Banco de Oro-EPCI, Inc. v. Daguna
REITERATIONFacts
The Antecedents: Philippine Development and Industrial Corporation (PDIC) obtained a credit line from PCI Bank, Inc. (PCIB), secured by a real estate mortgage. PDIC defaulted, executed a Repayment Agreement, and again failed to meet its obligations. PCIB, which later merged with Equitable Bank to form Equitable PCIBank (EPCIB), initiated foreclosure proceedings. Procedural History: PDIC filed a complaint for "Cancellation of Mortgage, Restitution of Titles and Damages" before the Makati RTC, which was amended to "Release of Mortgage and Damages." The Makati RTC dismissed this amended complaint for lack of jurisdiction, finding it an in rem action concerning property in Manila. PDIC moved for reconsideration and later to withdraw the "Release of Mortgage" claim to focus on "Damages," filing a Second Amended Complaint. Without awaiting resolution, PDIC filed a new complaint before the Manila RTC for "Annulment of Mortgage and the Foreclosure Sale with Application for TRO and Preliminary Injunction." EPCIB moved to dismiss this Manila complaint for forum shopping. The Manila RTC denied the motion, distinguishing the cases as "annulment of mortgage" versus "damages." EPCIB elevated this to the Court of Appeals, which affirmed the Manila RTC. Meanwhile, the Makati RTC granted PDIC's motion to withdraw its "Release of Mortgage" action and admitted the Second Amended Complaint for "Damages." The Petition: EPCIB (now Banco de Oro-EPCI, Inc.) filed a petition for review on certiorari, assailing the Manila RTC's denial of its motion to dismiss and the subsequent denial of its motion for reconsideration, raising the sole issue of whether PDIC resorted to forum shopping.
Issue(s)
Whether respondent PDIC committed forum shopping by filing separate complaints before the Makati RTC and the Manila RTC. Whether the actions filed before the Makati RTC and the Manila RTC involve the same cause of action.
Ruling
The petition is denied. The Court holds that respondent PDIC did not resort to forum shopping.
Ratio Decidendi
On the issue of forum shopping: The Court held that PDIC did not commit forum shopping. The filing of the complaint before the Manila RTC on June 16, 2003, occurred before the Makati RTC resolved PDIC's motion to reinstate its complaint for "Damages." At the time of filing in Manila, the reinstatement of the damages claim in Makati was still pending. The appellate court, like the Manila RTC, relied on PDIC's statement in its Certification of Non-Forum Shopping regarding the pendency of an action for Damages. While this statement was not entirely accurate as the reinstatement was pending, the Makati RTC eventually reinstated the damages action. The Court found that the actions in Makati and Manila were distinct and separate, involving different periods of time, subject matter, and issues, thus properly filed in their respective venues. On the issue of the identity of causes of action: The Court ruled that the actions in Makati and Manila, despite having similar factual antecedents, proceeded from different grounds and called for different bodies of evidence. The Makati RTC action, as amended, sought the release of the mortgage and damages for the alleged failure to provide funds under the secured credit line. Conversely, the Manila RTC complaint sought the annulment of the mortgage and foreclosure sale based on alleged flaws and irregularities. The Manila complaint would require evidence of vitiated consent, fraud, lack of consideration, and irregularities in the foreclosure sale, while the Makati action would focus on evidence of willful refusal to release funds and resulting losses. The Court reiterated that an action for release of mortgage is a personal action, while an action for annulment of mortgage and foreclosure sale over property located in Manila is an in rem action that should be filed in Manila. Since the foreclosure had already occurred, PDIC correctly withdrew its action for release of mortgage and filed the appropriate action for annulment of the foreclosure in Manila. The Makati RTC also correctly retained jurisdiction over the complaint for damages, which is a personal action. Therefore, the actions were distinct and did not constitute splitting a cause of action.
Main Doctrine
The filing of separate actions for annulment of mortgage and foreclosure sale in one venue, and for damages in another, does not constitute forum shopping when the causes of action, subject matters, and issues are distinct, and the venues are properly laid.