PHILIPPINE RADIANT PRODUCTS, INC., REPRESENTED BY DR. MANUEL T. ANG, PETITIONER, VS. METROPOLITAN BANK & TRUST PROMULGATED: COMPANY, INC. RESPONDENT.

Philippine Radiant Products versus Metropolitan Bank and Trust Company

The Case

This is a petition for review on certiorari brought by Philippine Radiant Products, Incorporated against Metropolitan Bank and Trust Company. The dispute began as a complaint for specific performance and damages filed by the corporation against its supplier and its banks, arising from a shipment of medical plaster cloth backing that was not vinyl coated as agreed. The case matters because it fixes the consequences of a defective initiatory petition in the Court of Appeals: whether its dismissal bars refiling, and whether refiling amounts to forum shopping. The Supreme Court's answer turns on the exact language of the rule on certification against forum shopping.

Procedural History

Philippine Radiant filed its complaint in the Regional Trial Court of Tagum City, which issued an injunction and later rendered judgment in its favor, amended on reconsideration. Metropolitan Bank filed a notice of appeal. The trial court denied the notice of appeal as late and declared the judgment final and executory. Metropolitan Bank then filed a petition for certiorari in the Court of Appeals, which was dismissed for technical defects, and the bank withdrew it. The bank refiled a second petition, and the Court of Appeals granted it, annulling the order that had denied the appeal and directing the trial judge to give due course to the notice of appeal. Philippine Radiant sought reconsideration, which was denied, and then elevated the matter to the Supreme Court by petition for review on certiorari.

Facts

Since 1990, Philippine Radiant had been ordering medical plaster cloth backing from Aurora Textile Finishing Company. It paid through a savings and current account with Philippine Savings Bank and a letter of credit with Metropolitan Bank. On August 12, 2000, Philippine Radiant ordered 35,000 yards of the cloth backing. The shipment first arrived in Manila rather than the agreed Davao City port, and when it reached Davao City, Philippine Radiant discovered the cloth was not vinyl coated. It informed the banks and the supplier, and the supplier promised to send a technician to perform the coating.

Because the supplier demanded payment, Philippine Radiant sued for specific performance and damages with a plea for injunctive relief, asking that the banks be prohibited from paying the supplier. The trial court enjoined payment. Metropolitan Bank answered that it had already paid under the letter of credit, and it later sued Philippine Radiant in Davao City for the unpaid import bills, which complaint was dismissed on the ground of litis pendentia, the pendency of another action.

The trial court in Tagum City rendered judgment for Philippine Radiant, later amended on reconsideration. Metropolitan Bank's notice of appeal was denied as filed out of time, the trial court crediting the sheriff's account that copies of the order had been left with the bank's branch manager on the instruction of its counsel. The Court of Appeals, on the bank's refiled petition, set aside that denial and ordered the trial judge to give due course to the appeal.

Issues

• Whether or not the dismissal of the bank's first petition in the Court of Appeals was with prejudice and barred the refiling of the same petition.
• Whether or not the bank was guilty of forum shopping when it refiled its petition after withdrawing the first.
• Whether or not the trial court's declaration that the judgment had become final and executory could be corrected through a petition for certiorari and mandamus.

Applicable Provisions

Section 5, Rule 7 of the Rules of Civil Procedure provides:

Section 5. Certification against forum shopping. — The plaintiff or principal party shall certify under oath in the complaint or other initiatory pleading asserting a claim for relief, or in a sworn certification annexed thereto and simultaneously filed therewith: (a) that he has not theretofore commenced any action or filed any claim involving the same issues in any court, tribunal or quasi-judicial agency and, to the best of his knowledge, no such other action or claim is pending therein; (b) if there is such other pending action or claim, a complete statement of the present status thereof; and (c) if he should thereafter learn that the same or similar action or claim has been filed or is pending, he shall report that fact within five (5) days therefrom to the court wherein his aforesaid complaint or initiatory pleading has been filed.

This provision governs the certification the bank's petition lacked, and it supplies the rule that a dismissal for its omission is without prejudice.

Ruling

On the first issue, the Court held that the dismissal was without prejudice. Section 5, Rule 7 plainly provides that such dismissal is without prejudice unless made upon motion and after hearing. The same holds for the failure to append the requisite certified copies of the challenged orders.

On the second issue, the Court held that the bank was not guilty of forum shopping. Forum shopping is the act of a party against whom an adverse judgment has been rendered in one forum of seeking another and possibly favorable opinion in another forum, other than by appeal or certiorari, or the institution of two or more actions grounded on the same cause. The Court found none here, because the bank withdrew its defective petition before refiling, and because it could not simply amend that petition to cure the missing board resolution.

On the third issue, the Court sustained the Court of Appeals. The service of the order on the bank's branch manager, rather than on its counsel of record, did not start the period for appeal, so the notice of appeal was timely and the trial court committed grave abuse of discretion in dismissing it.

Doctrine

A dismissal of a petition for failure to comply with the certification against forum shopping, or for failure to append the required certified copies of the challenged orders, is without prejudice unless the court, upon motion and after hearing, orders otherwise. Refiling after such a dismissal, especially after a notice of withdrawal, is not forum shopping. Forum shopping exists where the elements of litis pendentia are present or where a final judgment in one case will amount to res judicata in another. Service of an order on a party's branch manager, without a specific order authorizing service on the party rather than its counsel of record, does not commence the period to appeal.

Disposition

The Supreme Court denied the petition for lack of merit, sustained the Court of Appeals, and left standing its order directing the trial judge to give due course to the bank's notice of appeal.

Remember This

Memorize this line: a dismissal for a defective certification against forum shopping is without prejudice, so refiling is not forum shopping. Examiners use this case to test the without-prejudice rule under Section 5, Rule 7, and the rule on service of orders on counsel of record.