Title
Boracay Island Water Co. vs. Malay Resorts Holdings, Inc.
Case
G.R. No. 235641
Decision Date
Jan 17, 2023
BIWC's sewer charge program faced legal challenge; CA ruled no forum shopping, NWRB lacked jurisdiction, case remanded to RTC for further proceedings.
sewer charges
civil case
forum shopping

Case Summary (G.R. No. 235641)

Factual Background and Regulatory Setting

BIWC argued that its powers and operations were anchored on the charter of the Philippine Tourism Authority (PTA) and that it functioned as the PTA’s agent through a concession agreement. It maintained that in operating the sewer and water utility, it implemented Sewer Policies and Guidelines approved by the PTA.

The issue arose when MRHI and others challenged BIWC’s increased sewer charges. BIWC emphasized that MRHI had earlier filed a letter-complaint with the National Water Resources Board (NWRB) regarding the increased sewerage charge, which was discussed during an NWRB public conference, including a conference held on 3 July 2010. According to BIWC, the NWRB called a public conference on the allegation that BIWC was operating a water supply and sewerage system without a Certificate of Public Convenience (CPC) and charging fees without NWRB authority. BIWC further asserted that, when BIWC raised NWRB’s jurisdictional authority, the NWRB sought an opinion from the Department of Justice (DOJ).

On 13 August 2010, the DOJ issued its Opinion stating that regulatory power over sewerage utilities and services was not expressly granted by law or executive order to the NWRB. Consequently, BIWC contended that MRHI’s later intervention before the RTC reflected willful forum shopping and a deliberate failure to disclose the NWRB proceedings in the certificate against forum shopping.

RTC Proceedings and Orders

After the parties presented their evidence on BIWC’s motion to dismiss, the RTC issued an Order dated 31 August 2012, dismissing the plaintiffs’ amended complaint and the intervenors’ complaints-in-intervention without prejudice for failure to comply with the requirements against forum shopping.

The RTC found a violation of the rule against forum shopping because the parties did not disclose proceedings before the NWRB, which it described as having been initiated through letter-complaints. It held that the relief sought in the RTC case was substantially the same as that brought before the NWRB, specifically the stopping of the new sewer rates. The RTC acknowledged that the NWRB did not continue the proceedings due to lack of jurisdiction over sewerage utilities. Still, it ruled that the NWRB had already asserted its authority by allowing the issue to be discussed in the public conference and by issuing a show-cause order against BIWC.

MRHI sought reconsideration, but the RTC denied the motion in an Order dated 6 February 2014.

CA Review and Ruling

On appeal, the Court of Appeals (CA) reversed and set aside the RTC orders through a Decision dated 28 February 2017 and a corresponding resolution. The CA held that the RTC committed grave abuse of discretion in dismissing MRHI’s complaint-in-intervention for forum shopping.

The CA reasoned that, in view of the DOJ opinion showing that the NWRB lacked jurisdiction over the subject matter being contested, the NWRB could not render a decision that would have res judicata effect against the RTC action. Thus, the CA concluded that a forum shopping ground could not stand where the forum relied upon did not have jurisdiction, and any NWRB disposition would not legally bar the RTC case.

BIWC moved for Supreme Court review, arguing principally that forum shopping may still be committed even if one forum lacks jurisdiction, that MRHI willfully and deliberately engaged in forum shopping by failing to disclose the NWRB proceedings, and that the RTC case should have been dismissed with prejudice under Section 5, Rule 7 of the Rules of Court. BIWC also argued mootness on the theory that the Program was no longer being implemented due to new rates.

MRHI countered that forum shopping did not exist because the NWRB case was not pending, as shown by an NWRB certificate of no pending case. It further maintained that its letter-inquiry should not be treated as a formal “complaint” lacking the formal requisites under the implementing rules under Presidential Decree No. 1067, and that there was no identity of rights and relief between the NWRB matter and the RTC case. It also argued that res judicata could not arise because of NWRB’s lack of jurisdiction. On the mootness claim, MRHI asserted that non-implementation of the Program did not render the controversy moot because the issue was capable of repetition yet evading review.

Issues Raised Before the Supreme Court

The Supreme Court was tasked to determine (1) whether the CA correctly ruled that the RTC committed grave abuse of discretion when it dismissed MRHI’s complaint-in-intervention for forum shopping, and (2) whether MRHI’s complaint-in-intervention should be dismissed as moot and academic.

Legal Basis and Reasoning on Forum Shopping

The Court traced the concept of forum shopping and noted that, while it originally arose in private international law as a choice of forum, in Philippine practice it had expanded to encompass a choice of remedies. It emphasized that the rule exists to curb abuse of court processes and to avoid the grave evil of concurrent and contradictory rulings. The Court anchored the analysis on the established test: the presence of the elements of litis pendentia or res judicata.

The Court reiterated that the requisites of litis pendentia are: (a) identity of parties (or representation of the same interests); (b) identity of rights asserted and relief prayed for, founded on the same facts; and (c) identity of the two cases such that judgment in one case would amount to res judicata in the other. It also restated the elements of res judicata as: (a) a final former judgment; (b) jurisdiction of the court over subject matter and parties; (c) a judgment on the merits; and (d) identity of parties, subject matter, and causes of action.

Applying the test, the Court agreed with the CA that MRHI did not commit forum shopping. The Court held that the decisive defect was the absence of the third element of litis pendentia, because the NWRB’s lack of jurisdiction over the regulation of sewerage utilities and services was fatal to BIWC’s forum-shopping theory. It reasoned that any judgment or disposition that could have been issued by the NWRB—regardless of which party prevailed—could not amount to res judicata against the RTC action.

To illustrate the relevance of jurisdiction, the Court cited Heirs of Vidad v. Land Bank, where it held that forum shopping did not exist when one forum lacked jurisdiction over the specific relief sought, rendering its rulings void and of no legal effect. In that framework, filing the proper remedy in a court with correct jurisdiction did not amount to forum shopping.

The Court further examined the record and concluded that MRHI could not be faulted for failing to disclose the NWRB proceedings in the certificate of non-forum shopping because the NWRB did not assume jurisdiction on the issue of sewerage rates. The Court observed that the NWRB called a public conference on 26 May 2010, after MRHI had already filed its complaint-in-intervention, and the conference was limited to BIWC’s operation without a CPC rather than to resolving sewer-rate validity. Even assuming discussion of sewerage-rate matters occurred during the public conference, the NWRB’s action was restricted to the CPC issue, as shown by its Order dated 30 July 2010 directing BIWC and the PTA to show cause why a cease and desist order should not issue for operating a water supply system without a CPC.

The Court treated the NWRB’s request for the DOJ opinion as further confirmation that it had not assumed jurisdiction. It found that the NWRB could not simultaneously entertain doubt as to its authority and yet assume jurisdiction in a definitive way over sewerage-rate regulation. The Court also noted the absence of any NWRB order or issuance relating to the Program or sewer rate concern, while MRHI had presented an NWRB certification stating that there was no pending case against BIWC before the agency.

The Court addressed BIWC’s reliance on cases where forum shopping was found even when one forum lacked jurisdiction. It held that BIWC’s reliance was misplaced because those cases involved clear circumstances where the grave evil prevented by forum-shopping rules—specifically the possibility of conflicting decisions—was present. It discussed Villanueva v. Adre, Joy Mart Consolidated, Corp. v. Court of Appeals, and Top Rate Construction & General Services v. Paxton Development Corp., where successive filings were used to obtain favorable rulings across different fora despite the risk of conflicting determinations and despite jurisdictional defects in the second forum. It stressed that those pronouncements could not be applied indiscriminately, and the analysis must still be governed by the established test for forum shopping.

The Court emphasized that res judicata provided the conceptual backbone of forum shopping and that jurisdiction was an essential requirement. It therefore ruled that courts could not dismiss a case outright for forum shopping when, on the records, there was no pending case nor a final judgment on the related matter that would create the mischief the rule seeks to prevent. It likewise held that omissions in a certificate against forum shopping about an event that would not gi

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