CARMELITA T. PANGANIBAN, PETITIONER, VS. PILIPINAS SHELL PETROLEUM CORPORATION, RESPONDENT.

Panganiban versus Pilipinas Shell Petroleum Corporation

The Case

This is a petition for review brought by Carmelita Panganiban against Pilipinas Shell Petroleum Corporation, arising from a sublease and dealer agreement over a gasoline station. Panganiban asked the courts to declare that the agreement had not yet expired, but her action for declaratory relief was dismissed because a later ejectment suit was already pending. The case matters because it settles a procedural question every litigator must know: when two actions involving the same parties and the same subject matter are pending, which one gives way, and may a defendant still move to dismiss on the ground of litis pendentia after having already filed an answer.

Procedural History

Panganiban filed a petition for declaratory relief with the Regional Trial Court of Makati City. Shell filed its answer, and later filed a manifestation with a motion to dismiss on the ground of litis pendentia, pointing to an unlawful detainer case it had brought before the Metropolitan Trial Court of Caloocan City. The Regional Trial Court dismissed the petition for declaratory relief, ruling that the issue of possession could be threshed out in the ejectment case. Panganiban moved for reconsideration, but the motion was denied after she failed to appear at the hearing.

Panganiban then went to the Supreme Court by petition for review under Rule 45. The Supreme Court referred the petition to the Court of Appeals, since that court has concurrent jurisdiction and no special or important reason was shown for the Supreme Court to take immediate cognizance. The Court of Appeals denied the petition for certiorari, sustaining the dismissal on the ground of litis pendentia and applying the doctrine of Rosales versus the Court of First Instance of Lanao del Norte and University Physicians Services versus the Court of Appeals. The case then reached the Supreme Court by petition for review.

Facts

On August 7, 1990, Panganiban entered into a Sublease and Dealer Agreement with Pilipinas Shell Petroleum Corporation. Under that agreement, Shell subleased to her a gasoline station along Samson Road, EDSA, Caloocan City. Shell did not own the lot; it was itself leasing the land from its owner, Serafin Vasquez, under a lease effective from January 1, 1987 to December 31, 2002. The sublease provided that it was co-terminus with Shell's own lease on the site, notwithstanding the total five-year period stated in the agreement.

In a letter dated June 14, 1995, Shell notified Panganiban that the sublease and dealer agreement would expire on July 31, 1995, and advised her to wind up her business by that date. Believing the agreement was still effective until December 31, 2002, Panganiban continued to pay rentals, but Shell refused to accept the payments.

On July 10, 1995, Panganiban filed a petition for declaratory relief with the Regional Trial Court of Makati City. Shell filed its answer on August 30, 1995. On April 26, 1996, Shell filed an unlawful detainer case with the Metropolitan Trial Court of Caloocan City. On April 30, 1996, eight months after filing its answer, Shell filed a motion to dismiss the declaratory relief case on the ground of litis pendentia. The Metropolitan Trial Court decided the ejectment case in favor of Shell on September 25, 1996, and that decision was appealed to the Regional Trial Court of Caloocan City. On February 21, 1997, the Regional Trial Court of Makati City dismissed the petition for declaratory relief.

Issues

• Whether or not the Court of Appeals erred in affirming the dismissal of the action for declaratory relief on the ground of litis pendentia, when the motion to dismiss was filed long after Shell had already filed its answer.
• Whether or not the action for declaratory relief, having been filed earlier, should be preferred over the later unlawful detainer case.

Applicable Provisions

Section 1 of Rule 16 of the Rules of Court, on the time for filing a motion to dismiss, provides:

Within the time for but before filing the answer to the complaint or pleading asserting a claim, a motion to dismiss may be made on any of the following grounds.

Panganiban invoked this provision to argue that Shell's motion to dismiss, filed after its answer, came too late.

Section 1 of Rule 70 of the Rules of Court, on the one-year period for unlawful detainer, provides:

A person deprived of the possession of any land or building by force, intimidation, threat, strategy, or stealth, or a lessor, vendor, vendee, or other person against whom the possession of any land or building is unlawfully withheld after the expiration or termination of the right to hold possession, by virtue of any contract, express or implied, or the legal representatives or assigns of any such lessor, vendor, vendee, or other person, may, at any time within one year after such unlawful deprivation or withholding of possession, bring an action in the proper Municipal Trial Court against the person or persons unlawfully withholding or depriving of possession, or any person or persons claiming under them, for the restitution of such possession, together with damages and costs.

This provision bears on Panganiban's claim that Shell slept on its rights and was guilty of laches in filing the ejectment suit.

Ruling

On the first issue, the Court held that the requirement that a motion to dismiss be filed within the time for filing the answer is not absolute. Even after an answer has been filed, a defendant can still move to dismiss on the grounds of lack of jurisdiction, litis pendentia, lack of cause of action, and discovery during trial of evidence constituting a ground for dismissal. Litis pendentia is also a ground that authorizes a court to dismiss a case on its own motion. The cases relied upon by Panganiban were not squarely in point, because in each of them the Court found the elements of the exceptional grounds insufficient, so the general rule of estoppel applied. Here, the bona fide existence of litis pendentia was beyond dispute: there was identity of parties, identity of rights asserted and relief prayed for founded on the same facts, and identity of the two cases such that judgment in one would amount to res judicata in the other.

On the second issue, the Court held that the mere fact that the declaratory relief case was filed earlier did not mean it should be preferred. The relevant factors are the date of filing, whether the action sought to be dismissed was filed merely to preempt the later action, and whether the action is the appropriate vehicle for litigating the issues. The Court stressed that the interpretation of the provision on when the sublease would expire was the key issue determining Panganiban's right to possess the station, and that when the primary issue is physical possession, it should be threshed out in the ejectment suit to avoid multiplicity of suits. The Court also noted that the Metropolitan Trial Court had already decided the ejectment case before the Regional Trial Court dismissed the declaratory relief case, making the latter action vexatious and futile. On the claim of laches, the Court held that Shell had one year from July 31, 1995 to file the ejectment suit, and it filed well within that period.

Doctrine

A motion to dismiss is generally filed before the answer, but this rule is not absolute. Even after an answer has been filed, a defendant may still move to dismiss on the grounds of lack of jurisdiction, litis pendentia, lack of cause of action, and discovery during trial of evidence constituting a ground for dismissal. Litis pendentia may even be raised by the court on its own motion.

The requisites of litis pendentia are identity of parties, identity of rights asserted and relief prayed for founded on the same facts, and identity of the two cases such that judgment in one would amount to res judicata in the other. Where two actions are pending, preference is not automatically given to the earlier one; the court considers the date of filing, whether the action sought to be dismissed was filed merely to preempt the later action, and whether the action is the appropriate vehicle for litigating the issues. When the primary issue is physical possession, it should be threshed out in the ejectment suit, not in a declaratory relief action, to avoid multiplicity of suits.

Disposition

The Supreme Court denied the petition for lack of merit and affirmed the dismissal of the action for declaratory relief, with costs against Panganiban.

Remember This

Memorize this line: litis pendentia may be raised even after an answer has been filed, and the earlier case yields to the later ejectment suit when possession is the real issue. Examiners use this case to test the requisites of litis pendentia, the exceptions to the rule on the timing of a motion to dismiss, and the preference between a declaratory relief action and an unlawful detainer case.