Equitable Philippine Commercial International Bank v. Court of Appeals
REITERATIONFacts
The Antecedents: Santa Rosa Mining Co., Inc. (Sta. Rosa) filed a complaint for sum of money and damages against Equitable Philippine Commercial International Bank (Equitable-PCIB), its former President Rafael B. Buenaventura, and branch manager Cynthia F. Lota. Sta. Rosa alleged that it lost income opportunities from its joint venture due to the bank's refusal to issue checkbooks for its savings account, which contained P6,389,071.35. The bank allegedly cited a restraining order from the Securities and Exchange Commission (SEC) as the reason for refusal. Sta. Rosa claimed the bank's manager misrepresented the timing of the SEC order's receipt, as it was allegedly served after the bank informed Sta. Rosa of the injunction. This refusal, Sta. Rosa contended, caused prejudice to its stockholders and its joint venture partner, Sa Amin sa San Jose Panganiban, Inc. Procedural History: Equitable-PCIB and Buenaventura (petitioners) initially filed a Motion to Dismiss, arguing Sta. Rosa engaged in forum shopping and failed to state a cause of action, as the funds were already garnished in a separate case (Civil Case No. 6014) before the Regional Trial Court of Daet, Camarines Norte. The RTC denied this motion. Petitioners then filed a Motion for Reconsideration, which was also denied, and Sta. Rosa moved to declare them in default. The RTC granted the default motion, deeming the reconsideration motion dilatory and pro forma. A subsequent consolidated motion to set aside the default and for reconsideration was denied, as was a petition for relief from the order of default. Petitioners appealed to the Court of Appeals via a petition for certiorari, prohibition, and mandamus, seeking to annul the order of default. The Court of Appeals set aside the default order, directing the RTC to admit the petitioners' Answer and proceed to trial on the merits. The Petition: Petitioners seek review of the Court of Appeals' decision that set aside the order of default and directed the lower court to proceed with the case. They argue that the case should have been dismissed at the outset due to Sta. Rosa's alleged forum shopping, failure to state a cause of action, and res judicata arising from the Daet court's judgment. The core of their petition is that the Court of Appeals erred in not dismissing the case outright, despite the procedural history involving default orders and petitions for relief, and instead allowed the case to proceed to trial on the merits. They contend that the issues raised by Sta. Rosa were already resolved or should have been resolved in the prior litigation concerning the garnished funds.
Issue(s)
Whether Sta. Rosa is guilty of forum shopping. Whether Civil Case No. Q-95-25073 should be dismissed for failure to state a cause of action. Whether Civil Case No. Q-95-25073 should be dismissed on the ground of res judicata.
Ruling
The petition is DENIED. The decision of the Court of Appeals affirming the denial of the motion to dismiss and ordering the lower court to admit petitioners' Answer and proceed to hear the case on the merits is AFFIRMED.
Ratio Decidendi
On the issue of forum shopping: The Court held that Sta. Rosa was not guilty of forum shopping. For forum shopping to exist, there must be an identity of parties, reliefs sought, and causes of action. In this case, there was no identity of parties because Sa Amin, the plaintiff in Civil Case No. 6014, was not a party in Civil Case No. Q-95-25073, and the parties were impleaded in different capacities. Furthermore, there was no identity of rights asserted or reliefs sought, as Civil Case No. 6014 was a collection case where Sta. Rosa was a defendant, while Civil Case No. Q-95-25073 was a damage suit where Sta. Rosa was the plaintiff. Therefore, any judgment in Civil Case No. 6014 would not amount to res judicata in Civil Case No. Q-95-25073. On the issue of failure to state a cause of action: The Court ruled that Sta. Rosa sufficiently stated a cause of action. When a motion to dismiss is based on the failure to state a cause of action, the court must consider only the facts alleged in the complaint. The Court found that the allegations in Sta. Rosa's complaint, if admitted, would entitle it to relief. These included the opening of the account, the request for checkbooks, the refusal by the bank allegedly due to an SEC restraining order, the fact that the bank only received the order later, and the resulting prejudice to Sta. Rosa's joint venture. The Court emphasized that matters such as the propriety of the refusal to release funds and the actual date of receipt of the restraining order are evidentiary matters to be threshed out during trial, not at the dismissal stage. On the issue of res judicata: The Court affirmed that res judicata did not apply. For res judicata to exist, there must be an identity of parties, subject matter, and causes of action. While the deposit account was involved in both cases, the causes of action and reliefs prayed for were entirely different. Civil Case No. 6014 was a collection case involving garnishment, whereas Civil Case No. Q-95-25073 was a damage suit for the bank's alleged bad faith in refusing to issue checkbooks. The issue of damages was not passed upon by the Daet court in Civil Case No. 6014, thus the judgment in that case was not conclusive on the present case.
Main Doctrine
A motion for reconsideration that merely reiterates the grounds in a motion to dismiss is considered pro forma and does not toll the period to file an Answer. Default judgments are generally disfavored, and courts should be liberal in setting aside orders of default to allow parties to present their case on the merits.