Facts:

The case involves the petitioners, Asia United Bank (AUB) and Abraham Co, against the respondent, Goodland Company, Inc. The events took place following a mortgage agreement on July 21, 1999, when Goodland mortgaged two real estate properties in Laguna to AUB, primarily to secure loans that were contracted by Smartnet Philippines, Inc. (SPI). Gilbert G. Guy, acting as the vice president of Goodland, signed the mortgage contract. However, on January 29, 2002, Goodland sent a letter to AUB repudiating the mortgage, alleging that Guy had signed a blank deed of mortgage with the understanding that Goodland was merely a third-party accommodation mortgagor for SPI. Goodland claimed that AUB had fraudulently filled out the mortgage documents and demanded the release of the encumbrance on the properties.

The situation escalated with AUB initiating foreclosure proceedings due to SPI's loan defaults. On January 16, 2003, Goodland filed Civil Case No. B-6242 in the Regional Trial Cour

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Facts:

Background and Mortgage Agreement

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

Dispute over Intent and Allegations of Fraud

• On January 29, 2002, respondent sent a letter to the petitioners repudiating the mortgage and accusing them of fraud and falsification.
• The respondent asserted that Guy had signed a blank deed of mortgage under the understanding that the company would act merely as a third-party accommodation mortgagor for SPI, not to secure SPI’s loans by mortgaging the Laguna properties.
• Petitioners, contrary to this understanding, allegedly completed and registered the blank forms in a fraudulent manner, prompting the respondent to demand the release of the encumbrance over its properties.

Initiation of Legal Actions

• On January 16, 2003, the respondent filed Civil Case No. B-6242 in the RTC of BiAan, Laguna, Branch 25 seeking nullification of the mortgage on the ground of fraud, essentially reiterating the contents of its January 29, 2002 letter.
• Meanwhile, AUB proceeded with the foreclosure of the Laguna properties due to SPI’s failure to pay its loans, and subsequently, the properties were sold in a public auction where AUB emerged as the highest bidder.

Subsequent Litigation and Filing of a Second Case

• On November 26, 2006, respondent filed a second case, Civil Case No. B-7110, in the same RTC, seeking to nullify the foreclosure by asserting that it never consented to mortgage the Laguna properties to AUB as security for SPI’s loans.
• A motion to dismiss Civil Case No. B-7110 was filed by AUB, and the RTC dismissed it with prejudice on March 15, 2007, on the ground of willful and deliberate forum-shopping.

Dismissal of the First Case and Subsequent Developments

• On August 16, 2007, the RTC dismissed Civil Case No. B-6242 on a motion by the petitioners, noting that the allegations and reliefs sought in both cases were identical.
• The RTC emphasized that the respondent failed to report the filing of Civil Case No. B-7110, thereby breaching its certification against forum shopping.
• The respondent’s subsequent motion for reconsideration was denied in an order dated December 5, 2007.

Appeal and Final Resolution in the Higher Courts

• The respondent appealed the RTC decisions to the Court of Appeals (CA).
• On August 11, 2009, the CA reversed the RTC’s dismissal in Civil Case No. B-6242 by holding that the respondent asserted dissimilar rights and reliefs in the two cases, effectively reinstating Civil Case No. B-6242.
• Petitioners’ motion for reconsideration before the CA was denied in a resolution dated November 10, 2009.
• The petitioners then elevated the case by filing a petition under Rule 45 to reverse the CA rulings, asserting that the CA erred in reinstating Civil Case No. B-6242 given the respondent’s willful forum-shopping.

Issue:

Whether the dismissal with prejudice of Civil Case No. B-6242 by the RTC was appropriate.

• Did the respondent commit willful and deliberate forum-shopping by filing two actions involving the same subject matter?
• Was the respondent’s failure to notify the RTC of the filing of a second identical case a ground for dismissing the first case?

Whether the Court of Appeals erred in reinstating Civil Case No. B-6242 by holding that the respondent asserted dissimilar rights and sought different reliefs in the two cases.

• How should the alleged differences in the respondent’s claims between Civil Case Nos. B-6242 and B-7110 be reconciled in determining the presence or absence of forum-shopping?
• Does the existence of parallel proceedings automatically nullify the respondent’s claim to nullify the mortgage and foreclosure?

• Whether the principles of forum-shopping and the requirements under Rule 7, Section 5 of the Rules of Court have been correctly applied by the lower courts.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)