Appeals, Remedial Law

Aboitiz Equity Ventures, Inc. v. Chiongbian, G.R. No. 197530 July 9, 2014 J. Leonen, Appeal by Certiorari to the Supreme Court, Interlocutory Order, Forum Shopping, Res Judicata

FACTS:

On January 8, 1996, Aboitiz Shipping Corporation (“ASC”), principally owned by the Aboitiz family, CAGLI, principally owned by the Gothong family, and William Lines, Inc. (“WLI”), principally owned by the Chiongbian family, entered into an agreement whereby ASC and CAGLI would transfer their shipping assets to WLI in exchange for WLI’s shares of stock. WLI, in turn, would run their merged shipping businesses and, henceforth, be known as WG&A, Inc.

The Agreement required all disputes arising out of or in connection with the Agreement to be settled by arbitration, and that any award by the arbitration tribunal shall be final and binding upon the parties and shall be enforced by judgment of the Courts of Cebu or Metro Manila.

Sometime in 2002, the Chiongbian and Gothong families decided to leave the WG&A enterprise and sell their interest in WG&A to the Aboitiz family. As such, a share purchase agreement (“SPA”) was entered into by petitioner AEV and the respective shareholders groups of the Chiongbians and Gothongs. In the SPA, AEV agreed to purchase the Chiongbian group’s 40.61% share and the Gothong group’s 20.66% share in WG&A’s issued and outstanding stock.

As part of the SPA, the parties entered into an Escrow Agreement whereby ING Bank N.V.-Manila Branch was to take custody of the shares subject of the SPA.

Section 14.7 of the Escrow Agreement provided that all disputes arising from it shall be settled through arbitration.

As a result of the SPA, AEV became a stockholder of WG&A. Subsequently, WG&A was renamed Aboitiz Transport Shipping Corporation (“ATSC”).

Petitioner AEV alleged that in 2008, CAGLI resumed making demands despite having already received P120.04 million worth of excess inventories.

Its claims not having been satisfied, CAGLI filed the first of two applications for arbitration (“first complaint”) against respondent Chiongbian, ATSC, ASC, and petitioner AEV, before the Cebu City RTC.

AEV filed a motion to dismiss arguing that CAGLI failed to state a cause of action as there was no agreement to arbitrate between CAGLI and AEV.

The RTC sustained AEV’s assertion and dismissed the first complaint with respect to AEV. The RTC directed the parties remaining in the first complaint (after the discharge of AEV) to proceed with arbitration.

Pending the first complaint, CAGLI and Gothong, filed a second application for arbitration (“second complaint”) before the Cebu City RTC in view of the return of the same excess inventories subject of the first complaint.

AEV filed a motion to dismiss but was denied by the RTC. 

AEV’s motion for reconsideration was likewise denied.

Aggrieved, AEV filed the present petition.

AEV asserts that the second complaint is barred by res judicata and litis pendentia and that CAGLI engaged in blatant forum shopping. It insists that it is not bound by an agreement to arbitrate with CAGLI and that, even assuming that it may be required to arbitrate, it is being ordered to do so under terms that are “manifestly contrary to the . . . agreements on which CAGLI based its demand for arbitration.”

ISSUES:

I

Whether or not petitioner availed of the proper remedy prescribed by the Rules.

II

Whether or not the second complaint is barred by res judicata and constitutes forum shopping.

RULING:

We emphasize that AEV is in error in seeking relief from this court via a petition for review on certiorari under Rule 45 of the Rules of Court. As such, we are well in a position to dismiss the present petition outright. Nevertheless, as the actions of the Cebu City RTC are tainted with grave abuse of discretion amounting to lack or excess of jurisdiction, this court treats the present Rule 45 petition as a Rule 65 petition and gives it due course.

A petition for review on certiorari under Rule 45 is a mode of appeal. This is eminently clear from the very title and from the first section of Rule 45 (as amended by A.M. No. 07-7-12-SC):

Rule 45

APPEAL BY CERTIORARI TO THE SUPREME COURT

SECTION 1. Filing of petition with Supreme Court. 

A party desiring to appeal by certiorari from a judgment, final order or resolution of the Court of Appeals, the Sandiganbayan, the Court of Tax Appeals, the Regional Trial Court or other courts, whenever authorized by law, may file with the Supreme Court a verified petition for review on certiorari. The petition may include an application for a writ of preliminary injunction or other provisional remedies and shall raise only questions of law, which must be distinctly set forth. The petitioner may seek the same provisional remedies by verified motion filed in the same action or proceeding at any time during its pendency.

Further, it is elementary that an appeal may only be taken from a judgment or final order that completely disposes of the case. As such, no appeal may be taken from an interlocutory order (i.e., “one which refers to something between the commencement and end of the suit which decides some point or matter but it is not the final decision of the whole controversy”). 

An order denying a motion to dismiss is interlocutory in character. Hence, it may not be the subject of an appeal. 

The interlocutory nature of an order denying a motion to dismiss and the remedies for assailing such an order were discussed in Douglas Lu Ym v. Nabua:

An order denying a motion to dismiss is an interlocutory order which neither terminates nor finally disposes of a case, as it leaves something to be done by the court before the case is finally decided on the merits. As such, the general rule is that the denial of a motion to dismiss cannot be questioned in a special civil action for certiorari which is a remedy designed to correct errors of jurisdiction and not errors of judgment. Neither can a denial of a motion to dismiss be the subject of an appeal unless and until a final judgment or order is rendered. In order to justify the grant of the extraordinary remedy of certiorari, the denial of the motion to dismiss must have been tainted with grave abuse of discretion amounting to lack or excess of jurisdiction.

Thus, where a motion to dismiss is denied, the proper recourse is for the movant to file an answer. Nevertheless, where the order denying the motion to dismiss is tainted with grave abuse of discretion amounting to lack or excess of jurisdiction, the movant may assail such order via a Rule 65 (i.e., certiorari, prohibition, and/or mandamus) petition. 

II

The concept of and rationale against forum shopping were explained by this court in Top Rate Construction & General Services, Inc. v. Paxton Development Corporation:

FORUM SHOPPING is committed by a party who institutes two or more suits in different courts, either simultaneously or successively, in order to ask the courts to rule on the same or related causes or to grant the same or substantially the same reliefs, on the supposition that one or the other court would make a favorable disposition or increase a party’s chances of obtaining a favorable decision or action. It is an act of malpractice for it trifles with the courts, abuses their processes, degrades the administration of justice and adds to the already congested court dockets. What is critical is the vexation brought upon the courts and the litigants by a party who asks different courts to rule on the same or related causes and grant the same or substantially the same reliefs and in the process creates the possibility of conflicting decisions being rendered by the different fora upon the same issues, regardless of whether the court in which one of the suits was brought has no jurisdiction over the action.

Equally settled is the test for determining forum shopping. As this court explained in Yap v. Chua:

To determine whether a party violated the rule against forum shopping, the most important factor to ask is whether the elements of litis pendentia are present, or whether a final judgment in one case will amount to res judicata in another; otherwise stated, the test for determining forum shopping is whether in the two (or more) cases pending, there is identity of parties, rights or causes of action, and reliefs sought.

Litis pendentia “refers to that 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.” 

It requires the concurrence of three (3) requisites: 

“(1) the identity of parties, or at least such as representing the same interests in both actions; 

(2) the identity of rights asserted and relief prayed for, the relief being founded on the same facts; and 

(3) the identity of the two cases such that judgment in one, regardless of which party is successful, would amount to res judicata in the other.”

In turn, prior judgment or res judicata bars a subsequent case when the following requisites concur: 

“(1) the former judgment is final; (2) it is rendered by a court having jurisdiction over the subject matter and the parties; (3) it is a judgment or an order on the merits; (4) there is — between the first and the second actions — identity of parties, of subject matter, and of causes of action.”

Applying the cited concepts and requisites, we find that the second complaint is barred by res judicata and constitutes forum shopping.

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