FACTS: PHDI and Magno et al, filed a complaint in the RTC against Aum, a Korean National

and president of PHDI, and the Korea Exchange Bank (KEB). They alleged that through the
machination of Aum, KEB granted a $500,000.00 loan to the PHDI with the condition that the
said loan be deposited with the KEB in the name of PHDI. Thereafter, the plaintiffs executed a
real estate mortgage over their properties as security for the said loan.

Under PHDI’s board resolution, only Aum and Mendoza were authorized signatories to all
applications for withdrawals from the said accounts. Aum withdrew $160,000.00 from the
account by forging Mendoza’s signature. He was made another withdrawal, leaving a balance of
$163,000.00. Aum allegedly could not have withdrawn said deposits without the KEB’s
connivance. Aum's failure to heed demands for an accounting of the said withdrawals and for the
restitution of the said amounts constituted large scale estafa for which they are liable for
exemplary and moral damages. The KEB filed a Motion to Dismiss the complaint, which the trial
court denied. The KEB filed a petition for certiorari and prohibition with the CA for the
nullification of the orders of the RTC.

Meanwhile, in another case, KEB filed a Complaint against Magno et al and PHDI before the
RTC for sum of money and reformation of the real estate mortgage executed by PHDI. PHDI and
Magno, et al. filed a motion to dismiss on the ground of forum shopping, asserting that the KEB
should have filed its counterclaim for collection and the reformation of the mortgage in the first
civil case. They averred that the essential elements of litis pendentia were present. However, the
RTC denied the motion to dismiss.

PHDI and Magno, et al. therefore filed their answer with counterclaims in the second case where
they denied indebtedness to the KEB, alleging the same facts in their complaint in the first civil
case. KEB filed a motion to dismiss these counterclaims, alleging that the causes of action for
PHDI’s complaint for collection of $160,000.00 and damages, and for the counterclaims in this
second case for the set-off of the said amount against its claim of $500,000.00 were identical;
hence, their counterclaims should be dismissed for forum shopping.

PHDI, et al. opposed the motion to dismiss the complaint, alleging that KEB failed to include
forum shopping as a ground in its motion to dismiss their complaint in the first case; hence, it is
bound by the omnibus motion rule. PHDI, et al. also opposed the motion to dismiss their
counterclaims on the ground that the causes of action in the two cases were unrelated. They
asserted that the subject matter, causes of action and the issues in the two cases were different.
The RTC denied KEB's motion to dismiss the complaint and motion to dismiss the
counterclaims.KEB filed its answer to the counterclaims of the PHDI, et al., in the second case.

CA, in a joint decision, affirmed the RTC with respect to the first case, but dismissed
respondents’ counterclaims in the second case for forum-shopping. The CA declared that the
counterclaims of the PHDI, et al., for moral and exemplary damages were merely permissive;
hence, they were mandated to append thereto a certification of non-forum shopping.
ISSUE: Whether the counterclaim in the second case should be dismissed for the absence of a
certificate of non-forum shopping, and whether the first case should be dismissed for forum
shopping

YES. In interposing their counterclaim for set-off of the $160,000.00 against their loan of
$500,000.00 in the second case, as well as the counterclaims for moral damages, and exemplary
damages, the respondents thereby engaged in forum shopping.

The general rule is that compliance with the certificate of forum shopping is separate from and
independent of the avoidance of the act of forum shopping itself. Forum shopping is a ground for
summary dismissal of both initiatory pleadings without prejudice to the taking of appropriate
action against the counsel or party concerned.

There is forum shopping when, between an action pending before the court and another one,
there exist:(a) identity of parties, or at least such parties as represent the same interests in both
actions; (b) identity of rights asserted and relief prayed for, the relief being founded on the same
facts; and (c) the identity of the two preceding particulars is such that any judgment rendered in
the other action will, regardless of which party is successful, amount to res judicata in the action
under consideration.

There is forum shopping where a litigant sues the same party against whom another action or
actions for the alleged violation of the same right and the enforcement of the same relief is/are
still pending. The defense of litis pendentia in one case is a bar to the other/others; and, a final
judgment is one that would constitute res judicata and thus would cause the dismissal of the rest.
Absolute identity of parties is not required. It is enough that there is substantial identity of
parties.