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FIDEL O. CHUA v. METROPOLITAN BANK

FACTS:

The petitioner, Fidel Chua, obtained a loan from respondent Metrobank in 1988, which was secured by a real estate mortgage. The loan was amended several times over the years. In 2000, the petitioners entered into a Debt Settlement Agreement with respondent Metrobank, but failed to fully pay their obligations. Respondent Metrobank sought to foreclose the mortgage and the petitioners filed a complaint to stop the foreclosure. A TRO was issued, but the auction sale proceeded after its expiration and respondent Metrobank obtained a Certificate of Sale. The petitioners filed an amended complaint alleging that the Certificate of Sale was falsified and that the auction sale was done in violation of a court order. They sought damages for the abuse of power and bad faith of respondent Metrobank.

The petitioners also filed a separate case seeking the nullification of the foreclosure and a complaint for damages arising from the foreclosure. Both cases were filed against the same parties, involving the same central issue of whether there was an auction sale. The petitioners filed a Motion for Consolidation, but the RTC denied it. The Court of Appeals affirmed the denial, ruling that the two cases should proceed separately. The petitioners appealed to the Supreme Court, questioning the Court of Appeals' decision.

ISSUES:

  1. Whether or not the "first" and the "second" cases have the same ultimate objective, i.e., to have the auction sale be declared as null and void.

  2. Whether or not the outcome of the "first" case would affect the "second" case.

  3. Whether or not the successive filing of Civil Case No. CV-01-0207 and Civil Case No. CV-05-0402 amounts to forum shopping.

  4. Whether the filing of multiple cases by the petitioners based on the same cause of action amounts to forum shopping.

  5. Whether the claims for damages in Civil Case No. CV-01-0207 and Civil Case No. CV-05-0402 are based on the same cause of action.

  6. Whether or not the filing of separate cases for damages arising from the same wrongful act constitutes splitting a cause of action.

  7. Whether or not the filing of separate cases for damages arising from the same wrongful act constitutes forum shopping.

RULING:

  1. The Court answered the three issues raised in the affirmative. The Court found that the two cases have the same ultimate objective, which is to have the auction sale declared as null and void. The Court also determined that the outcome of the "first" case would affect the "second" case. Finally, the Court ruled that the successive filing of Civil Case No. CV-01-0207 and Civil Case No. CV-05-0402 amounts to forum shopping.

  2. Yes, the filing of multiple cases by the petitioners based on the same cause of action amounts to forum shopping. The court held that the petitioners committed forum shopping by filing multiple cases based on the same cause of action, although with different prayers.

  3. Yes, the claims for damages in Civil Case No. CV-01-0207 and Civil Case No. CV-05-0402 are based on the same cause of action. The court observed that the damages being claimed by the petitioners in both cases were occasioned by the same purportedly fictitious foreclosure sale.

  4. The Supreme Court ruled that the filing of separate cases for damages arising from the same wrongful act constitutes splitting a cause of action and is not allowed under the law. The rule against splitting a cause of action is intended to prevent repeated litigation between the same parties in regard to the same subject of controversy. It is meant to protect the defendant from unnecessary vexation and to avoid the costs and expenses incident to numerous suits. In this case, the petitioners filed two separate cases seeking damages arising from the same alleged fictitious auction sale. The Court held that even if the two cases contain separate remedies, these remedies cannot be pursued in two different cases when they arose from one wrongful act. Therefore, the filing of separate cases for damages arising from the same wrongful act is not allowed.

PRINCIPLES:

  • The proscription against forum shopping is found in Section 5, Rule 7 of the 1997 Rules of Court.

  • Forum shopping exists when a party repeatedly avails himself of several judicial remedies in different courts, simultaneously or successively, all substantially founded on the same transactions and the same essential facts and circumstances, and all raising substantially the same issues either pending in or already resolved adversely by some other court.

  • What is important in determining whether forum shopping exists or not is the vexation caused to the courts and party-litigant by a party who asks different courts to rule on the same or related causes and/or to grant the same or substantially the same reliefs.

  • Forum shopping can be committed in three ways: (1) filing multiple cases based on the same cause of action and with the same prayer, the previous case not having been resolved yet (where the ground for dismissal is litis pendentia); (2) filing multiple cases based on the same cause of action and the same prayer, the previous case having been finally resolved (where the ground for dismissal is res judicata); and (3) filing multiple cases based on the same cause of action, but with different prayers (splitting of causes of action, where the ground for dismissal is also either litis pendentia or res judicata).

  • Failure to comply with the requirements against forum shopping shall cause the dismissal of the case without prejudice, unless otherwise provided, upon motion and after hearing.

  • Forum shopping occurs when a party institutes multiple cases based on the same cause of action, although with different prayers.

  • The splitting of a single cause of action is proscribed under Sections 3 and 4, Rule 2 of the Rules of Court.

  • A cause of action refers to the delict or wrongful act or omission committed by the defendant in violation of the primary rights of the plaintiff.

  • Where there is only one delict or wrong, there is but a single cause of action regardless of the number of rights that may have been violated belonging to one person.

  • The rule against splitting a cause of action is intended to prevent repeated litigation between the same parties in regard to the same subject of controversy, to protect the defendant from unnecessary vexation, and to avoid the costs and expenses incident to numerous suits.

  • The filing of separate cases for damages arising from the same wrongful act constitutes splitting a cause of action and is not allowed.