[G.R. No. 128904. January 19, 2000]

MODERN MANILA REALTY, INC. vs. CA, et al.

THIRD DIVISION

Gentlemen:

Quoted hereunder, for your information, is a resolution of this Court dated JAN 19 2000.

G.R. No. 128904 (Modern Manila Realty, Inc. vs. CA, et al.)

Before this Court is a petition for review on certiorari seeking to reverse and set aside the Decision dated August 26, 1996 of the Court of Appeals1 Penned by Justice Salome A. Montoya with the concurrence of Justices Godardo A. Jacinto and Maximiano C. Asuncion (now deceased). in CA-G.R. CV No. 44848.

From the pleadings and their annexes, the following are the antecedents facts: On January 23, 1992, the homeowners and Land Tenants Association of Sampaloc, Inc., as plaintiff, filed a complaint docketed as Civil Case No. 92-59932 with the Regional Trial Court of Manila, Branch 11 against defendants R.V.T. Realty and Development Corporation (R.V.T., for short), Modern Manila Realty, Inc. (MMRI, for brevity) and the Register of Deeds of Manila invoking the right of first refusal of its members to purchase the lots they have been occupying as tenants-lessees for a minimum period of at least 20 years. The parcels of land in question, located in Sampaloc, Manila, were previously owned by defendant R.V.T. were later sold to defendant MMRI. Plaintiff prayed, among other things, that judgment be rendered against the defendants, to wit:

‘a) Upholding the rights of the plaintiff and its members to buy their occupied lots anchored on their right of first refusal, and ordering the defendant RVT to honestly comply with its agreement and commitment to plaintiff in the sale of the subject parcels of land in favor of the plaintiffs members;

‘b) Declaring both defendants in evident bad faith, when RVT reneged in its commitment and agreement to sell the property to plaintiff, and defendant MMRI in having cooperated and connived with RVT in buying the subject property, thereby completely depriving the plaintiff of its right of first refusal to buy the properties in question;

‘c) Declaring the Deed of Sale made by RVT in favor of (MMRI) involving the subject parcels of land occupied by plaintiff’s members, as null and void, for having been done to defraud plaintiff;

‘d) Ordering defendants MMRI and RVT and/or their successors-in-interest to sell and/or reconvey to plaintiff and its members, the parcels of land occupied by them and/or the land subject of the sale between RVT and MMRI, at the price obtaining in 1988; x x x."2 pp. 88-89, Rollo.

MMRI filed a Motion to Dismiss3 pp. 388-397, ibid. the complaint on the ground of failure to state a cause of action in that the plaintiff cannot be the real party in-interest; that plaintiff cannot prosecute the action as agent-litigant; and that a representative or class suit will not lie in actions for recovery of real property, portions of which are being claimed by several parties. The trial court4 Presided by Judge Roberto Barrios (now Associate Justice of the Court of Appeals). issued an Order dated November 27, 1992 dismissing the complaint, the pertinent portions of which read:

"The cause of action set out in the complaint is rooted on the alleged agreements between the defendant R.V.T Realty as registered owner of several lots to sell parcels of these to the corresponding lessees. Plaintiff alleges to be as association of these ‘homeowners and land that the word "plaintiff" as used hereof, shall refer to, and embrace the association and its members;’. The said lessees/tenants/members and their respective lots are allegedly as listed in Annex ‘A’ of the complaint… all of 141. It appears however in the said Annex ‘A’ that among those listed as such are: (a) Apartments; (b) House Tenants; (c) Divisoria Transport, and; (d) R.V.T. Realty, a defendant in this case.

Being admittedly a corporation and considering that its flawed claim of members includes nondescript parties and even a defendant itself, there is serious doubt that the plaintiff and its supposed tenants/members are one and the same, or even that it had their agency, or that the plaintiff has an interest in the suit.

As a general rule, one having no right or interest to protect cannot invoke the jurisdiction of the court as a party-plaintiff in an action [Ralla vs. Ralla, 199 SCRA 415]. The plaintiffs assertion that it had presented its alleged tenants/members in the negotiation of the agreements now sought to be enforced, falls quite short of the ‘interest’ contemplated in the Rules. ‘party-in-interest is the party who stand to be benefitted or injured by the judgment or the party entitled to the avails of the suit.’ [Republic vs. Sandiganbayan, 203 SCRA 310]. The plaintiff has no such interest in this case. It cannot claim to be the same as its alleged members or to represent their interest for it is a corporation with a separate entity and its claimed agency is questionable. x x x."5 pp. 102-103, Rollo.

Plaintiff filed a Motion for Reconsideration of the Above-Order. While the said motion was still pending, a second complaint was filed by plaintiff Homeowners and Land Tenants Association of Sampaloc, Inc., this time joined by the members of the Association in their personal capacities against the same defendants for substantially the same cause of action pleaded in the first civil case (No. 92-59932). The second case was docketed as Civil Case No. 93-64808 which was raffled to Branch 19 of the Regional Trial Court of Manila. Plaintiff therein prayed:

"a) that plaintiffs have the right to purchase their respective leased lot from the RVT in the amount as agreed upon between them;

"b) that the sale made by RVT to MMRI as fraudulent and void and/or in violations of the plaintiffs’ rights thus MMRI should respect such rights and therefore must sell the property to the plaintiffs at the amount as agreed upon between plaintiffs and RVT; x x x."6 pp. 115-116, Rollo.

Meanwhile, in Civil Case No, 92-59932, the trial court denied plaintiff’s motion for reconsideration in its Order of March 8, 1993.7 p. 132, ibid. No appeal was taken therefrom.8 par. D.11 of the Petition, p. 15, Rollo; p. 4 of Order of December 1, 1993, p. 206, Rollo.

In the meantime, defendant MMRI, in Civil Case No. 93-64808 filed a Motion to Dismiss the complaint on the following grounds: that plaintiffs did not pay the correct amount of filing fees; that the complaint states no cause of action in that the Homeowners and Land Tenants Association of Sampaloc, Inc. cannot be the real party in interest nor can a representative or class suit lie; that there is another action pending between the same parties for the same cause; and that res judicata bar plaintiff-association from impleading its members as plaintiffs.9 pp. 5-6, CA-Decision, pp. 68-69, Rollo.

Defendant R.V.T. likewise filed a Motion to Dismiss the second case on the grounds of lack of cause of action; that the properties involved in the case are not within the area declared for priority development; that there is a pending case between the same parties for the same cause; and that the cause of action is barred by prior judgment.10 p. 5, CA-Decision, p. 69, ibid.

In the Order dated July 8, 1993, in Civil Case No. 93-64808, the said motions to dismiss were denied for lack of merit. The trial court ruled that the inclusion of the Homeowners and Land Tenants Association of Sampaloc, Inc. as plaintiff would be construed as a misjoinder of party which is not a ground to dismiss; and that there is no identity of parties.11 The Order was issued by Judge Zenaida R. Daguna, pp. 159-160, Rollo.

Defendant MMRI filed a Motion for Reconsideration and Clarification/Amplification of the Order of July 8, 1993.

In the Order dated December 1, 1993, the trial court12 Judge Daguna inhibited herself; the case was re-raffled to Judge Joselito J. Dela Rosa of RTC-Manila, Branch 29. set aside the Order of July 8, 1993 and ordered the case (Civil Case No. 93-65808) dismissed on the ground of res judicata and forum-shopping. It ruled that the "mechanical act of Plaintiff-Association of adding certain new names allegedly by it to be its members-tenants, by itself, did not legally obliterate the fact that, in substance and in form, the parties in the Civil Case No. 92-59932 and in the instant case are one and the same, repeating the same issues and prayer" and that "plaintiffs maliciously shopped for another, co-equal forum to repeat the litigation of the same issues and prayer, between he same parties."13 Order of December 1, 1993, pp. 203-207, Rollo.

The Motions for Reconsideration were denied in the order of February 10, 1994 for lack of merit.

On appeal, the Court of Appeals rendered judgment14 pp. 64-77, Rollo. on August 26, 1996 stating that the principles of litis pendencia, res judicata or forum shopping do not apply in the case for the reason that there is no identity of parties; and that there is no case of forum shopping where the parties filing similar causes of action against similar defendants are not one and the same. It further ruled that the juridical personality of the Association is distinct and separate from that of its individual members. The dispositive portion of the judgment reads:

"WHEREFORE, the Order of December 1, 1993 and the Order of February 10, 1994 are hereby SET ASIDE insofar as they dismiss this case; the Order of July 8, 1993 of Judge Zenaida Daguna is REINSTATED; and the records of this case are ordered REMANDED to the court of origin for further proceedings.

Costs against the defendants-appellees."

Hence, the present petition raising the following assignment of errors:

"I

THE RESPONDENT COURT ERRED IN (i) SETTING ASIDE THE ORDER OF DECEMBER 1, 1993 AND THE ORDER OF FEBRUARY 10, 1994 INSOFAR AS THEY DISMISS THIS CASE; (iii) REINSTATING THE ORDER OF JULY 8, 1993 OF JUDGE ZENAIDA DAGUNA; AND (iii) REMAMDING THE RECORDS OF THIS CASE TO THE COURT OF ORIGIN FOR FURTHER PROCEEDINGS.

II

THE RESPONDENT COURT ERRED IN HOLDING THAT NEITHER THE PRINCIPLES OF FORUM-SHOPPING, LITIS PENDENTIA, FOR THOSE OF RES JUDICATA, APPLY IN THE INSTANT CASE ADVANCING THE REASON THAT THERE IS NO IDENTITY OF PARTIES IN CIVIL CASE NO. 92-59932 AND IN CIVIL CASE NO. 93-64808.

III

THE RESPONDENT COURT ERRED IN APPLYING THE CASE OF SALUD VS. CA, 233 SCRA 384 IN THE CASE AT BENCH TO REMOVE IT FROM THE OPERATION OF RES JUDICATA.

IV

THE RESPONDENT COURT ERRED IN NOT HOLDING THAT IT AS NO JURISDICTION OVER THE CASE CONSIDERING THAT THE TWIN ISSUES RAISED IN PRIVATE RESPONDENTS APPEAL ARE PURE QUESTIONS OF LAW AND THEREFORE WITHIN THE EXCLUSIVE JURISDICTION OF THE SUPREME COURT."

The parties filed their respective memorandum.

We find no merit in the petition.

The core issue raised before this Court is whether the second case (Civil Case No. 93-64808) should be held barred on the ground of res judicata. There are four (4) essential conditions which must concur in order that res judicata may effectively apply: (1) the judgment sought to bar the new action must be final; (2) the decision must have been rendered by a court having jurisdiction over the subject matter and the parties; (3) the disposition of the case must be a judgment or order on the merits; and (4) there must be between the first and the second action, identity of parties, identity of subject matter, and identity of causes of action.15 Serdoncillo vs. Benolirao, 297 SCRA 448; Bachrach Corporation vs. Court of Appeals, 296 SCRA 487.

There is no dispute as to the presence of the first three (3) requirements and the identity of the subject matter and the cause of action. The only issue remaining is whether as between Civil Case No. 92-59932 and Civil Case No. 93-64808, there is identity of parties in Civil Case No. 92-59932 to bar the institution of Civil Case No. 93-64808.

There is likewise no dispute that the defendants in both civil cases are the same. However, in the first civil case (No. 92-59932), the plaintiff is the Homeowners and Land Tenants Association of Sampaloc, Inc. while in the second civil case (No. 93-64808), plaintiff-association is joined individually by the members of the association who are tenants/lessees of the lots subject matter of the case.

The first civil case was dismissed on the ground that plaintiff-Association is not real party in interest since it had no interest in the case nor can it claim the same interest as that of its members, it being a corporation with a separate entity. The order of dismissal became final as no appeal was taken therefrom.

In the second civil case, the plaintiff is the same Association with the inclusion of its members as co-plaintiffs. While the Association was impleaded as plaintiff in both civil cases, there is no identity of parties firstly because, as aptly found by the trial court in the first case and affirmed by the Court of Appeals, the Association is not a real party in interest. Neither can the Association represent its members who are claiming rights on different lots. The first civil case filed by plaintiff-Association cannot be considered as a class suit as its members ate claimants of different portions embraced in a big tract of land; each one could allege and prove his respective right in a different way for each portion of the land so that they cannot all be held to have identical title.16 Sulo ng Bayan, Inc. vs. Araneta, Inc., 72 SCRA 347; Berses vs. Villanueva, 25 Phil., 473; Rallonza vs. Evangelista, 15 Phil. 531. In short, each member has a particular interest in his own portion separate and different from the others. Hence, the case should be prosecuted by the members who are the real parties in interest and in the names of all of them.17 See also, Ralloza vs. Evangelista, supra.

It is fundamental that every action must be prosecuted or defended in the name of the real party in interest.18 Section 2, Rule 3. Hence, there can be no identity of parties to speak of despite the inclusion of the Association as party-plaintiff in the second civil case since the Association is not the real party in interest in the first civil case.

There is likewise no forum shopping when the second civil case was filed while the first civil case was still pending resolution on the motion for reconsideration. Forum shopping exists where the elements of litis pendentia are present or where a final judgment in one case will amount to res judicata in the other.19 Prubankers Association vs. Prudential Bank & Trust Company, 302 SCRA 74; Dasmariñas Village Association, Inc. vs. Court of Appeals, 299 SCRA 598. Since, as adverted to above, there is no identity of parties which is an element of litis pendentia and res judicata, respondents cannot be guilty of forum shopping.

Petitioner further contends that the case of Salud vs. Court of Appeals (233 SCRA 384) cited by the lower court does not apply in the case at bar in that the petitioner in that case was not a party in the first case. Precisely, as found by the Court of Appeals and this Court, the individual members of the Association were not impleaded as plaintiffs in the first civil case and hence, they were not given any chance to contest the claim of herein petitioner. In the Salud case, this Court likewise held:

"x x x The demands of due process present a weightier consideration than the need to bring an end to parties’ litigation. For more important than the need to write finis to litigation is to finish it justly, and there can be no justice that satisfies unless the litigants are given the opportunity to be heard. x x x. The doctrine of res judicata is a rule of justice and cannot be rigidly applied where it will result in injustice."20 233 SCRA 384 at pp. 390-31.

Finally, anent the issue of whether the Court of Appeals had jurisdiction over the case, petitioners are of the view that the questions raised by respondents in their appeal below were pure questions of law and therefore within the exclusive jurisdiction of this Court.

We disagree.

In the determination whether or not res judicata and/or forum shopping will apply, the conditions/elements thereof should concur. Therefore, there should first be a finding of the existence of these conditions/elements. We hold that the question raised below as to whether there exists a concurrence of the four elements for the operation of res judicata is essentially one of tested by the standards laid down in the case of Macawiwili Gold Mining and Development Co., Inc. vs. Court of Appeals21 297 SCRA 602. that:

"[F]or a question to be one of law, the same must not involve an examination of the probative value of the evidence presented by the litigants or any of them. And the distinction is well-known: There is a question of law in a given case when the doubt or difference as to what the law is on a certain set of facts; there is a question of fact when the doubt or difference arises as to the truth or falsehood of the alleged facts."

WHEREFORE, the petition for review on certiorari is hereby DENIED.

SO ORDERED.

Very truly yours,

(Sgd.) JULIETA Y. CARREON

Clerk of Court