Development Bank of the Philippines v. Pingol Land Transport System Company, Inc.
REITERATIONFacts
The Antecedents: Respondent Pingol Land Transport System Company, Inc. (PLTSCI) obtained loans totaling P20 Million from petitioner Development Bank of the Philippines (DBP). To secure payment, PLTSCI executed a chattel mortgage over certain air-conditioned buses. PLTSCI defaulted on its loan payments, prompting DBP to apply for extra-judicial foreclosure of the mortgaged properties. Procedural History: PLTSCI filed a complaint for damages with injunction before the RTC of Makati, seeking to annul the foreclosure and seizure of its buses. The foreclosure sale proceeded, with DBP as the highest bidder. PLTSCI later filed an urgent motion for a preliminary prohibitory injunction to prevent the sale of the acquired buses. Subsequently, PLTSCI filed another complaint before the RTC of Naga City, for annulment of foreclosure and/or auction sale, replevin, and damages, based on the same facts as the Makati case, but with an additional prayer for a writ of replevin. The Naga court issued a writ of replevin, but later annulled it due to a fictitious replevin bond. However, it denied DBP's motion to dismiss based on forum shopping, reasoning that PLTSCI's prior motion to withdraw the Makati complaint terminated the proceedings there. DBP filed a petition for certiorari with the Court of Appeals, assailing the Naga court's denial of its motion to dismiss. Meanwhile, the Makati RTC denied PLTSCI's motion to withdraw its complaint, dismissed the complaint, declared PLTSCI in default on DBP's counterclaim, and rendered a decision ordering PLTSCI to pay the outstanding loan balance plus damages. PLTSCI withdrew its appeal from the Makati RTC decision, rendering it final and executory. The Court of Appeals dismissed DBP's petition for certiorari, ruling that the Naga court's error was an error of judgment, not jurisdiction. The Petition: DBP filed a petition for review on certiorari with the Supreme Court, assailing the Court of Appeals' decision.
Issue(s)
Whether the Court of Appeals erred in sustaining the denial of petitioner's motion to dismiss Civil Case No. 94-3192 on the ground of forum shopping. Whether the denial of the motion to dismiss, if erroneous, is correctible by certiorari.
Ruling
The petition is GRANTED. The September 7, 2000 Decision of the Court of Appeals in CA G.R. SP No. 35189 is REVERSED and SET ASIDE. The complaint in Civil Case No. 94-3192 before the Regional Trial Court of Naga City, Branch 22, is DISMISSED.
Ratio Decidendi
On the issue of forum shopping: The Court held that PLTSCI was guilty of forum shopping. Forum shopping is defined as the filing of multiple suits involving the same parties for the same cause of action, either simultaneously or successively, for the purpose of obtaining a favorable judgment. The elements of litis pendentia were present: identity of parties (PLTSCI and DBP), identity of rights asserted and relief prayed for (annulment of foreclosure and sale, with an additional prayer for replevin in the Naga case), and the identity such that any judgment in one case would amount to res judicata in the other. The Court emphasized that PLTSCI's withdrawal of its appeal from the Makati RTC decision, which ordered PLTSCI to pay the loan balance and damages, had the effect of rendering final and executory a judgment that constituted a bar by former judgment to the Naga court suit. The Court further clarified that Rule 17, Section 1 of the old Rules of Civil Procedure, which allows dismissal as a matter of right before service of answer, was not applicable because Jesusito Pingol, who signed the motion to withdraw, failed to present a Board Resolution authorizing him to do so. Since a counterclaim had been pleaded by DBP before the filing of a proper motion to withdraw, Section 2 of Rule 17 was applicable, and the action could not be dismissed against DBP's objection as the counterclaim could not be independently adjudicated. On the correctness of certiorari: The Court ruled that petitioner correctly resorted to the extraordinary writ of certiorari. While the denial of a motion to dismiss is generally interlocutory and not subject to certiorari, this rule is not absolute. The Court has allowed certiorari when the appeal does not constitute a speedy and adequate remedy, when the orders were issued in excess of or without jurisdiction, for special considerations, or when the order is a patent nullity. In this case, the violation of the rule on forum shopping was obvious, and disregarding this fact constituted grave abuse of discretion on the part of the trial court, amounting to lack or excess of jurisdiction. Therefore, certiorari was the proper remedy to assail the patently null order of the Naga court which denied petitioner's motion to dismiss.
Main Doctrine
The filing of multiple suits involving the same parties for the same cause of action, either simultaneously or successively, for the purpose of obtaining a favorable judgment constitutes forum shopping. A violation of the rule on forum shopping, when patent and constituting grave abuse of discretion, may be corrected by certiorari.