Facts:

The case involves Asia United Bank (AUB) and Abraham Co as petitioners against Goodland Company, Inc. as the respondent. The events leading to this case began on July 21, 1999, when Goodland Company, Inc. mortgaged two of its real properties in Laguna to AUB as collateral for loans taken by Smartnet Philippines, Inc. (SPI). The mortgage contract was signed by Goodland's vice president, Gilbert G. Guy. However, on January 29, 2002, Goodland sent a letter to AUB repudiating the mortgage, alleging that Guy had signed a blank deed of mortgage under the impression that Goodland was merely acting as a third-party accommodation mortgagor for SPI. Goodland claimed that AUB had fraudulently filled in the mortgage details and registered the documents without their consent. Following this, Goodland demanded the release of the encumbrance on the properties, threatening legal action for fraud if AUB failed to comply.

On January 16, 2003, Goodland filed Civil Case No. B-6242 in the R...

Facts:

Background of the Mortgage Agreement

• On July 21, 1999, respondent Goodland Company, Inc. mortgaged two real properties in Laguna to petitioner Asia United Bank (AUB) as security for the loans of Smartnet Philippines, Inc. (SPI). The contract of real estate mortgage was signed by Gilbert G. Guy, respondent's vice president, on behalf of the company.

Repudiation of the Mortgage

• On January 29, 2002, respondent sent a letter to petitioners repudiating the mortgage over the Laguna properties. Respondent accused petitioners of fraud and falsification, claiming that Guy signed a blank deed of real estate mortgage under the understanding that the company would act as a third-party accommodation mortgagor for SPI. Respondent alleged that it never intended to secure SPI's loans or mortgage the Laguna properties. It demanded the release of the encumbrance over the properties and threatened legal action for fraud if petitioners failed to comply.

Filing of Civil Case No. B-6242

• On January 16, 2003, respondent filed Civil Case No. B-6242 in the Regional Trial Court (RTC) of Biñan, Laguna, seeking to nullify the mortgage over the Laguna properties on the ground of fraud. Respondent reiterated the allegations in its January 29, 2002 letter.

Foreclosure of the Properties

• Meanwhile, AUB foreclosed on the Laguna properties due to SPI's failure to pay its loans. The properties were sold in a public auction, with AUB emerging as the highest bidder.

Filing of Civil Case No. B-7110

• On November 26, 2006, respondent filed Civil Case No. B-7110 in the same RTC, seeking to nullify the foreclosure of the Laguna properties. Respondent claimed that it never agreed to mortgage the properties to AUB as security for SPI's loans.

Dismissal of Civil Case No. B-7110

• On March 15, 2007, the RTC dismissed Civil Case No. B-7110 with prejudice on the ground of willful and deliberate forum-shopping.

Dismissal of Civil Case No. B-6242

• On August 16, 2007, the RTC dismissed Civil Case No. B-6242 with prejudice on the same ground of forum-shopping. The court noted that the allegations and reliefs sought in both cases were identical and that respondent failed to inform the court about the filing of Civil Case No. B-7110, violating the certification against forum shopping.

Appeal to the Court of Appeals

• Respondent appealed the RTC's dismissal of Civil Case No. B-6242 to the Court of Appeals (CA). On August 11, 2009, the CA reversed the RTC's decision, holding that the two cases involved dissimilar rights and sought different reliefs. The CA reinstated Civil Case No. B-6242.

Petition to the Supreme Court

• Petitioners filed a petition with the Supreme Court, arguing that the CA erred in reinstating Civil Case No. B-6242. They contended that respondent engaged in willful and deliberate forum-shopping by filing two cases with identical causes of action.

Issue:

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Ruling:

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Ratio:

• Forum Shopping: Forum shopping occurs when a party files multiple cases involving the same cause of action, with the expectation that one court will render a favorable judgment. The elements of litis pendentia (identity of parties, rights asserted, and reliefs sought) must be present for forum shopping to exist.
• Identity of Causes of Action: In both Civil Case Nos. B-6242 and B-7110, respondent essentially claimed that it did not consent to the mortgage of the Laguna properties and sought to nullify both the mortgage and the foreclosure. The similarity of the allegations and reliefs sought in both cases established that respondent engaged in forum shopping.
• Violation of Certification Against Forum Shopping: Respondent failed to notify the court of the filing of Civil Case No. B-7110 while Civil Case No. B-6242 was pending, violating Rule 7, Section 5 of the Rules of Court. This failure demonstrated respondent's intent to conceal the filing of the second case, justifying the dismissal of Civil Case No. B-6242 with prejudice.

Conclusion:

The Supreme Court ruled that respondent's actions constituted willful and deliberate forum-shopping. The RTC's dismissal of Civil Case No. B-6242 with prejudice was proper, and the CA's decision to reinstate the case was erroneous. The petition was granted, and the RTC's orders were reinstated.