FIRST DIVISION
[ G.R. NO. 158608, January 27, 2006 ]JOHANNES RIESENBECK v. SPS. SILVINO G. MACEREN +
JOHANNES RIESENBECK, PETITIONER, VS. SPOUSES SILVINO G. MACEREN, JR. AND PATRICIA A. MACEREN, RESPONDENTS.
D E C I S I O N
JOHANNES RIESENBECK v. SPS. SILVINO G. MACEREN +
JOHANNES RIESENBECK, PETITIONER, VS. SPOUSES SILVINO G. MACEREN, JR. AND PATRICIA A. MACEREN, RESPONDENTS.
D E C I S I O N
CHICO-NAZARIO, J.:
Impugned in this petition for review is the Decision[1] dated 02 September 2002 of the Court of Appeals, which dismissed the appeal filed by petitioner from the Order[2] of the Regional
Trial Court (RTC) of Lapu-Lapu City, Branch 54, in civil case No. 4307-L for annulment of Contract of Lease on the ground that the case has been rendered moot. Assailed likewise is the Resolution[3] of the Court of Appeals denying the motion for
reconsideration still on mootness and forum shopping.
We recount the facts paving the way to this petition:
Respondents Atty. Silvino G. Maceren, Jr., and his wife Patricia A. Maceren are the registered owners of a beach resort, known as the Golden Views Resort, situated at Buot, Punta Engaño, Lapu-Lapu City.
On 25 March 1988, Juergen Maile, a German national, and respondents Atty. Silvino G. Maceren, Jr., and his wife Patricia A. Maceren, entered into a Contract of Lease.[4] Petitioner Johannes Riesenbeck, a Dutch national, was the substitute lessee. Linda Villariasa,[5] Filipino wife of Riesenbeck, also appended her signature in the contract.[6] Excerpts of the lease contract provide:
Meanwhile, respondent Atty. Maceren sent a letter to petitioner Johannes Riesenbeck, as lessee of the property, informing the latter of his intention to transfer the ownership of the property subject of the Contract of Lease to the family corporation MAGICCORP. Thereafter, respondent Atty. Maceren was able to effect the transfer of the leased property to MAGICCORP based on an instrument denominated as "Deed of Exchange of Shares of Stocks and Transfer of Property."
Stirred by the foregoing event, on 30 March 1993, petitioner's wife, Linda Villariasa - Riesenbeck filed a complaint for Redemption tagged as Civil Case No. 2819 against M. A Gen. Industrial and Commercial Corp. or MAGICCORP pursuant to clause 11[8] of the Contract of Lease as cited above. In an order dated 11 March 1994, the trial court dismissed the complaint for redemption, with a ruling that there was no actual transfer of ownership interests of the leased property when the same was transferred by respondent Atty. Maceren to defendant corporation in exchange for the latter's shares of stock inasmuch as the transfer was merely one in form and not in substance, citing Delpher Trades Corporation v. Intermediate Appellate Court.[9] The Court of Appeals affirmed the ruling of the trial court on 08 February 2000.
Awaiting the conclusion of Civil Case No. 2819 for redemption and Civil Case No. 2296-L for Declaratory Relief, petitioner Johannes Riesenbeck filed on 13 September 1995 the case subject of the present review docketed as Civil Case No. 4307-L[10] against respondents, this time, to annul the aforementioned contract of lease. Petitioner replicated his allegations in his earlier Complaint for Declaratory Relief that he had suffered damages from respondents' act of defrauding him into entering into the abovementioned Contract of Lease. Petitioner specifically asserted that respondents swayed petitioner to enter into the Contract of Lease by stipulating, inter alia, that petitioner will have the first option or priority to purchase the same from respondents. Likewise, petitioner echoed the contention that he was conned as to the amount of taxes due inasmuch as he was assessed and had paid respondents P5,000 per taxable year pursuant to the provision in the said contract, only to find out much later that the taxes payable were only slightly over P2,000.
On 10 October 1995, respondents filed a Motion to Dismiss[11] citing the following grounds: (1) two other actions between the same parties and for the same cause are pending, one before Branch 53 of the RTC of Lapu-Lapu City, docketed as Civil Case No. 2296-L, and the other, before the Court of Appeals in CA-G.R. CV No. 45655, docketed as Civil Case No. 2819-L in the trial court; (2) the complaint violates the proscription against forum-shopping; and (3) the complaint does not state a cause of action. respondents averred in their Motion to Dismiss that the lease contract which petitioner wants to be annulled was already terminated by respondents effective 30 November 1994, or almost a year before this case was filed before the trial court on 13 September 1995 due to petitioner's violation of clauses 10 and 11[12] of their contract.
On 20 May 1996, the trial court issued a verdict[13] favoring the respondents and granting the Motion to Dismiss filed by respondents on the rationale that the present case is akin to forum-shopping. In the trial court's elucidation, there is no dispute that the plaintiff herein is the same plaintiff in Civil Case No. 2296-L for Declaratory Relief and at least, vicariously, in Civil Case No. 2819 for Redemption, since his wife is the one named as party plaintiff. Said trial court noted that all these cases sprung out of the same Contract of Lease executed by the same parties. In the trial court's words: "While it may be conceded that the present complaint, seeking as it does, the annulment of the said lease contract is literally different from the other two, which by the very nature of the action, necessarily sought the enforcement or at least, presupposes the recognition of the validity of the terms and conditions embodied therein, nonetheless, this fact standing alone, does not militate against the proscription against multiplicity of suits and forum-shopping, if the filing thereof would bring about the same evil sought to be avoided by the said rule."[14]
On 02 September 2002, the Court of Appeals rendered a Decision[15] affirming the trial court's decision with the initial finding that there was no forum-shopping, but nonetheless, dismissing the case for being moot. The Court of Appeals imparted the following rationale-
His motion for reconsideration having been denied by the Court of Appeals, petitioner now lays his cause before this Court through this petition for review where he assigns the following lone error to the Court of Appeals. Thus:
Petitioner submits that the potestative act of respondents in unilaterally and extrajudicially terminating the lease contract could not have rendered the said contract functus oficio inasmuch as such termination was without judicial approval.[19] Petitioner says that it is precisely this arbitrary termination of the contract by respondent that petitioner now seeks redress for as he had suffered damages from respondents' act of defrauding him into entering into the said Contract of Lease. Petitioner specifically claims that respondents convinced petitioner to enter into the Contract of Lease by stipulating, among other things, that petitioner will have the first option or priority to purchase the same from respondents. Repeating his argument, petitioner claims that as he is unfamiliar with the Philippine laws, and trusting on the representation of respondent who is a lawyer, he entered into a contract and spent, among other things, P1,153,890. Likewise, petitioner avers that he was duped into believing that respondents will be shouldering part of the taxes on the property because petitioner will only be allegedly contributing the sum of P5,000 per tax period, only to find out much later that the taxes due were only slightly over P2,000. It is these fraudulent acts resulting in petitioner's damage and prejudice that is the heart of the complaint filed in the present case, according to petitioner. [20]
Respondents, on the other hand, submit that the present petition ought to be dismissed not only because it is moot, but also because its filing smacks of forum shopping.
We find, as the Court of Appeals had found, that the petition was rendered moot or illusory by the fact that respondents have already pre-terminated the lease contract effective 30 November 1994, or almost a year before this case was filed with the trial court on 13 September 1995. The pre-termination was prompted by petitioner's violation of the terms and conditions of their contract following petitioner's act of sub-leasing the leased property sans the approval of private respondents in stark breach of Clause 10[21] in relation to Clause 13[22] of said contract. As the records bear out, petitioner had sub-leased the seven units of the property in question to a Japanese national against whom he filed a rap for Grave Threats with the Police Station of Lapu-lapu City per his Sworn Statement[23] taken dated 27 October 1994 in the presence of his wife, Linda Riesenbeck. Said affidavit is reproduced below for clarity of exposition:12345
The Contract of Lease was called off by respondents in virtue of Clauses No. 10 and No. 13 thereof to which the parties voluntarily bound themselves. In Manila Bay Club Corp. v. Court of Appeals,[25] this Court interpreted as requiring
mandatory compliance by the parties a provision in a lease contract that failure or neglect to perform or comply with any of the covenants, conditions, agreements or restrictions stipulated shall result in the automatic termination and cancellation of the
lease.
In accord with this ruling is People's Industrial and Commercial Corp. v. Court of Appeals[26] where the Court held that there is nothing wrong if the parties to a lease contract agreed on certain mandatory provisions concerning their respective rights and obligations, such as the procurement of insurance and the rescission clause. Thus -
As weighed on the basis of the foregoing, the Court holds that the petition no longer presents a live and justiciable controversy.
Petitioner further contends that the unilateral termination by respondents of the Contract of Lease has not wiped out the damages sustained by petitioner on the premise that action for damages based on respondents' act of defrauding him in entering into the Contract of Lease can, nevertheless, prosper dealing as it does with fraud committed prior to said termination such as respondents' manner of including the stipulation that petitioner has the first option to buy despite their knowledge that as a foreigner he could not own properties in the Philippines.[28]
We find no such sinister motive from the act of respondents of stipulating in the Contract of Lease that the petitioner has the first option to buy the subject property. The Court is convinced as to the veracity of respondents' assertion that petitioner was well aware that he could not own a property. This is precisely the reason why petitioner's wife, Linda Villarasa who is a Filipina, was made a party to the contract and has appended her signature thereon so that it is she who can exercise the option to buy the subject property in his behalf as clearly stipulated in Clause 16 of the Contract of Lease which states:
In brief, independently from this civil case for Annulment of Contract filed by petitioner Johannes Riesenbeck against the respondents, petitioner had earlier filed a case for Declaratory Relief which was, at that time, still pending in another branch of the Regional Trial Court while his wife, in his behalf, filed a case for Redemption, where in both cases petitioner, in his own behalf or vicariously through his wife, sought the enforcement of the provisions of the Contract of Lease.
During the pendency of the suit for Declaratory Relief and the other case for Redemption, does the filing of a third suit for Annulment of Contract to prevent the enforcement of the contract violate the ban against forum shopping?
The litmus test to determine if forum-shopping exists is where the elements of litis pendentia are present or where a final judgment in one case will amount to res judicata in the other. Consequently, where a litigant (or one representing the same interest or person) sues the same party against whom another action or actions for the alleged violation of the same right and the enforcement of the same relief is/are still pending, the defense of litis pendencia in one case is a bar to the others; and, a final judgment in one would constitute res judicata and this would cause the dismissal of the rest.[32] What is truly important to consider in determining whether forum-shopping exists or not is the vexation caused the courts and parties-litigant by a party who asks different courts and/or administrative agencies to rule on the same or related causes and/or to grant the same or substantially the same reliefs, in the process creating the possibility of conflicting decisions being rendered by the different fora upon the same issue.[33]
Applying the foregoing principles in the present case as compared with the first two cases, it is obvious that there exists identity of parties or interests represented, identity of rights or causes, and identity of reliefs sought. In fact, there are common allegations in the complaints in these three cases, particularly on the matters of taxes, the alleged fraud committed in making petitioner believe that he could own properties in the Philippines, as well as alleged ploys adopted by respondents which tainted the Contract of Lease at its inception. We further note that the original complaint in the court a quo which gave rise to the instant petition was filed by the lessee to annul or bar the enforcement of the Contract of Lease. On the other hand, the complaints in the two other cases seek to enforce the contract or at least to declare the rights of petitioner or his wife, accruing from said covenant. The objective or the relief being sought, though worded differently, is the same, namely, to enable the petitioner to profit from the Contract of Lease, either from the enforcement thereof or from its annulment. In other words, in the present case, petitioner is seeking to accomplish what he and his wife failed to do in the other two cases. Citing Danville Maritime, Inc. v. Commission on Audit,[34] this Court, in First Philippine International Bank v. Court of Appeals[35] ruled that the filing by a party of two apparently different actions, but with the same objective, constituted forum shopping.
In this case, a possible decision annulling the contract and barring the parties from enforcing or implementing the said contract will directly conflict with a decision recognizing the perfection and directing the enforcement of the Contract of Lease. Indeed, a final decision in the one would constitute res judicata in the other.[36]
Altogether, as both the lower court and the Court of Appeals have ruled, petitioner or his wife already sought to recover damages in the suit for Declaratory Relief and Redemption based on separate provisions of the same lease contract subject of the instant case and his posture of claiming damages once more, this time via the present case under a varied denomination of action, but anchored on the same Contract of Lease, is an utter disdain of the imperative forbidding forum shopping.
By and large, the Court must hold, as we now hold, that the present action cannot pass muster on sheer dictates of law and fair play.
WHEREFORE, the instant petition is hereby DENIED and the Decision[37] dated 02 September 2002 and the Resolution[38] dated 12 May 2003 of the Court of Appeals are hereby AFFIRMED. With costs.
SO ORDERED.
[1] Rollo, pp. 43-48. Penned by Associate Justice Salvador J. Valdez, Jr. with Associate Justices Mercedes Gozo-Dadole and Amelita G. Tolentino concurring.
[2] Id., pp. 40-41.
[3] Id., pp. 53-54.
[4] Id., pp. 22-25.
[5] Villarasa in other parts of the records.
[6] Rollo, p. 25.
[7] Id., pp. 91-98.
[8] 11. FIRST PRIORITY OPTION TO BUY In case the LESSOR decide to sell the property herein leased, they shall give the SUBSTITUTE LESSEE the first priority to equal the price offered by an interested buyer and should the LESSEE fail to exercise this option within 15 days from notice, the LESSOR shall have the right to sell the property herein leased to said buyer; x x x.
[9] G.R. No. L-69259, 26 January 1988, 157 SCRA 349.
[10] Rollo, pp. 17-21.
[11] Id., pp. 30-37.
[12] 10. SUB-LEASE - THE SUBSTITUTE LESSEE cannot sublease the leased premises to any party without first securing the written prior consent of the LESSOR, otherwise the sublease shall not be respected by the latter; x x x.
[13] Rollo, pp. 40-41.
[14] Id., p. 41.
[15] Id., pp. 43-48.
[16] Id., pp. 46-47.
[17] Id., pp. 53-54.
[18] Id., p. 8.
[19] Id., p. 8.
[20] Id., p. 9.
[21] 10. SUB-LEASE - THE SUBSTITUTE LESSE cannot sublease the leased premises to any party without first securing the written prior consent of the LESSOR, otherwise the sublease shall not be respected by the latter; x x x
[22] 3. VIOLATION AND DAMAGES In case of violation of any terms and conditions contained herein will be a ground for the offended party to terminate the contract even before the end of its term and in case the LESSEE violates the same the LESSOR have the option to terminate the contract without prejudice to his rights to collect whatever rentals due for the remaining years of the contract plus damages; x x x
[23] Rollo, p. 67.
[24] CA rollo, p. 102.
[25] 315 Phil. 805, 826 (1995).
[26] 346 Phil. 189, 202 (1997), citing Manila Bay Club Corp. v. Court of Appeals, 315 Phil. 805, 826 (1995); See also Subic Bay Metropolitan Authority (SBMA) v. Universal International Group of Taiwan (UIG), 394 Phil. 691 (2000); Heirs of Juan San Andres v. Rodriguez, 388 Phil. 571, 586 (2000).
[27] Pangilinan v. Court of Appeals, 345 Phil. 93 (1997); Jison v. Court of Appeals, G.R. No. L-45349, 15 August 1988, 164 SCRA 339, 344.
[28] Rollo, p. 83.
[29] Id., p. 24.
[30] Id., pp. 58-59.
[31] Masinsin v. Albano, G.R. No. 90893, 30 May 1994, 232 SCRA 619.
[32] First Philippine International Bank v. Court of Appeals, 322 Phil. 283 (1996).
[33] Id.
[34] G.R. No. 85285, 28 July 1989, 175 SCRA 701. In this case, petitioner filed with the Supreme Court a petition for certiorari questioning a letter-directive of the Commission on Audit ordering the re-bidding of a vessel, the "T/T Andres Bonifacio," being sold by the Philippine National Oil Company (PNOC). Simultaneously, a separate complaint for injunction and damages was filed by the same petitioner before the Makati RTC to enjoin PNOC from conducting such a re-bidding.
[35] Supra note 32.
[36] Supra note 32.
[37] Rollo, pp. 43-48.
[38] Id., pp. 53-54.
We recount the facts paving the way to this petition:
Respondents Atty. Silvino G. Maceren, Jr., and his wife Patricia A. Maceren are the registered owners of a beach resort, known as the Golden Views Resort, situated at Buot, Punta Engaño, Lapu-Lapu City.
On 25 March 1988, Juergen Maile, a German national, and respondents Atty. Silvino G. Maceren, Jr., and his wife Patricia A. Maceren, entered into a Contract of Lease.[4] Petitioner Johannes Riesenbeck, a Dutch national, was the substitute lessee. Linda Villariasa,[5] Filipino wife of Riesenbeck, also appended her signature in the contract.[6] Excerpts of the lease contract provide:
That the ORIGINAL LESSEE rented and leased the above-mentioned premises and facilities and in fact as part of the contract, he has introduced the restaurant of indigenous materials along the beach;On 23 July 1990, petitioner Johannes Riesenbeck filed Civil Case No. 2296-L for Declaratory Relief.[7] The Complaint alleged, inter alia, that he had spent a sizeable sum of money for the improvement and upkeep of the leased property. Sometime in April 1990, petitioner learned that the actual amount of realty taxes due annually is only P2,495.00, which is less than the P5,000.00 that was stipulated in the contract. Too, the Complaint averred that petitioner got wind of an impending sale of the leased property in favor of a third party. He alleged that judicial declaration is necessary to delineate the rights of the petitioner from those of the respondents vis-á-vis the stipulations pointed out in the contract and prayed for a declaration of his rights under the lease contract, specifically with respect to Stipulations No. 5, 8, 9, 11, 13, 14 and 15 as above-quoted concerning improvements, ownership and possession, reservation of privilege, first priority option to buy, violation and damages, term of lease and parties bound, and the taxes due, respectively.
That the ORIGINAL LESSEE has manifested his desire to relinquish the Contract of Lease covering the aforementioned beach resort and the facilities therein in favor of the SUBSTITUTE LESSEE who is interested to go on with the lease under the terms and conditions stipulated herein;
That the herein LESSOR is willing to grant in lease the aforementioned beach resort and all its improvements in favor of the SUBSTITUTE LESSEE.
x x x x
- IMPROVEMENTS The SUBSTITUTE LESSEE undertakes to introduce within the leased premises within a period of SEVEN AND A HALF (7 & ½) years from the signing of this contract, permanent improvements worth not less than FIVE HUNDRED THOUSAND PESOS (P500,000) provided that before any improvement is introduced, the LESSOR shall be first advised as to its location. In no case will the LESSEE destroy the tennis court and introduce improvements thereon, nor shall the LESSEE destroy any existing improvements without first getting the written permission of the LESSOR;
x x x x
- OWNERSHIP AND POSSESSION That at the end of the term of the lease or termination of the same for violations of its terms, all improvements introduced by the SUBSTITUTE LESSEE in the leased premises shall belong to the LESSOR without need of reimbursement of its costs; That upon termination of this contract the LESSEE shall return the peaceful possession of the properties herein leased together with any and all improvements they may have introduced to the LESSORS without need of demand;
- RESERVATION OF PRIVILEGE The LESSOR TOGETHER WITH THEIR GUESTS and lot buyers shall have free access to the beach and to enjoy bathing in the area, but in no case shall they crowd the leased premises and hamper the business of the SUBSTITUTE LESSEE. Neither can they make use of the hotel rooms and restaurant without paying the proper fees and charges, subject however to any special discount and privileges which the SUBSTITUTE LESSEE(s) may grant in their discretion. The LESSOR and his guests retain the privilege to use the tennis court which shall be maintained by the SUBSTITUTE LESSEE.
- SUB-LEASE - THE SUBSTITUTE LESSEE cannot sublease the leased premises to any party without first securing the written prior consent of the LESSOR, otherwise the sublease shall not be respected by the latter;
- FIRST PRIORITY OPTION TO BUY In case the LESSOR(s) decide to sell the property herein leased, they shall give the SUBSTITUTE LESSEE the first priority to equal the price offered by an interested buyer and should the LESSEE fail to exercise this option within 15 days from notice, the LESSOR shall have the right to sell the property herein leased to said buyer;
x x x x
- VIOLATION AND DAMAGES In case of violation of any terms and conditions contained herein will be a ground for the offended party to terminate the contract even before the end of its term and in case the LESSEE violates the same the LESSOR have the option to terminate the contract without prejudice to his rights to collect whatever rentals due for the remaining years of the contract plus damages;
- TERM OF LEASE AND PARTIES BOUND This CONTRACT OF LEASE shall be commenced immediately upon the signing hereof and shall remain valid and binding between the parties and their heirs for a period of FIFTEEN (15) YEARS from January, 1988 and to end on December 2003, unless earlier terminated for violation of terms hereof.
- TAXES - The SUBSTITUTE LESSEE shall contribute for the payment of the taxes and leased premises at no less than FIVE THOUSAND PESOS (P5,000.00) each year, however, for their additional improvements, all taxes thereon during the term of the lease shall be paid by the SUBSTITUTE LESSEE. (Emphases supplied)
Meanwhile, respondent Atty. Maceren sent a letter to petitioner Johannes Riesenbeck, as lessee of the property, informing the latter of his intention to transfer the ownership of the property subject of the Contract of Lease to the family corporation MAGICCORP. Thereafter, respondent Atty. Maceren was able to effect the transfer of the leased property to MAGICCORP based on an instrument denominated as "Deed of Exchange of Shares of Stocks and Transfer of Property."
Stirred by the foregoing event, on 30 March 1993, petitioner's wife, Linda Villariasa - Riesenbeck filed a complaint for Redemption tagged as Civil Case No. 2819 against M. A Gen. Industrial and Commercial Corp. or MAGICCORP pursuant to clause 11[8] of the Contract of Lease as cited above. In an order dated 11 March 1994, the trial court dismissed the complaint for redemption, with a ruling that there was no actual transfer of ownership interests of the leased property when the same was transferred by respondent Atty. Maceren to defendant corporation in exchange for the latter's shares of stock inasmuch as the transfer was merely one in form and not in substance, citing Delpher Trades Corporation v. Intermediate Appellate Court.[9] The Court of Appeals affirmed the ruling of the trial court on 08 February 2000.
Awaiting the conclusion of Civil Case No. 2819 for redemption and Civil Case No. 2296-L for Declaratory Relief, petitioner Johannes Riesenbeck filed on 13 September 1995 the case subject of the present review docketed as Civil Case No. 4307-L[10] against respondents, this time, to annul the aforementioned contract of lease. Petitioner replicated his allegations in his earlier Complaint for Declaratory Relief that he had suffered damages from respondents' act of defrauding him into entering into the abovementioned Contract of Lease. Petitioner specifically asserted that respondents swayed petitioner to enter into the Contract of Lease by stipulating, inter alia, that petitioner will have the first option or priority to purchase the same from respondents. Likewise, petitioner echoed the contention that he was conned as to the amount of taxes due inasmuch as he was assessed and had paid respondents P5,000 per taxable year pursuant to the provision in the said contract, only to find out much later that the taxes payable were only slightly over P2,000.
On 10 October 1995, respondents filed a Motion to Dismiss[11] citing the following grounds: (1) two other actions between the same parties and for the same cause are pending, one before Branch 53 of the RTC of Lapu-Lapu City, docketed as Civil Case No. 2296-L, and the other, before the Court of Appeals in CA-G.R. CV No. 45655, docketed as Civil Case No. 2819-L in the trial court; (2) the complaint violates the proscription against forum-shopping; and (3) the complaint does not state a cause of action. respondents averred in their Motion to Dismiss that the lease contract which petitioner wants to be annulled was already terminated by respondents effective 30 November 1994, or almost a year before this case was filed before the trial court on 13 September 1995 due to petitioner's violation of clauses 10 and 11[12] of their contract.
On 20 May 1996, the trial court issued a verdict[13] favoring the respondents and granting the Motion to Dismiss filed by respondents on the rationale that the present case is akin to forum-shopping. In the trial court's elucidation, there is no dispute that the plaintiff herein is the same plaintiff in Civil Case No. 2296-L for Declaratory Relief and at least, vicariously, in Civil Case No. 2819 for Redemption, since his wife is the one named as party plaintiff. Said trial court noted that all these cases sprung out of the same Contract of Lease executed by the same parties. In the trial court's words: "While it may be conceded that the present complaint, seeking as it does, the annulment of the said lease contract is literally different from the other two, which by the very nature of the action, necessarily sought the enforcement or at least, presupposes the recognition of the validity of the terms and conditions embodied therein, nonetheless, this fact standing alone, does not militate against the proscription against multiplicity of suits and forum-shopping, if the filing thereof would bring about the same evil sought to be avoided by the said rule."[14]
On 02 September 2002, the Court of Appeals rendered a Decision[15] affirming the trial court's decision with the initial finding that there was no forum-shopping, but nonetheless, dismissing the case for being moot. The Court of Appeals imparted the following rationale-
Nevertheless, even if there is no substantial finding of forum-shopping, we note that events which transpired prior to the filing of the instant suit have rendered the same moot and academic.Petitioner moved to reconsider the Court of Appeals' Decision, still obdurate that the case has not been rendered moot, but the Court of Appeals held in a Resolution[17] dated 12 May 2003, that since not once did petitioner address the issue on violations of the terms of the contract head on, he cannot now rightfully claim that the termination of their lease contract has not rendered the instant suit for annulment of contract moot following Section 2, Rule 9 of the Rules of Court, the law in force at the time this case was filed, which provided that "defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed waived." Quite noteworthy is the fact that although the Court of Appeals, at first glance, held in its Decision that there was no forum-shopping, a second look at the case under reconsideration led to its change of heart - this time ruling that petitioner already sought to recover damages in the suit for Declaratory Relief arising from the same lease contract subject of the instant case and to claim damages once more, this time via the present case would already be tantamount to forum-shopping, if not harassment.
The lease contract which appellant wants to be annulled was already terminated by appellees effective November 30, 1994, or almost a year before this case was filed before the trial court on September 13, 1995. Appellees alleged in their Motion to Dismiss that this was prompted by appellant's violation of the terms and conditions of their contract, particularly paragraph 13 thereof. Not once did appellant refute this. We thus see no point in appellant pursuing the annulment of the lease contract when the same is already of no force and effect between the parties.[16]
The Issue
His motion for reconsideration having been denied by the Court of Appeals, petitioner now lays his cause before this Court through this petition for review where he assigns the following lone error to the Court of Appeals. Thus:
THE LOWER COURT ERRED IN HOLDING THAT THE CASE HAS BECOME MOOT AND ACADEMIC.[18]Critical to the resolution of this case is the issue of whether or not the act of respondents of unilaterally terminating the lease contract, subject matter of this petition, on the basis of petitioner's alleged violation of the terms thereof has rendered the present case for annulment of said contract and for damages fusty.
Petitioner submits that the potestative act of respondents in unilaterally and extrajudicially terminating the lease contract could not have rendered the said contract functus oficio inasmuch as such termination was without judicial approval.[19] Petitioner says that it is precisely this arbitrary termination of the contract by respondent that petitioner now seeks redress for as he had suffered damages from respondents' act of defrauding him into entering into the said Contract of Lease. Petitioner specifically claims that respondents convinced petitioner to enter into the Contract of Lease by stipulating, among other things, that petitioner will have the first option or priority to purchase the same from respondents. Repeating his argument, petitioner claims that as he is unfamiliar with the Philippine laws, and trusting on the representation of respondent who is a lawyer, he entered into a contract and spent, among other things, P1,153,890. Likewise, petitioner avers that he was duped into believing that respondents will be shouldering part of the taxes on the property because petitioner will only be allegedly contributing the sum of P5,000 per tax period, only to find out much later that the taxes due were only slightly over P2,000. It is these fraudulent acts resulting in petitioner's damage and prejudice that is the heart of the complaint filed in the present case, according to petitioner. [20]
Respondents, on the other hand, submit that the present petition ought to be dismissed not only because it is moot, but also because its filing smacks of forum shopping.
The Court's Ruling
We find, as the Court of Appeals had found, that the petition was rendered moot or illusory by the fact that respondents have already pre-terminated the lease contract effective 30 November 1994, or almost a year before this case was filed with the trial court on 13 September 1995. The pre-termination was prompted by petitioner's violation of the terms and conditions of their contract following petitioner's act of sub-leasing the leased property sans the approval of private respondents in stark breach of Clause 10[21] in relation to Clause 13[22] of said contract. As the records bear out, petitioner had sub-leased the seven units of the property in question to a Japanese national against whom he filed a rap for Grave Threats with the Police Station of Lapu-lapu City per his Sworn Statement[23] taken dated 27 October 1994 in the presence of his wife, Linda Riesenbeck. Said affidavit is reproduced below for clarity of exposition:12345
Petitioner had the opportunity to refute the allegation of subleasing on various occasions: (1) when it was raised in respondents' Motion To Dismiss the Complaint, (2) when he filed a Motion for Reconsideration to the Court of Appeals' Decision dismissing his appeal on this very ground, and (3) before this Court when this became the lis mota of the case on review. Despite the many windows of opportunity, petitioner opted to be tight-lipped on this issue of sub-leasing. Petitioner's silence on this issue lends credibility to respondents' claim that the present complaint was borne out of rancor for respondents' act of notifying him of the pre-termination of the lease contract and in anticipation of the collection case for back rentals and damages that respondents were preparing to commence pursuant to the contract which provides that "in case the LESSEE violates the same (Contract of Lease) the LESSOR have the option to terminate the contract without prejudice to his rights to collect whatever rentals due for the remaining years of the contract plus damages." As found by the Court of Appeals, not once did petitioner deny the fact that he sub-leased the premises. By his silence, he has admitted the truth of this matter and he is now estopped from claiming otherwise. Qui tace consentire videtur. Silence means consent.
In accord with this ruling is People's Industrial and Commercial Corp. v. Court of Appeals[26] where the Court held that there is nothing wrong if the parties to a lease contract agreed on certain mandatory provisions concerning their respective rights and obligations, such as the procurement of insurance and the rescission clause. Thus -
[I]t is well to recall that contracts are respected as the law between the contracting parties, and they may establish such stipulations, clauses, terms and conditions as they may want to include. As long as such agreements are not contrary to law, morals, good customs, public policy or public order they shall have the force of law between them.The foregoing legal truism finds equal potency in the case at bar. No doubt, the pre-termination was properly resorted to by respondents pursuant to Clause 10 of the Contract of Lease. Indeed, the law on obligations and contracts does not prohibit parties from entering into agreement providing that a violation of the terms of the contract would cause its cancellation even without judicial intervention.[27] This is what petitioner and respondents entered into, a lease contract with stipulation that the contract is rescinded upon violation of its substantial provisions, which petitioner, does not deny having violated.
As weighed on the basis of the foregoing, the Court holds that the petition no longer presents a live and justiciable controversy.
Petitioner further contends that the unilateral termination by respondents of the Contract of Lease has not wiped out the damages sustained by petitioner on the premise that action for damages based on respondents' act of defrauding him in entering into the Contract of Lease can, nevertheless, prosper dealing as it does with fraud committed prior to said termination such as respondents' manner of including the stipulation that petitioner has the first option to buy despite their knowledge that as a foreigner he could not own properties in the Philippines.[28]
We find no such sinister motive from the act of respondents of stipulating in the Contract of Lease that the petitioner has the first option to buy the subject property. The Court is convinced as to the veracity of respondents' assertion that petitioner was well aware that he could not own a property. This is precisely the reason why petitioner's wife, Linda Villarasa who is a Filipina, was made a party to the contract and has appended her signature thereon so that it is she who can exercise the option to buy the subject property in his behalf as clearly stipulated in Clause 16 of the Contract of Lease which states:
The Court takes judicial notice of the fact that Civil Case No. 2819-L for Redemption filed by Linda Riesenbeck, wife of herein petitioner, was dismissed by the RTC, Branch 54, and which dismissal was affirmed by the Court of Appeals and has become final and executory per Comment[30] of respondents, which finality the petitioner does not deny anywhere in his pleadings. Although the principal party in said case is petitioner's wife, it was clearly stated in the above-quoted Clause 16 of the contract that: "the word LESSEE refers to the SUBSTITUTE LESSEE and his wife." Quite telling is the fact that in Civil Case No. 2819-L for Redemption of the property in question subject matter of the contract, petitioner's wife is the principal plaintiff where she sought to enforce her right of first refusal over the property. Thus, the Court cannot feign a blind eye to the fact that petitioner and his wife represent the same interests over the disputed Contract of Lease. In this light, petitioner cannot, on one hand, claim in the present case that he was defrauded by respondents into thinking that he has the right of first refusal over the property, and, on the other hand, seek to enforce the same right in another action. In a word, he cannot, without flouting the basic tenets of fair play, deny that such right exists in one case while insisting on it in another. Never again should the practice of trifling with judicial processes be countenanced.[31]
- That it is understood herein that mention of the word LESSEE refers to the SUBSTITUTE LESSEE and his wife and in case of death of the SUBSTITUTE LESSEE, the wife is subrogated to all his rights herein.[29] (Emphasis supplied)
In brief, independently from this civil case for Annulment of Contract filed by petitioner Johannes Riesenbeck against the respondents, petitioner had earlier filed a case for Declaratory Relief which was, at that time, still pending in another branch of the Regional Trial Court while his wife, in his behalf, filed a case for Redemption, where in both cases petitioner, in his own behalf or vicariously through his wife, sought the enforcement of the provisions of the Contract of Lease.
During the pendency of the suit for Declaratory Relief and the other case for Redemption, does the filing of a third suit for Annulment of Contract to prevent the enforcement of the contract violate the ban against forum shopping?
The litmus test to determine if forum-shopping exists is where the elements of litis pendentia are present or where a final judgment in one case will amount to res judicata in the other. Consequently, where a litigant (or one representing the same interest or person) sues the same party against whom another action or actions for the alleged violation of the same right and the enforcement of the same relief is/are still pending, the defense of litis pendencia in one case is a bar to the others; and, a final judgment in one would constitute res judicata and this would cause the dismissal of the rest.[32] What is truly important to consider in determining whether forum-shopping exists or not is the vexation caused the courts and parties-litigant by a party who asks different courts and/or administrative agencies to rule on the same or related causes and/or to grant the same or substantially the same reliefs, in the process creating the possibility of conflicting decisions being rendered by the different fora upon the same issue.[33]
Applying the foregoing principles in the present case as compared with the first two cases, it is obvious that there exists identity of parties or interests represented, identity of rights or causes, and identity of reliefs sought. In fact, there are common allegations in the complaints in these three cases, particularly on the matters of taxes, the alleged fraud committed in making petitioner believe that he could own properties in the Philippines, as well as alleged ploys adopted by respondents which tainted the Contract of Lease at its inception. We further note that the original complaint in the court a quo which gave rise to the instant petition was filed by the lessee to annul or bar the enforcement of the Contract of Lease. On the other hand, the complaints in the two other cases seek to enforce the contract or at least to declare the rights of petitioner or his wife, accruing from said covenant. The objective or the relief being sought, though worded differently, is the same, namely, to enable the petitioner to profit from the Contract of Lease, either from the enforcement thereof or from its annulment. In other words, in the present case, petitioner is seeking to accomplish what he and his wife failed to do in the other two cases. Citing Danville Maritime, Inc. v. Commission on Audit,[34] this Court, in First Philippine International Bank v. Court of Appeals[35] ruled that the filing by a party of two apparently different actions, but with the same objective, constituted forum shopping.
In this case, a possible decision annulling the contract and barring the parties from enforcing or implementing the said contract will directly conflict with a decision recognizing the perfection and directing the enforcement of the Contract of Lease. Indeed, a final decision in the one would constitute res judicata in the other.[36]
Altogether, as both the lower court and the Court of Appeals have ruled, petitioner or his wife already sought to recover damages in the suit for Declaratory Relief and Redemption based on separate provisions of the same lease contract subject of the instant case and his posture of claiming damages once more, this time via the present case under a varied denomination of action, but anchored on the same Contract of Lease, is an utter disdain of the imperative forbidding forum shopping.
By and large, the Court must hold, as we now hold, that the present action cannot pass muster on sheer dictates of law and fair play.
WHEREFORE, the instant petition is hereby DENIED and the Decision[37] dated 02 September 2002 and the Resolution[38] dated 12 May 2003 of the Court of Appeals are hereby AFFIRMED. With costs.
SO ORDERED.
Panganiban, CJ., (Chairperson), Ynares-Santiago, Austria-Martinez, and Callejo, Sr., JJ., concur.
[1] Rollo, pp. 43-48. Penned by Associate Justice Salvador J. Valdez, Jr. with Associate Justices Mercedes Gozo-Dadole and Amelita G. Tolentino concurring.
[2] Id., pp. 40-41.
[3] Id., pp. 53-54.
[4] Id., pp. 22-25.
[5] Villarasa in other parts of the records.
[6] Rollo, p. 25.
[7] Id., pp. 91-98.
[8] 11. FIRST PRIORITY OPTION TO BUY In case the LESSOR decide to sell the property herein leased, they shall give the SUBSTITUTE LESSEE the first priority to equal the price offered by an interested buyer and should the LESSEE fail to exercise this option within 15 days from notice, the LESSOR shall have the right to sell the property herein leased to said buyer; x x x.
[9] G.R. No. L-69259, 26 January 1988, 157 SCRA 349.
[10] Rollo, pp. 17-21.
[11] Id., pp. 30-37.
[12] 10. SUB-LEASE - THE SUBSTITUTE LESSEE cannot sublease the leased premises to any party without first securing the written prior consent of the LESSOR, otherwise the sublease shall not be respected by the latter; x x x.
x x x x
- VIOLATION AND DAMAGES In case of violation of any terms and conditions contained herein will be a ground for the offended party to terminate the contract even before the end of its term and in case the LESSEE violates the same the LESSOR have the option to terminate the contract without prejudice to his rights to collect whatever rentals due for the remaining years of the contract plus damages;
x x x
[13] Rollo, pp. 40-41.
[14] Id., p. 41.
[15] Id., pp. 43-48.
[16] Id., pp. 46-47.
[17] Id., pp. 53-54.
[18] Id., p. 8.
[19] Id., p. 8.
[20] Id., p. 9.
[21] 10. SUB-LEASE - THE SUBSTITUTE LESSE cannot sublease the leased premises to any party without first securing the written prior consent of the LESSOR, otherwise the sublease shall not be respected by the latter; x x x
[22] 3. VIOLATION AND DAMAGES In case of violation of any terms and conditions contained herein will be a ground for the offended party to terminate the contract even before the end of its term and in case the LESSEE violates the same the LESSOR have the option to terminate the contract without prejudice to his rights to collect whatever rentals due for the remaining years of the contract plus damages; x x x
[23] Rollo, p. 67.
[24] CA rollo, p. 102.
[25] 315 Phil. 805, 826 (1995).
[26] 346 Phil. 189, 202 (1997), citing Manila Bay Club Corp. v. Court of Appeals, 315 Phil. 805, 826 (1995); See also Subic Bay Metropolitan Authority (SBMA) v. Universal International Group of Taiwan (UIG), 394 Phil. 691 (2000); Heirs of Juan San Andres v. Rodriguez, 388 Phil. 571, 586 (2000).
[27] Pangilinan v. Court of Appeals, 345 Phil. 93 (1997); Jison v. Court of Appeals, G.R. No. L-45349, 15 August 1988, 164 SCRA 339, 344.
[28] Rollo, p. 83.
[29] Id., p. 24.
[30] Id., pp. 58-59.
[31] Masinsin v. Albano, G.R. No. 90893, 30 May 1994, 232 SCRA 619.
[32] First Philippine International Bank v. Court of Appeals, 322 Phil. 283 (1996).
[33] Id.
[34] G.R. No. 85285, 28 July 1989, 175 SCRA 701. In this case, petitioner filed with the Supreme Court a petition for certiorari questioning a letter-directive of the Commission on Audit ordering the re-bidding of a vessel, the "T/T Andres Bonifacio," being sold by the Philippine National Oil Company (PNOC). Simultaneously, a separate complaint for injunction and damages was filed by the same petitioner before the Makati RTC to enjoin PNOC from conducting such a re-bidding.
[35] Supra note 32.
[36] Supra note 32.
[37] Rollo, pp. 43-48.
[38] Id., pp. 53-54.