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MONDRAGON LEISURE v. VS.CA

FACTS:

In the case of Mondragon Leisure and Resorts Corporation v. Court of Appeals, the petitioner entered into a lease agreement with the Clark Development Corporation for the development of Mimosa Leisure Estate. The petitioner secured financing for the project by entering into an Omnibus Loan and Security Agreement with respondent banks. They agreed that the loan proceeds would be released in the form of advances through promissory notes, to be paid within a six-year period. The petitioner pledged US$20M worth of shares of stocks and assigned its leasehold rights over the project as security for the loan.

However, the petitioner failed to make payments after October 1998, despite fully availing of the loan. The lenders sent notices of default and demand letters to the petitioner. In response, the lenders filed a complaint for foreclosure of leasehold rights against the petitioner. The petitioner sought the dismissal of the complaint, arguing that it was premature and that the lenders engaged in forum shopping.

The trial court denied the petitioner's motion to dismiss, ruling that the complaint was valid and that there was no forum shopping. The petitioner filed a motion for reconsideration, which was also denied. Subsequently, the petitioner filed a special civil action for certiorari with the Court of Appeals, but the petition was dismissed and the motion for reconsideration was denied.

The petitioner then appealed to the Supreme Court, presenting three issues for resolution: the defective certification of non-forum shopping, forum shopping itself, and whether the lenders have a valid cause of action against the petitioner.

ISSUES:

  1. Was the certificate of non-forum shopping defective?

  2. Did respondents engage in forum shopping?

RULING:

  1. The Court did not find the certificate of non-forum shopping defective. The lack of authority of the persons who verified and certified the complaint was not raised in the motion to dismiss or motion for reconsideration of the petitioner. The verification and certification contained a statement by the persons who signed it that they had been authorized by the board of directors of their respective corporations.

  2. The Court did not find that respondents engaged in forum shopping. The subject matter of Civil Case No. 9527 is not the same as the subject matter in Civil Case No. 9510 where Asian Bank Corporation and Far East Bank and Trust Company are parties.

PRINCIPLES:

  • A certificate of non-forum shopping is not defective if there is a statement by the persons who signed it that they were authorized by the board of directors of their respective corporations.

  • Forum shopping occurs when a party files multiple cases involving the same subject matter in different courts.