Yap vs. Court of Appeals

A party commits forum shopping when, after receiving an adverse judgment in a collection suit, he files a separate action for the annulment of the same checks involved in the first suit, as the two actions involve identical parties, rights, and reliefs founded on the same facts.

Petitioner Jesse Yap and respondent Eliza Chua were involved in a series of financial transactions where Yap issued several postdated checks to Chua in exchange for funding his real estate purchases through broker Evelyn Te. When the checks were dishonored, Chua filed a collection suit in General Santos City. After being held liable, Yap filed a separate suit in Makati City seeking the annulment of the same checks.

Petitioner Jesse Yap purchased several real properties through respondent Evelyn Te, a real estate broker, and as payment, delivered to her a number of checks either payable to her, the property owners, or to the various individuals who agreed to finance his acquisitions. Respondent Eliza Chua, one of those who funded his purchases, asked him to issue checks with her as payee to replace the checks he delivered to Te. Yap obliged, drawing six checks payable to Chua against his account with the Bank of the Philippine Islands, uniformly postdated July 30, 1997. He stopped payment on these checks and closed his account when Te failed to deliver the titles to the properties. He also stopped payment on two other checks that Te endorsed to Chua for rediscounting without his consent, which were originally payable to a certain Badoria Bagatao for a parcel of land that Te represented Bagatao owned. Yap was later informed that Bagatao did not own the land, leading him to conclude that no consideration attended the contracts of sale entered into through Te.

Chua presented an altogether different version of the facts. According to Chua, she released funds to Yap through a certain Jovita Dimalanta in exchange for postdated checks payable to her. Yap twice requested for an extension and for Chua not to encash the checks, issuing additional checks to cover the interest due. Yap later replaced the initial checks with a single check for ₱20,000,000.00, postdated April 22, 1997. When this check became due, Yap requested another extension and replaced it with two checks to include the interest that would accrue until June 15, 1997. Thereafter, Yap issued another check to include payment of the interest that would accrue until July 30, 1997. Yap also delivered other checks to Chua to replace checks drawn against his account that were endorsed to her, as well as to cover interest from prior months. The checks were dishonored for the reason "account closed," while Yap stopped payment on the two checks payable to Bagatao.

Verbal demands for Yap to make good the checks proved futile, prompting Chua to file a complaint for a sum of money against Yap and his wife in the RTC of General Santos City, docketed as Civil Case No. 6236. The RTC ruled in favor of Chua, declaring the checks validly issued and Chua a holder in due course. Yap had raised lack of consideration as an affirmative defense in that case. Thereafter, Yap filed a separate complaint in the RTC of Makati City, docketed as Civil Case No. 04-030, principally praying for the cancellation or discharge of the same checks, alleging that no valid consideration attended their issuance. Chua moved to dismiss on the twin grounds of litis pendentia and forum shopping, but the RTC denied the motion, ruling that the reliefs prayed for in the two cases were different and that Yap, as plaintiff, was not mandated to declare a prior suit instituted against him.

• Forum Shopping: Petitioner argued that he is not guilty of forum shopping as the alleged existence of litis pendentia is belied by the incomparable causes of action he and Chua advanced in the separate complaints they initiated against each other.
• Litis Pendentia: Petitioner maintained that his prayer for the cancellation or discharge of the subject checks entails a determination of their validity and whether a valid consideration exists for their issuance, which is immaterial or irrelevant in determining whether he should be liable for the amounts that Chua released to Te and Dimalanta.

• Litis Pendentia and Forum Shopping: Respondent countered that Yap violated the rule against forum shopping when he failed to inform the RTC of Makati City of Civil Case No. 6236 and the pendency of his appeal of the decision rendered therein. She argued that the elements of litis pendentia exist, and forum shopping as the logical consequence thereof, considering that the two cases arose from the same set of facts and involve the same parties.

• Litis Pendentia: Whether the elements of litis pendentia are present in the two cases filed by Yap and Chua.
• Forum Shopping: Whether Yap is guilty of forum shopping for filing an action to annul checks after an adverse decision was rendered against him in a collection suit involving the same checks.

• Litis Pendentia: Yes. All the elements of litis pendentia exist: identity of parties, identity of rights asserted and relief prayed for founded on the same facts, and identity of the two cases such that judgment in one would amount to res judicata in the other.
• Forum Shopping: Yes. Yap committed forum shopping by filing a complaint for annulment of checks after being adjudged liable in the collection case, seeking to destroy the evidentiary foundation of the prior decision.

• Litis Pendentia: The requisites of litis pendentia are present. There is identity of parties. The same factual antecedents prompted the filing of both cases, and Yap's defense in the collection case constitutes his cause of action in the annulment case, implying reliance on the same evidence. Identity of causes of action does not mean absolute identity; the test is whether the same evidence will sustain both actions. Since the same facts or evidence would sustain both, the two actions are considered the same.
• Forum Shopping: The test for determining forum shopping is whether the elements of litis pendentia are present or whether a final judgment in one case will amount to res judicata in another. Yap filed the annulment case after being adjudged liable in the collection case. By seeking to cancel the checks, Yap attempted to use the RTC of Makati City to destroy the evidentiary foundation of the RTC of General Santos City's decision. This trifled with court processes and exposed the courts to the possibility of conflicting decisions, which the rule against forum shopping seeks to prevent.

• Litis Pendentia — Requires (a) identity of parties or interests, (b) identity of rights asserted and relief prayed for founded on the same facts, and (c) identity of the two cases such that judgment in one would amount to res judicata in the other. The Court applied this by finding that Yap's defense in the collection suit was his cause of action in the annulment suit, relying on the same evidence.
• Forum Shopping — The institution of two or more actions involving the same parties for the same cause of action, either simultaneously or successively, on the supposition that one court would make a favorable disposition. The test is whether the elements of litis pendentia are present. The Court found Yap liable because he sought to annul the same checks used against him in a prior collection suit.
• Identity of Causes of Action — Does not mean absolute identity. The test is whether the same evidence will sustain both actions, or whether there is identity in the facts essential to the maintenance of the two actions. The Court used this test to conclude that the same evidence would support both the collection and annulment suits.

• "Hornbook is the rule that identity of causes of action does not mean absolute identity; otherwise, a party could easily escape the operation of res judicata by changing the form of the action or the relief sought." — This passage defines the test for identity of causes of action, which is crucial for determining litis pendentia and forum shopping.
• "By seeking to cancel or discharge such checks, Yap attempted to use the RTC of Makati City to destroy the evidentiary foundation of the decision of the RTC of General Santos City. In doing so, Yap trifled with court processes and exposed the courts to the possibility of rendering conflicting decisions." — This passage explains the rationale for finding Yap guilty of forum shopping, emphasizing the vexation and potential for conflicting rulings.

• Spouses dela Cruz vs. Joaquin, 502 Phil. 803 (2005) — Cited for the definition of forum shopping and its detrimental effects on the administration of justice.
• Subic Telecommunications Company, Inc. vs. Subic Bay Metropolitan Authority, G.R. No. 185159 (2009) — Cited for the rule on identity of causes of action and the test using the same evidence.
• Madara vs. Perello, G.R. No. 172449 (2008) — Cited for the principle that the rule on forum shopping addresses the possibility and actuality of harmful effects on the judicial system, regardless of whether rulings ultimately concur.

• Rules of Court, Rule on Forum Shopping — The Court applied the rule against forum shopping, holding that willful and deliberate violation is a ground for summary dismissal and may constitute direct contempt.

Antonio T. Carpio (Senior Associate Justice, Chairperson, Second Division), Arturo D. Brion, Jose Portugal Perez, Maria Lourdes P. A. Sereno.