Goodland Company v. Asia United Bank, et. al.

G.R. No. 195546

March 14, 2012
VILLARAMA, JR., J.

DOCTRINE:

Definition of Cause Of Action. — Cause of action is defined in Section 2, Rule 2 of the Rules
of Court as the act or omission by which a party violates the right of another.

Forum Shopping; Elements of Forum Shopping.

FACTS:

Petitioner Goodland Company, Inc. mortgaged its two parcels of land situated in
Sta. Rosa, Laguna. The Third Party Real Estate Mortgage (REM) secured the loans
extended by respondent Asia United Bank ("AUB") to Radio Marine Network
(Smartnet), Inc. (RMNSI), doing business as Smartnet Philippines, under the latter’s
Php 250 million Omnibus Credit Line with AUB.

In addition to the aforesaid collaterals, Goodland executed a Third Party REM over
its property located in Makati City. The REMs, both signed by Gilbert G. Guy,
President of Goodland Company, Inc., were duly registered by AUB with the
Registry of Deeds.

Subsequently, however, Goodland repudiated the REMs by claiming that AUB and
its officers unlawfully filled up the blank mortgage forms and falsified the entries
therein. The Laguna properties were the subject of two suits filed by Goodland to
forestall their imminent foreclosure, and similar actions were likewise instituted by
Goodland involving the Makati property which is the subject of the present case.

Goodland filed a complaint for annulment of mortgage on the ground that said
REM was falsified and in contravention of the parties’ agreement that the blank
mortgage form would merely serve as "comfort document" and not to be registered
by AUB. While said case was pending, RMNSI/Smartnet defaulted on its loan
obligation, which prompted AUB to exercise its right under the REM.

Prior to the consolidation of title in the foreclosing mortgagee (AUB), Goodland

commenced a second suit. The complaint sought to annul the foreclosure sale and
enjoin the consolidation of title in favor of AUB, on the ground of alleged
falsification of the REM.

AUB, et. al. moved to dismiss Civil Case No. B-7110, calling the attention of the RTC
to Goodland’s forum shopping in view of the pendency of Civil Case No. B-6242.
They argued that the two cases were anchored on the alleged falsification of the
REM as basis for the reliefs sought. The RTC granted the said motion. Said court
explained that the injunction case (B-7110) and annulment case (B-6242) were
founded on the same transactions, same essential facts and circumstances, and raise
substantially the same issues.

Goodland appealed both dismissals to the CA, the separate appeals it filed were the
injunction case and annulment case. The CA concurred with the RTC. Goodland
filed two separate motions for reconsideration which the CA likewise denied.

Goodland filed before this Court two separate petitions through different counsels
assailing the same CA decision dismissing their two appeals and resolution denying
their twin motions for reconsideration.

ISSUE:

Whether or not there is forum shopping.

RULING:

Yes. In the case at bar, forum shopping exists.

There is forum shopping when the following elements are present:

"(a) identity of parties, or at least such parties as represent the same interests in both
actions;

(b) identity of rights asserted and relief prayed for, the relief being founded on the
same facts;

(c) the identity of the two preceding particulars[,] such that any judgment rendered
in the other action will, regardless of which party is successful, amount to res
judicata in the action under consideration; said requisites [are] also constitutive of
the requisites for auter action pendant or lis pendens."

The essence of forum shopping is the filing of multiple suits involving the same
parties for the same cause of action, either simultaneously or successively, for the
purpose of obtaining a favorable judgment, through means other than by appeal or
certiorari.

All the foregoing elements are present in this case.

There can be no dispute that the prayer for relief in the two cases was based on the
same attendant facts in the execution of REMs over petitioner’s properties in favor
of AUB. While the extrajudicial foreclosure of mortgage, consolidation of ownership
in AUB and issuance of title in the latter’s name were set forth only in the second
case (Civil Case No. 06-1032), these were simply the expected consequences of the
REM transaction in the first case (Civil Case No. 03-045). These eventualities are
precisely what Goodland sought to avert when it filed the first case. Undeniably
then, the injunctive relief sought against the extrajudicial foreclosure, as well as the
cancellation of the new title in the name of the creditor-mortgagee AUB, were all
premised on the alleged nullity of the REM due to its allegedly fraudulent and
irregular execution and registration – the same facts set forth in the first case. In
both cases, Goodland asserted its right as owner of the property subject of the REM,
while AUB invoked the rights of a foreclosing creditor-mortgagee.

There is also identity of parties. The parties in both cases are substantially the same
as they represent the same interests and offices/positions, and who were impleaded
in their respective capacities with corresponding liabilities/duties under the claims
asserted.

With respect to identity of cause of action, a cause of action is defined in Section 2,

Rule 2 of the Rules of Court as the act or omission by which a party violates the
right of another. This Court has laid down the test in determining whether or not
the causes of action in the first and second cases are identical, to wit: would the
same evidence support and establish both the present and former cause of action? If
so, the former recovery is a bar; if otherwise, it does not stand in the way of the
former action.

In the first case, petitioner alleged the fraudulent and irregular execution and
registration of the REM which violated its right as owner who did not consent
thereto, while in the second case petitioner cited further violation of its right as
owner when AUB foreclosed the property, consolidated its ownership and obtained
a new TCT in its name.

The cause of action in the earlier Annulment Case is the alleged nullity of the REM
(due to its allegedly falsified or spurious nature) which is allegedly violative of
Goodland’s right to the mortgaged property. It serves as the basis for the prayer for
the nullification of the REM. The Injunction Case involves the same cause of action,
inasmuch as it also invokes the nullity of the REM as the basis for the prayer for the
nullification of the extrajudicial foreclosure and for injunction against consolidation
of title. 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.

There can be no determination of the validity of the extrajudicial foreclosure and the
propriety of injunction in the Injunction Case without necessarily ruling on the
validity of the REM, which is already the subject of the Annulment Case. The
identity of the causes of action in the two cases entails that the validity of the
mortgage will be ruled upon in both, and creates a possibility that the two rulings
will conflict with each other. This is precisely what is sought to be avoided by the
rule against forum shopping.

The substantial identity of the two cases remains even if the parties should add
different grounds or legal theories for the nullity of the REM or should alter the
designation or form of the action. The well-entrenched rule is that "a party cannot,
by varying the form of 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 totality of circumstances considered, plaintiff’s forum shopping committed in

multifarious fashion cannot but be willful and deliberate. Hence, consistent with
established rule and jurisprudence, the same is punishable by and results in the
summary dismissal of the actions filed. Both Civil Case No. 03-045 and Civil Case
No.06-1032 are therefore dismissed with prejudice.