GR 164338; (January, 2005) (Digest)
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.
FACTS
Guaranteed Hotels, Inc. (GHI), represented by stockholder Urma Chiongbian, initially filed a derivative suit in Olongapo City (the Olongapo Case) against Sta. Lucia Realty and Guaranteed Homes, Inc. The suit sought to annul a Joint Venture Agreement (JVA) for including GHI’s property (TCT No. 11391) without the corporation’s consent. While this first case was pending, GHI, again through Chiongbian, filed a second derivative suit in Manila (the Manila Case) against several Baltao family members, who were alleged stockholders and directors of GHI. The Manila Case sought to annul all corporate acts and resolutions from 1990 onward, specifically including those authorizing GHI to enter into joint ventures like the JVA with Sta. Lucia.
The respondents in the Manila Case moved for a preliminary hearing on their affirmative defenses, including forum shopping. The trial court denied this motion. The respondents then elevated the matter to the Court of Appeals via a petition for certiorari.
ISSUE
Whether the petitioner engaged in forum shopping by filing the two derivative suits.
RULING
Yes, the petitioner committed willful and deliberate forum shopping. The Supreme Court affirmed the Court of Appeals’ dismissal of the Manila Case. Forum shopping exists when a party files multiple cases involving the same parties and causes of action to obtain a favorable judgment. The test is whether the elements of litis pendentia are present, meaning a judgment in one case would constitute res judicata in the other.
The Court found the requisite identity present. First, there was identity of interests. Both suits were derivative actions filed in the name of GHI, represented by the same stockholder, Urma Chiongbian, to vindicate the same corporate rights. Second, the rights asserted and the reliefs prayed for were founded on the same facts. The core objective of both suits was to nullify the JVA and related corporate acts concerning GHI’s property. The Manila Case, while broader in seeking to annul all acts from 1990, explicitly included the authorization for the Sta. Lucia JVA, which was the very subject of the Olongapo Case.
Consequently, any judgment in the first-filed Olongapo Case on the validity of the JVA would be conclusive in the Manila Case. Allowing both suits to proceed risked conflicting decisions from two different courts on the same fundamental issue, which is the precise evil the rule against forum shopping seeks to prevent. The practice burdens the judiciary and mocks judicial processes. Therefore, the dismissal of the second suit was proper.