Development Bank of the Philippines v. Intermediate Appellate Court
REITERATIONFacts
The Antecedents: Spouses Pedro and Matilde Lim owned two parcels of land mortgaged to the Development Bank of the Philippines (DBP). The mortgage contracts stipulated that DBP's consent was required for any transfer of the property. The Lims sold the lots to Spouses Miguel and Escolastica Paguio, who assumed the mortgage. DBP approved this transaction, and new titles were issued in the Paguios' names, with the DBP mortgage annotated. Due to the Paguios' failure to pay the Lims, the latter sued them, resulting in a compromise agreement and judgment, wherein the Paguios reconveyed the lots to the Lims, subject to DBP's liens. Subsequently, the Lims executed a Deed of Sale with Assumption of Mortgage over the same lots to Angel L. Bautista (private respondent). Bautista sought DBP's approval and requested an extension to settle the mortgage debt. DBP, through its Branch Manager, informed Bautista that his request was denied due to his unsatisfactory financial and credit standing and that the account was already set for foreclosure. The mortgage was extrajudicially foreclosed on July 31, 1974, with DBP as the highest bidder. Notices of sale were posted and published. After the redemption period expired without redemption, DBP consolidated its ownership on December 12, 1975, and new titles were issued in its name. Bautista took no action for over five years until DBP offered to sell the lots to Legaspi Allied Ventures Co. (LAVCO). Procedural History: Bautista filed a complaint against DBP, the Provincial Sheriff, and the Register of Deeds for annulment of the extrajudicial foreclosure, certificate of sale, consolidation of ownership, and damages. The Trial Court dismissed Bautista's complaint, finding the sale to Bautista void for lack of consideration (simulated), that DBP's consent was not obtained in violation of the mortgage stipulation, that the foreclosure was conducted with legal formalities, and that Bautista was aware of the mortgage and foreclosure but did not act. Bautista appealed to the Intermediate Appellate Court (IAC). The IAC declared void all orders of the Trial Court issued after the perfection of Bautista's appeal and ordered DBP and others claiming under it to deposit all monies, incomes, harvests, or proceeds of the properties. DBP filed the present petition for certiorari with the Supreme Court. The Petition: The Development Bank of the Philippines (DBP) seeks to nullify the resolutions of the Intermediate Appellate Court (IAC) which declared void the trial court's orders issued after the perfection of Bautista's appeal and ordered DBP to deposit all proceeds from the foreclosed properties. DBP argues that Bautista has no right to the property and that the IAC acted with grave abuse of discretion.
Issue(s)
Whether the Intermediate Appellate Court gravely abused its discretion in declaring void the trial court's orders issued subsequent to the perfection of Bautista's appeal and in ordering the deposit of proceeds from the foreclosed properties; and whether Bautista has any valid claim or right over the foreclosed properties. Whether Bautista engaged in forum shopping. On the Disposition of the Case: Whether remanding the case to the IAC would be unnecessary and cause undue delay.
Ruling
The Supreme Court granted the petition, nullified and set aside the resolutions of the respondent Intermediate Appellate Court, ordered the dismissal of Bautista's appeal and the case filed in the Makati Regional Trial Court, affirmed the trial court's order dismissing Bautista's complaint, and ordered Bautista and his counsel to show cause why they should not be sanctioned for forum shopping.
Ratio Decidendi
On the Intermediate Appellate Court's Resolutions and Bautista's Claim to the Property: The Supreme Court found that Bautista had absolutely no right over the property in question. The Court enumerated several indisputable facts: (1) the sale to Bautista was conditioned on DBP's approval, which was not obtained; (2) Bautista's request for approval was denied due to his poor financial standing; (3) the mortgage was foreclosed due to the mortgagor's failure to pay; (4) Bautista never offered to pay the mortgage obligation before or after foreclosure, and the redemption period expired without his action; (5) Bautista remained inactive for about five years after the foreclosure and consolidation of title in DBP's favor; and (6) no act of recognition of any right in Bautista's favor was executed by DBP or its transferees. The agreement between Bautista and National Steel Corporation was deemed ineffectual as it was contingent on an amicable settlement that never materialized and NSC itself had no right at the time. Therefore, the IAC's order to deposit proceeds was unjustified and constituted grave abuse of discretion, acting whimsically, capriciously, oppressively, and despotically. On Forum Shopping: The Court found that Bautista engaged in forum shopping by filing another case with the Makati Regional Trial Court alleging the same things as his complaint in the Iligan City case, from which he had appealed to the IAC. Bautista tacitly admitted filing the second action. The Court reiterated that forum shopping is an abuse of court processes and professional misconduct, regardless of the courts involved. Citing previous jurisprudence, the Court emphasized that litigants who frustrate the speedy administration of justice by resorting to all available means to get from one court what is denied them by another, as well as their counsel, deserve reprimand and sanction. The Court found Bautista's attempt to distinguish the rule on forum shopping to be without basis in existing jurisprudence. On the Disposition of the Case: The Court determined that all material facts necessary for a final determination of Bautista's appeal were already before the Supreme Court. Therefore, remanding the case to the IAC would be unnecessary and cause undue delay. The Court proceeded to adjudicate the case on its merits, nullifying the IAC's resolutions, dismissing Bautista's appeal and the Makati RTC case, and affirming the trial court's dismissal of Bautista's complaint. The Court also ordered Bautista and his counsel to show cause why they should not be sanctioned for forum shopping.
Main Doctrine
A sale lacking consideration is simulated and void. A foreclosure sale conducted with all legal formalities is valid, and a party who fails to establish a valid claim to the property cannot assail the foreclosure proceedings. Engaging in forum shopping constitutes an abuse of court processes and warrants sanctions.