Malayan Bank Savings & Mortgage Bank v. Holcim Philippines
REITERATIONFacts
The Antecedents: Respondent Holcim Philippines, Inc. (Holcim) filed a complaint for sum of money against petitioner Malayan Bank Savings and Mortgage Bank (Malayan) on May 16, 2011. Holcim alleged that Malayan reneged on its obligation to honor an irrevocable letter of credit issued in favor of Holcim, seeking PHP 19,999,980.00 in actual damages, PHP 1,000,000.00 in exemplary damages, and at least PHP 500,000.00 in attorney's fees and litigation expenses. Procedural History: Malayan's initial motion to dismiss was denied by the Regional Trial Court (RTC) of Makati City, Branch 61. Subsequently, Malayan was declared in default for failing to file an answer. Despite a motion to admit its answer being denied by the RTC, and a subsequent Petition for Certiorari to the Court of Appeals (CA) also being denied, Malayan filed another Petition for Review on Certiorari with the Supreme Court, which was also denied for procedural infirmities and failure to show reversible error. Meanwhile, the RTC rendered a decision in favor of Holcim. However, due to the conviction of the presiding judge, Judge Ruiz, for violating Republic Act No. 3019, the Supreme Court recalled his decisions, including the one in this case. This led to Malayan filing a motion to lift the order of default, which the RTC granted, setting the case for pre-trial. Holcim then filed a Petition for Certiorari with the CA, assailing the RTC's resolution. The Petition: The Court of Appeals granted Holcim's Petition for Certiorari, annulling the RTC's resolutions that lifted the order of default and set the case for pre-trial. The CA found that the RTC gravely abused its discretion, as the order of default had become final and immutable, having been affirmed by the CA and the Supreme Court. Malayan, in its Petition for Review on Certiorari before the Supreme Court, argues that the CA erred in annulling the RTC's resolutions. Malayan contends that the RTC acted within its discretion to lift the default order before judgment, that the prior rulings on the default order did not preclude a subsequent motion to lift it, and that the RTC was authorized to exercise full discretion in deciding the case following the Supreme Court's directive to resolve cases handled by the recalled judge.
Issue(s)
Whether the Court of Appeals erred in ruling that the Regional Trial Court committed grave abuse of discretion in issuing the assailed Resolutions, specifically regarding the disregard of the finality of the Supreme Court's resolution affirming the default order. Whether the Regional Trial Court committed grave abuse of discretion in granting Malayan's Motion for Reconsideration and lifting the order of default, despite the finality of the Supreme Court's resolution affirming the default order, thereby violating the doctrine of the 'law of the case'.
Ruling
The Supreme Court denied the Petition for Review on Certiorari, affirmed the Decision and Resolution of the Court of Appeals, and directed the Regional Trial Court to decide Civil Case No. 11-445 with reasonable dispatch.
Ratio Decidendi
On the issue of grave abuse of discretion and the finality of the default order: The Court held that the Court of Appeals correctly ascribed grave abuse of discretion to the RTC. The order of default, issued on February 17, 2012, was affirmed by the CA and subsequently by this Court in its Resolution dated June 29, 2015, which attained finality on October 22, 2015. This finality binds the parties and precludes relitigation of the same issue. The RTC's disregard of the finality of the Supreme Court's resolution, even after being apprised of it, constituted grave abuse of discretion amounting to lack or excess of jurisdiction. The RTC failed to recognize that its judicial power, while including the inherent power to recall or correct its own orders, must be exercised in recognition of settled legal principles like the doctrine of immutability of judgments. On the issue of grave abuse of discretion in granting Malayan's Motion for Reconsideration and violating the doctrine of the 'law of the case': Malayan's attempt to lift the default order by filing a Comment with Omnibus Motion, relying on the same circumstances previously cited, violated the doctrine of the 'law of the case.' This doctrine mandates that whatever has been irrevocably established as the controlling legal rule or decision between the same parties in the same case continues to be the law of the case, regardless of its correctness on general principles. The Court reiterated that a decision that has acquired finality becomes immutable and unalterable, serving the purpose of avoiding delay in the administration of justice and putting an end to judicial controversies. The recall of the original judge's decision in the administrative case did not extend to pre-decision interlocutory orders that had already attained finality. Therefore, the CA was correct in annulling the assailed RTC resolutions and upholding the RTC's earlier order deeming the case submitted for decision, thereby keeping the default order in force.
Main Doctrine
A court's order of default, once affirmed by the Court of Appeals and the Supreme Court, becomes final and immutable. A subsequent attempt to relitigate the issue of default before the same or a different judge violates the doctrine of the 'law of the case' and the principle of immutability of judgments, constituting grave abuse of discretion.