Deutsche Bank AG vs. Court of Appeals

Consolidation of cases requires that the cases be related, meaning they must arise from the same act, event, or transaction, involve the same or like issues, and depend largely or substantially on the same evidence; a common question of law alone, without factual relation or intimate connection between the cases, does not warrant consolidation.

Steel Corporation of the Philippines (SteelCorp) defaulted on its loan obligations and was placed under corporate rehabilitation by the Regional Trial Court of Batangas. During the pendency of the proceedings, Rizal Commercial Banking Corporation (RCBC) assigned its SteelCorp credits to Deutsche Bank AG. The RTC-Batangas subsequently issued an order directing the assignees, including Deutsche Bank AG, to disclose the actual price paid for the assigned debts. Deutsche Bank AG challenged this order via certiorari before the Court of Appeals. Separately, Vitarich Corporation, which was undergoing its own rehabilitation proceedings before the RTC of Bulacan, faced a similar issue regarding the assignment of its creditors' receivables and filed its own petition for certiorari before the Court of Appeals after the RTC-Bulacan denied its motion to compel disclosure of the assignment prices.

• SteelCorp Rehabilitation: SteelCorp obtained loans from a consortium of banks, including RCBC. Upon default, a creditor-initiated rehabilitation petition was filed before the RTC-Batangas, which approved the rehabilitation plan in December 2007.
• Assignment of Credits: In February 2008, RCBC assigned its SteelCorp loan interests to Deutsche Bank AG, which then moved to substitute parties in the rehabilitation proceedings.
• Disclosure Order: On October 28, 2009, the RTC-Batangas directed the assignees to disclose the actual price or consideration paid for the assigned debts.
• Deutsche Bank AG Petition: Deutsche Bank AG filed a certiorari petition with the CA (CA-G.R. SP No. 111556) to nullify the disclosure order. Two other SteelCorp creditors filed similar petitions (CA-G.R. SP Nos. 111560 and 112175).
• Vitarich Rehabilitation: Vitarich Corporation underwent rehabilitation in RTC-Bulacan. Its creditors assigned receivables to special purpose vehicles. Vitarich sought to compel assignees to disclose the purchase prices to exercise its right of redemption. The RTC-Bulacan denied the motion, ruling that rehabilitation was not "litigation" under Article 1634 of the Civil Code. Vitarich filed a certiorari and mandamus petition with the CA (CA-G.R. SP No. 107535).
• Consolidation Motion: SteelCorp moved to consolidate the Deutsche Bank AG petition with the Vitarich petition, arguing both raised the identical question of whether creditors could be compelled to disclose the assignment price under Articles 1634 and 1236 of the Civil Code.
• CA Ruling: The CA granted consolidation, citing Section 3(a), Rule III of its Internal Rules and ruling that cases involving the same parties or related questions of law are considered related.
• Mootness: While the Rule 65 petition was pending before the Supreme Court, SteelCorp withdrew its consolidation motion before the CA, rendering the specific controversy moot.

• Requisites for Consolidation: Petitioner argued that under the Internal Rules of the Court of Appeals (IRCA) and jurisprudence, consolidation requires cases to be related—arising from the same act, event, or transaction, involving the same or like issues, and depending largely on the same evidence. A common question of law alone is insufficient.
• Unrelated Cases: Petitioner maintained that the Deutsche Bank AG and Vitarich petitions were totally unrelated, originating from the separate rehabilitation proceedings of two distinct corporations with different factual antecedents and no interconnected transactions or identical subject matter.
• Purpose of Consolidation Defeated: Petitioner contended that consolidating the two cases would complicate the resolution of the petitions, subject the parties to added expense and unjust vexation, and contravene the purpose of consolidation, which is to obtain justice with the least expense and vexation.

• Common Question of Law Suffices: Respondent countered that the CA may consolidate cases on the sole ground that they involve related questions of law.
• Relatedness Established: Respondent argued that the identity of the legal question—whether creditors can be compelled to disclose the assignment price of credits in litigation under the Civil Code—sufficiently made the Deutsche Bank AG and Vitarich petitions related cases proper for consolidation under Section 3(a), Rule III of the IRCA.

• Consolidation: Whether the Court of Appeals gravely abused its discretion in ordering the consolidation of two certiorari petitions solely on the ground that they involve a common question of law.

• Consolidation: The assailed resolutions were reversed, grave abuse of discretion having been committed by the Court of Appeals. Consolidation is proper only when the cases are related, which requires that they arise from the same act, event, or transaction, involve the same or like issues, and depend largely or substantially on the same evidence. A common question of law alone does not satisfy the relatedness requirement. The Deutsche Bank AG and Vitarich petitions possessed no factual relationship, no interconnected transactions, and no identical subject matter, having originated from the distinct rehabilitation proceedings of two different corporations. Furthermore, consolidation was found to defeat the rule's purpose, as it would complicate the resolution of the cases, increase costs due to the increased number of parties, and unduly prejudice the banks by entangling them in Vitarich proceedings where the legal issue had already become the law of the case. The CA's reliance on Zulueta, Benguet Corp., and Active Wood Products was misplaced, as those cases actually upheld consolidation based on intimate factual relations, the same parties, or closely related subject matters. Assignment of cases with similar legal questions to one justice is permissible, but consolidation requires relatedness.

• Consolidation of Cases — Consolidation is proper whenever the subject matter involved and relief demanded make it expedient for the court to determine all issues and adjudicate the rights of the parties by hearing the suits together. The requisites are: (1) the cases arise from the same act, event, or transaction; (2) they involve the same or like issues; and (3) they depend largely or substantially on the same evidence. A common question of law, without more, does not justify consolidation. The purpose of the rule is to avoid multiplicity of suits, guard against oppression and abuse, prevent delays, clear congested dockets, simplify court work, and avoid the possibility of conflicting decisions. Consolidation should be denied when it would cause complications, delay, prejudice, or restrict the rights of a party.
• Moot and Academic Cases / Capable of Repetition Yet Evading Review — Courts generally decline jurisdiction over moot cases, but an exception exists when the issue is capable of repetition yet evading review. The issue of whether the CA can validly order consolidation solely based on a common question of law falls under this exception.

• "Consolidation of cases is proper when there is a real need to forestall the possibility of conflicting decisions being rendered in the cases."
• "Lest it be misunderstood, the CA may prescribe reasonable rules governing assignment of cases with similar questions of law or facts to one justice. In case of consolidation, however, it may be effected only if the said cases are related. Needless to state, assignment is different from consolidation."
• "The fact that Deutsche Bank AG is a party to both cases does not make the proceedings intimately related. There is no factual relation between the two proceedings."

• Teston v. Development Bank of the Philippines, 511 Phil. 221 (2005) — Followed. Established that actions involving common questions of law or fact may be tried together only where they arise from the same act, event, or transaction, involve the same or like issues, and depend largely or substantially on the same evidence.
• Zulueta v. Asia Brewery, Inc., 406 Phil. 543 (2001) — Distinguished. Cited by the CA to justify consolidation based on a common question of law, but found inapplicable because consolidation there was upheld due to the cases arising from the same Dealership Agreement involving the same parties and closely related subject matters.
• Benguet Corporation, Inc. v. Court of Appeals, 247-A Phil. 356 (1988) — Distinguished. Cited by the CA, but actually bolstered petitioner's position because consolidation was upheld there on the ground that one case was intimately related to and an offshoot of the issues already resolved in the other.
• Active Wood Products Co., Inc. v. Court of Appeals, 260 Phil. 825 (1990) — Distinguished. Relied upon by the CA, but actually involved the same parties and the same subject matter (the same parcels of land), which are absent in the present case.
• Philippine National Bank v. Tyan Ming Development, Inc., G.R. No. 183211, June 5, 2009 — Followed. Non-consolidation was upheld because consolidation would defeat the very purpose of the rule by delaying the resolution and prejudicing a party's substantive rights.
• De Vera v. Agloro, 489 Phil. 185 (2005) — Followed. Consolidation should be denied when it would prejudice a party or cause complications, delay, or restrict rights.

• Section 1, Rule 31 of the 1997 Rules of Civil Procedure — Authorizes the court to order a joint hearing or trial, or consolidate actions, when they involve a common question of law or fact, and to make orders tending to avoid unnecessary costs or delay. Applied to emphasize that consolidation is meant for intimately related cases to avoid conflicting decisions.
• Section 3(a), Rule III of the 2009 Internal Rules of the Court of Appeals (IRCA) — Provides that consolidation shall ensue when cases involve the same parties and/or related questions of fact and/or law. Interpreted to require that the cases must be "related cases," meaning they must share a factual connection beyond just a common question of law.
• Articles 1634 and 1236 of the Civil Code — Mentioned as the common question of law shared by the two petitions (whether creditors can be compelled to disclose the actual assignment price for credits in litigation). Not substantively applied to the issue of consolidation.

Velasco, Jr., C.J. (Chairperson); Peralta, Abad, and Perlas-Bernabe, JJ.