Asia United Bank v. Goodland Company
REITERATIONFacts
The Antecedents: Respondent Goodland Company, Inc. (Goodland) mortgaged two real properties to petitioner Asia United Bank (AUB) as security for the loans of Smartnet Philippines, Inc. (SPI). Goodland later repudiated the mortgage, alleging fraud and falsification, claiming its vice president signed a blank deed of mortgage with the understanding that the company would act as a third-party accommodation mortgagor, not to secure SPI's loans. Petitioners allegedly fraudulently filled up the blank forms. Procedural History: Goodland filed Civil Case No. B-6242 seeking to nullify the mortgage on the ground of fraud. Subsequently, AUB foreclosed the properties due to SPI's non-payment, with AUB as the highest bidder. Goodland then filed Civil Case No. B-7110 seeking to nullify the foreclosure, asserting it never agreed to mortgage the properties. AUB moved for the dismissal of Civil Case No. B-7110 on the ground of willful and deliberate forum-shopping, which was granted. The RTC also dismissed Civil Case No. B-6242 with prejudice on the same ground, noting the identical allegations and reliefs sought, and Goodland's failure to report the filing of Civil Case No. B-7110. The CA reversed the RTC, holding that Goodland asserted dissimilar rights and sought different reliefs in the two cases. The Petition: Petitioners sought reversal of the CA decision, arguing that the CA erred in reinstating Civil Case No. 6242, as Goodland committed willful and deliberate forum-shopping by filing both cases.
Issue(s)
Whether the Court of Appeals erred in reinstating Civil Case No. B-6242. Whether respondent Goodland Company, Inc. committed willful and deliberate forum-shopping.
Ruling
The petition is granted. The August 11, 2009 decision and November 10, 2009 resolution of the Court of Appeals are reversed and set aside. The August 16, 2007 and December 5, 2007 orders of the Regional Trial Court are reinstated.
Ratio Decidendi
On the dismissal of Civil Case No. B-6242: Rule 7, Section 5 of the Rules of Court requires every litigant to notify the court of the filing or pendency of a complaint involving the same or similar action or claim within five days of learning of that fact. While both Civil Case Nos. B-6242 and B-7110 were raffled to the same court, the RTC of Biñan, Laguna, Branch 25, respondent did not report the filing of Civil Case No. B-7110 in the proceedings of Civil Case No. 6242. This fact clearly established respondent’s furtive intent to conceal the filing of Civil Case No. B-7110 for the purpose of securing a favorable judgment. For this reason, Civil Case No. 6242 was correctly dismissed with prejudice. On the issue of forum shopping: Forum shopping is defined as the institution of two or more actions or proceedings grounded on the same cause, on the supposition that one or the other court would render a favorable disposition. It exists when the elements of litis pendentia are present or where a final judgment in one case will amount to res judicata in another. In Civil Case No. B-6242, respondent sought to nullify the deed of real estate mortgage on the ground that it did not consent to encumber the Laguna properties as security for SPI’s loan. In Civil Case No. B-7110, respondent claimed AUB did not have a right to foreclose over the Laguna properties because it never agreed to mortgage the same. A cursory examination of respondent’s allegations in both cases reveals the similarity of the two actions, as in both cases, respondent essentially claimed that it did not consent to the mortgage and, for this reason, sought to nullify both the mortgage and the foreclosure. Thus, by filing Civil Case No. B-7110 while Civil Case No. B-6242 was still pending, respondent engaged in willful and deliberate forum-shopping.
Main Doctrine
Filing of two or more actions or proceedings grounded on the same cause, where a final judgment in one case will amount to res judicata in another, constitutes willful and deliberate forum shopping, warranting dismissal with prejudice.