Doctrine: For litis pendentia to exist, the following requisites or elements must concur: (a) identity of parties, or at least such parties who represent the same interests in both actions; (b) identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (c) identity with respect to the two (2) preceding particulars in the two (2) cases is such that any judgment that may be rendered in the pending case, regardless of which party is successful, would amount to res judicata in the other case.
Facts: EYCO and its controlling stockholders, the Yutingcos filed with the SEC a "Petition for the Declaration of Suspension of Payment[s], Formation and Appointment of Rehabilitation Receiver/Committee, Approval of Rehabilitation Plan with Alternative Prayer for Liquidation and Dissolution of Corporations”. A consortium of EYCO's creditors composed of 22 domestic banks, including Union Bank, convened for the purpose of deciding their options in the event that EYCO and its co-petitioners would invoke the provisions of Presidential Decree (PD) No. 902-A, as amended.
However, Union Bank, without notifying the members of the Consortium, decided to break away from the group by suing EYCO and the Yutingcos in the regular courts. Union Bank alleged that Spouses Yutingco were its debtors by virtue of a Continuing Surety Agreement to secure credit accommodations granted to NIKON, which they owned. Upon investigation, Union Bank confirmed that majority of NIKON's assets were used to purchase real estate properties through EYCO, purposely to shield NIKON from answering for its debts. EYCO owned condominium units and parking spaces in Tektite Tower and the Strata 200 Building Condominium Project. These properties were sold to herein petitioner, FEBTC. Union Bank claimed that the sale of the properties was fraudulent and done in bad faith to prevent them from being levied upon; in fact, it was made a day before the Spouses Yutingco and NIKON filed a petition for suspension of payments with the SEC.
An Order was issued by the SEC enjoining the disposition of the debtor corporations' properties in any manner except in the ordinary course of business and payment outside of legitimate business expenses during the pendency of the proceedings and suspending all actions, claims and proceedings against EYCO until further orders from the SEC. The SEC Hearing Panel directed the creation of a Management Committee.
Union Bank filed a petition for certiorari in the CA assailing the Order declaring the suspension of payments for EYCO and directing the creation of the MANCOM. Union Bank contended that these issuances were premature and would render the motion to dismiss filed before the RTC as moot.
SC held that the SEC's jurisdiction on matters of suspension of payments is confined only to those initiated by corporations, partnerships or associations. Consequently, the SEC exceeded its jurisdiction in declaring the Spouses Yutingco together with EYCO under suspension of payments.
SEC issued an Order adopting the Unsolicited Rehabilitation Proposal submitted by Strategies and Alliances Corporation (SAC) which was granted a period of six months within which to complete the groundwork for the effective implementation of the early "all-debt payment plan.” The SEC Order further barred all creditors from pursuing their respective claims until further orders.
The Consortium appealed the Order to the SEC En Banc. The SEC En Banc rendered its Decision finding the SAC plan not viable and feasible for the rehabilitation of EYCO. SEC issued an Order directing all creditors claiming against EYCO to file their formal claims with the Liquidator.
The Spouses Yutingco filed a Motion to Dismiss on the ground of pendency of the proceedings in the SEC which had acquired prior jurisdiction over the subject matter of the case. FEBTC also filed a motion to dismiss on the ground of Union Bank's failure to implead NIKON, which are indispensable parties. The RTC granted the motions to dismiss on the ground of litis pendentia.
Union Bank filed an appeal with the CA. CA granted Union Bank's appeal and reversed the assailed orders of the RTC. BAYAN filed a Motion for Substitution With Motion to Admit Comment. XA granted the motion for substitution.
Issues: Whether or not the civil case should be dismissed on the ground of litis pendentia; whether or not Union Bank was guilty of forum shopping; and whether or not Union Bank had the legal personality to file the civil case.
Held: Petition is denied. Litis pendentia is not applicable to the present case. For litis pendentia to exist, the following requisites or elements must concur: (a) identity of parties, or at least such parties who represent the same interests in both actions; (b) identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (c) identity with respect to the two (2) preceding particulars in the two (2) cases is such that any judgment that may be rendered in the pending case, regardless of which party is successful, would amount to res judicata in the other case. None of the requisites were present in this case.
There being no litis pendentia or res judicata, we find Union Bank not guilty of forum shopping. Jurisprudence has laid down the test for determining whether a party violated the rule against forum shopping. Forum shopping exists where the elements of litis pendentia are present or where a final judgment in one case will amount to res judicata in the other.
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