This case clarifies that when a principal legal action is dismissed, any temporary or provisional remedies associated with that action are automatically dissolved. This means that any benefits or protections granted under these temporary measures, such as preliminary injunctions, cease to be in effect once the main case is dismissed. The Supreme Court emphasizes that these provisional remedies are merely incidents of the main action and cannot exist independently of it, ensuring that the dismissal of a case effectively nullifies all related temporary reliefs.

When a Venue Clause Clashes with Forum Shopping: The Fate of Provisional Remedies

United Alloy Philippines Corporation (UniAlloy) entered into a Lease Purchase Agreement (LPA) with United Coconut Planters Bank (UCPB). The LPA contained a venue clause stipulating that any legal actions arising from the agreement must be filed exclusively in Makati City. UniAlloy subsequently filed a complaint against UCPB in Cagayan de Oro City, seeking annulment and/or reformation of certain promissory notes and the rescission of the LPA. The complaint also requested a temporary restraining order (TRO) to prevent UCPB from taking possession of the leased premises.

The trial court dismissed UniAlloy’s complaint based on improper venue, forum-shopping, and the court considered the action a harassment suit. UCPB had already filed a motion to dismiss, citing the venue clause in the LPA. The court found that UniAlloy had improperly laid venue by filing in Cagayan de Oro City, despite the agreement mandating Makati City as the exclusive venue for disputes. This led to a petition for certiorari and mandamus filed by UniAlloy, questioning the dismissal and the order to surrender possession of the property to UCPB.

At the heart of the matter was whether the dismissal of the main action—UniAlloy’s complaint—had any effect on the provisional remedies, specifically the preliminary injunction, that had been previously granted. The case hinged on the principle that provisional remedies are ancillary to the main action and whether the appellate court erred in upholding the trial court’s decision. The Supreme Court was tasked to determine whether the appellate court’s decision aligned with established legal principles regarding venue, forum-shopping, and the nature of provisional remedies.

The Supreme Court affirmed the Court of Appeals’ decision, emphasizing that the dismissal of the main action carries with it the denial or revocation of all ancillary reliefs. According to the Court, UniAlloy availed the correct remedy. The court clarified that under Section 1 Rule 16 of the Rules of Court, the dismissal of an action based on improper venue, forum-shopping, or being a harassment suit is without prejudice. Because it was without prejudice, it does not prevent the refiling of the same action. And, under Section l(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.

The Supreme Court underscored the binding nature of venue stipulations in contracts. Parties may agree in writing to limit the venue of future actions between them to a specified place. In this case, paragraph 18 of the LPA expressly provided that “[a]ny legal action arising out of or in connection with this Agreement shall be brought exclusively in the proper courts of Makati City, Metro Manila.” This stipulation was clear, and UniAlloy was bound by it.

The Court also addressed the issue of forum-shopping, finding that UniAlloy failed to disclose the pendency of another case involving similar issues. This failure to disclose constituted a violation of the rules against forum-shopping, further justifying the dismissal of the complaint. The court noted the identity of causes of action and issues in both cases, reinforcing its conclusion that UniAlloy engaged in improper conduct.

Addressing the preliminary injunction, the Supreme Court reiterated that such remedies are provisional and ancillary to the main action. Provisional 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 measures 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 Supreme Court quoted Bacolod City Water District v. Hon. Labayen,^[45] this Court elucidated that the auxiliary remedy of preliminary injunction persists only until it is dissolved or until the tepnination of the main action without the court issuing a final injunction, viz.:

x x x Injunction is a judicial writ, process or proceeding whereby a party is ordered to do or refrain from doing a certain act, It may be the main action or merely a provisional remedy for and as an incident in the main action.

The main action for injunction is distinct from 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.

Once the main action is dismissed, the preliminary injunction is automatically dissolved. The Court dismissed UniAlloy’s argument that the Court of Appeals (CA CDO) contradicted the earlier Resolution of the CA Manila. Rather, it continued to hear the petition until its termination after the CA Manila referred the same to it by virtue of a law. Therefore, CA CDO did not intrude into an order issued by another co-equal court in a different case. It simply continued to hear the petition until its termination.

FAQs

What was the key issue in this case?	The key issue was whether the dismissal of the main action (UniAlloy’s complaint) automatically dissolves the ancillary relief of a preliminary injunction that had been previously granted. The court determined that provisional remedies are dependent on the main action.
Why was UniAlloy’s complaint dismissed?	UniAlloy’s complaint was dismissed due to improper venue and forum-shopping. The Lease Purchase Agreement (LPA) stipulated that any legal actions must be filed in Makati City, but UniAlloy filed in Cagayan de Oro City.
What is a venue stipulation in a contract?	A venue stipulation is a contractual clause where parties agree to a specific location for resolving future legal disputes. Such stipulations are generally upheld by courts, provided they are clear and unambiguous.
What constitutes forum-shopping?	Forum-shopping occurs when a litigant files multiple cases based on the same cause of action, seeking a favorable outcome in different courts. It is considered an abuse of judicial process.
What is the effect of dismissing the main action on provisional remedies?	The dismissal of the main action dissolves any provisional remedies, such as preliminary injunctions, that were granted as ancillary to the main action. Provisional remedies are temporary measures that cease to exist once the main case is terminated.
What is the significance of the Bacolod City Water District v. Hon. Labayen case?	Bacolod City Water District v. Hon. Labayen clarifies that a preliminary injunction persists only until it is dissolved or until the termination of the main action without the court issuing a final injunction.
Did the CA CDO contradict the CA Manila in this case?	No, the CA CDO did not contradict the CA Manila. The CA CDO continued to hear the petition until its termination after the CA Manila referred the same to it by virtue of a law.
What was the main point of contention regarding the venue?	The main point of contention regarding the venue was that UniAlloy filed its complaint in Cagayan de Oro City, despite the Lease Purchase Agreement (LPA) stipulating that any legal actions must be filed exclusively in Makati City. The court upheld the validity of the venue stipulation.

This case serves as a reminder of the importance of adhering to contractual stipulations, particularly venue clauses, and the procedural rules against forum-shopping. It reinforces the principle that provisional remedies are intrinsically linked to the main action and cannot survive its dismissal. Understanding these principles is crucial for parties involved in contractual disputes and litigation.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: United Alloy Philippines Corporation v. United Coconut Planters Bank, G.R. No. 179257, November 23, 2015