G.R. No. 195546 and G.R. No. 195561; March 14, 2012
GOODLAND COMPANY, INC., Petitioner, vs. ASIA UNITED BANK, ET AL., Respondents.

FACTS

Petitioner Goodland Company, Inc. mortgaged its Makati property to respondent Asia United Bank (AUB) to secure a loan extended to a third party, Radio Marine Network (Smartnet), Inc. The mortgage was duly registered and annotated on the title. Subsequently, Smartnet defaulted on its loan. AUB initiated extrajudicial foreclosure proceedings. To forestall the foreclosure, Goodland filed a complaint for annulment of mortgage and damages with the Regional Trial Court (RTC) of Makati, Branch 66, docketed as Civil Case No. 06-1280. Goodland alleged that the mortgage was falsified and that the signed document was merely intended as a “comfort document,” not to be enforced.
While Civil Case No. 06-1280 was pending, the foreclosure proceeded. AUB emerged as the highest bidder at the public auction. Goodland then filed a second complaint, docketed as Civil Case No. 08-100, before the RTC of Makati, Branch 133. This action sought to annul the foreclosure sale and the certificate of sale issued to AUB, essentially reiterating the claim of falsification of the mortgage deed.

ISSUE

Whether the filing of Civil Case No. 08-100 (to annul the foreclosure sale) constitutes forum shopping, given the pendency of Civil Case No. 06-1280 (to annul the mortgage itself).

RULING

Yes, the filing of the second case constitutes willful and deliberate forum shopping, warranting its dismissal. The Supreme Court affirmed the Court of Appeals’ dismissal of Civil Case No. 08-100. The test for forum shopping is whether in the two or more cases pending, there is identity of parties, rights or causes of action, and reliefs sought. Here, both cases involved the same primary parties: Goodland as plaintiff and AUB as defendant. Both actions were fundamentally anchored on the same core allegation—that the real estate mortgage was falsified and therefore void. The reliefs sought were also identical in substance: the ultimate objective in both suits was to invalidate AUB’s security interest and prevent the loss of the Makati property. The fact that the second case specifically targeted the foreclosure sale, a subsequent event, did not create a new cause of action. The validity of the foreclosure sale was a direct and inevitable consequence of the validity of the mortgage itself. A ruling in the first case on the mortgage’s nullity would render the foreclosure sale void, making the second case unnecessary. By filing the second case while the first was pending, Goodland engaged in forum shopping, which is an act of malpractice that trifles with the courts and degrades the administration of justice. The dismissal of the second case with prejudice was therefore proper.