"x x x.
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:
x x x x
(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 Corporation[33]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]
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
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.”
Apropos, Carlet v. Court of Appeals[37] 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), GPHI’s 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 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-à-vis the constitution, purpose and consequences of the real estate mortgage over the properties of GPHI. While the reliefs sought inCivil Case Nos. TM-1022 (Annulment of the Real Estate Mortgage) and TM-1108 (Annulment of 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
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]
Be that as it may, while the appeal of the dismissal of Civil Case No. TM-1108 (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.
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