Republic of the
Supreme Court
THIRD DIVISION
|
DEUTSCHE BANK AG, Petitioner, - versus - COURT OF APPEALS and
STEEL CORPORATION OF THE Respondents. |
|
G.R. No. 193065
Present: VELASCO, JR., J., Chairperson, PERALTA, ABAD, PERLAS-BERNABE, JJ. Promulgated: February 27, 2012 |
X
--------------------------------------------------------------------------------------
X
D E C I S I O N
MENDOZA, J.:
This is a petition for certiorari under
Rule 65 of the 1997 Rules of Civil Procedure assailing the March 12, 2010[1] and
July 19, 2010[2] Resolutions
of the Court of Appeals (CA) in
CA-G.R. SP No. 111556 entitled Deutsche Bank AG v. Hon. Judge Albert A.
Kalalo and Steel Corporation of the Philippines (Deutsche Bank AG
Petition) for having been issued without jurisdiction or with grave abuse
of discretion amounting to lack or excess of jurisdiction, insofar as they ordered
the consolidation of the Deutsche Bank AG Petition with another case earlier
filed and docketed as CA-G.R. SP No. 107535 entitled Vitarich Corporation
v. Judge Danilo Manalastas (Vitarich Petition) on the ground that
the two cases involve a common question of law.
THE FACTS
Private respondent Steel Corporation
of the
On
SteelCorp
failed to pay its loan obligations as they fell due. Thus, on
In its Decision[5]
dated
In
February 2008 and during the pendency of the proceedings before the
RTC-Batangas, RCBC and petitioner Deutsche Bank AG entered into a deed of assignment,[6]
wherein the former assigned to the latter all of its rights, obligations, title
to, and interest in, the loans which it had extended to SteelCorp in the
aggregate outstanding principal amount of ₱94,412,862.58.
SteelCorp
was duly informed of the said assignment through the Notice of Transfer[7]
sent to it by RCBC.
Through
its Entry of Appearance with Motion for Substitution of Parties[8]
dated
The
RTC-Batangas, upon the motion of SteelCorp, issued its Order dated
Records show that two other petitions
for certiorari filed by other creditors of SteelCorp were pending before
different divisions of the CA, both of which arising from the same
1. CA-G.R. SP No. 111560 entitled Investments 2234
Philippines Fund, Inc. v. Hon. Albert A. Kalalo, in His Capacity as the
Presiding Judge of the Regional Trial Court of Batangas City, Branch 4 and
Steel Corporation of the Philippines (Investments 2234 Petition); and
2. CA-G.R. SP No. 112175 entitled Equitable PCI Bank,
Inc. (now BDO Unibank, Inc.) v. Hon. Albert A. Kalalo in His Capacity as
Presiding Judge of the Regional Trial Court of Batangas City, Branch 4 and
Steel Corporation of the Philippines (EPCIB Petition).
In the meantime, SteelCorp filed its
Motion for Consolidation[11]
dated February 18, 2010, praying for the consolidation of the Deutsche Bank AG
Petition, together with the Investments 2234 Petition and EPCIB Petition, with
the Vitarich Petition on the ground that the cases involved the same question
of law whether creditors could be compelled to disclose the actual assignment
price for credits in litigation which were assigned in the context of a corporate
rehabilitation proceeding pursuant to Articles 1634 and 1236 of the Civil Code.
On
Finding merit in the motion, and pursuant
to Section 3(a), Rule III of the Internal Rules of the Court of Appeals, the
instant petition is ordered CONSOLIDATED with CA-G.R. SP No. 107535 (the case with the lower docket
number), subject to the conformity of the ponente thereof and with right
of replacement with a case of similar nature and status.
SO
ORDERED.[12]
It appears from the records that the
Vitarich Petition emanated from Civil Case No. 592-M-2006 entitled In the
Matter of the Petition for Corporate Rehabilitation of Vitarich Corporation
which is currently pending before Branch 7, Regional Trial Court of Bulacan (RTC-Bulacan).
The RTC-Bulacan in its Decision dated
Vitarich sought a partial reversal of
the said decision via a petition for review under Rule 43 of the 1997 Rules of
Court (docketed as CA-G.R. SP No. 99374), contending that it should only be
made to pay the discounted transfer prices of the assigned credits should it
decide to exercise its right of redemption.
Vitarich, however, withdrew the said petition and instead filed a motion
to direct the assignees to disclose the amounts paid by them to their
assignors.
In its Order dated
Hence, Vitarich filed its petition[13]
praying that the CA order the assignees to disclose the actual amount paid to
their respective assignors so that it could pay the transfer prices of the
assigned credits should it exercise its right of redemption. Several banks moved for the dismissal of this
petition on the ground that the ruling on the issue raised therein had already
become final.
Deutsche Bank AG filed a motion for reconsideration[14]
of the March 12, 2010 CA resolution arguing that the Deutsche Bank AG petition
and the Vitarich petition were not related cases that would merit consolidation. It stressed that a common question of law
alone does not warrant consolidation inasmuch as the Internal Rules of the CA (IRCA)
provides that for consolidation to be proper, the cases must be
related. It also claimed that the consolidation
of these two unrelated cases would not serve the purpose of consolidation,
which was to obtain justice with the least expense and vexation to the
litigants.
The said motion was, however, denied
by the CA in its Resolution dated
Thus, the CA agreed with the
SteelCorps conclusion that when two cases involved the same parties, or
related questions of fact, or related questions of law, then they were
considered as related cases for purposes of consolidation. The pertinent portion of the CA resolution
reads:
To deny the transfer of a case to a court
or division where another case involving the same question of law is pending
could lead to further protracted litigations.
The rationale for consolidation is to have all cases intimately related
acted upon by one Court/Division to avoid the possibility of conflicting
decisions being rendered that will not serve the orderly administration of
justice.
The added expense and unjustified
vexation intimated by petitioner are all in the mind. One division of this Court would be able to
resolve the issue in both petitions with more dispatch and accord than two
divisions.
WHEREFORE,
the motion for reconsideration is DENIED.
SO ORDERED.[16]
Hence,
Deutsche Bank AG interposes the present special civil action before this Court
anchored on the following
GROUNDS
THE RESPONDENT
COURT COMMITTED GRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK OR EXCESS OF
JURISDICTION, IN ISSUING THE ASSAILED RESOLUTIONS AND ORDERING THE
CONSOLIDATION OF THE TWO (2) SUBJECT PETITIONS CONSIDERING THAT:
(I)
UNDER SECTION
3(A) RULE III OF THE INTERNAL RULES OF THE COURT OF APPEALS AND LONGSTANDING
JURISPRUDENCE, FOR CONSOLIDATION TO BE PROPER, THE CASES MUST BE RELATED, I.E.,
THEY ARISE FROM THE SAME ACT, EVENT OR TRANSACTION, INVOLVE THE SAME OR LIKE
ISSUES, AND DEPEND LARGELY OR SUBSTANTIALLY ON THE SAME EVIDENCE. HERE, THE CASES SOUGHT TO BE CONSOLIDATED ARE
TOTALLY UNRELATED;
(II)
THE CONSOLIDATION OF THE TWO CASES WILL BE COMPLETELY AGAINST THE PURPOSE OF CONSOLIDATION, WHICH IS TO OBTAIN JUSTICE WITH THE LEAST EXPENSE AND VEXATION TO THE LITIGANTS.[17]
It appears from the records
that on
In view of the said
withdrawal of the motion for consolidation, the present petition assailing the
CAs order of consolidation has certainly been rendered moot and academic.
A moot and academic case is one that
ceases to present a justiciable controversy by virtue of supervening events, so
that a declaration thereon would be of no practical use or value. Generally,
courts decline jurisdiction over such case or dismiss it on ground of mootness.
However, even in cases where supervening events had made the cases moot, this
Court did not hesitate to resolve the legal or constitutional issues raised to
formulate controlling principles to guide the bench, the bar and the public.
Moreover, as an exception to the rule on mootness, the courts will decide a
question otherwise moot if it is capable of repetition, yet evading review.[18]
This
case comes within the rule that courts will decide a question, otherwise moot
and academic, if it is capable of repetition, yet evading review. The issue of whether the CA pursuant to its
internal rules can validly order consolidation of cases on the sole ground that
the same involve a common question of law most likely will recur. Thus, there is a necessity to decide the case
on the merits.
The Court
will now resolve the merits of the sole issue raised in this petition, whether
the CA gravely abused its discretion amounting to lack or excess of
jurisdiction when it ordered the consolidation of the Deutsche Bank AG petition
and the Vitarich petition.
Deutsche Bank AG argues that a common
question of law alone would not warrant consolidation, and for cases to be consolidated, the same
must be related cases. It cited as basis
the ruling enunciated in the landmark case of Teston v. Development Bank of
the Philippines,[19]
that actions involving common question of law or fact may be tried together
where they arise from the same act, event or transaction, involve the same or
like issues, and depend largely or substantially on the same evidence. It contends that there was grave abuse of
discretion on the part of the CA when it ordered the consolidation because Deutsche
Bank AG Petition and the Vitarich Petition were not related, much less,
intimately related cases. The two cases
were entirely different with separate factual antecedents, having arisen from
two separate petitions for rehabilitation of two distinct corporations. In addition, there were no interconnected
transactions in, nor identical properties subject of, the two cases. It further argues that consolidation would
only defeat, rather than serve, the purpose of consolidation.
SteelCorp counters that the CA may consolidate
cases on the sole ground that the cases involve related questions of law. Thus, the fact that Deutsche Bank AG Petition
and Vitarich Petition involve an identical question of law is sufficient to
make them related cases which were proper for consolidation pursuant to Section
3(a), Rule III of the IRCA.
The Court agrees with Deutsche Bank AG.
Consolidation
of actions involving a common question of law or fact is expressly authorized
under Section 1, Rule 31 of the 1997 Rules of Civil Procedure, to wit:
SECTION 1. Consolidati0n. When actions involving a
common question of law or fact are pending before the court, it may order a
joint hearing or trial of any or all the matters in issue in the actions; it
may order all the actions consolidated; and it may make such orders concerning
proceedings therein as may tend to avoid unnecessary costs or delay.
Consolidation
of cases is also allowed under Section 3, Rule III of the 2009 IRCA, to wit:
Consolidation
of Cases. When related
cases are assigned to different Justices, they may be consolidated and
assigned to one Justice.
(a) Upon
motion of a party with notice to the other party/ies, or at the instance of the
Justice to whom any of the related cases is assigned, upon notice to the
parties, consolidation shall ensue when the cases involve the same parties
and/or related questions of fact and/or law.
(b) Consolidated cases shall pertain to
the Justice
(1)
To whom the case with the lowest docket number is assigned, if they are of the
same kind;
(2)
To whom the criminal case with the lowest number is assigned, if two or more of
the cases are criminal and the others are civil or special;
(3)
To whom the criminal case is assigned and the other are civil or special; and
(4)
To whom the civil case is assigned, or to whom the civil case with the lowest
docket number is assigned, if the cases involved are civil and special.
(c)
Notice of the consolidation and replacement shall be given to the Raffle Staff
and the Judicial Records Division. (Emphasis and underscoring supplied)
As can be
gleaned from the aforequoted provision, for consolidation to be proper, the
cases sought to be consolidated must be related.
Similarly, jurisprudence has laid down
the requisites for consolidation. In the
recent case of Steel Corporation of the Philippines v. Equitable PCI Bank,
Inc.,[20] the
Court held that it is a
time-honored principle that when two or more cases involve the same parties and
affect closely related subject matters, they must be consolidated and jointly
tried, in order to serve the best interests of the parties and to settle
expeditiously the issues involved. In other words, consolidation is proper
wherever the subject matter involved and relief demanded in the different suits
make it expedient for the court to determine all of the issues involved and
adjudicate the rights of the parties by hearing the suits together.
In the present case, there is no
sufficient justification to order the consolidation inasmuch as the Deutsche
Bank AG Petition has no relation whatsoever to the Vitarich Petition. To recall, the Deutsche Bank AG Petition is
an appeal on certiorari from the Order dated
The fact that Deutsche Bank AG is a
party to both cases does not make the proceedings intimately related. There is no factual relation between the two
proceedings. SteelCorp proceedings
originated from SteelCorps rehabilitation proceedings which have nothing to do
with the Vitarich proceeding that originated from Vitarichs rehabilitation proceeding.
Neither
are there interconnected transactions, nor identical subject matter in the
Deutsche Bank AG and Vitarich petitions.
The former involved issue resulting from the assignment of credits of
RCBC to Deutsche Bank AG whereas in the latter, the issue arose from the assignment
of the receivables of various creditors of Vitarich to several corporations and
special purpose vehicles (SPVs).
Verily,
the two petitions having no factual relationship with and no interconnected
transactions on the same subject matter, they cannot be deemed related cases. As such, the necessity to consolidate does not
become imperative. The order of
consolidation by the CA on the sole ground that the cases involved a common
question of law was, therefore, not in order.
It bears
noting that the CA cited the cases of Zulueta v. Asia Brewery, Inc.,[21]
Benguet Corporation, Inc. v. Court of Appeals,[22]
and Active Wood Products Co., Inc. v. Court of Appeals[23] as
jurisprudential basis of its order to consolidate. Its reliance on the said cases was misplaced
as the factual milieus therein were not in all fours with the case at
bench. The ruling in these cases, in
fact, bolstered Deutsche Bank AGs position that for consolidation to be
warranted the cases sought to be consolidated must not only involve related
issues but also the same parties and closely related subject matters.
The CA cannot rely on the case of Zulueta
v. Asia Brewery, Inc., to support its ruling that consolidation is proper
when the cases involve the resolution of a common question of law or fact. In the said case, a joint trial of the two
cases was justified because both arose out of, or an incident of, the same
Dealership Agreement. Thus, the Court
upheld the consolidation in this wise:
Inasmuch as the binding force of the
Dealership Agreement was put in question, it would be more practical and
convenient to submit to the
Two cases involving the same parties and affecting
closely related subject matters must be ordered consolidated and jointly
tried in court, where the earlier case was filed.[24]
(underscoring supplied)
In
the case of Benguet Corporation, Inc. v. Court of Appeals, where it was
written that the rationale for consolidation is to have all cases intimately
related acted upon by one Court/Division to avoid the possibility of
conflicting decisions being rendered.[25]
A scrutiny of the ruling in Benguet reveals that the case pending in the
9th Division was merely an offshoot of the decision rendered in the
10th Division. Faulting the
CA 9th Division with grave abuse of discretion in denying Benguet's Motion to
Transfer Case No. CA-G.R. SP No. 12964 to the 10th Division, the Court held,
thus:
2. The matter elevated to the 9th Division, namely,
the implementation of the Writ of Preliminary Mandatory Injunction with
Break-open Order issued by the Trial Court on
3. The rationale for consolidation is to have all
cases intimately related acted upon by one Court Division to avoid the
possibility of conflicting decisions in cases involving the same facts and
common questions of law. The cases before the 10th Division and the 9th
Division of the Court of Appeals are two (2) such intimately and substantially
related cases. Consolidation being called for it cannot be justifiably argued,
as private respondents do, that BENGUET is estopped from pleading for such
consolidation. To deny the transfer could lead to further protracted
litigations to the detriment of the efficient and effective determination of
actions and proceedings.[26]
(underscoring supplied)
Hence, consolidation of cases is
proper when there is a real need to forestall the possibility of conflicting
decisions being rendered in the cases.[27] In the case under consideration, considering
that Deutsche Bank AG and Vitarich cases are not related, the risk of
conflicting decisions is a remote probability.
Lastly, in Active Wood Products
The
consolidation of cases becomes mandatory because it involves the same
parties and the same subject matter which is the same parcel of land. Such
consolidation is desirable to avoid confusion and unnecessary costs and
expenses with the multiplicity of suits.[28] xxx (underscoring supplied)
Further,
the Court finds merit in Deutsche Bank AGs contention that the consolidation
of the subject cases will defeat the purpose of consolidation.
It
is well recognized that the purpose of the rule on consolidation is to avoid
multiplicity of suits; to guard against oppression and abuse; to prevent delays;
to clear congested dockets; and to simplify the work of the trial court. In
short, consolidation aims to attain justice with the least expense and vexation
to the parties-litigants.[29]
It contributes to the swift dispensation of justice, and is in accord with the
aim of affording the parties a just, speedy, and inexpensive determination of
their cases before the courts. Further, it results in the avoidance of the
possibility of conflicting decisions being rendered by the courts in two or
more cases, which would otherwise require a single judgment.[30]
Under the circumstances, the
consolidation of the Deutsche Bank AG Petition with the Vitarich Petition does
not appear to be a prudent move as it serves none of the purposes cited
above. On the contrary and as correctly
pointed out by Deutsche Bank AG, it will only complicate the resolution of the
cases as the CA would have to consider the different factual antecedents of
both the Deutsche Bank AG and Vitarich petitions.
Moreover, the
question of law that the Vitarich proceedings allegedly shares with the
SteelCorp Proceedings whether Vitarichs creditors could be compelled to
disclose the sums paid for the assigned Vitarich loans - has long been finally
resolved and has already become the law of the case among the parties in the Vitarich
rehabilitation proceedings. Thus, the
consolidation would unduly prejudice the banks and would lead to complications,
delay or restriction on the right of the banks to the immediate dismissal of
the Vitarich proceedings.
Furthermore, the consolidation will
only subject the parties to added expense and unjust vexation. The number of parties will substantially
increase so as the cost of furnishing the parties with pleadings, thereby
defeating the very rationale behind consolidation.
Relevant is the case
of Republic of the Phils. v. Hon. Mangrobang,[31]
where the Court disallowed the consolidation of an ejectment case and a case
for eminent domain because the consolidation thereof would complicate
procedural requirements and delay the resolution of the cases which raised
dissimilar issues. The Court held that
fairness and due process might be hampered rather than helped if the cases were
consolidated.
Likewise, in Philippine National Bank v. Tyan Ming
Development, Inc.[32]
the non-consolidation of PNBs petition for a writ of possession and GOTESCOs complaint for
annulment of foreclosure proceeding was upheld for defeating the very purpose of consolidation, thus:
The
record shows that PNBs petition was filed on
It
should be stressed that GOTESCO was well aware of the expiration of the period
to redeem the property. Yet, it did not exercise its right of redemption. There
was not even an attempt to redeem the property. Instead, it filed a case for
annulment of foreclosure, specific performance, and damages and prayed for a
writ of injunction to prevent PNB from consolidating its title. GOTESCOs
maneuvering, however, failed, as the CA and this Court refused to issue the
desired writ of injunction.
Cognizant
that the next logical step would be for PNB to seek the delivery of possession
of the property, GOTESCO now tries to delay the issuance of writ of possession.
It is clear that the motion for consolidation was filed merely to frustrate
PNBs right to immediate possession of the property. It is a transparent ploy
to delay, if not to prevent, PNB from taking possession of the property it
acquired at a public auction ten (10) years ago. This we cannot tolerate.
xxx
In
De Vera v. Agloro, this Court upheld the denial by the RTC of a
motion for consolidation of a petition for issuance of a writ of possession
with a civil action, as it would prejudice the right of one of the parties,
viz.:
It
bears stressing that consolidation is aimed to obtain justice with the least
expense and vexation to the litigants. The object of consolidation is to avoid
multiplicity of suits, guard against oppression or abuse, prevent delays and
save the litigants unnecessary acts and expense. Consolidation should be
denied when prejudice would result to any of the parties or would cause
complications, delay, prejudice, cut off, or restrict the rights of a party.[33] (underscoring
supplied)
In the recent case of Espinoza v. United
Overseas Bank Phils.,[34]
the Court, in the same manner ruled against the consolidation of the proceedings for the issuance of a
writ of possession with that for the declaration of nullity of a foreclosure
sale on the ground that it would run counter to the purpose of consolidation:
In
this case, title to the litigated property had already been consolidated in the
name of respondent, making the issuance of a writ of possession a matter of right.
Consequently, the consolidation of the petition for the issuance of a writ of
possession with the proceedings for nullification of foreclosure would be
highly improper. Otherwise, not only will the very purpose of consolidation
(which is to avoid unnecessary delay) be defeated but the procedural matter of
consolidation will also adversely affect the substantive right of possession as
an incident of ownership.[35]
Indeed, the consolidation of actions is addressed
to the sound discretion of the court and its action in consolidating will not
be disturbed in the absence of manifest abuse of discretion.[36] Grave abuse of discretion defies
exact definition, but it generally refers to capricious or whimsical exercise
of judgment as is equivalent to lack of jurisdiction. The abuse of discretion
must be patent and gross as to amount to an evasion of a positive duty or a
virtual refusal to perform a duty enjoined by law, or to act at all in
contemplation of law, as where the power is exercised in an arbitrary and despotic
manner by reason of passion and hostility.[37]
In this particular case, however, the exercise of such
discretion by the CA in ordering the consolidation of the Deutsche Bank AG
Petition and the Vitarich Petition was less than judicious considering that the
two cases were not intimately and substantially related.
Lest it be misunderstood, the CA may prescribe reasonable rules
governing assignment of cases with similar questions of law or facts to one justice.
In case of consolidation, however, it may be effected only if the said cases
are related. Needless to state, assignment is different from consolidation.
WHEREFORE,
the petition is GRANTED.
The
SO ORDERED.
JOSE CATRAL
WE CONCUR:
PRESBITERO
J. VELASCO, JR.
Associate Justice
Chairperson
DIOSDADO M.
PERALTA ROBERTO A.
ABAD
Associate
Justice Associate Justice
ESTELA M.
PERLAS-BERNABE
Associate Justice
A T T E S T A T I O N
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 Courts Division.
PRESBITERO
J. VELASCO, JR.
Associate Justice
Chairperson,
Third Division
C E R T I F I C A T I O N
Pursuant to Section 13, Article VIII of the
Constitution and the Division Chairpersons 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 Courts Division.
RENATO
C. CORONA
Chief Justice
[1]Annex
A of Petition, rollo, pp. 69-70. Penned by Associate Justice Magdangal
M. De
[2]
Annex B of Petition, id. at
72-74.
[3] Annex C of Petition, id. at
76-112.
[4] Annex H of Petition, id. at
234-267.
[5] Annex I of Petition, id. at
269-297.
[6] Annex J of Petition, id. at 300.
[7] Annex K of Petition, id. at
304-305.
[8] Annex L of Petition, id.at
307-309.
[9] Annex Q of Petition, id. at
368-371.
[10] Annex R of Petition, id. at 373.
[11] Annex X of Petition, id. at
496-592.
[12] Rollo, pp. 69-70.
[13] Annex AA of Petition, id. at
525-558.
[14] Rollo, p. 656.
[15] 406 Phil. 543 (2001).
[16] Rollo, pp. 73-74.
[17]
[18] Integrated Bar of the
Philippines v. Atienza, G.R. No. 175241,
[19] 511 Phil. 221 (2005).
[20] G.R.
No. 190462 & G.R. No. 190538,
[21] 406 Phil. 543 (2001).
[22] 247-A
Phil. 356 (1988).
[23] 260 Phil. 825 (1990).
[24] Zulueta v. Asia Brewery, Inc., supra note 21 at 555-556.
[25] Supra note 22.
[26] Benguet Corporation, Inc. v. Court of Appeals, supra note 22 at 363.
[27] Bank of Commerce v. Perlas-Bernabe, G.R. No. 172393,
[28] Active Wood Products Co., Inc. v. Court of Appeals, supra note 23 at 829-830.
[29] Steel
Corporation of the Philippines v. Equitable PCI Bank, Inc., supra note 20
at 416, citing Canos v. Peralta, 201 Phil. 422 (1982).
[30]
Id., citing Yu, Sr. v. Basilio G. Magno Construction and Development
Enterprises, Inc., G.R. Nos. 138701-02, October 17, 2006, 504 SCRA 618,
633.
[31] 422 Phil. 178 (2001).
[32] G.R.
No. 183211,
[33]
[34] G.R.
No. 175380,
[35]
[36] Teston v. Development Bank of the Philippines, supra note 19 at 229-230, citing De Vera v. Agloro, 489 Phil. 185 (2005).
[37] People
of the Philippines v. Tan, G.R. No. 167526, July 26, 2010, 625 SCRA 388,
397; De Vera v. De Vera, G.R. No. 172832, April 7, 2009,
584 SCRA 506, 514-515, citing People v. Court of Appeals, 368
Phil. 169, 180 (1999).