Korea Exchange Bank v. Gonzales
REITERATIONFacts
The Antecedents: Phi-Han Development, Inc. (PHDI), a real estate corporation, along with its incorporators Teodoro de Mesa, Antusa de Mesa Magno, and Lourdes de Mesa Mendoza, filed a complaint against Jae Il Aum and Korea Exchange Bank (KEB). They alleged that Aum, with KEB's connivance, facilitated a US$500,000.00 loan for PHDI, which was deposited into PHDI's accounts with KEB. Aum subsequently withdrew US$160,000.00 by forging Mendoza's signature, leaving a balance in the accounts. The plaintiffs claimed KEB's failure to account for and restitute these funds constituted large-scale estafa, entitling them to damages. Procedural History: The KEB's motion to dismiss the initial complaint was denied by the Regional Trial Court (RTC), leading to a petition for certiorari with the Court of Appeals (CA), which was also dismissed. Subsequently, KEB filed its own complaint against PHDI and others for sum of money and reformation of a real estate mortgage, alleging PHDI defaulted on a US$500,000.00 loan. PHDI, et al. moved to dismiss KEB's complaint for forum shopping, arguing the issues should have been raised as a counterclaim in the first case. The RTC denied this motion. KEB then moved to dismiss PHDI's counterclaims for failure to attach a certificate of non-forum shopping. The RTC denied this as well. Both parties appealed to the CA. The CA affirmed the RTC's dismissal of KEB's petition regarding the first case but partially granted KEB's petition regarding the second case, dismissing PHDI's counterclaims for moral and exemplary damages due to forum shopping. The Petition: The petitioner, KEB, seeks review of the CA's joint decision. KEB argues that the CA erred in not ordering the dismissal of PHDI's counterclaims in Civil Case No. G-3119 for failure to attach a certificate of non-forum shopping, and in not dismissing the complaint in Civil Case No. G-3012 for forum shopping. KEB contends that PHDI's counterclaims for set-off of US$160,000.00 and for damages in Civil Case No. G-3119, and their complaint for the same US$160,000.00 and damages in Civil Case No. G-3012, involve the same parties, causes of action, and reliefs, constituting forum shopping. KEB asserts that PHDI's counterclaims were permissive and required a certificate of non-forum shopping, which was not provided, thus warranting dismissal.
Issue(s)
Whether the respondents engaged in forum shopping by filing a complaint in Civil Case No. G-3012 and counterclaims in Civil Case No. G-3119, and whether these counterclaims are compulsory or permissive. Whether the respondents' failure to attach a certification of non-forum shopping to their counterclaims warrants their dismissal. Whether the dismissal of the complaint in Civil Case No. G-3012 was proper given the allegations of forum shopping.
Ruling
The petition is GRANTED. The complaint of the respondents against the petitioner in Civil Case No. G-3012 is DISMISSED without prejudice to the continuation thereof against the defendant Jae Il Aum.
Ratio Decidendi
On the issue of forum shopping and the nature of the counterclaims: The Court held that the respondents engaged in forum shopping. The respondents' claim for set-off or compensation of US$160,000.00 against their loan of US$500,000.00 in Civil Case No. G-3119, as well as their counterclaims for moral and exemplary damages, were deemed permissive counterclaims. A counterclaim is compulsory if it arises out of or is connected with the transaction or occurrence constituting the subject matter of the opposing party's claim and does not require the presence of third parties. However, in this case, the issues of fact and law raised by KEB in its complaint and the respondents' counterclaims were not identical or largely the same. The evidence required for KEB's claim and the respondents' counterclaims were also different, and there was no logical relation between them. Therefore, the counterclaims were initiatory pleadings requiring a certification of non-forum shopping. On the requirement of a certification of non-forum shopping: The Court reiterated 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. The respondents' counterclaims, being permissive, were initiatory pleadings and thus mandated the attachment of a certification of non-forum shopping. Their failure to do so resulted in the dismissal of their counterclaims without prejudice. On the dismissal of the complaint in Civil Case No. G-3012: The Court found that the respondents were guilty of forum shopping because they sought to recover US$160,000.00 in their complaint in Civil Case No. G-3012, which was the same amount they sought to recover by way of set-off in their counterclaims in Civil Case No. G-3119. The issues of whether the signature of Lourdes Mendoza was forged and whether KEB connived with Jae Il Aum in the fraudulent withdrawal were common to both the complaint and the counterclaim for set-off. Any judgment in Civil Case No. G-3012 would resolve the threshold issue in the counterclaim in Civil Case No. G-3119. Therefore, the complaint in Civil Case No. G-3012 was dismissed without prejudice to its continuation against Jae Il Aum.
Main Doctrine
A counterclaim for set-off or compensation, as well as counterclaims for moral and exemplary damages, are permissive in nature and require the attachment of a certification of non-forum shopping. Failure to attach such certification warrants the dismissal of the counterclaim. Engaging in forum shopping by filing multiple suits involving the same parties, same rights, same reliefs, and same issues constitutes malpractice and is a ground for summary dismissal.