G.R. No. L-10989 - Gacho vs. Osmena

Case Summary (G.R. No. L-10989)

Petitioner

Jesse Yap filed Civil Case No. 04-030 in the RTC of Makati City seeking cancellation or discharge of several checks he had issued, on the ground that the underlying real estate transactions brokered by Evelyn Te lacked valid consideration and that he was entitled to have the checks annulled.

Respondents

Eliza Chua filed a separate action for sum of money in the RTC of General Santos City, docketed as Civil Case No. 6236, seeking payment based on the same or related checks. Chua prevailed in that case, obtaining a monetary judgment against Yap, including damages and attorney’s fees.

Key Dates and Procedural Milestones

June 8, 2001: RTC General Santos (Branch 23) rendered judgment in favor of Chua in Civil Case No. 6236.
January 9, 2004: Yap filed Civil Case No. 04-030 in RTC Makati (Branch 66) seeking annulment/discharge of the checks.
October 21, 2005 and January 18, 2006: RTC Makati issued orders refusing Chua’s motion to dismiss on grounds of litis pendentia and forum shopping and denying reconsideration, respectively.
December 10, 2008: Court of Appeals granted certiorari and set aside the RTC Makati orders, dismissing Civil Case No. 04-030 for litis pendentia and violation of the rule against forum shopping.
Final disposition at the Supreme Court level: the petition for review was denied and the CA decision affirmed.

Applicable Law and Constitutional Basis

The analysis applies the 1987 Constitution as the governing constitutional framework (decision being after 1990). Applicable doctrines and rules include the prohibition against forum shopping, the doctrine of litis pendentia, res judicata principles, the Rules of Civil Procedure on pleading and non-forum shopping certifications, and controlling jurisprudence cited by the courts (including Spouses dela Cruz v. Joaquin; Top Rate Construction; Municipality of Taguig; Young v. John Keng Seng; Villarica Pawnshop, Inc. v. Gernale; Subic Telecommunications Co., Inc. v. SBMA; Umale v. Canoga Park; and Madara v. Perello).

Factual Background

Yap purchased several real properties through Evelyn Te and, as payment, issued multiple postdated checks to Te, the property owners, or third parties who financed the acquisitions. Chua, who funded some purchases, requested checks payable to her; Yap issued six postdated BPI checks (listed with numbers and amounts in the record) and later stopped payment and closed his account when titles were not delivered. Yap also stopped payment on two checks endorsed to Chua for rediscounting. Chua’s version detailed funds advanced via a third party (Jovita Dimalanta), successive replacements of checks, issuance of additional checks to cover interest, and eventual dishonor for account closure or stopped payment. Chua filed the General Santos collection suit based on these checks and prevailed; Yap thereafter filed the Makati suit to annul or discharge the same checks.

Reliefs Sought in the Two Actions

In RTC General Santos (Civil Case No. 6236): Chua sought recovery of the amounts she had advanced, founded on the checks Yap issued and endorsed. The RTC awarded P32,558,332.00 as principal with interest, moral and exemplary damages, attorney’s fees, and costs.
In RTC Makati (Civil Case No. 04-030): Yap sought annulment or discharge of the same checks on the ground of lack of valid consideration and other defenses, effectively seeking a declaration that the checks were null and void.

Motions to Dismiss and Initial RTC Makati Rulings

Chua moved to dismiss Civil Case No. 04-030 on the grounds of litis pendentia and forum shopping, arguing that the Makati action duplicated the General Santos action and that Yap failed to disclose the pending suit in his certificate of non-forum shopping. The RTC of Makati denied dismissal, reasoning that the claims and reliefs were different (annulment of checks versus collection of money) and emphasizing that the duty to declare pending suits rests with the plaintiff, not the defendant.

Court of Appeals’ Determination

The CA granted Chua’s petition for certiorari, finding that the RTC of Makati committed grave abuse of discretion in denying the motion to dismiss. The CA applied the three (3) requisites of litis pendentia: (a) identity of parties or interests; (b) identity of rights asserted and reliefs prayed for based on the same facts; and (c) such identity that judgment in one would amount to res judicata in the other. The CA concluded that Yap’s annulment action in Makati was essentially his defense in the General Santos collection case, that the same evidence would be necessary in both proceedings, and that a judgment in one case would operate as res judicata in the other, thereby satisfying the elements of litis pendentia and constituting forum shopping.

Supreme Court’s Analysis and Holding

The Supreme Court affirmed the CA. It reiterated the legal definition and policy against forum shopping, characterized as filing two or more actions involving the same parties and cause of action to obtain a favorable forum, which vexes courts and undermines the administration of justice. The Court applied the litis pendentia requisites and the tests to determine identity of causes: (1) whether the same evidence would sustain both actions; and (2) whether defenses in one case could be used to support the complaint in the other. The Court found all requisites satisfied: identity of parties; ident

Case Syllabus (G.R. No. L-10989)

Court, Citation, and Nature of Proceeding

Supreme Court of the Philippines, Second Division; G.R. No. 186730; reported at 687 Phil. 392; Decision rendered June 13, 2012.
Petition for review on certiorari from the Decision dated December 10, 2008 and Resolution dated February 19, 2009 of the Court of Appeals (CA) in CA-G.R. SP No. 93974.
Case involves petition by Jesse Yap to set aside CA’s dismissal of his civil action (Civil Case No. 04-030, RTC Makati, Branch 66) and challenges to RTC Makati Orders dated October 21, 2005 and January 18, 2006.

Parties

Petitioner: Jesse Yap (Yap).
Respondents: Court of Appeals (Special Eleventh [11th] Division) as public respondent; private respondents Eliza Chua (Chua) and Evelyn Te (Te).
Other persons/entities appearing in the factual narrative: Bessie (Yap’s wife and co-defendant in Civ. Case No. 6236), Jovita Dimalanta (Dimalanta), Badoria Bagatao (Bagatao), Jesus Dy, Bank of the Philippine Islands (BPI), Canda Medical Clinic and Hospital.

Factual Background — Yap’s Version (Plaintiff in Makati Case)

On January 9, 2004, Jesse Yap filed a complaint in the Regional Trial Court (RTC) of Makati City (Civil Case No. 04-030, Branch 66) principally seeking cancellation/discharge of several checks drawn on his BPI account.
Yap alleged purchase of several real properties through Evelyn Te, a real estate broker; as payment he delivered checks to Te payable to her, the property owners, or third parties who financed acquisitions.
Yap states he issued checks to Eliza Chua upon Chua’s request to replace checks delivered to Te; the checks were uniformly postdated July 30, 1997.
Yap stopped payment on the listed checks and closed his account when Te failed to deliver titles; he contended the contracts of sale had no consideration and therefore checks should be cancelled/annulled.
Specific checks Yap alleged he drew on BPI (postdated July 30, 1997) and amounts as pleaded:
- Check No. 659599 — P3,000,000.00
- Check No. 708158 — P2,500,000.00
- Check No. 708160 — P2,756,666.00
- Check No. 712418 — P10,900,000.00
- Check No. 712417 — P10,900,000.00
- Check No. 727214 — P960,000.00
Additional checks Yap alleges Te endorsed to Chua for rediscounting (which he stopped payment on):
- Check No. 0727205 (dated September 15, 1997) — P770,833.33
- Check No. 0727206 (dated September 30, 1997) — P770,833.33

Factual Background — Chua’s Version (Plaintiff in General Santos Case)

Chua asserted a sequence of loans/disbursements to Yap effected through Jovita Dimalanta:
- January 1997: Chua released P9,415,000.00 to Yap via Dimalanta in exchange for two postdated checks payable to Chua, face value P5,000,000.00 each.
- February 1997: Chua released another P9,415,000.00 at Yap’s request; Yap issued two postdated checks payable to Chua totaling P10,000,000.00.
Yap requested extensions twice and issued two checks to Chua for P1,400,000.00 and P1,206,066.66 to cover interest.
Yap later replaced the four P5,000,000.00 checks with a check payable to Chua for P20,000,000.00 postdated April 22, 1997; when due Yap requested another extension and replaced it with BPI Check Nos. 712418 and 712417 to include interest until June 15, 1997.
Yap subsequently issued BPI Check No. 727214 to include interest to July 30, 1997 on the P20,000,000.00 obligation.
Chua averred Yap delivered BPI Check Nos. 659599 and 708158 to replace checks drawn against his account that a certain Jesus Dy had endorsed to her.
Yap allegedly delivered to Te a check payable to Canda Medical Clinic and Hospital, which Te later endorsed to Chua for rediscounting; Chua stated Yap replaced this with BPI Check No. 708160 to cover interest from March to May 1997.
Chua contended that Te endorsed to Chua the checks payable to Bagatao (BPI Check Nos. 0727205 and 0727206) for rediscounting.
Status of checks per Chua’s narrative:
- BPI Check Nos. 659599, 708158, 708160, 712418, 712417 and 727214 were dishonored for reason “account closed.”
- Yap stopped payment on BPI Check Nos. 727205 and 727206 (source reflects variation in numbering for these two checks).

Parallel Proceedings and Prior Judgment (RTC General Santos City)

Chua filed a complaint for sum of money against Yap and his wife Bessie in the RTC of General Santos City; case docketed as Civil Case No. 6236 and raffled to Branch 23.
On June 8, 2001, RTC General Santos (Branch 23) rendered a Decision in favor of Chua. The dispositive portion awarded:
- P32,558,332.00 as principal with interest at 6% per annum from filing until full payment;
- P150,000.00 as moral damages;
- P50,000.00 as exemplary damages;
- P1,000,000.00 as attorney’s fees;
- Costs of suit;
- Dismissal of the third-party complaint.
The RTC of General Santos determined checks at issue were validly issued and declared Chua a holder in due course; Yap’s lack of consideration defense had been raised as an affirmative defense and as basis for counterclaim/third-party complaint.

Procedural History in Makati, Motions to Dismiss, and RTC Makati Rulings

Armed with the General Santos proceedings and decision, Chua moved in the Makati case (Civ. Case No. 04-030) to dismiss on grounds of litis pendentia and forum shopping, alleging Yap failed to inform RTC Makati of Civil Case No. 6236 and the pendency of his appeal.
RTC Makati, Branch 66, issued an Order dated October 21, 2005 denying Chua’s motion to dismiss:
- Court reasoned litis pendentia not established because reliefs in the two cases were different — Makati case sought discharge/annulment of checks while General Santos was a collection case; therefore fundamental requisites of litis pendentia not met.
- On forum shopping, court held the duty to declare pending suits rests with the plaintiff (not the defendant) in verification and certificate of non-forum shopping; plaintiff in a civil case is not mandated to declar