In Surendra Gobindram Daswani v. Banco De Oro Universal Bank, the Supreme Court clarified the application of forum shopping in cases where an initial complaint was dismissed without prejudice. The Court ruled that re-filing a complaint after its initial dismissal without prejudice does not constitute forum shopping, provided the dismissal was not on the merits and the defect causing the dismissal has been cured. This decision underscores the importance of distinguishing between dismissals based on technicalities versus those that adjudicate the substantive rights of the parties.

Second Chance or Second Offense: Understanding Forum Shopping in Dismissed Cases

This case revolves around Surendra Gobindram Daswani’s legal battle against Banco De Oro (BDO) concerning the foreclosure of his properties. Daswani initially filed a complaint challenging the foreclosure proceedings, but it was dismissed without prejudice due to his failure to pay the required docket fees. Subsequently, he re-filed the complaint, leading BDO to argue that Daswani was engaged in forum shopping. The central legal question is whether re-filing a case, which was previously dismissed without prejudice, constitutes forum shopping when the defect leading to the initial dismissal has been rectified.

The Supreme Court began its analysis by emphasizing that a direct appeal to the Court under Rule 45 of the Rules of Court is appropriate when only questions of law are raised. In this instance, the sole issue—whether Daswani committed forum shopping—is a question of law. A question of law arises when the doubt or difference centers on what the law is on a certain set of facts. The resolution of such a question depends solely on what the law provides on the given facts, without requiring an examination of the probative value of evidence.

The Court then delved into the concept of forum shopping. It exists when a party repetitively avails of several judicial remedies in different courts, simultaneously or successively, all substantially founded on the same transactions, facts, and circumstances, and raising substantially the same issues. However, the Court noted that forum shopping implies a willful and deliberate intent to seek a favorable disposition by different courts. This intent was crucial in the Court’s assessment of Daswani’s actions.

In Yap v. Chua, the Court explained the nature of forum shopping:

Forum shopping is the institution of two or more actions or proceedings involving the same parties for the same cause of action, either simultaneously or successively, on the supposition that one or the other court would make a favorable disposition. Forum shopping [is] resorted to by any party against whom an adverse judgment or order has been issued in one forum, in an attempt to seek a favorable opinion in another, other than by appeal or a special civil action for certiorari.

The Court found that Daswani’s actions did not reflect such an intent. His re-filing of the complaint was based on the belief that the initial dismissal without prejudice allowed him to correct the deficiency (non-payment of docket fees) and re-present his case. The Supreme Court emphasized that Daswani’s statement in his motion to withdraw that he would re-file the complaint indicated his recognition of the finality of the initial dismissal.

Furthermore, the Court examined the elements of litis pendentia, which is closely related to forum shopping. The elements are: (a) identity of parties, (b) identity of rights asserted and relief prayed for, and (c) the identity is such that any judgment in the pending case would amount to res judicata in the other case. The Court found that the element of res judicata was not present. Res judicata requires that the prior judgment be final and on the merits.

The Court in Taganas v. Emuslan expounded the elements of res judicata:

Res judicata exists, if the following requisites are all present: “(1) the former judgment or order had already been final; (2) the judgment or order had been on the merits; (3) it had been rendered by a court having jurisdiction over the subject matter and the parties; (4) and because of the concurrence of the first three requisites, there is now between the first and the second action, identity of parties, of subject matter and cause of action.

In Daswani’s case, the initial dismissal was not on the merits; it was due to a procedural lapse. The dismissal order explicitly stated that it was without prejudice, granting Daswani the option to re-file once the defect was cured. This meant that the dismissal did not bar Daswani from re-litigating the same claims after complying with the requirements.

BDO also argued that Daswani misrepresented facts in his certification against forum shopping. Section 5, Rule 7 of the Rules of Court requires a plaintiff to certify that there are no other pending actions involving the same issues. A misrepresentation in this certification can lead to the dismissal of the complaint. However, the Court found that Daswani’s certification was not a misrepresentation because the initial case was no longer pending when he re-filed the complaint.

Once the initial dismissal order became final due to Daswani’s failure to file a motion for reconsideration, the case was effectively terminated. The Court clarified that the certification against forum shopping applies only when the earlier case is still ongoing. Since the first case was no longer pending, there was no basis to accuse Daswani of misrepresentation or forum shopping. The Supreme Court emphasized that fraud is not presumed and must be proven by clear and convincing evidence, which BDO failed to provide.

The Supreme Court, in granting the petition, clarified the conditions under which a re-filed case can be considered legitimate rather than an act of forum shopping. The dismissal of the first complaint without prejudice provided Daswani the opportunity to cure the defect and re-file his case. This was not a violation of the rules against forum shopping, especially since there was no misrepresentation in his certification.

FAQs

What is forum shopping?	Forum shopping is the practice of filing multiple lawsuits based on the same cause of action in different courts, hoping to obtain a favorable ruling in one of them.
What does dismissal “without prejudice” mean?	A dismissal without prejudice means the case is dismissed, but the plaintiff is allowed to re-file the lawsuit, provided they correct the identified deficiencies.
What is a certification against forum shopping?	A certification against forum shopping is a sworn statement required in complaints, where the plaintiff declares that they have not filed any similar case in other courts.
What are the elements of litis pendentia?	The elements of litis pendentia are: (1) identity of parties, (2) identity of rights asserted and relief prayed for, and (3) any judgment in the pending case would amount to res judicata in the other case.
What is res judicata?	Res judicata is a legal principle that prevents the re-litigation of issues that have already been decided in a final judgment by a competent court.
What happens if a plaintiff misrepresents facts in the certification against forum shopping?	If a plaintiff misrepresents facts in the certification, the case may be dismissed, and the plaintiff may face contempt charges.
Was the dismissal of Daswani’s first complaint considered “on the merits”?	No, the dismissal was not on the merits because it was based on a procedural issue (failure to pay docket fees) and not on the substance of the claims.
Why was Daswani not considered to have engaged in forum shopping?	Daswani was not considered to have engaged in forum shopping because the initial case was dismissed without prejudice, and he corrected the deficiency before re-filing.

This case provides a clear framework for understanding the nuances of forum shopping and the implications of dismissals without prejudice. It reinforces the principle that procedural lapses should not bar a party from seeking justice, provided they rectify the errors and comply with the rules of court. The ruling serves as a reminder for both litigants and legal practitioners to carefully assess the nature of dismissals and their impact on future legal actions.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: SURENDRA GOBINDRAM DASWANI, VS. BANCO DE ORO UNIVERSAL BANK, G.R. No. 190983, July 29, 2015