FCD PAWNSHOP vs. UNION BANK

FCD PAWNSHOP AND MERCHANDISING COMPANY, ET AL. VS. UNION BANK OF THE PHILIPPINES, ET AL.

G.R. NO. 207914

JANUARY 18, 2017

FACTS:

Together with Felicitas Dionisio-Juguilon and Adelaida Dionisio, petitioners Fortunato C. Dionisio, Jr, and Franklin C. Dionisio owned FCD Pawnshop and Merchandising Company, which in turn was the registered owner of a pared of fond in Makati under Transfer Certificate of Title No. (168302) S-3664, or TCT (168302) S-3664.

In 2009, Fortunato and Franklin entrusted the original owner’s copy of TCT (168302) S-3664 to Atty. Rowena Dionisio. It was later discovered that the said title was used as collateral by Sunyang Mining Corporation to obtain a ₱20 million loan from respondent Union Bank of the Philippines (UBP).

Civil Case No. 11-116 – for annulment of mortgage

On February 9, 2011, Fortunato and Franklin filed against UBP, Sunyang, the Registry of Deeds of Makati, and several others Civil Case No. 11-116, a Petition to annul the Sunyang mortgage and claim for damages, based on the premise that TCT (168302) S-3664 was fraudulently mortgaged.

Civil Case No. 11-1192 – for annulment of foreclosure sale and certificate of sale

On account of perceived irregularities in the foreclosure and sale proceedings, Fortunato and Franklin filed in December 2011 a Complaint against UBP, the Registry of Deeds of Makati, and several others for annulment of the extrajudicial foreclosure and certificate of sale issued, with injunctive relief.

In a written opposition, UBP claimed that the filing of Civil Case No. 11-1192 violated the rule against forum shopping. On March 26, 2012, Branch 133 issued an Order dismissing Civil Case No. 11-1192 on the ground of forum shopping. Fortunato and Franklin moved to reconsider, but the trial court, in a June 14, 2012, held its ground,

Petitioners filed an original Petition for Certiorari before the CA docketed as CA-G.R. SP. No. l26075. However, claiming that there is no forum shopping. On February 28, 2013, the CA rendered the assailed Decision dismissing the Petition.

A Motion for Reconsideration was filed, but the same was denied in a June 28, 2013 Resolution of the CA.

ISSUES:

Whether in maintaining Civil Case Nos. 11-116 and 11-1192, Petitioners are not guilty of forum shopping, nor did they violate the rule on litis pendentia.

RULING OF THE COURT:

It so happened that the assigned ponente has had the occasion to rule on a case where a party instituted two cases against the same set of defendants – one for the annulment of a real estate mortgage, and a second for injunction and nullification of the extrajudicial foreclosure and consolidation of title, rooted in the same real estate mortgage – who moved to dismiss the second case on the ground of forum shopping, claiming that both cases relied on a determination of the same issue: that is, the validity of the real estate mortgage. The trial court dismissed the second case, but the CA ordered its reinstatement. The ponente affirmed the trial court, declaring as follows:

There is forum shopping ‘when a party repetitively avails of several judicial remedies in different courts, simultaneously or successively, all substantially founded on the same transactions and the same essential facts and circumstances, and all raising substantially the same issues either pending in or already resolved adversely by some other court.’ The different ways by which forum shopping may be committed were explained in Chua v. Metropolitan Bank & Trust Company:

Forum shopping can be committed in three ways: (1) filing multiple cases based on the same cause of action and with the same prayer, the previous case not having been resolved yet (where the ground for dismissal is litis pendentia); (2) filing multiple cases based on the same cause of action and the same prayer, the previous case having been finally resolved (where the ground for dismissal is res judicata); and (3) filing multiple cases based on the same cause of action but with different prayers (splitting causes of action, where the ground for dismissal is also either litis pendentia or res judicata).

The factual milieu in the present case is the same as in the above-cited cases. The plaintiffs in both cases first filed a case for annulment of the mortgage, followed by the case for annulment of the foreclosure proceedings. For this reason, the underlying principle in these previously decided cases must apply equally to the instant case. Thus, the Court completely agrees with the CA’s findings that in the event that the court in Civil Case No. 11-116 (annulment of mortgage case) should nullify the Sunyang mortgage, then subsequent proceedings based thereon, including the foreclosure, shall also be nullified. Notably as well, the CA’s observation in Civil Case No. 11-1192 (case for annulment of foreclosure and sale) – that since the complaint therein repeatedly makes reference to an “unlawful” and “fraudulent” Sunyang mortgage, then the same evidence in Civil Case No. 11-116 will have to be utilized- is well-taken.

Petitioners maintain that Civil Case No. 11-1192 (case for annulment of foreclosure and sale) is grounded on specific irregularities committed during the foreclosure proceedings. However, their Complaint in said case reiterates the supposed illegality of the Sunyang mortgage, thus presenting the court in said case with the opportunity and temptation to resolve the issue of validity of the mortgage. There is therefore a danger that a decision might be rendered by the court in Civil Case No. 11-1192 that contradicts the eventual ruling in Civil Case No. 11-116, or the annulment of mortgage case.

The rules of procedure are geared toward securing a just, speedy, and inexpensive disposition of every action and proceeding. “Procedural law has its own rationale in the orderly administration of justice, namely, to ensure the effective enforcement of substantive rights by providing for a system that obviates arbitrariness, caprice, despotism, or whimsicality in the settlement of disputes.” With these principles in mind, the Court would rather have petitioners try their cause of action in Civil Case No. 11-116, rather than leave the trial court in danger of committing error by issuing a decision or resolving an issue in Civil Case No. 11-1192 that should properly be rendered or resolved by the court trying Civil Case No. 11-116.

The Court denied the petition, and the February 28, 2013 Decision and June 28, 2013 Resolution of the Court of Appeals in CA-G.R. SP. No. 126075 are affirmed. Digested by jsg