Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 150888             September 24, 2004

TRAVERSE DEVELOPMENT CORPORATION, petitioner,
vs.
DEVELOPMENT BANK OF THE PHILIPPINES, respondent.

D E C I S I O N

CALLEJO, SR., J.:

Before us is a petition for review on certiorari assailing the Decision1 of the Court of Appeals dismissing the petitioner’s appeal in CA-G.R. CV No. 43157 for lack of jurisdiction and the Resolution denying the motion for reconsideration thereof.

On July 21, 1980, the respondent, Development Bank of the Philippines (DBP), granted a loan of P910,000.00 to the petitioner, Traverse Development Corporation, for the construction of a three-storey commercial building on its property located in Tarlac (now Tarlac City), with an area of 698 square meters covered by TCT No. 154736. The loan was payable in fifteen (15) years, or until June 30, 1996. To secure the payment thereof, the petitioner executed a real estate mortgage over a portion of said property, consisting of 349 square meters. The contract of mortgage was annotated at the dorsal portion of TCT No. 154736 as Entry No. E-20-10483.2

Under the real estate mortgage, the petitioner was required to secure an insurance policy covering the building against fire and earthquake from an acceptable insurance company and to endorse the corresponding policy/policies to the respondent. The respondent was authorized to foreclose the mortgage extrajudicially in case the petitioner defaulted on its obligation.

The petitioner secured a fire insurance policy from the FGU Insurance Corporation for P1,000,000, effective until May 7, 1982. However, before the said date, the respondent required the petitioner to secure another fire insurance policy, this time from the Central Surety and Insurance Company (CSIC) also for P1,000,000. The petitioner did as directed and secured Fire Insurance Policy No. TAR 1056 from CSIC covering the building for the period of May 7, 1982 to May 7, 1983.3 Under the policy, the CSIC obliged itself to pay, in case of loss or damage to the insured property, the amount of such loss or damage to the respondent or as its interests may appear.4

On August 9, 1982, the building was gutted by fire. The petitioner notified the respondent, through a written notice, of the total loss of the building and, at the same time, filed its claim with CSIC in the amount of P1,000,000 under the insurance policy.

On November 6, 1982, the CSIC proposed a settlement of the petitioner’s claim for P230,748.00. The petitioner rejected the offer and filed, on February 28, 1983, a complaint against the CSIC and the respondent in the Regional Trial Court (RTC) of Quezon City. The case was docketed as Civil Case No. Q-37497.

The petitioner alleged that, despite its demands, the CSIC refused to pay the amount of P1,000,000 which was the amount of the insurance plus interests, and that because of such delay, it failed to pay its loan to the respondent and to collect rentals from its prospective lessees on the building. The respondent failed to convince the CSIC to pay the said amount.

The petitioner prayed that it be granted the following reliefs:

WHEREFORE, after hearing, it is most respectfully prayed that judgment be rendered by this Honorable Court in favor of the plaintiff and against the defendants as follows:

1. Sentencing the defendants, jointly and severally, to pay to the plaintiff the amount of P1,000,000.00, the amount for which Fire Insurance Company Policy No. TAR 1056 was issued plus interest thereon at the legal rate computed thirty (30) days after defendants received proof of loss;

2. Sentencing defendants, jointly and severally, to pay to plaintiff actual and compensatory damages in an amount of not less than P275,000.00, more or less;

3. Sentencing defendants, jointly and severally, to pay to the plaintiff, rentals which it failed to receive from the premises due to the unjustifiable delay of the defendants in the settlement of plaintiff’s claim;

4. Sentencing defendants, jointly and severally, to pay to plaintiff the interest and penalty charged to plaintiff’s loan account with the Development Bank of the Philippines due to the unjustifiable delay of defendants in the settlement of plaintiff’s claim;

5. Sentencing defendant SURETY to pay to plaintiff nominal damages in an amount of not less than P100,000.00, more or less;

6. Sentencing defendant SURETY to pay to plaintiff exemplary damages in an amount of not less than P100,000.00, more or less;

7. Sentencing defendants, jointly and severally, to pay to plaintiff the amount of P50,000.00 by way of attorney’s fees and expenses of litigation;

8. Sentencing defendants, jointly and severally, to pay the costs of suit.

Plaintiff prays for such other and further reliefs as may be just and equitable in the premises.5

However, the RTC did not issue any temporary restraining order.

During the pendency of Civil Case No. Q-37497, the respondent foreclosed the real estate mortgage upon the petitioner’s default in the payment of its obligation under the said contract. The respondent was the highest bidder at the sale at public auction, with the bid price of P540,050.00. A certificate of sale was issued in its favor on May 30, 1990 and was annotated at the dorsal portion of TCT No. 154736.6 The respondent consolidated its title to the property in due course.

On May 28, 1991, the petitioner filed a complaint against the respondent in the RTC of Tarlac, for the annulment of the extrajudicial foreclosure sale and damages; and for the issuance of a writ of preliminary injunction and temporary restraining order, to enjoin the defendant from selling the property. The case was docketed as Civil Case No. 74327 which was raffled to Branch 63, Tarlac, Tarlac.

As its first cause of action, the petitioner alleged, inter alia, that the foreclosure of the real estate mortgage of the entire property, as well as the sale thereof at public auction to the respondent, was null and void because only 349 square meters of the entire property, or one-half (1/2) of the eastern portion thereof, was mortgaged to the respondent. The petitioner alleged that its failure to pay its loan was due to the fire that gutted its building, a fortuitous event under Article 1174 of the New Civil Code; as such, it was excused from paying its loan. The petitioner also alleged that were it not for the delay of the payment of its insurance claim from the CSIC, an insurance company chosen by the respondent, it would have been able to pay its loan, as provided in the real estate mortgage.

On its second cause of action, the petitioner alleged that the respondent proceeded with the extrajudicial foreclosure of the mortgage and the sale of its property at public auction despite the pendency of Civil Case No. Q-37497.

The petitioner prayed that it be granted the following reliefs:

WHEREFORE, it is respectfully prayed that –

(1) immediately upon the filing of this Complaint, a temporary restraining order be issued ex parte and, after notice and hearing, a writ of preliminary injunction, enjoining defendants from consolidating ownership over the foreclosed properties or issuing new transfer certificate of title;

(2) after trial, judgment be rendered in favor of plaintiff and against defendants –

[a] on the First Cause of Action, annulling the foreclosure sale and enjoining defendants from consolidating ownership over the foreclosed properties or issuing new transfer certificate of title thereto;

[b] on the Second Cause of Action, ordering defendants to pay plaintiff, jointly and severally –

moral damages in the amount of P200,000.00;

attorney’s fees and expenses of litigation in the sum of P100,000.00;

Exemplary or corrective damages of P100,000.00; and

the costs of suit.

Plaintiff prays for such other reliefs as this Court may deem just and equitable in the premises.8

Since the RTC did not issue a writ of preliminary injunction, the respondent consolidated its title on August 21, 1991 over the foreclosed property and was placed in possession thereof.

Almost two (2) years thereafter, or on July 7, 1993, the petitioner filed another complaint in the RTC of Tarlac against DBP for annulment of extrajudicial foreclosure proceedings, reconveyance of title, cancellation of writ of possession, damages and preliminary injunction with prayer for a restraining order. The verification in the complaint was signed by Angel Tadeo Q. Roxas. The case was docketed as Civil Case No. 78859 and raffled to Branch 63 of the court.

The petitioner alleged, inter alia, that, despite the respondent’s interference in the procurement of a fire insurance policy over the still-to-be constructed building, and the fact that the respondent was entitled to the proceeds of the insurance policy under the real estate mortgage and fire insurance policy in the amount of P1,000,000.00, the said respondent still proceeded with the extrajudicial foreclosure of the real estate mortgage; the respondent failed to give notice to the petitioner relative to its agreement with the respondent to await the outcome of Civil Case No. Q-37497 and Civil Case No. 7432 before the latter consolidated its title over the property and took possession thereof; the petitioner was no longer obliged to pay its loan to the respondent because of the total loss of the building; the petitioner’s failure to pay its loan was due to the delay in the payment of the amount of P1,000,000 in insurance policy by the CSIC; since it was the respondent which impelled the petitioner to procure the said policy, the petitioner should not be faulted for failure to pay its loan. The petitioner prayed for judgment, thus:

WHEREFORE, it is respectfully prayed that a restraining order be immediately issued by this Honorable Court prohibiting or restraining the defendant or any other persons acting in its behalf from proceeding with the sale of plaintiffs’ (sic) properties to third parties, either through public bidding or through negotiated sale.

And after due hearing, judgment be rendered:

a) Making the restraining order and/or preliminary injunction permanent and declare the extra-judicial foreclosure as null and void;

b) Ordering defendant to reconvey to plaintiff the title to the foreclosed properties;

c) Declaring the Writ of Possession issued thereon as cancelled and ordering defendant to return and surrender possession of the premises it seized to the plaintiff;

d) Ordering defendant to pay the plaintiff moral damages in an amount not less than P500,000.00 and exemplary damages in the sum of P100,000.00;

e) Ordering defendant to pay attorney’s fees and expenses of litigation in the amount of P100,000.00; and

f) to pay the cost of suit.

PLAINTIFF FURTHER PRAYS for such other reliefs this Honorable Court may deem just and equitable in the premises.10

The case was raffled to Branch 63 of the court. On July 15, 1993, the respondent filed an Omnibus Motion11 in Civil Case No. 7885 for the dismissal of the case on the grounds of litis pendentia and forum shopping and to cite Angel Tadeo Q. Roxas and the petitioner’s counsel, Atty. Jesus A. Concepcion, in contempt of court. The respondent asserted that Civil Case No. 7885 was a duplication of Civil Case No. 7432 pending before the same branch of the RTC, with the same parties, the same issues and the same reliefs being prayed for by the petitioner. The respondent cited Section 1(e), Rule 16 of the 1985 Rules of Court, as its ground for its motion to dismiss Civil Case No. 7885. It asserted that Angel Tadeo Roxas, the petitioner and its counsel, were guilty of indirect contempt and should be sanctioned for abusing the processes of the courts, citing the ruling of this Court in Minister of Natural Resources vs. Heirs of Orval Hughes.12

The respondent opposed the motion asserting that the reliefs prayed for by it in the two cases are different. It contended that in Civil Case No. 7432, it sought the nullification of the extrajudicial foreclosure of the mortgage and the sale of the mortgaged property at public auction and prayed for an injunctive relief to enjoin the respondent from consolidating its title over the property; on the other hand, in Civil Case No. 7885, it sought to enjoin the respondent from selling the property to third parties, and the nullification of the extrajudicial foreclosure of the mortgage, including the sale at public auction of the mortgaged property on account of the respondent’s violations of the real estate mortgage provisions, and to cancel the writ of possession in its favor. The petitioner contended that the decision of the RTC in Civil Case No. 7432 was not a bar to its action in Civil Case No. 7885 and that Roxas and his counsel were not liable for contempt of court.

On August 20, 1993, the trial court issued an Order granting the respondent’s motion to dismiss the case, but denied its motion to cite Roxas, the petitioner and its counsel for contempt of court.

The petitioner appealed the decision to the Court of Appeals in which it asserted the following:

I

THE LOWER COURT ERRED IN DISMISSING THE COMPLAINT BECAUSE OF LITIS PENDENTIA.

II

THE LOWER COURT ERRED IN HOLDING THAT THE PLAINTIFF IS GUILTY OF FORUM SHOPPING UNDER THE CONCLUSION THAT CIVIL CASE NO. 7432 AND CIVIL CASE NO. 7885 ARE BASED ON THE SAME ALLEGATIONS OF FACTS INVOLVING THE SAME ISSUE, THE SAME TRANSACTION AND ARE BETWEEN THE SAME PARTIES.

III

THE LOWER COURT ERRED IN NOT ORDERING THE CONSOLIDATION OF CIVIL CASE NO. 7432 WITH CIVIL CASE NO. 7885.13

On July 27, 2001, the Court of Appeals rendered judgment dismissing the appeal for lack of jurisdiction, ruling that the remedy of the petitioner from the trial court’s order dismissing Civil Case No. 7885 was to file a petition for review on certiorari under Rule 45 of the Rules of Court, the sole issue raised by it on appeal being purely legal and not factual.

The petitioner now comes to this Court, asserting that:

1. The appeal below raises not only questions of law but also questions of fact that may very well be looked into.14

2. Contrary to the ruling of the lower court, the appeal below is the "correct mode" of appeal.15

3. Because Civil Case No. 7885 is merely a continuation of Civil Case No. 7432, consolidation, not dismissal, is the proper remedy.16

The issue for resolution is whether or not the Court of Appeals erred in dismissing the petitioner’s appeal on the ground that it had no jurisdiction over the same. The resolution of the issue is, in turn, anchored on the determination of whether the petitioner raised purely legal issues in the appellate court.

The petition has no merit.

Under Batas Pambansa Blg. 129, as amended, the Court of Appeals has exclusive appellate jurisdiction over decisions of the Regional Trial Courts in the exercise of its original jurisdiction. Under Rule 41, Section 2 of the Rules of Court, as amended, the aggrieved party may appeal from the said decision by filing a notice of appeal and paying the requisite docket fees therefor within fifteen days from notice of said decision. However, the Court of Appeals has no jurisdiction over appeals from the decision of the Regional Trial Court rendered in the exercise of its original jurisdiction in cases wherein the issues raised are purely legal.17 In such a case, the remedy of the aggrieved party is to appeal the decision via a petition for review on certiorari in this Court under Rule 45 of the Rules of Court.

It has been held in a number of cases18 that there is a "question of law" when the doubt or difference arises as to what the law is on certain state of facts, and which does not call for an examination of the probative value of the evidence presented by the parties-litigants. On the other hand, there is a "question of fact" when the doubt or controversy arises as to the truth or falsity of the alleged facts. Simply put, when there is no dispute as to fact, the question of whether or not the conclusion drawn therefrom is correct, is a question of law.19

We agree with the Court of Appeals that only legal issues were raised by the petitioner in its appeal: (a) whether its action in Civil Case No. 7885 which was raffled to Branch 63 of the court is barred by the pendency of Civil Case No. 7432, also pending in the same court and, if so, whether the petitioner is guilty of forum shopping; (b) whether Roxas, a member of the petitioner’s Board of Directors, who signed the verification of the complaint in Civil Case No. 7885 and its counsel are guilty of forum shopping; and (c) whether the trial court should have denied the consolidation of the proceedings in the two cases considering that the same were raffled to the same court.

The petitioner appended to its brief a copy of its complaint in Civil Case No. 7432. The records of Civil Case No. 7885 were elevated to the Court of Appeals. Thus, the Court of Appeals had the complaints in Civil Cases Nos. 7885 and 7432 before it for review in resolving the issue of whether or not the issues raised were purely legal or factual, and whether it had jurisdiction over the petitioner’s appeal or not.

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED DUE COURSE. The assailed Decision of the Court of Appeals is AFFIRMED. Costs against the petitioner.

SO ORDERED.

Puno, Austria-Martinez, Tinga, and Chico-Nazario*, JJ., concur.

Footnotes

* On leave.

1 Penned by Associate Justice Marina L. Buzon, with Associate Justices Eubulo G. Verzola and Bienvenido L. Reyes, concurring.

2 CA Rollo, p. 40.

3 Annex "B" of Complaint. (Civil Case No. 7885).

4 Annex "C" of Complaint. (Civil Case No. 7885)

5 CA Rollo, pp. 45-46.

6 Id. at 40.

7 Id. at 29.

8 Id. at 37-38.

9 Records, p. 4.

10 Records, pp. 9-10.

11 Id. at 16.

12 155 SCRA 567 (1987).

13 CA Rollo, p. 13.

14 Rollo, p. 15.

15 Id. at 17.

16 Id. at 18.

17 Philippine National Bank vs. Court of Appeals, 337 SCRA 381 (2000).

18 Bernardo vs. Court of Appeals, 216 SCRA 224 (1992); Medina vs. Asistio, Jr., 191 SCRA 218 (1990); Pilar Development Corp. vs. Intermediate Appellate Court, 146 SCRA 215 (1986); Ramos vs. Pepsi-Cola Bottling Co. of the P.I.,19 SCRA 289 (1967); Consolidated Mines, Inc. vs. Court of Tax Appeals, 58 SCRA 618 (1974).

19 See Far East Marble (Phil.) Inc. vs. Court of Appeals, 225 SCRA 249 (1993).


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