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UNITED OVERSEAS BANK PHILS. v. ROSEMOORE MINING

FACTS:

Respondent Rosemoor Mining and Development Corporation (Rosemoor) obtained a credit facility from petitioner Westmont Bank (Bank) in the amount of P80 million. To secure the credit facility, a real estate mortgage agreement was executed by Rosemoor and Dr. Lourdes Pascual, Rosemoor's president, in favor of the Bank. The mortgage covered properties in Bulacan and Nueva Ecija.

Rosemoor defaulted on its payment obligations, prompting the Bank to initiate foreclosure proceedings on the properties. The Bank emerged as the highest bidder and annotated the Notarial Certificates of Sale on the certificates of title of the properties.

Rosemoor filed separate complaints against the Bank before the Regional Trial Courts (RTCs) of Manila and Malolos, seeking damages, accounting, and specific performance. These complaints were later amended. The Bank sought the dismissal of the complaints, claiming forum-shopping.

In the first case filed by Rosemoor and Dr. Pascual in Manila RTC, the Bank filed a motion to dismiss, arguing that both cases (Manila and Malolos) were based on the same set of facts. The Manila RTC denied the motion and the Bank's subsequent motion for reconsideration. The Bank then filed a petition for certiorari before the Court of Appeals (CA), questioning the Manila RTC's denial of its motion to dismiss. The CA dismissed the petition, and the Bank's motion for reconsideration was also denied.

Meanwhile, Rosemoor and Dr. Pascual filed another action against the Bank before the Malolos RTC, seeking an injunction and damages. They claimed that the Bank's foreclosure of their properties was fraudulent and baseless. The Bank, on its part, moved to dismiss the second case, alleging forum-shopping and lack of cause of action. The Malolos RTC denied the motion to dismiss and directed the Bank to file its answer. However, the Bank opted not to answer and instead filed a motion for reconsideration. Consequently, Rosemoor and Dr. Pascual sought to declare the Bank in default.

ISSUES:

  1. Whether Rosemoor committed forum-shopping in filing two cases against the Bank during the pendency of the first case.

  2. Whether the action to invalidate the foreclosure sale was properly filed in the Malolos RTC.

  3. Whether Rosemoor committed forum-shopping.

  4. Whether the Malolos RTC has jurisdiction over the action to nullify the foreclosure sale.

  5. Whether the default order against the Bank was proper.

  6. Whether the Malolos RTC's order denying the Bank's motion to dismiss was contrary to law and jurisprudence.

  7. Whether the trial court's order denying the motion to dismiss complies with the requirement of Rule 16 to state the reasons therefor.

  8. Whether the trial court's failure to comply with the requirement of stating the reasons for its order is a reversible error.

RULING:

  1. The Court found that Rosemoor did not commit forum-shopping. There was no identity of parties as several bank officers and employees sued in the first case were not included in the second case. Additionally, Dr. Pascual was only included as a petitioner in the second case because it involved properties registered in her name. The rights asserted and reliefs prayed for in the two cases were also different - the first case sought the remittance of the unreleased portion of the loan while the second case aimed to restrain the foreclosure of the properties. Therefore, there was no forum-shopping.

  2. The Court ruled that the action to annul the foreclosure sale was properly filed in the Malolos RTC. This is because an action to annul a foreclosure sale is a real action that should be commenced and tried in the province where the property is located.

  3. The Court held that Rosemoor did not commit forum-shopping since the action for injunction filed in Malolos was necessary due to the need to secure a writ of injunction to prevent the consolidation of titles to the mortgaged properties. The Court stated that the action for injunction can only be commenced where the properties are located, thus, the filing of the Malolos case was justified.

  4. The Court ruled that the Malolos RTC has jurisdiction over the action to nullify the foreclosure sale. The bank argued that the Malolos RTC does not have jurisdiction because the Nueva Ecija properties were included in the action along with the Bulacan properties. However, the Court held that the venue of real actions involving properties found in different provinces is determined by the singularity or plurality of the transactions. Since there was only one proceeding sought to be nullified (the foreclosure sale) and one initial transaction (the mortgage contract), the venue was properly laid with the Malolos RTC.

  5. The Court held that the default order against the Bank was proper. The Bank filed a motion for reconsideration which could not have tolled the running of the period to answer since it was filed late and was a mere rehash of the motion to dismiss. Thus, the Malolos RTC did not err in declaring the Bank in default.

  6. The Court ruled that the Malolos RTC's order denying the Bank's motion to dismiss was not contrary to law and jurisprudence. The Bank argued that the order should have stated the legal basis for the denial as required by Section 3, Rule 16 of the Rules of Court. However, the Court held that the resolution on the motion denying the motion to dismiss shall state clearly and distinctly the reasons therefor, and it is not required to state the specific legal basis.

  7. The trial court's order denying the motion to dismiss does not comply with the requirement of Rule 16 to state the reasons therefor. The order fails to clearly and distinctly state the reasons for denying the motion and is therefore inappropriate to the grounds detailed in the motion to dismiss.

  8. While decisions on cases submitted for decision are subject to the requirement of specificity of rulings, the trial court's failure to state the reasons for its order is harmless in this case because the Bank was not misled and it had the opportunity to argue its position before the Court of Appeals.

PRINCIPLES:

  • Forum-shopping refers to the filing of multiple suits involving the same parties for the same cause of action, either simultaneously or successively, for the purpose of obtaining a favorable judgment.

  • The elements of forum-shopping are: (a) identity of parties, (b) identity of rights asserted and reliefs prayed for, and (c) the identity with respect to the first two elements is such that any judgment rendered in one case would amount to res judicata in the other case.

  • In real actions, actions to annul foreclosure sales included, the action should be commenced and tried in the province where the property is located.

  • Personal actions, on the other hand, may be commenced and tried where the plaintiff or any of the principal defendants resides, or where the defendant resides if the action affects the personal status of the plaintiff.

  • A party does not commit forum-shopping if the filing of multiple cases are justified by different circumstances and legal purposes.

  • The venue of real actions involving properties in different provinces is determined by the singularity or plurality of the transactions.

  • A default order may be proper when a motion for reconsideration is late and is a mere rehash of a previous motion.

  • An order denying a motion to dismiss is not required to state the specific legal basis, but it should clearly and distinctly state the reasons for the denial.

  • Rule 16 of the Rules of Court requires that the resolution of a motion to dismiss must clearly and distinctly state the reasons therefor.

  • A trial court's failure to comply with the requirement of stating the reasons for its order may cause difficulty and misunderstanding for the aggrieved party and the higher court.

  • While the requirement to state the reasons for the trial court's resolutory order calls for a liberal interpretation, the order should still provide a clear and specific justification for denying the motion to dismiss.

  • Failure to comply with the requirement of stating the reasons for an order may be considered harmless if the party was not misled and had the opportunity to argue its position before the higher court.