G.R. No. 154187 ; April 14, 2004
MONDRAGON LEISURE AND RESORTS CORPORATION, petitioner, vs. UNITED COCONUT PLANTERS BANK, respondent.

FACTS

Petitioner Mondragon Leisure and Resorts Corporation obtained a loan from respondent United Coconut Planters Bank, secured by an assignment of its leasehold rights over the Mimosa Leisure Estate. Due to financial setbacks, petitioner allegedly defaulted. Respondent bank filed a complaint for foreclosure of real estate mortgage (Civil Case No. 9510) before the Regional Trial Court (RTC) of Angeles City. Petitioner moved to dismiss the complaint on three grounds: a defective certification of non-forum shopping due to the alleged failure to disclose a pending related case (Civil Case No. 99-1171), forum shopping, and failure to comply with a condition precedent or to state a cause of action.
The RTC denied the motion to dismiss and the subsequent motion for reconsideration. Petitioner elevated the matter to the Court of Appeals via a petition for certiorari, arguing that the RTC committed grave abuse of discretion. The CA dismissed the petition, finding no forum shopping as the two civil cases involved different facts, transactions, and causes of action, and that the complaint sufficiently alleged a cause of action based on an event of default.

ISSUE

The core issues are: (1) whether respondent bank engaged in forum shopping; and (2) whether the complaint failed to state a cause of action.

RULING

The Supreme Court denied the petition. On the first issue, the Court held there was no forum shopping. Forum shopping exists when a party files multiple cases involving the same parties, rights, and causes of action, or seeks the same relief, to increase the chances of a favorable ruling. Here, Civil Case No. 99-1171 was a collection suit for a separate credit line, while Civil Case No. 9510 was a foreclosure suit based on a distinct omnibus credit agreement. The causes of action and the reliefs sought were fundamentally different.
On the second issue, the Court ruled that the complaint sufficiently stated a cause of action. A motion to dismiss based on failure to state a cause of action tests the sufficiency of the allegations in the complaint. The bank’s complaint explicitly alleged the existence of the loan agreements, the assignment of leasehold rights as security, the occurrence of an event of default, and a written demand—all of which, if hypothetically admitted, would entitle the bank to the relief of foreclosure. Any other factual defenses raised by petitioner regarding the validity of the default are evidentiary matters to be resolved during trial, not in a motion to dismiss. The Court emphasized that an order denying a motion to dismiss is interlocutory; the proper remedy is to proceed to trial and raise the defenses therein. No grave abuse of discretion by the RTC was found.