Chua vs.

Metro Bank

Facts:

 Petitioner Chua is president of co-petitioner Filiden, a domestic corporation, engaged

in the realty business. Respondent Metropolitan Bank and Trust Co. (respondent
Metrobank) is a domestic corporation and a duly licensed banking institution.
 Sometime in 1988, petitioners obtained from respondent Metrobank a loan of
₱4,000,000.00, which was secured by a real estate mortgage (REM) on parcels of
land covered by Transfer Certificates of Title, registered in petitioner Chua’s name
(subject properties).
 Since the value of the collateral was more than the loan, petitioners were given an
open credit line for future loans. As a result, Petitioners obtained other loans from
respondent Metrobank, and the real estate mortgages were repeatedly amended in
accordance with the increase in petitioners’ liabilities.
 Having failed to fully pay their obligations, petitioners entered into a Debt Settlement
Agreement with respondent Metrobank, whereby the loan obligations of the former
were restructured. The debt consisted of a total principal amount of ₱79,650,000.00,
plus unpaid interest of ₱7,898,309.02, and penalty charges of ₱552,784.96.
Amortization payments were to be made in accordance with the schedule attached to
the agreement.
 The lawyers of respondent Metrobank demanded that petitioners fully pay and settle
their liabilities.
 Consequently, petitioners still failed to pay their loans, respondent Metrobank sought
to extra-judicially foreclose the REM constituted on the subject properties. Upon a
verified Petition for Foreclosure filed by respondent Metrobank.
 Thereafter, respondent Atty. Romualdo Celestra (Atty. Celestra) issued a Notice of
Sale, wherein the mortgage debt was set at ₱88,101,093.98, excluding unpaid
interest and penalties (to be computed from 14 September 1999), attorney’s fees,
legal fees, and other expenses for the foreclosure and sale. The auction sale was
scheduled on 31 May 2001.
 Petitioner Chua, in his personal capacity and acting on behalf of petitioner Filiden,
filed before Branch 257 of the Regional Trial Court of Parañaque (RTC-Branch 257),
a Complaint for Injunction with Prayer for Issuance of Temporary Restraining
Order (TRO), Preliminary Injunction and Damages, against respondents Atty.
Celestra, docketed as Civil Case No. CV-01-0207. Upon the motion of petitioners,
RTC-Branch 257 issued a TRO enjoining respondents Metrobank and Atty. Celestra
from conducting the auction sale of the mortgaged properties .
 After the expiration of the TRO on 18 June 2001, and no injunction having been
issued by RTC-Branch 257, respondent Atty. Celestra reset the auction sale on 8
November 2001. On 8 November 2001, the rescheduled date of the auction sale,
RTC-Branch 257 issued an Order directing that the said sale be reset anew after 8
November 2001. The Order was served on 8 November 2001, on respondent Atty.
Celestra’s daughter, Arlene Celestra, at a coffee shop owned by other daughter of
Celestra.The auction sale, however, proceeded on 8 November 2001, and a
Certificate of Sale was accordingly issued to respondent Metrobank as the highest
bidder of the foreclosed properties.
  Petitioners filed with RTC-Branch 257 a Motion to Admit Amended Complaint15 in
Civil Case No. CV-01-0207. The Amended Verified Complaint, attached to the said
Motion, impleaded as additional defendant the incumbent Register of Deeds of
Parañaque City. Petitioners alleged that the Certificate of Sale was a falsified
document since there was no actual sale that took place on 8 November 2001. And,
even if an auction sale was conducted, the Certificate of Sale would still be void
because the auction sale was done in disobedience to a lawful order of RTC-Branch
257.

 Petitioners additionally prayed in their Amended Complaint for the award of damages
given the abuse of power of respondent Metrobank in the preparation, execution, and
implementation of the Debt Settlement Agreement with petitioners; the bad faith of
respondent Metrobank in offering the subject properties at a price much lower than
its assessed fair market value; and the gross violation by respondents Metrobank
and Atty. Celestra of the injunction.

 Petitioners also sought, in their Amended Complaint, the issuance of a TRO or a writ
of preliminary injunction to enjoin respondent Atty. Celestra and all other persons
from proceeding with the foreclosure sale, on the premise that no auction sale was
actually held on 8 November 2001.

 RTC-Branch 257 denied petitioners’ application for injunction on the ground that the
sale of the foreclosed properties rendered the same moot and academic. The auction
sale, which was conducted by respondents Metrobank and Atty. Celestra, after the
expiration of the TRO, and without knowledge of the Order dated 8 November 2001
of RTC-Branch 257, was considered as proper and valid.
 Petitioners filed with Branch 195 of the Regional Trial Court of Parañaque (RTC-
Branch 195) a Verified Complaint for Damages against respondents Metrobank, Atty.
Celestra, and three Metrobank lawyers, namely, Atty. Antonio Viray, Atty. Ramon
Miranda and Atty. Pompeyo Maynigo. The Complaint was docketed as Civil Case
No. CV-05-0402. Petitioners sought in their Complaint the award of actual, moral,
and exemplary damages against the respondents for making it appear that an
auction sale of the subject properties took place, as a result of which, the prospective
buyers of the said properties lost their interest and petitioner Chua was prevented
from realizing a profit of ₱70,000,000.00 from the intended sale.
 The two complaints were consolidated but respondents filed two motions before
RTC-Branch 258: (1) Motion for Reconsideration of the Order dated 23 January 2006
of RTC-Branch 195, which granted the Motion to Consolidate of petitioners; and (2)
Manifestation and Motion raising the ground of forum shopping, among the
affirmative defenses of respondents. RTC-Branch 258 issued an Order on 3 July
2006, granting the first Motion of respondents, thus, dismissing Civil Case No. CV-
05-0402 on the ground of forum shopping. Moreover, RTC-Branch 258 declared that
the facts or claims submitted by petitioners, the rights asserted, and the principal
parties in the two cases were the same.
 CA affirmed the decision of RTC Branch 258.

Issue: whether or not successively filing Civil Case No. CV-01-0207 and Civil Case No. CV-
05-0402 amounts to forum shopping.
Ruling: The Court answers in the affirmative.

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.

Ultimately, what is truly important in determining whether forum shopping exists or not is the
vexation caused 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, in the
process creating the possibility of conflicting decisions being rendered by the different fora
upon the same issue.

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).

In the present case, there is no dispute that petitioners failed to state in the Certificate of
Non-Forum Shopping, attached to their Verified Complaint in Civil Case No. CV-05-0402
before RTC-Branch 195, the existence of Civil Case No. CV-01-0207 pending before RTC-
Branch 258. Nevertheless, petitioners insist that they are not guilty of forum shopping, since
(1) the two cases do not have the same ultimate objective – Civil Case No. CV-01-0207
seeks the annulment of the 8 November 2001 public auction and certificate of sale issued
therein, while Civil Case No. CV-05-0402 prays for the award of actual and compensatory
damages for respondents’ tortuous act of making it appear that an auction sale actually took
place on 8 November 2001; and (2) the judgment in Civil Case No. CV-01-0207, on the
annulment of the foreclosure sale, would not affect the outcome of Civil Case No. CV-05-
0402, on the entitlement of petitioners to damages.

Petitioners committed forum shopping by filing multiple cases based on the same cause of
action, although with different prayers.

Sections 3 and 4, Rule 2 of the Rules of Court proscribe the splitting of a single cause of
action:

Section 3. A party may not institute more than one suit for a single cause of action.

Section 4. Splitting a single cause of action; effect of.—If two or more suits are instituted on
the basis of the same cause of action, the filing of one or a judgment upon the merits in any
one is available as a ground for the dismissal of the others.

Forum shopping occurs although the actions seem to be different, when it can be seen that
there is a splitting of a cause of action. 35 A cause of action is understood to be the delict or
wrongful act or omission committed by the defendant in violation of the primary rights of the
plaintiff. It is true that a single act or omission can violate various rights at the same time, as
when the act constitutes juridically a violation of several separate and distinct legal
obligations. However, 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.
 NLMK-OLALIA-KMU vs. Keihin

Facts:

 Helen Valenzuela (Helen) was a production associate in respondent Keihin

Philippines Corporation (Keihin), a company engaged in the production of intake
manifold and throttle body used in motor vehicles manufactured by Honda.

 It is a standard operating procedure of Keihin to subject all its employees to

reasonable search before they leave the company premises. While Helen was about
to leave the company premises, she saw a packing tape near her work area and
placed it inside her bag because it would be useful in her transfer of residence. When
the lady guard on duty inspected Helen’s bag, she found the packing tape inside her
bag. The guard confiscated it and submitted an incident report5 dated September 5,
2003 to the Guard-in-Charge, who, in turn, submitted a memorandum6 regarding the
incident to the Human Resources and Administration Department on the same date.

 The following day, respondent company issued a show cause notice to Helen
accusing her of violating F.2 of the company’s Code of Conduct, which says, "Any
act constituting theft or robbery, or any attempt to commit theft or robbery, of any
company property or other associate’s property. Penalty: D (dismissal)." Paul Cupon,
Helen’s supervisor, called her to his office and directed her to explain in writing why
no disciplinary action should be taken against her.’

 Helen, in her explanation,9 admitted the offense and even manifested that she would
accept whatever penalty would be imposed upon her. She, however, did not reckon
that respondent company would terminate her services for her admitted offense.

 On September 26, 2003, Helen received a notice petitioners filed a complaint against
respondent for illegal dismissal, non-payment of 13th month pay, with a prayer for
reinstatement and payment of full backwages, as well as moral and exemplary
damages. Petitioners alleged that Helen’s act of taking the packing tape did not
constitute serious misconduct, because the same was done with no malicious intent.
 The Labor Arbiter likewise upheld the right of the company to terminate Helen on the
ground of loss of confidence or breach of trust.
 NLRC affirmed the decision of RTC.
 The CA dismissed the petition outright for not having been filed by an indispensable
party in interest under Section 2, Rule 3 of the Rules of Court.

Issue: Whether CA committed serious error in holding that the petition for certiorari filed
by the Union and Ms. Helen was not filed by an indispensable party.

Ruling: It is clear that petitioners failed to include the name of the dismissed employee Helen
Valenzuela in the caption of their petition for certiorari filed with the CA as well as in the body of
the said petition. Instead, they only indicated the name of the labor union Nagkakaisang Lakas
ng Manggagawa sa Keihin (NLMK-OLALIA) as the party acting on behalf of Helen. As a result,
the CA rightly dismissed the petition based on a formal defect.

Under Section 7, Rule 3 of the Rules of Court, "parties in interest without whom no final
determination can be had of an action shall be joined as plaintiffs or defendants." If there is a
failure to implead an indispensable party, any judgment rendered would have no effectiveness.It
is "precisely ‘when an indispensable party is not before the court (that) an action should be
dismissed.’ The absence of an indispensable party renders all subsequent actions of the court
null and void for want of authority to act, not only as to the absent parties but even to those
present." The purpose of the rules on joinder of indispensable parties is a complete determination
of all issues not only between the parties themselves, but also as regards other persons who
may be affected by the judgment. A decision valid on its face cannot attain real finality where
there is want of indispensable parties.
 Cua vs. Tan

Facts: PRCI is a corporation organized and established under Philippine laws to: (1) carry on
the business of a race course in all its branches and, in particular, to conduct horse races or
races of any kind, to accept bets on the results of the races, and to construct grand or other
stands, booths, stablings, paddocks, clubhouses, refreshment rooms and other erections,
buildings, and conveniences, and to conduct, hold and promote race meetings and other
shows and exhibitions; and (2) promote the breeding of better horses in the Philippines, lend
all possible aid in the development of sports, and uphold the principles of good
sportsmanship and fair play. To pursue its avowed purposes, PRCI holds a franchise
granted under Republic Act No. 6632, as amended by Republic Act No. 7953, to operate a
horse racetrack and manage betting stations. Under its franchise, PRCI may operate only
one racetrack.

In 1999, the Articles of Incorporation of PRCI was amended to include a secondary purpose,
viz:

To acquire real properties and/or develop real properties into mix-use realty projects
including but not limited to leisure, recreational and memorial parks and to own, operate,
manage and/or sell these real estate projects.

Using the results of the SGV study, PRCI management determined that PRCI could initially
acquire 41,928,290 shares, or 95.55% of the outstanding capital stock of JTH. The PRCI Board
of Directors held a meeting on 26 September 2006. Among the directors present were petitioners
Santiago Sr., Santiago Jr., and Solomon, as well as respondent Dulay. After discussing and
deliberating on the matter of the acquisition of JTH by PRCI, all the directors present, except
respondent Dulay, voted affirmatively to pass and approve the following resolutions:

1. Declaration of Intention to Acquire and Purchase Shares of Stock of Another

Company
2. Special Stockholders’ Meeting
3. Authorized Attorney-In-Fact and Proxy

The next day, 27 September 2006, PRCI entered into a Sale and Purchase Agreement for the
acquisition from JME of 41,928,290 common shares or 95.55% of the outstanding capital stock
of JTH.

In the Special Stockholders’ Meeting held on 7 November 2006, attended by stockholders with
481,045,887 shares or 84.42% of the outstanding capital stock of PRCI, the acquisition by PRCI
of JTH was presented for approval.

Thereafter, PRCI again engaged the assistance of SGV in executing its intended spin-off to JTH
of the management and development of PRCI’s Makati property. It was then determined that the
Makati property, with a total zonal value of ₱3,817,242,000.00, could be transferred to JTH in
exchange for the unissued portion of the latter’s recently increase authorized capital
stock,17 amounting to ₱397,908,894.50, divided into 795,817,789 shares with a par value of
₱0.50 per share. The difference of ₱3,419,333,105.50 between the total zonal value of the
Makati property and the aggregate par value of the JTH shares to be issued in exchange for the
same, would be reflected as additional paid-in capital of PRCI in JTH.
However, on 10 July 2007, respondents Miguel, et al., as minority stockholders of PRCI filed
before the RTC a Complaint, denominated as a Derivative Suit with prayer for Issuance of
TRO/Preliminary Injunction, against the rest of the directors of PRCI and/or JTH. The Complaint
was docketed as Civil Case No. 07-610.

The Complaint was based on three causes of action: (1) the approval by the majority directors of
PRCI of the Board Resolutions dated 26 September 2006 and 11 May 2007 -- with undue haste
and deliberate speed, despite the absence of any disclosure and information -- was not only
anomalous and fraudulent, but also extremely prejudicial and inimical to interest of PRCI,
committed in violation of their fiduciary duty as directors of the said corporation; (2) respondent
Solomon, as PRCI President, with the acquiescence of the majority directors of PRCI,
maliciously refused and resisted the request of respondents Miguel, et al., for complete and
adequate information relative to the disputed Board Resolutions, brazenly and unlawfully
violating the rights of the minority stockholders to information and to inspect corporate books and
records; and (3) without being officially and formally nominated, the majority directors of PRCI
illegally and unlawfully constituted themselves as members of the Board of Directors and/or
Executive Officers of JTH, rendering all the actions they have taken as such null and void ab
initio. In the end, respondents Miguel, et al., prayed to the RTC Issuance of TRO/Preliminary
Injunction, against the Directors of PRCI and/or JTH based on their alleged devices or schemes
amounting to fraud or misrepresentation.

Issue:

Ruling: if the derivative suit, insofar as it concerns the Resolution dated 26 September 2006
of the PRCI Board of Directors, is not dismissible for mootness, it is still vulnerable to
dismissal for failure to implead indispensable parties, namely, the majority of the PRCI
stockholders.

Under Rule 3, Section 7 of the Rules of Court, an indispensable party is a party-in-interest,

without whom there can be no final determination of an action. The interests of such
indispensable party in the subject matter of the suit and the relief are so bound with those of
the other parties that his legal presence as a party to the proceeding is an absolute
necessity. As a rule, an indispensable party’s interest in the subject matter is such that a
complete and efficient determination of the equities and rights of the parties is not possible if
he is not joined.74

The majority of the stockholders of PRCI are indispensable parties to Civil Case No. 07-610,
for they have approved and ratified, during the Special Stockholders’ Meeting on 7
November 2006, the Resolution dated 26 September 2006 of the PRCI Board of Directors.
Obviously, no final determination of the validity of the acquisition by PRCI of JTH or of the
constitution of the JTH Board of Directors can be had without consideration of the effect of
the approval and ratification thereof by the majority stockholders.

Respondents Miguel, et al., cannot simply assert that the majority of the PRCI Board of
Directors named as defendants in Civil Case No. 07-610 are also the PRCI majority
stockholders, because respondents Miguel, et al., explicitly impleaded said defendants in
their capacity as directors of PRCI and/or JTH, not as stockholders.
 MIAA vs. Rivera Village Lessee Homeowners

Facts:

 The then Civil Aeronautics Administration (CAA) was entrusted with the
administration, operation, management, control, maintenance and development of
the Manila International Airport (MIA), now the Ninoy Aquino International Airport.
Among its powers was the power to enter into, make and execute concessions and
concession rights for purposes essential to the operation of the airport.
 On May 25, 1965, the CAA, through its Director, Capt. Vicente C. Rivera, entered
into individual lease contracts with its employees (lessees) for the lease of portions of
a four (4)-hectare lot situated in what is now known as Rivera Village located in
Barangay 199 and 200 in Pasay City. The leases were for a twenty-five (25)-year
period to commence on May 25, 1965 up to May 24, 1990 at P20.003 per annum as
rental.
 On May 4, 1982, Executive Order No. (EO) 778 was issued (later amended by EO
903 on July 21, 1983), creating petitioner MIAA, transferring existing assets of the
MIA to MIAA, and vesting the latter with the power to administer and operate the
MIA.
 Sometime in January 1995, MIAA stopped issuing accrued rental bills and refused to
accept rental payments from the lessees. As a result, respondent Rivera Village
Lessee Homeowners Association, Inc. (homeowners association), purportedly
representing the lessees, requested MIAA to sell the subject property to its members,
invoking the provisions of Presidential Decree No. (PD) 1517 or the Urban Land
Reform Act and PD 2016.
 The MIAA, on February 14, 1996, denied the request, claiming that the subject
property is included in its Conceptual Development Plan intended for airport-related
activities.
 Respondent then filed a petition for mandamus and prohibition with prayer for the
issuance of a preliminary injunction4 against MIAA and the National Housing
Authority (NHA). The petition, docketed as Civil Case No. 97-1598 in the Regional
Trial Court of Pasay City, Branch 109, sought to restrain the MIAA from implementing
its Conceptual Development Plan insofar as Rivera Village is concerned. It also
sought to compel MIAA to segregate Rivera Village from the scope of the Conceptual
Development Plan and the NHA to take the necessary steps for the disposition of the
property in favor of the members of the homeowners association.
 MIAA filed an answer alleging that the petition fails to state a cause of action
in view of the expiration of the lease contracts and the lack of personality to
sue of the homeowners association. MIAA also claimed that the homeowners
association is not entitled to a writ of mandamus because it does not have a
clear legal right to possess the subject property and MIAA does not have a
corresponding duty to segregate Rivera Village from its Conceptual
Development Plan.
 The RTC ruled that Proclamation No. 1967 and PD 2016, which respectively
identify parcels of urban land as part of the Urban Land Reform Zone, specify
certain areas in Metro Manila, including Rivera Village, as areas for priority
development or urban land reform zones, and prohibit the eviction of occupant
families from such lands, the trial court declared that the subject property has
been reserved by MIAA for airport-related activities and, as such, is exempt
from the coverage of the Comprehensive and Continuing Urban Development
and Housing Program under Republic Act No. (RA) 7279.
  The CA reversed the decision of RTC.The construed Sec. 5(c) of RA 7279 to mean
that if the government lot has not been utilized during the ten (10)-year period for the
purpose for which it has been reserved prior to 1983, then said lot is encompassed
by the law and is subject to distribution to the legitimate and qualified residents of the
area after appropriate proceedings have been undertaken.

Issue: Whether the case can be construed as a class suit instituted by the
Rivera Village lessees

Ruling:

 The 1997 Rules of Civil Procedure (Rules of Court) requires that every action must
be prosecuted or defended in the name of the real party-in-interest, i.e., the party
who stands to be benefited or injured by the judgment in the suit, or the party entitled
to the avails of the suit.15 A case is dismissible for lack of personality to sue upon
proof that the plaintiff is not the real party-in-interest, hence grounded on failure to
state a cause of action.16
 The petition before the trial court was filed by the homeowners association,
represented by its President, Panfilo R. Chiutena, Sr., upon authority of a Board
Resolution empowering the latter to file "[A]ll necessary action to the Court of Justice
and other related acts necessary to have our Housing Project number 4 land be titled
to the members of the Association."
 Obviously, the petition cannot be considered a class suit under Sec. 12, Rule 317 of
the Rules of Court, the requisites therefor not being present in the case, notably
because the petition does not allege the existence and prove the requisites of a class
suit, i.e., that the subject matter of the controversy is one of common or general
interest to many persons and the parties are so numerous that it is impracticable to
bring them all before the court, and because it was brought only by one party.
 In Board of Optometry v. Colet, we held that courts must exercise utmost caution
before allowing a class suit, which is the exception to the requirement of joinder of all
indispensable parties. For while no difficulty may arise if the decision secured is
favorable to the plaintiffs, a quandary would result if the decision were otherwise as
those who were deemed impleaded by their self-appointed representatives would
certainly claim denial of due process.
 There is, however, merit in the appellate court's pronouncement that the petition
should be construed as a suit brought by the homeowners association as the
representative of the members thereof under Sec. 3, Rule 3 of the Rules of Court,
which provides:
 Sec. 3. Representatives as parties. 'Where the action is allowed to be prosecuted or
defended by a representative or someone acting in a fiduciary capacity, the
beneficiary shall be included in the title of the case and shall be deemed to be
the real party in interest. A representative may be a trustee of an express trust, a
guardian, an executor or administrator, or a party authorized by law or these Rules.
An agent acting in his own name and for the benefit of an undisclosed principal may
sue or be sued without joining the principal except when the contract involves things
belonging to the principal. [Emphasis supplied.]
 It is a settled rule that every action must be prosecuted or defended in the name of
the real party-in-interest. Where the action is allowed to be prosecuted or defended
by a representative acting in a fiduciary capacity, the beneficiary must be included in
the title of the case and shall be deemed to be the real party-in-interest. The name of
such beneficiaries shall, likewise, be included in the complaint.