G.R. No. 181485 - PHILIPPINE NATIONAL BANK, VS. GATEWAY PROPERTY HOLDINGS, INC..D E C I S I O N - Supreme Court E-Library

Ruling

ACCORDINGLY, this case is DISMISSED. [19] (Emphasis ours.) GPHI filed a Motion for Reconsideration [20] of the above ruling, but the trial court denied the motion in an Order [21] dated March 14, 2002. GPHI, thus, filed a Notice of Appeal, [22] which was given due course by the trial court. [23] In the interregnum, after the parties presented their respective evidence in Civil Case No. TM-1022 (Annulment of the Real Estate Mortgage), GPHI filed a Motion for Leave to Amend Complaint to Conform to the Evidence [24] on November 24, 2006. In the Amended Complaint [25] attached therein, GPHI made mention of the foreclosure sale conducted on June 20, 2001 and the fact that the mortgaged properties were sold to PNB for P168 million. Since GPHIs liability was allegedly limited only to P112 million in accordance with the letter of PNB dated August 13, 1997 and the Amendment to the Credit Agreement between GEC, GPHI and PNB, GPHI claimed that it should be refunded the amount of P56 million. GPHI then prayed for a judgment declaring the real estate mortgage, the foreclosure and the sale of the mortgaged properties null and void; or, alternatively, for a judgment ordering PNB to return to GPHI the amount of P56 million, plus interest. [26] The Judgment of the Court of Appeals GPHIs appeal in Civil Case No. TM-1108 (Annulment of the Foreclosure Sale) was docketed in the Court of Appeals as CA-G.R. CV No. 75108. GPHI primarily argued that the causes of action in the two cases filed before the RTC were separate and distinct such that a decision in one case would not necessarily be determinative of the issue in the other case. On September 28, 2007, the Court of Appeals rendered the assailed decision granting the appeal of GPHI. The relevant portions of the appellate courts ruling stated: For litis pendentia to be a ground for the dismissal of an action, the following requisites must concur: (a) identity of parties; (b) identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (c) the identity in the two cases should be such that the judgment that may be rendered in one would, regardless of which party is successful, amount to res adjudicata to the other. While it is true that there is an identity of parties and subject matter, the third requisite of litis pendentia is not present. x x x x The former suit is for the annulment of the real estate mortgage while the present case is one for the annulment of the foreclosure of the mortgage. It may be conceded that if the final judgment in the former action is for the annulment of the mortgage, such an adjudication will deny the right of the bank to foreclose on the properties. Following the above doctrine, the immediate question would thus be: Will a decree holding the mortgage contract valid prevent a party from challenging the propriety of the foreclosure and the conduct of its proceedings? Verily, an adjudication holding the real estate mortgage valid does not preclude a