Overseas Bank v. Rosemoor Mining
REITERATIONFacts
The Antecedents: Rosemoor Mining and Development Corporation (Rosemoor Mining), through its President, Dra. Lourdes S. Pascual, obtained a loan of P80,000,000.00 from United Overseas Bank of the Philippines (Overseas Bank) to fund the importation of necessary machineries. The loan was secured by Real Estate Mortgages over six parcels of land owned by Rosemoor Mining in Bulacan and two parcels owned by Pascual in Nueva Ecija. The agreement stipulated that Overseas Bank would manage P50,000,000.00 for machinery importation and release the remaining P30,000,000.00 as a revolving credit line. Rosemoor Mining executed Letters of Credit and promissory notes for these transactions. Subsequently, Rosemoor Mining defaulted on its payments, leading Overseas Bank to extrajudicially foreclose the mortgaged properties in Nueva Ecija and Bulacan, subsequently bidding the highest in both auctions. Procedural History: In an effort to prevent the consolidation of ownership by Overseas Bank, Rosemoor Mining filed two separate complaints: one for damages, accounting, release of loan balance, and annulment of foreclosure sales before the RTC of Manila (Civil Case No. 98-90089), and another for injunction with damages, seeking the annulment of the Real Estate Mortgage foreclosures due to fraud, before the RTC of Malolos, Bulacan (Civil Case No. 215-M-02). Overseas Bank filed motions to dismiss both cases on grounds of improper venue and forum shopping, which were denied by the respective RTCs. Overseas Bank's subsequent appeals to the Court of Appeals and petitions to the Supreme Court regarding these issues, including the validity of the default order in the Bulacan case, were consolidated and ultimately denied, with the Supreme Court affirming that Rosemoor Mining was not guilty of forum shopping and that the venue for the annulment of foreclosure sales was proper in Bulacan. The Bulacan RTC, after declaring Overseas Bank in default, proceeded ex-parte and rendered a decision nullifying the Real Estate Mortgages and their foreclosures. This decision was appealed by Overseas Bank to the Court of Appeals, which affirmed the RTC's decision with modifications, deleting the awards for damages and attorney's fees. The Petition: Overseas Bank filed this Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court, seeking to reverse the Court of Appeals' decision that affirmed the RTC's ruling. Overseas Bank raises several issues, including alleged errors in declaring the bank in default, depriving it of due process, assuming jurisdiction over properties in Nueva Ecija, making the injunction permanent without sufficient basis, finding the mortgages fraudulent, refusing to dismiss the case for forum shopping, and exceeding jurisdiction by granting relief not prayed for in the complaint. However, the Supreme Court notes that many of these issues, particularly those concerning forum shopping, venue, and the default order, have already been definitively resolved in prior related cases (G.R. Nos. 159669 and 163521) under the principle of the law of the case. The Court also addresses the remaining contentions regarding the injunction and the annulment of mortgages, finding no reversible error in the lower courts' factual findings and legal conclusions.
Issue(s)
Whether the issues of forum shopping, default order, and venue were already resolved with finality by this Court in G.R. Nos. 159669 and 163521, thus barring their relitigation under the principle of the 'law of the case'. Whether the Bulacan RTC committed grave abuse of discretion in declaring Overseas Bank in default and proceeding with the case ex-parte. Whether the Bulacan RTC assumed jurisdiction over real properties in Nueva Ecija and annulled foreclosure of mortgages thereon, which were allegedly outside its territorial jurisdiction. Whether the injunction issued by the Bulacan RTC was proper and supported by sufficient evidence. Whether the Real Estate Mortgages and subsequent foreclosures were fraudulently secured and wanting in consideration, and whether the Bulacan RTC exceeded its jurisdiction by granting a relief (annulment of mortgages) not specifically prayed for in the complaint, which only asked for annulment of foreclosure sales.
Ruling
The Supreme Court denied the petition. The Court affirmed the decision of the Court of Appeals, upholding the ruling of the RTC of Malolos, Bulacan, which declared the Real Estate Mortgages and subsequent foreclosures null and void. The Court ruled that issues previously decided with finality in G.R. Nos. 159669 and 163521 are now the law of the case and cannot be relitigated. The Court also found no grave abuse of discretion in the RTC's declaration of default, the propriety of the venue, the issuance of the injunction, and the annulment of the mortgages and foreclosures based on fraud and want of consideration. Finally, the Court held that the general prayer for equitable relief in the complaint justified the annulment of the mortgages, as it was a necessary consequence of the alleged fraud and want of consideration, even if not specifically pleaded.
Ratio Decidendi
On the principle of 'Law of the Case': The Court reiterated that issues already decided with finality in a prior appeal within the same case cannot be relitigated. The Court cited Padillo v. Court of Appeals and Zarate v. Director of Lands to explain that the 'law of the case' is the opinion delivered on a former appeal and continues to be the controlling legal rule between the same parties in the same case, regardless of whether it was correct on general principles. Therefore, Overseas Bank was barred from raising issues concerning forum shopping, the default order, and the venue of Civil Case No. 215-M-02, as these were already adjudicated in G.R. Nos. 159669 and 163521. The Court emphasized that Overseas Bank had numerous opportunities to raise these issues and had, in fact, done so, but its repeated attempts to dismiss the cases instead of proving their merits led to its default. The Court found that Overseas Bank could not claim denial of due process when its default was a consequence of its own procedural choices and refusal to file an answer. On the propriety of the default order and ex-parte proceedings: The Court found no merit in Overseas Bank's contention that it was denied due process. The Court reiterated that the issues regarding the default order and venue had already been settled in G.R. Nos. 159669 and 163521. The Court noted that Overseas Bank had repeatedly filed motions to dismiss and motions for reconsideration instead of filing an Answer, thereby assuming the risk of default. The Court held that the Bulacan RTC did not err in declaring Overseas Bank in default, as its motion for reconsideration was filed late and was merely a rehash of the motion to dismiss, making it pro forma. Consequently, the subsequent ex-parte reception of evidence by the RTC was a valid procedural step following the declaration of default. On jurisdiction over real properties and annulment of foreclosure: The Court affirmed the ruling that the venue for actions nullifying foreclosure sales of properties in different provinces is proper in the court of any province where at least one of the properties is situated, provided the transactions involving them are singular. The Court also upheld the Bulacan RTC's finding that the Real Estate Mortgages and subsequent foreclosures were null and void due to fraud and want of consideration. The Court reiterated its policy of not disturbing the factual findings of the trial court, especially when affirmed by the Court of Appeals, as it is not a trier of facts. The Court found that the RTC's appreciation of the evidence presented by Rosemoor Mining, even if from a lone witness, was a valid exercise of judicial discretion and not a grave abuse thereof. On the issuance of injunction: The Court held that the issuance of an injunction rests within the sound discretion of the trial court and is generally not interfered with except in cases of manifest abuse. The Court found no manifest abuse of discretion in the Bulacan RTC's issuance of a permanent injunction, as the court found sufficient basis in the evidence presented by Rosemoor Mining. The Court reiterated that it is not its function to re-weigh evidence, and the RTC's preference for Rosemoor Mining's evidence over Overseas Bank's was a matter of judicial discretion. On the annulment of Real Estate Mortgages as relief exceeding the prayer: The Court clarified that while Rosemoor Mining specifically prayed for the nullification of foreclosure sales, its allegations in the complaint attacked the very validity of the mortgage contracts due to fraud. The nullity of the foreclosures was a necessary consequence of the invalidity of the mortgages. The Court further noted that the general prayer for "such other reliefs and remedies as may be deemed just and equitable in the premises" could encompass the annulment of the mortgages, as it was evident from the body of the complaint and the evidence presented. The Court cited its jurisprudence that a general prayer is broad enough to justify granting a remedy different from or together with the specific remedy sought, even if not specifically pleaded, if the facts and evidence warrant it.
Main Doctrine
The principle of the 'law of the case' bars the relitigation of issues already decided with finality in a prior appeal within the same case. Furthermore, a general prayer for 'other reliefs and remedies as may be deemed just and equitable' can justify granting a relief not specifically pleaded, if the facts and evidence warrant it, especially when the specific relief sought is a necessary consequence of the broader relief.