G. R. No. 164338 - January 17, 2005
GUARANTEED HOTELS, INC., represented by URMA BALTAO CHIONGBIAN, Petitioner, vs. JOSEFINA S. BALTAO, ROCIO P. BALTAO, GARY BALTAO and GINO BALTAO, respondents.
D E C I S I O N
Before us is a petition for review on certiorari under Rule 45 of the Rules of Court seeking a reversal of the Court of Appeals April 6, 2004 Decision 1 and its June 30, 2004 Resolution 2 in CA-G.R. SP No. 74154, which reversed and set aside the Regional Trial Court of Manila, Branch 46, September 23, 2002 Order 3 and its February 17, 2004 Partial Decision 4 in Civil Case No. 02-102705.
On November 4, 1996, Sta. Lucia Realty and Development, Inc. ("Sta. Lucia") and Guaranteed Homes, Inc. entered into a Joint Venture Agreement (JVA) 5 for the purpose of developing a resort complex in Cabituagan, Zambales. The JVA included a parcel of land covered by TCT No. 11391 6 which was allegedly registered in the name of Guaranteed Hotels, Inc.
On August 28, 2001, the Testate Estate of Eugenio S. Baltao represented by Mariano Alejandro L. Baltao, Eugenio L. Baltao III and Urma Chiongbian, and Guaranteed Hotels, Inc., represented by Urma Chiongbian, in her capacity as a stockholder, filed before the Regional Trial Court of Olongapo City a derivative suit 7 ("OLONGAPO CASE") against Sta. Lucia and Guaranteed Homes, Inc. for Injunction, Annulment of Document and Damages with Application for a Temporary Restraining Order and a Writ of Preliminary Prohibitory and Mandatory Injunction.
The OLONGAPO CASE sought the annulment of the JVA insofar as the inclusion of TCT No. 11391 is concerned because it was allegedly made without the consent or knowledge of Guaranteed Hotels, Inc.
On June 21, 2002, during the pendency of the OLONGAPO CASE, Guaranteed Hotels, Inc., represented by Urma Chiongbian filed a second derivative suit before the Regional Trial Court of Manila ("MANILA CASE") against Rocio, Josefina, Gary, Jaime and Gino, all surnamed Baltao as alleged stockholders and directors of Guaranteed Hotels, Inc., and Alicia Pantig and Jane and John Does. 8 The MANILA CASE, docketed as Civil Case No. 02-102705 and raffled to Branch 46 9 of the Regional Trial Court of Manila, sought to annul and set aside all resolutions, corporate acts, and transactions of the defendants, herein respondents, from 1990 up to the present, including but not limited to those where the respondents allegedly authorized Guaranteed Hotels, Inc. to enter into joint venture agreements with Sta. Lucia and other corporations for the development of the properties of Guaranteed Hotels, Inc. 10
The respondents filed their answer 11 in the MANILA CASE on August 16, 2002, raising petitioners violation of the rules on forum shopping as one of their defenses. On September 3, 2002, they filed a Motion to Conduct Preliminary Hearing on the special and affirmative defenses which they raised in their answer but the same was denied by the trial court in its Order 12 dated September 23, 2002.
On December 2, 2002, respondents filed with the Court of Appeals a Petition for Certiorari 13 claiming that the trial court gravely abused its discretion in denying their motion to conduct a preliminary hearing. This petition was docketed as CA-G.R. SP No. 74154.
On February 13, 2003, the Seventh Division of the Court of Appeals, upon motion of respondents, temporarily restrained the Regional Trial Court of Manila, Branch 46 from taking further proceedings on the MANILA CASE until pending issues on the petitioners, the respondents herein, special and affirmative defenses are resolved. 14
Finding petitioner guilty of violating the rules on forum shopping, the Court of Appeals, in its decision dated April 6, 2004, reversed and set aside the September 23, 2002 Order and February 17, 2004 Partial Decision of the Regional Trial Court of Manila, Branch 46 and dismissed Civil Case No. 02-102705.
The dispositive portion of the Court of Appeals decision stated:
WHEREFORE, premises considered, the petition is GRANTED and the assailed September 23, 2002 Order and February 17, 2004 Partial Decision are hereby REVERSED, SET ASIDE. FINDING willful and deliberate forum shopping by private respondent, Civil Case No. 02102705, the second derivative suit, in the Regional Trial Court of Manila Branch 46, is hereby DISMISSED pursuant to Section 5, Rule 7 of the 1997 Rules of Civil Procedure. DISMISSAL of Civil Case No. 406-0-2001, the first derivative suit, in the Regional Trial Court of Olongapo City Branch 74, has become MOOT and ACADEMIC, the same having been DISMISSED at the instance of herein private respondents counsel who filed a Notice of Dismissal for its dismissal.
Costs against private respondent.
SO ORDERED. 15
Petitioner moved for reconsideration but the same was denied.
In the instant petition, petitioner maintains that it did not engage in forum shopping since there is no identity of parties or causes of action between the OLONGAPO CASE and MANILA CASE.
We are not persuaded.
Forum shopping consists of filing multiple suits involving the same parties for the same cause of action, either simultaneously or successively, for the purpose of obtaining a favorable judgment. 16
There is forum shopping where there exist: (a) identity of parties, or at least such parties as represent the same interests in both actions; (b) identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (c) the identity of the two preceding particulars is such that any judgment rendered in the pending case, regardless of which party is successful would amount to res judicata in the other. 17
The case of Buan v. Lopez 18 laid down the test for determining whether there has been a violation of the rule against forum shopping. Thus, 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 the other. Litis pendentia as a ground for the dismissal of a civil action refers to that situation wherein another action is pending between the same parties for the same cause of action, such that the second action becomes unnecessary and vexatious. For litis pendentia to be invoked, the concurrence of the following requisites is necessary:
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