G.R. No. 219815 , September 14, 2016
J.O.S. Managing Builders, Inc. and Eduardo B. Olaguer, Petitioners, vs. United Overseas Bank Philippines, Emmanuel T. Mangosing and David Goh Chai Eng, Respondents.

FACTS

Petitioners filed an annulment case against respondents concerning an extrajudicial foreclosure sale. The trial court (RTC Br. 98) issued a writ of preliminary injunction in 2000, prohibiting respondents from consolidating title to the subject properties and from committing acts prejudicial to petitioners. While this annulment case was pending, respondents sold the properties in 2008. Consequently, petitioners initiated a separate contempt case, alleging the sale violated the 2000 writ. This contempt case was raffled to RTC Br. 220, which denied respondents’ motion to dismiss. Respondents filed an Answer Ad Cautelam.
Subsequently, the contempt case was re-raffled to RTC Br. 87. Meanwhile, the Court of Appeals reversed the trial court’s decision in the main annulment case. Relying on this reversal, respondents filed a second motion to dismiss the contempt case before RTC Br. 87, arguing it was moot since the writ of injunction, being ancillary, was automatically dissolved. RTC Br. 87 granted the motion and dismissed the contempt case. Petitioners filed a motion for reconsideration. Respondents moved to expunge this motion for violating the three-day notice rule, as petitioners served notice only one day before the hearing. RTC Br. 87 granted the motion to expunge.

ISSUE

The core issues were: (1) whether the RTC erred in expunging the motion for reconsideration; (2) whether it erred in entertaining a second motion to dismiss filed after an answer; and (3) whether it erred in dismissing the contempt case on grounds of mootness.

RULING

The Supreme Court partially granted the petition, reversing the RTC’s orders. On the first issue, the Court held the RTC erred in expunging the motion for reconsideration. While the three-day notice rule is mandatory, its violation does not automatically warrant expunction. The court retains discretion to relax the rule in the interest of justice, especially where no substantial prejudice is shown. Here, the RTC’s outright expunction was a grave abuse of discretion, as it deprived petitioners of their right to be heard on a substantive dismissal order.
On the second issue, the Court ruled the RTC erred in giving due course to the second motion to dismiss. Under Section 1, Rule 16 of the Rules of Court, a motion to dismiss must be filed within the time for, but before filing, the answer. Respondents had already filed their Answer Ad Cautelam. Therefore, they were barred from subsequently filing a motion to dismiss based on the grounds therein, as this procedural misstep was a waiver of those grounds.
On the third issue, the Court held the RTC erred in dismissing the contempt case for mootness. The CA’s reversal of the main annulment case did not automatically render the contempt proceedings moot. Contempt charges are intended to vindicate the court’s authority and are not purely ancillary or dependent on the outcome of the principal action. The alleged violation of the injunction occurred while it was in full force and effect. Therefore, the dismissal of the main case on appeal does not extinguish liability for acts committed during the injunction’s efficacy. The contempt case remained justiciable to determine whether respondents willfully disobeyed a subsisting court order.