G.R. No. 118910 - Kilosbayan, Inc. vs. Morato

Pilipinas Shell Petroleum Corporation (Shell) and Leyte Development Company, Inc. (LDCI) entered into a Distributorship Agreement in 2005, under which Shell appointed LDCI as its distributor for Shellane LPG products in Tacloban City and Southern Leyte.
The Agreement provided for a three-year term (commencing February 1, 2005) with provisions for month-to-month extension upon expiration, unless terminated by either party with a 90-day notice or terminated immediately by Shell upon breach.
The contract was renewed for another three-year period beginning on March 1, 2008.

Prior to the expiry of the renewed contract, LDCI further expanded its business by buying out the distributorship of a competitor for approximately P5 million, covering additional areas such as Ormoc, Isabel, Merida, Palompon, and Biliran.
Shell certified LDCI as its exclusive authorized distributor for the whole of Leyte.
On September 12, 2011, Shell, through its General Manager Ramon Del Rosario, informed LDCI that its shares in Shell Gas (LPG) Philippines, Inc. were sold to Isla Petroleum and Gas (Isla). Del Rosario assured LDCI that the sale would not immediately affect its ability to procure LPG products.

The sale was scheduled to be completed on January 27, 2012, with the subsequent renaming of Shell Gas (LPG) Philippines, Inc. to Isla LPG Corporation effective on the same date.
On January 30, 2012, Del Rosario confirmed the acquisition and the change of corporate name to Isla LPG Corporation, followed by a rebranding of Shellane LPG products to “Solane.”
Rebranding led to operational delays, including the repainting of cylinders, transportation issues, and a shortage during peak LPG sales periods that affected LDCI’s business.

In 2012, LDCI alerted Isla about confirmed territorial encroachments by another Solane distributor in its Tacloban area, with additional complaints regarding lack of price support.
A meeting was held in January 2013, in which Isla committed to extend a price support program and review LDCI’s sales and financial capacity.
Subsequently, Isla terminated the month-to-month Distributorship Agreement effective January 12, 2013, and LDCI was prohibited from using any Solane trademarks, logos, or trade names.

After termination of LDCI’s distributorship, Isla appointed Supreme Star Oil (and others) as the new distributor for Solane LPG products in Leyte, Masbate, and Biliran.
LDCI claimed loss of an established business opportunity—averaging purchases between P5 million to P15 million per month—and loss of goodwill, which led to its filing of a Petition for Declaratory Relief with an application for a 72-hour TRO and/or preliminary injunction before RTC-Makati.
The petition was dismissed without prejudice on the ground that the Distributorship Agreement had already terminated.

LDCI then filed a complaint for breach of contract and damages with an application for a writ of preliminary injunction (Civil Case No. 13-155) against Shell, Isla, and their officers before RTC-Makati.
On March 11, 2013, RTC-Makati issued a preliminary injunction restraining Isla and its associates from implementing the termination of the Agreement, pending posting of an Injunction Bond of P2,000,000.
Isla and Shell filed respective motions (Motion for Reconsideration and Motion to Dismiss) against the injunction; these were denied on August 23, 2013.
Instead of filing a responsive pleading, Isla sought to reconsider the Order and introduced the parallel filing of a complaint (Civil Case No. 2013-07-61) by LDCI before RTC-Tacloban.
The RTC-Makati eventually denied Isla’s motion for reconsideration on January 16, 2014.

LDCI, challenging the non-dismissal of its case on the ground of litis pendentia (the existence of similar pending cases in RTC-Makati and RTC-Tacloban), elevated the issue before the Court of Appeals (CA).
In its Decision dated February 24, 2015, the CA dismissed LDCI’s petition, holding that while litis pendentia existed due to identical issues (i.e., the validity of the termination of the Distributorship Agreement), the “priority in time” rule favored the RTC-Makati case.
The CA’s Resolution dated August 5, 2015 denied Isla’s Motion for Reconsideration.
Isla then filed the present Petition for Review on Certiorari before the Supreme Court.

Whether the case before RTC-Makati should be dismissed on the ground of litis pendentia due to the existence of a parallel case (Civil Case No. 2013-07-61) in RTC-Tacloban.
Whether the filing of the second complaint by LDCI amounted to forum shopping—availing of multiple judicial remedies based on the same facts and issues—to increase its chance of a favorable decision.
Whether the “priority in time” rule (qui prior est tempore, potior est jure) applies, thereby favoring the earlier filed complaint before RTC-Makati, provided no evidence shows the first complaint was filed merely to pre-empt the second or that the second action was the more appropriate venue.