Facts:

This case involves Banco De Oro-EPCI, Inc. (formerly known as Equitable PCI Bank, Inc.), as the petitioner, against Hon. Zenaida R. Daguna, in her capacity as presiding judge of the Regional Trial Court (RTC) of Manila, Branch 19, and the Philippine Development and Industrial Corporation (respondent). The events leading to this case unfolded in 1996 when PCI Bank, Inc. approved a credit line application from the Philippine Development and Industrial Corporation (PDIC) to fund a townhouse project located in Sta. Ana, Manila. PDIC executed a real estate mortgage on the mother title of the said project as collateral for its secured credit line. However, PDIC defaulted on its obligations, leading to a Repayment Agreement where it pledged additional collateral in the form of real estate mortgages over 29 condominium units and a property in Meycauayan, Bulacan. PDIC again failed to meet its repayment obligations, prompting PCI Bank, which later merged with Equitable Bank to form EPCIB

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Facts:

Background of the Transaction and Parties

• In 1996, PCI Bank, Inc. (later merged with Equitable Bank to form Equitable PCI Bank, Inc., now Banco de ORO-EPCI, Inc. – the petitioner) approved a credit line application of the Philippine Development and Industrial Corporation (PDIC, the respondent) to fund its townhouse project in Sta. Ana, Manila.
• As security for the credit line, PDIC executed a real estate mortgage over the mother title of its townhouse project.

Default, Additional Collateral, and Foreclosure Proceedings

• PDIC defaulted in the performance of its obligations under the secured credit line.
• To secure its obligations, PDIC entered into a Repayment Agreement, providing additional collateral by executing real estate mortgages over twenty-nine (29) condominium units and a titled real estate property located in Meycauayan, Bulacan.
• Owing to its failure to meet the obligations under the repayment arrangement, Equitable PCI Bank (later Banco de ORO-EPCI, Inc.) initiated foreclosure proceedings before the Manila Regional Trial Court (RTC), Branch 19.

Multiple Complaints and Judicial Proceedings

• Concurrently, PDIC instituted separate legal actions against the bank:
• On April 11, 2003, PDIC filed a complaint before the Makati RTC (Civil Case No. 03-401) for “Cancellation of Mortgage, Restitution of Titles and Damages.”
• On the same day, it filed an Amended Complaint changing the relief prayed from cancellation to “Release of Mortgage and Damages.”
• The Makati RTC, Branch 63, dismissed the amended complaint on April 15, 2003 for lack of jurisdiction, noting that the principal cause of action, namely the annulment of the real estate mortgage in Manila, was an action in rem.
• PDIC then sought to have the dismissal reconsidered and, after learning that foreclosure proceedings had already been consummated by EPCIB (Equitable PCI Bank), moved to withdraw the "Release of Mortgage" claim and limit its cause of action to damages, which was then repleaded in a Second Amended Complaint.
• Not stopping there, PDIC subsequently filed—on June 16, 2003—a complaint before the Manila RTC for “Annulment of Mortgage and the Foreclosure Sale with Application for TRO and Preliminary Injunction,” thereby raising a distinct set of issues compared to the claim for damages pending in Makati.

Allegations Relating to the Credit Line and Construction Delays

• The underlying factual allegations in the complaints include:
• The bank’s unjustified and allegedly malicious refusal to release funds under the secured credit line despite PDIC having put up sufficient collateral.
• Specific details, such as the bank’s refusal in a letter dated November 12, 1998, to release funds necessary to complete the townhouse project.
• The delay in the project leading to construction delays from an estimated one-year completion to eventually taking five years.
• PDIC’s claim that due to the bank’s stalling and additional collateral demands, it incurred significant losses and was forced into alternative financing, even facing threats of civil and criminal actions from buyers.
• The factual matrix is substantially similar in both the Makati and Manila complaints, yet each suit raises different legal remedies and grounds—damages in one instance and annulment of the mortgage (together with issues on foreclosure sale irregularities) in the other.

Certification, Alleged Forum Shopping, and Judicial Findings

• PDIC’s Verification/Certification of Non-Forum Shopping stated that no other action involving the same issues was pending except for the action for damages in Makati, asserting that the two actions involved different causes of action (in personam for damages and in rem for annulment of mortgage).
• EPCIB (petitioner) moved to dismiss the Manila RTC complaint on the ground that PDIC was guilty of forum shopping by pursuing similar litigation in two separate courts.
• The Manila RTC, Branch 19, denied the motion to dismiss by drawing a distinction between the causes of action:
• The complaint in the Manila RTC purported to annul the mortgage and address foreclosure irregularities.
• In contrast, the Makati RTC complaint centered on a claim for damages arising from the alleged failure to release funds.
• The issue was further compounded by the chronological fact that PDIC had filed the Manila RTC complaint prior to the Makati RTC’s final ruling on its damaged-oriented litigation.

Resolution in the Lower and Appellate Courts

• The Manila RTC’s orders (including one dated September 5, 2003, denying the motion to dismiss and another dated June 22, 2005, denying the motion for reconsideration) were sustained by the Court of Appeals in its Decision of June 6, 2007.
• The appellate court’s reliance on PDIC’s non-forum shopping certification and its differentiation of the distinct causes of action in the separate filing venues formed part of its factual and legal findings.

Issue:

Whether the respondent (PDIC) committed forum shopping by instituting two separate actions in different courts based on similar factual circumstances.

• Specifically, the central issue is if PDIC’s filing of a complaint for annulment of mortgage in the Manila RTC, while another complaint for damages was pending in the Makati RTC, amounted to an impermissible splitting of the cause of action.
• Whether the Certification of Non-Forum Shopping submitted by PDIC was accurate or deficient given that, at the time of filing, the reinstatement of the damages action in Makati was still pending.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)