United Alloy Philippines Corporation v. United Coconut Planters Bank
REITERATIONFacts
The Antecedents: United Alloy Philippines Corporation (UniAlloy) entered into a Lease Purchase Agreement (LPA) with United Coconut Planters Bank (UCPB) for several parcels of land. UniAlloy also obtained loans from UCPB. UniAlloy later filed a Complaint against UCPB, Robert T. Chua (UCPB Vice-President), and Jakob Van Der Sluis (UniAlloy Chairman), alleging manipulation by Van Der Sluis, fictitious loans, and unilateral rescission of the LPA by UCPB. UniAlloy sought annulment of promissory notes, nullification of the LPA rescission, injunction against UCPB taking possession, and damages. A Temporary Restraining Order (TRO) was issued. Procedural History: Respondent Jakob Van Der Sluis filed a Motion to Dismiss on grounds of improper venue, forum-shopping, litis pendentia, and harassment, citing a stipulation in the LPA for exclusive venue in Makati City and the pendency of other cases. Respondents UCPB and Chua also filed a Motion to Dismiss, raising improper venue and lack of authority of the complainant's verifier. The Regional Trial Court (RTC), acting as a Special Commercial Court, dismissed the Complaint on September 13, 2001, finding improper venue, forum-shopping, and harassment, and ordered UniAlloy to surrender possession of the premises. A Writ of Execution was issued and satisfied, placing UCPB in possession. UniAlloy filed a Petition for Certiorari and Mandamus with the Court of Appeals (CA), assailing the RTC Orders. The CA Manila issued a TRO and later a Resolution granting a preliminary injunction. However, the Supreme Court issued a restraining order in G.R. No. 152238, preventing the CA from enforcing its resolution. Subsequently, the Supreme Court affirmed the CA's resolution in G.R. No. 152238, finding no grave abuse of discretion by the CA in issuing the preliminary injunction. The records of the case were forwarded to the CA Cagayan de Oro City (CA CDO). The CA CDO denied UniAlloy's motion to issue and implement the writ of preliminary mandatory injunction, finding that UniAlloy had lost its right to possession due to default in rentals and prior vacation of the premises. The CA CDO further opined that UniAlloy erred in filing a Rule 65 petition instead of an appeal, as the dismissal order had become final. The CA CDO's Decision dated August 17, 2007, denied UniAlloy's petition and affirmed the RTC Orders. The Petition: UniAlloy filed a Petition for Review on Certiorari with the Supreme Court, challenging the CA CDO's dismissal of its Petition for Certiorari and Mandamus, arguing that the CA CDO erred in denying its motion for injunction despite the Supreme Court's affirmation of the CA Manila's earlier resolution and that the CA CDO disregarded Supreme Court decisions.
Issue(s)
Whether the Court of Appeals (Cagayan de Oro City) erred in denying United Alloy's Motion to Issue and Implement Writ of Preliminary Mandatory Injunction despite the earlier resolution of the Court of Appeals (Manila) granting the injunction and the Supreme Court's decision sustaining said resolution. Whether the Court of Appeals (Cagayan de Oro City) disregarded the rule that courts must take cognizance of Supreme Court decisions. Whether the Court of Appeals (Cagayan de Oro City) decided the case in accord with law and evidence, and whether its proceedings called for the exercise of the Supreme Court's supervisory power. Whether the dismissal of UniAlloy's Complaint by the RTC on the grounds of improper venue, forum-shopping, and harassment was proper. Whether UniAlloy availed of the correct remedy in filing a Petition for Certiorari and Mandamus with the Court of Appeals.
Ruling
The Supreme Court denied the petition for review on certiorari. It affirmed the decision of the Court of Appeals (Cagayan de Oro City) which dismissed UniAlloy's Petition for Certiorari and Mandamus.
Ratio Decidendi
On the effect of the dismissal of the main action on ancillary relief: The Court reiterated the principle that the dismissal of the principal action carries with it the dissolution of any ancillary relief previously granted. Therefore, the CA CDO's dismissal of UniAlloy's Petition for Certiorari and Mandamus effectively superseded the CA Manila's earlier Resolution granting a preliminary injunction. The preliminary injunction, being an ancillary remedy, could not exist independently of the main action and was dissolved upon the dismissal of the main case. On the alleged disregard of Supreme Court decisions and coordinate court rulings: The Court clarified that the CA CDO did not err in affirming the dismissal. The proceeding before the CA CDO was a continuation of the case originally filed with the CA Manila, transferred due to law (Republic Act No. 8246). Therefore, it was not an intrusion into the order of a co-equal court. The Supreme Court's affirmation of the CA Manila's resolution in G.R. No. 152238 was limited to the propriety of the injunctive relief and did not pass upon the issues of improper venue, forum-shopping, and harassment, which were the basis for the dismissal of the main case. On the turnover of possession: The Court found no merit in UniAlloy's argument that the RTC erred in ordering the turnover of possession. UCPB was already in possession prior to the filing of the Complaint, and UniAlloy regained possession only through a TRO. With the dismissal of the main action, the TRO and the status quo order lost their efficacy, necessitating the restitution of possession to UCPB, even if not explicitly prayed for by UCPB, as it was a consequence of the dissolved provisional remedy. On the dismissal of the Complaint on grounds of improper venue, forum-shopping, and harassment: The Court found the RTC correct in dismissing the Complaint. The Lease Purchase Agreement (LPA) expressly stipulated that any legal action arising from it shall be brought exclusively in the proper courts of Makati City. UniAlloy's argument that the subject matter was the loans and not the LPA was rejected, as the rescission of the LPA was a central issue, making the LPA intrinsically connected to the controversy. Furthermore, UniAlloy committed forum-shopping by failing to disclose the pendency of Civil Case No. 2001-156, which involved the same parties, transactions, and essential facts. The RTC took judicial notice of this other case pending before it, confirming the existence of forum-shopping. On the propriety of the remedy: The Court held that UniAlloy availed of the correct remedy. The dismissal of UniAlloy's Complaint by the RTC was based on improper venue, forum-shopping, and harassment, which are grounds for dismissal without prejudice under Section 1, Rule 16 of the Rules of Court. Orders of dismissal without prejudice are not appealable, and the proper recourse is a special civil action for certiorari under Rule 65. The Court clarified that dismissals based on grounds like res judicata or prescription are with prejudice and are appealable, but this was not the case here.
Main Doctrine
The dismissal of a principal action carries with it the dissolution of any ancillary relief previously granted therein. Furthermore, a Rule 65 petition for certiorari is the proper remedy when an action is dismissed without prejudice on grounds such as improper venue, forum-shopping, or harassment, as these do not fall under the exceptions that would render the dismissal with prejudice and appealable.