SUPREME COURT DECISIONS

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G.R. No. 128349 - BACHRACH CORPORATION vs. COURT OF

APPEALS, ET AL.

FIRST DIVISION

G.R. No. 128349 September 25, 1998

BACHRACH CORPORATION, Petitioner, vs. THE HONORABLE COURT OF

APPEALS and PHILIPPINE PORTS AUTHORITY, Respondents.

VITUG, J.:

Bachrach Corporation ("Bachrach"), in its petition for review on certiorari,

questions the decision of the Court of Appeals in CA-G.R. SP No. 38763,
promulgated on 12 November 1996, the dispositive part of which reading -

WHEREFORE, the petition is granted. The assailed RTC

orders art hereby NULLIFIED and SET ASIDE and public
respondent is ordered to dismiss the subject action
before him under Civil Case No. 95-73399. No
pronouncement as to costs. 1 -

on several counts; viz:

I. THE COURT OF APPEALS GRAVELY

ERRED IN NOT DISMISSING CA-G.R.
SP NO. 38673 DESPITE THE FACT
THAT A SIMILAR PETITION EARLIER
FILED BY PPA WAS DISMISSED FOR
BEING INSUFFICIENT NOT ONLY IN
FORM BUT ALSO IN SUBSTANCE WHICH
DISMISSAL CONSTITUTES RES
 JUDICATA INSOFAR AS THE ISSUES
RAISED THEREIN ARE CONCERNED.

II. THE COURT OF APPEALS GRAVELY

ERRED IN RULING THAT THE DECISION
IN THE UNLAWFUL DETAINER CASE
CONSTITUTES RES JUDICATA WHICH
BARS THE SPECIFIC PERFORMANCE
CASE.

III. THE COURT CF APPEALS GRAVELY

ERRED IN RULING THAT THE FILING
OF THE SPECIFIC PERFORMANCE CASE
VIOLATES THE RULE AGAINST FORUM
SHOPPING.

IV. THE COURT OF APPEALS GRAVELY

ERRED IN RULING THAT THE WRIT OF
PRELIMINARY INJUNCTION ISSUED BY
THE TRIAL COURT CONSTITUTES
INTERFERENCE WITH ITS JUDGMENT IN
THE UNLAWFUL DETAINER CASE.

V. THE COURT OF APPEALS GRAVELY

ERRED IN ORDERING THE DISMISSAL
OF CIVIL CASE NO. 95-73399
THEREBY RULING ON THE MERITS OF
THE CASE WHEN IN FACT, THE ONLY
ISSUES FOR ITS RESOLUTION WERE
THE PROPRIETY OF THE WRIT OF
PRELIMINARY INJUNCTION ISSUED BY
THE TRIAL COURT AND THE DENIAL OF
PPA'S MOTION FOR PRELIMINARY
HEARING ON AFFIRMATIVE
2
DEFENSES.

It would appear that petitioner corporation entered into two lease contracts
with the Philippine government covering two specified areas, Block 180 and
Block 185, located at the Manila Port Area, then under the control and
management of the Director of Lands, for a term of ninety-nine years each,
the first lease to expire on 19 June 2017 and the other on 14 February 2018.
During her tenure, President Corazon Aquino issued Executive Order No. 321
transferring the management and administration of the entire Port Area to
herein respondent Philippine Ports Authority ("PPA"). Shortly alter its take-
over, PPA issued a Memorandum increasing the rental rates of Bachrach by
1,500%. Bachrach refused to pay the substantial increased rates demanded
by PPA.
On 23 March 1992, PPA initiated unlawful detainer proceedings, docketed Civil
Case No. 138838 of the Metropolitan Trial Court ("MeTC") of Manila, against
Bachrach for non-payment of rent. On 27 April 1993, MeTC rendered a
decision ordering the eviction of Bachrach from the leased premises.
Bachrach appealed to the Regional Trial Court ("RTC") of Manila which, on 21
September 1993, affirmed the decision of the lower court in toto. 3

Bachrach elevated the case to the Court of Appeals by way of a petition for
review. On 29 July 1994, the appellate court affirmed the decision of the RTC.
A motion for reconsideration was filed by Bachrach; however, the resolution
of the motion was put on hold pending submission of a compromise
agreement. 4 When tile parties failed to submit the promised compromise
agreement, the Court of Appeals, on 15 May 1995, denied Bachrach's motion
for reconsideration. The decision of the appellate court in the ejectment suit
became final and executory on 20 May 1995. 5

Meanwhile on 25 March 1995, while the motion for reconsideration was yet
pending with the appellate court, Bachrach filed a complaint against PPA with
the Manila RTC, docketed Civil Case No. 95-73399 (hereinafter referred to
also as the specific performance case), for refusing to honor a compromise
agreement said to have been perfected between Bachrach and PPA during
their 04 February 1994 conference that superseded the ejectment case. In its
complaint, Bachrach prayed for specific performance.

On 08 June 1995, PPA filed a motion for a writ of execution/garnishment in

the ejectment case. The next day, 09 June 1995, Bachrach filed an
application in the specific performance case for the issuance of a temporary
restraining order and/or a writ of preliminary injunction to enjoin the MeTC
from issuing the writ of execution/garnishment. PPA countered by filling a
motion for preliminary hearing on its affirmative defenses along the same
grounds mentioned in its motion to dismiss the specific performance case, to
wit: (a) the pendency of another action between the same parties for the
same cause; (b) the violation of the anti-forum-shopping rule; (c) the
complaint's lack of cause of action; and (d) the unenforceable character of
the compromise agreement invoked by Bachrach. On 13 July 1995, the trial
court issued an omnibus order, granting the application of Bachrach for a writ
of preliminary injunction, in this tenor -

PREMISES CONSIDERED, this Court is of the opinion and so

holds (1) that plaintiff (Bachrach) is entitled to the
injunctive relief prayed for and upon the posting of a
bond in the amount of P300,000.00, let a writ of
preliminary injunction be issued enjoining the defendant
(PPA), the Presiding Judge of the Metropolitan Trial
Court of Manila, Branch 2 from issuing a writ of
execution/garnishment in Civil Case No. 238838-CV
entitled "Philippine Ports Authority vs. Bachrach
Corporation"; (2) lifting/setting aside the order dated
June 5, 1995 and (3) denying defendant's motion for a
preliminary hearing on affirmative defenses. 6
PPA moved for reconsideration of the above order but the trial court denied
the plea in its order of 29 August 1995.

On 25 September 1995, PPA filed a petition for certiorari and prohibition, with
application for the issuance of a temporary restraining order and/or writ of
preliminary injunction, docketed CA-G.R. SP No. 36508, before the Court of
Appeals. The petition was dismissed by resolution, dated 28 September 1995,
of the appellate court for being insufficient in form and substance, i.e., the
failure of PPA to properly attach a certified true copy each of the assailed
order of 13 July 1995 and 29 August 1995 of the trial court. PPA received on
05 October 1995 7 a copy of the resolution, dated 28 September 1995, of the
appellate court. Undaunted, PPA filed a new petition on 11 October 1995, now
evidently in proper form, asseverating that since it had received a copy of the
assailed resolution of the trial court only on 07 September 1995, the refiling
of the petition with the Court of Appeals within a period of less than two
months from the date of such receipt was well within the reasonable time
requirement under the Rules for a special civil action for certiorari. 8 In the
meantime, the resolution, dated 28 September 1995, of the Court of Appeals
which dismissed CA-G.R. No. 38508 became final on 21 October 1995. 9

In its newly filed petition, docketed CA-G.R. SP No. 38673, PPA invoked the
following grounds for its allowance:

I. That respondent judge acted without, or in excess of

jurisdiction, or with grave abuse of discretion when it
issued a writ of preliminary injunction against the final
and executory resolution of the Honorable Court of
Appeals Annex "I") inspite of the well-established rule
that courts are allowed to interfere with each other's
judgment or decrees by injunction, and worse, in this
case, against the execution of the judgment of a
superior or collegiate court which had already became
final executory.

II. That respondent Judge acted without, or in excess of

jurisdiction, or with grave abuse of discretion when it
also denied petitioner's motion for a preliminary hearing
on its affirmative defenses or in failing to have the
case below outrightly dismissed on the grounds stated in
its affirmative defenses, when respondent Judge
pronounced there is no identity as to the causes of
action between the case decided by the Court of Appeals
(CA-G.R. SP No. 32630) and the case below (Civil Case No.
95-73399) when clearly the causes or action in both cases
revolve on the same issue of possession of the subject
leased premises.
 III. That respondent Judge acted without, or in excess of
jurisdiction, or with grave abuse of discretion in
refusing to take cognizance (of), abide (by) and
acknowledge the final judgment of the Court of Appeals
which, on said ground alone, is enough justification for
the dismissal of the case grounded on res judicata.
Moreover private respondent is guilty of forurn-
shopping and the penalty therefor is the dismissal of
10
its case.

On 12 November 1996, the Court of Appeals rendered the assailed decision

nullifying and setting aside the orders of the RTC and ordering the latter to
dismiss the specific performance case.

The Court finds merit in the instant appeal interposed by petitioner.

Verily, the decisive issue raised by the parties before the Court in the instant
petition is whether or not the specific performance case (Civil Case No. 73399)
should be held barred by the unlawful detainer case on the ground of res
judicata. There are four (4) essential conditions which must concur in order
that res judicata may effectively apply, viz: (1) The judgment sought to bar
the new action must be final; (2) the decision must have been rendered by a
court having jurisdiction over the subject matter and the parties; (3) the
disposition of the case must be a judgment or order on the merits, and (4)
there must be between the first and second action identity of parties, identity
of subject matter, and identity of causes of action." 11 There is no question
about the fact that all the first three elements of res judicata are here extant;
it is the final condition requiring an identity of parties, of subject matter and
of causes of action, particularly the last two, i.e., subject matter and cause of
action, that presents a problem.

A cause of action, broadly defined, is an act or omission of one party in

violation of the legal right of the other. 12 The subject matter, on the other
hand, is the item with respect to which the controversy has arisen, or
concerning which the wrong has been done, and it is ordinarily the right, the
thing, or the contract under dispute. 13 In a breach of contract, the contract
violated is the subject matter while the breach thereof by the obligor is the
cause of action. It would appear quite plain then that the RTC did act aptly in
taking cognizance of the specific performance case. In Civil Case No. 138838
of the MeTC, the unlawful detainer case, the subject matter is the contract of
lease between the parties while the breach thereof, arising from petitioner's
non-payment of rentals, constitutes the suit's cause of action. In Civil Case
No. 73399 of the RTC, the specific performance case, the subject matter is
the compromise agreement allegedly perfected between the same parties
while the cause of action emanates from the averred refusal of PPA to comply
therewith. The ultimate test in ascertaining the identity of causes of action is
said to be to look into whether or not the same evidence fully supports and
establishes both the present cause of action and the former cause of action.
In the affirmative, the former judgment would be a bar; if otherwise, then
that prior judgment would not serve as such a bar to the second. 14 The
evidence needed to establish the cause of action in the unlawful detainer case
would be the lease contract and the violation of that lease by Bachrach. In
the specific performance case, what would be consequential is evidence of the
alleged compromise agreement and its breach by PPA.

The next thing to ask, of course, would be the question of whether or not the
issuance by the trial court of the writ of preliminary injunction was an
improper interference with the judgment in the unlawful detainer suit. It
could be argued that, instead of filing a separate action for specific
performance. Bachrach should just have presented the alleged compromise
agreement in the unlawful detainer case. Unfortunately, the refusal of PPA to
honor the agreement after its alleged perfection effectively prevented
Bachrach from seeking the coercive power of the court to enforce the
compromise in the unlawful detainer case. The situation virtually left
Bachrach with but the remedy of independently initiating the specific
performance case in a court of competent jurisdiction. In its challenged
decision, the Court of Appeals, on its part, has said that respondent PPA's
prayer for the issuance of a writ of execution and garnishment is but the
necessary and legal consequence of its affirmance of the lower court's
decision in the unlawful in the unlawful detainer case which has by then
become final and executory. 15 The rule indeed is, and has almost invariably
been, that after a judgment has gained finality, it becomes the ministerial
duty of the court to order its execution. 16 No court, perforce, should interfere
by injunction or otherwise to restrain such execution. The rule, however,
concededly admits of exceptions; hence, when facts and circumstances later
transpire that would render execution inequitable or unjust, the interested
party may ask a competent court to stay its execution or prevent its
enforcement. 17 So, also, a change in the situation of the parties can warrant
an injunctive relief. 18 Evidently, in issuing its orders of 13 July 1995 and 29
August 1995 assailed by PPA in the latter's petition or certiorari and
prohibition before the Court of Appeals, the trial court in the case at bar
would want to preserve status quo pending its disposition of the specific
performance case and to prevent the case from being mooted by an early
implementation of the ejectment writ. In holding differently and ascribing to
the trial court grave abuse of discretion amounting to lack or excess of
jurisdiction, the appellate court, in our considered view, has committed
reversible error.

Having reached the above conclusions, other incidental issues raised by

petitioner no longer need to be passed upon.

WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals is

reversed and set aside; Civil Case No. 73399 along with the assailed orders of
the Regional Trial Court, aforedated, are hereby reinstated. No costs.

SO ORDERED.

Davide, Jr., Bellosillo, Panganiban and Quisumbing, JJ., concur.

Endnotes:

1 Rollo, p. 59.

2 Rollo, p. 14.
3 Rollo, p. 47.

4 Court of Appeals Decision, Rollo, pp. 47-48.

5 Ibid.

6 Rollo, p. 145.

7 Per entry of judgment issued by the Court of

Appeals, Rollo, pp. 286-287.

8 Rollo, p. 288.

9 Rollo, p. 264.

10 Rollo, pp. 51-52.

11 Mendiola vs. Court of Appeals, 258 SCRA 492; Blue Bar

Coconut Phils., Inc. vs. National Labor Relations
Commission, 208 SCRA 371; Development Bank of the
Philippines vs. Pundogar, 218 SCRA 118, Guevara vs.
Benito, 247 SCRA 570.

12 Development Bank of the Philippines vs. Pundogar, 218

SCRA 118; Racoma vs. Fortich, 39 SCRA 520; Santos vs. IAC,
145 SCRA 238; Republic Planters Bank vs. IAC, 131 SCRA
631.

13 Yusingco vs. Ong Hing Lian, 42 SCRA 590.

14 Mendiola vs. Court of Appeals, 258 SCRA 492;

Development Bank of the Phils. vs. Pundogar, 218 SCRA 118.

15 Rollo, pp. 53-54.

16 Sec. 1, Rule 39, Rules of Court; Nique vs. Zapatos,

219 SCRA 639; Ortegas vs. Hidalgo, 198 SCRA 635; Esquivel
vs. Alegre, 172 SCRA 315; Rodriguez vs. Project 6 Market
Service Cooperative, Inc., 247 SCRA 528.

17 Lee vs. De Guzman, Jr., 187 SCRA 276.

18 Luna vs. Court of Appeals, 137 SCRA 7; Heirs of

Guminpin vs. Court of Appeals, 120 SCRA 687.