FIRST
DIVISION
ASIA
UNITED BANK and G.R. No. 190231
ABRAHAM
CO,
Petitioners, Present:
CORONA,
C.J.,
Chairperson,
- v e r s u s
- LEONARDO-DE
CASTRO,*
DEL CASTILLO,
ABAD**
and
PEREZ, JJ.
GOODLAND
COMPANY, INC.,
Respondent. Promulgated:
December 8, 2010
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R
E S O L U T I O N
CORONA, C.J.:
This
petition under Rule 45 seeks to reverse and set aside the August 11, 2009
decision[1]
and November 10, 2009 resolution[2] of
the Court of Appeals (CA) in CA-G.R. CV No. 91269. The CA decision and
resolution affirmed the August 16, 2007[3]
and December 5, 2007[4]
orders of the Regional Trial Court (RTC) of Biñan, Laguna, Branch 25 dismissing
Civil Case No. B-6242 with prejudice on the ground of willful and deliberate forum-shopping.
The
antecedents follow.
On July 21, 1999,
respondent Goodland Company, Inc. mortgaged[5] its
two real properties in Laguna[6] to
petitioner Asia United Bank (AUB) as security for the loans of Smartnet
Philippines, Inc. (SPI). Respondent’s vice president, Gilbert G. Guy,[7]
signed the contract of real estate mortgage on its behalf.
On January 29, 2002, respondent
sent a letter to petitioners[8] repudiating
the mortgage over the Laguna properties and accusing them of fraud and
falsification. Respondent claimed that Guy signed a blank deed of real estate mortgage
on the understanding that the company would act as a third-party accommodation
mortgagor for SPI. In other words, respondent did not intend to secure the
loans of SPI or mortgage the Laguna properties. Petitioners, however, reneging on
this understanding, fraudulently filled up the blank pre-signed forms and
registered the same. Thus, respondent demanded that petitioners release the
encumbrance over the Laguna properties; otherwise, it would take appropriate
legal actions for fraud against petitioners.[9] Petitioners
ignored respondent’s demand.
On
January 16, 2003, respondent filed Civil Case No. B-6242[10]
in the RTC of Biñan, Laguna, Branch 25. Respondent, essentially reiterating the
contents of the January 29, 2002 letter,[11]
sought to nullify the mortgage over the Laguna properties on the ground of
fraud.[12]
Meanwhile,
AUB foreclosed on the Laguna properties due to SPI’s failure to pay its loans.
The properties were sold in a public auction in which the bank emerged as the
highest bidder.
On November 26, 2006, respondent
filed Civil Case No. B-7110[13] in
the RTC of Biñan, Laguna, Branch 25. Respondent sought to nullify the
foreclosure of the Laguna properties on the ground that it never agreed to mortgage
the same to AUB as security for SPI’s loans.[14]
On the motion of AUB,[15] Civil
Case No. B-7110 was dismissed with prejudice in an order dated March 15, 2007[16]
on the ground of willful and deliberate forum-shopping.
On August 16, 2007, the
RTC likewise dismissed Civil Case No. B-6242[17]
on motion of petitioners.[18] It
noted that the allegations of and reliefs sought by respondent in Civil Case Nos.
B-6242 and B-7110 were identical and that the respondent did not inform the
court that it filed Civil Case No. 7110. Respondent therefore did not comply
with its undertaking in the certificate of non-forum shopping that it would
report the filing of a complaint involving the same or similar action or claim
to the court within five days of learning that such a complaint had been filed.[19] Thus,
the RTC found respondent guilty of engaging in willful and deliberate
forum-shopping and consequently dismissed Civil Case No. B-6242 with prejudice.[20]
Respondent moved for
reconsideration but it was denied in an order dated December 5, 2007.[21]
Respondent appealed the
aforementioned August 16, 2007 and December 5, 2007 orders to the CA.[22]
In a decision dated August
11, 2009, [23]
the CA granted the appeal holding that respondent asserted dissimilar rights
and sought different reliefs in Civil Case No. B-6242 and Civil Case No. B-7110.[24] It,
in effect, reinstated Civil Case No. B-6242.
Petitioners moved for
reconsideration but it was denied in a resolution dated November 10, 2009.[25]
Petitioners thus
availed of this recourse claiming that the CA erred in reinstating Civil Case
No. 6242.[26]
They assert that respondent committed willful and deliberate forum-shopping by
filing Civil Case Nos. B-6242 and B-7110.
We
grant the petition.
Forum shopping is 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.[27] 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.[28]
In Civil Case No.
B-6242, respondent sought to nullify the deed of real estate mortgage respondent
executed in favor of the AUB on the ground that it did not consent to encumber
the Laguna properties as security for SPI’s loan. On the other hand, 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 Civil Case No. B-6242 and B7110 reveals the
similarity of the two actions. 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.
The pivotal issue in
this petition is whether Civil Case No. B-6242 was aptly dismissed with
prejudice.
Rule 7, Section 5 of
the Rules of Court[29]
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.[30]
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.[31]
WHEREFORE, the petition is hereby GRANTED. The August 11, 2009
decision and November 10, 2009 resolution of the Court of Appeals in CA-G.R. CV
No. 9126 are REVERSED and SET ASIDE. The August 16, 2007 and
December 5, 2007 orders
of the Regional
Trial Court of
Biñan, Laguna, Branch 25 in Civil Case No. B-6242 are REINSTATED.
No
pronouncement as to costs.
SO
ORDERED.
Chief Justice
Chairperson
WE CONCUR:
Associate
Justice Associate Justice
ROBERTO A. ABAD JOSE PORTUGAL PEREZ
Associate Justice Associate Justice
Pursuant to Section 13,
Article VIII of the Constitution, I certify that the conclusions in the above
Resolution had been reached in consultation before the case was assigned to the
writer of the opinion of the Court’s Division.
Chief Justice
* Per Special Order No. 916 dated November 24, 2010.
** Per Special Order No. 917 dated November 24, 2010.
[1] Penned by Associate Justice Juan Q. Enriquez and concurred in by Associate Justices Celia C. Librea-Leagogo and Antonio L. Villamor of the Tenth Division of the Court of Appeals. Rollo, pp. 40-51.
[2] Penned by Associate Justice Juan Q. Enriquez and concurred in by Associate Justices Antonio L. Villamor and Jane Aurora C. Lantion of the Special Former Tenth Division of the Court of Appeals. Id., pp. 53-54.
[3] Penned by Presiding Judge Teodoro N. Solis. Id., pp. 259-264.
[4] Id., p. 276.
[5] Deed of real estate mortgage. Id., pp. 80-83.
[6] Covered by TCT Nos. T-321672 and T-321673. Id., pp. 72-79.
[7] The contract of real estate mortgage reveals that Mr. Guy was also president of SPI.
[8] Petitioner Abraham Co is president of AUB.
[9] Rollo, pp. 85-87.
[10] An action for declaration of nullity of real estate mortgage and damages.
[11] Respondent claimed that Guy signed a blank deed of real estate mortgage as a “comfort document” to show that SPI (which did not have substantial property) obtained the loans in good faith. In other words, it agreed to act as third-party accommodation mortgagor but did not consent to mortgage the Laguna properties as security for SPI’s loans. For this reason, respondent claimed that the deed of real estate mortgage it allegedly executed was void. Id., pp. 55-71.
[12] Id., pp. 67-68.
[13] An application for preliminary injunction and/or annulment of extrajudicial foreclosure sale, sheriff’s certificate of sale, consolidation of ownership, cancellation and/or issuance of new titles, writ of possession and damages with prayer for temporary restraining order, and/or writ of preliminary injunction.
[14] Rollo, pp. 181-211.
[15] Motion to dismiss dated December 10, 2006. Id., pp. 116-175.
[16] Penned by Acting Presiding Judge Romeo C. de Leon. Id., pp. 212-213.
[17] Supra, note 4.
[18] Motion to dismiss and supplemental motion to dismiss. Id., pp. 178 -186 and 214-223.
[19] See Rules
of Court, Rule 7, Sec. 5:
Section 5. Certification against forum shopping. The plaintiff or principal party shall
certify under oath in the complaint or other initiatory pleading asserting a
claim for relief, or in a sworn certification annexed thereto and
simultaneously filed therewith: (a) that he has not theretofore commenced any
action or filed any claim involving the same issues in any court, tribunal or
quasi-judicial agency and, to the best of his knowledge, no such other action
or claim is pending therein; (b) if there is such other pending action or
claim, a complete statement of the present status thereof; and (c) if he
should thereafter learn that the same or similar action or claim has been filed
or is pending, he shall report that fact within five (5) days therefrom
to the court wherein his aforesaid complaint or initiatory pleading has been
filed.
Failure to comply with the foregoing requirements shall not be curable by mere amendment of the complaint or other initiatory pleading but shall be cause for the dismissal of the case without prejudice, unless otherwise provided, upon motion and after hearing. The submission of a false certification or non-compliance with any of the undertakings therein shall constitute indirect contempt of court, without prejudice to the corresponding administrative and criminal actions. If the acts of the party or his counsel clearly constitute willful and deliberate forum shopping, the same shall be ground for summary dismissal with prejudice and shall constitute direct contempt, as well as a cause for administrative sanctions. (emphasis supplied)
[20] Rollo, pp. 263- 264.
[21] Supra note 4.
[22] Notice of appeal dated January 4, 2008 and filed January 9, 2008. Id., p. 277.
[23] Supra note 1.
[24] Id., pp. 47-48.
[25] Supra note 2.
[26] Id., pp. 3-39.
[27] Metropolitan Bank and Trust Company v. Bance, G.R. No. 167280, 30 April 2008, 553 SCRA 507, 517-519 and Lo Bun Tiong v. Balboa, G.R. No. 158177, 28 January 2007, 542 SCRA 504, 509 (citations omitted).
[28] Yu v. Lim, G.R. No. 182291, 22 September 2010 (citations omitted). Litis pendentia requires the concurrence of the following requisites: (1) identity of parties, or at least such parties as those representing the same interests in both actions; (2) identity of rights asserted and reliefs prayed for, the reliefs being founded on the same facts; and (3) identity with respect to the two preceding particulars in the two cases, such that any judgment that may be rendered in the pending case, regardless of which party is successful, would amount to res judicata in the other case.
[29] Supra note 19.
[30] Rollo, p. 263.
[31] Air Materiel Wing Savings and Loan Association et al. v. Manay, et al., G.R. No. 175338, 29 April 2008, 552 SCRA 643, 654-655.