismiss some eight months after it had already filed an answer in Case No. 95-1010, the action for declaratory relief. This, according to petitioner, is a violation of Section 1, Rule 16 of the Rules of Court mandating that the motion to dismiss must be filed within the time for but before the filing of the answer to the complaint.

We are not persuaded.

The requirement that a motion to dismiss should be filed within the time for filing the answer is not absolute. Even after an answer has been filed, a defendant can still file a motion to dismiss on the following grounds: (1) lack of jurisdiction, (2) litis pendentia (3) lack of cause of action, and (4) discovery during trial of evidence that would constitute a ground for dismissal.[19] Litis pendentia is also one of the grounds that authorize a court to dismiss a case motu proprio.[20]

The cases relied upon by petitioner, namely, J.M. Tuason & Co., Inc., Ruiz, Jr. and Heirs of Mariano Lagutan, are not squarely in point. The motions to dismiss in these cases were also predicated on the grounds that would have permitted the filing of a motion to dismiss even after an answer had already been filed. However, in each of the three cases, the Court found the elements of the exceptional grounds invoked in the motions to dismiss to be insufficient. Thus, in J.M. Tuason & Co., Inc., Ruiz, Jr. and Heirs of Mariano Lagutan, the Court applied the general rule that a party who has filed his answer is already estopped from filing a motion to dismiss.

The present case is different from J.M. Tuason & Co., Inc., Ruiz, Jr., and Heirs of Mariano Lagutan. In this case, the bona fide existence of litis pendentia is beyond dispute. The following requisites of litis pendentia are present in this case: (a) the identity of parties, or at least such as representing the same interests 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.[21]

Petitioner questions the preference given by the Regional Trial Court and the Court of Appeals to the unlawful detainer case filed by private respondent. Petitioner maintains that based on priority in time, the action for declaratory relief, the case filed earlier, should not have been abated in favor of the ejectment suit, a case filed much later.

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 actions and that the second action becomes unnecessary and vexatious.[22] We have set the relevant factors that a court must consider when it has to determine which case should be dismissed given the pendency of two actions. These are:

(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 latter 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.[23]

The mere fact that the action for declaratory relief was filed earlier than the case for unlawful detainer does not necessarily mean that the first case will be given preference. Rosales and University Physicians Services, Inc. clearly place a premium on the two other factors. In Cruz v. Court of Appeals,[24] we have ruled that the earlier case can be dismissed in favor of the later case if the later case is the more appropriate forum for the ventilation of the issues between the parties.

An action for unlawful detainer is filed by a person from whom possession of any land or building is unlawfully withheld by another after the expiration or termination of the latters right to hold possession under a contract, express or implied.[25] Clearly, the interpretation of a provision in the SLDA as to when the SLDA would expire is the key issue that would determine petitioners right to possess the gasoline service station. When the primary issue to be resolved is physical possession, the issue should be threshed out in the ejectment suit, and not in any other case such as an action for declaratory relief to avoid multiplicity of suits.

There is a more compelling reason for the dismissal of the action for declaratory relief. The Metropolitan Trial Court had already resolved the unlawful detainer case in favor of private respondent even before the Regional Trial Court dismissed the action for declaratory relief. The Metropolitan Trial Court issued its Decision on September 25, 1996 and this decision is now on appeal.[26] The Regional Trial Court dismissed the action for declaratory relief on February 21, 1997 based on the April 30, 1996 Motion to Dismiss filed by private respondent that raised the ground of litis pendentia. Based on the record, it appears that private respondent failed to inform the Regional Trial Court of the decision of the Metropolitan Trial Court on the unlawful detainer case. The significance of the earlier resolution of the unlawful detainer case, however, will not escape our attention.

Indeed, the action for declaratory relief had become vexatious. It would have been an exercise in futility for the Regional Trial Court to continue the proceedings in the action for declaratory relief when the Metropolitan Trial Court had already ruled that the term of the SLDA was for only five years or until July 31, 1995.[27] Moreover, the decision of the Metropolitan Trial Court once it attains finality would amount to res judicata. The proper forum for petitioner to clarify the provision of the SLDA on the expiration of the term of the contract is in her appeal of the decision of the Metropolitan Trial Court in the unlawful detainer case.

Petitioner erroneously believes that the unlawful detainer case should have been dismissed because private respondent was already guilty of laches when it filed the ejectment suit 269 days from July 31, 1995, the date private respondent claims the SLDA expired. A complaint for unlawful detainer should be filed within one year after such unlawful deprivation or withholding of possession occurs.[28] When the action is to terminate the lease because of the expiration of its term, it is upon the expiration of the term of the lease that the lessee is already considered to be unlawfully withholding the property.[29] The expiration of the term of the lease immediately gives rise to a cause of action for unlawful detainer.[30] In such a case, a demand to vacate is no longer necessary.[31] Private respondent therefore had one year or 365 days from July 31, 1995 to file the case for unlawful detainer. Laches definitely had not yet set in when private respondent filed the unlawful detainer case 269 days after the expiration of the SLDA. Private respondent did not sleep on its right when it filed the unlawful detainer case well within the prescriptive period for filing the action.

Petitioner implores us to reconsider the application of Rosales[32] and University Physicians Services, Inc.[33] to this case because this will, in the words of petitioner, open a floodgate of abuses.[34] Petitioner claims that this can happen where an earlier case filed by the lessee is already submitted for resolution and the lessor belatedly files an ejectment suit to create a cause to dismiss the earlier case based on litis pendentia.

Petitioners contention is unfounded.

The action for declaratory relief was not yet submitted for resolution when private respondent filed the action for unlawful detainer. There is also no proof that private respondent filed the ejectment suit in anticipation of the early resolution of the action for declaratory relief. Private respondent was not out to frustrate the impending resolution of the action for declaratory relief when it filed the ejectment suit. In fact, the unlawful detainer case was already decided upon by the Metropolitan Trial Court even before the Regional Trial Court dismissed the action for declaratory relief. It appears that it is petitioner who wants to avoid the adverse ruling in the unlawful detainer case by insisting that the action for declaratory relief be given preference even after the ejectment suit was already decided. The abuse feared by petitioner does not apply in this case and yet, petitioner urges us to reevaluate the applicability of a doctrine based on a feared hypothetical abuse. This, we cannot do. We can only rule upon actual controversies, not on scenarios that a party merely conjures to suit her interest.

WHEREFORE, the petition is DENIED for lack of merit. Costs against petitioner.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Vitug, Ynares-Santiago and Azcuna, JJ., concur.



[1] Penned by Associate Justice Bernardo LL. Salas with Associate Justices Angelina Sandoval-Gutierrez and Marina L. Buzon, concurring, Sixteenth Division.

[2] Rollo, pp. 47-48.

[3] Rollo, pp. 158-159.

[4] Ibid., p. 101.

[5] Ibid., pp. 44-45.

[6] 154 SCRA 153 (1987), Rollo, p. 40.

[7] 233 SCRA 86 (1994), Rollo p. 42.

[8] Supra.

[9] Supra.

[10] Rollo, p. 20.

[11] Supra, see note 6.

[12] Supra, see note 7.

[13] Supra, see note 6.

[14] 22 SCRA 632 (1968).

[15] Supra, see note 7.

[16] 5 SCRA 478 (1962), Rollo, p. 26.

[17] 220 SCRA 490 (1993), Rollo, p. 26.

[18] 224 SCRA 9 (1993), Rollo, p. 26.

[19] Obando v. Figueras, 322 SCRA 148 (2000).

[20] Rudolf Lietz Holdings, Inc. v. The Registry of Deeds of Paraaque City, 344 SCRA 680 (2000).

[21] Casil v. Court of Appeals, 285 SCRA 264 (1998).

[22] Feliciano v. Court of Appeals, 287 SCRA 61 (1998).

[23] Cruz v. Court of Appeals, 309 SCRA 714 (1999).

[24] Ibid.

[25] Javelosa v. Court of Appeals, 265 SCRA 493 (1996).

[26] The appeal is pending with Branch 124 of the Regional Trial Court of Caloocan City.

[27] Rollo, p. 158.

[28] Section 1, Rule 70 of the Rules of Court.

[29] Roxas v. Alcantara, 113 SCRA 21 (1982).

[30] Ibid.

[31] Ibid.

[32] Supra, see note 6.

[33] Supra, see note 7.

[34] Rollo, p. 26.