United Alloy vs UCPB Case Digest

UNITED ALLOY VS UCPB FACTS: -

-

-

-

Unialloy, a domestic corporation engaged in the business of manufacturing and trading on wholesale basis of alloy products entered into a Lease Purchase Agreement with UCPB, a banking corporation, In the said agreement, Unialloy leased several parcels of land which it will purchase upon the expiration of the agreement on a staggered basis However, it did not materialize because Unialloy filed a complaint against their own Chairman, Jakob Van Der Sluis, and UCPB According to Unialloy, Sluis and UCPB connived with one another to obtain fictitious loans for Unoalloy and that UCPB unilaterally rescinded the agreement Unialloy then prayed for the nullification of the unilateral rescission and as ancillary relief, the issuance of a temporary restraining order and/or writ of preliminary injunction The RTC Cagayan de Oro issued a 72-hour TRO directing UCPB to cease and desist from taking possession of the disputed premises Van der Sluis and UCPB filed separate motions to dismiss the case and Opposition to the Application for Injunction or TRO on the grounds of improper venue, forum-shopping, litis pendentia, and for being a harassment suit Van der Sluis argued that the agreement specifically provides that any legal action arising therefrom should be brought exclusively in the proper courts of Makati City The RTC directed the parties to maintain the status quo by not disturbing the possession of the present occupants of the properties in question pending resolution of respondents’ motion The RTC, acting as Special Commercial Court, issued an order granting the motions to dismiss on the grounds of improper venue, forum-shopping and for being a harassment suit Upon UCPB’s motion, the RTC issued an order directing the issuance of a writ of execution to enforce the decision of the RTC (acting as SCC), which was executed and satisfied, evicting the employees of Unialloy from the leased premises and placing it under the possession of UCPB Unialloy filed with the Court of Appeals in Manila a petition for certiorari The CA Manila issued a TRO and granted the issuance of a writ of preliminary injunction upon posting of a bond on a later date 8 Feb 2002 Unialloy posted the bond but no writ of preliminary injunction was issued by the CA Manila because of another resolution restraining it from enforcing its 8 Feb 2002 decision The resolution prohibiting it is a petition for Certiorari initiated by UCPB assailing said resolution of CA Manila, hence, restraining it from taking further action until the said petition of UCPB has been resolved UCPB’s petition was then denied and after it attained finality, Unialloy filed with the CA Manila a Motion to Issue and Implement Writ of Preliminary Mandatory Injunction The records of the case were forwarded to CA CDO pursuant to RA 8246 CA CDO issued a resolution denying Unialloy’s motion because it found that the latter had lost its right to remain in possession of the disputed premises for defaulting in the payment of the lease rentals. Further, the Unialloy employees had already vacated the premised and UCPB was already in actual physical possession thereof Unialloy filed a Motion for Reconsideration which was denied by the CA CDO ruling that Unialloy erred in resorting to a Rule 65 petition because its proper recourse should have ben to appeal

FACTOR, J.V.B. Remedial Law Review I Judge Eleuterio Bathan

1

ISSUES: I Whether or not Petition for Certiorari under Rule 65 is the proper recourse of Unialloy II Whether or not the dismissal of UniAlloy’s main action carries with it the dissolution of any ancillary relief previously granted therein III Whether or not the Court of Appeals CDO erred in affirming the dismissal of the Unialloy’s complaint on the grounds of improper venue, forum-shopping, and for being a harassment suit HELD: I.

The Petition for Certiorari is the proper recourse of Unialloy

Under Section 1 of Rule 16, the grounds for Motion to Dismiss is enumerated. Except for cases falling under f, h, or I of the said section, the dismissal of an action is without prejudice and does not preclude the refilling of the same action. And, under Section 1 (g) of Rule 41, an order dismissing an action without prejudice is not appealable. The proper remedy therefrom is a special civil action for certiorari under Rule 65. If the reason for the dismissal is based on paragraphs f, h, or I, the dismissal under Section 5 of Rule 16 is with prejudice, and the remedy of the aggrieved party is to appeal the order granting the motion to dismiss. Hence, the since the dismissal of Unialloy’s complaint was without prejudice, the remedy then available to Unialloy was a Rule 65 petition. II.

The dismissal of Unialloy’s main action carries with it the dissolution of any ancillary relief previously granted therein

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 measure 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. The main action for injunction is distinct form the provisional or ancillary remedy of preliminary injunction which cannot exist except only as part or an incident of an independent action or proceeding. As a matter of course, in an action for injunction, the auxiliary remedy of preliminary injunction, whether prohibitory or mandatory, may issue. Under the law, the main action for injunction seeks a judgment embodying a final injunction which is distinct from, and should not be confused with, the provisional remedy of preliminary injunction, the sole object of which is to preserve the status quo until the merits can be heard. 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. FACTOR, J.V.B. Remedial Law Review I Judge Eleuterio Bathan

2

Based on the foregoing, it is clear that the decision of CA CDO dismissing Unialloy’s petition for certiorari and mandamus effectively superseded the resolution of the CA Manila granting the Unialloy’s ancillary prayer for the issuance of a writ of preliminary injunction. A borne out by the records of the case, UCPB was already in actual possession of the litigated premises prior to the filing of the complaint. This conforms with the finding of the CA CDO which pronounced that an actual turnover of the premises prior to the institution of the complaint was effected. It was only by virtue of the 72-hour TRO which enable the regaining of the possession of Unialloy. After the issuance of the RTC’s order dismissing the complaint of Unialloy, the issued 72-hour TRO and order to maintain status quo, which are both mere incidents of tha main action, lost their efficacy. One of the inevitable consequences of the dismissal of the main action is the dissolution of the ancillary relief granted therein. III.

The Court of Appeals CDO did not err in affirming the dismissal of Unialloy’s complaint on the grounds of improper venue, forum-shopping and for being a harassment suit

In general, personal actions must be commenced and tried: i. ii. iii.

Where the plaintiff or any of the principal plaintiffs resides; Where the defendant or any of the principal defendants resides; or In the case of a resident defendant where he may be found, at the election of the plaintiff

Nevertheless, the parties may agree in writing to limit the venue of future actions between them to a specified place. In the case at bench, par. 18 of the Leased Purchase Agreement expressly provides that “any legal action arising out of or in connection with this Agreement shall be brought exclusively in the proper courts of Makati City”. Hence, Unialloy should have filed its complaint before the RTC of Makati and not with the RTC of CDO. Unialloy insisted that the subject matter of its complaint is not the LPA but the fictitious loans. Its complaint sought to declare as null and void the unilateral rescission made by defendant UCPB of its subsisting LPA with Unialloy. What UCPB unilaterally rescinded is the LPA ad without it there can be no unilateral rescission to speak of. Hence, the LPA is the subject matter of the complaint. Moreover, and to paraphrase the aforecited paragraph 18 of the LPA, as long as the controversy arises out of or is connected therewith, any legal action should be filed exclusively before the proper courts of Makati City. Thus, even assuming that the LPA is not the main subject matter, considering that what is being sought to be annulled is an act connected and inseparably related thereto, the Complaint should have been filed before the proper courts in Makati City. With regard to the forum-shopping, the review of the case revealed that it did not disclose in the verification that there is a pending case. The trial court took judicial notice of its pendency as said case is also assigned and pending before it. The two civil cases have identical causes, subject matter, and issues.

FACTOR, J.V.B. Remedial Law Review I Judge Eleuterio Bathan

3