Republic
of the
SUPREME
COURT
THIRD DIVISION
|
SUBIC
TELECOMMUNICATIONS COMPANY, INC., Petitioner, -
versus - Respondents. |
|
G.R. No. 185159 Present: CARPIO, J., Chairperson, CHICO-NAZARIO, VELASCO,
JR., NACHURA,
and PERALTA,
JJ. Promulgated: October
12, 2009 |
x-----------------------------------------------------------------------------------------x
D E C I S I O N
VELASCO, JR., J.:
The Case
In
this Petition for Review on Certiorari under Rule 45, petitioner Subic
Telecommunications Company, Inc. (Subic Telecom) assails and seeks to set aside
the April 4, 2008 Decision,[1]
as effectively reiterated in a Resolution[2]
of October 28, 2008, both issued by the Court of Appeals (CA) in CA-G.R. CV No.
88757, an appeal from the orders dated June 30, 2006 and August 24, 2006 of the
Regional Trial Court (RTC), Branch 74 in Olongapo City in Civil Case No. 155-O-2006,
a suit for specific performance.
The Facts
Respondent Subic Bay Metropolitan
Authority (SBMA) is a government corporation created pursuant to Republic Act
No. (RA) 7227, otherwise known as the “Bases Conversion and Development Act of
1992.” Consequent to the withdrawal in
1992 of the American naval forces and its civilian complement from the Subic
Naval Base and the earlier eruption of
After winning an international competitive
bidding to provide telecommunications services in the SBFZ, the Philippine Long
Distance Telephone Co., Inc. (PLDT) and the American Telephone and Telegraph
Co. (AT&T) entered on June 29, 1994 into a 25-year renewable Joint Venture
Agreement[4]
(JVA) with the SBMA for the purpose of, among others, forming a joint venture
company to provide telecommunications and related services in the zone. Thus, the incorporation of Subic Telecom.
On January 23, 1995, SBMA, by a
Resolution,[5]
granted Subic Telecom a franchise to provide telecommunications services and
establish, operate, and maintain telecommunications facilities, networks, and
systems in the SBFZ. Subsequent
developments saw Subic Telecom investing on telecommunications equipment and
other facilities and starting to operate its telecommunications services with
its network connected to the nationwide network of PLDT.
To ensure Subic Telecom’s viability and
safeguard its investments, the joint venture partners agreed that, for a period
of 10 years from June 29, 1994, the date of the agreement, up to June 30, 2004,
SBMA would not allow third parties to engage in any activity that would
materially affect what the partners considered as Subic Telecom’s basic and
enhanced telecommunications services, i.e.,
local exchange and toll services. This
agreement was reflected in Section 11(c)(ii) of the JVA pertinently providing,
thus:
SECTION 11. COVENANTS
x x
x x
(c)
SBMA Covenants. SBMA
covenants and agree with as follows:
x
x x x
(ii)
Contracts. Except as
provided hereunder, during the terms of the Agreement and any renewal thereof,
SBMA shall not enter into contracts with third parties which would materially
impair or materially restrict in any unreasonable way Subic Telecom’s
operations. For ten (10) years from
the date hereof, SBMA shall not enter into contracts with third parties which
would materially restrict in any unreasonable way Subic Telecom’s operation of
local exchange and toll services (domestic and international) (“Basic and Enhanced
Telecommunications Services”); provided however that SBMA shall not be
restricted from entering into contracts with or issuing authorizations in favor
of parties engaged in businesses other than Basic and Enhanced
Telecommunications Services, including, but not limited to wireless or cellular
telephone services, paging services, cable television or manufacture, sale,
installation or servicing of telecommunications and telephone equipment.[6] (Emphasis supplied.)
In
addition to the non-competition clause on the basic and enhanced telecommunications services in
the SBFZ,
it is provided under Sec. 18(k) of the JVA that Subic Telecom has the option to
renew its exclusivity privilege for three (3) five-year periods subject to the
continuing compliance by Subic Telecom of its obligations under the JVA, and
provided that neither PLDT nor AT&T defaults under the JVA. Said Sec. 18(k) pertinently provides:
SECTION
18. MISCELLANEOUS
x
x x x
(k) Non-Competition.
– Upon the incorporation and organization of Subic Telecom in accordance with
the provisions set-forth in this Agreement and for the duration of its
existence, the parties, their subsidiaries and affiliates, hereto shall cease
and desist from engaging in competition with Subic Telecom in the Zone;
Provided however that the foregoing shall not restrict SBMA other than with
regard to Basic and Enhanced Telecommunications Service, as defined in Section
11 (c) (ii) hereof for the period from the date of this Agreement until the
tenth anniversary of this Agreement; Provided further that as long as Subic
Telecom has consistently complied with its obligations as set forth in Appendix
(g) to this Agreement and as long as PLDT and AT&T are not in default under
this Agreement, Subic Telecom shall have the option, for three (3) five year
periods, to extend the effectivity of this Section.[7] (Emphasis supplied.)
Then came the 1997 Asian financial
crisis that, among other causes, prevented Subic Telecom from recovering its
investments during the initial exclusivity period.
In November 1999, SBMA sold its equity
interest in Subic Telecom to PLDT. And
in January 2001, AT&T likewise sold its equity interest in Subic Telecom to
PLDT. Thus, Subic Telecom became a
wholly-owned subsidiary of PLDT.
On April 22, 2004 or shortly before the
end of the 10-year period covered by Sec. 11(c)(ii), Subic Telecom notified
SBMA that it is exercising its option to renew its exclusivity privilege
granted under Sec. 18(k) (notice to renew, hereinafter) for an extended period
of five years.[8] Receiving no response from SBMA, Subic
Telecom sent a second notice on June 25, 2004.[9]
On July 14, 2004, Subic Telecom and
SBMA held a bilateral meeting which saw an exchange of memoranda, with Subic
Telecom submitting its Position Paper[10]
to argue and defend its right to the desired renewal.
On
Meanwhile, as early as March 2004, SBMA
started accepting applications for Certificate of Public Convenience and
Necessity (CPCN) to operate in the SBFZ international, and leased lines
services as well as local exchange and toll services in direct competition with
Subic Telecom. Among the CPCN applicants
was respondent Innove Communications, Inc. (Innove), which filed its
application before the SBMA on March 26, 2004, docketed as SBMA Case Nos.
04-001 and 04-002. As might be expected, Subic Telecom opposed Innove’s
application.
On September 10, 2004, pending the
issuance by the OGCC of an opinion, SBMA issued Resolution No. (Res.)
On
Obviously guided by OGCC Opinion No.
236, SBMA proceeded with the rejection of Subic Telecom’s notice to renew and
at the same time entertained applications for CPCN of other telecommunications
industry players.
Subsequently, on
On
Subic Telecom moved for reconsideration
of the February 17, 2006 SBMA Order.[18]
Apparently owing to SBMA’s failure after the lapse of several days to act on
this motion, Subic Telecom formally withdrew[19]
its motion and instead filed on May 16, 2006 a Complaint for Specific
Performance (With Prayer for Temporary Restraining Order and Preliminary
Injunction) against SMBA and Innove before the RTC in Olongapo City,
docketed as Civil Case No. 155-O-2006, entitled Subic Telecommunications
Company, Inc. v. Subic Bay Metropolitan Authority and Innove Communications,
Inc.
In its complaint, Subic Telecom, inter
alia, prayed that: (a) its notices of renewal dated April 22 and
June 25, 2004 of its exclusivity privilege under Sec. 18(k) of the JVA be
declared as a valid exercise of its option and effective for five years from
June 30, 2004 to June 29, 2009; and (b) SBMA be ordered to comply with its
contractual obligations under the JVA and be enjoined from violating Subic
Telecom’s rights in the JVA. To the complaint, SBMA and Innove filed their respective
oppositions,[20] with
motion to dismiss[21]
the complaint.
The
RTC Ruling in Civil Case No. 155-O-2006
On June 30, 2006, the RTC issued an
Order[22]
dismissing the complaint of Subic Telecom on the ground of litis
pendentia. The fallo reads:
WHEREFORE, foregoing considered, this
case is DISMISSED on the ground of litis pendentia. With this resolution, the court does not find
it necessary anymore to discuss the other grounds. Last, the application for injunctive relief
has been rendered academic.
SO ORDERED.[23]
Its motion for reconsideration having
been denied in an Order[24]
of August 24, 2006, Subic Telecom appealed to the CA.
Ruling of the CA
The CA, in its Decision dated April 4,
2008, denied the appeal and effectively affirmed the dismissal by the RTC of
Subic Telecom’s complaint on the same ground relied upon by the latter court. The fallo of the CA’s decision
reads:
WHEREFORE, premises considered, the
appeal is DENIED for lack of merit. The
Orders dated
SO ORDERED.[25]
Subic
Telecom’s motion for reconsideration of the assailed decision was denied in the
equally assailed CA Resolution of October 28, 2008.
The
Issues
Undaunted, Subic Telecom is now with
this Court via the present
recourse raising the following grounds for the allowance of its petition, thus:
I
THE COURT OF APPEALS HAS DECIDED
A QUESTION OF SUBSTANCE NOT IN ACCORDANCE WITH THE APPLICABLE DECISIONS OF THIS
HONORABLE COURT IN THAT IT FAILED TO RECOGNIZE THAT THERE EXISTS NO LITIS
PENDENTIA IN THIS INSTANCE.
II
THE COURT OF APPEALS HAS SO FAR
DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF PROCEEDINGS CALLING FOR THE EXERCISE
OF THIS HONORABLE COURT’S SUPERVISION WHEN IT REFUSED TO TAKE COGNIZANCE OF
SUBICTEL’S ARGUMENTS IN SUPPORT OF ITS PRAYER FOR INJUNCTION.[26]
The above assignment of errors boils
down to the basic question of whether there is litis pendentia involving
SBMA Case Nos. 04-001 and 04-002 and Civil Case No. 155-O-2006.
The
Court’s Ruling
The
petition is meritorious.
As
may be noted, the RTC viewed Subic Telecom’s cause of action as oppositor in
SBMA Case Nos. 04-001 and 04-002 as the very same cause of action in Civil Case
No. 155-O-2006 as the “evidence needed to support both x x x is the correct
interpretation and application of the pertinent provisions of the [JVA] under
consideration.”[27]
Similarly,
the appellate court posited the existence in this case of litis pendentia
on the rationale that “evidently, the judgment that may be rendered in one
would, regardless of which party is successful, inevitably amount to res
judicata in the other. Simply put,
the identity of the causes of action in the civil case a quo and in the
SBMA cases is patent. The causes of
action are premised on whether or not appellant [Subic Telecom] has the right
to be the exclusive telecommunications service provider within the [SBFZ], so
as to preclude appellee Innove from operating therein.”[28]
We
cannot agree with the case disposition of the courts a quo.
Litis pendentia, a Latin
term meaning “a pending suit,” is also referred to as lis pendens and auter
action pendant. While it
is normally connected with the control which the court has over a property
involved in a suit during the continuance proceedings, it is interposed more as
a ground for the dismissal of a civil action pending in court.[29]
Litis
pendentia as a ground for the dismissal of a
civil action contemplates a situation wherein another action is pending between
the same parties for the same cause of action, such that the second action
becomes unnecessary and vexatious.[30] In fact, it is one of the grounds that
authorizes a court to dismiss a case motu
proprio.[31] It is provided under Sec. 1(e),
Rule 16 of the 1997 Rules of Civil Procedure, thus:
SECTION 1. Grounds.¾Within 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:
x x x
(e) That there is another action pending between
the same parties for the same cause.
Litis pendentia is
predicated on the principle that a party should not be allowed to vex another
more than once regarding the same subject matter and for the same cause of
action.[32] This principle in turn is founded on the
public policy that the same subject matter should not be the subject of
controversy in courts more than once, in order that possible conflicting
judgments may be avoided for the sake of the stability of the rights and status
of persons,[33] and
also to avoid the costs
and expenses incident to numerous suits.
Among the several tests resorted to
in ascertaining whether two suits relate to a single or common cause of action
are: (1) whether the same evidence would support and sustain both the first and
second causes of action;[34]
and (2) whether the defenses in one case may be used to substantiate the
complaint in the other.[35]
The determination of whether there is
an identity of causes of action for purposes of litis pendentia is
inextricably linked with that of res judicata, each constituting an
element of the other. In either case,
both relate to the sound practice of including, in a single litigation, the
disposition of all issues relating to a cause of action that is before a court.[36]
Thus, the invocation of the litis
pendentia or res judicata rule is proper in cases where a party
splits a cause of action by, for example, filing separate cases to recover
separate reliefs for a single cause of action, or in cases where a defendant
files another case arising from what should have been pleaded in a compulsory
counterclaim.
For litis pendentia to exist,
the following requisites or elements must concur: (a) identity of parties, or at least such
parties who represent the same interests in both actions; (b) identity of
rights asserted and relief prayed for, the relief being founded on the same
facts; and (c) identity with respect to the two (2) preceding particulars in
the two (2) cases is such that any judgment that may be rendered in the pending
case, regardless of which party is successful, would amount to res judicata in
the other case.[37]
In the instant case, both cases
seemingly involve the same parties, but a close perusal of those cases shows
otherwise. In the first case, SBMA Case
Nos. 04-001 and 04-002, involving the application of Innove before the
SBMA Telecommunications Department for a CPCN to
operate international and leased lines services as well as local exchange and
toll services, SBMA was
not a party but was the quasi-judicial body hearing the application, while
Subic Telecom intervened in said case as oppositor to Innove’s application
to protect its interests. But in the second case, Civil Case
No. 155-O-2006, filed by Subic Telecom, SBMA was the principal party
(defendant) for specific performance and mandatory injunction, while Innove was impleaded for
having been granted a temporary franchise by SBMA. Thus, as between the administrative case and
the civil case, there was no identity of parties.
As regards the reliefs sought, Subic
Telecom prays in SBMA Case Nos. 04-001 and 04-002 for (a) the denial of
Innove’s application on the ground that Subic Telecom is exercising its right
for an extension of its alleged exclusivity right to operate basic
and enhanced telecommunications services in the SBFZ; and, in the meantime, (b)
the SBMA to defer the proceedings on Innove’s application pending the
resolution by SBMA on Subic Telecom’s notices to extend for five years its
alleged exclusivity rights under Sec. 18(k) of the JVA. In Civil Case No. 155-O-2006, on the other hand, Subic
Telecom pleads that the RTC (a) declare its notices of renewal as a valid
exercise of its option to renew the effectivity of Secs. 11(c)(ii) and 18(k) of
the June 29, 1994 JVA for five years; (b) order SBMA to comply with its
contractual obligations under said JVA; and (c) issue a permanent injunctive
writ.
The
remedies Subic Telecom sought in the first case hinge on the acceptance by SBMA
of Innove’s application and the consequent proceedings. The second case was based on and was
triggered by the denial by SBMA of Subic Telecom’s notices to exercise the
renewal of its alleged exclusivity rights under the JVA which the latter viewed
as violation of the former’s contractual obligations under the JVA.
The
Court can plausibly concede that both cases, insofar as Subic Telecom’s defense
in the first case and cause of action in the second case are concerned, touch
and deal with the interpretation of the pertinent JVA provisions. It cannot be over-emphasized, however, that
both cases are not based on the same set of controlling facts, for when Subic
Telecom opposed Innove’s application, its notices of renewal to SBMA have not
yet been rejected or denied. While, in
the second case, its notices of renewal have already been denied, prompting it
to file a suit for specific performance that entailed a determination by the
RTC of the rights of the parties, i.e.,
primarily those of Subic Telecom and SBMA, based on the June 29, 1994 JVA
through the interpretation of its pertinent provisos. From the foregoing distinction, it is clear
that there is, as between the two actions, no identity of rights asserted and
reliefs prayed for; and the facts whence the reliefs are sought are
different.
In
ruling on the presence of litis pendentia, both the trial and appellate
courts, however, overlooked the fact that there is more to determining the
identity of the causes of action than an identity of the documentary evidence
presented by Subic Telecom. But the more
fundamental question to consider is whether or not the cause of action in the
second case existed at the time of the filing of the first case.
To reiterate, the denial by SBMA of
Subic Telecom’s notices of renewal of its exclusivity privilege gave rise to
the latter’s cause of action in the second case for specific performance based
on the JVA stipulations, particularly Sec. 18(k) in relation to Sec. 11(c)(ii).
Whereas, in the administrative case (first case), Subic Telecom was pursuing
its rights based on the same provisos of the JVA before SBMA could act on its
notices for such renewal.
A cause of action is the fact or
combination of facts which affords a party a right to judicial interference in
his behalf.[38] The elements that constitute a cause of
action are: (1) the legal right of the plaintiff; (2) correlative obligation of
the defendant to respect that legal right; and (3) an act or omission of the
defendant that violates such right.[39]
All the elements above appear to
obtain in the instant civil case. Sec.
18(k) of the JVA conferred on Subic Telecom a certain legal right which SBMA
has the corresponding obligation to respect. And, to Subic Telecom, SBMA had
violated such right by ignoring, if not denying, the former’s notice of or
request for renewal.
Lest it be overlooked, the SBMA is
the decision-maker in SBMA Case Nos. 04-001 and 04-002, being the regulator for
telecommunications in the SBFZ. Be that
as it may, SBMA cannot be impleaded in said case when it denied Subic Telecom’s
notices of renewal. And for an obvious
reason, Subic Telecom cannot, in said administrative case, pursue, let alone
succeed in, an action for specific performance against SBMA. Since SBMA is a party to the JVA, thus
otherwise rendering it bound for the obligations it freely entered into, Subic
Telecom cannot and may not compel SBMA to honor its commitments through the
same administrative case before the SBMA.
SBMA, to be sure, would necessarily be biased for the SBMA in cases before
it.
Upon the foregoing considerations,
the appropriate action for Subic Telecom to pursue is a suit for specific
performance before an independent body, the RTC, for the latter to interpret
the pertinent provisos in the JVA and adjudicate the rights and obligations of
SBMA and Subic Telecom, pursuant to Sec. 19(1)[40]
of Batas Pambansa Blg. 129, as
amended, otherwise known as “The Judiciary Reorganization Act of 1980.”
The bare fact that Subic Telecom
included Innove as a party defendant in its complaint for specific performance
does not bring into play the application of litis pendentia. Innove was impleaded only because SBMA
granted it a temporary franchise to operate, a privilege which would
necessarily be canceled or dissolved in the event Subic Telecom secures a
favorable court ruling. Were it not for
the temporary grant, Innove would really be irrelevant in the principal action
for specific performance.
As for the third requisite of litis
pendentia, we likewise find it absent in this case.
It cannot be said that a judgment in
SBMA Case Nos. 04-001 and 04-002 would have settled all matters concerning the
rights and obligations of the parties under the JVA. In fine, any judgment in SBMA Case Nos.
04-001 and 04-002, regardless of the prevailing party, would not necessarily
resolve Subic Telecom’s rights under the JVA, and would not, therefore,
constitute res judicata as to the second case, i.e., Civil Case No. 155-O-2006.
This brings us to Subic Telecom’s
plea for injunction, the issuance of which it predicates on its perceived
rights under the JVA which SBMA allegedly ignored. In this regard, it is inappropriate for the
Court to favorably act on the plea, absent a clear-cut determination of the
right in esse of Subic Telecom, a material and substantial evasion of
such right, and the prevention of irreparable injury, if any. As may be
noted, both the RTC and the CA no longer saw fit to delve into the asserted
right issue which to them was rendered moot by their finding, erroneous as it
turned out, on the existence of litis pendentia. Thus, we cannot make yet a judicious
disposition as to the propriety of an injunction, given for one the dearth of
evidence on record. By the same token,
it would be premature to order the trial court to issue the injunctive
writ. The remand of the case to the RTC is in order, thereby allowing
Subic Telecom to substantiate its assertions on the existence of its rights and
the alleged breach by SBMA of its obligations, and for respondents SBMA and
Innove, if so minded, to contest them.
The Court has time and again reiterated that it is not a trier of fact
or otherwise structurally capacitated to receive and evaluate evidence.
WHEREFORE, the
petition is hereby GRANTED. Accordingly, the CA’s April
4, 2008 Decision and October 28, 2008 Resolution in CA-G.R. CV No. 88757 that
affirmed the RTC’s Orders dated June 30, 2006 and August 24, 2006 are hereby REVERSED
and SET ASIDE. The RTC, Branch 74
in
SO ORDERED.
PRESBITERO
J. VELASCO, JR.
Associate Justice
WE
CONCUR:
Associate Justice
Chairperson
MINITA V.
Associate Justice
Associate Justice
DIOSDADO M.
PERALTA
Associate Justice
I attest that the conclusions in the
above Decision had been reached in consultation before the case was assigned to
the writer of the opinion of the Court’s Division.
Pursuant to Section 13,
Article VIII of the Constitution, and the Division Chairperson’s Attestation, I
certify that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court’s Division.
LEONARDO
A. QUISUMBING
Acting Chief Justice
[1] Rollo, pp. 39-56. Penned by Associate Justice Celia C. Librea-Leagogo and concurred in by Associate Justices Regalado E. Maambong and Agustin S. Dizon.
[2]
[3] The
SBFZ comprises the former Subic Naval Base,
[4] Rollo, pp. 73-100.
[5]
[6]
[7]
[8]
[9]
[10]
[11]
[12]
[13]
[14]
[15]
[16]
[17]
[18]
[19]
[20]
[21]
[22]
[23]
[24]
[25]
[27]
[28]
[29] Agilent
Technologies
[30] Guevarra
v. BPI Securities Corporation, G.R. No. 159786,
[31] Rudolf Lietz Holdings, Inc. v. The Registry of Deeds of Parañaque City, G.R. No. 133007, November 29, 2000, 344 SCRA 680, 686.
[32] Sherwill
Development Corporation v. Sitio Sto. Niño Residents Association, Inc.,
G.R. No. 158455,
[33] Forbes Park Association, Inc. v. Pagrel, Inc., G.R. No. 153821, February 13, 2008, 545 SCRA 39, 49.
[34] Feliciano v. Court of Appeals, G.R. No. 123293, March 5, 1998, 287 SCRA 61, 68.
[35] Victronics
Computers, Inc. v. RTC, Branch 63,
[36] See 2 J.Y. Feria and M.C.S. Noche, Civil Procedure Annotated 126 (2001).
[37] Bangko Silangan Development Bank v. Court of Appeals, G.R. No. 110480, June 29, 2001, 360 SCRA 322, 335; citation omitted.
[38] Philippine National Construction Corporation v. Court of Appeals, G.R. No. 165433, February 6, 2007, 514 SCRA 569, 582; citing Navoa v. Court of Appeals, G.R. No. 59255, December 29, 1995, 251 SCRA 545, 552.
[39] Pineda v. Santiago, G.R. No. 143482, April 13, 2007, 521 SCRA 47, 63; citing Goodyear Phils., Inc. v. Sy, G.R. No. 154554, November 9, 2005, 474 SCRA 427, 435.
[40] SEC. 19. Jurisdiction in Civil Cases. — Regional Trial Courts shall exercise exclusive original jurisdiction:
(1) In all civil actions in which the subject of the litigation is incapable of pecuniary estimation.