Goodland Co., Inc. v. Asia United Bank

G.R. No. 195546, 195561 (March 14, 2012)

Goodland Co. guilty of forum shopping; cases dismissed with prejudice, upheld by Supreme Court.

Facts:

In July 1999, Goodland Company, Inc. (petitioner) mortgaged two parcels of land in Sta. Rosa, Laguna, covered by Transfer Certificate of Title (TCT) Nos. 321672 and 321673, to Asia United Bank (AUB) as collateral for loans extended to Radio Marine Network (Smartnet), Inc. (RMNSI). Additionally, Goodland executed a Third Party Real Estate Mortgage (REM) over a 5,801-square meter property in Makati City, covered by TCT No. 114645. The REMs were duly registered with the respective Registry of Deeds.

Subsequently, Goodland repudiated the REMs, alleging that AUB and its officers had unlawfully filled out the blank mortgage forms and falsified the entries. To prevent foreclosure, Goodland filed two lawsuits concerning the Laguna properties and a separate suit regarding the Makati property.

In January 2003, Goodland filed a complaint for annulment of the mortgage in the Regional Trial Court (RTC) of Biñan, Laguna, claiming the REM was falsified. While this case was pending, AUB initiated extrajudicial foreclosure proceedings due to RMNSI's default on its loan. AUB emerged as the highest bidder in the public auction and obtained a Certificate of Sale.

Goodland subsequently filed another suit in November 2006 to annul the foreclosure sale and enjoin the consolidation of title in favor of AUB, which the RTC dismissed due to forum shopping, as it was based on the same allegations as the earlier case.

In January 2003, Goodland also filed a suit in the RTC of Makati City against AUB and its officers, alleging that the REM over the Makati property was executed under false pretenses and sought to annul the foreclosure sale. This case was later consolidated with the earlier case from Laguna.

The RTC dismissed both cases, citing forum shopping, and Goodland's appeals to the Court of Appeals (CA) were also dismissed. Goodland then filed separate petitions for review with the Supreme Court.

Legal Issues:

  1. Whether Goodland was guilty of forum shopping by filing multiple cases based on the same cause of action.
  2. Whether the dismissal of Goodland's cases by the RTC and CA was justified.

Arguments:

Petitioner (Goodland Company, Inc.):

  • Goodland argued that there was no forum shopping as the two cases could yield different outcomes regarding the validity of the REM and the legality of the foreclosure.
  • It contended that the second case was necessary to address the extrajudicial foreclosure, which was a supervening event not covered in the first case.
  • Goodland claimed it disclosed the pendency of the first case in the second case's certification of non-forum shopping.

Respondents (Asia United Bank and others):

  • Respondents maintained that Goodland was guilty of forum shopping, as both cases involved the same parties, issues, and reliefs, which would result in conflicting judgments.
  • They argued that the second case was merely a reiteration of the first and that the issues raised were already being litigated in the first case.
  • Respondents emphasized that Goodland's actions were deliberate and malicious, aimed at securing a favorable judgment through multiple filings.

Court's Decision and Legal Reasoning:

The Supreme Court ruled against Goodland, affirming the CA's decision to dismiss the petitions. The Court found that all elements of forum shopping were present, including the identity of parties, rights asserted, and reliefs prayed for. The Court emphasized that both cases were based on the same facts regarding the execution of the REM and the subsequent foreclosure, which would lead to res judicata.

The Court noted that Goodland's claims in the second case were essentially a continuation of the first case's issues, and the relief sought in both cases was intertwined. The Court also highlighted Goodland's failure to properly disclose the pendency of the first case in the second case's certification, which constituted a violation of the rules against forum shopping.

The Court reiterated that forum shopping undermines the integrity of the judicial system and that parties cannot escape the prohibition by varying the form of action or the relief sought. The ruling underscored the importance of judicial economy and the avoidance of conflicting decisions in similar cases.

Significant Legal Principles Established:

  • Forum shopping occurs when a party files multiple suits involving the same parties and cause of action, leading to the potential for conflicting judgments.
  • The identity of parties, rights asserted, and reliefs prayed for must be considered to determine if forum shopping exists.
  • A party's failure to disclose the pendency of related cases can result in dismissal for forum shopping.