G.R. No. 167471 - Sarmiento vs. Zaratan

Case Summary (G.R. No. 167471)

Key Dates and Procedural Milestones

Notable dates and orders in the record (as presented): March 12, 2003 — RTC denied MII’s motion to dismiss for lack of valid service; September 25, 2003 — RTC denied reconsideration; July 13, 2005 — CA denied MII’s Rule 65 petition (CA G.R. SP No. 80547); March 29, 2006 — MII filed answer with compulsory counterclaim in the Collection Case; June 20, 2006 — SVHFI filed the Ejectment Case; March 31, 2008 — RTC granted MII’s motion to dismiss the Collection Case for forum shopping; October 6, 2008 — RTC denied SVHFI’s motion for reconsideration; August 30, 2013 — Court of Appeals affirmed RTC order; February 26, 2014 — CA denied motions for reconsideration; April 21, 2014 and July 9, 2014 — the Supreme Court denied MII’s petitions relating to disposition of its counterclaim; final appellate resolution culminated in the Supreme Court’s decision reversing the CA on the forum-shopping ruling.

Applicable Law and Governing Legal Standards

Governing constitutional and procedural framework: the analysis applied under the 1987 Philippine Constitution and the Rules of Court. Relevant procedural provisions cited include Section 5, Rule 7 (anti–forum shopping certification), Sections 3–5, Rule 2 (joinder of causes of action), and Section 6, Rule 16 (compulsory counterclaims). Controlling doctrines: forum shopping (prohibited practice of initiating multiple actions for the same relief), litis pendentia, and res judicata. Controlling tests and elements are drawn from established jurisprudence cited by the Court.

Issue Presented

Whether SVHFI committed forum shopping by filing an ejectment (unlawful detainer) action after a collection suit for unpaid rentals was already pending in another court.

Legal Test for Forum Shopping and Litis Pendentia

The Court reiterated the settled test: forum shopping exists where a party institutes two or more actions grounded on the same cause to obtain a more favorable decision. The determinative inquiry is whether the elements of litis pendentia (and thus res judicata) are present. The requisites for litis pendentia are: (a) identity of parties or parties representing the same interests; (b) identity of rights asserted and reliefs prayed for, founded on the same facts; and (c) identity such that a judgment in one action would amount to res judicata in the other. Res judicata requires, inter alia, a final judgment on the merits and identity of parties, subject matter, and causes of action.

Distinction Between Ejectment (Unlawful Detainer) and Collection of Sum of Money

The Court emphasized a categorical distinction: unlawful detainer proceedings are special civil actions concerned solely with the issue of physical possession, whereas an ordinary civil action for collection of a sum of money is a full-blown action addressing contractual obligations and the proper computation of sums due. In ejectment, the elements are limited to (1) initial possession by contract or tolerance, (2) termination notice by the possessor, (3) continued possession by the adverse party depriving the possessor of enjoyment, and (4) institution within one year from the last demand. Damages recoverable in unlawful detainer are likewise limited to fair rental value or reasonable compensation for use and occupation — damages directly related to the loss of possession. By contrast, a collection action seeks payment of rentals irrespective of the legality of the occupancy and may involve extensive factual and documentary proof regarding amounts, terms, and offsets.

Application of the Legal Test to the Facts — Identity of Rights and Reliefs

Applying the litis pendentia/forum-shopping test, the Court found missing the second and third requisites: there is no identity of rights asserted nor identity of reliefs such that a judgment in one action would operate as res judicata in the other. Although parties and property overlap, the Collection Case seeks monetary recovery for alleged unpaid rentals and potentially damages not directly tied to mere loss of possession, while the Ejectment Case seeks restoration of possession and the corresponding fair rental value. Because the causes of action and the nature of reliefs differ materially, the elements of litis pendentia and therefore forum shopping are not satisfied.

Joinder Rule and the Inappropriateness of Combining Ordinary and Special Actions

The Court reiterated Section 5, Rule 2’s prohibition on joinder of special civil actions with ordinary actions. An action for collection (ordinary civil action requiring full trial and extensive evidence) cannot be properly joined with an ejectment action (special, summary proceeding). The summary nature of ejectment proceedings precludes the full evidentiary treatment required for collection disputes over the correctness and computation of rentals, terms, and offsets.

Relation to Prior Jurisprudence (Intramuros, Lajave, Araos, et al.)

The Court compared the present case with prior decisions. In Intramuros Administration v. Offshore Construction Development Co., the Court recognized circumstances where recovery of unpaid rentals in one action could bar recovery in another under the principle against unjust enrichment; however, Intramuros involved a different factual matrix (ejectment versus specific performance and interpleader) that produced overlapping remedies. The Court explained that Intramuros is consistent with the present ruling because any amount recovered as fair rental value in an ejectment action may preclude recovery of the same re

Case Syllabus (G.R. No. 167471)

Case Background / Parties / Subject Property

Petitioner: Santos Ventura Hocorma Foundation, Inc. (SVHFI).
Respondent: Mabalacat Institute, Inc. (MII), now known as Don Teodoro V. Santos Institute.
Subject property: parcel of land described as Lot No. 530, covered by Transfer Certificate of Title No. T-195826-R, with an area of 11,451 square meters, situated in Mabalacat, Pampanga, alleged by SVHFI to be its registered and absolute property.
Occupancy history: MII occupied the subject lot without payment of rent and by tolerance from 1983 until March 14, 2002, according to the account in the record.

Pre-litigation Correspondence and Demand for Rent

March 14, 2002: SVHFI notified MII that, beginning April 1, 2002, MII would be charged rent at P50.00 per square meter per month, payable on or before the 5th day of each month.
June 7, 2002: MII replied and refused to comply with SVHFI’s demand for rent.
July 11, 2002: SVHFI sent another letter demanding payment of rent for April to July 2002 in the total amount of P2,519,220.00, giving MII 15 days to pay or vacate the subject lot.
MII failed to pay or vacate in response to the July 11, 2002 demand.

Complaints Filed / Nature of Actions

Collection Case (Civil Case No. 02-1326, Branch 150, RTC Makati City): SVHFI filed a Complaint for collection of a sum of money (alleged rentals and damages) against MII. The action sought payment of rentals and related monetary relief.
Ejectment Case (Civil Case No. 06-2568, Sixth MCTC of Mabalacat and Magalang, Pampanga): SVHFI later filed a Complaint for Ejectment (unlawful detainer) against MII on June 20, 2006, seeking recovery of physical possession of the subject lot.

Procedural History — Collection Case (RTC Makati)

Upon filing, the Collection Case was raffled to Branch 150, RTC Makati (Civil Case No. 02-1326).
MII filed a Motion to Dismiss the complaint on the ground of improper service of summons instead of filing an answer.
March 12, 2003: RTC denied MII’s Motion to Dismiss.
MII filed a Motion for Reconsideration; September 25, 2003: RTC denied reconsideration.
MII filed a Petition for Certiorari under Rule 65 with the Court of Appeals (CA) in CA G.R. SP No. 80547 seeking nullification of the RTC’s March 12 and September 25, 2003 orders.
July 13, 2005: CA denied MII’s Rule 65 Petition. September 16, 2005: CA denied reconsideration.
MII filed a Petition for Review on Certiorari to the Supreme Court, G.R. No. 167876; July 4, 2005: Supreme Court dismissed the petition on grounds of (i) being an unsigned pleading/ failure to verify under Section 4, Rule 7 in relation to Section 1, Rule 65, and (ii) lack of sufficient showing of grave abuse of discretion.
March 29, 2006: MII filed Answer with Compulsory Counterclaim in the Collection Case; the counterclaim was admitted in an Order dated June 27, 2007.
Pre-trial for the Collection Case was set, but prior to pre-trial, September 28, 2007: MII filed a Motion to Dismiss the Collection Case on the ground of forum shopping, alleging SVHFI’s failure to report the filing of the Ejectment Case as required by Section 5(c), Rule 7, and also alleging splitting of a single cause of action under Sections 3 and 4, Rule 2.

Procedural History — Ejectment Case (MCTC)

June 20, 2006: SVHFI filed the Ejectment Case against MII, docketed as Civil Case No. 06-2568, in the sixth Municipal Circuit Trial Court of Mabalacat and Magalang, Pampanga.
The Ejectment Case was pending while the Collection Case remained pending before Branch 150, RTC Makati.

RTC Ruling on Forum Shopping Motion

March 31, 2008: RTC, Branch 150, Makati — in an Order penned by Presiding Judge Elmo M. Alameda — granted MII’s Motion to Dismiss and dismissed Civil Case No. 02-1326 (the Collection Case).
October 6, 2008: RTC denied SVHFI’s Motion for Reconsideration of the dismissal.

Court of Appeals Proceedings and Ruling

SVHFI appealed the RTC dismissal to the Court of Appeals under CA-G.R. CV No. 93376.
The sole issue on appeal: whether SVHFI was guilty of forum shopping for filing both the Collection and Ejectment Cases in two different courts.
August 30, 2013: Court of Appeals Decision affirmed the RTC’s March 31, 2008 Order, holding that SVHFI was guilty of forum shopping. (Decision penned by Associate Justice Isaias P. Dicdican, concurred in by Associate Justices Michael P. Elbinias and Nina G. Antonio-Valenzuela.)
Both parties filed Motions for Reconsideration before the CA; February 26, 2014: CA denied the motions in its Resolution.

Petitions to the Supreme Court (Rule 45) and Related Pleadings

SVHFI filed a Petition for Review on Certiorari under Rule 45, docketed as G.R. No. 211563, contesting the CA’s affirmation that it committed forum shopping.
MII filed its own Petition for Review on Certiorari, docketed as G.R. No. 211531, raising an issue that the CA failed to resolve whether it should be allowed to present evidence on its compulsory counterclaim pursuant to Section 6, Rule 16 of the Rules of Court; MII contended dismissal under the forum-shopping provision was without prejudice to prosecution of counterclaims and prayed for ex parte presentation of evidence for its counterclaim.
April 21, 2014: Supreme Court denied MII’s petition in G.R. No. 211531 by Resolution, holding the fate of MII’s counterclaim was for the RTC to decide, not the CA, and finding no error in the CA’s failure to dispose of the counterclaim.
July 9, 2014: MII’s motion for reconsideration of the April 21, 2014 denial was likewise denied; the denial became final and executory on September 9, 2014.

Issue Presented to the Supreme Court

Whether petitioner SVHFI committed forum shopping when it filed two different actions — the Collection Case and the Ejectment Case — in two different courts while the Collection Case had been pending for four years.

Legal Standards / Authorities Cited

Definition and general rule against forum shopping: forum shopping is resorting to multiple fora for the same relief to increase chances of a favorable judgment (citing Intramuros Administration v. Offshore Construction Development Co.; Dy v. Mandy Commodities, Inc.).
Section 5, Rule 7, Rules of Court: requires plaintiff’s certification under oath that no action involving the same issues has been commenced in another court to prohibit forum shopping.
Jurisprudential test for forum shoppin