ASIA UNITED BANK vs. GOODLAND CO.

G.R. No. 191388

FACTS: Respondent Goodland Company Inc. executed a Third Party Real Estate Mortgage
(REM) over two parcels
of land located in Sta. Rosa, Laguna, in favor of petitioner Asia United Bank (AUB). This mortgage
secured the
obligation amounting to PHP 250,000,000 of Radiomarine Network, Inc. (RMNI) doing business as
Smartnet
Philippines, to AUB. The REM was registered on March 8, 2001 in the Registry of Deeds of
Calamba, Laguna.
Respondent then filed a complaint in the RTC of Biñan, Laguna, for the annulment of the REM on
the ground that
the same was falsified and done in contravention of the parties’ verbal agreement. While the same
was pending,
RMNI defaulted in the payment of its obligation to AUB, prompting AUB to exercise the right to
extrajudicially
foreclose the mortgage. It filed its application for extrajudicial foreclosure under Act No. 3135. The
mortgaged
properties were sold in public auction to the petitioner as the highest bidder.
Before petitioner could consolidate its title, respondent filed a complaint to annul the foreclosure
sale and to enjoin
the consolidation in favor of AUB (injunction). Respondent alleged the falsified nature of the REM
as basis for the
injunction. A few days later, petitioner consolidated its ownership over the parcels of land.
Petitioner then filed a motion to dismiss for the injunction case, stating that the two cases filed by
the respondent
both relied on the alleged falsification of the real estate mortgage as the basis for the reliefs. The
RTC dismissed
the injunction case with prejudice, on the grounds of forum shopping/litis pendentia. Since both
were founded upon
the same transactions, essential facts and circumstances, and both raise the same issues, the
judgment of one
might necessarily bar another or result in res judicata.
Respondent appealed the aforesaid decision to the CA, and the CA reversed the trial court’s
ruling, and ruled for
the respondents. The CA ruled that the two cases that Goodland filed were asking for different
reliefs—the
annulment case sought the nullification of the REM, while the injunction asked for the nullification
of the foreclosure
proceedings, and to enjoin the consolidation of title in favor of the petitioners.
ISSUE: Whether or not the successive filing of annulment and injunction case constituted 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 three ways, according to recent jurisprudence:
1.
filing multiple cases based on the same cause of action and with the same prayer, the previous
case not
having been resolved yet (litis pendentia);
2.
filing multiple cases based on the same cause of action and the same prayer, the previous case
having
been finally resolved (res judicata);
3.
filing multiple cases based on the same cause of action but with different prayers (res judicata / litis
pendentia)
Common in the types of forum shopping is the identity of cause of action in the different cases filed,
which is
defined under Rule 2, Sec. 2 as “the act or omission by which a party violates the right of another.”
The cause of action in the annulment case is the alleged nullity of the REM because of its spurious
nature, which
is allegedly violative of Goodland’s right to the mortgaged property. It serves as the basis for the
nullification of the
REM. The injunction case involves the same cause of action as it also invokes the nullity of the REM
as the basis
of the prayer for nullification of the extrajudicial foreclosure and for injunction against consolidation
of title.
What is involved in the case at bar is the third mode of committing forum shopping, as there is still
forum shopping
even if the reliefs prayed for in the two cases be different, so long as both cases raise substantially
the same
issues. A party cannot, by varying the form of an action, or adopting a different method of
presenting his case,
escape the operation of the principle that one and the same cause of action shall not be twice
litigated.
The RTC decision dismissing the complaint is now reinstated.