Forum shopping kills Mondragon’s bid to take back Mimosa

BY PAUL C.H. HOW, BusinessWorld Reporter The Supreme Court has denied the bid of Mondragon Leisure and Resorts Corp., Mondragon International Philippines, Inc. and Mondragon Securities Corp. to settle an obligation to state-owned Clark Development Corp. (CDC) worth P427 million in unpaid rental fees. The high court’s second division reversed a Sept. 5, 2001 Court of Appeals decision, finding Mondragon guilty of forum shopping, as two cases had been filed at the Angeles City Regional Trial Court supposedly seeking the same objective of being allowed to continue its lease of the Mimosa Leisure Estate. In the first of these cases, Civil Case no. 9242 — filed with the Angeles City court’s Branch 58 — the group, whose businesses include hotels, gaming, undergarments and securities, had asked the court to prevent the termination of a 1994 lease agreement with CDC due to nonpayment of its obligation. This was resolved in a June 28, 1999 compromise agreement with CDC worth P325 million. The second lawsuit, Civil Case no. 9596 — filed with the Angeles City court’s Branch 60 — had sought to prevent the termination of the compromise after Mondragon’s failure to pay its debts in full by June 30, 2000. A provision in the compromise agreement allowed CDC to take over the Mimosa Leisure Estate in the event of nonpayment. The second case was filed even as CDC had asked the other court, Branch 58, to be allowed to take over the Mondragon premises, which was granted on Dec. 1, 1999. In its decision authored by Associate Justice Presbitero J. Velasco, Jr., the high court said "Mondragon had the opportunity to oppose petitioner [CDC’s] motion in Civil Case no. 9242 pending before the Angeles City RTC Branch 58. However, without waiting for the trial court’s resolution, Mondragon filed Civil Case no. 9596 before the RTC Branch 60. This was clearly an attempt to prevent the RTC Branch 58 in the First Mondragon Case from ordering the execution of the judgment on the compromise agreement by obtaining a favorable judgment from the RTC Branch 60." The tribunal also ordered Mondragon to show cause within 10 days why it should be not be held in contempt for forum shopping. Mondragon Chairman Jose Antonio U. Gonzales said he was "flabbergasted" by the high court’s reversal of the appellate court’s decision, and added that he will file a motion for reconsideration, even though the high court had dismissed their case with prejudice, meaning that future pleadings will not be entertained. He said CDC had long since taken over the estate, which reportedly has assets worth P1.5 billion, much more than its debt to the government corporation. "They wouldn’t let us take our things. They kept our cars and continue using them. [Our assets] are much more than what we could have paid them [CDC] way back," he said. Officials of CDC refused to give comments on the Supreme Court decision favoring the government-run corporation’s full takeover of Mimosa. CDC President Levy P. Laus told BusinessWorld that "we need to see first the decision because there was one already before." It could be recalled that in May last year, CDC under its former president Antonio R. Ng announced the privatization of the Mimosa Leisure Estate inside Clark Special Economic Zone (CSEZ). The bidding has attracted two property developers, NTM-Jin Hung Joint Venture and Avenue Asia. CDC’s Legal and Contracts Administration Department Manager Jose Cornelio Lukban declared NTM-Jin Hung Joint Venture as the winner. A month after the bidding, however, CDC rescinded the Notice of Award issued to NTM-Jin Hung following its alleged failure to comply with the conditions set in the bid proposal. The cancellation, officials said, was due to NTM’s inability to sign a lease agreement with minimum upfront payment. Mimosa’s privatization has been put on hold as the current CDC management awaits the completion of the Subic-Clark-Tarlac road. — with Rey Garcia/BusinessWorld