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2.19 Metropolitan Bank Vs International Exchange Bank
2.19 Metropolitan Bank Vs International Exchange Bank
THIRD DIVISION Subsequently, SSC defaulted in the payment of its obligations. IEB's demand for payment went
unheeded. On July 7, 2004, the IEB filed with the RTC of Misamis Oriental an action for injunction for
G.R. No. 176008 August 10, 2011 the purpose of enjoining SSC from taking out the mortgaged equipment from its premises. The case
was docketed as Civil Case No. 2004-197. Thereafter, IEB filed a Supplemental Complaint praying for
METROPOLITAN BANK and TRUST COMPANY, substituted by MERIDIAN (SPV-AMCI) the issuance of a writ of replevin or, in the alternative, for the payment of SSC's outstanding obligations
CORPORATION,Petitioner, and attorney's fees.3
vs.
INTERNATIONAL EXCHANGE BANK, Respondent. On the other hand, on July 18, 2004, SSC filed with the same RTC of Misamis Oriental a Complaint for
annulment of mortgage and specific performance for the purpose of compelling the IEB to restructure
x - - - - - - - - - - - - - - - - - - - - - - -x SSC's outstanding obligations. SSC also prayed for the issuance of a Temporary Restraining Order (TRO)
and writ of preliminary injunction to prevent IEB from taking any steps to dispossess SSC of any
equipment in its steel manufacturing plant as well as to restrain it from foreclosing the mortgage on
G.R. No. 176131
the said equipment.4 The RTC issued a TRO. The case was docketed as Civil Case No. 2004-200 and was
subsequently consolidated with Civil Case No. 2004-197.
CHUAYUCO STEEL MANUFACTURING, Petitioner,
vs.
On July 23, 2004, the RTC issued an Order5 granting IEB's application for the issuance of a writ of
INTERNATIONAL EXCHANGE BANK (now UNION BANK OF THE PHILIPPINES), Respondent.
replevin. However, upon agreement of the parties, the implementation of the said writ was held in
abeyance pending the trial court's resolution of the other incidents in the said case. 6 The RTC also
DECISION
directed that there shall be "no commercial operation without court approval.7
PERALTA, J.:
On August 26, 2004, the IEB filed a petition for extrajudicial foreclosure of chattel mortgage.
Before the Court are two consolidated petitions for review on certiorari under Rule 45 of the Rules of
SSC opposed IEB's petition and prayed for the issuance of a writ of preliminary injunction.
Court, both of which are seeking the reversal and setting aside of the Decision 1 and Resolution2 of the
Court of Appeals (CA) dated May 5, 2006 and December 22, 2006, respectively, in CA-G.R. SP No. 00549-
On September 6, 2004, the RTC issued an Order disposing as follows:
MIN which annulled and set aside the Orders dated September 6, 2004 and February 14, 2005, the
Resolution dated March 15, 2005 and the Joint Resolution dated June 8, 2005 of the Regional Trial
Court (RTC) of Misamis Oriental, Branch 17 in Civil Case Nos. 2004-197 and 2004-200. WHEREFORE, let a Writ of preliminary injunction be issued restraining defendant iBank [IEB], the
Sheriff, his agents and other person/s acting in their behalf as agents – privies or representative[s] in
whatever capacity, from conducting foreclosure, whether judicial or extrajudicial, of any properties
The pertinent factual and procedural antecedents of the case are as follows:
subject of the controversy and are further directed not to take any steps that will, in effect, dispossess
plaintiff [SSC] of any of its machineries and equipment in its steel manufacturing plant pending
Sacramento Steel Corporation (SSC) is a business entity engaged in manufacturing and producing steel
determination of the case. Let a bond (cash or surety) of Five Hundred Thousand (P500,000.00) Pesos
and steel products, such as cold rolled coils and galvanized sheets, in its own steel manufacturing plant
be posted by the plaintiff Sacramento Steel Corporation as required by law.
located at Tagoloan, Misamis Oriental.
SO ORDERED.8
For the purpose of increasing its capital, SSC entered into a Credit Agreement with herein respondent
International Exchange Bank (IEB) on September 10, 2001 wherein the latter granted the former an
omnibus credit line in the amount of ₱60,000,000.00, a loan of ₱20,000,000.00 and a subsequent credit
line with a limit of ₱100,000,000.00.
Meanwhile, on August 30, 2004, SSC entered into a Capacity Lease Agreement with herein petitioner mortgaged properties covered by the writ of replevin to petitioner I-Bank for the eventual foreclosure
Chuayuco Steel Manufacturing Corporation (CSMC) which allowed the latter to lease and operate the thereof.
former's cold rolling mill and galvanizing plant for a period of five years.
SO ORDERED.16
On October 21, 2004, herein petitioner Metropolitan Bank and Trust Company (Metrobank) filed a
motion for intervention contending that it has legal interest in the properties subject of the litigation Metrobank, CSMC and SSC filed their respective motions for reconsideration, but these were all denied
between IEB and SSC because it is a creditor of SSC and that the mortgage contracts between IEB and by the CA in its Resolution dated December 22, 2006.
SSC were entered into to defraud the latter's creditors.9 Metrobank prayed for the rescission of the
chattel mortgages executed by SSC in favor of IEB. Hence, the instant petitions for review on certiorari.
On January 21, 2005, CSMC filed an Omnibus Motion for intervention and for allowance to immediately In G.R. No. 176008, petitioner Metrobank submits the following issues:
operate the cold rolling mill and galvanizing plant of SSC contending that its purpose in intervening is
to seek the approval of the court to operate the said plant pursuant to the Capacity Lease Agreement
(A) WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED WHEN IT RULED THAT
it entered into with SSC.10 IEB filed its Opposition to the said Motion.11
PETITIONER'S COMPLAINT-IN-INTERVENTION IS AN ACCION PAULIANA, A SUBSIDIARY
ACTION, WHICH PRESUPPOSES AN UNSATISFIED JUDGMENT, WHICH UNSATISFIED
On February 14, 2005, the RTC issued an Order12 admitting the motions for intervention filed by CSMC JUDGMENT IS ABSENT IN THE CASE AT BAR.
and Metrobank.
(B) WHETHER OR NOT THE HONORABLE COURT OF APPEALS ERRED WHEN IT RULED THAT THE
On March 15, 2005, the RTC issued a Resolution, the dispositive portion of which reads, thus: TRIAL COURT COMMITTED GRAVE ABUSE OF DISCRETION IN ALLOWING PETITIONER'S
COMPLAINT-IN-INTERVENTION.17
WHEREFORE, premises considered, the motion to operate the machineries pendente lite is hereby
GRANTED based on law and equity as soon as practicable. This is without prejudice on the part of the In G.R. No. 176131, petitioner CSMC raises the following grounds:
I-bank [IEB] to assert the enforcement of the proposed schedule of payment submitted by SSC to the
Court (Exh. "A" – Motion for Early Resolution, 2/16/2005 hearing) and to continually post their security
I. THE HONORABLE COURT ERRED IN NOT PASSING UPON THE ISSUE THAT HEREIN
guards unless withdrawn.
RESPONDENT IBANK IS GUILTY OF FORUM-SHOPPING.
SO ORDERED.13
II. THE HONORABLE COURT ERRED IN NOT RULING THAT HEREIN RESPONDENT IBANK'S
FAILURE TO FILE A MOTION FOR RECONSIDERATION TO THE ORDER DATED 08 JUNE 2005 IS
On June 8, 2005, the RTC issued a Joint Resolution 14 reiterating its admission of CSMC's motion for FATAL TO ITS PETITION.
intervention and directing the latter to file its complaint-in-intervention.
III. THE HONORABLE COURT ERRED IN RULING THAT THE ORDER OF JUDGE SEALANA-ABBU
On August 25, 2005, IEB filed a petition for certiorari, prohibition and mandamus with the CA assailing ADMITTING THE INTERVENTION OF HEREIN PETITIONER CSMC IS WITHOUT LEGAL BASIS. 18
the RTC Orders dated September 6, 2004 and February 14, 2005, Resolution dated March 15, 2005 and
Joint Resolution dated June 8, 2005.15
In a Manifestation and Motion dated September 26, 2007, petitioner Metrobank manifested that it no
longer has any interest in pursuing the instant case as the loan obligation owed by SSC to it has been
On May 5, 2006, the CA rendered its presently assailed Decision which disposed of the case as follows: sold by the latter to a corporation known as Meridian (SPV-AMC) Corporation (Meridian). Accordingly,
Metrobank prayed that it be substituted by Meridian as petitioner in the instant case. 19
WHEREFORE, the petition is hereby GRANTED. The questioned Orders dated September 6, 2004,
February 14, 2005, March 15, 2005 and June 8, 2005 issued by public respondent RTC, Branch 17, In a Resolution20 dated November 12, 2007, this Court granted Metrobank's Motion.
Misamis Oriental, presided by Hon. Florencia D. Sealana-Abbu in Civil Case Nos. 2004-197 and 2004-
200 are hereby ANNULLED and SET ASIDE. Public respondent is hereby DIRECTED to turn-over the
At the outset, the Court takes note that no arguments or questions were raised by petitioners with
respect to the September 6, 2004 Order and March 15, 2005 Resolution of the RTC which were annulled
by the CA. Hence, the only issues left for resolution in the instant petition are whether or not petitioners rescind, or an accion pauliana, must be of last resort, availed of only after the creditor has exhausted
Metrobank and CSMC may be allowed to intervene in Civil Case Nos. 2004-197 and 2004-200. all the properties of the debtor not exempt from execution or after all other legal remedies have been
exhausted and have been proven futile.24
The Court will dwell first on the issues raised by Metrobank in G.R. No. 176008.
It does not appear that Metrobank sought other properties of SSC other than the subject lots alleged
In its first assigned error, Metrobank contends that the CA erred in ruling that its Complaint-in- to have been transferred in fraud of creditors. Neither is there any showing that Metrobank subrogated
Intervention is in the nature of an accion pauliana. itself in SSC's transmissible rights and actions. Without availing of the first and second remedies,
Metrobank simply undertook the third measure and filed an action for annulment of the chattel
The Court does not agree. mortgages. This cannot be done. Article 1383 of the New Civil Code is very explicit that the right or
remedy of the creditor to impugn the acts which the debtor may have done to defraud them is
subsidiary in nature.25 It can only be availed of in the absence of any other legal remedy to obtain
A perusal of Metrobank's Complaint-in-Intervention would show that its main objective is to have the
reparation for the injury.26 This fact is not present in this case. No evidence was presented nor even an
chattel mortgages executed by SSC in favor of IEB rescinded. This is clearly evident in its prayer, which
allegation was offered to show that Metrobank had availed of the abovementioned remedies before it
reads as follows:
tried to question the validity of the contracts of chattel mortgage between IEB and SSC.
WHEREFORE, premises considered, it is respectfully prayed unto the Honorable Court that judgment
Metrobank also contends that in order to apply the concept of, and the rules pertaining to, accion
be rendered:
pauliana, the subject matter must be a conveyance, otherwise valid, which is undertaken in fraud of
creditors. Metrobank claims that since there is no conveyance involved in the contract of chattel
(1) RESCINDING the chattel mortgages executed by Defendants Sacramento and Delmo in
mortgage between SSC and IEB, which Metrobank seeks to rescind, the CA erred in ruling that the
favor of Defendant Ibank dated May 25, 2004 and June 7, 2004, respectively;
latter's Complaint-in-Intervention is an accion pauliana.
(2) Ordering defendants Sacramento, Delmo and Ibank to pay, jointly and severally, Plaintiff-
The Court is not persuaded.
Intervenor the amounts of:
In the instant case, the contract of chattel mortgage entered into by and between SSC and IEB involves
(A) ₱500,000.00, as and by way of exemplary damages;
a conveyance of patrimonial benefit in favor of the latter as the properties subject of the chattel
mortgage stand as security for the credit it extended to SSC. In a very recent case involving an action
(B) ₱500,000.00, as and by way of attorney's fees; and for the rescission of a real estate mortgage, 27 while this Court found that some of the elements
of accion pauliana were not present, it found that a mortgage contract involves the conveyance of a
(C) Costs of suit. patrimonial benefit.
Other reliefs as may be just and equitable under the premises are likewise prayed for. In sum, Metrobank may not be allowed to intervene and pray for the rescission of the chattel
mortgages executed by SSC in favor of IEB. The remedy being sought by Metrobank is in the nature of
x x x x21 an accion pauliana which, under the factual circumstances obtaining in the present case, may not be
allowed. Based on the foregoing, the Court finds no error in the ruling of the CA that the RTC committed
Under Article 1381 of the Civil Code, an accion pauliana is an action to rescind contracts in fraud of grave abuse of discretion in allowing Metrobank's intervention.
creditors.22
The Court will now proceed to resolve the issues raised by petitioner CSMC in G.R. No. 176131.
However, jurisprudence is clear that the following successive measures must be taken by a creditor
before he may bring an action for rescission of an allegedly fraudulent contract: (1) exhaust the Firstly, CSMC contends that IEB was forum shopping when it filed a petition for certiorari with the CA
properties of the debtor through levying by attachment and execution upon all the property of the seeking, among others, the enjoinment of the commercial operation of the subject machineries and
debtor, except such as are exempt by law from execution; (2) exercise all the rights and actions of the equipment when its Opposition28 to the implementation of the Capacity Lease Agreement between
debtor, save those personal to him (accion subrogatoria); and (3) seek rescission of the contracts SSC and CSMC is still pending determination by the RTC.
executed by the debtor in fraud of their rights (accion pauliana).23 It is thus apparent that an action to
The Court does not agree. The purpose of intervention is to enable a stranger to an action to become a party in order for him to
protect his interest and for the court to settle all conflicting claims. 34 Intervention is allowed to avoid
Forum shopping has been defined as an act of a party, against whom an adverse judgment has been multiplicity of suits more than on due process considerations.35 To warrant intervention under Rule 19
rendered in one forum, of seeking and possibly getting a favorable opinion in another forum, other of the Rules of Court, two requisites must concur: (1) the movant has a legal interest on the matter in
than by appeal or a special civil action for certiorari, or the institution of two or more actions or litigation; and (2) intervention must not unduly delay or prejudice the adjudication of the rights of the
proceedings grounded on the same cause on the supposition that one or the other court would make parties, nor should the claim of the intervenor be capable of being properly decided in a separate
a favorable disposition.29 proceeding.36
Forum shopping exists when two or more actions involve the same transactions, essential facts and In the present case, CSMC, being a lessee of the subject properties, has a legal interest
circumstances, and raise identical causes of action, subject matter, and issues. 30 Still another test of therein.1awphil The RTC correctly held, thus:
forum shopping is when the elements of litis pendencia are present or where a final judgment in one
case will amount to res judicata in another – whether in the two or more pending cases, there is an Under the Rules of Court, intervention is permissive and maybe permitted by the Court when the
identity of (a) parties (or at least such parties as represent the same interests in both actions); (b) rights applicant shows facts which satisfy the requirements of the law authorizing intervention. (Firestone
or causes of action, and (c) reliefs sought.31 Ceramics Inc. vs. CA 313 SCRA 522) Records of the case showed that on August 30, 2004, an agreement
was finalized and entered into by applicant Chuayuco and defendant/plaintiff Sacramento Steel
In the instant case on the one hand, IEB's Opposition questions the legality and seeks to prevent the Corporation whereby the former shall lease and make use of the machineries of Sacramento Steel
implementation of the Capacity Lease Agreement between CSMC and SSC which, in essence, authorizes under the Capacity Lease Agreement (CLA). One of the terms and condition[s] under [the] CLA was for
CSMC to operate the subject machineries pendente lite. On the other hand, the petition the monthly lease payments to take effect upon signing of the contract. A person seeking to intervene
for certiorari filed by IEB assails and seeks to nullify, among others, the March 15, 2005 and June 8, in a suit must show that he has legal interest which must be actual and material, direct and immediate.
2005 Orders of the RTC allowing SSC to operate the subject machineries pendente lite. It is, thus, clear He must show that he will either gain or lose by direct legal operation and effect of a judgment. (Hrs.
that there is no identity of subject matter, cause of action and reliefs sought in IEB's Opposition filed of Nicolas Orosa vs. Migrino 218 SCRA 311) The Court finds that Chuayuco had a constituted and
with the RTC and in its petition for certiorari filed with the CA. Hence, IEB is not guilty of forum sufficient legal interest in the machineries subject of the litigation which is actual and material. Any
shopping. disposition of the case will adversely affect the standing of the intervenor. 37
Secondly, CSMC argues that IEB's failure to file a motion for reconsideration of the RTC Order dated Moreover, considering that CSMC's interest is limited only to the operation of the subject machineries
June 8, 2005 is fatal to its petition for certiorari filed with the CA. pursuant to its lease contract with SSC, its intervention would not unduly delay or prejudice the
adjudication of the rights of SSC and IEB. CSMC's intervention should be treated as one pro interesse
The Court is not persuaded. suo which is a mode of intervention in equity wherein a stranger desires to intervene for the purpose
of asserting a property right in the res, or thing, which is the subject matter of the litigation, without
becoming a formal plaintiff or defendant, and without acquiring control over the course of a litigation,
While the general rule is that before certiorari may be availed of, petitioner must have filed a motion
which is conceded to the main actors therein.38
for reconsideration of the act or order complained of, the Court has dispensed with this requirement
in several instances.32 Thus, a previous motion for reconsideration before the filing of a petition
for certiorari is necessary unless: (i) the issue raised is one purely of law; (ii) public interest is involved; Lastly, the Court does not agree with the CA when it ruled that the applicable provision is Rule 3, Section
(iii) there is urgency; (iv) a question of jurisdiction is squarely raised before and decided by the lower 19 (erroneously cited as Section 20) of the Rules of Court on transfer of interest and substitution of
court; and (v) the order is a patent nullity.33 In the instant case, the Court agrees with the CA that there parties. Being a mere lessee of the subject properties, CSMC is a stranger insofar as the dispute
is no need for such motion because the issue regarding the applicability of the rule on intervention between SSC and IEB is concerned. The action filed by IEB against SSC is an action for the payment or
raised by IEB in its petition for certiorari filed with the CA, insofar as the June 8, 2005 Order of the RTC satisfaction of the loans incurred by the latter, which includes a possible foreclosure of the subject
is concerned, is one purely of law. properties given as security for the said loans. CSMC may not be considered a successor, and may not
be substituted in place of SSC, insofar as these loans are concerned. If any, what has been transferred
to CSMC is only the right of SSC to operate the subject equipment and machineries which it owns. As
The foregoing notwithstanding, the Court finds that the CA erred in ruling that the allowance of CSMC's
such, SSC may not be removed as defendant because its interest in the subject properties remains,
motion for intervention is improper. CSMC's intervention should be allowed.
being the owner thereof.
WHEREFORE, the assailed Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 00549-
MIN are AFFIRMED with MODIFICATION. The February 14, 2005 Order of the Regional Trial Court of
Misamis Oriental, Branch 17, is MODIFIED by denying Metrobank's Motion for Intervention, while the
Joint Resolution of the same trial court, dated June 8, 2005, reiterating its admission of CSMC's Motion
for Intervention and directing the latter to file its complaint-in-intervention, is REINSTATED.
SO ORDERED.
DIOSDADO M. PERALTA
Associate Justice
WE CONCUR:
ANTONIO T. CARPIO*
Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Court’s Division.
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson’s Attestation, I
certify that the conclusions in the above Decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Court’s Division.
RENATO C. CORONA