United Alloy Philippines Corporation vs. United Coconut Planters Bank

The dismissal of the principal action carries with it the denial, disallowance, or revocation of all reliefs ancillary to the main remedy sought in that action. Provisional remedies, including preliminary injunction, are ancillary because they are mere incidents in and are dependent upon the result of the main action; they persist only until dissolved or until the termination of the action without the court issuing a final injunction.

UniAlloy is a domestic corporation engaged in manufacturing and trading alloy products, with its principal office at the Phividec Industrial Area, Tagoloan, Misamis Oriental. UCPB is a banking corporation co-owning 75.67% of the subject property with the Development Bank of the Philippines, which holds the remaining 24.33% interest. Robert T. Chua is a UCPB Vice-President, while Jakob Van Der Sluis, a Dutch citizen, served as UniAlloy's Chairman. PDIC is the assignee-in-interest of UCPB as regards UniAlloy's loan account. On September 10, 1999, UniAlloy and UCPB entered into a Lease Purchase Agreement (LPA) covering 156,372 square meters of land in Barangay Gracia, Tagoloan, Misamis Oriental, with a three-year lease commencing August 1, 1999 at a monthly rent of P756,700.00, and a stipulation that UniAlloy would purchase the leased properties for P300 million upon lease expiration. The LPA contained a venue stipulation directing that any legal action arising out of or in connection with the agreement be brought exclusively in the proper courts of Makati City. UniAlloy likewise obtained loans from UCPB evidenced by Promissory Notes.

UniAlloy, a domestic corporation manufacturing and trading alloy products such as ferrochrome, ferrosilicon, and ferromanganese, maintained its principal office at the Phividec Industrial Area, Tagoloan, Misamis Oriental. On September 10, 1999, UniAlloy and UCPB entered into a Lease Purchase Agreement covering several parcels of land totaling 156,372 square meters in Barangay Gracia, Tagoloan, Misamis Oriental. The three-year lease ran from August 1, 1999 to July 31, 2002 at a monthly rent of P756,700.00, with a stipulation that UniAlloy would purchase the leased properties for P300 million on a staggered basis upon lease expiration. UniAlloy also obtained loans from UCPB during this period.

On August 27, 2001, UniAlloy filed a Complaint for Annulment and/or Reformation of Contract and Damages with Prayer for a Writ of Preliminary Injunction or TRO against UCPB, Chua, and Van Der Sluis before the RTC, Branch 40, Cagayan de Oro City, docketed as Civil Case No. 2001-219. UniAlloy alleged that through misrepresentation and manipulation, Van Der Sluis took full control of its management and operations, and that respondents connived to obtain fictitious loans purportedly for UniAlloy, evidenced by Promissory Note Nos. 8111-00-00110-6, 8111-00-20031-1, and 8111-01-20005-6 for P6 million, US$10,000.00, and US$320,000.00, respectively. UniAlloy claimed that UCPB demanded payment of these loans and unilaterally rescinded the LPA. The complaint sought annulment or reformation of the promissory notes, nullification of UCPB's unilateral rescission of the LPA, an injunction against UCPB's taking possession of the leased premises, and damages. On the same day, the Executive Judge issued a 72-hour TRO.

The following day, Van Der Sluis filed a Motion to Dismiss on grounds of improper venue, forum-shopping, litis pendentia, and the complaint being a harassment suit under the Interim Rules of Procedure for Intra-Corporate Cases, noting that the LPA stipulated exclusive venue in Makati City and that UniAlloy failed to disclose the pendency of Civil Case No. 2001-156 before the same branch. UCPB and Chua separately moved to dismiss, additionally raising lack of authority of the verifying party. During the injunction hearing on August 30, 2001, the RTC directed the parties to maintain the status quo pending resolution of the motions.

On September 13, 2001, the RTC, acting as Special Commercial Court, granted the motions to dismiss on grounds of improper venue, forum-shopping, and harassment, rendering the prayer for preliminary injunction moot and ordering UniAlloy to turn over possession of the subject premises to UCPB. The following day, upon UCPB's motion, the RTC issued an Order directing the issuance of a writ of execution, which was satisfied on September 17, 2001, resulting in the eviction of UniAlloy's employees and UCPB's placement in possession. UniAlloy received copies of the RTC Orders on September 25, 2001, and on October 9, 2001, filed a petition for certiorari and mandamus with the CA Manila, which issued a TRO on October 18, 2001 and, on February 18, 2002, granted UniAlloy's ancillary prayer for preliminary injunction upon posting of a P300,000.00 bond. No writ was actually issued, however, because the Supreme Court's March 18, 2002 Resolution in G.R. No. 152238 restrained the CA Manila from enforcing its February 18, 2002 Resolution. The Supreme Court's January 28, 2005 Decision in G.R. No. 152238 ultimately denied UCPB's petition and sustained the CA Manila's Resolution, but deliberately reserved for the CA the determination of whether the RTC erred in dismissing the main case. The records were thereafter forwarded to CA CDO pursuant to Republic Act No. 8246, which denied UniAlloy's motion for a writ of preliminary mandatory injunction on May 31, 2006, finding that UCPB had already been in actual physical possession of the premises since August 24, 2001, three days before UniAlloy filed its complaint. The CA CDO subsequently denied UniAlloy's motion for reconsideration on November 29, 2006, and on August 17, 2007, issued the assailed Decision affirming the RTC's questioned Orders and dismissing UniAlloy's petition.

• Proper Remedy: Petitioner argued that it filed a Rule 65 petition with the CA because the remedy of appeal was inadequate, the RTC having already directed the issuance of a writ of execution and the RTC Orders being patently illegal.
• Venue: Petitioner insisted that the subject matter of its complaint was not the LPA but the fictitious loans that purportedly matured on April 17, 2001, and therefore the venue stipulation in the LPA did not apply.
• Ancillary Relief: Petitioner argued that the CA CDO erred in denying its motion considering that the Supreme Court had already sustained with finality the CA Manila's February 18, 2002 Resolution granting its prayer for the issuance of a writ of preliminary mandatory injunction.
• Judicial Stability: Petitioner contended that the CA CDO contradicted the earlier Resolution of a coordinate court, the CA Manila, and the Supreme Court's January 28, 2005 Decision in G.R. No. 152238, insisting that no court can interfere with the judgments or orders of another court of concurrent or coordinate jurisdiction.
• Judicial Notice: Petitioner argued as a sub-issue that the CA CDO disregarded the rule that every court must take judicial notice of Supreme Court decisions, which form part of the legal system.

• Wrong Remedy: Respondents UCPB, Van Der Sluis, and Chua argued that UniAlloy should have filed a Notice of Appeal from the RTC's September 13, 2001 Order instead of a Rule 65 petition before the CA, and that the dismissal of the complaint had become final and executory, rendering UniAlloy's Rule 65 petition moot and academic.
• Improper Venue: Respondent Van Der Sluis argued that the LPA specifically provides that any legal action arising therefrom should be brought exclusively in the proper courts of Makati City.
• Forum-Shopping: Respondent Van Der Sluis averred that the complaint failed to disclose the pendency of Civil Case No. 2001-156 and CA-G.R. SP No. 66240, and that what UniAlloy sought to enjoin was already fait accompli.
• Lack of Authority: Respondents UCPB and Chua raised the issue of lack of authority of the person who verified the complaint, no secretary's certificate or board resolution having been attached thereto.

• Proper Remedy: Whether UniAlloy availed of the proper remedy in assailing the RTC's September 13, 2001 Order dismissing its complaint.
• Improper Venue: Whether the RTC correctly dismissed UniAlloy's complaint on the ground of improper venue under the venue stipulation in the LPA.
• Forum-Shopping: Whether UniAlloy committed forum-shopping by failing to disclose the pendency of Civil Case No. 2001-156.
• Dissolution of Ancillary Relief: Whether the dismissal of the main action carries with it the dissolution of the ancillary preliminary injunction previously granted.
• Judicial Stability: Whether the CA CDO violated the doctrine of judicial stability or non-interference by acting on the case previously handled by the CA Manila.

• Proper Remedy: Yes. UniAlloy availed of the correct remedy. The dismissal was without prejudice because the grounds (improper venue, forum-shopping, harassment) do not fall under paragraphs (f), (h), or (i) of Section 1, Rule 16; an order of dismissal without prejudice is not appealable under Section 1(g) of Rule 41, and the proper remedy is a special civil action for certiorari under Rule 65.
• Improper Venue: Yes. The RTC correctly dismissed on the ground of improper venue. Paragraph 18 of the LPA expressly stipulates that any legal action arising out of or in connection with the agreement shall be brought exclusively in the proper courts of Makati City, and the complaint sought to nullify UCPB's unilateral rescission of the LPA, making the LPA the subject matter or at least one of the subject matters of the complaint.
• Forum-Shopping: Yes. UniAlloy committed forum-shopping by failing to disclose the pendency of Civil Case No. 2001-156 in its Verification/Certification, which case involves the same parties, transactions, essential facts, causes of action, subject matter, and issues.
• Dissolution of Ancillary Relief: Yes. The dismissal of the principal action carries with it the dissolution of all ancillary reliefs. The CA CDO's August 17, 2007 Decision dismissing UniAlloy's petition effectively superseded the CA Manila's February 18, 2002 Resolution granting the ancillary prayer for preliminary injunction.
• Judicial Stability: No. The doctrine of judicial stability is inapplicable because the CA CDO proceeding was a continuation of the CA Manila proceeding in the same case, CA-G.R. SP No. 67079, transferred pursuant to Republic Act No. 8246; CA CDO did not intrude into an order of another co-equal court in a different case.

• Proper Remedy: Under Section 1, Rule 16 of the Rules of Court, the grounds for a motion to dismiss include improper venue, litis pendentia, and other enumerated grounds. Section 5 of Rule 16 provides that only dismissals based on paragraphs (f) (res judicata/prescription), (h) (extinguishment of claim), or (i) (unenforceability under the Statute of Frauds) are with prejudice and bar refiling. All other dismissals are without prejudice. Under Section 1(g) of Rule 41, an order dismissing an action without prejudice is not appealable; the proper remedy is a special civil action for certiorari under Rule 65. The RTC dismissed UniAlloy's complaint on grounds of improper venue, forum-shopping, and harassment — none of which fall under paragraphs (f), (h), or (i). The dismissal was therefore without prejudice, and UniAlloy's Rule 65 petition was the correct remedy.

• Improper Venue: As a general rule, personal actions must be commenced where the plaintiff or defendant resides, or where a resident defendant may be found, at the election of the plaintiff. However, parties may agree in writing to limit venue to a specified place. Paragraph 18 of the LPA expressly provides that any legal action arising out of or in connection with the agreement shall be brought exclusively in the proper courts of Makati City. UniAlloy's complaint unequivocally sought to declare null and void UCPB's unilateral rescission of the LPA; without the LPA there can be no unilateral rescission to speak of. Even if the LPA were not the main subject matter, the controversy arises out of and is connected with it, so the complaint should have been filed in Makati City. UniAlloy's insistence that the subject matter was the fictitious loans, not the LPA, lacks merit because the complaint itself sought to nullify the rescission of the LPA.

• Forum-Shopping: UniAlloy failed to disclose in the Verification/Certification of its complaint the pendency of Civil Case No. 2001-156, entitled "Ernesto Paraiso and United Alloy Philippines Corporation vs. Jakob Van Der Sluis," pending before the same RTC branch. The RTC took judicial notice of this pendency and found that both cases involve identical causes of action, the same transactions, the same essential facts and circumstances, and identical subject matter and issues — all revolving around Van Der Sluis's alleged misrepresentations regarding financial assistance, the stockholders' resolution making him chairman, the Memorandum of Agreement obligating him to provide loans, and the fraudulent manipulation of UniAlloy's bank account. Forum-shopping exists where both actions involve the same transactions and essential facts as well as identical causes of action, subject matter, and issues.

• Dissolution of Ancillary Relief: Provisional remedies are writs and processes available during the pendency of an action to preserve and protect certain rights pending rendition of a final judgment. They are provisional because they constitute temporary measures and ancillary because they are mere incidents dependent upon the result of the main action. Preliminary injunction, as a provisional remedy, persists only until it is dissolved or until the termination of the action without the court issuing a final injunction. The CA CDO's August 17, 2007 Decision dismissing UniAlloy's petition effectively superseded the CA Manila's February 18, 2002 Resolution granting the ancillary prayer for injunctive relief. It wrote finis not only to the main case but also to the ancillary relief issued therein. For the same reason, the RTC's 72-hour TRO and August 30, 2001 status quo order lost their efficacy upon dismissal of the complaint. UniAlloy, having regained possession only by virtue of the dissolved TRO, had no basis to remain in possession and was required to restitution, even though UCPB never prayed for turnover — UCPB was already in actual possession as of August 24, 2001, before the complaint was filed.

• Judicial Stability: Under the doctrine of judicial stability or non-interference, no court can interfere by injunction with the judgments or orders of another court of concurrent jurisdiction having power to grant the relief sought. The rationale is that a court acquiring jurisdiction over a case has jurisdiction over its judgment to the exclusion of all other coordinate courts. This doctrine is inapplicable here because the CA CDO proceeding was a continuation of the CA Manila proceeding — the same case, CA-G.R. SP No. 67079, transferred to CA CDO pursuant to Section 5 of Republic Act No. 8246, which mandates that pending cases, except those submitted for resolution, be referred to the proper division of the Court of Appeals. CA CDO did not intrude into an order of another co-equal court in a different case but continued hearing the same petition after transfer by operation of law. Moreover, the Supreme Court's January 28, 2005 Decision in G.R. No. 152238 only affirmed the CA Manila's ancillary injunctive relief and deliberately reserved for the CA the determination of whether the RTC erred in dismissing the main case on the grounds of improper venue, forum-shopping, and harassment.

• Doctrine on Dissolution of Ancillary Reliefs Upon Dismissal of the Main Action — The dismissal of the principal action carries with it the denial, disallowance, or revocation of all reliefs ancillary to the main remedy sought. Provisional remedies are ancillary because they are mere incidents in and are dependent upon the result of the main action; they persist only until dissolved or until the termination of the action without the court issuing a final injunction. Applied in this case: the CA CDO's dismissal of UniAlloy's petition for certiorari and mandamus effectively superseded and dissolved the CA Manila's February 18, 2002 Resolution granting preliminary injunction, as well as the RTC's 72-hour TRO and status quo order.

• Doctrine of Judicial Stability or Non-Interference — No court can interfere by injunction with the judgments or orders of another court of concurrent jurisdiction having the power to grant the relief sought by injunction. A court that acquires jurisdiction over a case and renders judgment has jurisdiction over its judgment, to the exclusion of all other coordinate courts, for its execution and over all its incidents. Applied in this case: the doctrine was held inapplicable because the CA CDO proceeding was a continuation of the same case previously handled by CA Manila, transferred by operation of law pursuant to Republic Act No. 8246 — not an intrusion into a different case of a co-equal court.

• Nature of Provisional/Ancillary Remedies — Provisional remedies are writs and processes available during the pendency of an action to preserve and protect certain rights and interests pending rendition of a final judgment. They are provisional because they constitute temporary measures availed of during the pendency of the action, and ancillary because they are mere incidents in and are dependent upon the result of the main action. Preliminary injunction as a provisional remedy may issue at any stage of an action prior to judgment or final order and persists until dissolved or until termination of the action without issuance of a final injunction.

• Venue Stipulations in Contracts — Parties may agree in writing to limit the venue of future actions between them to a specified place. Such stipulations are binding, and any legal action arising out of or in connection with the agreement must be filed exclusively in the stipulated venue. Applied in this case: paragraph 18 of the LPA stipulated exclusive venue in Makati City, and since UniAlloy's complaint sought to nullify UCPB's unilateral rescission of the LPA, venue was improperly laid in Cagayan de Oro City.

• "Provisional remedies [also known as ancillary or auxiliary remedies], are writs and processes available during the pendency of the action which may be resorted to by a litigant to preserve and protect certain rights and interests pending rendition, and for purposes of the ultimate effects, of a final judgment in the case. They are provisional because they constitute temporary measures availed of during the pendency of the action, and they are ancillary because they are mere incidents in and are dependent upon the result of the main action." — This passage defines the nature of provisional remedies and establishes the doctrinal foundation for the rule that dismissal of the main action dissolves ancillary reliefs.

• "A preliminary injunction is granted at any stage of an action or proceeding prior to the judgment or final order. It persists until it is dissolved or until the termination of the action without the court issuing a final injunction." — Quoted from Bacolod City Water District vs. Hon. Labayen, this is the canonical formulation of the lifespan of a preliminary injunction as a provisional remedy, directly supporting the holding that the CA CDO's dismissal superseded the CA Manila's earlier grant of injunctive relief.

• "The dismissal of Civil Case No. 2001-219 on the grounds of forum-shopping, improper venue and harassment - although raised, too, by Unialloy in its Petition before the Court of Appeals - was not passed upon in the assailed interlocutory CA Resolution. As a consequence, it would be premature and improper for us to pass upon the RTC's dismissal of the case. Hence, we shall limit our discussion to the assailed Resolutions temporarily stopping the trial court's turnover of the litigated property to petitioner." — This quotation from the Supreme Court's January 28, 2005 Decision in G.R. No. 152238 demonstrates that the earlier ruling deliberately reserved the merits of the RTC's dismissal for the CA, undermining UniAlloy's argument that the Supreme Court had already definitively ruled in its favor.

• "In fine, CA CDO did not intrude into an order issued by another co-equal court in a different case. Rather, it continued to hear the petition until its termination after the CA Manila referred the same to it by virtue of a law." — This passage articulates why the doctrine of judicial stability does not apply when a case is transferred between CA stations by operation of law, distinguishing continuation of the same proceeding from interference with a co-equal court's order.

• Bacolod City Water District vs. Hon. Labayen, 487 Phil. 335 (2004) — Followed. Cited for the canonical formulation that preliminary injunction as a provisional remedy persists only until dissolved or until the termination of the action without the court issuing a final injunction. The Court relied on this doctrine to hold that the CA CDO's dismissal of the main petition superseded the CA Manila's earlier grant of injunctive relief.

• United Coconut Planters Bank vs. United Alloy Phils. Corp., G.R. No. 152238, Jan. 28, 2005, 490 Phil. 353 (2005) — Prior related ruling. The Supreme Court's earlier decision in the companion case sustaining the CA Manila's February 18, 2002 Resolution granting ancillary injunctive relief, but deliberately reserving for the CA the determination of whether the RTC erred in dismissing the main case. The Court held this prior ruling did not preclude the CA CDO from dismissing the main petition.

• Atty. Cabili vs. Judge Balindong, 672 Phil. 398 (2011) — Followed. Cited for the doctrine of judicial stability or non-interference, which the Court held inapplicable because the CA CDO proceeding was a continuation of the same case transferred from CA Manila by operation of law.

• Palma vs. Hon. Galvez, 629 Phil. 86 (2010) — Cited for the proposition that the proper remedy from an order of dismissal without prejudice is a special civil action for certiorari under Rule 65, supporting the Court's finding that UniAlloy availed of the correct remedy.

• Mangila vs. Court of Appeals, 435 Phil. 870 (2002) — Cited for the rule that parties may agree in writing to limit venue of future actions to a specified place, supporting the Court's affirmance of the RTC's dismissal on the ground of improper venue.

• Section 1, Rule 16, Rules of Court — Enumerates the grounds for a motion to dismiss, including lack of jurisdiction, improper venue, litis pendentia, and prescription. Applied to determine that the grounds for the RTC's dismissal (improper venue, forum-shopping, harassment) were properly raised in the motions to dismiss.

• Section 5, Rule 16, Rules of Court — Provides that only dismissals based on paragraphs (f) (res judicata/prescription), (h) (extinguishment of claim), or (i) (unenforceability under the Statute of Frauds) are with prejudice and bar refiling. Applied to determine that UniAlloy's dismissal was without prejudice, making Rule 65 the proper remedy.

• Section 1(g), Rule 41, Rules of Court — Provides that an order dismissing an action without prejudice is not appealable. Applied to confirm that UniAlloy's remedy was certiorari under Rule 65, not appeal.

• Section 2, Rule 4, Rules of Court — Governs venue of personal actions, providing that they must be commenced where the plaintiff or defendant resides, or where a resident defendant may be found, at the election of the plaintiff. Applied as the general rule on venue, subject to the parties' written stipulation.

• Section 4(b), Rule 4, Rules of Court — Allows parties to agree in writing to limit the venue of future actions to a specified place. Applied to uphold the venue stipulation in paragraph 18 of the LPA directing exclusive venue in Makati City.

• Section 1, Rule 58, Rules of Court — Defines preliminary injunction as a remedy available at any stage of an action prior to judgment to compel a party to refrain from doing particular acts. Applied in discussing the ancillary nature of preliminary injunction.

• Section 5, Republic Act No. 8246 — Provides that upon the Act's effectivity, all pending cases, except those submitted for resolution, shall be referred to the proper division of the Court of Appeals. Applied to establish that the transfer of CA-G.R. SP No. 67079 from CA Manila to CA CDO was by operation of law, making the CA CDO proceeding a continuation of the same case rather than an intrusion into a co-equal court's order.

Velasco, Jr. (Chairperson), Brion, Mendoza, and Leonen, JJ., concurred.