Lui Enterprises, Inc. vs Zuellig Pharma Corp.

Lui Enterprises, Inc. vs. Zuellig Pharma Corp.
[G.R. No. 193494, March 12, 2014] 

Facts:
 Petitioner Lui Enterprises, Inc. and respondent Zuellig Pharma Corporation entered into a 10-year lease contract over a parcel of land located in Barrio Tigatto, Buhangin, Davao City. During the pendency of the lease, respondent Philippine Bank of Communications (PBCOM) contacted Zuellig to inform them that it was the new owner of the property, and asked the latter to pay rent directly to it. Zuellig subsequently informed petitioner of PBCOM’s letter, and petitioner insisted on its right to collect rent. As a result of this, Zuellig Pharma filed a complaint for interpleader with the Makati Regional Trial Court of Makati, consigned its current (P604,024.35) and future rental payments to the court, and prayed to for Zui Enterprises and PBCOM be ordered to litigate their conflicting claims. Petitioner filed a motion to dismiss, stating that it had a pending nullification of deed of dation in payment case with the Regional Trial Court of Davao, which barred the filing of the current interpleader case as the dation case involved the proper that Zuelling was leasing. Zuellig responded that the pendency of the nullification case did not bar the filing of the interpleader, as it (Zuellig) was not a party to the nullification case.

Petitioner had also filed its motion to dismiss beyond the 15-day period to file an answer, and Zuellig subsequently moved that petitioner be declared in default. In its subsequent motion to set aside the order of default – filed one year after being declared in default - Lui invoked the ground of excusable negligence, alleging that its failure to file a motion to dismiss on time "was caused by the negligence of its former counsel”. For meritorious defense, petitioner alleged that the earlier filed nullification of deed of dation in payment case (Davao RTC) barred the filing of the interpleader case (Makati RTC). The two actions allegedly involved the same parties and the same issue of which corporation had the better right over the rental payments (aka, Litis Pendentia). 
The Makati RTC ruled that Lui Enterprises was "barred from any claim in respect of the rental payments" since it was declared in default, awarded the rental fees to PBCOM, and ordered the petitioner to pay Zuellig Pharma P50,000.00 in attorney’s fees.  Petitioner appealed the RTC ruling to the Court of Appeals, which on the matter of the motion to set aside the order of default found that petitioner failed to show the excusable negligence that prevented it from filing its motion to dismiss on time. The CA further ruled that the nullification of deed of dation in payment case did not bar the filing of the interpleader case, since Zuellig was not a party to the aforementioned case. In its subsequent petition before the SC, petitioner argued that the pending nullification of deed of dation in payment case barred the filing of the interpleader case. The nullification of deed of dation in payment case and the interpleader case allegedly involved the same issue of which corporation had the better right to the rent. 
​
Issue:
 Whether or not the annulment of deed of dation in payment pending in Davao RTC barred the subsequent filing of the interpleader case in the Regional Trial Court of Makati on grounds of litis pendentia.

Held: 
No. Petition denied, CA ruling affirmed with modification.

Litis pendentia is Latin for "a pending suit." It exists when "another action is pending between the same parties for the same cause of action The subsequent action is "unnecessary and vexatious" and is instituted to "harass the respondent [in the subsequent action]." The requisites of litis pendentia are:

• Identity of parties or at least such as represent the same interest in both actions;
• Identity of rights asserted and reliefs prayed for, the reliefs being founded on the same facts; and
• 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 judicata in the other.

All of the requisites must be present. Absent one requisite, there is no litis pendentia. 
In the current case, there is no litis pendentia since there is no identity of parties in the nullification of deed of dation in payment case and the interpleader case. Zuellig is not a party to the nullification case filed in the Davao trial court. There is also no identity of rights asserted and reliefs prayed for. Petitioner filed the first case to nullify the deed of dation in payment it executed in favor of PBCOM. Zuellig subsequently filed the interpleader case to consign in court the rental payments and extinguish its obligation as lessee. The interpleader case was necessary and was not instituted to harass either Lui Enterprises or PBCOM.

​