G.R. No. 163344 March 20, 2009
VILLARICA PAWNSHOP, INC., represented by Atty. Henry R. Villarica, Maria Consolacion Valmadrid and Rafael Valmadrid Tan, Petitioners, vs. SPOUSES ROGER G. GERNALE and CORAZON C. GERNALE, FAR EAST BANK & TRUST CO. (now Bank of the Philippine Islands) and the REGISTER OF DEEDS of Meycauayan, Bulacan, Respondents.

FACTS

On May 29, 2002, respondent spouses Roger and Corazon Gernale filed a Complaint for Quieting of Title and Damages against Villarica Pawnshop, Inc. (Civil Case No. 438-M-2002, RTC Branch 18, Malolos). The Gernales alleged they purchased two parcels of land from Maria Consolacion Valmadrid on April 16, 1978. After reconstitution of the burned titles, Transfer Certificate of Title (TCT) Nos. T-286452(M) and T-286453(M) were issued in their names in 1996. They later discovered that TCTs covering the same lots were issued in Villarica’s name in 1995, which they claimed were void. On July 3, 2002, Villarica filed its Answer with Counterclaim, denying the sale to the Gernales and asserting ownership of ten lots, including the two in dispute, purchased from Valmadrid and Rafael Valmadrid Tan on May 23, 1995. Villarica alleged the Gernales’ deed of sale was fake and Valmadrid’s signature was falsified.
Meanwhile, on June 25, 2002, petitioners (Villarica Pawnshop, Inc., Valmadrid, and Tan) filed a separate Complaint for annulment and cancellation of titles and for damages against the Gernale spouses, the Register of Deeds, and Far East Bank & Trust Co. (now BPI) (Civil Case No. 502-M-2002, RTC Branch 10, Malolos). This complaint sought to declare null and void the Gernales’ deeds of sale and titles, as well as the real estate mortgage they executed in favor of BPI. The Gernale spouses moved to dismiss Civil Case No. 502-M-2002 on the ground of litis pendentia, arguing the allegations were identical to those in Villarica’s Answer in the first case. The RTC Branch 10 denied the motion to dismiss and the subsequent motion for reconsideration. The Gernales then filed a petition for certiorari and mandamus with the Court of Appeals. The CA granted the petition, reversed the RTC orders, and directed the dismissal of Civil Case No. 502-M-2002 on the ground of litis pendentia.

ISSUE

Whether the Court of Appeals correctly ruled that litis pendentia exists between Civil Case No. 438-M-2002 and Civil Case No. 502-M-2002, warranting the dismissal of the latter.

RULING

Yes, the Court of Appeals correctly found the existence of litis pendentia. The Supreme Court affirmed the CA Decision. The elements of litis pendentia are: (1) identity of parties, or at least such parties as represent the same interests in both actions; (2) identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (3) identity of the two cases such that judgment in one, regardless of which party is successful, would amount to res judicata in the other. All these elements are present.
First, there is substantial identity of parties. In Civil Case No. 438-M-2002, the parties are the Gernale spouses (plaintiffs) and Villarica Pawnshop, Inc. (defendant). In Civil Case No. 502-M-2002, the parties are Villarica Pawnshop, Inc., Valmadrid, and Tan (plaintiffs) versus the Gernale spouses, BPI, and the Register of Deeds (defendants). While the parties are not exactly the same, there is substantial identity because Villarica is the real party-in-interest in both cases, representing the same interest. Valmadrid and Tan, the alleged vendors, are not indispensable parties to the first case, as Villarica’s cause of action as the registered owner is independent of its vendors’ rights. The inclusion of additional parties (BPI and the Register of Deeds) in the second case does not negate the identity, as the core dispute remains between the Gernales and Villarica.
Second, there is identity of rights asserted and reliefs prayed for, founded on the same facts. Both actions ultimately seek to determine who has valid title to the disputed properties. In the first case, the Gernales seek to quiet their title and declare Villarica’s titles void. In the second case, Villarica seeks to annul the Gernales’ titles and deeds. Both actions are founded on the same factual premise: the validity of the competing deeds of sale (the Gernales’ 1978 deed versus Villarica’s 1995 deed) and the resulting certificates of title. The reliefs, though phrased differently, are essentially contradictory claims over the same property.
Third, any judgment in one case would constitute res judicata in the other. A ruling in the quieting of title case (No. 438-M-2002) on the validity of either party’s title would necessarily settle the issue sought in the annulment case (No. 502-M-2002). The Supreme Court also held that the CA correctly entertained the petition for certiorari despite the general rule, as the RTC committed grave abuse of discretion in not dismissing the second case, and allowing both to proceed would risk conflicting decisions.