Bachrach Corporation vs CA : 128349 : September 25, 1998 : J. Vitug : First Division

FIRST DIVISION

[G.R. No. 128349. September 25, 1998]

BACHRACH CORPORATION, petitioner, vs. THE HONORABLE COURT OF APPEALS and PHILIPPINE PORTS AUTHORITY, respondents.

D E C I S I O N

VITUG, J.:

Bachrach Corporation (“Bachrach”), in its petition for review on certiorari, questions the decision of the Court of Appeals in CA-G.R. SP No. 38763, promulgated on 12 November 1996, the dispositive part of which reading -

“WHEREFORE, the petition is granted. The assailed RTC orders are hereby NULLIFIED and SET ASIDE and public respondent is ordered to dismiss the subject action before him under Civil Case No. 95-73399. No pronouncement as to costs.”[1] –on several counts; viz:

“I. THE COURT OF APPEALS GRAVELY ERRED IN NOT DISMISSING CA-G.R. SP NO. 38673 DESPITE THE FACT THAT A SIMILAR PETITION EARLIER FILED BY PPA WAS DISMISSED FOR BEING INSUFFICIENT NOT ONLY IN FORM BUT ALSO IN SUBSTANCE WHICH DISMISSAL CONSTITUTES RES JUDICATA INSOFAR AS THE ISSUES RAISED THEREIN ARE CONCERNED.

“II. THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE DECISION IN THE UNLAWFUL DETAINER CASE CONSTITUTES RES JUDICATA WHICH BARS THE SPECIFIC PERFORMANCE CASE.

“III. THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE FILING OF THE SPECIFIC PERFORMANCE CASE VIOLATES THE RULE AGAINST FORUM SHOPPING.

“IV. THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE WRIT OF PRELIMINARY INJUNCTION ISSUED BY THE TRIAL COURT CONSTITUTES INTERFERENCE WITH ITS JUDGMENT IN THE UNLAWFUL DETAINER CASE.

“V. THE COURT OF APPEALS GRAVELY ERRED IN ORDERING THE DISMISSAL OF CIVIL CASE NO. 95-73399 THEREBY RULING ON THE MERITS OF THE CASE WHEN IN FACT, THE ONLY ISSUES FOR ITS RESOLUTION WERE THE PROPRIETY OF THE WRIT OF PRELIMINARY INJUNCTION ISSUED BY THE TRIAL COURT AND THE DENIAL OF PPA’S MOTION FOR PRELIMINARY HEARING ON AFFIRMATIVE DEFENSES.”[2]

It would appear that petitioner corporation entered into two lease contracts with the Philippine government covering two specified areas, Block 180 and Block 185, located at the Manila Port Area, then under the control and management of the Director of Lands, for a term of ninety-nine years each, the first lease to expire on 19 June 2017 and the other on 14 February 2018. During her tenure, President Corazon Aquino issued Executive Order No. 321 transferring the management and administration of the entire Port Area to herein respondent Philippine Ports Authority (“PPA”). Shortly after its take-over, PPA issued a Memorandum increasing the rental rates of Bachrach by 1,500%. Bachrach refused to pay the substantial increased rates demanded by PPA.

On 23 March 1992, PPA initiated unlawful detainer proceedings, docketed Civil Case No. 138838 of the Metropolitan Trial Court (“MeTC”) of Manila, against Bachrach for non-payment of rent. On 27 April 1993, MeTC rendered a decision ordering the eviction of Bachrach from the leased premises. Bachrach appealed to the Regional Trial Court (“RTC”) of Manila which, on 21 September 1993, affirmed the decision of the lower court in toto.[3]

Bachrach elevated the case to the Court of Appeals by way of a petition for review. On 29 July 1994, the appellate court affirmed the decision of the RTC. A motion for reconsideration was filed by Bachrach; however, the resolution of the motion was put on hold pending submission of a compromise agreement.[4] When the parties failed to submit the promised compromise agreement, the Court of Appeals, on 15 May 1995, denied Bachrach’s motion for reconsideration. The decision of the appellate court in the ejectment suit became final and executory on 20 May 1995.[5]

Meanwhile on 28 March 1995, while the motion for reconsideration was yet pending with the appellate court, Bachrach filed a complaint against PPA with the Manila RTC, docketed Civil Case No. 95-73399 (hereinafter referred to also as the specific performance case), for refusing to honor a compromise agreement said to have been perfected between Bachrach and PPA during their 04 February 1994 conference that superseded the ejectment case. In its complaint, Bachrach prayed for specific performance.

On 08 June 1995, PPA filed a motion for a writ of execution/garnishment in the ejectment case. The next day, 09 June 1995, Bachrach filed an application in the specific performance case for the issuance of a temporary restraining order and/or a writ of preliminary injunction to enjoin the MeTC from issuing the writ of execution/garnishment. PPA countered by filing a motion for preliminary hearing on its affirmative defenses along the same grounds mentioned in its motion to dismiss the specific performance case, to wit: (a) the pendency of another action between the same parties for the same cause; (b) the violation of the anti-forum-shopping rule; (c) the complaint’s lack of cause of action; and (d) the unenforceable character of the compromise agreement invoked by Bachrach. On 13 July 1995, the trial court issued an omnibus order, granting the application of Bachrach for a writ of preliminary injunction, in this tenor -

“PREMISES CONSIDERED, this Court is of the opinion and so holds (1) that plaintiff (Bachrach) is entitled to the injunctive relief prayed for and upon the posting of a bond in the amount of P300,000.00, let a writ of preliminary injunction be issued enjoining the defendant (PPA), the Presiding Judge of the Metropolitan Trial Court of Manila, Branch 2 from issuing a writ of execution/garnishment in Civil Case No. 238838-CV entitled `Philippine Ports Authority vs. Bachrach Corporation’; (2) lifting/setting aside the order dated June 5, 1995 and (3) denying defendant’s motion for a preliminary hearing on affirmative defenses.”[6]

PPA moved for reconsideration of the above order but the trial court denied the plea in its order of 29 August 1995.

On 25 September 1995, PPA filed a petition for certiorari and prohibition, with application for the issuance of a temporary restraining order and/or writ of preliminary injunction, docketed CA-G.R. SP No. 38508, before the Court of Appeals. The petition was dismissed by resolution, dated 28 September 1995, of the appellate court for being insufficient in form and substance, i.e., the failure of PPA to properly attach a certified true copy each of the assailed order of 13 July 1995 and 29 August 1995 of the trial court. PPA received on 05 October 1995[7] a copy of the resolution, dated 28 September 1995, of the appellate court. Undaunted, PPA filed a new petition on 11 October 1995, now evidently in proper form, asseverating that since it had received a copy of the assailed resolution of the trial court only on 07 September 1995, the refiling of the petition with the Court of Appeals within a period of less than two months from the date of such receipt was well within the reasonable time requirement under the Rules for a special civil action for certiorari.[8] In the meantime, the resolution, dated 28 September 1995, of the Court of Appeals which dismissed CA-G.R. No. 38508 became final on 21 October 1995.[9]

In its newly filed petition, docketed CA-G.R. SP No. 38673, PPA invoked the following grounds for its allowance:

“I. That respondent Judge acted without, or in excess of jurisdiction, or with grave abuse of discretion when it issued a writ of preliminary injunction against the final and executory resolution of the Honorable Court of Appeals (Annex `I’) inspite of the well-established rule that courts are not allowed to interfere with each other’s judgment or decrees by injunction, and worse, in this case, against the execution of the judgment of a superior or collegiate court which had already become final and executory.

“II. That respondent Judge acted without, or in excess of jurisdiction, or with grave abuse of discretion when it also denied petitioner’s motion for a preliminary hearing on its affirmative defenses or in failing to have the case below outrightly dismissed on the grounds stated in its affirmative defenses, when respondent Judge pronounced there is no identity as to the causes of action between the case decided by the Court of Appeals (CA-G.R. SP No. 32630) and the case below (Civil Case No. 95-73399) when clearly the causes of action in both cases revolve on the same issue of possession of the subject leased premises.

“III. That respondent Judge acted without, or in excess of jurisdiction, or with grave abuse of discretion in refusing to take cognizance (of), abide (by) and acknowledge the final judgment of the Court of Appeals which, on said ground alone, is enough justification for the dismissal of the case grounded on res judicata. Moreover private respondent is guilty of forum-shopping and the penalty therefor is the dismissal of its case.”[10]

On 12 November 1996, the Court of Appeals rendered the assailed decision nullifying and setting aside the orders of the RTC and ordering the latter to dismiss the specific performance case.

The Court finds merit in the instant appeal interposed by petitioner.

Verily, the decisive issue raised by the parties before the Court in the instant petition is whether or not the specific performance case (Civil Case No. 73399) should be held barred by the unlawful detainer case on the ground of res judicata. There are four (4) essential conditions which must concur in order that res judicata may effectively apply, viz: (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 second action identity of parties, identity of subject matter, and identity of causes of action.”[11] There is no question about the fact that all the first three elements of res judicata are here extant; it is the final condition requiring an identity of parties, of subject matter and of causes of action, particularly the last two, i.e., subject matter and cause of action, that presents a problem.

A cause of action, broadly defined, is an act or omission of one party in violation of the legal right of the other.[12] The subject matter, on the other hand, is the item with respect to which the controversy has arisen, or concerning which the wrong has been done, and it is ordinarily the right, the thing, or the contract under dispute.[13] In a breach of contract, the contract violated is the subject matter while the breach thereof by the obligor is the cause of action. It would appear quite plain then that the RTC did act aptly in taking cognizance of the specific performance case. In Civil Case No. 138838 of the MeTC, the unlawful detainer case, the subject matter is the contract of lease between the parties while the breach thereof, arising from petitioner’s non-payment of rentals, constitutes the suit’s cause of action. In Civil Case No. 73399 of the RTC, the specific performance case, the subject matter is the compromise agreement allegedly perfected between the same parties while the cause of action emanates from the averred refusal of PPA to comply therewith. The ultimate test in ascertaining the identity of causes of action is said to be to look into whether or not the same evidence fully supports and establishes both the present cause of action and the former cause of action. In the affirmative, the former judgment would be a bar; if otherwise, then that prior judgment would not serve as such a bar to the second.[14] The evidence needed to establish the cause of action in the unlawful detainer case would be the lease contract and the violation of that lease by Bachrach. In the specific performance case, what would be consequential is evidence of the alleged compromise agreement and its breach by PPA.

The next thing to ask, of course, would be the question of whether or not the issuance by the trial court of the writ of preliminary injunction was an improper interference with the judgment in the unlawful detainer suit. It could be argued that, instead of filing a separate action for specific performance, Bachrach should just have presented the alleged compromise agreement in the unlawful detainer case. Unfortunately, the refusal of PPA to honor the agreement after its alleged perfection effectively prevented Bachrach from seeking the coercive power of the court to enforce the compromise in the unlawful detainer case. The situation virtually left Bachrach with but the remedy of independently initiating the specific performance case in a court of competent jurisdiction. In its challenged decision, the Court of Appeals, on its part, has said that respondent PPA’s prayer for the issuance of a writ of execution and garnishment is but the necessary and legal consequence of its affirmance of the lower court’s decision in the unlawful detainer case which has by then become final and executory.[15] The rule indeed is, and has almost invariably been, that after a judgment has gained finality, it becomes the ministerial duty of the court to order its execution.[16] No court, perforce, should interfere by injunction or otherwise to restrain such execution. The rule, however, concededly admits of exceptions; hence, when facts and circumstances later transpire that would render execution inequitable or unjust, the interested party may ask a competent court to stay its execution or prevent its enforcement.[17] So, also, a change in the situation of the parties can warrant an injunctive relief.[18] Evidently, in issuing its orders of 13 July 1995 and 29 August 1995 assailed by PPA in the latter’s petition for certiorari and prohibition before the Court of Appeals, the trial court in the case at bar would want to preserve status quo pending its disposition of the specific performance case and to prevent the case from being mooted by an early implementation of the ejectment writ. In holding differently and ascribing to the trial court grave abuse of discretion amounting to lack or excess of jurisdiction, the appellate court, in our considered view, has committed reversible error.

Having reached the above conclusions, other incidental issues raised by petitioner no longer need to be passed upon.

WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals is reversed and set aside; Civil Case No. 73399 along with the assailed orders of the Regional Trial Court, aforedated, are hereby reinstated. No costs.

SO ORDERED.

Davide, Jr., Bellosillo, Panganiban and Quisumbing, JJ., concur.