G.R. No. 210606 - Grace Park International Corp. vs. Eastwest Banking Corp.

Petitioners, Grace Park International Corporation and Woodlink Realty Corporation (collectively “petitioners”), filed an Amended Complaint for Injunction and Annulment of Foreclosure Sale.
The complaint arose out of a Mortgage Trust Indenture (MTI) entered into with several banks—Eastwest Banking Corporation (EBC), Allied Banking Corporation, Security Banking Corporation, and Banco De Oro Unibank (BDO).
Under the MTI, the total mortgage value amounted to P162,314,499.00 and US$797,176.47, with BDO holding a 58.04% majority stake, while EBC, Allied, and Security held 18.33%, 12.58%, and 11.05% respectively.
Petitioners mortgaged eight parcels of land, including the improvements thereon, as collateral, as evidenced by several Transfer Certificates of Title.

Petitioners alleged that, under the MTI, foreclosure proceedings could not be commenced by the trustee (EBC) without written instructions from the majority creditors.
It was further alleged that, during the pendency of the MTI, BDO’s majority interest was effectively paid for by Sherwyn Yao, Jeremy Jerome Sy, and Leveric Ng (collectively “Sherwyn, et al.”), who thereby should have been subrogated to BDO’s creditor rights.
Petitioners maintained that EBC’s refusal to honor the subrogation led Sherwyn, et al. to file a separate action for subrogation and injunction before the RTC of Makati City (Civil Case No. 10-323).
Despite the contention regarding subrogation, EBC allegedly commenced foreclosure proceedings without obtaining the requisite written instructions from the majority creditors, thereby prompting petitioners' relief-seeking action in Civil Case No. 543-M-2010 filed before the RTC-Malolos.

In their Answer and Motion to Dismiss, respondents—including EBC, Allied, Security, and the involved sheriffs—argued that the complaint should be dismissed on the grounds of forum shopping and/or litis pendentia.
They contended that the remedy sought in Civil Case No. 543-M-2010 was essentially the same as that being pursued in Civil Case No. 10-323 by Sherwyn, et al., as both actions sought to enjoin the foreclosure of the same collaterals and involved substantially the same parties or their representatives.
Respondents emphasized the similarity in facts and the identical nature of the evidence needed to sustain both claims, thus arguing that one action rendered the other unnecessary and potentially conflicting.

The RTC-Malolos, in its Order dated April 25, 2012, dismissed Civil Case No. 543-M-2010 on the ground of forum shopping, finding that there was a convergence between the two cases, notably in issues concerning the foreclosure of the collaterals and the requisite subrogation of rights.
The Court of Appeals (CA) upheld the dismissal in its Decision dated May 22, 2013 by affirming that the elements of litis pendentia were present.

a. The CA noted a community of interests between the parties in both the RTC-Malolos and RTC-Makati cases.
b. It further held that identical facts and evidence were essential to substantiate both claims, with resolution in one case potentially resulting in res judicata in the other.

Petitioners, disagreeing with the dismissal, moved for reconsideration which was denied by the CA in a Resolution dated December 27, 2013, thus prompting the petition for review before the Supreme Court.

Whether the Court of Appeals was correct in upholding the dismissal of Civil Case No. 543-M-2010 on the basis of forum shopping and/or litis pendentia.

Whether there is true identity of parties or sufficient community of interests between the case pending in RTC-Makatic (involving individual plaintiffs Sherwyn, et al.) and that pending in RTC-Malolos (involving petitioners as corporate entities).
Whether the cause of action in the two cases is identical, given that one case is rooted in a claim for subrogation while the other seeks to enforce foreclosure provisions under the MTI.
Whether a judgment in the RTC-Makati action would automatically amount to res judicata in the RTC-Malolos action, thereby justifying the dismissal on the grounds articulated.