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BANK OF AMERICA NT v. CA

FACTS:

The Litonjuas, engaged in the shipping business, filed a complaint against the Bank of America NT&SA and Bank of America International, Ltd. (defendant banks), alleging that they owned two vessels through their corporations and deposited their revenues from the business with the defendant banks. The defendant banks induced the Litonjuas to acquire additional vessels through easy loans. The vessels were registered under the names of the Litonjuas' corporations but were under the complete control and disposition of the Litonjuas. The Litonjuas claimed that the defendant banks did not fully account for the income derived from the operation of the vessels and from the foreclosure sale, resulting in a decline in revenues. As a result, the defendant banks foreclosed and sold all six vessels, including the two originally owned by the Litonjuas. The Litonjuas prayed for accounting of revenues, damages for breach of trust, exemplary damages, and attorney's fees. The defendant banks filed a Motion to Dismiss which was denied by the trial court. Instead of filing an answer, the defendant banks brought the case to the Court of Appeals, which dismissed their petition. The defendant banks then filed a petition for review on certiorari before the Supreme Court.

The case involves a dispute between petitioners Bank of America and Bank of America International Ltd. (BOAIL) and private respondents Aurelio Katipunan Litonjua Jr., Aurelio Katipunan Litonjua Sr., Eduardo Katipunan Litonjua, Litonjua Chartering (EDYSHIP) Co., Inc., Espriona Shipping Company S.A., El Challenger S.A., and Eshley Compania Naviera S.A. over loans and mortgages. The loans were obtained and executed outside the Philippines, and the mortgaged vessels were part of an offshore fleet not based in the Philippines. The loan agreements and subsequent restructuring agreements were governed by the laws of England. Petitioners argue that the local court is not the proper forum due to the lack of access to sources of proof and witnesses in the Philippines, the foreign parties involved, and the application of foreign law. Petitioners also claim that private respondents have already waived their causes of action by refusing to contest foreign civil cases filed against them in Hongkong and England.

ISSUES:

  1. Did the trial court commit grave abuse of discretion in refusing to dismiss the complaint on the ground that plaintiffs have no cause of action against defendants since plaintiffs are merely stockholders of the corporations which are the registered owners of the vessels and the borrowers of petitioners?

  2. Whether the complaint states a cause of action.

  3. Whether the complaint should be dismissed on the ground of forum non-conveniens.

  4. Whether the private respondents are guilty of forum shopping.

RULING:

  1. The denial of the motion to dismiss does not constitute a patent grave abuse of discretion. The trial court acted within its jurisdiction when it issued the order denying the motion to dismiss. The proper remedy for the aggrieved party is to file an answer and interpose the objections raised in the motion to dismiss as defenses during trial, and then appeal in due course if the decision is adverse. The denial of the motion to dismiss may only be subject to certiorari or mandamus in certain situations: (a) when the trial court issued the order without or in excess of jurisdiction; (b) when there is patent grave abuse of discretion by the trial court; or (c) when appeal would not prove to be a speedy and adequate remedy.

  2. The complaint states a cause of action because it contains the three essential elements: the legal right of the plaintiff, the correlative obligation of the defendant, and the act or omission of the defendant in violation of said legal right.

  3. The complaint should not be dismissed on the ground of forum non-conveniens because the Philippine court is a convenient forum for the parties, has the ability to make an intelligent decision on the case, and has the power to enforce its decision.

  4. The private respondents are not guilty of forum shopping because all the elements of litis pendentia are not present.

PRINCIPLES:

  • An order denying a motion to dismiss is interlocutory and cannot be the subject of an extraordinary petition for certiorari or mandamus. The remedy is to file an answer, raise the objections as defenses during trial, and appeal in due course. Recourse to certiorari or mandamus is appropriate only in specific situations.

  • Lack of personality to sue can be used as a ground for a motion to dismiss. Lack of personality to sue means that the plaintiff is not the real party-in-interest. However, it can only be used as a ground for dismissal if it is evident on the face of the complaint that there is no cause of action.

  • A complaint states a cause of action if it contains the legal right of the plaintiff, the correlative obligation of the defendant, and the act or omission of the defendant in violation of said legal right.

  • "Failure to state a cause of action" refers to the insufficiency of allegation in the pleading, while "lack of cause of action" refers to the insufficiency of factual basis for the action.

  • The doctrine of forum non-conveniens allows a court to refuse impositions on its jurisdiction if it is not the most convenient or available forum and the parties are not precluded from seeking remedies elsewhere.

  • The doctrine of forum non-conveniens should not be used as a ground for a motion to dismiss because it is not included as a ground in Rule 16 of the Rules of Court.

  • Forum shopping exists when the elements of litis pendentia are present and when a final judgment in one case will amount to res judicata in the other.

  • Litis pendentia requires the identity of the parties, identity of rights asserted, and identity of reliefs sought for.