THIRD DIVISION
[ G.R. No. 193065, February 27, 2012 ]DEUTSCHE BANK AG v. CA +
DEUTSCHE BANK AG, PETITIONER, VS. COURT OF APPEALS AND STEEL CORPORATION OF THE PHILIPPINES, RESPONDENTS.
D E C I S I O N
DEUTSCHE BANK AG v. CA +
DEUTSCHE BANK AG, PETITIONER, VS. COURT OF APPEALS AND STEEL CORPORATION OF THE PHILIPPINES, RESPONDENTS.
D E C I S I O N
MENDOZA, J.:
This is a petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure assailing the March 12, 2010[1] and July 19, 2010[2] Resolutions of the Court of Appeals (CA) in CA-G.R. SP No. 111556
entitled "Deutsche Bank AG v. Hon. Judge Albert A. Kalalo and Steel Corporation of the Philippines" (Deutsche Bank AG Petition) for having been issued without jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction, insofar as they
ordered the consolidation of the Deutsche Bank AG Petition with another case earlier filed and docketed as CA-G.R. SP No. 107535 entitled "Vitarich Corporation v. Judge Danilo Manalastas" (Vitarich Petition) on the ground that the two cases involve a common
question of law.
THE FACTS
Private respondent Steel Corporation of the Philippines (SteelCorp) is a domestic corporation organized and existing under the laws of the Philippines with principal place of business in Munting Tubig, Balayan, Batangas. It is engaged in the business of manufacturing and distribution of cold-rolled, galvanized and pre-painted steel sheets and coils.
On December 7, 1995, SteelCorp, as borrower, entered into a loan agreement[3] with a consortium of lending banks and other financial institutions for the purpose of partially financing the construction of its integrated steel mill project. One of the participating lenders was Rizal Commercial Banking Corporation (RCBC).
SteelCorp failed to pay its loan obligations as they fell due. Thus, on September 11, 2006, Equitable PCI Bank, Inc. (now Banco de Oro) filed a creditor-initiated petition to place SteelCorp under corporate rehabilitation before the Regional Trial Court of Batangas, Branch 2, which was subsequently raffled to Branch 4 (RTC-Batangas). This case was docketed as Spec. Proc. No. 06-7993.[4]
In its Decision[5] dated December 3, 2007, the RTC-Batangas approved the proposed Rehabilitation Plan and ordered the parties to comply strictly with the provisions of the approved Rehabilitation Plan.
In February 2008 and during the pendency of the proceedings before the RTC-Batangas, RCBC and petitioner Deutsche Bank AG entered into a deed of assignment,[6] wherein the former assigned to the latter all of its rights, obligations, title to, and interest in, the loans which it had extended to SteelCorp in the aggregate outstanding principal amount of P94,412,862.58.
SteelCorp was duly informed of the said assignment through the Notice of Transfer[7] sent to it by RCBC.
Through its Entry of Appearance with Motion for Substitution of Parties[8] dated May 2, 2008, Deutsche Bank AG informed the RTC-Batangas of the said transfer and assignment of the loan obligations.
The RTC-Batangas, upon the motion of SteelCorp, issued its Order dated October 28, 2009, directing the assignees, including Deutsche Bank AG, to disclose the actual price or consideration paid by them for the SteelCorp debts assigned and transferred to them.[9] From this order, Deutsche Bank AG filed its Petition for Certiorari (With Urgent Application for a Temporary Restraining Order and/or Writ of Preliminary Injunction) with the CA docketed as CA-G.R. No. 111556.[10]
Records show that two other petitions for certiorari filed by other creditors of SteelCorp were pending before different divisions of the CA, both of which arising from the same October 28, 2009 Order of the RTC-Batangas. The cases were docketed as follows:
In the meantime, SteelCorp filed its Motion for Consolidation[11] dated February 18, 2010, praying for the consolidation of the Deutsche Bank AG Petition, together with the Investments 2234 Petition and EPCIB Petition, with the Vitarich Petition on the ground that the cases involved the same question of law whether creditors could be compelled to disclose the actual assignment price for credits in litigation which were assigned in the context of a corporate rehabilitation proceeding pursuant to Articles 1634 and 1236 of the Civil Code.
On March 12, 2010, the CA in CA-G.R. SP No. 111556 issued the assailed Resolution ordering the consolidation of Deutsche Bank AG Petition with the Vitarich Petition, to wit:
It appears from the records that the Vitarich Petition emanated from Civil Case No. 592-M-2006 entitled "In the Matter of the Petition for Corporate Rehabilitation of Vitarich Corporation" which is currently pending before Branch 7, Regional Trial Court of Bulacan (RTC-Bulacan).
The RTC-Bulacan in its Decision dated May 31, 2007, approved the Vitarich rehabilitation plan and upheld the rights of the assignees as subrogees to all the rights and obligations of the original creditors.
Vitarich sought a partial reversal of the said decision via a petition for review under Rule 43 of the 1997 Rules of Court (docketed as CA-G.R. SP No. 99374), contending that it should only be made to pay the discounted transfer prices of the assigned credits should it decide to exercise its right of redemption. Vitarich, however, withdrew the said petition and instead filed a motion to direct the assignees to disclose the amounts paid by them to their assignors.
In its Order dated January 15, 2009, the RTC-Bulacan denied Vitarich's motion, ruling that the rehabilitation case before it could not be considered as a litigation as contemplated in Article 1634 of the Civil Code.
Hence, Vitarich filed its petition[13] praying that the CA order the assignees to disclose the actual amount paid to their respective assignors so that it could pay the transfer prices of the assigned credits should it exercise its right of redemption. Several banks moved for the dismissal of this petition on the ground that the ruling on the issue raised therein had already become final.
Deutsche Bank AG filed a motion for reconsideration[14] of the March 12, 2010 CA resolution arguing that the Deutsche Bank AG petition and the Vitarich petition were not related cases that would merit consolidation. It stressed that a common question of law alone does not warrant consolidation inasmuch as the Internal Rules of the CA (IRCA) provides that for consolidation to be proper, the cases must be related. It also claimed that the consolidation of these two unrelated cases would not serve the purpose of consolidation, which was to obtain justice with the least expense and vexation to the litigants.
The said motion was, however, denied by the CA in its Resolution dated July 19, 2010. Citing Zulueta v. Asia Brewery, Inc.,[15] it held that consolidation of cases under Section 3(a), Rule III of the IRCA was proper as the cases involved common questions of law.
Thus, the CA agreed with the SteelCorp's conclusion that when two cases involved the same parties, or related questions of fact, or related questions of law, then they were considered as related cases for purposes of consolidation. The pertinent portion of the CA resolution reads:
Hence, Deutsche Bank AG interposes the present special civil action before this Court anchored on the following
It appears from the records that on November 18, 2011, SteelCorp filed a manifestation dated November 17, 2011, stating that the assailed resolution ordering consolidation dated March 12, 2010 had been issued in response to the Motion for Consolidation dated February 18, 2010 filed therein by SteelCorp. SteelCorp manifested that on November 14, 2011, in CA-G.R. SP No. 111556, it filed its Motion to Withdraw the said Motion for Consolidation in order to forestall further delay and for the CA to proceed in the resolution of the merits of the case, rendering this petition moot.
In view of the said withdrawal of the motion for consolidation, the present petition assailing the CA's order of consolidation has certainly been rendered moot and academic.
A moot and academic case is one that ceases to present a justiciable controversy by virtue of supervening events, so that a declaration thereon would be of no practical use or value. Generally, courts decline jurisdiction over such case or dismiss it on ground of mootness. However, even in cases where supervening events had made the cases moot, this Court did not hesitate to resolve the legal or constitutional issues raised to formulate controlling principles to guide the bench, the bar and the public. Moreover, as an exception to the rule on mootness, the courts will decide a question otherwise moot if it is capable of repetition, yet evading review.[18]
This case comes within the rule that courts will decide a question, otherwise moot and academic, if it is "capable of repetition, yet evading review." The issue of whether the CA pursuant to its internal rules can validly order consolidation of cases on the sole ground that the same involve a common question of law most likely will recur. Thus, there is a necessity to decide the case on the merits.
The Court will now resolve the merits of the sole issue raised in this petition, whether the CA gravely abused its discretion amounting to lack or excess of jurisdiction when it ordered the consolidation of the Deutsche Bank AG petition and the Vitarich petition.
Deutsche Bank AG argues that a common question of law alone would not warrant consolidation, and for cases to be consolidated, the same must be related cases. It cited as basis the ruling enunciated in the landmark case of Teston v. Development Bank of the Philippines,[19] that actions involving common question of law or fact may be tried together where they arise from the same act, event or transaction, involve the same or like issues, and depend largely or substantially on the same evidence. It contends that there was grave abuse of discretion on the part of the CA when it ordered the consolidation because Deutsche Bank AG Petition and the Vitarich Petition were not related, much less, intimately related cases. The two cases were entirely different with separate factual antecedents, having arisen from two separate petitions for rehabilitation of two distinct corporations. In addition, there were no interconnected transactions in, nor identical properties subject of, the two cases. It further argues that consolidation would only defeat, rather than serve, the purpose of consolidation.
SteelCorp counters that the CA may consolidate cases on the sole ground that the cases involve related questions of law. Thus, the fact that Deutsche Bank AG Petition and Vitarich Petition involve an identical question of law is sufficient to make them related cases which were proper for consolidation pursuant to Section 3(a), Rule III of the IRCA.
The Court agrees with Deutsche Bank AG.
Consolidation of actions involving a common question of law or fact is expressly authorized under Section 1, Rule 31 of the 1997 Rules of Civil Procedure, to wit:
Consolidation of cases is also allowed under Section 3, Rule III of the 2009 IRCA, to wit:
As can be gleaned from the aforequoted provision, for consolidation to be proper, the cases sought to be consolidated must be related.
Similarly, jurisprudence has laid down the requisites for consolidation. In the recent case of Steel Corporation of the Philippines v. Equitable PCI Bank, Inc.,[20] the Court held that "it is a time-honored principle that when two or more cases involve the same parties and affect closely related subject matters, they must be consolidated and jointly tried, in order to serve the best interests of the parties and to settle expeditiously the issues involved. In other words, consolidation is proper wherever the subject matter involved and relief demanded in the different suits make it expedient for the court to determine all of the issues involved and adjudicate the rights of the parties by hearing the suits together."
In the present case, there is no sufficient justification to order the consolidation inasmuch as the Deutsche Bank AG Petition has no relation whatsoever to the Vitarich Petition. To recall, the Deutsche Bank AG Petition is an appeal on certiorari from the Order dated October 28, 2009 of the RTC Batangas in Sp. Proc. No. 06-7993. Vitarich case, on the other hand, is an appeal on certiorari and mandamus from the Order dated January 19, 2009 of the RTC Bulacan in Civil Case No. 592-M-2006.
The fact that Deutsche Bank AG is a party to both cases does not make the proceedings intimately related. There is no factual relation between the two proceedings. SteelCorp proceedings originated from SteelCorp's rehabilitation proceedings which have nothing to do with the Vitarich proceeding that originated from Vitarich's rehabilitation proceeding.
Neither are there interconnected transactions, nor identical subject matter in the Deutsche Bank AG and Vitarich petitions. The former involved issue resulting from the assignment of credits of RCBC to Deutsche Bank AG whereas in the latter, the issue arose from the assignment of the receivables of various creditors of Vitarich to several corporations and special purpose vehicles (SPVs).
Verily, the two petitions having no factual relationship with and no interconnected transactions on the same subject matter, they cannot be deemed "related cases." As such, the necessity to consolidate does not become imperative. The order of consolidation by the CA on the sole ground that the cases involved a common question of law was, therefore, not in order.
It bears noting that the CA cited the cases of Zulueta v. Asia Brewery, Inc.,[21] Benguet Corporation, Inc. v. Court of Appeals,[22] and Active Wood Products Co., Inc. v. Court of Appeals[23] as jurisprudential basis of its order to consolidate. Its reliance on the said cases was misplaced as the factual milieus therein were not in all fours with the case at bench. The ruling in these cases, in fact, bolstered Deutsche Bank AG's position that for consolidation to be warranted the cases sought to be consolidated must not only involve related issues but also the same parties and closely related subject matters.
The CA cannot rely on the case of Zulueta v. Asia Brewery, Inc., to support its ruling that consolidation is proper when the cases involve the resolution of a common question of law or fact. In the said case, a joint trial of the two cases was justified because both arose out of, or an incident of, the same Dealership Agreement. Thus, the Court upheld the consolidation in this wise:
In the case of Benguet Corporation, Inc. v. Court of Appeals, where it was written that "the rationale for consolidation is to have all cases intimately related acted upon by one Court/Division to avoid the possibility of conflicting decisions being rendered."[25] A scrutiny of the ruling in Benguet reveals that the case pending in the 9th Division was merely an offshoot of the decision rendered in the 10th Division. Faulting the CA 9th Division with grave abuse of discretion in denying Benguet's Motion to Transfer Case No. CA-G.R. SP No. 12964 to the 10th Division, the Court held, thus:
Hence, consolidation of cases is proper when there is a real need to forestall the possibility of conflicting decisions being rendered in the cases.[27] In the case under consideration, considering that Deutsche Bank AG and Vitarich cases are not related, the risk of conflicting decisions is a remote probability.
Lastly, in Active Wood Products Co., Inc. v. Court of Appeals, the Court sustained the consolidation of the civil case filed by Active Wood against State Investment House and the latter's petition for a writ of possession in the land registration case as they involved the same parties and the same subject matter Active Wood's two parcels of land, thus:
Further, the Court finds merit in Deutsche Bank AG's contention that the consolidation of the subject cases will defeat the purpose of consolidation.
It is well recognized that the purpose of the rule on consolidation is to avoid multiplicity of suits; to guard against oppression and abuse; to prevent delays; to clear congested dockets; and to simplify the work of the trial court. In short, consolidation aims to attain justice with the least expense and vexation to the parties-litigants.[29] It contributes to the swift dispensation of justice, and is in accord with the aim of affording the parties a just, speedy, and inexpensive determination of their cases before the courts. Further, it results in the avoidance of the possibility of conflicting decisions being rendered by the courts in two or more cases, which would otherwise require a single judgment.[30]
Under the circumstances, the consolidation of the Deutsche Bank AG Petition with the Vitarich Petition does not appear to be a prudent move as it serves none of the purposes cited above. On the contrary and as correctly pointed out by Deutsche Bank AG, it will only complicate the resolution of the cases as the CA would have to consider the different factual antecedents of both the Deutsche Bank AG and Vitarich petitions.
Moreover, the question of law that the Vitarich proceedings allegedly shares with the SteelCorp Proceedings whether Vitarich's creditors could be compelled to disclose the sums paid for the assigned Vitarich loans - has long been finally resolved and has already become the law of the case among the parties in the Vitarich rehabilitation proceedings. Thus, the consolidation would unduly prejudice the banks and would lead to complications, delay or restriction on the right of the banks to the immediate dismissal of the Vitarich proceedings.
Furthermore, the consolidation will only subject the parties to added expense and unjust vexation. The number of parties will substantially increase so as the cost of furnishing the parties with pleadings, thereby defeating the very rationale behind consolidation.
Relevant is the case of Republic of the Phils. v. Hon. Mangrobang,[31] where the Court disallowed the consolidation of an ejectment case and a case for eminent domain because the consolidation thereof would complicate procedural requirements and delay the resolution of the cases which raised dissimilar issues. The Court held that fairness and due process might be hampered rather than helped if the cases were consolidated.
Likewise, in Philippine National Bank v. Tyan Ming Development, Inc.[32] the non-consolidation of PNB's petition for a writ of possession and GOTESCO's complaint for annulment of foreclosure proceeding was upheld for defeating the very purpose of consolidation, thus:
In the recent case of Espinoza v. United Overseas Bank Phils.,[34] the Court, in the same manner ruled against the consolidation of the proceedings for the issuance of a writ of possession with that for the declaration of nullity of a foreclosure sale on the ground that it would run counter to the purpose of consolidation:
Indeed, the consolidation of actions is addressed to the sound discretion of the court and its action in consolidating will not be disturbed in the absence of manifest abuse of discretion.[36] Grave abuse of discretion defies exact definition, but it generally refers to capricious or whimsical exercise of judgment as is equivalent to lack of jurisdiction. The abuse of discretion must be patent and gross as to amount to an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law, or to act at all in contemplation of law, as where the power is exercised in an arbitrary and despotic manner by reason of passion and hostility.[37]
In this particular case, however, the exercise of such discretion by the CA in ordering the consolidation of the Deutsche Bank AG Petition and the Vitarich Petition was less than judicious considering that the two cases were not intimately and substantially related.
Lest it be misunderstood, the CA may prescribe reasonable rules governing assignment of cases with similar questions of law or facts to one justice. In case of consolidation, however, it may be effected only if the said cases are related. Needless to state, assignment is different from consolidation.
WHEREFORE, the petition is GRANTED. The March 12, 2010 and the July 19, 2010 Resolutions of the Court of Appeals in CA-G.R. SP No. 111556 are REVERSED and SET ASIDE.
SO ORDERED.
Velasco, Jr., (Chairperson), Peralta, Abad, and Perlas-Bernabe, JJ., concur.
[1]Annex "A" of Petition, rollo, pp. 69-70. Penned by Associate Justice Magdangal M. De Leon with Associate Justice Romeo F. Barza and Associate Justice Franchito N. Diamante, concurring.
[2] Annex "B" of Petition, id. at 72-74.
[3] Annex "C" of Petition, id. at 76-112.
[4] Annex "H" of Petition, id. at 234-267.
[5] Annex "I" of Petition, id. at 269-297.
[6] Annex "J" of Petition, id. at 300.
[7] Annex "K" of Petition, id. at 304-305.
[8] Annex "L" of Petition, id.at 307-309.
[9] Annex "Q" of Petition, id. at 368-371.
[10] Annex "R" of Petition, id. at 373.
[11] Annex "X" of Petition, id. at 496-592.
[12] Rollo, pp. 69-70.
[13] Annex "AA" of Petition, id. at 525-558.
[14] Rollo, p. 656.
[15] 406 Phil. 543 (2001).
[16] Rollo, pp. 73-74.
[17] Id. at 48-49.
[18] Integrated Bar of the Philippines v. Atienza, G.R. No. 175241, February 24, 2010, 613 SCRA 518, 523, citing Funa v. Ermita, G.R. No. 184740, February 11, 2010, 612 SCRA 308.
[19] 511 Phil. 221 (2005).
[20] G.R. No. 190462 & G.R. No. 190538, November 17, 2010, 635 SCRA 403.
[21] 406 Phil. 543 (2001).
[22] 247-A Phil. 356 (1988).
[23] 260 Phil. 825 (1990).
[24] Zulueta v. Asia Brewery, Inc., supra note 21 at 555-556.
[25] Supra note 22.
[26] Benguet Corporation, Inc. v. Court of Appeals, supra note 22 at 363.
[27] Bank of Commerce v. Perlas-Bernabe, G.R. No. 172393, October 20, 2010, 634 SCRA 107, 121.
[28] Active Wood Products Co., Inc. v. Court of Appeals, supra note 23 at 829-830.
[29] Steel Corporation of the Philippines v. Equitable PCI Bank, Inc., supra note 20 at 416, citing Canos v. Peralta, 201 Phil. 422 (1982).
[30] Id., citing Yu, Sr. v. Basilio G. Magno Construction and Development Enterprises, Inc., G.R. Nos. 138701-02, October 17, 2006, 504 SCRA 618, 633.
[31] 422 Phil. 178 (2001).
[32] G.R. No. 183211, June 5, 2009, 588 SCRA 798.
[33] Id. at 804-806.
[34] G.R. No. 175380, March 22, 2010, 616 SCRA 353.
[35] Id. at 361.
[36] Teston v. Development Bank of the Philippines, supra note 19 at 229-230, citing De Vera v. Agloro, 489 Phil. 185 (2005).
[37] People of the Philippines v. Tan, G.R. No. 167526, July 26, 2010, 625 SCRA 388, 397; De Vera v. De Vera, G.R. No. 172832, April 7, 2009, 584 SCRA 506, 514-515, citing People v. Court of Appeals, 368 Phil. 169, 180 (1999).
THE FACTS
Private respondent Steel Corporation of the Philippines (SteelCorp) is a domestic corporation organized and existing under the laws of the Philippines with principal place of business in Munting Tubig, Balayan, Batangas. It is engaged in the business of manufacturing and distribution of cold-rolled, galvanized and pre-painted steel sheets and coils.
On December 7, 1995, SteelCorp, as borrower, entered into a loan agreement[3] with a consortium of lending banks and other financial institutions for the purpose of partially financing the construction of its integrated steel mill project. One of the participating lenders was Rizal Commercial Banking Corporation (RCBC).
SteelCorp failed to pay its loan obligations as they fell due. Thus, on September 11, 2006, Equitable PCI Bank, Inc. (now Banco de Oro) filed a creditor-initiated petition to place SteelCorp under corporate rehabilitation before the Regional Trial Court of Batangas, Branch 2, which was subsequently raffled to Branch 4 (RTC-Batangas). This case was docketed as Spec. Proc. No. 06-7993.[4]
In its Decision[5] dated December 3, 2007, the RTC-Batangas approved the proposed Rehabilitation Plan and ordered the parties to comply strictly with the provisions of the approved Rehabilitation Plan.
In February 2008 and during the pendency of the proceedings before the RTC-Batangas, RCBC and petitioner Deutsche Bank AG entered into a deed of assignment,[6] wherein the former assigned to the latter all of its rights, obligations, title to, and interest in, the loans which it had extended to SteelCorp in the aggregate outstanding principal amount of P94,412,862.58.
SteelCorp was duly informed of the said assignment through the Notice of Transfer[7] sent to it by RCBC.
Through its Entry of Appearance with Motion for Substitution of Parties[8] dated May 2, 2008, Deutsche Bank AG informed the RTC-Batangas of the said transfer and assignment of the loan obligations.
The RTC-Batangas, upon the motion of SteelCorp, issued its Order dated October 28, 2009, directing the assignees, including Deutsche Bank AG, to disclose the actual price or consideration paid by them for the SteelCorp debts assigned and transferred to them.[9] From this order, Deutsche Bank AG filed its Petition for Certiorari (With Urgent Application for a Temporary Restraining Order and/or Writ of Preliminary Injunction) with the CA docketed as CA-G.R. No. 111556.[10]
Records show that two other petitions for certiorari filed by other creditors of SteelCorp were pending before different divisions of the CA, both of which arising from the same October 28, 2009 Order of the RTC-Batangas. The cases were docketed as follows:
- CA-G.R. SP No. 111560 entitled "Investments 2234 Philippines Fund, Inc. v. Hon. Albert A. Kalalo, in His Capacity as the Presiding Judge of the Regional Trial Court of Batangas City, Branch 4 and Steel Corporation of the Philippines" (Investments 2234 Petition); and
- CA-G.R. SP No. 112175 entitled "Equitable PCI Bank, Inc. (now BDO Unibank, Inc.) v. Hon. Albert A. Kalalo in His Capacity as Presiding Judge of the Regional Trial Court of Batangas City, Branch 4 and Steel Corporation of the Philippines" (EPCIB Petition).
In the meantime, SteelCorp filed its Motion for Consolidation[11] dated February 18, 2010, praying for the consolidation of the Deutsche Bank AG Petition, together with the Investments 2234 Petition and EPCIB Petition, with the Vitarich Petition on the ground that the cases involved the same question of law whether creditors could be compelled to disclose the actual assignment price for credits in litigation which were assigned in the context of a corporate rehabilitation proceeding pursuant to Articles 1634 and 1236 of the Civil Code.
On March 12, 2010, the CA in CA-G.R. SP No. 111556 issued the assailed Resolution ordering the consolidation of Deutsche Bank AG Petition with the Vitarich Petition, to wit:
Finding merit in the motion, and pursuant to Section 3(a), Rule III of the Internal Rules of the Court of Appeals, the instant petition is ordered CONSOLIDATED with CA-G.R. SP No. 107535 (the case with the lower docket number), subject to the conformity of the ponente thereof and with right of replacement with a case of similar nature and status.
SO ORDERED.[12]
It appears from the records that the Vitarich Petition emanated from Civil Case No. 592-M-2006 entitled "In the Matter of the Petition for Corporate Rehabilitation of Vitarich Corporation" which is currently pending before Branch 7, Regional Trial Court of Bulacan (RTC-Bulacan).
The RTC-Bulacan in its Decision dated May 31, 2007, approved the Vitarich rehabilitation plan and upheld the rights of the assignees as subrogees to all the rights and obligations of the original creditors.
Vitarich sought a partial reversal of the said decision via a petition for review under Rule 43 of the 1997 Rules of Court (docketed as CA-G.R. SP No. 99374), contending that it should only be made to pay the discounted transfer prices of the assigned credits should it decide to exercise its right of redemption. Vitarich, however, withdrew the said petition and instead filed a motion to direct the assignees to disclose the amounts paid by them to their assignors.
In its Order dated January 15, 2009, the RTC-Bulacan denied Vitarich's motion, ruling that the rehabilitation case before it could not be considered as a litigation as contemplated in Article 1634 of the Civil Code.
Hence, Vitarich filed its petition[13] praying that the CA order the assignees to disclose the actual amount paid to their respective assignors so that it could pay the transfer prices of the assigned credits should it exercise its right of redemption. Several banks moved for the dismissal of this petition on the ground that the ruling on the issue raised therein had already become final.
Deutsche Bank AG filed a motion for reconsideration[14] of the March 12, 2010 CA resolution arguing that the Deutsche Bank AG petition and the Vitarich petition were not related cases that would merit consolidation. It stressed that a common question of law alone does not warrant consolidation inasmuch as the Internal Rules of the CA (IRCA) provides that for consolidation to be proper, the cases must be related. It also claimed that the consolidation of these two unrelated cases would not serve the purpose of consolidation, which was to obtain justice with the least expense and vexation to the litigants.
The said motion was, however, denied by the CA in its Resolution dated July 19, 2010. Citing Zulueta v. Asia Brewery, Inc.,[15] it held that consolidation of cases under Section 3(a), Rule III of the IRCA was proper as the cases involved common questions of law.
Thus, the CA agreed with the SteelCorp's conclusion that when two cases involved the same parties, or related questions of fact, or related questions of law, then they were considered as related cases for purposes of consolidation. The pertinent portion of the CA resolution reads:
To deny the transfer of a case to a court or division where another case involving the same question of law is pending could lead to further protracted litigations. The rationale for consolidation is to have all cases intimately related acted upon by one Court/Division to avoid the possibility of conflicting decisions being rendered that will not serve the orderly administration of justice.
The added expense and unjustified vexation intimated by petitioner are all in the mind. One division of this Court would be able to resolve the issue in both petitions with more dispatch and accord than two divisions.
WHEREFORE, the motion for reconsideration is DENIED.
SO ORDERED.[16]
Hence, Deutsche Bank AG interposes the present special civil action before this Court anchored on the following
GROUNDS
THE RESPONDENT COURT COMMITTED GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK OR EXCESS OF JURISDICTION, IN ISSUING THE ASSAILED RESOLUTIONS AND ORDERING THE CONSOLIDATION OF THE TWO (2) SUBJECT PETITIONS CONSIDERING THAT:
(I)
UNDER SECTION 3(A) RULE III OF THE INTERNAL RULES OF THE COURT OF APPEALS AND LONGSTANDING JURISPRUDENCE, FOR CONSOLIDATION TO BE PROPER, THE CASES MUST BE RELATED, I.E., THEY ARISE FROM THE SAME ACT, EVENT OR TRANSACTION, INVOLVE THE SAME OR LIKE ISSUES, AND DEPEND LARGELY OR SUBSTANTIALLY ON THE SAME EVIDENCE. HERE, THE CASES SOUGHT TO BE CONSOLIDATED ARE TOTALLY UNRELATED;
(II)
THE CONSOLIDATION OF THE TWO CASES WILL BE COMPLETELY AGAINST THE PURPOSE OF CONSOLIDATION, WHICH IS TO OBTAIN JUSTICE WITH THE LEAST EXPENSE AND VEXATION TO THE LITIGANTS.[17]
It appears from the records that on November 18, 2011, SteelCorp filed a manifestation dated November 17, 2011, stating that the assailed resolution ordering consolidation dated March 12, 2010 had been issued in response to the Motion for Consolidation dated February 18, 2010 filed therein by SteelCorp. SteelCorp manifested that on November 14, 2011, in CA-G.R. SP No. 111556, it filed its Motion to Withdraw the said Motion for Consolidation in order to forestall further delay and for the CA to proceed in the resolution of the merits of the case, rendering this petition moot.
In view of the said withdrawal of the motion for consolidation, the present petition assailing the CA's order of consolidation has certainly been rendered moot and academic.
A moot and academic case is one that ceases to present a justiciable controversy by virtue of supervening events, so that a declaration thereon would be of no practical use or value. Generally, courts decline jurisdiction over such case or dismiss it on ground of mootness. However, even in cases where supervening events had made the cases moot, this Court did not hesitate to resolve the legal or constitutional issues raised to formulate controlling principles to guide the bench, the bar and the public. Moreover, as an exception to the rule on mootness, the courts will decide a question otherwise moot if it is capable of repetition, yet evading review.[18]
This case comes within the rule that courts will decide a question, otherwise moot and academic, if it is "capable of repetition, yet evading review." The issue of whether the CA pursuant to its internal rules can validly order consolidation of cases on the sole ground that the same involve a common question of law most likely will recur. Thus, there is a necessity to decide the case on the merits.
The Court will now resolve the merits of the sole issue raised in this petition, whether the CA gravely abused its discretion amounting to lack or excess of jurisdiction when it ordered the consolidation of the Deutsche Bank AG petition and the Vitarich petition.
Deutsche Bank AG argues that a common question of law alone would not warrant consolidation, and for cases to be consolidated, the same must be related cases. It cited as basis the ruling enunciated in the landmark case of Teston v. Development Bank of the Philippines,[19] that actions involving common question of law or fact may be tried together where they arise from the same act, event or transaction, involve the same or like issues, and depend largely or substantially on the same evidence. It contends that there was grave abuse of discretion on the part of the CA when it ordered the consolidation because Deutsche Bank AG Petition and the Vitarich Petition were not related, much less, intimately related cases. The two cases were entirely different with separate factual antecedents, having arisen from two separate petitions for rehabilitation of two distinct corporations. In addition, there were no interconnected transactions in, nor identical properties subject of, the two cases. It further argues that consolidation would only defeat, rather than serve, the purpose of consolidation.
SteelCorp counters that the CA may consolidate cases on the sole ground that the cases involve related questions of law. Thus, the fact that Deutsche Bank AG Petition and Vitarich Petition involve an identical question of law is sufficient to make them related cases which were proper for consolidation pursuant to Section 3(a), Rule III of the IRCA.
The Court agrees with Deutsche Bank AG.
Consolidation of actions involving a common question of law or fact is expressly authorized under Section 1, Rule 31 of the 1997 Rules of Civil Procedure, to wit:
SECTION 1. Consolidati0n. When actions involving a common question of law or fact are pending before the court, it may order a joint hearing or trial of any or all the matters in issue in the actions; it may order all the actions consolidated; and it may make such orders concerning proceedings therein as may tend to avoid unnecessary costs or delay.
Consolidation of cases is also allowed under Section 3, Rule III of the 2009 IRCA, to wit:
Consolidation of Cases. When related cases are assigned to different Justices, they may be consolidated and assigned to one Justice.
(a) Upon motion of a party with notice to the other party/ies, or at the instance of the Justice to whom any of the related cases is assigned, upon notice to the parties, consolidation shall ensue when the cases involve the same parties and/or related questions of fact and/or law.
(b) Consolidated cases shall pertain to the Justice
(1) To whom the case with the lowest docket number is assigned, if they are of the same kind;
(2) To whom the criminal case with the lowest number is assigned, if two or more of the cases are criminal and the others are civil or special;
(3) To whom the criminal case is assigned and the other are civil or special; and
(4) To whom the civil case is assigned, or to whom the civil case with the lowest docket number is assigned, if the cases involved are civil and special.
(c) Notice of the consolidation and replacement shall be given to the Raffle Staff and the Judicial Records Division. (Emphasis and underscoring supplied)
As can be gleaned from the aforequoted provision, for consolidation to be proper, the cases sought to be consolidated must be related.
Similarly, jurisprudence has laid down the requisites for consolidation. In the recent case of Steel Corporation of the Philippines v. Equitable PCI Bank, Inc.,[20] the Court held that "it is a time-honored principle that when two or more cases involve the same parties and affect closely related subject matters, they must be consolidated and jointly tried, in order to serve the best interests of the parties and to settle expeditiously the issues involved. In other words, consolidation is proper wherever the subject matter involved and relief demanded in the different suits make it expedient for the court to determine all of the issues involved and adjudicate the rights of the parties by hearing the suits together."
In the present case, there is no sufficient justification to order the consolidation inasmuch as the Deutsche Bank AG Petition has no relation whatsoever to the Vitarich Petition. To recall, the Deutsche Bank AG Petition is an appeal on certiorari from the Order dated October 28, 2009 of the RTC Batangas in Sp. Proc. No. 06-7993. Vitarich case, on the other hand, is an appeal on certiorari and mandamus from the Order dated January 19, 2009 of the RTC Bulacan in Civil Case No. 592-M-2006.
The fact that Deutsche Bank AG is a party to both cases does not make the proceedings intimately related. There is no factual relation between the two proceedings. SteelCorp proceedings originated from SteelCorp's rehabilitation proceedings which have nothing to do with the Vitarich proceeding that originated from Vitarich's rehabilitation proceeding.
Neither are there interconnected transactions, nor identical subject matter in the Deutsche Bank AG and Vitarich petitions. The former involved issue resulting from the assignment of credits of RCBC to Deutsche Bank AG whereas in the latter, the issue arose from the assignment of the receivables of various creditors of Vitarich to several corporations and special purpose vehicles (SPVs).
Verily, the two petitions having no factual relationship with and no interconnected transactions on the same subject matter, they cannot be deemed "related cases." As such, the necessity to consolidate does not become imperative. The order of consolidation by the CA on the sole ground that the cases involved a common question of law was, therefore, not in order.
It bears noting that the CA cited the cases of Zulueta v. Asia Brewery, Inc.,[21] Benguet Corporation, Inc. v. Court of Appeals,[22] and Active Wood Products Co., Inc. v. Court of Appeals[23] as jurisprudential basis of its order to consolidate. Its reliance on the said cases was misplaced as the factual milieus therein were not in all fours with the case at bench. The ruling in these cases, in fact, bolstered Deutsche Bank AG's position that for consolidation to be warranted the cases sought to be consolidated must not only involve related issues but also the same parties and closely related subject matters.
The CA cannot rely on the case of Zulueta v. Asia Brewery, Inc., to support its ruling that consolidation is proper when the cases involve the resolution of a common question of law or fact. In the said case, a joint trial of the two cases was justified because both arose out of, or an incident of, the same Dealership Agreement. Thus, the Court upheld the consolidation in this wise:
Inasmuch as the binding force of the Dealership Agreement was put in question, it would be more practical and convenient to submit to the Iloilo court all the incidents and their consequences. The issues in both civil cases pertain to the respective obligations of the same parties under the Dealership Agreement. Thus, every transaction as well as liability arising from it must be resolved in the judicial forum where it is put in issue. The consolidation of the two cases then becomes imperative to a complete, comprehensive and consistent determination of all these related issues.
Two cases involving the same parties and affecting closely related subject matters must be ordered consolidated and jointly tried in court, where the earlier case was filed.[24] (underscoring supplied)
In the case of Benguet Corporation, Inc. v. Court of Appeals, where it was written that "the rationale for consolidation is to have all cases intimately related acted upon by one Court/Division to avoid the possibility of conflicting decisions being rendered."[25] A scrutiny of the ruling in Benguet reveals that the case pending in the 9th Division was merely an offshoot of the decision rendered in the 10th Division. Faulting the CA 9th Division with grave abuse of discretion in denying Benguet's Motion to Transfer Case No. CA-G.R. SP No. 12964 to the 10th Division, the Court held, thus:
2. The matter elevated to the 9th Division, namely, the implementation of the Writ of Preliminary Mandatory Injunction with Break-open Order issued by the Trial Court on 29 September 1987 in favor of BENGUET in the Reconveyance Case (Civil Case No. 5815) was a consequence of the very Decision rendered by the 10th Division. It was, therefore, properly within its competence being intimately related to the very issues raised and resolved by said Division.
3. The rationale for consolidation is to have all cases intimately related acted upon by one Court Division to avoid the possibility of conflicting decisions in cases involving the same facts and common questions of law. The cases before the 10th Division and the 9th Division of the Court of Appeals are two (2) such intimately and substantially related cases. Consolidation being called for it cannot be justifiably argued, as private respondents do, that BENGUET is estopped from pleading for such consolidation. To deny the transfer could lead to further protracted litigations to the detriment of the efficient and effective determination of actions and proceedings.[26] (underscoring supplied)
Hence, consolidation of cases is proper when there is a real need to forestall the possibility of conflicting decisions being rendered in the cases.[27] In the case under consideration, considering that Deutsche Bank AG and Vitarich cases are not related, the risk of conflicting decisions is a remote probability.
Lastly, in Active Wood Products Co., Inc. v. Court of Appeals, the Court sustained the consolidation of the civil case filed by Active Wood against State Investment House and the latter's petition for a writ of possession in the land registration case as they involved the same parties and the same subject matter Active Wood's two parcels of land, thus:
The consolidation of cases becomes mandatory because it involves the same parties and the same subject matter which is the same parcel of land. Such consolidation is desirable to avoid confusion and unnecessary costs and expenses with the multiplicity of suits.[28] xxx (underscoring supplied)
Further, the Court finds merit in Deutsche Bank AG's contention that the consolidation of the subject cases will defeat the purpose of consolidation.
It is well recognized that the purpose of the rule on consolidation is to avoid multiplicity of suits; to guard against oppression and abuse; to prevent delays; to clear congested dockets; and to simplify the work of the trial court. In short, consolidation aims to attain justice with the least expense and vexation to the parties-litigants.[29] It contributes to the swift dispensation of justice, and is in accord with the aim of affording the parties a just, speedy, and inexpensive determination of their cases before the courts. Further, it results in the avoidance of the possibility of conflicting decisions being rendered by the courts in two or more cases, which would otherwise require a single judgment.[30]
Under the circumstances, the consolidation of the Deutsche Bank AG Petition with the Vitarich Petition does not appear to be a prudent move as it serves none of the purposes cited above. On the contrary and as correctly pointed out by Deutsche Bank AG, it will only complicate the resolution of the cases as the CA would have to consider the different factual antecedents of both the Deutsche Bank AG and Vitarich petitions.
Moreover, the question of law that the Vitarich proceedings allegedly shares with the SteelCorp Proceedings whether Vitarich's creditors could be compelled to disclose the sums paid for the assigned Vitarich loans - has long been finally resolved and has already become the law of the case among the parties in the Vitarich rehabilitation proceedings. Thus, the consolidation would unduly prejudice the banks and would lead to complications, delay or restriction on the right of the banks to the immediate dismissal of the Vitarich proceedings.
Furthermore, the consolidation will only subject the parties to added expense and unjust vexation. The number of parties will substantially increase so as the cost of furnishing the parties with pleadings, thereby defeating the very rationale behind consolidation.
Relevant is the case of Republic of the Phils. v. Hon. Mangrobang,[31] where the Court disallowed the consolidation of an ejectment case and a case for eminent domain because the consolidation thereof would complicate procedural requirements and delay the resolution of the cases which raised dissimilar issues. The Court held that fairness and due process might be hampered rather than helped if the cases were consolidated.
Likewise, in Philippine National Bank v. Tyan Ming Development, Inc.[32] the non-consolidation of PNB's petition for a writ of possession and GOTESCO's complaint for annulment of foreclosure proceeding was upheld for defeating the very purpose of consolidation, thus:
The record shows that PNB's petition was filed on May 26, 2006, and remains pending after three (3) years, despite the summary nature of the petition. Obviously, the consolidation only delayed the issuance of the desired writ of possession. Further, it prejudiced PNB's right to take immediate possession of the property and gave GOTESCO undue advantage, for GOTESCO continues to possess the property during the pendency of the consolidated cases, despite the fact that title to the property is no longer in its name.
It should be stressed that GOTESCO was well aware of the expiration of the period to redeem the property. Yet, it did not exercise its right of redemption. There was not even an attempt to redeem the property. Instead, it filed a case for annulment of foreclosure, specific performance, and damages and prayed for a writ of injunction to prevent PNB from consolidating its title. GOTESCO's maneuvering, however, failed, as the CA and this Court refused to issue the desired writ of injunction.
Cognizant that the next logical step would be for PNB to seek the delivery of possession of the property, GOTESCO now tries to delay the issuance of writ of possession. It is clear that the motion for consolidation was filed merely to frustrate PNB's right to immediate possession of the property. It is a transparent ploy to delay, if not to prevent, PNB from taking possession of the property it acquired at a public auction ten (10) years ago. This we cannot tolerate.
xxx
In De Vera v. Agloro, this Court upheld the denial by the RTC of a motion for consolidation of a petition for issuance of a writ of possession with a civil action, as it would prejudice the right of one of the parties, viz.:
It bears stressing that consolidation is aimed to obtain justice with the least expense and vexation to the litigants. The object of consolidation is to avoid multiplicity of suits, guard against oppression or abuse, prevent delays and save the litigants unnecessary acts and expense. Consolidation should be denied when prejudice would result to any of the parties or would cause complications, delay, prejudice, cut off, or restrict the rights of a party.[33] (underscoring supplied)
In the recent case of Espinoza v. United Overseas Bank Phils.,[34] the Court, in the same manner ruled against the consolidation of the proceedings for the issuance of a writ of possession with that for the declaration of nullity of a foreclosure sale on the ground that it would run counter to the purpose of consolidation:
In this case, title to the litigated property had already been consolidated in the name of respondent, making the issuance of a writ of possession a matter of right. Consequently, the consolidation of the petition for the issuance of a writ of possession with the proceedings for nullification of foreclosure would be highly improper. Otherwise, not only will the very purpose of consolidation (which is to avoid unnecessary delay) be defeated but the procedural matter of consolidation will also adversely affect the substantive right of possession as an incident of ownership.[35]
Indeed, the consolidation of actions is addressed to the sound discretion of the court and its action in consolidating will not be disturbed in the absence of manifest abuse of discretion.[36] Grave abuse of discretion defies exact definition, but it generally refers to capricious or whimsical exercise of judgment as is equivalent to lack of jurisdiction. The abuse of discretion must be patent and gross as to amount to an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law, or to act at all in contemplation of law, as where the power is exercised in an arbitrary and despotic manner by reason of passion and hostility.[37]
In this particular case, however, the exercise of such discretion by the CA in ordering the consolidation of the Deutsche Bank AG Petition and the Vitarich Petition was less than judicious considering that the two cases were not intimately and substantially related.
Lest it be misunderstood, the CA may prescribe reasonable rules governing assignment of cases with similar questions of law or facts to one justice. In case of consolidation, however, it may be effected only if the said cases are related. Needless to state, assignment is different from consolidation.
WHEREFORE, the petition is GRANTED. The March 12, 2010 and the July 19, 2010 Resolutions of the Court of Appeals in CA-G.R. SP No. 111556 are REVERSED and SET ASIDE.
SO ORDERED.
Velasco, Jr., (Chairperson), Peralta, Abad, and Perlas-Bernabe, JJ., concur.
[1]Annex "A" of Petition, rollo, pp. 69-70. Penned by Associate Justice Magdangal M. De Leon with Associate Justice Romeo F. Barza and Associate Justice Franchito N. Diamante, concurring.
[2] Annex "B" of Petition, id. at 72-74.
[3] Annex "C" of Petition, id. at 76-112.
[4] Annex "H" of Petition, id. at 234-267.
[5] Annex "I" of Petition, id. at 269-297.
[6] Annex "J" of Petition, id. at 300.
[7] Annex "K" of Petition, id. at 304-305.
[8] Annex "L" of Petition, id.at 307-309.
[9] Annex "Q" of Petition, id. at 368-371.
[10] Annex "R" of Petition, id. at 373.
[11] Annex "X" of Petition, id. at 496-592.
[12] Rollo, pp. 69-70.
[13] Annex "AA" of Petition, id. at 525-558.
[14] Rollo, p. 656.
[15] 406 Phil. 543 (2001).
[16] Rollo, pp. 73-74.
[17] Id. at 48-49.
[18] Integrated Bar of the Philippines v. Atienza, G.R. No. 175241, February 24, 2010, 613 SCRA 518, 523, citing Funa v. Ermita, G.R. No. 184740, February 11, 2010, 612 SCRA 308.
[19] 511 Phil. 221 (2005).
[20] G.R. No. 190462 & G.R. No. 190538, November 17, 2010, 635 SCRA 403.
[21] 406 Phil. 543 (2001).
[22] 247-A Phil. 356 (1988).
[23] 260 Phil. 825 (1990).
[24] Zulueta v. Asia Brewery, Inc., supra note 21 at 555-556.
[25] Supra note 22.
[26] Benguet Corporation, Inc. v. Court of Appeals, supra note 22 at 363.
[27] Bank of Commerce v. Perlas-Bernabe, G.R. No. 172393, October 20, 2010, 634 SCRA 107, 121.
[28] Active Wood Products Co., Inc. v. Court of Appeals, supra note 23 at 829-830.
[29] Steel Corporation of the Philippines v. Equitable PCI Bank, Inc., supra note 20 at 416, citing Canos v. Peralta, 201 Phil. 422 (1982).
[30] Id., citing Yu, Sr. v. Basilio G. Magno Construction and Development Enterprises, Inc., G.R. Nos. 138701-02, October 17, 2006, 504 SCRA 618, 633.
[31] 422 Phil. 178 (2001).
[32] G.R. No. 183211, June 5, 2009, 588 SCRA 798.
[33] Id. at 804-806.
[34] G.R. No. 175380, March 22, 2010, 616 SCRA 353.
[35] Id. at 361.
[36] Teston v. Development Bank of the Philippines, supra note 19 at 229-230, citing De Vera v. Agloro, 489 Phil. 185 (2005).
[37] People of the Philippines v. Tan, G.R. No. 167526, July 26, 2010, 625 SCRA 388, 397; De Vera v. De Vera, G.R. No. 172832, April 7, 2009, 584 SCRA 506, 514-515, citing People v. Court of Appeals, 368 Phil. 169, 180 (1999).