Wednesday, February 29, 2012

UCPB vs. Beluso (2007)

Facts: In 1996, UCPB granted the spouses Beluso a Promissory Notes Line under a Credit Agreement whereby the latter could avail from the former credit of up to a maximum amount of P1.2 Million pesos for a term ending in April 1997. In addition to the promissory notes, the spouses Beluso also constituted a real estate mortgage over parcels of land in Roxas City. Subsequently, the said Credit Arrangement was amended to extend the amount of the Promissory Notes Line to a maximum of P2.35 Million pesos and to extend the term thereof to February 1998. 

The spouses executed three promissory notes which were renewed several times. In 1997, the payment of the principal and interest of the latter two promissory notes were debited from the spouses Beluso’s account with UCPB; yet, a consolidated loan for P1.3 Million was again released to the spouses Beluso under one promissory note with a due date of 28 February 1998. 

To completely avail themselves of the P2.35 Million credit line extended to them by UCPB, the spouses Beluso executed two more promissory notes for a total of P350 thousand. However, the spouses Beluso alleged that the amounts covered by these last two promissory notes were never released or credited to their account and, thus, claimed that the principal indebtedness was only P2 Million. 

In any case, UCPB applied interest rates on the different promissory notes ranging from 18% to 34%. During the term of these promissory notes, the Belusos were able to pay the total sum of about P760 thousand. However, they failed to pay for the interest and penalty on their obligations. As a result, UCPB demanded that they pay their total obligation of P2.9 millionbut the spouses Beluso failed to comply therewith. Thereafter, UCPB foreclosed the properties mortgaged by the spouses Beluso to secure their credit line, which, by that time, already ballooned to nearly P3.8 million. 

Two months after the foreclosure, the spouses Beluso filed a Petition for Annulment, Accounting and Damages against UCPB with the RTC of Makati City. UCPB moved to dismiss the case on the ground that the spouses Beluso instituted another case before the RTC of Roxas City, involving the same parties and issues. UCPB claims that while the Roxas City case initially appears to be a different action, as it prayed for the issuance of a temporary restraining order and/or injunction to stop foreclosure of spouses Beluso’s properties, it poses issues which are similar to those of the present case. 

The spouses Beluso claim that the issue in the Roxas City case is the propriety of the foreclosure before the true account of spouses Beluso is determined. On the other hand, the issue in the Makati case is the validity of the interest rate provision. The spouses Beluso claim that the Roxas City case has become moot because, before RTC Roxas City could act on the restraining order, UCPB proceeded with the foreclosure and auction sale. As the act sought to be restrained has already been accomplished, the spouses Beluso had to file a different action, that of Annulment of the Foreclosure Sale with RTC Makati. 

RTC ruled in favor of the Belusos. CA affirmed. 

Issue: Whether or not the case should be dismissed due to forum shopping 

Held: YES. Even if it is assumed for the sake of argument, however, that only one cause of action is involved in the two civil actions, namely, the violation of the right of the spouses Beluso not to have their property foreclosed for an amount they do not owe, the Rules of Court nevertheless allows the filing of the second action. The case in Roxas City was dismissed before the filing of the case with RTC Makati, since the venue of litigation as provided for in the Credit Agreement is in Makati City. 

Rule 16, Section 5 bars the refiling of an action previously dismissed only in the following instances: 

(a) That the cause of action is barred by a prior judgment or by the statute of limitations; 

(b) That the claim or demand set forth in the plaintiff’s pleading has been paid, waived, abandoned, or otherwise extinguished; and 

(c) That the claim on which the action is founded is unenforceable under the provisions of the statute of frauds. 

When an action is dismissed on the motion of the other party, it is only when the ground for the dismissal of an action is either of those aforementioned that the action cannot be refiled. As regards all the other grounds, the complainant is allowed to file same action, but should take care that, this time, it is filed with the proper court or after the accomplishment of the erstwhile absent condition precedent, as the case may be. 

The MR filed by the Belusos in the Roxas City case that has not yet been resolved upon the filing of the Makati case does not change the SC’s findings. It is indeed the general rule that in cases where there are two pending actions between the same parties on the same issue, it should be the later case that should be dismissed. However, this rule is not absolute. In the case of Allied Banking v. CA, it was ruled that: “Even if this is not the purpose for the filing of the first action, it may nevertheless be dismissed if the later action is the more appropriate vehicle for the ventilation of the issues between the parties.” 

Applying the said ruling in the case at bar, the Court found that the Makati City case is the more proper action in view of the execution of the foreclosure sale. Moreover, Makati is the proper venue of the action as mandated by the Credit Agreement. Hence, the Court deemed that the Makati Case is the more appropriate vehicle for litigating the issues between the parties, as compared to the Roxas City case. 

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