Asia United Bank v. Goodland Co. G.R. No. 191388, March 9, 2011

Facts:

Respondent Goodland Company, Inc. (Goodland) executed a Third Party Real Estate Mortgage (REM) over two parcels of land in favor of petitioner Asia United Bank (AUB). The mortgage secured the obligation amounting to ₱250 million of Radiomarine Network, Inc. (RMNI). Goodland then filed a Complaint before the Regional Trial Court for the annulment of the REM on the ground that the same was falsified and done in contravention of the parties’ verbal agreement (Annulment Case).

While the Annulment Case was pending, RMNI defaulted in the payment of its obligation to AUB, prompting the latter to exercise its right under the REM to extrajudicially foreclose the mortgage. It filed its Application for Extrajudicial Foreclosure of Real Estate Mortgage with the Office of the Executive Judge. The mortgaged properties were sold in public auction to AUB as the highest bidder. It was issued a Certificate of Sale, which was registered with the Registry of Deeds of Calamba. Before AUB could consolidate its title, Goodland filed another Complaint before the RTC against AUB. This Complaint sought to annul the foreclosure sale and to enjoin the consolidation of title in favor of AUB (Injunction Case).

Petitioners then filed a Motion to Dismiss with Opposition to a Temporary Restraining Order in the Injunction Case. They brought to the trial court’s attention Goodland’s forum shopping given the pendency of the Annulment Case. They argued that the two cases both rely on the alleged falsification of the real estate mortgage as basis for the reliefs sought.

the trial court acted favorably on petitioners’ motion and dismissed the Injunction Case with prejudice on the grounds of forum shopping and litis pendentia.

Goodland appealed the same to the CA which ruled in favor of Goodland and ordered the reinstatement of the Injunction Case in the trial court.

Hence, the instant petition.

Issue:

Whether Goodland is guilty of forum shopping?

Held:

Yes, There is forum shopping “when a party repetitively avails of several judicial remedies in different courts, simultaneously or successively, all substantially founded on the same transactions and the same essential facts and circumstances, and all raising substantially the same issues either pending in or already resolved adversely by some other court.”

Forum shopping can be committed in three ways: (1) filing multiple cases based on the same cause of action and with the same prayer, the previous case not having been resolved yet (where the ground for dismissal is litis pendentia); (2) filing multiple cases based on the same cause of action and the same prayer, the previous case having been finally resolved (where the ground for dismissal is res judicata); and (3) filing multiple cases based on the same cause of action, but with different prayers (splitting causes of action, where the ground for dismissal is also either litis pendentia or res judicata).

Common in these types of forum shopping is the identity of the cause of action in the different cases filed. Cause of action is defined as “the act or omission by which a party violates the right of another.”

While the main relief sought in the Annulment Case (nullification of the REM) is ostensibly different from the main relief sought in the Injunction Case (nullification of the extrajudicial foreclosure and injunction against consolidation of title), the cause of action which serves as the basis for the said reliefs remains the same — the alleged nullity of the REM. Thus, what is involved here is the third way of committing forum shopping, i.e., filing multiple cases based on the same cause of action, but with different prayers. As previously held by the Court, there is still forum shopping even if the reliefs prayed for in the two cases are different, so long as both cases raise substantially the same issues.