This petition for review on certiorari assails the October 7, 2004 Decision^[1] of the Court of Appeals in CA-G.R. SP No. 73606 setting aside the June 14, 2002 Omnibus Order^[2] and September 18, 2002^[3] Order of the Regional Trial Court (RTC) of Cebu City, Branch 16 in Civil Case No. CEB-27700 and ordering the dismissal of Civil Case No. CEB-27700, and the March 14, 2005 Resolution^[4] denying petitioners' motion for reconsideration.

On February 27, 2002, respondent Bank of the Philippine Islands (BPI) filed a complaint^[5] for collection of sum of money and damages with prayer for preliminary injunction against petitioners spouses Crisologo and Priscilla Abines before the Regional Trial Court of Cebu City docketed as Civil Case No. 27464 (COLLECTION CASE).

BPI alleged in the complaint that on April 23, 1999 and May 26, 2000, petitioners obtained from respondents BPI and BPI Family Bank a loan in the amount of P22,935,200.00 and P23,162,959.42, respectively, as evidenced by BPI Promissory Note Nos. 5012531-00 and 1120000014, and secured by two deeds of real estate mortgage.  When the petitioners defaulted on their loan payments, the mortgaged properties were extrajudicially foreclosed and sold at public auction where BPI emerged as the highest bidder.  The bid price of    P35,730,184.00, however, did not cover the total amount owed by petitioners to respondents, hence, BPI sought the collection of the deficiency amount plus interest.

On the other hand, petitioners filed on May 13, 2002, a complaint against respondents for accounting in order to determine the correct amount of principal and outstanding obligations, annulment of foreclosure, annulment or reformation of documents, annulment of registration of certificate of sale, redemption, specific performance, injunction, and damages, with an application for preliminary injunction before the RTC of Cebu City, which was docketed as Civil Case No. 27700 (REFORMATION CASE).

In their complaint, petitioners assailed the genuineness and due execution of the promissory notes and deeds of real estate mortgage.  They alleged that the principal amount and interest on the loan as reflected in these documents are inaccurate which made the subsequent foreclosure sale invalid.

In their answer, respondents asserted that the filing of the REFORMATION CASE constituted forum shopping because of the similarity of the parties and issues with the COLLECTION CASE previously filed by BPI against petitioners. Respondents thus sought the consolidation of the two cases or the outright dismissal of the REFORMATION CASE.

On June 14, 2002, the trial court issued the Omnibus Order denying respondents' motion for consolidation and granting petitioners' application for preliminary injunction.  On August 13, 2002, a writ of preliminary injunction^[6] was issued upon petitioners' posting of a bond in the amount of P2,000,000.00.

Respondents' motion for reconsideration from the omnibus order and a motion to lift preliminary injunction was denied by the trial court in an order issued on September 18, 2002.

Respondents appealed to the Court of Appeals through a petition for certiorari.  On October 7, 2004, the Court of Appeals rendered the assailed decision holding that the trial court committed grave abuse of discretion when it failed to dismiss the REFORMATION CASE on the ground of forum shopping.  It ruled that the REFORMATION CASE and the COLLECTION CASE are intimately related because they involve the same parties, transactions and issues and that the disposition of one will amount to res judicata in the other.  Hence, it ordered the dismissal of the REFORMATION CASE and likewise held that the issuance of the writ of preliminary injunction was tainted with grave abuse of discretion because there was no proof of deposit of the requisite bond before the writ was issued; that the amount of the bond was fixed at only P2,000,000.00 while respondents' claim was more than P36,000,000.00. Thus, the principal purpose of the bond to protect the enjoined party against loss or damage by reason of the injunction was subverted.

Petitioners' motion for reconsideration having been denied, hence, the instant petition on the following issues: (1) whether the REFORMATION CASE should be dismissed on the ground of forum shopping; and (2) whether the issuance of the writ of preliminary injunction was proper.

The petition lacks merit.

Petitioners contend that the issue of forum shopping was not the proper subject of the petition for certiorari filed by respondents before the Court of Appeals.  They claim that the omnibus order dated June 14, 2002 issued by the trial court did not touch on the issue of forum shopping but merely resolved petitioners' application for the writ of preliminary injunction and respondents' motion for consolidation.  They assert that it is respondents' motion to dismiss which squarely touches on the issue of forum shopping which should have been resolved first.

We are not persuaded.

The omnibus order categorically stated that the REFORMATION CASE and the COLLECTION CASE involved different issues and parties.^[7] In effect, the trial court ruled that there was no forum shopping. Thus, to require the trial court in the REFORMATION CASE to rule on the issue of forum shopping in the pending motion to dismiss, as suggested by the petitioners, would be a puerile exercise.  No useful purpose will be served if the determination of the issue of forum shopping is remanded to the trial court which has already shown its predisposition to rule that there was none.

Petitioners next contend that respondents are estopped from raising the issue of forum shopping because they have already argued in the COLLECTION CASE that the two cases have no identity of causes of action.  Relying on the equitable doctrine of estoppel, petitioners posit that respondents should not be allowed to assert that there is forum shopping in the subject REFORMATION CASE.

Petitioners' contention is untenable.

The doctrine of estoppel applies only to questions of fact and not of law.^[8] Evidently, the determination of whether petitioners are liable for forum shopping is a question of law that properly belongs to the courts. Moreover, if we were to uphold petitioners' contention, then we would effectively allow the parties to determine for themselves when forum shopping exists, in violation of the basic precept that estoppel cannot give validity to an act that is prohibited by law or is against public policy.^[9] Undoubtedly, the public policy considerations behind forum shopping are superior to that of petitioners' claim of estoppel.

Petitioners claim that when they filed the REFORMATION CASE, they were not aware of the pending COLLECTION CASE filed by respondents against them.  Thus, they posit that they did not misrepresent when they stated in the certificate of no forum shopping that they were not aware of any pending action involving the same parties and issues in another court.

Forum shopping is the act of a party against whom an adverse judgment has been rendered in one forum, of seeking another opinion in another forum other than by appeal or the special civil action of certiorari, or the institution of two or more actions or proceedings grounded on the same cause on the supposition that one or the other court would make a favorable disposition.^[10]  The practice of forum shopping is proscribed because it unnecessarily burdens our courts with heavy caseloads, unduly taxes the manpower and financial resources of the judiciary and trifles with and mocks our judicial processes thereby affecting the efficient administration of justice.^[11]

In the case at bar, the records reveal that the COLLECTION CASE was filed by BPI against petitioners on February 27, 2002, which was subsequently amended on May 6, 2002, while petitioners filed the REFORMATION CASE against respondents on May 13, 2002.  However, petitioners were served with the summons in the COLLECTION CASE through substituted service only on May 16, 2002,^[12] hence, they were unaware of the pending COLLECTION CASE when they filed the REFORMATION CASE.  Thus, it cannot be said that the REFORMATION CASE was filed in anticipation of an unfavorable decision in the COLLECTION CASE.  On this score, petitioners do not appear to be liable for forum shopping.  Nonetheless, the REFORMATION CASE should still be dismissed on the ground of litis pendentia.

An action may be dismissed when there is another action pending between the same parties for the same cause.^[13] This ground for dismissal is commonly known as litis pendentia, the requisites of which are: (a) identity of parties or at least such as representing the same interests in both actions; (b) identity of rights asserted and reliefs prayed for, the relief being founded on the same facts; and (c) the identity in the two cases should be such that the judgment that may be rendered in one would, regardless of which party is successful, amounts to res judicata in the other.^[14]

As to the first requisite, petitioners and respondents are the same parties in both cases.  BPI is the plaintiff while petitioners are the defendants in the COLLECTION CASE.  With respect to the REFORMATION CASE, petitioners are the plaintiffs while BPI and BPI Family Bank are the defendants therein.  It is of no moment that BPI Family Bank is not a party-plaintiff in the COLLECTION CASE because what the rule requires is not absolute identity of parties but merely substantial identity of parties or such as representing the same interests in both actions.  In the case at bar, it is not disputed that BPI Family Bank represents the same interests as BPI.

As to the second requisite, the rights asserted by both parties are based on the same promissory notes and real estate mortgages.  In the COLLECTION CASE, respondents seek to enforce its rights under the promissory notes and real estate mortgages and would thus have to prove that they are valid and enforceable; that the subsequent foreclosure is likewise valid; and that there is still a deficiency after deducting the proceeds of the foreclosure sale from petitioners' loan obligation.

On the other hand, in the REFORMATION CASE, petitioners seek to diminish their liability under the promissory notes and real estate mortgages by proving that the terms do not reflect the correct amount of principal and interest; that the deficiency amount being demanded by respondents is erroneous; and that the subsequent foreclosure is void.

Clearly then, the resolution of both cases revolve on the validity and enforceability of the promissory notes and real estate mortgages and foreclosure proceedings.  A judgment in the COLLECTION CASE will be res judicata in the REFORMATION CASE and vice versa.  The same evidence would be presented and the same subject matter would be litigated. Thus, in Casil v. Court of Appeals,^[15] where the petitioner filed a case against private respondent for the enforcement of their agreement while private respondent subsequently filed a case against petitioner for the rescission of this same agreement, we ruled that the first case would constitute res judicata in the second case:

Furthermore, any judgment in the First Case will serve as res adjudicata to the Second Case.  The requisites of res adjudicata are as follows:

"(a) The former judgment or order must be final;
(b) It must be a judgment or order on the merits, that is, it was rendered after a consideration of the evidence or stipulations submitted by the parties at the trial of the case;
(c) It must have been rendered by a court having jurisdiction over the subject matter and the parties; and
(d) There must be, between the first and second actions, identity of parties, of subject matter and of cause of action.  This requisite is satisfied if the two actions are substantially between the same parties."

The Court of Appeals held that there can be no res adjudicata, because there is no identity of causes of action between the two cases.  We do not agree.  In the two cases, both petitioner and private respondent brought to fore the validity of the agreement dated May 4, 1994.  Private respondent raised this point as an affirmative defense in her answer in the First Case.  She brought it up again in her complaint in the Second Case.  A single issue cannot be litigated in more than one forum.  As held in Mendiola vs. Court of Appeals:

"The similarity between the two causes of action is only too glaring.  The test of identity of causes of action lies not in the form of an action but on whether the same evidence would support and establish the former and the present causes of action.  The difference of actions in the aforesaid cases is of no moment.  In Civil Case No. 58713, the action is to enjoin PNB from foreclosing petitioner's properties, while in Civil Case No. 60012, the action is one to annul the auction sale over the foreclosed properties of petitioner based on the same grounds.  Notwithstanding a difference in the forms of the two actions, the doctrine of res judicata still applies considering that the parties were litigating for the same thing, i.e. lands covered by TCT No. 27307, and more importantly, the same contentions and evidence as advanced by herein petitioner in this case were in fact used to support the former cause of action." (Italics supplied.)

In this light, there is identity of subject matter and of causes of action, for the same evidence presented in the First Case will necessarily be presented in the Second Case, and the judgment sought in the Second Case will either duplicate or contradict any judgment in the First Case.  It is beyond dispute, therefore, that a judgment in the First Case will constitute res adjudicata to bar the Second Case.^[16] (Emphasis supplied)

Similarly, in Victronics Computers, Inc. v. Regional Trial Court, Branch 63, Makati,^[17]  we held:

x x x [A] careful reading of the allegations in the parties' respective complaints and motions to dismiss in the two (2) civil actions below reveals that both assert rights founded on an identical set of facts which give rise to one basic issue the validity of the contract in question, x x x. Civil Case No. 91-2069 actually involves an action for specific performance; it thus upholds the contract and assumes its validity. Civil Case No. 91-2192, on the other hand, is for the nullification of the contract on the grounds of fraud and vitiated consent. While ostensibly the cause of action in one is opposite to that in the other, in the final analysis, what is being determined is the validity of the contract. It would not have been unlikely that in its answer filed in Civil Case No. 91-2192, the petitioner would merely reiterate its allegations in the complaint in Civil Case No. 91-2069 sustaining and invoking the validity of the purchase order and setting up lis pendens as a defense. This is what it exactly did. It would not have been likewise unlikely that the defense of the private respondents in Civil Case No. 91-2069 would be one in pursuit of their theory, as plaintiffs, in Civil Case No. 91-2192. Thus, the identity of rights asserted cannot be disputed. Howsoever viewed, it is beyond cavil that regardless of the decision that would be promulgated in Civil Case No. 91-2069, the same would constitute res judicata on Civil Case No. 91-2192 and vice-versa. (Emphasis supplied)

Based on the foregoing, there is no doubt that a judgment in the COLLECTION CASE will be res judicata in the REFORMATION CASE and vice versa.

The only question that remains to be resolved is which case should be dismissed.  In Compania General De Tabacos De Filipinas v. Court of Appeals,^[18] we had occasion to summarize the rules in determining which case to dismiss when litis pendentia arises:

There is no hard and fast rule in determining which of the actions should be abated on the ground of litis pendentia, but through time, the Supreme Court has endeavored to lay down certain criteria to guide lower courts faced with this legal dilemma.  As a rule, preference is given to the first action filed to be retained. This is in accordance with the maxim Qui prior est tempore, potior est jure. There are, however, limitations to this rule.  Hence, the first action may be abated if it was filed merely to pre-empt the later action or to anticipate its filing and lay the basis for its dismissal. Thus, the bona fides or good faith of the parties is a crucial element.  A later case shall not be abated if not brought to harass or vex; and the first case can be abated if it is merely an anticipatory action or, more appropriately, an anticipatory defense against an expected suit a clever move to steal the march from the aggrieved party.

Another exception to the priority in time rule is the criterion of the more appropriate action. Thus, an action, although filed later, shall not be dismissed if it is the more appropriate vehicle for litigating the issues between the parties.

The records of this case show that when petitioners filed the REFORMATION CASE, they were not aware of the pending COLLECTION CASE, thus, it does not appear that the REFORMATION CASE was filed to vex or harass respondents.

The COLLECTION CASE should subsist because it is the first action filed and the more appropriate vehicle for litigating all the issues in controversy.  In the REFORMATION CASE, petitioners acknowledge their indebtedness to respondents but they contest the amounts of the principal, interest and the remaining balance.  Clearly, these claims are in the nature of defenses to the COLLECTION CASE and should be asserted in that case and not in a separate action.  Accordingly, the subject REFORMATION CASE should be dismissed on the ground of litis pendentia.

Finally, it may not be amiss to point out that on May 17, 2004, while the instant case was pending before the Court of Appeals, the trial court rendered a decision in the COLLECTION CASE finding petitioners liable to respondents for a deficiency sum of P19,227,174.53.^[19] In that case, the issues with respect to the validity and enforceability of the promissory notes and real estate mortgages as well as the validity of the foreclosure proceedings were resolved by the trial court.  The case is now on appeal before the Court of Appeals.  Thus, to allow the REFORMATION CASE to proceed would clearly defeat the public policy reasons behind litis pendencia which, like the rule on forum shopping, aim to prevent the unnecessary burdening of our courts and undue taxing of the manpower and financial resources of the judiciary; avoid the situation where co-equal courts issue conflicting decisions over the same cause; and preclude one party from harassing the other party through the filing of an unnecessary or vexatious suit.

WHEREFORE, the petition is DENIED.  The October 7, 2004 Decision of the Court of Appeals in CA-G.R. SP No. 73606 setting aside the June 14, 2002 Omnibus Order and September 18, 2002 Order of the Regional Trial Court of Cebu City, Branch 16 in Civil Case No. CEB-27700 and ordering the dismissal of Civil Case No. CEB-27700, as well as the March 14, 2005 Resolution, are AFFIRMED.

SO ORDERED.

Panganiban, C.J., (Chairperson), Austria-Martinez, Callejo, Sr. and Chico-Nazario, JJ., concur.

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^[1] Rollo, pp. 35-47.  Penned by Associate Justice Isaias P. Dicdican and concurred in by Associate Justices Elvi John S. Asuncion and Ramon M. Bato, Jr.

^[2] Id. at 54-56.  Penned by Judge Agapito L. Hontanosas, Jr.

^[3] Id. at 70.

^[4] Id. at 48-49.  Penned by Associate Justice Isaias P. Dicdican and concurred in by Associate Justices Sesinando E. Villon and Ramon M. Bato, Jr.

^[5] An amended complaint was filed on May 6, 2002.

^[6] Rollo, pp. 87-90.

^[7] Id. at 54.

^[8] Tañada v. Cuenco, 103 Phil. 1051, 1093 (1957).

^[9] Auyong Hian (Hong Whua Hang) v. Court of Tax Appeals, G.R. No. L-28782, September 12, 1974, 59 SCRA 110, 124.

^[10] Ortigas & Company Limited Partnership v. Velasco, G.R. Nos. 109645 & 112564, July 25, 1994, 234 SCRA 455, 500.

^[11] Progressive Development Corp. Inc. v. Court of Appeals, 361 Phil. 566, 584 (1999).

^[12] Rollo, p. 53.

^[13] RULES OF COURT, Rule 16, Sec. 1(e).

^[14] Olayvar v. Olayvar, 98 Phil. 52, 54 (1955).

^[15] 349 Phil. 187 (1998).

^[16] Id. at 199-201.

^[17] G.R. No. 104019, January 25, 1993, 217 SCRA 517, 530-531.

^[18] 422 Phil. 405, 425 (2001).

^[19] Rollo, p. 125.  Penned by Judge Gabriel T. Ingles.