Philippine Commercial International Bank v. Court of Appeals
REITERATIONFacts
The Antecedents: Respondents Ley Construction & Development Corporation, LC Builders & Developers, Inc., Metro Container Corporation, and spouses Manuel and Janet Ley obtained loans from petitioner Philippine Commercial International Bank (PCIB) totaling approximately P98,800,000. These loans were secured by real estate mortgages and chattel mortgages over various properties. The respondents defaulted on their obligations, leading to a total outstanding amount of P105,442,145. Despite demands, they failed to pay. Consequently, PCIB initiated extrajudicial foreclosure proceedings for the mortgaged real and personal properties. Procedural History: Before the scheduled auction sales, the respondents filed a complaint for injunction and damages with the Regional Trial Court (RTC) of Makati, seeking to halt the foreclosure. The RTC initially issued temporary restraining orders and later a writ of preliminary injunction, conditioned upon the respondents posting a P1,000,000 bond. PCIB's motion to dismiss was denied, and its subsequent petition for certiorari and mandamus with the Court of Appeals (CA) was also dismissed. PCIB then filed its answer and a second motion to lift the preliminary injunction, arguing the bond was inadequate and the alleged loan extensions had lapsed. The RTC granted this motion, lifting the injunction. The respondents then filed multiple subsequent complaints and motions in various courts, including the RTC of Manila and the CA, attempting to enjoin the foreclosure sales and reinstate the injunction. The CA eventually set aside the RTC's order lifting the injunction, restoring the status quo ante. However, the RTC of Manila had dismissed the respondents' complaints for forum shopping and violation of judicial stability. Ultimately, the RTC of Makati dismissed the original case for failure to prosecute. The Petition: This petition for review on certiorari seeks to reverse the CA's decision that nullified the RTC's order lifting the writ of preliminary injunction. Petitioners argue that respondents were afforded due process, despite the RTC's order lifting the injunction ex parte. They contend that respondents were negligent in their legal representation and engaged in forum shopping by filing multiple suits in different courts to achieve the same objective of enjoining the foreclosure sales. Petitioners assert that the RTC had the authority to dissolve the injunction and that the CA should have dismissed the respondents' petition as moot and academic, given the subsequent dismissal of the original case for failure to prosecute and the issuance of writs of possession.
Issue(s)
Whether the private respondents were denied due process when the RTC lifted the writ of preliminary injunction without affording them a hearing. Whether the private respondents engaged in forum shopping by filing multiple complaints in different courts. Whether the RTC had the authority to lift the writ of preliminary injunction ex parte. Whether the Court of Appeals erred in setting aside the RTC's order lifting the writ of preliminary injunction.
Ruling
The petition is granted. The decision of the Court of Appeals is reversed and set aside. The complaint of the private respondents in Civil Case No. 91-2495 is dismissed with prejudice. This is without prejudice to the liability for contempt of the counsels for the private respondents for violation of Supreme Court Circular No. 28-91 on forum shopping, as may be determined by the trial courts concerned. Costs against the private respondents.
Ratio Decidendi
On the denial of due process: The Court held that while service of pleadings must generally be made upon the counsel of record, the private respondents were not denied due process. They were served with a copy of PCIB's second motion to lift the injunction and subsequently engaged new counsel, Atty. Malaya. Despite this opportunity, neither Atty. Malaya nor the private respondents filed an opposition or comment to the motion. The RTC was therefore not unreasonable in assuming no opposition would be filed. The Court emphasized that the essence of due process is the opportunity to be heard, which was afforded to the private respondents, even if they failed to avail of it due to negligence. The Court noted that the private respondents were served with notices of the auction sales and the RTC's order lifting the injunction, yet they failed to file a motion for reconsideration with deliberate speed. On forum shopping: The Court found the private respondents guilty of forum shopping. It explained that forum shopping involves filing multiple suits involving the same parties for the same cause of action, either simultaneously or successively, to obtain a favorable judgment. The private respondents filed separate complaints for injunction with the RTC of Manila (Civil Cases Nos. 93-65135 and 93-65757) concerning the foreclosure of the same mortgaged chattels, despite a pending case with the same prayer for injunctive relief in the RTC of Makati (Civil Case No. 91-2495). The Court rejected the CA's reasoning that the cases involved different facts or issues, stating that the core issue in all cases was the injunction against the foreclosure sale of the chattels. The Court highlighted that the private respondents' claim that the RTC of Manila had jurisdiction over properties in its area was contradicted by their earlier belief that the RTC of Makati was the proper venue for injunctive relief concerning the same chattels. On the RTC's authority to lift the injunction ex parte: The Court clarified that while service of pleadings must be made on the counsel of record, the RTC was not entirely precluded from acting on PCIB's motion. Given the private respondents' failure to file an opposition despite being served with the motion and subsequently engaging new counsel, the RTC could reasonably proceed. Furthermore, the Court noted that the RTC had the inherent power to control its processes and orders, including the modification or rescission of interlocutory orders like the writ of preliminary injunction, to conform to law and justice. The private respondents' subsequent actions, including filing emergency motions after sales had already occurred, demonstrated a pattern of dilatory tactics rather than a genuine pursuit of due process. On the Court of Appeals' error: The Court found that the CA erred in setting aside the RTC's order and restoring the status quo ante. The CA's ruling was based on the premise that the private respondents were denied due process due to improper service of the motion to lift the injunction. However, the Supreme Court found that the private respondents were afforded opportunities to be heard and failed to avail of them. The CA also erred in not finding forum shopping, which was a clear violation of judicial rules and principles. The Court emphasized that the RTC's order lifting the injunction was interlocutory and subject to modification, and the private respondents' subsequent actions undermined the orderly administration of justice.
Main Doctrine
The Supreme Court reversed the Court of Appeals, holding that while service of pleadings must generally be made upon counsel of record, the private respondents were not denied due process as they were afforded opportunities to be heard, but failed to avail of them due to their own negligence and indulgence in forum shopping. The Court emphasized that litigants have a duty to assist their counsel and that repeated filing of suits in different fora to frustrate legitimate foreclosure proceedings constitutes forum shopping and violates judicial stability.