United Overseas Bank v. Rosemoor Mining
REITERATIONFacts
The Antecedents: Rosemoor Mining and Development Corporation (Rosemoor), through its president Dr. Lourdes Pascual, obtained a credit facility of P80 million from Westmont Bank (now United Overseas Bank Phils.). To secure this facility, Rosemoor and Dr. Pascual executed a real estate mortgage agreement covering six parcels of land in Bulacan owned by Rosemoor and two parcels in Nueva Ecija owned by Dr. Pascual. Rosemoor subsequently drew against the credit facility and executed promissory notes totaling P49,862,682.50 to cover payments for four irrevocable Letters of Credit. Rosemoor defaulted on these payments, leading the Bank to extra-judicially foreclose on the mortgaged properties in Nueva Ecija and Bulacan, with the Bank being the highest bidder in both instances. Procedural History: Following the foreclosure, Rosemoor filed two separate complaints against the Bank. The first, filed before the Regional Trial Court (RTC) of Manila, was initially for damages, accounting, and injunction, later amended to an action for accounting, specific performance, and damages. The Bank's motions to dismiss, including one for alleged forum-shopping due to the filing of the second case, were denied by the Manila RTC. The Court of Appeals affirmed these denials. The second complaint was filed before the RTC of Malolos, Bulacan, as a Petition for Injunction with Damages, seeking to restrain the consolidation of titles over the foreclosed Bulacan properties. The Bank again moved to dismiss for forum-shopping, which was denied by the Malolos RTC. The Bank's subsequent petition for certiorari before the Court of Appeals challenging the Malolos RTC's orders was dismissed. The Malolos RTC later declared the Bank in default for failing to file an answer and proceeded to render judgment in favor of Rosemoor. The Bank appealed this decision, and the Court of Appeals also dismissed the petition. These two consolidated cases before the Supreme Court stem from these separate but related proceedings. The Petition: In G.R. No. 163521, the Bank petitions the Supreme Court, arguing that the Court of Appeals erred in holding that no forum-shopping occurred when Rosemoor filed the Malolos case during the pendency of the Manila case. In G.R. No. 159669, the Bank assails the orders of the Malolos RTC, questioning the propriety of the venue for the action to nullify the foreclosure sale of the Nueva Ecija properties, the declaration of default against the Bank, and the manner in which the motion to dismiss was resolved. The core issue consolidated for the Supreme Court's resolution is whether Rosemoor committed forum-shopping. The Court also addresses the specific issues raised in G.R. No. 159669 concerning the Malolos RTC's rulings.
Issue(s)
Whether Rosemoor committed forum-shopping in filing the Malolos case during the pendency of the Manila case. Whether the action to nullify the foreclosure sale of the Bulacan and Nueva Ecija properties was properly laid before the Malolos RTC. Whether it was proper for the Malolos RTC to declare the Bank in default. Whether it was proper for the Malolos RTC to deny the Bank's motion to dismiss through a minute resolution.
Ruling
The Supreme Court affirmed the decisions of the Court of Appeals in both G.R. No. 163521 and G.R. No. 159669. The Court found no forum-shopping, upheld the venue of the Malolos RTC for the real action, affirmed the propriety of the default order, and found the trial court's minute resolution denying the motion to dismiss, while lacking in detailed reasoning, to be harmless in this instance. The Bank and its counsel were ordered to explain why they should not be held in contempt for misrepresentation.
Ratio Decidendi
On Forum-Shopping: The Court held that Rosemoor did not commit forum-shopping. The elements of forum-shopping, namely identity of parties, rights asserted, and reliefs prayed for, were not fully met. While there was an overlap in parties, several bank officers were impleaded in Manila but not in Malolos, and Dr. Pascual was a plaintiff only in Malolos concerning her personal properties. More importantly, the rights asserted and reliefs prayed for differed significantly. The Manila case primarily sought an accounting and damages for alleged non-release of loan proceeds, constituting a personal action. In contrast, the Malolos case sought to annul the foreclosure sale of real properties, which is a real action that must be filed in the province where the property is located. The Court emphasized that the venue rules for real and personal actions are distinct, and filing a real action in the proper venue, even if another personal action is pending elsewhere, does not constitute forum-shopping. On Venue of the Action to Nullify Foreclosure Sale: The Court ruled that the venue of the action to nullify the foreclosure sale was properly laid with the Malolos RTC, even though some properties were located in Nueva Ecija. The Court cited Section 1, Rule 4 of the Rules of Court, which states that real actions shall be commenced in the province where the property or a portion thereof is situated. Crucially, the Court found that all the foreclosed properties, both in Bulacan and Nueva Ecija, were subject to a single real estate mortgage contract. Therefore, following established jurisprudence, when parcels of land are the object of one and the same transaction, the venue can be in the court of any of the provinces wherein a parcel of land is situated. The Court also noted the Bank's misrepresentation in its pleadings regarding the singularity of the mortgage contract. On Propriety of Default Order: The Court affirmed the Malolos RTC's order declaring the Bank in default. The Bank received the order denying its motion to dismiss on May 21, 2002, and was directed to file an answer within five days. Instead of filing an answer, the Bank filed a motion for reconsideration on June 5, 2002. The Court found this motion for reconsideration to be both late (filed nine days after the deadline to answer) and pro forma, as it was a mere rehash of the original motion to dismiss. Consequently, the motion for reconsideration did not toll the period to file an answer, making the subsequent declaration of default by the trial court proper. On Deviation from Prescribed Content of Order Denying Motion to Dismiss: While acknowledging that the Malolos RTC's order denying the motion to dismiss, stating only that there were "justiciable questions which require a full blown trial," fell short of the requirement under Section 3, Rule 16 of the Rules of Court to state clearly and distinctly the reasons therefor, the Court deemed this defect to be harmless. The Court reasoned that despite the terseness of the order, the Bank was not misled and understood that its motion to dismiss was denied. The Bank proceeded to challenge this denial, and the issue of forum-shopping was thoroughly ventilated before the Court of Appeals and the Supreme Court, which both disagreed with the Bank's position. Therefore, the trial court's procedural lapse did not prejudice the Bank's substantial rights.
Main Doctrine
The filing of two cases involving the same parties and cause of action, but with different reliefs sought and venue, does not constitute forum-shopping, especially when one is a real action requiring specific venue and the other is a personal action with broader venue options. Furthermore, a motion for reconsideration that is a mere rehash of a dismissed motion to dismiss does not toll the period to file an answer, and failure to file an answer within the prescribed period may lead to a declaration of default.