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Republic of the Philippines SUPREME COURT Manila FIRST DIVISION

Bachrach's motion for reconsideration. The decision of the appellate court in the ejectment suit became final and executory on 20 May 1995. 5 Meanwhile on 25 March 1995, while the motion for reconsideration was yet pending with the appellate court, Bachrach filed a complaint against PPA with the Manila RTC, docketed Civil Case No. 95-73399 (hereinafter referred to also as the specific performance case), for refusing to honor a compromise agreement said to have been perfected between Bachrach and PPA during their 04 February 1994 conference that superseded the ejectment case. In its complaint, Bachrach prayed for specific performance. On 08 June 1995, PPA filed a motion for a writ of execution/garnishment in the ejectment case. The next day, 09 June 1995, Bachrach filed an application in the specific performance case for the issuance of a temporary restraining order and/or a writ of preliminary injunction to enjoin the MeTC from issuing the writ of execution/garnishment. PPA countered by filling a motion for preliminary hearing on its affirmative defenses along the same grounds mentioned in its motion to dismiss the specific performance case, to wit: (a) the pendency of another action between the same parties for the same cause; (b) the violation of the anti-forum-shopping rule; (c) the complaint's lack of cause of action; and (d) the unenforceable character of the compromise agreement invoked by Bachrach. On 13 July 1995, the trial court issued an omnibus order, granting the application of Bachrach for a writ of preliminary injunction, in this tenor PREMISES CONSIDERED, this Court is of the opinion and so holds (1) that plaintiff (Bachrach) is entitled to the injunctive relief prayed for and upon the posting of a bond in the amount of P300,000.00, let a writ of preliminary injunction be issued enjoining the defendant (PPA), the Presiding Judge of the Metropolitan Trial Court of Manila, Branch 2 from issuing a writ of execution/garnishment in Civil Case No. 238838-CV entitled "Philippine Ports Authority vs. Bachrach Corporation"; (2) lifting/setting aside the order dated June 5, 1995 and (3) denying defendant's motion for a preliminary hearing on affirmative defenses. 6 PPA moved for reconsideration of the above order but the trial court denied the plea in its order of 29 August 1995. On 25 September 1995, PPA filed a petition for certiorari and prohibition, with application for the issuance of a temporary restraining order and/or writ of preliminary injunction, docketed CA-G.R. SP No. 36508, before the Court of Appeals. The petition was dismissed by resolution, dated 28 September 1995, of the appellate court for being insufficient in form and substance, i.e., the failure of PPA to properly attach a certified true copy each of the assailed order of 13 July 1995 and 29 August 1995 of the trial court. PPA received on 05 October 1995 7 a copy of the resolution, dated 28 September 1995, of the appellate court. Undaunted, PPA filed a new petition on 11 October 1995, now evidently in proper form, asseverating that since it had received a copy of the assailed resolution of the trial court only on 07 September 1995, the refiling of the petition with the Court of Appeals within a period of less than two months from the date of such receipt was well within the reasonable time requirement under the Rules for a special civil action for certiorari. 8 In the meantime, the resolution, dated 28 September 1995, of the Court of Appeals which dismissed CA-G.R. No. 38508 became final on 21 October 1995. 9 In its newly filed petition, docketed CA-G.R. SP No. 38673, PPA invoked the following grounds for its allowance: I. That respondent judge acted without, or in excess of jurisdiction, or with grave abuse of discretion when it issued a writ of preliminary injunction against the final and executory resolution of the Honorable Court of Appeals Annex "I") inspite of the well-established rule that courts are allowed to interfere with each other's judgment or decrees by injunction, and worse, in this case, against the execution of the judgment of a superior or collegiate court which had already became final executory. II. That respondent Judge acted without, or in excess of jurisdiction, or with grave abuse of discretion when it also denied petitioner's motion for a preliminary hearing on its affirmative defenses or in failing to have the case below outrightly dismissed on the grounds stated in its affirmative defenses, when respondent Judge pronounced there is no identity as to the causes of action between the case decided by the Court of Appeals (CA-G.R. SP No. 32630) and the case below (Civil Case No. 95-73399) when clearly the causes or action in both cases revolve on the same issue of possession of the subject leased premises. III. That respondent Judge acted without, or in excess of jurisdiction, or with grave abuse of discretion in refusing to take cognizance (of), abide (by) and acknowledge the final judgment of the Court of Appeals which, on said ground alone, is enough justification for the dismissal of the case grounded on res judicata. Moreover private

G.R. No. 128349 September 25, 1998 BACHRACH CORPORATION, petitioner, vs. THE HONORABLE COURT OF APPEALS and PHILIPPINE PORTS AUTHORITY, respondents.

VITUG, J.: Bachrach Corporation ("Bachrach"), in its petition for review on certiorari, questions the decision of the Court of Appeals in CA-G.R. SP No. 38763, promulgated on 12 November 1996, the dispositive part of which reading WHEREFORE, the petition is granted. The assailed RTC orders art hereby NULLIFIED and SET ASIDE and public respondent is ordered to dismiss the subject action before him under Civil Case No. 95-73399. No pronouncement as to costs. 1 on several counts; viz: I. THE COURT OF APPEALS GRAVELY ERRED IN NOT DISMISSING CA-G.R. SP NO. 38673 DESPITE THE FACT THAT A SIMILAR PETITION EARLIER FILED BY PPA WAS DISMISSED FOR BEING INSUFFICIENT NOT ONLY IN FORM BUT ALSO IN SUBSTANCE WHICH DISMISSAL CONSTITUTES RES JUDICATA INSOFAR AS THE ISSUES RAISED THEREIN ARE CONCERNED. II. THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE DECISION IN THE UNLAWFUL DETAINER CASE CONSTITUTES RES JUDICATA WHICH BARS THE SPECIFIC PERFORMANCE CASE. III. THE COURT CF APPEALS GRAVELY ERRED IN RULING THAT THE FILING OF THE SPECIFIC PERFORMANCE CASE VIOLATES THE RULE AGAINST FORUM SHOPPING. IV. THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE WRIT OF PRELIMINARY INJUNCTION ISSUED BY THE TRIAL COURT CONSTITUTES INTERFERENCE WITH ITS JUDGMENT IN THE UNLAWFUL DETAINER CASE. V. THE COURT OF APPEALS GRAVELY ERRED IN ORDERING THE DISMISSAL OF CIVIL CASE NO. 95-73399 THEREBY RULING ON THE MERITS OF THE CASE WHEN IN FACT, THE ONLY ISSUES FOR ITS RESOLUTION WERE THE PROPRIETY OF THE WRIT OF PRELIMINARY INJUNCTION ISSUED BY THE TRIAL COURT AND THE DENIAL OF PPA'S MOTION FOR PRELIMINARY HEARING ON AFFIRMATIVE DEFENSES. 2 It would appear that petitioner corporation entered into two lease contracts with the Philippine government covering two specified areas, Block 180 and Block 185, located at the Manila Port Area, then under the control and management of the Director of Lands, for a term of ninety-nine years each, the first lease to expire on 19 June 2017 and the other on 14 February 2018. During her tenure, President Corazon Aquino issued Executive Order No. 321 transferring the management and administration of the entire Port Area to herein respondent Philippine Ports Authority ("PPA"). Shortly alter its takeover, PPA issued a Memorandum increasing the rental rates of Bachrach by 1,500%. Bachrach refused to pay the substantial increased rates demanded by PPA. On 23 March 1992, PPA initiated unlawful detainer proceedings, docketed Civil Case No. 138838 of the Metropolitan Trial Court ("MeTC") of Manila, against Bachrach for non-payment of rent. On 27 April 1993, MeTC rendered a decision ordering the eviction of Bachrach from the leased premises. Bachrach appealed to the Regional Trial Court ("RTC") of Manila which, on 21 September 1993, affirmed the decision of the lower court in toto. 3 Bachrach elevated the case to the Court of Appeals by way of a petition for review. On 29 July 1994, the appellate court affirmed the decision of the RTC. A motion for reconsideration was filed by Bachrach; however, the resolution of the motion was put on hold pending submission of a compromise agreement. 4 When tile parties failed to submit the promised compromise agreement, the Court of Appeals, on 15 May 1995, denied

respondent is guilty of forurn-shopping and the penalty therefor is the dismissal of its case. 10 On 12 November 1996, the Court of Appeals rendered the assailed decision nullifying and setting aside the orders of the RTC and ordering the latter to dismiss the specific performance case. The Court finds merit in the instant appeal interposed by petitioner.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

G.R. No. 87434 August 5, 1992 Verily, the decisive issue raised by the parties before the Court in the instant petition is whether or not the specific performance case (Civil Case No. 73399) should be held barred by the unlawful detainer case on the ground ofres judicata. There are four (4) essential conditions which must concur in order that res judicata may effectively apply, viz: (1) The judgment sought to bar the new action must be final; (2) the decision must have been rendered by a court having jurisdiction over the subject matter and the parties; (3) the disposition of the case must be a judgment or order on the merits, and (4) there must be between the first and second action identity of parties, identity of subject matter, and identity of causes of action." 11 There is no question about the fact that all the first three elements of res judicata are here extant; it is the final condition requiring an identity of parties, of subject matter and of causes of action, particularly the last two, i.e., subject matter and cause of action, that presents a problem. A cause of action, broadly defined, is an act or omission of one party in violation of the legal right of the other. 12The subject matter, on the other hand, is the item with respect to which the controversy has arisen, or concerning which the wrong has been done, and it is ordinarily the right, the thing, or the contract under dispute. 13 In a breach of contract, the contract violated is the subject matter while the breach thereof by the obligor is the cause of action. It would appear quite plain then that the RTC did act aptly in taking cognizance of the specific performance case. In Civil Case No. 138838 of the MeTC, the unlawful detainer case, the subject matter is the contract of lease between the parties while the breach thereof, arising from petitioner's non-payment of rentals, constitutes the suit's cause of action. In Civil Case No. 73399 of the RTC, the specific performance case, the subject matter is the compromise agreement allegedly perfected between the same parties while the cause of action emanates from the averred refusal of PPA to comply therewith. The ultimate test in ascertaining the identity of causes of action is said to be to look into whether or not the same evidence fully supports and establishes both the present cause of action and the former cause of action. In the affirmative, the former judgment would be a bar; if otherwise, then that prior judgment would not serve as such a bar to the second. 14 The evidence needed to establish the cause of action in the unlawful detainer case would be the lease contract and the violation of that lease by Bachrach. In the specific performance case, what would be consequential is evidence of the alleged compromise agreement and its breach by PPA. The next thing to ask, of course, would be the question of whether or not the issuance by the trial court of the writ of preliminary injunction was an improper interference with the judgment in the unlawful detainer suit. It could be argued that, instead of filing a separate action for specific performance. Bachrach should just have presented the alleged compromise agreement in the unlawful detainer case. Unfortunately, the refusal of PPA to honor the agreement after its alleged perfection effectively prevented Bachrach from seeking the coercive power of the court to enforce the compromise in the unlawful detainer case. The situation virtually left Bachrach with but the remedy of independently initiating the specific performance case in a court of competent jurisdiction. In its challenged decision, the Court of Appeals, on its part, has said that respondent PPA's prayer for the issuance of a writ of execution and garnishment is but the necessary and legal consequence of its affirmance of the lower court's decision in the unlawful in the unlawful detainer case which has by then become final and executory. 15 The rule indeed is, and has almost invariably been, that after a judgment has gained finality, it becomes the ministerial duty of the court to order its execution. 16 No court, perforce, should interfere by injunction or otherwise to restrain such execution. The rule, however, concededly admits of exceptions; hence, when facts and circumstances later transpire that would render execution inequitable or unjust, the interested party may ask a competent court to stay its execution or prevent its enforcement. 17 So, also, a change in the situation of the parties can warrant an injunctive relief. 18 Evidently, in issuing its orders of 13 July 1995 and 29 August 1995 assailed by PPA in the latter's petition or certiorari and prohibition before the Court of Appeals, the trial court in the case at bar would want to preserve status quo pending its disposition of the specific performance case and to prevent the case from being mooted by an early implementation of the ejectment writ. In holding differently and ascribing to the trial court grave abuse of discretion amounting to lack or excess of jurisdiction, the appellate court, in our considered view, has committed reversible error. Having reached the above conclusions, other incidental issues raised by petitioner no longer need to be passed upon. WHEREFORE, the petition is GRANTED. The decision of the Court of Appeals is reversed and set aside; Civil Case No. 73399 along with the assailed orders of the Regional Trial Court, aforedated, are hereby reinstated. No costs. SO ORDERED. PHILIPPINE AMERICAN GENERAL INSURANCE CO., INC. and TAGUM PLASTICS, INC., petitioners, vs. SWEET LINES, INC., DAVAO VETERANS ARRASTRE AND PORT SERVICES, INC. and HON. COURT OF APPEALS, respondents. De Lara, De Lunas & Rosales for petitioners. Carlo L. Aquino for Sweet Lines, Inc.

REGALADO, J.: A maritime suit 1 was commenced on May 12, 1978 by herein Petitioner Philippine American General Insurance Co., Inc. (Philamgen) and Tagum Plastics, Inc. (TPI) against private respondents Sweet Lines, Inc. (SLI) and Davao Veterans Arrastre and Port Services, Inc. (DVAPSI), along with S.C.I. Line (The Shipping Corporation of India Limited) and F.E. Zuellig, Inc., as codefendants in the court a quo, seeking recovery of the cost of lost or damaged shipment plus exemplary damages, attorney's fees and costs allegedly due to defendants' negligence, with the following factual backdrop yielded by the findings of the court below and adopted by respondent court: It would appear that in or about March 1977, the vessel SS "VISHVA YASH" belonging to or operated by the foreign common carrier, took on board at Baton Rouge, LA, two (2) consignments of cargoes for shipment to Manila and later for transhipment to Davao City, consisting of 600 bags Low Density Polyethylene 631 and another 6,400 bags Low Density Polyethylene 647, both consigned to the order of Far East Bank and Trust Company of Manila, with arrival notice to Tagum Plastics, Inc., Madaum, Tagum, Davao City. Said cargoes were covered, respectively, by Bills of Lading Nos. 6 and 7 issued by the foreign common carrier (Exhs. E and F). The necessary packing or Weight List (Exhs. A and B), as well as the Commercial Invoices (Exhs. C and D) accompanied the shipment. The cargoes were likewise insured by the Tagum Plastics Inc. with plaintiff Philippine American General Insurance Co., Inc., (Exh. G). In the course of time, the said vessel arrived at Manila and discharged its cargoes in the Port of Manila for transhipment to Davao City. For this purpose, the foreign carrier awaited and made use of the services of the vessel called M/V "Sweet Love" owned and operated by defendant interisland carrier. Subject cargoes were loaded in Holds Nos. 2 and 3 of the interisland carrier. These were commingled with similar cargoes belonging to Evergreen Plantation and also Standfilco. On May 15, 1977, the shipment(s) were discharged from the interisland carrier into the custody of the consignee. A later survey conducted on July 8, 1977, upon the instance of the plaintiff, shows the following: Of the cargo covered by Bill of Lading No. 25 or (2)6, supposed to contain 6,400 bags of Low Density Polyethylene 647 originally inside 160 pallets, there were delivered to the consignee 5,413 bags in good order condition. The survey shows shortages, damages and losses to be as follows: Undelivered/Damaged bags as tallied during discharge from vessel-173 bags; undelivered and damaged as noted and observed whilst stored at the pier-699 bags; and shortlanded-110 bags (Exhs. P and P-1). Of the 600 bags of Low Density Polyethylene 631, the survey conducted on the same day shows an actual delivery to the consignee of only 507 bags in good order condition. Likewise noted were the following losses, damages and shortages, to wit: Undelivered/damaged bags and tally sheets during discharge from vessel-17 bags. Undelivered and damaged as noted and observed whilst stored at the pier-66 bags; Shortlanded-10 bags.

Therefore, of said shipment totalling 7,000 bags, originally contained in 175 pallets, only a total of 5,820 bags were delivered to the consignee in good order condition, leaving a balance of 1,080 bags. Such loss from this particular shipment is what any or all defendants may be answerable to (sic). As already stated, some bags were either shortlanded or were missing, and some of the 1,080 bags were torn, the contents thereof partly spilled or were fully/partially emptied, but, worse, the contents thereof contaminated with foreign matters and therefore could no longer serve their intended purpose. The position taken by the consignee was that even those bags which still had some contents were considered as total losses as the remaining contents were contaminated with foreign matters and therefore did not (sic) longer serve the intended purpose of the material. Each bag was valued, taking into account the customs duties and other taxes paid as well as charges and the conversion value then of a dollar to the peso, at P110.28 per bag (see Exhs. L and L-1 M and O). 2 Before trial, a compromise agreement was entered into between petitioners, as plaintiffs, and defendants S.C.I. Line and F.E. Zuellig, upon the latter's payment of P532.65 in settlement of the claim against them. Whereupon, the trial court in its order of August 12, 1981 3 granted plaintiffs' motion to dismiss grounded on said amicable settlement and the case as to S.C.I. Line and F.E. Zuellig was consequently "dismissed with prejudice and without pronouncement as to costs." The trial court thereafter rendered judgment in favor of herein petitioners on this dispositive portion: WHEREFORE, judgment is hereby rendered in favor of the plaintiff Philippine General American Insurance Company Inc. and against the remaining defendants, Sweet Lines Inc. and Davao Veterans Arrastre Inc. as follows: Defendant Sweet Lines, Inc. is ordered to pay said plaintiff the sum of P34,902.00, with legal interest thereon from date of extrajudicial demand on April 28, 1978 (Exh. M) until fully paid; Defendant Sweet Lines Inc. and Davao Veterans Arrastre and (Port) Services Inc. are directed to pay jointly and severally, the plaintiff the sum of P49,747.55, with legal interest thereon from April 28, 1978 until fully paid; Each of said defendants are ordered to pay the plaintiffs the additional sum of P5,000 is reimbursable attorney's fees and other litigation expenses; Each of said defendants shall pay one-fourth (1/4) costs. 4 Due to the reversal on appeal by respondent court of the trial court's decision on the ground of prescription, 5 in effect dismissing the complaint of herein petitioners, and the denial of their motion for reconsideration, 6 petitioners filed the instant petition for review on certiorari, faulting respondent appellate court with the following errors: (1) in upholding, without proof, the existence of the so-called prescriptive period; (2) granting arguendo that the said prescriptive period does exist, in not finding the same to be null and void; and (3) assuming arguendo that the said prescriptive period is valid and legal, in failing to conclude that petitioners substantially complied therewith. 7 Parenthetically, we observe that herein petitioners are jointly pursuing this case, considering their common interest in the shipment subject of the present controversy, to obviate any question as to who the real party in interest is and to protect their respective rights as insurer and insured. In any case, there is no impediment to the legal standing of Petitioner Philamgen, even if it alone were to sue herein private respondents in its own capacity as insurer, it having been subrogated to all rights of recovery for loss of or damage to the shipment insured under its Marine Risk Note No. 438734 dated March 31, 1977 8 in view of the full settlement of the claim thereunder as evidenced by the subrogation receipt 9 issued in its favor by Far East Bank and Trust Co., Davao Branch, for the account of petitioner TPI. Upon payment of the loss covered by the policy, the insurer's entitlement to subrogation pro tanto, being of the highest equity, equips it with a cause of action against a third party in case of contractual breach. 10 Further, the insurer's subrogatory right to sue for recovery under the bill of lading in case of loss of or damage to the cargo is jurisprudentially upheld. 11 However, if an insurer, in the exercise of its subrogatory right, may proceed against the erring carrier and for all intents and purposes stands in the place and in substitution of the consignee, a fortiori such insurer is presumed to know and is just as bound by the contractual terms under the bill of lading as the insured. On the first issue, petitioners contend that it was error for the Court of Appeals to reverse the appealed decision on the supposed ground of prescription when SLI failed to adduce any evidence in support thereof and that the bills of lading said to contain the shortened periods for filing a claim and for instituting a court action against the carrier were never offered in evidence. Considering that the existence and tenor of this stipulation on the

aforesaid periods have allegedly not been established, petitioners maintain that it is inconceivable how they can possibly comply therewith. 12 In refutation, SLI avers that it is standard practice in its operations to issue bills of lading for shipments entrusted to it for carriage and that it in fact issued bills of lading numbered MD-25 and MD-26 therefor with proof of their existence manifest in the records of the case. 13 For its part, DVAPSI insists on the propriety of the dismissal of the complaint as to it due to petitioners' failure to prove its direct responsibility for the loss of and/or damage to the cargo. 14 On this point, in denying petitioner's motion for reconsideration, the Court of Appeals resolved that although the bills of lading were not offered in evidence, the litigation obviously revolves on such bills of lading which are practically the documents or contracts sued upon, hence, they are inevitably involved and their provisions cannot be disregarded in the determination of the relative rights of the parties thereto. 15 Respondent court correctly passed upon the matter of prescription, since that defense was so considered and controverted by the parties. This issue may accordingly be taken cognizance of by the court even if not inceptively raised as a defense so long as its existence is plainly apparent on the face of relevant pleadings. 16 In the case at bar, prescription as an affirmative defense was seasonably raised by SLI in its answer, 17 except that the bills of lading embodying the same were not formally offered in evidence, thus reducing the bone of contention to whether or not prescription can be maintained as such defense and, as in this case, consequently upheld on the strength of mere references thereto. As petitioners are suing upon SLI's contractual obligation under the contract of carriage as contained in the bills of lading, such bills of lading can be categorized as actionable documents which under the Rules must be properly pleaded either as causes of action or defenses, 18 and the genuineness and due execution of which are deemed admitted unless specifically denied under oath by the adverse party. 19 The rules on actionable documents cover and apply to both a cause of action or defense based on said documents. 20 In the present case and under the aforestated assumption that the time limit involved is a prescriptive period, respondent carrier duly raised prescription as an affirmative defense in its answer setting forth paragraph 5 of the pertinent bills of lading which comprised the stipulation thereon by parties, to wit: 5. Claims for shortage, damage, must be made at the time of delivery to consignee or agent, if container shows exterior signs of damage or shortage. Claims for non-delivery, misdelivery, loss or damage must be filed within 30 days from accrual. Suits arising from shortage, damage or loss, non-delivery or misdelivery shall be instituted within 60 days from date of accrual of right of action. Failure to file claims or institute judicial proceedings as herein provided constitutes waiver of claim or right of action. In no case shall carrier be liable for any delay, non-delivery, misdelivery, loss of damage to cargo while cargo is not in actual custody of carrier. 21 In their reply thereto, herein petitioners, by their own assertions that 2. In connection with Pars. 14 and 15 of defendant Sweet Lines, Inc.'s Answer, plaintiffs state that such agreements are what the Supreme Court considers as contracts of adhesion ( see Sweet Lines, Inc. vs. Hon. Bernardo Teves, et al., G.R. No. L-37750, May 19, 1978) and, consequently, the provisions therein which are contrary to law and public policy cannot be availed of by answering defendant as valid defenses. 22 thereby failed to controvert the existence of the bills of lading and the aforequoted provisions therein, hence they impliedly admitted the same when they merely assailed the validity of subject stipulations. Petitioners' failure to specifically deny the existence, much less the genuineness and due execution, of the instruments in question amounts to an admission. Judicial admissions, verbal or written, made by the parties in the pleadings or in the course of the trial or other proceedings in the same case are conclusive, no evidence being required to prove the same, and cannot be contradicted unless shown to have been made through palpable mistake or that no such admission was made. 23 Moreover, when the due execution and genuineness of an instrument are deemed admitted because of the adverse party's failure to make a specific verified denial thereof, the instrument need not be presented formally in evidence for it may be considered an admitted fact. 24 Even granting that petitioners' averment in their reply amounts to a denial, it has the procedural earmarks of what in the law on pleadings is called a negative pregnant, that is, a denial pregnant with the admission of the substantial facts in the pleading responded to which are not squarely denied. It is in effect an admission of the averment it is directed to. 25 Thus, while petitioners objected to the validity of such agreement for being contrary to public policy, the existence of the bills of lading and said stipulations were nevertheless impliedly admitted by them.

We find merit in respondent court's comments that petitioners failed to touch on the matter of the non-presentation of the bills of lading in their brief and earlier on in the appellate proceedings in this case, hence it is too late in the day to now allow the litigation to be overturned on that score, for to do so would mean an over-indulgence in technicalities. Hence, for the reasons already advanced, the non-inclusion of the controverted bills of lading in the formal offer of evidence cannot, under the facts of this particular case, be considered a fatal procedural lapse as would bar respondent carrier from raising the defense of prescription. Petitioners' feigned ignorance of the provisions of the bills of lading, particularly on the time limitations for filing a claim and for commencing a suit in court, as their excuse for non-compliance therewith does not deserve serious attention. It is to be noted that the carriage of the cargo involved was effected pursuant to an "Application for Delivery of Cargoes without Original Bill of Lading" issued on May 20, 1977 in Davao City 26 with the notation therein that said application corresponds to and is subject to the terms of bills of lading MD-25 and MD-26. It would be a safe assessment to interpret this to mean that, sight unseen, petitioners acknowledged the existence of said bills of lading. By having the cargo shipped on respondent carrier's vessel and later making a claim for loss on the basis of the bills of lading, petitioners for all intents and purposes accepted said bills. Having done so they are bound by all stipulations contained therein. 27 Verily, as petitioners are suing for recovery on the contract, and in fact even went as far as assailing its validity by categorizing it as a contract of adhesion, then they necessarily admit that there is such a contract, their knowledge of the existence of which with its attendant stipulations they cannot now be allowed to deny. On the issue of the validity of the controverted paragraph 5 of the bills of lading above quoted which unequivocally prescribes a time frame of thirty (30) days for filing a claim with the carrier in case of loss of or damage to the cargo and sixty (60) days from accrual of the right of action for instituting an action in court, which periods must concur, petitioners posit that the alleged shorter prescriptive period which is in the nature of a limitation on petitioners' right of recovery is unreasonable and that SLI has the burden of proving otherwise, citing the earlier case of Southern Lines, Inc. vs. Court of Appeals, et al. 28 They postulate this on the theory that the bills of lading containing the same constitute contracts of adhesion and are, therefore, void for being contrary to public policy, supposedly pursuant to the dictum in Sweet Lines, Inc. vs. Teves, et al. 29 Furthermore, they contend, since the liability of private respondents has been clearly established, to bar petitioners' right of recovery on a mere technicality will pave the way for unjust enrichment. 30 Contrarily, SLI asserts and defends the reasonableness of the time limitation within which claims should be filed with the carrier; the necessity for the same, as this condition for the carrier's liability is uniformly adopted by nearly all shipping companies if they are to survive the concomitant rigors and risks of the shipping industry; and the countervailing balance afforded by such stipulation to the legal presumption of negligence under which the carrier labors in the event of loss of or damage to the cargo. 31 It has long been held that Article 366 of the Code of Commerce applies not only to overland and river transportation but also to maritime transportation. 32 Moreover, we agree that in this jurisdiction, as viewed from another angle, it is more accurate to state that the filing of a claim with the carrier within the time limitation therefor under Article 366 actually constitutes a condition precedent to the accrual of a right of action against a carrier for damages caused to the merchandise. The shipper or the consignee must allege and prove the fulfillment of the condition and if he omits such allegations and proof, no right of action against the carrier can accrue in his favor. As the requirements in Article 366, restated with a slight modification in the assailed paragraph 5 of the bills of lading, are reasonable conditions precedent, they are not limitations of action. 33 Being conditions precedent, their performance must precede a suit for enforcement 34 and the vesting of the right to file spit does not take place until the happening of these conditions. 35 Now, before an action can properly be commenced all the essential elements of the cause of action must be in existence, that is, the cause of action must be complete. All valid conditions precedent to the institution of the particular action, whether prescribed by statute, fixed by agreement of the parties or implied by law must be performed or complied with before commencing the action, unless the conduct of the adverse party has been such as to prevent or waive performance or excuse non-performance of the condition. 36 It bears restating that a right of action is the right to presently enforce a cause of action, while a cause of action consists of the operative facts which give rise to such right of action. The right of action does not arise until the performance of all conditions precedent to the action and may be taken away by the running of the statute of limitations, through estoppel, or by other circumstances which do not affect the cause of action. 37 Performance or fulfillment of all conditions precedent upon which a right of action depends must be sufficiently alleged, 38 considering that the burden of proof to show that a party has a right of action is upon the person initiating the suit. 39 More particularly, where the contract of shipment contains a reasonable requirement of giving notice of loss of or injury to the goods, the giving of such notice is a condition precedent to the action for loss or injury or the right to enforce the carrier's liability. Such requirement is not an empty formalism. The fundamental reason or purpose of such a stipulation is not to relieve the carrier from just liability, but reasonably to inform it that the shipment has

been damaged and that it is charged with liability therefor, and to give it an opportunity to examine the nature and extent of the injury. This protects the carrier by affording it an opportunity to make an investigation of a claim while the matter is fresh and easily investigated so as to safeguard itself from false and fraudulent claims. 40 Stipulations in bills of lading or other contracts of shipment which require notice of claim for loss of or damage to goods shipped in order to impose liability on the carrier operate to prevent the enforcement of the contract when not complied with, that is, notice is a condition precedent and the carrier is not liable if notice is not given in accordance with the stipulation, 41 as the failure to comply with such a stipulation in a contract of carriage with respect to notice of loss or claim for damage bars recovery for the loss or damage suffered. 42 On the other hand, the validity of a contractual limitation of time for filing the suit itself against a carrier shorter than the statutory period therefor has generally been upheld as such stipulation merely affects the shipper's remedy and does not affect the liability of the carrier. In the absence of any statutory limitation and subject only to the requirement on the reasonableness of the stipulated limitation period, the parties to a contract of carriage may fix by agreement a shorter time for the bringing of suit on a claim for the loss of or damage to the shipment than that provided by the statute of limitations. Such limitation is not contrary to public policy for it does not in any way defeat the complete vestiture of the right to recover, but merely requires the assertion of that right by action at an earlier period than would be necessary to defeat it through the operation of the ordinary statute of limitations. 43 In the case at bar, there is neither any showing of compliance by petitioners with the requirement for the filing of a notice of claim within the prescribed period nor any allegation to that effect. It may then be said that while petitioners may possibly have a cause of action, for failure to comply with the above condition precedent they lost whatever right of action they may have in their favor or, token in another sense, that remedial right or right to relief had prescribed. 44 The shipment in question was discharged into the custody of the consignee on May 15, 1977, and it was from this date that petitioners' cause of action accrued, with thirty (30) days therefrom within which to file a claim with the carrier for any loss or damage which may have been suffered by the cargo and thereby perfect their right of action. The findings of respondent court as supported by petitioners' formal offer of evidence in the court below show that the claim was filed with SLI only on April 28, 1978, way beyond the period provided in the bills of lading45 and violative of the contractual provision, the inevitable consequence of which is the loss of petitioners' remedy or right to sue. Even the filing of the complaint on May 12, 1978 is of no remedial or practical consequence, since the time limits for the filing thereof, whether viewed as a condition precedent or as a prescriptive period, would in this case be productive of the same result, that is, that petitioners had no right of action to begin with or, at any rate, their claim was time-barred. What the court finds rather odd is the fact that petitioner TPI filed a provisional claim with DVAPSI as early as June 14, 1977 46 and, as found by the trial court, a survey fixing the extent of loss of and/or damage to the cargo was conducted on July 8, 1977 at the instance of petitioners. 47 If petitioners had the opportunity and awareness to file such provisional claim and to cause a survey to be conducted soon after the discharge of the cargo, then they could very easily have filed the necessary formal, or even a provisional, claim with SLI itself 48 within the stipulated period therefor, instead of doing so only on April 28, 1978 despite the vessel's arrival at the port of destination on May 15, 1977. Their failure to timely act brings us to no inference other than the fact that petitioners slept on their rights and they must now face the consequences of such inaction. The ratiocination of the Court of Appeals on this aspect is worth reproducing: xxx xxx xxx It must be noted, at this juncture, that the aforestated time limitation in the presentation of claim for loss or damage, is but a restatement of the rule prescribed under Art. 366 of the Code of Commerce which reads as follows: Art. 366. Within the twenty-four hours following the receipt of the merchandise, the claim against the carrier for damage or average which may be found therein upon opening the packages, may be made, provided that the indications of the damage or average which gives rise to the claim cannot be ascertained from the outside part of the packages, in which case the claims shall be admitted only at the time of the receipt. After the periods mentioned have elapsed, or the transportation charges have been paid, no claim shall be admitted against the carrier with regard to the condition in which the goods transported were delivered. Gleanable therefrom is the fact that subject stipulation even lengthened the period for presentation of claims thereunder. Such

modification has been sanctioned by the Supreme Court. In the case of Ong Yet (M)ua Hardware Co., Inc. vs. Mitsui Steamship Co., Ltd., et al., 59 O.G. No. 17, p. 2764, it ruled that Art. 366 of the Code of Commerce can be modified by a bill of lading prescribing the period of 90 days after arrival of the ship, for filing of written claim with the carrier or agent, instead of the 24-hour time limit after delivery provided in the aforecited legal provision. Tested, too, under paragraph 5 of said Bill of Lading, it is crystal clear that the commencement of the instant suit on May 12, 1978 was indeed fatally late. In view of the express provision that "suits arising from . . . damage or loss shall be instituted within 60 days from date of accrual of right of action," the present action necessarily fails on ground of prescription. In the absence of constitutional or statutory prohibition, it is usually held or recognized that it is competent for the parties to a contract of shipment to agree on a limitation of time shorter than the statutory period, within which action for breach of the contract shall be brought, and such limitation will be enforced if reasonable . . . (13 C.J.S. 496-497) A perusal of the pertinent provisions of law on the matter would disclose that there is no constitutional or statutory prohibition infirming paragraph 5 of subject Bill of Lading. The stipulated period of 60 days is reasonable enough for appellees to ascertain the facts and thereafter to sue, if need be, and the 60-day period agreed upon by the parties which shortened the statutory period within which to bring action for breach of contract is valid and binding. . . . (Emphasis in the original text.) 49 As explained above, the shortened period for filing suit is not unreasonable and has in fact been generally recognized to be a valid business practice in the shipping industry. Petitioners' advertence to the Court's holding in the Southern Lines case, supra, is futile as what was involved was a claim for refund of excess payment. We ruled therein that non-compliance with the requirement of filing a notice of claim under Article 366 of the Code of Commerce does not affect the consignee's right of action against the carrier because said requirement applies only to cases for recovery of damages on account of loss of or damage to cargo, not to an action for refund of overpayment, and on the further consideration that neither the Code of Commerce nor the bills of lading therein provided any time limitation for suing for refund of money paid in excess, except only that it be filed within a reasonable time.

Unless and until a notice of claim is therewith timely filed, the carrier cannot be expected to presume that for every loss or damage tallied, a corresponding claim therefor has been filed or is already in existence as would alert it to the urgency for an immediate investigation of the soundness of the claim. The report on losses and damages is not the claim referred to and required by the bills of lading for it does not fix responsibility for the loss or damage, but merely states the condition of the goods shipped. The claim contemplated herein, in whatever form, must be something more than a notice that the goods have been lost or damaged; it must contain a claim for compensation or indicate an intent to claim. 53 Thus, to put the legal effect of respondent carrier's report on losses or damages, the preparation of which is standard procedure upon unloading of cargo at the port of destination, on the same level as that of a notice of claim by imploring substantial compliance is definitely farfetched. Besides, the cited notation on the carrier's report itself makes it clear that the filing of a notice of claim in any case is imperative if carrier is to be held liable at all for the loss of or damage to cargo. Turning now to respondent DVAPSI and considering that whatever right of action petitioners may have against respondent carrier was lost due to their failure to seasonably file the requisite claim, it would be awkward, to say the least, that by some convenient process of elimination DVAPSI should proverbially be left holding the bag, and it would be pure speculation to assume that DVAPSI is probably responsible for the loss of or damage to cargo. Unlike a common carrier, an arrastre operator does not labor under a presumption of negligence in case of loss, destruction or deterioration of goods discharged into its custody. In other words, to hold an arrastre operator liable for loss of and/or damage to goods entrusted to it there must be preponderant evidence that it did not exercise due diligence in the handling and care of the goods. Petitioners failed to pinpoint liability on any of the original defendants and in this seemingly wild goose-chase, they cannot quite put their finger down on when, where, how and under whose responsibility the loss or damage probably occurred, or as stated in paragraph 8 of their basic complaint filed in the court below, whether "(u)pon discharge of the cargoes from the original carrying vessel, the SS VISHVA YASH," and/or upon discharge of the cargoes from the interisland vessel the MV "SWEET LOVE," in Davao City and later while in the custody of defendant arrastre operator. 54 The testimony of petitioners' own witness, Roberto Cabato, Jr., Marine and Aviation Claims Manager of petitioner Philamgen, was definitely inconclusive and the responsibility for the loss or damage could still not be ascertained therefrom: Q In other words, Mr. Cabato, you only computed the loss on the basis of the figures submitted to you and based on the documents like the survey certificate and the certificate of the arrastre? A Yes, sir. Q Therefore, Mr. Cabato, you have no idea how or where these losses were incurred? A No, sir.

The ruling in Sweet Lines categorizing the stipulated limitation on venue of action provided in the subject bill of lading as a contract of adhesion and, under the circumstances therein, void for being contrary to public policy is evidently likewise unavailing in view of the discrete environmental facts involved and the fact that the restriction therein was unreasonable. In any case, Ong Yiu vs. Court of Appeals, et al., 50 instructs us that "contracts of adhesion wherein one party imposes a ready-made form of contract on the other . . . are contracts not entirely prohibited. The one who adheres to the contract is in reality free to reject it entirely; if he adheres he gives his consent." In the present case, not even an allegation of ignorance of a party excuses non-compliance with the contractual stipulations since the responsibility for ensuring full comprehension of the provisions of a contract of carriage devolves not on the carrier but on the owner, shipper, xxx or xxx xxx consignee as the case may be. While it is true that substantial compliance with provisions on filing of claim for loss of or damage to cargo may sometimes suffice, the invocation of such an assumption must be viewed vis-a-vis the object or purpose which such a provision seeks to attain and that is to afford the carrier a reasonable opportunity to determine the merits and validity of the claim and to protect itself against unfounded impositions. 51 Petitioners' would nevertheless adopt an adamant posture hinged on the issuance by SLI of a "Report on Losses xxx xxx xxx and Damages," dated May 15, 1977, 52 from which petitioners theorize that this charges private respondents with actual knowledge of the loss and damage involved in the present case as would obviate the need for or render superfluous the filing of a claim within the stipulated period. Withal, it has merely to be pointed out that the aforementioned report bears this notation at the lower part thereof: "Damaged by Mla. labor upon unloading; B/L noted at port of origin," as an explanation for the cause of loss of and/or damage to the cargo, together with an iterative note stating that "(t)his Copy should be submitted together with your claim invoice or receipt within 30 days from date of issue otherwise your claim will not be honored." Moreover, knowledge on the part of the carrier of the loss of or damage to the goods deducible from the issuance of said report is not equivalent to nor does it approximate the legal purpose served by the filing of the requisite claim, that is, to promptly apprise the carrier about a consignee's intention to xxx xxx xxx file a claim and thus cause the prompt investigation of the veracity and merit thereof for its protection. It would be an unfair imposition to require the carrier, upon discovery in the process of preparing the report on losses or damages of any and all such loss or damage, to presume the existence of a claim against it when at that time the carrier is expectedly concerned merely with accounting for each and every shipment and assessing its condition.

Q Mr. Witness, you said that you processed and investigated the claim involving the shipment in question. Is it not a fact that in your processing and investigation you considered how the shipment was transported? Where the losses could have occurred and what is the extent of the respective responsibilities of the bailees and/or carriers involved?

A With respect to the shipment being transported, we have of course to get into it in order to check whether the shipment coming in to this port is in accordance with the policy condition, like in this particular case, the shipment was transported to Manila and transhipped through an interisland vessel in accordance with the policy. With respect to the losses, we have a general view where losses could have occurred. Of course we will have to consider the different bailees wherein the shipment must have passed through, like the ocean vessel, the interisland vessel and the arrastre, but definitely at that point and time we cannot determine the extent of each liability. We are only interested at that point and time in the liability as regards the underwriter in accordance with the policy that we issued.

Q Mr. Witness, from the documents, namely, the survey of Manila Adjusters and Surveyors Company, the survey of Davao Arrastre contractor and the bills of lading issued by the defendant Sweet

Lines, will you be able to tell the respective liabilities of the bailees and/or carriers concerned? A No, sir. (Emphasis ours.) 55 Neither did nor could the trial court, much less the Court of Appeals, precisely establish the stage in the course of the shipment when the goods were lost, destroyed or damaged. What can only be inferred from the factual findings of the trial court is that by the time the cargo was discharged to DVAPSI, loss or damage had already occurred and that the same could not have possibly occurred while the same was in the custody of DVAPSI, as demonstrated by the observations of the trial court quoted at the start of this opinion. ACCORDINGLY, on the foregoing premises, the instant petition is DENIED and the dismissal of the complaint in the court a quo as decreed by respondent Court of Appeals in its challenged judgment is hereby AFFIRMED. SO ORDERED.

WHEREFORE, defendants' motion to set aside the decision rendered in this case and to order a new trial is hereby denied. Counsel for defendants argues that the trial court erred in not dismissing this case as premature because since it was agreed that the loans cannot be paid within one year from the termination of the last world war and according to the treaty between Japan and the Allied Powers the same should come into force for each State only after its ratification and from date of the deposit of its instrument of ratification, it cannot be said that the war has terminated when this action was brought on June 23, 1956, it appearing that the instrument of ratification was deposited only on July 23, 1956. This contention is untenable. In Navarre v. Barreto, et al., G.R. No. L-8660, promulgated on May 21, 1956, we said that "in the legal sense, war formally ended in the Philippines the moment President Harry S. Truman officially issued a proclamation of peace on December 31, 1946 .... And if counsel meant that there should be a formal treaty of peace, we may say that this purpose has also been accomplished when the treaty of peace with Japan had been signed in San Francisco, California on September 8, 1951 by the United States and the Allied Powers, including the Philippines." At any rate, even granting that the date of the deposit of the instrument of ratification of the treaty should be reckoned with to determine when the last world war should be deemed legally terminated, this point is now moot since said instrument was deposited on July 23, 1956. The contention that his action is already barred by the filing of Civil Case No. 11969 for the simple reason that the two loans herein involved could have been included in said action because at the time it was filed they had already matured, is likewise untenable, considering that the first case refers to a transaction different from those covered in the present case. Section 3, Rule 2, of our Rules of Court, invoked by appellants, which provides that a single cause of action cannot be split up into two or more parts so as to be made the subject of different complaints, does not apply, for here there is not a single cause of action that was split up, but several causes that refer to different transactions. And it was held that a contract embraces only one cause of action because it may be violated only once even if it contains several stipulations.1 Thus, non-payment of a loan secured by mortgage constitutes a single cause of action. The creditor cannot split up this single cause of action into two separate complaints, one for payment of the debt and another for the foreclosure of the mortgage. If he does so, the filing of the first complaint will bar the second complaint. In other words, the complaint filed for the payment of certain debt shall be considered as a waiver of the right to foreclose the mortgage executed thereon.2 The lower court, therefore, did not err in denying the motion to dismiss on this ground. 1wph1.t The third contention that the recoverable amounts should be converted into money according to the Ballantyne scale of values cannot also be sustained it having been agreed between the parties that said loans shall be payable after the termination of the last world war. The rule is well-settled "that where the obligation incurred during the Japanese occupation was made payable after a fixed period, the maturity falling after liberation, the promissor must pay in Philippine currency the same amount stated in the obligation, that is, the obligation must be settled peso for peso in Philippine currency. He cannot discharge his debt by paying only the equivalent in Philippine currency of the value of the military notes he had received."3 WHEREFORE, the decision appealed from is affirmed, with costs against appellants.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-13159 February 28, 1962

REMEDIOS QUIOGUE, ET AL., plaintiffs-appellees, vs. JACINTO BAUTISTA, ET AL., defendants-appellants. T. Silverio for plaintiffs-appellees. J. Serrano Espiritu for defendants-appellants. BAUTISTA ANGELO, J.: This is an action to foreclose two deeds of mortgage executed to secure the payment of two loans, one for P2,000.00 and another for P6,000.00 covering two parcels of land situated in the City of Manila. The first deed was executed on May 9, 1944 and the second on October 11, 1944 and it was stipulated therein as a common provision that the two loans cannot be repaid within one year from the date of the termination of the last world war. The defendants set up the defense that the present action is already barred by Civil Case No. 11969 filed in the same court between the same parties, and that if there is any amount recoverable from them the same shall be computed in accordance with the Ballantyne schedule. They also set up a counterclaim for moral damages in the amount of P10,000.00. On August 27, 1957, the trial court rendered decision in favor of plaintiffs sentencing defendants to pay the sum of P12,829.81, with interest at the rates of 6% and 3% per annum on the amounts of P8,000.00 and P4,829.81, respectively, from July 21, 1957, plus costs, and in default of payment, it was ordered that the properties mortgaged be sold at public auction and the proceeds thereof applied to the payment of the judgment. Defendants have appealed to this Court on purely questions of law. It appears that prior to the filing of the present complaint plaintiffs had instituted before the Court of First Instance of Manila an action to foreclose a first mortgage on the same properties and that on the date said action was filed the two loans covered by the second and third mortgages which are herein foreclosed had already matured (Civil Case No. 11969). It likewise appears that judgment was duly entered in the first case and when a writ of execution was issued to enforce it, it was fully satisfied by defendants on August 18, 1952 by paying to the sheriff the sum of P9,000.00. It is now contended that the trial court erred (1) in not dismissing this case as premature; (2) in not finding that this case is barred by the decision rendered in Civil Case No. 11969; and (3) in not converting the amounts recoverable under the Ballantyne scale of values. With regard to the first contention, the lower court said: . Considering that the Japanese Peace Treaty terminating the Second World War between Japan and the Allied Powers, of which the Philippines was a signatory, was signed on September 8, 1951 at San Francisco. U.S.A., the interpretation of counsel for the defendants that the war did not terminate for the Philippines until July 23, 1956 is not tenable.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 167724 June 27, 2006

BPI FAMILY SAVINGS BANK, INC., Petitioner, vs. MARGARITA VDA. DE COSCOLLUELA, Respondent. DECISION CALLEJO, SR., J.: Assailed before this Court is a Petition for Review under Rule 45 of the Rules of Court of the Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 69732 granting respondents petition for certiorari, and its resolution denying petitioners motion for reconsideration. The Antecedents

Respondent Margarita Coscolluela and her husband Oscar Coscolluela obtained an agricultural sugar crop loan from the Far East Bank & Trust Co. (FEBTC) Bacolod City Branch (later merged with petitioner Bank of the Philippine Islands) for crop years 1997 and 1998.2 However, in the book of FEBTC, the loan account of the spouses was treated as a single account,3 which amounted to P13,592,492.00 as evidenced by 67 Promissory Notes4 executed on various dates, from August 29, 1996 to January 23, 1998, to wit: 1avvphil.net Promissory Note No. Date Amount (in Phil. Peso) 148,000

36. 37. 38. 39. 40. 41. 42.

02-052-970819 02-052-970852 02-052-970926 02-052-970949 02-052-970975 02-052-970999 02-052-971028 02-052-971053 02-052-971073 02-052-971215 02-052-971253 02-052-971280 02-052-971317 02-052-971340 02-052-971351 02-052-971362 02-052-971394 02-052-971407 02-052-971449 02-052-971464 02-052-971501 02-052-971527 02-052-971538 02-052-971569 02-052-971604 02-052-971642 02-052-971676 02-052-971688 02-052-980019 02-052-980032 02-052-980064 02-052-980079

4 July 1997 11 July 1997 1 August 1997 5 August 1997 8 August 1997 15 August 1997 22 August 1997 29 August 1997 4 September 1997 12 September 1997 19 September 1997 26 September 1997 2 October 1997 10 October 1997 15 October 1997 16 October 1997 24 October 1997 29 October 1997 6 November 1997 13 November 1997 20 November 1997 25 November 1997 28 November 1997 4 December 1997 12 December 1997 18 December 1997 23 December 1997 29 December 1997 7 January 1998 8 January 1998 15 January 1998 23 January 1998

250,000 350,000 170,000 200,000 120,000 150,000 110,000 130,000 90,000 160,000 190,000 140,000 115,000 115,000 700,000 90,000 185,000 170,000 105,000 170,000 150,000 620,000 130,000 140,000 220,000 185,000 117,000 100,000 195,000 170,000 225,000 176,000

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35.

02-052-960971 02-052-961095 02-052-961122 02-052-961205 02-052-961231 02-052-961252 02-052-961274 02-052-961310 02-052-961373 02-052-961442 02-052-961464 02-052-961498 02-052-961542 02-052-970018 02-052-970052 02-052-970078 02-052-970087 02-052-970131 02-052-970163 02-052-970190 02-052-970215 02-052-970254 02-052-970293 02-052-970345 02-052-970367 02-052-970402 02-052-970422 02-052-970453 02-052-970478 02-052-970502 02-052-970539 02-052-970558 02-052-970589 02-052-970770 02-052-970781

29 August 1996 23 September 1996 27 September 1996 11 October 1996 18 October 1996 24 October 1996 30 October 1996 8 November 1996 21 November 1996 6 December 1996 12 December 1996 19 December 1996 27 December 1996 3 January 1997 10 January 1997 15 January 1997 17 January 1997 23 January 1997 31 January 1997 7 February 1997 13 February 1997 20 February 1997 28 February 1997 7 March 1997 13 March 1997 21 March 1997 26 March 1997 4 April 1997 11 April 1997 17 April 1997 25 April 1997 30 April 1997 8 May 1997 25 June 1997 27 June 1997

43. 1,200,000 44. 550,000 45. 180,000 46. 155,000 47. 190,000 48. 115,000 49. 90,000 50. 125,000 51. 650,000 52. 240,000 53. 164,000 54. 200,000 55. 120,000 56. 185,000 57. 80,000 58. 170,000 59. 180,000 60. 220,000 61. 110,000 62. 170,000 63. 140,000 64. 130,000 65. 90,000 66. 50,000 67. 160,000 190,000 82,000 150,000 80,000 145,000 135,000 54,000 646,492 160,000

The promissory notes listed under Nos. 1 to 33 bear the maturity date of February 9, 1998, with a 30-day extension of up to March 11, 1998, while those listed under Nos. 34 to 67 bear December 28, 1998 as maturity date. Meanwhile, on June 13, 1997, the spouses Coscolluela executed a real estate mortgage in favor of FEBTC over their parcel of land located in Bacolod City covered by Transfer Certificate of Title (TCT) No. T-109329 as security of loans on credit accommodation obtained by the spouses from FEBTC and those that may be obtained by the mortgagees which was fixed at P7,000,000.00, as well as those that may be extended by the mortgagor to the mortgagees.5 Under the terms and conditions of the real estate mortgage, in the event of failure to pay the mortgage obligation or any portion thereof when due, the entire principal, interest, penalties and other charges then outstanding, shall become immediately due; upon such breach or violation of the terms and conditions thereof, FEBTC may, at its absolute discretion foreclose the same extrajudicially in accordance with the procedure prescribed by Act No. 3135, as amended, and for the purpose appointed FEBTC as its attorney-in-fact

with full power and authority to enter the premises where the mortgaged property is located and to take actual possession and control thereof without need of any order of any court, nor written permission from the spouses, and with special power to sell the mortgaged property at a public or private sale at the option of the mortgagee; and that the spouses expressly waived the term of 30 days or any other terms granted by law as the period which must elapse before the mortgage agreement may be foreclosed and, in any case, such period has already lapsed. The mortgage was registered with the Registry of Deeds of Bacolod and was annotated in the title of the land on June 20, 1997. 6 Meantime, Oscar died intestate and was survived by his widow, herein respondent. For failure to settle the outstanding obligation on the maturity dates, FEBTC sent a final demand letter7 to respondent on March 10, 1999 demanding payment, within five days from notice, of the principal of the loan amounting to P13,481,498.68, with past due interests and penalties or in the total amount of P19,482,168.31 as of March 9, 1999.8 Respondent failed to settle her obligation. On June 10, 1999, FEBTC filed a petition for the extrajudicial foreclosure of the mortgaged property, significantly only for the total amount of P4,687,006.68 exclusive of balance, interest and penalty, covered by promissory notes from 1 to 33, except nos. 2 and 10.9 While the extrajudicial foreclosure proceeding was pending, petitioner FEBTC filed a complaint10 with the Regional Trial Court (RTC) of Makati City, Branch 64, against respondent for the collection of the principal amount ofP8,794,492.00 plus interest and penalty, or the total amount of P12,672,000.31, representing the amounts indicated in the rest of the promissory notes, specifically Promissory Note Nos. 34 to 67, as well as those dated December 6, 1996 and September 23, 1996:

2-052-971028 2-052-970999 2-052-970975 2-052-970949 2-052-970926 2-052-970852 2-052-970819 2-052-970781 2-052-970770 2-052-961442 2-052-961095

August 22, 1997 August 15, 1997 August 08, 1997 August 05, 1997 August 01, 1997 July 11, 1997 July 04, 1997 June 27, 1997 June 25, 1997 December 06, 1996 September 23, 1996

110,000.00 150,000.00 120,000.00 200,000.00 170,000.00 350,000.00 250,000.00 160,000.00 646,492.00 650,000.00 1,200,000.00

Z AA BB CC DD EE FF GG HH II JJ11

Petitioner prayed that, after due proceedings, judgment be rendered in its favor, thus: WHEREFORE, it is respectfully prayed that, after trial, judgment be rendered in its favor and against defendants ordering them to pay the following: a. The amount TWELVE MILLION SIX HUNDRED SEVENTYTWO THOUSAND PESOS and 31/100 (P12,672,000.31), with additional stipulated interest and penalty equivalent to one (1%) percent of the amount due for every thirty (30) days or fraction thereof, until fully paid; b. Expense of litigation amounting to P50,000.00; c. The amount of P500,000.00 as attorneys fees. Other reliefs just and equitable in the premises are similarly prayed for.12 In her answer, respondent alleged, by way of special and affirmative defense, that the complaint was barred by litis pendentia, specifically, the pending petition for the extrajudicial foreclosure of the real estate mortgage, thus: 8) That plaintiff is guilty of forum shopping, in that some of the promissory notes attached to plaintiffs complaint are also the same promissory notes which were made the basis of the plaintiff in their extrajudicial foreclosure of mortgage filed against the defendantspouses and also marked in evidence in support of their opposition to the issuance of the preliminary injunction in Civil Case No. 9910864; 9) That plaintiff-bank has not only charged but over charged the defendant-spouses with excessive and exorbitant interest over and above those authorized by law. And in order to add more injury to the defendants, plaintiff also included other charges not legally collectible from the defendant-spouses; 10) That the act of the plaintiff-bank in seeking to collect twice on the same promissory notes is not only unfair and unjust but also condemnable as plaintiff seek to unjustly enrich itself at the expense of the defendants; 11) That there is another action pending between the same parties for the same cause; 12) That the claim or demand set forth in the plaintiffs complaint has either been waived, abandoned or otherwise extinguished. 13 Petitioner presented Emmanuel Ganuelas, its loan officer in its Bacolod City Branch, as sole witness. He testified that the spouses Coscolluela were granted an agricultural sugar loan which is designed to finance the cultivation and plantation of sugar farms of the borrowers. 14 Borrowers were allowed to make successive drawdowns or availments against the loan as their need arose. Each drawdown is covered by a promissory note with uniform maturity dates.15 The witness also testified that the loan account of the spouses was a "single loan account."16 After petitioner rested its case, respondent filed a demurrer to evidence17 contending, among others, that, with Ganuelas admission, there is only one loan account secured by the real estate mortgage, that the promissory notes were executed as evidence of the loans. Plaintiff was thus barred from instituting a personal action for collection of the drawdowns evidenced by Promissory Note Nos. 2, 10, and 34 to 67 after instituting a

PN No. 2-052-980079 2-052-980064 2-052-980032 2-052-980019 2-052-971688 2-052-971676 2-052-971642 2-052-971604 2-052-971569 2-052-971538 2-052-971527 2-052-971501 2-052-971464 2-052-971449 2-052-971407 2-052-971394 2-052-971362 2-052-971351 2-052-971340 2-052-971317 2-052-971280 2-052-971253 2-052-971215 2-052-971073 2-052-971053

Date January 02, 1998 January 15, 1998 January 08, 1998 January 07, 1998 December 29, 1997 December 23, 1997 December 18, 1997 December 12, 1997 December 04, 1997 November 28, 1997 November 25, 1997 November 20, 1997 November 13, 1997 November 06, 1997 October 29, 1997 October 24, 1997 October 16, 1997 October 15, 1997 October 15, 1997 October 02, 1997 September 26, 1997 September 19, 1997 September 12, 1997 September 04, 1997 August 29, 1997

Amount 176,000.00 225,000.00 170,000.00 195,000.00 100,000.00 117,000.00 185,000.00 220,000.00 140,000.00 130,000.00 620,000.00 150,000.00 170,000.00 105,000.00 170,000.00 185,000.00 90,000.00 700,000.00 115,000.00 115,000.00 140,000.00 190,000.00 160,000.00 90,000.00 130,000.00

Annex A B C D E F G H I J K L M N O P Q R S T U V W X Y

petition for extrajudicial foreclosure of the real estate mortgage for the amount covered by Promissory Note Nos. 1, 3 to 9, and 11 to 33. Respondent insisted that by filing a complaint for a sum of money, petitioner thereby split its cause of action against her; hence, the complaint must perforce be dismissed on the ground of litis pendentia. Petitioner opposed the demurrer arguing that while the loans were considered as a single account, each promissory note executed by respondent constituted a separate contract. It reiterated that its petition for the extrajudicial and foreclosure of the real estate mortgage before the ExOficio Provincial Sheriff involves obligations different and separate from those in its action for a sum of money before the court. Thus, petitioner could avail of the personal action for the collection of the amount evidenced by the 36 promissory notes not subject of its petition for the extrajudicial foreclosure of the real estate mortgage. Petitioner insists that the promissory notes subject of its collection suit should be treated separately from the other set of obligations, that is, the 31 promissory notes subject of its extrajudicial foreclosure petition.18 In its Order19 dated January 10, 2002, the trial court denied the demurrer on the ground that the promissory notes executed by respondent and her deceased husband contained different amounts, and each note covered a loan distinct from the others. Thus, petitioner had the option to file a petition for the extrajudicial foreclosure of the real estate mortgage covering 31 of the promissory notes, and, as to the rest, to file an ordinary action for collection. Petitioner, thus, merely opted to institute an action for collection of the debt on the 36 promissory notes, and waived its action for the foreclosure of the security given on these notes. Respondent filed a motion for reconsideration,20 which the trial court denied in its February 19, 2002 Order,21prompting her to file a certiorari petition22 under Rule 65 with the CA, assailing the January 10, 2002 and February 19, 2002 Orders of the trial court. Respondent alleged that: 1. PUBLIC RESPONDENT GRAVELY ABUSED HER DISCRETION TANTAMOUNT TO LACK AND/OR EXCESS OF JURISDICTION IN HOLDING THAT THE RESPONDENT BANK CAN FILE SIMULTANEOUS ACTIONS FOR FORECLOSURE AND FOR COLLECTION. Meanwhile, on January 6, 2003, the parcel of land subject of the aforementioned real estate mortgage was sold at public auction where petitioner emerged as the highest bidder.23 On September 30, 2004, the CA rendered its Decision24 granting the petition, holding, under prevailing jurisprudence, the remedies either a real action to foreclose the mortgage or a personal action to collect the debt of a mortgage creditor are alternative and not cumulative. Since respondent availed of the first one, it was deemed to have waived the second. Further, the filing of both actions results in a splitting of a single cause of action. Thus, in denying her Demurrer to Evidence, the RTC committed grave abuse of discretion as it overruled settled judicial pronouncements. The dispositive part of the decision states: WHEREFORE, the instant petition is GRANTED. The assailed Orders dated January 10, 2002 and February 19, 2002 are SET ASIDE. SO ORDERED. The CA cited the ruling of this Court in Bachrach Motor Co., Inc. v. Esteban Icaragal and Oriental Commercial Co., Inc.25 Aggrieved, petitioner filed a motion for reconsideration26 on October 12, 2004. Respondent filed her opposition27to the motion on October 26, 2004. The CA thereafter denied the motion in a resolution promulgated on April 6, 2005.28 Petitioner filed the instant petition for review on certiorari, alleging that: I. THE COURT OF APPEALS ERRED IN GRANTING THE PETITION FOR CERTIORARI OF RESPONDENT ON THE GROUND OF GRAVE ABUSE OF DISCRETION. xxxx The Trial Court did not commit grave abuse of discretion amounting to lack or excess of jurisdiction in denying the Demurrer to Evidence filed by the respondents. Petitioner, in instituting a petition for the Extra Judicial Foreclosure of the Mortgage of respondents based on 31 promissory notes executed by respondents and another action to collect on a separate set of 36 promissory notes, did not split their cause of action. xxxx

The trial court did not commit grave abuse of discretion amounting to lack or excess of jurisdiction when it denied respondents Demurrer to Evidence. In this wise, the Petition for Certiorari filed by respondents should not have been granted.29 During the pendency of this appeal, petitioner filed with this Court on December 2, 2005 a manifestation and joint motion for substitution, informing the court that petitioner bank has assigned to the Philippine Asset Investment, Inc. all its rights, title and interest over its non-performing loan accounts pursuant to Republic Act No. 9182 entitled "The Special Purpose Vehicle Act of 2002." The issues raised in this case are (1) whether the petition for certiorari under Rule 65 of the Rules of Court filed by respondent in the CA was the proper remedy to assail the January 10, 2002 Order of the trial court; (2) whether the appellate court issued its January 10, 2002 Order with grave abuse of its discretion amounting to excess or lack of jurisdiction. Petitioner avers that the January 10, 2002 Order of the RTC denying the Demurrer to Evidence of respondent was interlocutory, and as such could not be the subject of a petition for certiorari. 30 The RTC did not commit a grave abuse of its discretion in issuing its January 10, 2002 Order. Petitioner maintains that respondent executed 67 separate loan obligations evidenced by 67 separate promissory notes, with different amounts and maturity dates. It avers that each of the loans, as evidenced by each of the promissory notes, may properly be the subject of a separate action; thus, each promissory note is an actionable document. Moreover, the real estate mortgage executed by the spouses secured an obligation only to a fixed amount of P7,000,000.00 which is covered by Promissory Note Nos. 1 to 31, whereas the loans secured by the spouses covered by the Promissory Note Nos. 32 to 67 for the total amount of P12,672,000.31 were not secured by the real estate mortgage. Petitioner insists that it was proper to file the petition for extrajudicial foreclosure of the real estate mortgage only for respondents loan account covered by the 36 promissory notes for the amount of P7,755,733.64. It was not barred from filing a separate action for the collection of the P12,672,000.31 against respondent in the RTC for the drawdowns as evidenced by Promissory Note Nos. 34 to 67. What should apply, petitioner asserts, is the ruling of this Court in Caltex Philippines, Inc. v. Intermediate Appellate Court31 and Quiogue v. Bautista,32 and not the ruling of this Court in Bachrach which involves only one promissory note. Petitioner insists that, although respondent and her husband had a joint account with it, they had separate loan obligations as evidenced by the promissory notes; hence, it had separate causes of action for each and every drawdown evidenced by a promissory note. For her part, respondent admits having executed the promissory notes. However, as testified to by Ganuelas, the witness for petitioner, she and her husband only have one loan account with petitioner, hence, the latter had only one cause of action against her either for the collection of the entire loan account or for the extrajudicial foreclosure of the real estate mortgage, also for the entire amount of the loan. Petitioner cannot split her single loan account by filing a simple collection suit and a petition for extrajudicial foreclosure of the real estate mortgage without violating the rule against splitting a single cause of action. Respondent asserts that the real estate mortgage executed by respondent and her deceased husband was a security not only of their loan account in the amount of P7,000,000.00 but for all other loans that may have been extended to them in excess of that amount. The petition is unmeritorious. On the first issue, we agree with petitioners contention that the general rule is that an order denying a motion to dismiss or demurrer to evidence is interlocutory and is not appealable. Consequently, defendant must go to trial and adduce its evidence, and appeal, in due course, from an adverse decision of the trial court. However, the rule admits of exceptions. Where the denial by the trial court of a motion to dismiss or demurrer to evidence is tainted with grave abuse of discretion amounting to excess or lack of jurisdiction, the aggrieved party may assail the order of dismissal on a petition for certiorari under Rule 65 of the Rules of Court. A wide breadth of discretion is granted in certiorari proceedings in the interest of substantial justice and to prevent a substantial wrong.33 As the Court held in Preferred Home Specialties, Inc. v. Court of Appeals:34 It bears stressing that a writ of certiorari is of the highest utility and importance for curbing excessive jurisdiction and correcting errors and most essential to the safety of the people and the public welfare. Its scope has been broadened and extended, and is now one of the recognized modes for the correction of errors by this Court. The cases in which it will lie cannot be defined. To do so would be to destroy its comprehensiveness and limit its usefulness. The appropriate function of a certiorari writ is to relieve aggrieved parties from the injustice arising from errors of law committed in proceedings affecting justiciable rights when no other means for an adequate and speedy relief is open. It is founded upon a sense of justice, to release against wrongs otherwise irreconcilable, wrongs which go unredressed because of want of

adequate remedy which would be a grave reproach to any system of jurisprudence.35 The aggrieved party is entitled to a writ of certiorari where the trial court commits a grave abuse of discretion amounting to excess or lack of jurisdiction in denying a motion to dismiss a complaint on the ground of litis pendentia. An appeal while available eventually is cumbersome and inadequate for it requires the parties to undergo a useless and timeconsuming and expensive trial. The second case constitutes a rude if not debilitating imposition on the trial and the docket of the judiciary. 36 In the present case, we agree with the ruling of the CA that the RTC acted with grave abuse of discretion amounting to excess or lack of jurisdiction when it denied the Demurrer to Evidence of respondent and, in the process, ignored applicable rulings of this Court. Although respondent had the right to appeal the decision of the trial court against her after trial, however, she, as defendant, need not use up funds and undergo the tribulations of a trial and thereafter appeal from an adverse decision. Section 3, Rule 2 of the 1997 Rules of Civil Procedure provides that a party may not institute more than one suit for a single cause of action and, if two or more suits are instituted on the basis of the same cause of action, the filing of one on a judgment upon the merits in any one is available as ground for the dismissal of the other or others.37 A party will not be permitted to split up a single cause of action and make it a basis for several suits. 38 A party seeking to enforce a claim must present to the court by the pleadings or proofs or both, all the grounds upon which he expects a judgment in his favor. He is not at liberty to split up his demands and prosecute it by piecemeal, or present only a portion of the grounds upon which special relief is sought, and leave the rest to be presented in a second suit if the first fails. 39 The law does not permit the owner of a single or entire cause of action or an entire or indivisible demand to divide and split the cause or demand so as to make it the subject of several actions. The whole cause must be determined in one action. Indeed, in Goldberg v. Eastern Brewing Co., 40 the New York Supreme Court emphasized that: It was held in the case of Bendernagle v. Cocks, 19 Wend. 207 (32 Am.Dec. 448), that where a party had several demands or existing causes of action growing out of the same contract or resting in matter of account, which may be joined and sued for in the same action, they must be joined; and if the demands or causes of action be split up, and a suit brought for part only, and subsequently a second suit for the residue is brought, the first action may be pleaded in abatement or in bar of the second action. x x x41 The rule against splitting causes of action is not altogether one of original legal right but is one of interposition based upon principles of public policy and of equity to prevent the inconvenience and hardship incident to repeated and unnecessary litigation.42 It is not always easy to determine whether in a particular case under consideration, the cause of action is single and entire or separate. The question must often be determined, not by the general rules but by reference to the facts and circumstances of the particular case. Where deeds arising out of contract are distinct and separate, they give rise to separate cause of action for which separate action may be maintained; but it is also true that the same contract may give rise to different causes of action either by reason of successive breaches thereof or by reason of different stipulations or provisions of the contract.43 The true rule which determines whether a party has only a single and entire cause of action for all that is due him, and which must be sued for in one action, or has a severable demand for which he may maintain separate suits, is whether the entire amount arises from one and the same act or contract or the several parts arise from distinct and different acts or contracts.44 Where there are entirely distinct and separate contracts, they give rise to separate causes of action for which separate actions may be instituted and presented. When money is payable by installments, a distinct cause of action assails upon the following due by each installment and they may be recovered in successive action. On the other hand, where several claims payable at different times arise out of the same transactions, separate actions may be brought as each liability accounts. But where no action is brought until more than one is due, all that are due must be included in one action; and that if an action is brought to recover upon one or more that are due but not upon all that are due, a recovery in such action will be a bar to a several or other actions brought to recover one or more claims of the other claims that were due at the time the first action was brought. 45 The weight of authority is that in the absence of special controlling circumstances, an open or continuous running account between the same parties constitutes a single and indivisible demand, the aggregate of all the items of the account constituting the amount due. But the rule is otherwise where it affirmatively appears that the parties regarded the different items of the account as separate transactions and not parts of an ordinary running account. And there may also be, even between the same parties, distinct and separate actions upon which separate actions may be maintained.46 In fine, what is decisive is that there be either an express contract, or the circumstances must be such as to raise an implied contract embracing all the items to make them, when they arise, at different times, a single or entire demand or cause of action.47

Decisive of the principal issue is the ruling of this Court in Bachrach Motor Co., Inc. v. Esteban Icaragal and Oriental Commercial Co., Inc. 48 in which it ruled that on the nonpayment of a note secured by a mortgage, the creditor has a single cause of action against the debtor. The single cause of action consists in the recovery of the credit with execution of the suit. In a mortgage credit transaction, the credit gives rise to a personal action for collection of the money. The mortgage is the guarantee which gives rise to a mortgage foreclosure suit to collect from the very property that secured the debt.49 The action of the creditor is anchored on one and the same cause: the nonpayment by the debtor of the debt to the creditor-mortgagee. Though the debt may be covered by a promissory note or several promissory notes and is covered by a real estate mortgage, the latter is subsidiary to the former and both refer to one and the same obligation. A mortgage creditor may institute two alternative remedies against the mortgage debtor, either a personal action for the collection of debt, or a real action to foreclose the mortgage, but not both. Each remedy is complete by itself. As explained by this Court: We hold, therefore, that, in the absence of express statutory provisions, a mortgage creditor may institute against the mortgage debtor either a personal action for debt or a real action to foreclose the mortgage. In other words, he may pursue either of the two remedies, but not both. By such election, his cause of action can by no means be impaired, for each of the two remedies is complete in itself. Thus, an election to bring a personal action will leave open to him all the properties of the debtor for attachment and execution, even including the mortgaged property itself. And, if he waives such personal action and pursues his remedy against the mortgaged property, an unsatisfied judgment thereon would still give him the right to sue for a deficiency judgment, in which case, all the properties of the defendant, other than the mortgaged property, are again open to him for the satisfaction of the deficiency. In either case, his remedy is complete, his cause of action undiminished, and any advantages attendant to the pursuit of one or the other remedy are purely accidental and are all under his right of election. On the other hand, a rule that would authorize the plaintiff to bring a personal action against the debtor and simultaneously or successively another action against the mortgaged property, would result not only in multiplicity of suits so offensive to justice (Soriano v. Enriques, 24 Phil. 584) and obnoxious to law and equity (Osorio v. San Agustin, 25 Phil. 404), but also in subjecting the defendant to the vexation of being sued in the place of his residence or of the residence of the plaintiff, and then again in the place where the property lies.50 If the mortgagee opts to foreclose the real estate mortgage, he thereby waives the action for the collection of the debt and vice versa. 51 If the creditor is allowed to file its separate complaints simultaneously or successively, one to recover his credit and another to foreclose his mortgage, he will, in effect, be authorized plural redress for a single breach of contract at so much costs to the court and with so much vexation and oppressiveness to the debtor. 52 In the present case, petitioner opted to file a petition for extrajudicial foreclosure of the real estate mortgage but only for the principal amount of P4,687,006.08 or in the total amount of P7,755,733.64 covering only 31 of the 67 promissory notes. By resorting to the extrajudicial foreclosure of the real estate mortgage, petitioner thereby waived its personal action to recover the amount covered not only by said promissory notes but also of the rest of the promissory notes. This is so because when petitioner filed its petition before the Ex-Oficio Provincial Sheriff on June 10, 1999, the entirety of the loan account of respondent under the 67 promissory notes was already due. The obligation of respondent under Promissory Note Nos. 1 to 33 became due on February 9, 1998 but was extended up to March 11, 1998, whereas, those covered by Promissory Note Nos. 34 to 67 matured on December 28, 1998. Petitioner should have caused the extrajudicial foreclosure of the real estate mortgage for the recovery of the entire obligation of respondent, on all the promissory notes. By limiting the account for which the real estate mortgage was being foreclosed to the principal amount of P4,687,006.68, exclusive of interest and penalties, petitioner thereby waived recovery of the rest of respondents agricultural loan account. It must be stressed that the parties agreed in the Real Estate Mortgage that in the event that respondent shall fail to pay the mortgage obligation "or any portion thereof when due, the entire principal, interest, penalties and other charges then outstanding shall become immediately due, payable and defaulted," thus: 3. The terms and conditions of the Mortgage have been violated when the Mortgagors failed and/or refused to pay, notwithstanding repeated demands, the installment and/or maturity amount of the Mortgage obligation which became due and payable on the said date; 4. Under the terms and conditions of the Mortgage Agreement, in the event the Mortgagors fail and/or refuse to pay the Mortgage obligation or any portion thereof when due, the entire principal, interest, penalties and other charges then outstanding, shall, without need for demand, notice, or any other act or deed, become immediately due, payable and defaulted; 5. The Mortgage Agreement provides that upon such breach or violation of the terms and conditions thereof, the Mortgagee may,

at its absolute discretion foreclose the same extrajudicially in accordance with the procedure prescribed by Act No. 3135, as amended, and for the purpose appointed the Mortgagee as its attorney-in-fact with full power and authority to enter the premises where the Mortgaged property is located and to take actual possession and control thereof without need of any order of any Court, nor written permission from the Mortgagors, and with special power to sell the Mortgaged Property at a public or private sale at the option of the Mortgagee.53 Petitioner cannot split the loan account of respondent by filing a petition for the extrajudicial foreclosure of the real estate mortgage for the principal amount of P4,687,006.68 covered by the first set of promissory notes, and a personal action for the collection of the principal amount of P12,672,000.31 covered by the second set of promissory notes without violating the proscription against splitting a single cause of action against respondent. The contention of petitioner that respondents loan account that was secured by the real estate mortgage was limited only to those covered by the Promissory Note Nos. 1 to 33 or for the total amount of P7,000,000.00 is belied by the real estate mortgage and by its own evidence. Under the deed, the mortgage was to secure the payment of a credit accommodation already obtained by respondent, the principal of all of which was fixed at P7,000,000.00, as well as any other obligation that may be extended to respondent, including interest and expenses, to wit: That for and in consideration of credit accommodation obtained from the MORTGAGEE, and to secure the payment of the same and those that may hereafter be obtained, the principal of all of which is hereby fixed at SEVEN MILLION PESOS ONLY (P7,000,000.00), Philippine Currency, as well as those that the MORTGAGEE may extend to the MORTGAGOR, including interest and expenses or any other obligation owing to the MORTGAGEE, whether direct or indirect, principal or secondary, as appears in the accounts, books and records of the MORTGAGEE, the MORTGAGOR does hereby transfer and convey by way of mortgage unto the MORTGAGEE, its successors or assigns, the parcels of land which are described in the list inserted on the back of this document and/or appended herein, together with all the buildings and improvements now existing or which may hereafter be erected or constructed thereon, of which the MORTGAGOR declares that he/it is the absolute owner free from all liens and encumbrances. However, if the MORTGAGOR shall pay to the MORTGAGEE, its successors or assigns, the obligation secured by this mortgage when due, together with interest, and shall keep and perform all and singular the covenants and agreements herein contained for the MORTGAGOR to keep and perform, then this mortgage shall be void, otherwise, it shall remain in full force and effect. 54 (Emphasis supplied) The testimony of Ganuelas in the RTC relative to the real estate mortgage follows: Q The real estate mortgage states: "That for and in consideration of credit accommodation obtained from the mortgagee." This simply means, Mr. Witness, that this mortgage is offered to secure loans already obtained by the mortgagor from the mortgagee Far East Bank and Trust Company. I am referring only to that phrase, obtained from the mortgagee, is that correct? A Yes, Sir. Q So from this phrase in the real estate mortgage, this mortgage was constituted to secure the credit accommodation already obtained by the mortgagor, the defendant spouses, as of the time of the execution of the real estate mortgage, is that correct? A Yes, Sir. Q Now since the loan secured by the defendants are evidenced by promissory notes, will you agree with me, Mr. Witness, that this real estate mortgage was executed for promissory notes already executed by the defendant spouses as of the time of the execution of the mortgage on June 13, 1997, is that correct? A Yes, Sir. ATTY. MIRANO: For purposes of identification, we respectfully request that this phrase: "that for and in consideration of the credit accommodation obtained from the mortgagee" be bracketed and mark as Exhibit 6-B. (Acting court interpreter marking said phrase as Exhibit 6-B.) Q Now in accordance with the terms of this real estate mortgage, this real estate mortgage was executed by the defendant spouses not only to secure the loan already obtained by the said spouses as of the time of the execution of the mortgage on June 13, 1997 but also all other loans that may be extended by Far East Bank and Trust Company to the defendant spouses after the execution of the mortgage as stated in this portion of the real estate

mortgage which we quote: "to secure the payment as and those that may hereafter be obtained," is that correct? A Yes, Sir. Q So from your statement, Mr. Witness, this real estate mortgage was offered by the defendant spouses as a security for the loans they already secured as of the time of the execution of the mortgage but also for the loans that they will secure thereafter, is that correct? A Yes, Sir.55 (Emphasis supplied) As gleaned from the plain terms of the real estate mortgage, the real estate of respondent served as continuing security liable for future advancements or obligations beyond the amount of P7,000,000.00. The mortgage partakes of the nature of contract for future advancements. As explained by this Court in the early case of Lim Julian v. Lutero:56 The rule, of course, is well settled that an action to foreclose a mortgage must be limited to the amount mentioned in the mortgage. The exact amount, however, for which the mortgage is given need not always be specifically named. The amount for which the mortgage is given may be stated in definite or general terms, as is frequently the case in mortgages to secure future advancements. The amount named in the mortgage does not limit the amount for which it may stand as security, if, from the four corners of the document, the intent to secure future indebtedness or future advancements is apparent. Where the plain terms, of the mortgage, evidence such an intent, they will control as against a contention of the mortgagor that it was the understanding of the parties that the mortgage was security only for the specific amount named. (Citizens Savings Bank v. Kock, 117 Mich. 225). In that case, the amount mentioned in the mortgage was $7,000. The mortgage, however, contained a provision that "the mortgagors agree to pay said mortgagee any sum of money which they may now or hereafter owe said mortgagee." At the time the action of foreclosure was brought, the mortgagors owed the mortgagee the sum of $21,522. The defendants contended that the amount to be recovered in an action to foreclose should be limited to the amount named in the mortgage. The court held that the amount named as consideration for the mortgage did not limit the amount for which the mortgage stood as security, if, from the whole instrument the intent to secure future indebtedness could be gathered. The court held that a mortgage to cover future advances is valid. (Michigan Insurance Co. v. Brown, 11 Mich. 265; Jones on Mortgages, 1, sec. 373; Keyes v. Bumps Administrator, 59 Vt. 391; Fisher v. Otis, 3 Pin. 78; Brown v. Kiefer, 71 N.Y. 610; Douglas v. Reynolds, 7 Peters [U.S.] 113; Shores v. Doherty, 65 Wis. 153) Literal accuracy in describing the amount due, secured by a mortgage, is not required, but the description of the debt must be correct and full enough to direct attention to the sources of correct information in regard to it, and be such as not to mislead or deceive as to the amount of it, by the language used. Reading the mortgage before us from its four corners, we find that the description of the debt is full enough to give information concerning the amount due. The mortgage recites that it is given to secure the sum of P12,000, interest, commissions, damages, and all other amounts which may be found to be due at maturity. The terms of the contract are sufficiently clear to put all parties who may have occasion to deal with the property mortgaged upon inquiry. The parties themselves from the very terms of the mortgage could not be in ignorance at any time of the amount of their obligation and the security held to guarantee the payment. When a mortgage is given for future advancements and the money is paid to the mortgagor "little by little" and repayments are made from time to time, the advancements and the repayments must be considered together for the purpose of ascertaining the amount due upon the mortgage at maturity. Courts of equity will not permit the consideration of the repayments only for the purpose of determining the balance due upon the mortgage. (Luengo & Martinez v. Moreno, 26 Phil. 111) The mere fact that, in contract of advancements, the repayments at any one time exceeds the specific amount mentioned in the mortgage will not have the effect of discharging the mortgage when the advancements at that particular time are greatly in excess of the repayments; especially is this true when the contract of advancement or mortgage contains a specific provision that the mortgage shall cover all "such other amounts as may be then due." Such a provision is added to the contract of advancements or mortgage for the express purpose of covering advancements in excess of the amount mentioned in the mortgage. (Luengo & Martinez v. Moreno, supra) The sum found to be owing by the debtor at the termination of the contract of advancements between him and the mortgagee, during continuing credit, is still secured by the mortgage on the debtors property, and the mortgagee is entitled to bring the proper action for the collection of the amounts still due and to request the sale of the property covered by the mortgage. (Luengo & Martinez v. Moreno, supra; Russell v. Davey, 7 Grant Ch. 13; Patterson First National Bank v. Byard, 26 N.J. Equity 225) Under a mortgage to secure the payment of future advancements, the mere fact that the repayments on a particular day equal the amount of the mortgage will not discharge the mortgage before maturity so long as advancements may be demanded and are being received. (Luengo & Martinez v. Moreno, supra)57

Moreover, the series of loan advancements herein cannot be likened to the credit line discussed in Caltex Philippines, Inc. v. Intermediate Appellate Court,58 as petitioner posited in its reply59 filed before this Court. In Caltex, unlike the instant case, the real estate mortgage executed did not contain a "dragnet" clause60 that would subsume all past and future debts. The mortgage therein specifically secured only the loans extended prior to the mortgage. Thus, in the said case, the future debts were deemed as constituting a separate transaction from the past debts secured by the mortgage. The ruling of the Court in Quiogue v. Bautista61 is likewise inapplicable. In that case, the Court deemed the loan transactions as separate, considering that those were two separate loans secured by two separate mortgages. In this case, however, there is only one mortgage securing all 67 drawdowns made by respondent. In fine, for the failure of respondent to pay her loan obligation, petitioner had only one cause of action arising from such non-payment. This single cause of action consists in the recovery of the credit with execution of the security.62 Petitioner is proscribed from splitting its single cause of action by filing an extrajudicial foreclosure proceedings on June 10, 1999 with respect to the amounts in the 31 promissory notes, and, during the pendency thereof, file a collection case on June 23, 1999, with respect to the amounts in the remaining 36 promissory notes. Considering, therefore, that, in the case at bar, petitioner had already instituted extrajudicial foreclosure proceedings of the mortgaged property, it is now barred from availing itself of a personal action for the collection of the indebtedness. IN VIEW OF ALL THE FOREGOING, the instant petition is DISMISSED for lack of merit. Costs against petitioner. SO ORDERED.

proceeding, arguing that these petition should be conducted and pursued as two separate proceedings. After considering the evidence and arguments of the contending parties, the trial court ruled in favor of herein private respondents in this wise: WHEREFORE, minor child Kevin Earl Bartolome Moran is freed from all legal obligations of obedience and maintenance with respect to his natural parents, and for all legal intents and purposes shall be known as Aaron Joseph Munson y Andrade, the legally adopted child of Van Munson and Regina Munson effective upon the filing of the petition on March 10, 1994. As soon as the decree of adoption becomes final and executory, it shall be recorded in the Office of the Local Civil Registrar of Pasig, Metro Manila pursuant to Section 8, Rule 99 and Section 6, Rule 103, respectively, of the Rules of Court, and shall be annotated in the record of birth of the adopted child, which in this case is in Valenzuela, Metro Manila, where the child was born. Likewise, send a copy of this Order to the National Census and Statistics Office, Manila, for its appropriate action consisten(t) herewith. 5 At this juncture, it should be noted that no challenge has been raised by petitioner regarding the fitness of herein private respondents to be adopting parents nor the validity of the decree of adoption rendered in their favor. The records show that the latter have commendably established their qualifications under the law to be adopters, 6 and have amply complied with the procedural requirements for the petition for adoption, 7 with the findings of the trial court being recited thus: To comply with the jurisdictional requirements, the Order of this Court dated March 16, 1994 setting this petition for hearing (Exh. "A") was published in the March 31, April 6 and 13, 1994 issues of the Manila Chronicle, a newspaper of general circulation (Exhs. "B" to "E" and submarkings). . . . xxx xxx xxx

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 117209 February 9, 1996

Petitioners apart from being financially able, have no criminal nor derogatory record (Exhs. "K" to "V"); and are physically fit to be the adoptive parents of the minor child Kevin (Exh. "W"). Their qualification to become the adoptive parents of Kevin Earl finds support also in the Social Case Study Report prepared by the DSWD through Social Worker Luz Angela Sonido, the pertinent portion of which reads: "Mr. and Mrs. Munson are very religious, responsible, mature and friendly individuals. They are found physically healthy; mentally fit, spiritually and financially capable to adopt Kevin Earl Moran aka Aaron Joseph. "Mr. and Mrs. Munson have provided AJ with all his needs. They unselfishly share their time, love and attention to him. They are ready and willing to continuously provide him a happy and secure home life. "Aaron Joseph, on the other hand, is growing normally under the care of the Munsons. He had comfortably settled in his new environment. His stay with the Munsons during the six months trial custody period has resulted to a close bond with Mr. and Mrs. Munson and vice-versa. "We highly recommend to the Honorable Court that the adoption of Kevin Earl Moran aka Aaron Joseph by Mr. and Mrs. Van Munson be legalized." 8 It has been said all too often enough that the factual findings of the lower court, when sufficiently buttressed by legal and evidential support, are accorded high respect and are binding and conclusive upon this Court. 9Accordingly, we fully uphold the propriety of that portion of the order of the court below granting the petition, for adoption. The only legal issues that need to be resolved may then be synthesized mainly as follows. (1) whether or not the court a quo erred in granting the prayer for the change of the registered proper or given name of the minor adoptee embodied in the petition for adoption; and (2) whether or not there was lawful ground for the change of name. I. It is the position of petitioner that respondent judge exceeded his jurisdiction when he additionally granted the prayer for the change of the given or proper name of the adoptee in a petition for adoption. Petitioner argues that a petition for adoption and a petition for change of name are two special proceedings which, in substance and purpose, are different from and are not related to each other, being respectively governed by distinct sets of law and rules. In order to be entitled to both reliefs, namely, a decree of adoption and an authority to change the giver or proper name of the adoptee, the respective proceedings for each must be instituted

REPUBLIC OF THE PHILIPPINES, petitioner, vs. HON. JOSE R. HERNANDEZ, in his capacity as Presiding Judge, Regional Trial Court, Branch 158, Pasig City and SPOUSES VAN MUNSON y NAVARRO and REGINA MUNSON y ANDRADE, respondents. DECISION REGALADO, J.: Indeed, what's in a name, as the Bard of Avon has written, since a rose by any other name would smell as sweet? This could well be the theme of the present appeal by certiorari which challenges, on pure questions of law, the order of the Regional Trial Court, Branch 158, Pasig City, dated September 13, 1994 1 in JDRC Case No. 2964. Said court is faulted for having approved the petition for adoption of Kevin Earl Bartolome Moran and simultaneously granted the prayer therein for the change of the first name of said adoptee to Aaron Joseph, to complement the surname Munson y Andrade which he acquired consequent to his adoption. The facts are undisputed. On March 10, 1994, herein private respondent spouses, Van Munson y Navarro and Regina Munson y Andrade, filed a p petition 2 to adopt the minor Kevin Earl Bartolome Moran, duly alleging therein the jurisdictional facts required by Rule 99 of the Rules of Court for adoption, their qualifications as and fitness to be adoptive parents, as well as the circumstances under and by reason of which the adoption of the aforenamed minor was sought. In the very same petition, private respondents prayed for the change of the first name or said minor adoptee to Aaron Joseph, the same being the name with which he was baptized in keeping with religious tradition and by which he has been called by his adoptive family, relatives and friends since May 6, 1993 when he arrived at private respondents' residence. 3 At the hearing on April 18, 1994, petitioner opposed the inclusion of the relief for change of name in the same petition for adoption. In its formal opposition dated May 3, 1995, 4 petitioner reiterated its objection to the joinder of the petition for adoption and the petitions for change of name in a single

separately, and the substantive and procedural requirements therefor under Articles 183 to 193 of the Family Code in relation to Rule 99 of the Rules of Court for adoption, and Articles 364 to 380 of the Civil Code in relation to Rule 103 of the Rules of Court for change of name, must correspondingly be complied with. 10 A perusal of the records, according to petitioner, shows that only the laws and rules on adoption have been observed, but not those for a petition for change of name. 11 Petitioner further contends that what the law allows is the change of the surname of the adoptee, as a matter of right, to conform with that of the adopter and as a natural consequence of the adoption thus granted. If what is sought is the change of the registered given or proper name, and since this would involve a substantial change of one's legal name, a petition for change of name under Rule 103 should accordingly be instituted, with the substantive and adjective requisites therefor being conformably satisfied. 12 Private respondents, on the contrary, admittedly filed the petition for adoption with a prayer for change of name predicated upon Section 5, Rule 2 which allows permissive joinder of causes of action in order to avoid multiplicity of suits and in line with the policy of discouraging protracted and vexatious litigations. It is argued that there is no prohibition in the Rules against the joinder of adoption and change of name being pleaded as two separate but related causes of action in a single petition. Further, the conditions for permissive joinder of causes of action, i.e., jurisdiction of the court, proper venue and joinder of parties, have been met. 13 Corollarily, petitioner insists on strict adherence to the rule regarding change of name in view of the natural interest of the State in maintaining a system of identification of its citizens and in the orderly administration of justice. 14 Private respondents argue otherwise and invoke a liberal construction and application of the Rules, the welfare and interest of the adoptee being the primordial concern that should be addressed in the instant proceeding. 15 On this score, the trial court adopted a liberal stance in holding that Furthermore, the change of name of the child from Kevin Earl Bartolome to Aaron Joseph should not be treated strictly, it appearing that no rights have been prejudiced by said change of name. The strict and meticulous observation of the requisites set forth by Rule 103 of the Rules of Court is indubitably for the purpose of preventing fraud, ensuring that neither State nor any third person should be prejudiced by the grant of the petition for change of name under said rule, to a petitioner of discernment. The first name sought to be changed belongs to an infant barely over a year old. Kevin Earl has not exercised full civil rights nor engaged in any contractual obligations. Neither can he nor petitioners on his behalf, be deemed to have any immoral, criminal or illicit purpose for seeking said cha(n)ge of name. It stands to reason that there is no way that the state or any person may be so prejudiced by the action for change of Kevin Earl's first name. In fact, to obviate any possible doubts on the intent of petitioners, the prayer for change of name was caused to be published together with the petition for adoption. 16 Art. 189 of the Family Code enumerates in no uncertain terms the legal effects of adoption: (1) For civil purposes, the adopted shall be deemed to be a legitimate child of the adopters and both shall acquire the reciprocal rights and obligations arising from the relationship of parent and child, including the right of the adopted to use the surname of the adopters; (2) The parental authority of the parents by nature over the adopted shall terminate and be vested in the adopters, except that if the adopter is the spouse of the parent by nature of the adopted, parental authority over the adopted shall be exercised jointly by both spouses; and (3) The adopted shall remain an intestate heir of his parents and other blood relatives. Clearly, the law allows the adoptee, as a matter of right and obligation, to bear the surname of the adopter, upon issuance of the decree of adoption. It is the change of the adoptee's surname to follow that of the adopter which is the natural and necessary consequence of a grant of adoption and must specifically be contained in the order of the court, in fact, even if not prayed for by petitioner. However, the given or proper name, also known as the first or Christian name, of the adoptee must remain as it was originally registered in the civil register. The creation of an adoptive relationship does not confer upon the adopter a license to change the adoptee's registered Christian or first name. The automatic change thereof, premised solely upon the adoption thus granted, is beyond the purview of a decree of adoption. Neither is it a mere incident in nor an adjunct of an adoption proceeding, such

that a prayer therefor furtively inserted in a petition for adoption, as in this case, cannot properly be granted. The name of the adoptee as recorded in the civil register should be used in the adoption proceedings in order to vest the court with jurisdiction to hear and determine the same, 17 and shall continue to be so used until the court orders otherwise. Changing the given or proper name of a person as recorded in the civil register is a substantial change in one's official or legal name and cannot be authorized without a judicial order. The purpose of the statutory procedure authorizing a change of name is simply to have, wherever possible, a record of the change, and in keeping with the object of the statute, a court to which the application is made should normally make its decree recording such change. 18 The official name of a person whose birth is registered in the civil register is the name appearing therein. If a change in one's name is desired, this can only be done by filing and strictly complying with the substantive and procedural requirements for a special proceeding for change of name under Rule 103 of the Rules of Court, wherein the sufficiency of the reasons or grounds therefor can be threshed out and accordingly determined. Under Rule 103, a petition for change of name shall be filed in the regional trial court of the province where the person desiring to change his name resides. It shall be signed and verified by the person desiring his name to be changed or by some other person in his behalf and shall state that the petitioner has been a bona fide resident of the province where the petition is filed for at least three years prior to such filing, the cause for which the change of name is sought, and the name asked for. An order for the date and place of hearing shall be made and published, with the Solicitor General or the proper provincial or city prosecutor appearing for the Government at such hearing. It is only upon satisfactory proof of the veracity of the allegations in the petition and the reasonableness of the causes for the change of name that the court may adjudge that the name be changed as prayed for in the petition, and shall furnish a copy of said judgment to the civil registrar of the municipality concerned who shall forthwith enter the same in the civil register. A petition for change of name being a proceeding in rem, strict compliance with all the requirements therefor is indispensable in order to vest the court with jurisdiction for its adjudication. 19 It is an independent and discrete special proceeding, in and by itself, governed by its own set of rules. A fortiori, it cannot be granted by means of any other proceeding. To consider it as a mere incident or an offshoot of another special proceeding would be to denigrate its role and significance as the appropriate remedy available under our remedial law system. The Solicitor General correctly points out the glaring defects of the subject petition insofar as it seeks the change of name of the adoptee, 20 all of which taken together cannot but lead to the conclusion that there was no petition sufficient in form and substance for change of name as would rightfully deserve an order therefor. It would be procedurally erroneous to employ a petition for adoption to effect a change of name in the absence of the corresponding petition for the latter relief at law. Neither can the allowance of the subject petition, by any stretch of imagination and liberality, be justified under the rule allowing permissive joinder of causes of action. Moreover, the reliance by private respondents on the pronouncements in Briz vs. Brit, et al. 21 and Peyer vs. Martinez, et al. 22 is misplaced. A restatement of the rule and jurisprudence on joinder of causes of action would, therefore, appear to be called for. By a joinder of actions, or more properly, a joinder of causes of action, is meant the uniting of two or more demands or rights of action in one action; the statement of more than one cause of action in a declaration. 23 It is the union of two or more civil causes of action, each of which could be made the basis of a separate suit, in the same complaint, declaration or petition. A plaintiff may under certain circumstances join several distinct demands, controversies or rights of action in one declaration, complaint or petition. 24 As can easily be inferred from the above definitions, a party is generally not required to join in one suit several distinct causes of action. The joinder of separate causes of action, where allowable, is permissive and not mandatory in the absence of a contrary statutory provision, even though the causes of action arose from the same factual setting and might under applicable joinder rules be joined. 25 Modern statutes and rules governing joinders are intended to avoid a multiplicity of suits and to promote the efficient administration of justice wherever this may be done without prejudice to the rights of the litigants. To achieve these ends, they are liberally construed. 26 While joinder of causes of action is largely left to the option of a party litigant, Section 5, Rule 2 of our present Rules allows causes of action to be joined in one complaint conditioned upon the following requisites: (a) it will not violate the rules on jurisdiction, venue and joinder of parties; and (b) the causes of action arise out of the same contract, transaction or relation between the parties, or are for demands for money or are of the same nature and character. The objectives of the rule or provision are to avoid a multiplicity of suits where the same parties and subject matter are to be dealt with by effecting in one action a complete determination of all matters in controversy and litigation between the parties involving one subject matter, and to expedite the

disposition of litigation at minimum cost. The provision should be construed so as to avoid such multiplicity, where possible, without prejudice to the rights of the litigants. Being of a remedial nature, the provision should be liberally construed, to the end that related controversies between the same parties may be adjudicated at one time; and it should be made effectual as far as practicable, 27 with the end in view of promoting the efficient administration of justice. 28 The statutory intent behind the provisions on joinder of causes of action is to encourage joinder of actions which could reasonably be said to involve kindred rights and wrongs, although the courts have not succeeded in giving a standard definition of the terms used or in developing a rule of universal application. The dominant idea is to permit joinder of causes of action, legal or equitable, where there is some substantial unity between them. 29 While the rule allows a plaintiff to join as many separate claims as he may have, there should nevertheless be some unity in the problem presented and a common question of law and fact involved, subject always to the restriction thereon regarding jurisdiction, venue and joinder of parties. Unlimited joinder is not authorized. 30 Our rule on permissive joinder of causes of action, with the proviso subjecting it to the correlative rules on jurisdiction, venue and joinder of parties 31 and requiring a conceptual unity in the problems presented, effectively disallows unlimited joinder. 32 Turning now to the present petition, while it is true that there is no express prohibition against the joinder of a petition for adoption and for change of name, we do not believe that there is any relation between these two petitions, nor are they of the same nature or character, much less do they present any common question of fact or law, which conjointly would warrant their joinder. In short, these petitions do not rightly meet the underlying test of conceptual unity demanded to sanction their joinder under our Rules. As keenly observed and correctly pointed out by the Solicitor General A petition for adoption and a petition for change of name are two special proceedings which, in substance and purpose, are different from each other. Each action is individually governed by particular sets of laws and rules. These two proceedings involve disparate issues. In a petition for adoption, the court is called upon to evaluate the proposed adopter's fitness and qualifications to bring up and educate the adoptee properly (Prasnick vs. Republic, 99 Phil. 665). On the other hand, in a petition for change of name, no family relations are created or affected for what is looked into is the propriety and reasonableness of the grounds supporting the proposed change of name (Yu vs. Republic, 17 SCRA 253). xxx xxx xxx

Besides, it is interesting to note that although a joinder of the two actions was, in Briz, declared feasible, the Supreme Court did not indorse an automatic joinder and instead remanded the matter for further proceedings, granting leave to amend the pleadings and implead additional parties-defendants for a complete determination of the controversy (Briz vs. Briz, 43 Phil. 763, 770). Such cautionary stance all the more emphasizes that although joinders are generally accepted, they are not allowed where the conditions are not satisfactorily met. 34 It furthermore cannot be said that the proposed joinder in this instance will make for a complete determination of all matters pertaining to the coetaneous grant of adoption and change of name of the adoptee in one petition. As already stated, the subject petition was grossly insufficient in form and substance with respect to the prayer for change of name of the adoptee. The policy of avoiding multiplicity of suits which underscores the rule on permissive joinder of causes of action is addressed to suits that are intimately related and also present interwoven and dependent issues which can be most expeditiously and comprehensively settled by having just one judicial proceeding, but not to suits or actions whose subject matters or corresponding reliefs are unrelated or diverse such that they are best taken up individually. In Nabus vs. Court of Appeals, et al., 35 the Court clarified the rule on permissive joinder of causes of action: The rule is clearly permissive. It does not constitute an obligatory rule, as there is no positive provision of law or any rule of jurisprudence which compels a party to join all his causes of action and bring them at one and the same time. Under the present rules, the provision is still that the plaintiff may, and not that he must, unite several causes of action although they may be included in one of the classes specified. This, therefore, leaves it to the plaintiff's option whether the causes of action shall be joined in the same action, and no unfavorable inference may be drawn from his failure or refusal to do so. He may always file another action based on the remaining cause or causes of action within the prescriptive period therefor. (Emphasis supplied.) The situation presented in this case does not warrant exception from the Rules under the policy of liberal construction thereof in general, and for change of name in particular, as proposed by private respondents and adopted by respondent judge. Liberal construction of the Rules may be invoked in situations wherein there may be some excusable formal deficiency or error in a pleading, provided that the same does not subvert the essence of the proceeding and connotes at least a reasonable attempt at compliance with the Rules. Utter disregard of the Rules cannot justly be rationalized by harking on the policy of liberal construction. The Court is not impervious to the frustration that litigants and lawyers alike would at times encounter in procedural bureaucracy but imperative justice requires correct observance of indispensable technicalities precisely designed to ensure its proper dispensation. 36 It has long been recognized that strict compliance with the Rules of Court is indispensable for the prevention of needless delays and for the orderly and expeditious dispatch of judicial business. 37 Procedural rules are not to be disdained as mere technicalities that may be ignored at will to suit the convenience of a party. Adjective law is important in ensuring the effective enforcement of substantive rights through the orderly and speedy administration of justice. These rules are not intended to hamper litigants or complicate litigation but, indeed to provide for a system under which a suitor may be heard in the correct form and manner and at the prescribed time in a peaceful confrontation before a judge whose authority they acknowledge. 38 It cannot be overemphasized that procedural rules have their own wholesome rationale in the orderly administration of justice. Justice has to be administered according to the Rules in order to obviate arbitrariness, caprice, or whimsicality. 39 We have been cautioned and reminded in Limpot vs. CA, et al. that: 40 Rules of procedure are intended to ensure the orderly administration of justice and the protection of substantive rights in judicial and extrajudicial proceedings. It is a mistake to propose that substantive law and adjective law are contradictory to each other or, as has often been suggested, that enforcement of procedural rules should never be permitted if it will result in prejudice to the substantive rights of the litigants. This is not exactly true; the concept is much misunderstood. As a matter of fact, the policy of the courts is to give both kinds of law, as complementing each other, in the just and speedy resolution of the dispute between the parties. Observance of both substantive rights is equally guaranteed by due process, whatever the source of such rights, be it the Constitution itself or only a statute or a rule of court. xxx xxx xxx

. . . Hence, the individual merits of each issue must be separately assessed and determined for neither action is dependent on the other. 33 The rule on permissive joinder of: causes of action is clear. Joinder may be allowed only if the actions show a commonality of relationship and conform to the rules on jurisdiction, venue and joinder of parties (Section 5, Rule 2, Rules of Court). These conditions are wanting in the instant case. As already pointed out in our Petition (pp. 9-10), an action for adoption and an action for change of name are, in nature and purpose, not related to each other and do not arise out of the same relation between the parties. While what is cogent in an adoption proceeding is the proposed adopter's fitness and qualifications to adopt, a petition for change of first name may only prosper upon proof of reasonable and compelling grounds supporting the change requested. Fitness to adopt is not determinative of the sufficiency of reasons justifying a change of name. And similarly, a change of first name cannot be justified in view of a finding that the proposed adopter was found fit to adopt. There is just no way that the two actions can connect and find a common ground, thus the joinder would be improper. In contending that adoption and change of name may be similarly sought in one petition, private respondents rely upon Peyer vs. Martinez and Briz vs. Briz (p. 4, Comment) We however submit that these citations are non sequitur. In both cases, the fact of intimacy and relatedness of the issues is so pronounced. In Peyer, an application to pronounce the husband an absentee is obviously intertwined with the action to transfer the management of conjugal assets to the wife. In Briz, an action for declaration of heirship was deemed a clear condition precedent to an action to recover the land subject of partition and distribution proceeding. However, the commonality of relationship which stands out in both cases does not characterize the present action for adoption and change of name. Thus the rulings in Peyerand Briz find no place in the case at bar.

. . . (T)hey are required to be followed except only when for the most persuasive of reasons they may be relaxed to relieve a

litigant of an injustice not commensurate with the degree of his thoughtlessness in not complying with the procedure prescribed. . . . While it is true that a litigation is not a game of technicalities, this does not mean that the Rules of Court may be ignored at will and at random to the prejudice of the orderly presentation and assessment of the issues and their just resolution. Justice eschews anarchy. Only exceptionally in very extreme circumstances, when a rule deserts its proper office as an aid to justice and becomes its great hindrance and chief enemy such that rigid application thereof frustrates rather than promotes substantial justice, will technicalities deserve scant consideration from the court. In such situations, the courts are empowered, even obligated, to suspend the operation of the rules. 41 We do not perceive any injustice that can possibly be visited upon private respondents by following the reglementary procedure for the change in the proper or given name that they seek for their adopted child. We are hard put to descry the indispensability of a change of the first name of the adoptee to his welfare and benefit. Nor is the said change of such urgency that would justify an exemption from or a relaxation of the Rules. It is the State that stands to be prejudiced by a wanton disregard of Rule 103 in this case, considering its natural interest in the methodical administration of justice and in the efficacious maintenance of a system of identification of its citizens. The danger wrought by non-observance of the Rules is that the violation of or failure to comply with the procedure prescribed by law prevents the proper determination of the questions raised by the parties with respect to the merits of the case and makes it necessary to decide, in the first place, such questions as relate to the form of the action. The rules and procedure laid down for the trial court and the adjudication of cases are matters of public policy. 42 They are matters of public order and interest which can in no wise be changed or regulated by agreements between or stipulations by parties to an action for their singular convenience. 43 In Garcia vs. Republic, 44 we are reminded of the definiteness in the application of the Rules and the importance of seeking relief under the appropriate proceeding: . . . The procedure set by law should be delimited. One should not confuse or misapply one procedure for another lest we create confusion in the application of the proper remedy. Respondent judge's unmindful disregard of procedural tenets aimed at achieving stability of procedure is to be deplored. He exceeded his prerogatives by granting the prayer for change of name, his order being unsupported by both statutory and case law. The novel but unwarranted manner in which he adjudicated this case may be characterized as a regrettable abdication of the duty to uphold the teachings of remedial law and jurisprudence. II. Petitioner avers that it was error for the lower court to grant the petition for change of name without citing or proving any lawful ground. Indeed, the only justification advanced for the change of name was the fact of the adoptee's baptism under the name Aaron Joseph and by which he has been known since he came to live with private respondents. 45 Private respondents, through a rather stilted ratiocination, assert that upon the grant of adoption, the subject minor adoptee ipso facto assumed a new identification and designation, that is, Aaron Joseph which was the name given to him during the baptismal rites. Allowing the change of his first name as prayed for in the petition, so they claim, merely confirms the designation by which he is known and called in the community in which he lives. This largely echoes the opinion of the lower court that naming the child Aaron Joseph was symbolic of naming him at birth, and that they, as adoptive parents, have as much right as the natural parents to freely select the first name of their adopted child. 46 The lower court was sympathetic to herein private respondents and ruled on this point in this manner: As adoptive parents, petitioner like other parents may freely select the first name given to his/her child as it is only the surname to which the child is entitled that is fixed by law. . . . xxx xxx xxx

distinguished from others, for the convenience of the world at large in addressing him, or in speaking of or dealing with him. It is both of personal as well as public interest that every person must have a name. The name of an individual has two parts: the given or proper name and the surname or family name. The giver or proper name is that which is given to the individual at birth or at baptism, to distinguish him from other individuals. The surname or family name is that which identifies the family to which he belongs and is continued from parent to child. The given name may be freely selected by the parents for the child, but the surname to which the child is entitled is fixed by law. 48 By Article 408 of the Civil Code, a person's birth must be entered in the civil register. The official name of a person is that given him in the civil register. That is his name in the eyes of the law. 49 And once the name of a person is officially entered in the civil register, Article 376 of the same Code seals that identity with its precise mandate: no person can change his name or surname without judicial authority. This statutory restriction is premised on the interest of the State in names borne by individuals and entities for purposes of identification. 50 By reason thereof, the only way that the name of person can be changed legally is through a petition for change of name under Rule 103 of the Rules of Court. 51 For purposes of an application for change of name under Article 376 of the Civil Code and correlatively implemented by Rule 103, the only name that may be changed is the true or official name recorded in the civil register. As earlier mentioned, a petition for change of name being a proceeding in rem, impressed as it is with public interest, strict compliance with all the requisites therefor in order to vest the court with jurisdiction is essential, and failure therein renders the proceedings a nullity. 52 It must likewise be stressed once again that a change of name is a privilege, not a matter of right, addressed to the sound discretion of the court which has the duty to consider carefully the consequences of a change of name and to deny the same unless weighty reasons are shown. Before a person can be authorized to change his name, that is, his true or official name or that which appears in his birth certificate or is entered in the civil register, he must show proper and reasonable cause or any convincing reason which may justify such change. 53 Jurisprudence has recognized, inter alia, the following grounds as being sufficient to warrant a change of name: (a) when the name is ridiculous, dishonorable or extremely difficult to write or pronounce; (b) when the change results as a legal consequence of legitimation or adoption; (c) when the change will avoid confusion; (d) when one has continuously used and been known since childhood by a Filipino name and was unaware of alien parentage; (e) when the change is based on a sincere desire to adopt a Filipino name to erase signs of former alienage, all in good faith and without prejudice to anybody; and (f) when the surname causes embarrassment and there is no showing that the desired change of name was for a fraudulent purpose or that the change of name would prejudice public interest. 54 Contrarily, a petition for change of name grounded on the fact that one was baptized by another name, under which he has been known and which he used, has been denied inasmuch as the use of baptismal names is not sanctioned. 55 For, in truth, baptism is not a condition sine qua non to a change of name. 56 Neither does the fact that the petitioner has been using a different name and has become known by it constitute proper and reasonable cause to legally authorize a change of name. 57 A name given to a person in the church records or elsewhere or by which be is known in the community when at variance with that entered in the civil register - is unofficial and cannot be recognized as his real name. 58 The instant petition does not sufficiently persuade us to depart from such rulings of long accepted wisdom and applicability. The only grounds offered to justify the change of name prayed for was that the adopted child had been baptized as Aaron Joseph in keeping with the religious faith of private respondents and that it was the name by which he had been called and known by his family, relatives and friends from, the time he came to live with private respondents. 59 Apart from suffusing their pleadings with sanctimonious entreaties for compassion, none of the justified grounds for a change of name has been alleged or established by private respondents. The legal bases chosen by them to bolster their cause have long been struck down as unavailing for their present purposes. For, to allow the adoptee herein to use his baptismal name, instead of his name registered in the civil register, would be to countenance or permit that which has always been frowned upon. 60 The earlier quoted posturing of respondent judge, as expressed in his assailed order that (a)s adoptive parents, petitioners like other parents may freely select the first name given to his/her child as it is only the surname to which the child is entitled that is fixed by law. . . . The given name of the minor was Kevin Earl, a name given for no other purpose than for identification purposes in a birth certificate by a woman who had all the intentions of giving him away. The naming of the minor as Aaron Joseph by petitioners upon grant of their petition for adoption is symbolic of naming the minor at birth.

The given name of the minor was Kevin Earl, a name given for no other purpose than for identification purposes in a birth certificate by a woman who had all intentions of giving him away. The naming of the minor as Aaron Joseph by petitioners upon the grant of their petition for adoption is symbolic of naming the minor at birth. 47 We cannot fathom any legal or jurisprudential basis for this attenuated ruling of respondent judge and must thus set it aside. It is necessary to reiterate in this discussion that a person's name is a word or combination of words by which he is known and identified, and

and supposedly based on the authority of Republic vs. Court of Appeals and Maximo Wong, supra, painfully misapplies the ruling therein enunciated. The factual backdrop of said case is not at all analogous to that of the case at bar. In the Wong case, therein petitioner Maximo Wong sought the change of his surname which he acquired by virtue of the decree of adoption granted in favor of spouses Hoong Wong and Concepcion Ty Wong. Upon reaching the age of majority, he filed a petition in court to change his surname from Wong to Alcala, which was his surname prior to the adoption. He adduced proof that the use of the surname Wong caused him embarrassment and isolation from friends and relatives in view of a suggested Chinese ancestry when in reality he is a Muslim Filipino residing in a Muslim community, thereby hampering his business and social life, and that his surviving adoptive mother consented to the change of name sought. This Court granted the petition and regarded the change of the surname as a mere incident in, rather than the object of, the adoption. It should be noted that in said case the change of surname, not the given name, and the legal consequences thereof in view of the adoption were at issue. That it was sought in a petition duly and precisely filed for that purpose with ample proof of the lawful grounds therefor only serves to reinforce the imperative necessity of seeking relief under and through the legally prescribed procedures. Here, the Solicitor General meritoriously explained that: Respondent Judge failed to distinguish between a situation wherein a child is being named for the first time by his natural parent, as against one wherein, a child is previously conferred a first name by his natural parent, and such name is subsequently sought to be disregarded and changed by the adoptive parents. In the first case, there is no dispute that natural parents have the right to freely select and give the child's first name for every person, including juridical persons, must have a name (Tolentino, A., Commentaries and Jurisprudence on the Civil Code, Vo. I, 1987 edition, page 721). In the second case, however, as in the case at bar, private respondents, in their capacities as adopters, cannot claim a right to name the minor adoptee after such right to name the child had already been exercised by the natural parent. Adopting parents have not been conferred such right by law, hence, the right assertes by private respondents herein remains but illusory. Renaming the adoptee cannot be claimed as a right. It is merely a privilege necessitating judicial consent upon compelling grounds. 61 The liberality with which this Court treats matters leading up to adoption insofar as it carries out the beneficent purposes of adoption and ensures to the adopted child the rights and privileges arising therefrom, ever mindful that the paramount consideration is the overall benefit and interest of the adopted child, 62 should be understood in its proper context. It should not be misconstrued or misinterpreted to extend to inferences beyond the contemplation of law and jurisprudence. The practically unrestricted freedom of the natural parent to select the proper or given name of the child presupposes that no other name for it has theretofore been entered in the civil register. Once such name is registered, regardless of the reasons for such choice and even if it be solely for the purpose of identification, the same constitutes the official name. This effectively authenticates the identity of the person and must remain unaltered save when, for the most compelling reasons shown in an appropriate proceeding, its change may merit judicial approval. While the right of a natural parent to name the child is recognized, guaranteed and protected under the law, the so-called right of an adoptive parent to re-name an adopted child by virtue or as a consequence of adoption, even for the most noble intentions and moving supplications, is unheard of in law and consequently cannot be favorably considered. To repeat, the change of the surname of the adoptee as a result of the adoption and to follow that of the adopter does not lawfully extend to or include the proper or given name. Furthermore, factual realities and legal consequences, rather than sentimentality and symbolisms, are what are of concern to the Court. Finally, it is understood that this decision does not entirely foreclose and is without prejudice to, private respondents' privilege to legally change the proper or given name of their adopted child, provided that the same is exercised, this time, via a proper petition for change of name. Of course, the grant thereof is conditioned on strict compliance with all jurisdictional requirements and satisfactory proof of the compelling reasons advanced therefor. WHEREFORE, on the foregoing premises, the assailed order of respondent judge is hereby MODIFIED. The legally adopted child of private respondents shall henceforth be officially known as Kevin Earl Munson y Andrade unless a change thereof is hereafter effected in accordance with law. In all other respects, the order is AFFIRMED. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-64013 November 28, 1983 UNION GLASS & CONTAINER CORPORATION and CARLOS PALANCA, JR., in his capacity as President of Union Glass & Container Corporation, petitioners, vs. THE SECURITIES AND EXCHANGE COMMISSION and CAROLINA HOFILEA, respondents. Eduardo R. Ceniza for petitioners. The Solicitor General for respondent SEC. Remedios C. Balbin for respondent Carolina Y. Hofilea.

ESCOLIN, J.:+.wph!1 This petition for certiorari and prohibition seeks to annul and set aside the Order of the Securities and Exchange Commission, dated September 25, 1981, upholding its jurisdiction in SEC Case No. 2035, entitled "Carolina Hofilea, Complainant, versus Development Bank of the Philippines, et al., Respondents." Private respondent Carolina Hofilea, complainant in SEC Case No. 2035, is a stockholder of Pioneer Glass Manufacturing Corporation, Pioneer Glass for short, a domestic corporation engaged in the operation of silica mines and the manufacture of glass and glassware. Since 1967, Pioneer Glass had obtained various loan accommodations from the Development Bank of the Philippines [DBP], and also from other local and foreign sources which DBP guaranteed. As security for said loan accommodations, Pioneer Glass mortgaged and/or assigned its assets, real and personal, to the DBP, in addition to the mortgages executed by some of its corporate officers over their personal assets. The proceeds of said financial exposure of the DBP were used in the construction of a glass plant in Rosario, Cavite, and the operation of seven silica mining claims owned by the corporation. It appears that through the conversion into equity of the accumulated unpaid interests on the various loans amounting to P5.4 million as of January 1975, and subsequently increased by another P2.2 million in 1976, the DBP was able to gain control of the outstanding shares of common stocks of Pioneer Glass, and to get two, later three, regular seats in the corporation's board of directors. Sometime in March, 1978, when Pioneer Glass suffered serious liquidity problems such that it could no longer meet its financial obligations with DBP, it entered into a dacion en pago agreement with the latter, whereby all its assets mortgaged to DBP were ceded to the latter in full satisfaction of the corporation's obligations in the total amount of P59,000,000.00. Part of the assets transferred to the DBP was the glass plant in Rosario, Cavite, which DBP leased and subsequently sold to herein petitioner Union Glass and Container Corporation, hereinafter referred to as Union Glass. On April 1, 1981, Carolina Hofilea filed a complaint before the respondent Securities and Exchange Commission against the DBP, Union Glass and Pioneer Glass, docketed as SEC Case No. 2035. Of the five causes of action pleaded therein, only the first cause of action concerned petitioner Union Glass as transferee and possessor of the glass plant. Said first cause of action was based on the alleged illegality of the aforesaid dacion en pagoresulting from: [1] the supposed unilateral and unsupported undervaluation of the assets of Pioneer Glass covered by the agreement; [2] the self-dealing indulged in by DBP, having acted both as stockholder/director and secured creditor of Pioneer Glass; and [3] the wrongful inclusion by DBP in its statement of account of P26M as due from Pioneer Glass when the same had already been converted into equity. Thus, with respect to said first cause of action, respondent Hofilea prayed that the SEC issue an order:t.hqw 1. Holding that the so called dacion en pago conveying all the assets of Pioneer Glass and the Hofilea personal properties to Union Glass be declared null and void on the ground that the said conveyance was tainted with.t.hqw

A. Self-dealing on the part of DBP which was acting both as a controlling stockholder/director and as secured creditor of the Pioneer Glass, all to its advantage and to that of Union Glass, and to the gross prejudice of the Pioneer Glass, B. That the dacion en pago is void because there was gross undervaluation of the assets included in the socalled dacion en pago by more than 100% to the prejudice of Pioneer Glass and to the undue advantage of DBP and Union Glass; C. That the DBP unduly favored Union Glass over another buyer, San Miguel Corporation, notwithstanding the clearly advantageous terms offered by the latter to the prejudice of Pioneer Glass, its other creditors and socalled 'Minority stockholders.' 2. Holding that the assets of the Pioneer Glass taken over by DBP and part of which was delivered to Union Glass particularly the glass plant to be returned accordingly. 3. That the DBP be ordered to accept and recognize the appraisal conducted by the Asian Appraisal Inc. in 1975 and again in t978 of the asset of Pioneer Glass. 1 In her common prayer, Hofilea asked that DBP be sentenced to pay Pioneer Glass actual, consequential, moral and exemplary damages, for its alleged illegal acts and gross bad faith; and for DBP and Union Glass to pay her a reasonable amount as attorney's fees. 2 On April 21, 1981, Pioneer Glass filed its answer. On May 8, 1981, petitioners moved for dismissal of the case on the ground that the SEC had no jurisdiction over the subject matter or nature of the suit. Respondent Hofilea filed her opposition to said motion, to which herein petitioners filed a rejoinder. On July 23, 1981, SEC Hearing Officer Eugenio E. Reyes, to whom the case was assigned, granted the motion to dismiss for lack of jurisdiction. However, on September 25, 1981, upon motion for reconsideration filed by respondent Hofilea, Hearing Officer Reyes reversed his original order by upholding the SEC's jurisdiction over the subject matter and over the persons of petitioners. Unable to secure a reconsideration of the Order as well as to have the same reviewed by the Commission En Banc, petitioners filed the instant petition for certiorari and prohibition to set aside the order of September 25, 1981, and to prevent respondent SEC from taking cognizance of SEC Case No. 2035. The issue raised in the petition may be propounded thus: Is it the regular court or the SEC that has jurisdiction over the case? In upholding the SEC's jurisdiction over the case Hearing Officer Reyes rationalized his conclusion thus:t.hqw As correctly pointed out by the complainant, the present action is in the form of a derivative suit instituted by a stockholder for the benefit of the corporation, respondent Pioneer Glass and Manufacturing Corporation, principally against another stockholder, respondent Development Bank of the Philippines, for alleged illegal acts and gross bad faith which resulted in the dacion en pagoarrangement now being questioned by complainant. These alleged illegal acts and gross bad faith came about precisely by virtue of respondent Development Bank of the Philippine's status as a stockholder of co-respondent Pioneer Glass Manufacturing Corporation although its status as such stockholder, was gained as a result of its being a creditor of the latter. The derivative nature of this instant action can also be gleaned from the common prayer of the complainant which seeks for an order directing respondent Development Bank of the Philippines to pay co-respondent Pioneer Glass Manufacturing Corporation damages for the alleged illegal acts and gross bad faith as above-mentioned. As far as respondent Union Glass and Container Corporation is concerned, its inclusion as a party-respondent by virtue of its being an indispensable party to the present action, it being in possession of the assets subject of the dacion en pago and, therefore, situated in such a way that it will be affected by any judgment thereon, 3 In the ordinary course of things, petitioner Union Glass, as transferee and possessor of the glass plant covered by the dacion en pago agreement, should be joined as party-defendant under the general rule which requires the joinder of every party who has an interest in or lien on the property subject matter of the dispute. 4 Such joinder of parties avoids multiplicity of suits as well as ensures the convenient, speedy and orderly administration of justice. But since petitioner Union Glass has no intra-corporate relation with either the complainant or the DBP, its joinder as party-defendant in SEC Case No. 2035 brings the cause of action asserted against it outside the jurisdiction of the respondent SEC.

The jurisdiction of the SEC is delineated by Section 5 of PD No. 902-A as follows:t.hqw Sec. 5. In addition to the regulatory and adjudicative function of the Securities and Exchange Commission over corporations, partnerships and other forms of associations registered with it as expressly granted under existing laws and devices, it shall have original and exclusive jurisdiction to hear and decide cases involving: a] Devices and schemes employed by or any acts, of the board of directors, business associates, its officers or partners, amounting to fraud and misrepresentation which may be detrimental to the interest of the public and/or the stockholders, partners, members of associations or organizations registered with the Commission b] Controversies arising out of intra-corporate or partnership relations, between and among stockholders, members or associates; between any or all of them and the corporation, partnership, or association of which they are stockholders, members or associates, respectively; and between such corporation, partnership or association and the state insofar as it concerns their individual franchise or right to exist as such entity; c] Controversies in the election or appointments of directors, trustees, officers or managers of such corporations, partnerships or associations. This grant of jurisdiction must be viewed in the light of the nature and function of the SEC under the law. Section 3 of PD No. 902-A confers upon the latter "absolute jurisdiction, supervision, and control over all corporations, partnerships or associations, who are grantees of primary franchise and/or license or permit issued by the government to operate in the Philippines ... " The principal function of the SEC is the supervision and control over corporations, partnerships and associations with the end in view that investment in these entities may be encouraged and protected, and their activities pursued for the promotion of economic development. 5 It is in aid of this office that the adjudicative power of the SEC must be exercised. Thus the law explicitly specified and delimited its jurisdiction to matters intrinsically connected with the regulation of corporations, partnerships and associations and those dealing with the internal affairs of such corporations, partnerships or associations. Otherwise stated, in order that the SEC can take cognizance of a case, the controversy must pertain to any of the following relationships: [a] between the corporation, partnership or association and the public; [b] between the corporation, partnership or association and its stockholders, partners, members, or officers; [c] between the corporation, partnership or association and the state in so far as its franchise, permit or license to operate is concerned; and [d] among the stockholders, partners or associates themselves. The fact that the controversy at bar involves the rights of petitioner Union Glass who has no intra-corporate relation either with complainant or the DBP, places the suit beyond the jurisdiction of the respondent SEC. The case should be tried and decided by the court of general jurisdiction, the Regional Trial Court. This view is in accord with the rudimentary principle that administrative agencies, like the SEC, are tribunals of limited jurisdiction6 and, as such, could wield only such powers as are specifically granted to them by their enabling statutes. 7 As We held in Sunset View Condominium Corp. vs. Campos, Jr.: 8t.hqw Inasmuch as the private respondents are not shareholders of the petitioner condominium corporation, the instant cases for collection cannot be a 'controversy arising out of intra-corporate or partnership relations between and among stockholders, members or associates; between any or all of them and the corporation, partnership or association of which they are stockholders, members or associates, respectively,' which controversies are under the original and exclusive jurisdiction of the Securities & Exchange Commission, pursuant to Section 5 [b] of P.D. No. 902-A. ... As heretofore pointed out, petitioner Union Glass is involved only in the first cause of action of Hofileas complaint in SEC Case No, 2035. While the Rules of Court, which applies suppletorily to proceedings before the SEC, allows the joinder of causes of action in one complaint, such procedure however is subject to the rules regarding jurisdiction, venue and joinder of parties. 9 Since petitioner has no intra-corporate relationship with the complainant, it cannot be joined as party-defendant in said case as to do so would violate the rule or jurisdiction. Hofileas complaint against petitioner for cancellation of the sale of the glass plant should therefore be brought separately before the regular court But such action, if instituted, shall be suspended to await the final outcome of SEC Case No. 2035, for the issue of the validity of the dacion en pago posed in the last mentioned case is a prejudicial question, the resolution of which is a logical antecedent of the issue involved in the action against petitioner Union Glass. Thus, Hofileas complaint against the latter can only prosper if final judgment is rendered in

SEC Case No. 2035, annulling the dacion en pago executed in favor of the DBP. WHEREFORE, the instant petition is hereby granted, and the questioned Orders of respondent SEC, dated September 25, 1981, March 25, 1982 and May 28, 1982, are hereby set aside. Respondent Commission is ordered to drop petitioner Union Glass from SEC Case No. 2035, without prejudice to the filing of a separate suit before the regular court of justice. No pronouncement as to costs. SO ORDERED.1wph1.t Concepcion, Jr., Guerrero, Abad Santos, De Castro, Melencio-Herrera, Plana, Relova and Gutierrez, Jr., JJ., concur.

itself en banc, this Court would have no jurisdiction over this case. It should be the Appellate Court that should exercise the power of review. Carolina Hofilea has been a stockholder since 1958 of the Pioneer Glass Manufacturing Corporation. Her personal assets valued at P6,804,810 were apparently or supposedly mortgaged to the DBP to secure the obligations of Pioneer Glass (p. 32, Rollo). Pioneer Glass became indebted to the Development Bank of the Philippines in the total sum of P59,000,000. Part of the loan was used by Pioneer Glass to establish its glass plant in Rosario, Cavite. The unpaid interest on the loan amounting to around seven million pesos became the DBP's equity in Pioneer Glass. The DBP became a substantial stockholder of Pioneer Glass. Three members of the Pioneer Glass' board of directors were from the DBP. The glass plant commenced operations in 1977. At that time, Pioneer Glass was heavily indebted to the DBP. Instead of foreclosing its mortgage, DBP maneuvered to have the mortgaged assets of Pioneer Glass, including the glass plant, transferred to the DBP by way of dacion en pago. This transaction was alleged to be an "auto contract" or a case of the DBP contracting with itself since the DBP had a dominant position in Pioneer Glass. Hofilea alleged that although the debt to the DBP of Pioneer Glass amounted to P59,000,000, the glass plant in 1977 had a "sound value" of P77,329,000 and a "reproduction cost" of P90,403,000. She further alleged that San Miguel Corporation was willing to buy the glass plant for P40,000,000 cash, whereas it was actually sold to Union Glass & Container Corporation for the same amount under a 25-year term of payment (pp. 3234, Rollo). On March 31, 1981; Carmen Hofilea filed with the SEC a complaint against the DBP, Union Glass, Pioneer Glass and Rafael Sison as chairman of the DBP and Pioneer Glass boards of directors. Union Glass filed a motion to dismiss on the ground that jurisdiction over the case is lodged in the Court of First Instance. Hofilea opposed the motion. Hearing Officer Reyes in his order of July 23, 1981 dismissed the complaint on the ground that the case is beyond the jurisdiction of the SEC. Hofilea filed a motion for reconsideration which was opposed by Union Glass. Hearing Officer Reyes in his order of September 25, 1981 reconsidered his dismissal order and ruled that Union Glass is an indispensable party because it is the transferee of the controverted assets given by way of dacion en pago to the DBP. He ruled that the SEC has jurisdiction over the case. Union Glass filed a motion for reconsideration. Hearing Officer Antonio R. Manabat denied the motion on the ground "that the present action is an intracorporate dispute involving stockholders of the same corporation (p. 26, Rollo). Union Glass filed a second motion for reconsideration with the prayer that the SEC should decide the motion en banc. The hearing officer ruled that the remedy of Union Glass was to file a timely appeal. Hence, its second motion for reconsideration was denied by the hearing officer. (This ruling is a technicality which hinders substantial justice.) It is clear that Union Glass has no cause of action for certiorari and prohibition. Its recourse was to appeal to the SEC en banc the denial of its first motion for reconsideration. There is no question that the SEC has jurisdiction over the intra-corporate dispute between Hofilea and the DBP, both stockholders of Pioneer Glass, over the dacion en pago. Now, does the SEC lose jurisdiction because of the joinder of Union Glass which has privity with the DBP since it was the transferee of the assets involved in the dacion en pago? Certainly, the joinder of Union Glass does not divest the SEC of jurisdiction over the case. The joinder of Union Glass is necessary because the DBP, its transfer or, is being sued regarding the dacion en pago. The defenses of Union Glass are tied up with the defenses of the DBP in the intra-corporate dispute. Hofileas cause of action should not be split. It would not be judicious and expedient to require Hofilea to sue the DBP and Union Glass in the Regional Trial Court. The SEC is more competent than the said court to decide the intra-corporate dispute. The SEC, as the agency enforcing Presidential Decree No. 902-A, is in the best position to know the extent of its jurisdiction. Its determination that it has jurisdiction in this case has persuasive weight. Concepcion, Jr., Guerro, Abad Santos, De Castro, Melencio-Herrera, Plana, Relova and Gutierrez, Jr., JJ., concur.

Separate Opinions TEEHANKEE, J., concurring: I concur in the Court's judgment penned by Mr. Justice Escolin setting aside the questioned orders of respondent SEC and ordering that petitioner Union Glass be dropped from SEC Case No. 2035 for lack of SEC jurisdiction over it as a third party purchaser of the glass plant acquired by the DBP by dacion en pago from Pioneer Glass, without prejudice to Hofilea filing a separate suit in the regular courts of justice against Union Glass for recovery and cancellation of the said sale of the glass plant in favor of Union Glass. I concur also with the statement in the Court's opinion that the final outcome of SEC Case No. 2035 with regard to the validity of the dacion en pago is a prejudicial case. If Hofilea's complaint against said dacion en pago fails in the SEC, then it clearly has no cause of action against Union Glass for cancellation of DBP's sale of the plant to Union Glass. The purpose of this brief concurrence is with reference to the statement in the Court's opinion that "Thus, Hofileas complaint against the latter can only prosper if final judgment is rendered in SEC Case No. 2035, annulling the dacion en pago executed in favor of the DBP," to erase any impression that a favorable judgment secured by Hofilea in SEC Case No. 2035 against the DBP and Pioneer Glass would necessarily mean that its action against Union Glass in the regular courts of justice for recovery and cancellation of the DBP sale of the glass plant to Union Glass would necessarily prosper. It must be borne in mind that as already indicated, the SEC has no jurisdiction over Union Glass as an outsider. The suit in the regular courts of justice that Hofilea might bring against Union Glass is of course subject to all defenses as to the validity of the sale of the glass plant in its favor as a buyer in good faith and should it successfully substantiate such defenses, then Hofileas action against it for cancellation of the sale might fail as a consequence. AQUINO, J., dissenting: I dissent with due deference to Justice Escolin's opinion. What are belatedly assailed in this certiorari and prohibition case filed on May 17, 1983 are the order of September 25, 1981 of Eugenio E. Reyes, a SEC hearing officer, and the orders of March 25 and May 28, 1982 of Antonio R. Manabat, another SEC hearing officer. Although a jurisdictional issue is raised and jurisdiction over the subject matter may be raised at any stage of the case, nevertheless, the petitioners are guilty of laches and nonexhaustion of the remedy of appeal with the Securities and Exchange Commission en banc. The petitioners resorted to the special civil actions of certiorari and prohibition because they assail the orders of mere SEC hearing officers. This is not a review of the order, decision or ruling of the SEC sitting en banc which, according to section 6 of Presidential Decree No. 902-A (1976), may be made by this Court "in accordance with the pertinent provisions of the Rules of Court." Rule 43 of the Rules of Court used to allow review by this Court of the SEC order, ruling or decision. Republic Act 5434 (1968) substituted the Court of Appeals for this Court in line with the policy of lightening our heavy jurisdictional burden. But this Court seems to have been restored as the reviewing authority by Presidential Decree No. 902-A. However, section 9 of the Judiciary Reorganization Law returned to the Intermediate Appellate Court the exclusivejurisdiction to review the ruling, order or decision of the SEC as a quasi-judicial agency. The same section 9 granted to the Appellate Court jurisdiction in certiorari and prohibition cases over the SEC although not exclusive.t.hqw In this case, the SEC seems to have adopted the orders of the two hearing officers as its own orders as shown by the stand taken by the Solicitor General in defending the SEC. If that were so, that is, if the orders of the hearing officers should be treated as the orders of the SEC