G.R. No. 190231; December 8, 2010
ASIA UNITED BANK and ABRAHAM CO, Petitioners, vs. GOODLAND COMPANY, INC., Respondent.

FACTS

Respondent Goodland Company, Inc. executed a real estate mortgage over its Laguna properties in favor of petitioner Asia United Bank (AUB) to secure the loans of Smartnet Philippines, Inc. (SPI). Respondent later repudiated the mortgage, alleging its vice-president signed a blank deed under the understanding it would only act as an accommodation mortgagor, and that AUB fraudulently completed and registered the document. On January 16, 2003, respondent filed Civil Case No. B-6242 in the RTC of Biñan, Laguna, seeking to nullify the mortgage on the ground of fraud. Subsequently, AUB foreclosed the properties. On November 26, 2006, respondent filed another case, Civil Case No. B-7110, in the same RTC branch, seeking to nullify the foreclosure sale, claiming it never agreed to the mortgage.
The RTC, upon AUB’s motion, dismissed Civil Case No. B-7110 with prejudice on March 15, 2007, finding willful forum-shopping. Later, on August 16, 2007, the RTC also dismissed Civil Case No. B-6242 with prejudice on the same ground, noting the identical allegations and reliefs in both cases and respondent’s failure to report the filing of the second case as required by the rules. The Court of Appeals reversed, holding the two actions asserted dissimilar rights and sought different reliefs, thereby reinstating Civil Case No. B-6242.

ISSUE

Whether the Court of Appeals erred in reinstating Civil Case No. B-6242 by ruling that respondent did not commit willful and deliberate forum-shopping.

RULING

The Supreme Court granted the petition and reinstated the RTC’s dismissal with prejudice. Forum-shopping exists when the elements of litis pendentia are present, where there is identity of parties, rights asserted, reliefs prayed for, and the facts upon which the reliefs are founded. A cursory examination reveals that in both Civil Case No. B-6242 (to nullify the mortgage) and Civil Case No. B-7110 (to nullify the foreclosure), respondent’s core allegation was identical: it did not consent to mortgage its properties for SPI’s loans. The reliefs sought, though phrased differently, were fundamentally the same—to invalidate the encumbrance based on the same claim of lack of consent. Therefore, by filing the second case while the first was pending, respondent engaged in willful forum-shopping.
Rule 7, Section 5 of the Rules of Court requires a litigant to report the filing of a similar action within five days. Respondent, despite both cases being raffled to the same court branch, did not report the filing of Civil Case No. B-7110 in the proceedings of Civil Case No. B-6242. This failure demonstrated a furtive intent to conceal the second filing to secure a favorable judgment. Consequently, the dismissal of Civil Case No. B-6242 with prejudice was correct, as the acts constituted willful and deliberate forum-shopping, a ground for summary dismissal with prejudice under the rules. The CA decision was reversed.