Westmont Investment Corp. v. Farmix Fertilizer Corp.
REITERATIONFacts
The Antecedents: In 1999, Westmont Bank underwent rehabilitation, leading United Overseas Bank Limited (UOBL) to express interest in acquiring a controlling stake. The former controlling shareholders, including Westmont Investment Corporation (WINCORP), the Espiritu Group, the Cua Group, the Farmix Group (respondents Farmix Fertilizer Corporation and Pearlbank Securities, Inc.), the Tankiansee Group (respondents Manuel N. Tankiansee and Juanita U. Tan), and the Tan Caktiong Group, agreed to sell their interests to UOBL for P1.4 billion. The payment was to be made through an assignment of receivables from the bank's portfolio, which UOBL considered "political loans." These receivables were to be collected by the bank's trust department, with proceeds reinvested in the bank through subscriptions of new shares. This transaction aimed to dilute the existing shareholders' interests, allowing UOBL to acquire control. A trust agreement was executed in favor of the Tan Caktiong Group to facilitate the buy-out. Subsequently, the bank was renamed United Overseas Bank of the Philippines (UOBP). Procedural History: In February 2000, the Bangko Sentral ng Pilipinas (BSP) directed UOBP to reinstate the P1.4 billion receivables and take steps to recover them. Consequently, UOBL did not pay the former controlling stockholders, and UOBP reinstated the receivables. The Espiritu Group revoked its trust agreement. In March 2002, John B. Espiritu, representing the Espiritu and Tan Caktiong Groups, filed a petition under the Interim Rules of Procedure for Intra-Corporate Controversies against UOBL and others, seeking the issuance of shares and/or return of management control. The Farmix and Tankiansee Groups intervened to enforce their share in the receivables. A compromise agreement was reached between the Espiritu and Tan Caktiong Groups and the UOB Group, leading to a Joint Motion to Dismiss, which the Regional Trial Court (RTC) granted. However, the Farmix Group contested the settlement. The RTC subsequently issued orders for parties to submit memoranda, deeming the case ready for decision, despite WINCORP's objections and motions for reconsideration, which were denied. On February 2, 2004, the RTC rendered a decision awarding specific amounts to the intervenors (Farmix and Tankiansee Groups). The Espiritu Group appealed this decision. WINCORP, on February 13, 2004, filed an Ex Abundanti Ad Cautelam Notice of Appeal and simultaneously filed a petition for certiorari and mandamus with the Court of Appeals (CA), assailing the RTC decision. The CA dismissed WINCORP's petition for certiorari and mandamus on October 29, 2004, citing forum shopping. The Petition: WINCORP filed the present petition for review on certiorari under Rule 45 of the Rules of Civil Procedure, as amended, seeking to annul the CA's decision. WINCORP argues that the CA erred in affirming the RTC's premature judgment before pre-trial, thereby violating its right to due process, and in ruling that WINCORP engaged in forum shopping. WINCORP contends that the RTC abused its discretion by rendering judgment based on pleadings and affidavits without resolving substantial factual issues through trial, and that its simultaneous appeal and petition for certiorari did not constitute forum shopping, citing Paradero v. Abragan. The Supreme Court, however, found that WINCORP's petition for certiorari was filed out of time, as it should have been filed within sixty days from receipt of the RTC's November 12, 2003 or December 3, 2003 orders, which were prohibited from being subject to motions for reconsideration under the Interim Rules. The Court also found that the simultaneous filing of the appeal and the certiorari petition constituted forum shopping because both remedies sought the same ultimate relief: the setting aside of the RTC's February 2, 2004 decision, unlike in Paradero where the remedies addressed different matters.
Issue(s)
Whether the Court of Appeals erred in affirming the RTC's premature rendition of judgment before pre-trial, thus depriving petitioner of its constitutional right to due process. Whether the Court of Appeals erred in ruling that petitioner violated the procedural rule against forum shopping.
Ruling
The petition is denied for lack of merit. The Court of Appeals correctly dismissed petitioner's petition for certiorari and mandamus on the ground of forum shopping. Furthermore, the petition for certiorari was filed out of time.
Ratio Decidendi
On the issue of premature judgment and due process: The Court found that the petition for certiorari was filed out of time. The issues raised in the petition pertained to the RTC's November 12 and December 3, 2003 Orders submitting the case for decision. Under the Interim Rules of Procedure for Intra-Corporate Controversies, motions for reconsideration are prohibited pleadings. Therefore, the RTC should not have issued the December 3, 2003 Order denying the motion for reconsideration. The proper remedy was a petition for certiorari within sixty (60) days from receipt of the assailed order. WINCORP received the November 12, 2003 Order on November 13, 2003. Even if the period were reckoned from the December 3, 2003 Order, the petition for certiorari filed on February 13, 2004, was still filed late. The Court concluded that WINCORP filed the petition for certiorari as a subterfuge to appear timely when it was actually assailing an earlier order whose period to assail had already elapsed. Even if considered timely from the February 2, 2004 Decision, it was still dismissible for forum shopping. On the issue of forum shopping: The Court held that the simultaneous filing of a petition for certiorari and an appeal assailing the same February 2, 2004 RTC Decision constitutes forum shopping. Both remedies sought the same ultimate goal: the setting aside of the RTC Decision. Allowing both would create the possibility of conflicting decisions from different tribunals, which the prohibition against forum shopping aims to prevent. The Court distinguished this case from Paradero v. Abragan, where simultaneous remedies were allowed because they dealt with different matters (execution pending appeal versus the merits of the decision).
Main Doctrine
The simultaneous filing of a petition for certiorari and an appeal assailing the same decision constitutes forum shopping, as both remedies ultimately seek the same objective: the setting aside of the questioned decision. Furthermore, motions for reconsideration are prohibited pleadings under the Interim Rules of Procedure for Intra-Corporate Controversies, and the proper remedy against an order that should not have been filed is a petition for certiorari within the reglementary period.