JIMMY TIU AND LONG LONG MANUFACTURING CORP., PLAINTIFFS-APPELLANTS, VS. SAMUEL T. SY, DEFENDANT-APPELLEE.

Tiu versus Sy

The Case

This is the case of Tiu versus Sy, an appeal brought to the Supreme Court by Jimmy Tiu and Long Long Manufacturing Corporation against Samuel Sy. The plaintiffs below sued Samuel for a sum of money, seeking to recover the unpaid balance of a promissory note and the value of company checks allegedly diverted to his personal accounts, and they asked for a writ of preliminary attachment over his property. The trial court dismissed the complaint outright on the grounds of forum shopping and litis pendentia, and the Supreme Court was asked to reverse that dismissal. The case matters because it is a compact teaching vehicle on three linked ideas: the certification against forum shopping, the requisites of litis pendentia and res judicata, and the rule that an ancillary writ of attachment rises and falls with the principal action.

Procedural History

Jimmy Tiu and Long Long Manufacturing Corporation filed a complaint for a sum of money with a prayer for preliminary attachment before the Regional Trial Court of Manila, Branch 19. The trial court granted the prayer, and the writ was annotated on a transfer certificate of title covering Samuel's land in Bulacan. In his Answer, Samuel raised forum shopping and litis pendentia as affirmative defenses and asked that the writ be lifted. The trial court, in an Order dated February 9, 2011, found both defenses meritorious and dismissed the complaint. The plaintiffs appealed. Before the Supreme Court, Samuel filed an urgent motion to resolve a pending incident, arguing that the dismissal of the main case automatically dissolved the writ of attachment. The appeal was elevated to the Supreme Court, which denied it and affirmed the trial court.

Facts

Sometime in 1990, Jimmy Tiu and Samuel Sy, together with several others, formed Long Long Manufacturing Corporation. Both men were authorized signatories on the company's bank checking account, but Samuel regularly prepared the company's checks for suppliers, utilities, dividends, and salaries. In March 1999, Samuel resigned, leaving an outstanding obligation of 2,000,000 pesos to the company, which he promised to pay in monthly installments under a promissory note dated March 11, 1999.

The company later discovered that Samuel had deposited sixty company checks, supposedly meant for suppliers, into his personal accounts. The checks were payable in cash and totaled 3,147,535 pesos. Four of them, worth 323,760 pesos, were made payable to Alex Sy, a supplier, but Alex executed an affidavit denying that he had been paid through those checks. Samuel ignored the company's demands for return of the amounts.

Jimmy then filed a complaint-affidavit for sixty counts of estafa before the City Prosecutor of Manila. The prosecutor recommended charges only as to the four checks made out to Alex, and those four were filed in court. Jimmy later executed an affidavit of desistance after the civil aspect of those four checks was settled, and that criminal case was dismissed. As to the remaining fifty-six checks, the Department of Justice initially found probable cause, but later reversed itself and directed withdrawal of the information; the trial court granted the withdrawal, and the Supreme Court dismissed the company's petition for certiorari, which became final in January 2006. Meanwhile, Samuel had filed a case in Valenzuela for annulment of the promissory note, accounting, and determination of compensation. The trial court dismissed it on the basis of an apparent compromise, but the Court of Appeals reversed, and that matter remained pending on appeal. The plaintiffs then filed the present complaint for a sum of money.

Issues

• Whether or not the plaintiffs violated the rule on the certification against forum shopping by failing to disclose the criminal cases and the pending Valenzuela case.
• Whether or not there is litis pendentia between the Valenzuela case and the complaint for a sum of money.
• Whether or not res judicata bars the complaint for a sum of money by reason of the dismissal of the criminal cases for estafa.
• Whether or not the dismissal of the main action carries with it the dissolution of the writ of preliminary attachment.

Applicable Provisions

Section 5 of Rule 7 of the Rules of Court, on the certification against forum shopping, provides:

The plaintiff or principal party shall certify under oath in the complaint or other initiatory pleading asserting a claim for relief, or in a sworn certification annexed thereto and simultaneously filed therewith: (a) that he has not thereto commenced any action or filed any claim involving the same issues in any court, tribunal or quasi-judicial agency and, to the best of his knowledge, no such other action or claim is pending therein; (b) if there is such other pending action or claim, a complete statement of the present status thereof; and (c) if he should thereafter learn that the same or similar action or claim has been filed or is pending, he shall report that fact within five (5) days therefrom to the court wherein his aforesaid complaint or initiatory pleading has been filed.

This provision supplies the disclosure duty that the plaintiffs were found to have breached, and it anchors the dismissal for forum shopping.

Ruling

On the first issue, the Court held that the appeal lacked merit. Forum shopping consists of filing multiple suits involving the same parties upon the same causes of action, simultaneously or successively, to obtain a favorable judgment. The rules require the certification to state not only the actions filed by the party executing it but also any other actions or claims pending at that time. The Court found this prescription crystal clear, leaving no room for interpretation, and held that the trial court correctly applied it.

On the second issue, the Court held that the most important factor in ascertaining forum shopping is the presence of the elements of litis pendentia or res judicata. Litis pendentia, literally a pending suit, requires identity of parties, identity of the rights asserted and reliefs prayed for founded on the same facts, and a judgment in one that would amount to res judicata in the other. The Court stressed that identity of causes of action requires only substantial identity, and the ultimate test is whether the same evidence would support both cases. Applying this, the Court found that the Valenzuela case and the complaint for a sum of money involved the same principal parties and both turned on the obligation arising from the promissory note; although the reliefs differed, the disposition of either would require a ruling on the note's validity. The complaint was therefore properly dismissed, considering the priority in date of filing.

On the third issue, the Court held that res judicata barred the claim based on the sixty checks. Samuel's civil liability for the four checks had been settled in the first criminal case, and the approval of a compromise is a judgment on the merits. The dismissal of the second criminal case for the fifty-six checks, after the court considered the evidence and gave the parties full opportunity to be heard, was likewise a judgment on the merits. Since the criminal cases and the complaint arose from the same set of facts and both rested on allegations of fraud, the evidence in the criminal cases would necessarily be presented in the civil complaint, and the dismissals barred it.

On the fourth issue, the Court held that the dismissal of the main action carried with it the dissolution of the writ of preliminary attachment. Quoting its own ruling, the Court explained:

Attachment is an ancillary remedy. It is not sought for its own sake but rather to enable the attaching party to realize upon relief sought and expected to be granted in the main or principal action.

Because the writ is provisional and dependent on the result of the main action, the affirmance of the dismissal required that the writ be lifted.

Doctrine

A Bar candidate should retain these rules. First, the certification against forum shopping must disclose not only the actions filed by the party executing it but also any other actions or claims pending at that time; a crystal-clear prescription leaves no room for interpretation. Second, the key to forum shopping is the presence of the elements of litis pendentia or res judicata. Litis pendentia requires identity of parties, identity of the rights asserted and reliefs prayed for founded on the same facts, and a judgment in one that would amount to res judicata in the other. Third, identity of causes of action requires only substantial identity, not absolute identity; the ultimate test is whether the same evidence would support both cases, and a party cannot escape the rule by varying the form of action. Fourth, a compromise approved by the court, and a dismissal after consideration of the evidence with full opportunity to be heard, are judgments on the merits that can support res judicata. Fifth, a writ of preliminary attachment is ancillary and provisional, so the dismissal of the main action dissolves it.

Disposition

The Supreme Court denied the appeal, affirmed the dismissal of the complaint for a sum of money, and ordered the writ of attachment over Samuel Sy's property lifted upon the finality of the decision.

Remember This

Memorize this line: identity of causes of action requires only substantial identity, tested by whether the same evidence would support both cases. Examiners use this case to test the certification against forum shopping, the requisites of litis pendentia and res judicata, and the ancillary nature of preliminary attachment.