Lamis v. Maningo
REITERATIONFacts
The Antecedents: Santiago Maningo initiated a civil suit against Neville Y. Lamis Enterprises and Neville Lamis, seeking recovery of sums of money. The complaint detailed three causes of action: first, for an unpaid loan of P55,000.00 with 14% annual interest and attorney's fees, evidenced by a promissory note; second, for the unpaid purchase price of a Komatsu Crawler Tractor valued at P200,000.00, acquired through a chattel mortgage, with stipulated installments and penalties for late payment; and third, for damages, including moral damages and exemplary damages, arising from alleged abuse of rights and bad faith in filing a separate suit to evade obligations. Procedural History: Neville Y. Lamis Enterprises had previously filed a complaint (Civil Case No. 35199) against Santiago Maningo in the Court of First Instance of Rizal, Branch XXV, on November 16, 1979. This suit alleged breaches of a Memorandum of Agreement dated January 27, 1979, including failure to release P50,000.00 of an advance, delivery of an incorrect tractor model, failure to deliver a payloader, and resulting financial losses and damages. Maningo, as defendant in that Rizal case, filed an answer with a counterclaim. Subsequently, Maningo filed Civil Case No. 1395 in the Court of First Instance of Davao at Tagum, seeking collection of the P55,000.00 loan and the P200,000.00 for the tractor. Lamis moved to dismiss Civil Case No. 1395 on grounds of lis pendens and improper venue. The respondent judge denied this motion, leading to the present appeal. The Petition: This case reached the Supreme Court on appeal by certiorari, seeking to annul the order of the respondent judge denying the motion to dismiss Civil Case No. 1395. The petitioners argued that Civil Case No. 1395 should have been dismissed due to lis pendens, as the claims for the P55,000.00 loan and the tractor purchase price were already pending or should have been raised as compulsory counterclaims in the prior Civil Case No. 35199 filed in Rizal. They contended that allowing the Davao case would result in a multiplicity of suits and violate the principle of res judicata. The Supreme Court found the petitioners' arguments regarding lis pendens and multiplicity of suits to be tenable, noting that the claims in Civil Case No. 1395 arose from the same transaction as Civil Case No. 35199 and should have been adjudicated in the earlier proceeding.
Issue(s)
Whether Civil Case No. 1395 should be dismissed on the ground of 'lis pendens' or 'multiplicity of suits' due to the pendency of Civil Case No. 35199. Whether the venue in Civil Case No. 1395 was improperly laid.
Ruling
The petition is granted. The order of the respondent judge dated April 2, 1981, in Civil Case No. 1395 is set aside, and another order is entered dismissing said case. No special pronouncement as to costs.
Ratio Decidendi
On the issue of 'lis pendens' and 'multiplicity of suits': The Court found the petitioners' argument tenable. The claim for P55,000.00 in Civil Case No. 1395 arose from the same transaction, the Memorandum of Agreement, which was the subject of Civil Case No. 35199. The private respondent (Maningo) had also demanded the same amount as a counterclaim in Civil Case No. 35199, meaning the resolution of that case would necessarily pass upon Maningo's right to this amount. Therefore, allowing the claim in Civil Case No. 1395 would violate the principle against multiplicity of suits. The Court reiterated the requisites for 'lis pendens': identity of parties, identity of rights asserted and relief prayed for founded on the same facts, and such identity that any judgment in one action would be res judicata in the other. The Court also held that Maningo's claim for the purchase price of the tractor should have been set up as a compulsory counterclaim in Civil Case No. 35199, as it arose out of the same transaction and was necessarily connected with the plaintiff's claim therein. Failure to do so bars the claim under Section 4, Rule 9 of the Rules of Court, citing jurisprudence on compulsory counterclaims. On the issue of venue: The Court found the respondent judge's ruling on venue to be acceptable. While the promissory note and chattel mortgage stipulated Davao City as the venue, a stipulation as to venue does not preclude filing in the residence of the plaintiff or defendant in the absence of restrictive words indicating it as the exclusive venue. The respondent judge found that Maningo had both legal and physical residence in Tagum, Davao, and the Court was not inclined to disturb this finding. The Court cited Polytrade Corporation vs. Blanco to support the principle that a stipulation on venue does not deprive a party of the right to pursue remedies in other permissible venues under the Rules of Court.
Main Doctrine
A motion to dismiss based on 'lis pendens' or 'multiplicity of suits' is tenable when there is another pending action between the same parties for the same cause, involving identity of parties, rights asserted, relief prayed for, and where any judgment in one action would constitute res judicata in the other. Claims that are necessarily connected with or arise out of the transaction involved in the first case are barred if not set up as compulsory counterclaims.