DANAO V.

CA

Facts:
 On February 27, 1963, spouses Pedro Danao and Concepcion Danao applied for
a commercial credit line (₱20,000.00) with the People’s Bank and Trust
Company.
 After the application had been granted, the parties executed a Commercial Credit
Agreement and Mortgage.
 It stipulated that the spouses (mortgagors) agreed to secure the repayment of
the said credits and advances by means of a good and valid mortgage.
 The security was a parcel of land together with the building and improvements
thereon.
 Antonio Co Kit and Pedro Danao signed a promissory note of ₱10,000.00 and the
proceeds of which were issued to the former. It was agreed that the two shall
note jointly and severally. Because of their failure to pay, People’s Bank and
Trust Company sent them a demand letter.
 People’s Bank and Trust Company filed a complaint against Kit and Danao which
was dismissed for lack of interest on the part of the plaintiff.
 The branch manager then wrote a letter to Danao informing him that they had
filed a petition for foreclosure and that the parcel of land will be sold at public
auction.
 Counsel for the bank executed a cancellation of the real estate mortgage, stating
that the mortgagors had fully paid the obligation.
 The spouses Danao then filed a complaint for damages against BPI (PBTC’s
successor) in the CFI.
 The complainant alleged that the petition for foreclosure and the notice of public
auction sale have neither legal nor factual bases because (1) while the credit line
was availed of from time to time, the credits and loans were duly paid, and (2)
the alleged indebtedness for foreclosure and in the notice of public auction sale
was the balance due on a “clean loan”

Issue:
W/N the filing of civil action for the collection of the debt and then subsequently filing
an action to foreclosure the mortgage constitutes splitting a single cause of action.

Ruling:
A bank cannot file a civil action against the debtor for the collection of the debt and then
subsequently file an action to foreclose the mortgage. This would be splitting a single
cause of action.
The court has laid down the rule that a mortgage creditor may institute against the
mortgage debtor either personal action for debt or a real action to foreclosure the
mortgage. Thus, he may pursue either of the two remedies, but not both.

“For non-payment of a note secured by mortgage, the creditor has a single cause
of action against the debtor. This single cause of action consists in the recovery
of the credit with execution of the security. In other words, the creditor in his
action may make two demands, the payment of the debt and the foreclosure of
the mortgage. But both demands arise from the same cause, the non-payment of
the debt, and, for that reason, they constitute a single cause of action. Though
the debt and the mortgage constitute separate agreements, the latter is
subsidiary to the former, and both refer to one and the same obligation.
Consequently there exists only once cause of action for a single breach of that
obligation. Plaintiff, then, by applying the rule above stated cannot split up his
single cause of action by filing a complaint for payment of the debt, and
thereafter another complaint for foreclosure of the mortgage. If he does so, the
fishing of the first complaint will bar the subsequent complaint. By allowing the
creditor to file two separate complaints simultaneously or successively, one to
recover his credit and another to foreclose his mortgage, we will, in effect, be
authorizing him plural redress for a single breach of contract at much cost to the
courts and with so much vexation and oppression to the debtor.”

Hence, the prior recourse of the creditor bank in filing a civil action against the Danao
spouses and subsequently resorting the complaint of foreclosure proceedings, are not
only a demonstration of the prohibited splitting up of cause of action but also of the
resulting vexation and oppression to the debtor.
 UNION GLASS V. SECURITIES AND EXCHANGE COMMISSION

Facts:
 Private Respondent Carolina Hofilena, is a stockholder of Pioneer Glass
Manufacturing Corporation (Pioneer Glass). Pioneer Glass obtained various loan
accommodations from the Development Bank of the Philippines (DBP), and also
from other local and foreign sources which DBP guaranteed.
 In 1978, 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.
 On 1981, Hofilena filed a complaint before the SEC against DBP, Union Glass
and Pioneer Glass. Of the five causes of action, only the first cause of action was
based on the alleged illegality of the aforesaid dacion en pago.

Issue:
W/N the joinder is proper.

Ruling:
The joinder is improper. Petitioner Union Glass is involved only in the first cause of
action of Hofilena's complaint. 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. Since the petitioner has no intra-corporate relationship with the complainant,
it cannot be joined as party-defendant in the said case as to do so would violate the rule
on jurisdiction.
 FAR EAST MARBLE V. CA

Facts:
 On February 1987, the respondent, Bank of the Philippine Islands (BPI) filed a
complaint for foreclosure of chattel mortgage with replevin against petitioner Far
East Marble Inc., Ramon Tabuena and Luis Tabuena, Jr.
 Far East filed a compulsory counterclaim where it admitted the genuineness and
due execution of the promissory note but alleged further that it has already
prescribed, so it raised the defense of prescription and lack of cause of action; it
also denied that BPI made prior demands for payment.
 BPI filed an opposition to the motion to hear affirmative defenses, alleging that its
cause of action accrued, various written extrajudicial demands were made by BPI
to Far East.
 The RTC dismissed that complaint based in prescription and lack of cause of
action. (Ratio: Apart from the fact that the complaint failed to allege that the
period of prescription was interrupted, the phrase “repeated requests and
demands for payment” is vague and incomplete so as to establish in the minds of
defendant, or to enable the court to draw a conclusion, that demands or
acknowledgments of debt were made that could have interrupted the period of
prescription.)
 The Court of Appeals reversed the RTC ruling and remanded the case for further
proceedings

Issue:
W/N the claim in the allegation in the complaint of private respondent has already
prescribed and has no sufficient cause of action because the of the phrase “repeated
requests and demands for payment” is not sufficient to state a cause of action.

Ruling:
The Supreme Court held in the negative. The claim in petitioner’s complaint has not
prescribed and petitioner has a valid cause of action.

Complaint is a concise statement of the ultimate facts constituting the plaintiff’s cause or
causes of action.

Further, a cause of action consists of three elements:

1. The legal right of the plaintiff;
2. The correlative obligation of the defendant; and
3. The act or omission of the defendant in violation of said legal right.

These elements are manifest in BPI’s complaint, where it alleged that:

1. For valuable consideration, BPI granted several loans, evidenced by promissory
notes, and extended credit facilities in the form of trust receipts to Far East;
 2. Said promissory notes and trust receipts had matured; and
3. Despite repeated demands, Far East failed and refused to pay.

Clearly then, the general allegation of BPI that “despite repeated requests and demands
for payment, Far East has failed to pay” is sufficient to establish BPI’s cause of action.
Besides, prescription is not a cause of action; it is a defense, which having been raised
should be supported by competent evidence.

A complaint is sufficient if it contains sufficient notice of the cause of action even though
the allegation may be vague or indefinite, for in such case, the recourse of the
defendant would be to file a motion for a bill of particulars.

The circumstances of BPI extending loans and credits to Far East and the failure of the
latter to pay and discharge the same upon maturity are the only ultimate facts which
have to be pleaded, although the facts necessary to make the mortgage validly
enforceable must be proven during the trial.

In fine, the finding of the trial court that prescription has set in is primarily premised on a
misappreciation of the sufficiency of BPI’s allegation as discussed. The records will
show that the hearing conducted by the trial court was merely pro forma and the trial
judge did not sufficiently address the issue whether or not a demand for payment in fact
made by BPI and duly received by herein petitioner Far east.
 MALABANAN V. GAW CHING AND INTERMEDIATE APPELLATE COURT

Facts:
 Respondent Gaw Ching instituted 2 cases against petitioners Angelina
Malabanan, Leonida Senolos, et al. in connection with the sale of piece of land
located in Binondo, Manila.
 Mr. Jabit previously entered into an oral contract of lease with respondent Gaw
Ching. When Mr. Jabit died, the petitioner, his daughter, continued the lease but
rental was increased from Php 700 to Php 1,000 per month.
 There was no written contract with regard to the duration of the lease between
Mr. Jabit and respondent.
 Subsequently thereafter, petitioner informed respondent that she was selling the
house and lot for Php 5,000 per square meter.
 Respondent argued that the price is prohibitive; nonetheless, petitioner
maintained her proposition and still tried to pay her rental dues but petitioner
refused to accept. Hence, respondent deposited the same in a bank as per
advised by his counsel.
 After letters of notice that petitioner will sell the subject property should
respondent opt not to buy the same, the property was subsequently sold to
Leonidas Senolos.
 Various notices were sent by petitioner to vacate the said property.
 Petitioner then caused the said property to be demolished; hence, respondent
filed an action to annul sale with damages between Senolos and petitioner.
 RTC: declared the validity of the sale; respondent was given ample opportunity to
exercise right of first refusal.
 IAC: Reversed the decision of the RTC; the majority held that the transaction
between petitioner was vitiated by fraud, deceit and bad faith allegedly causing
damage to respondent; hence, annulled the deed of sale and ordered petitioner
to pay respondent Php 350,000.00 in damages. (moral, exemplary, and actual).

Issue:
W/N the respondent has been prejudiced in his right so as to give him the right of action
to annul the sale and is entitled to said damages as awarded by the IAC.

Ruling:
1.   No, respondent was not prejudiced in his right by reason of the sale of said property.

The firmly settled rule is that strangers to a contract cannot sue either or both of the
contracting parties to annul and set aside the contract.

Nonetheless, he who is not the party obligated principally or subsidiarily in a contract

may perhaps be entitled to an action for nullity, if he is prejudiced in his rights with
respect to one of the contracting parties; but, in order that such be the case, it is
indispensable to show the detriment which positively would result to him from the
contract in which he had no intervention.

Gaw Ching does not fall within such exception. First, Gaw Ching had no legal right of
preemption in respect of the house and lot involved. The subject piece of land is
located outside the Urban Land Reform Zones declared in P.D. 1517 which entitles the
lessee to a right of preemption or redemption if he has built his home thereon and
resided for at least 10 years thereat.

Even assuming (which it is not) that the subject property falls within the Urban Land, still
Gaw Ching has not satisfactorily complied with the requisites for entitlement
(construction of home and the 10-year requirement).

Furthermore, he was even offered to buy said property which he declined.

2.  No, respondent is not entitled to the damages awarded by the IAC.

Firstly, the order of condemnation or demolition had been issued by the proper
authorities (Office of the City Engineer) which order was valid and subsisting at the time
the demolition was carried out.

Second, it is the owner of the building or installation to be demolished who may appeal

an order of demolition to the Secretary of Public Works and Highways. At bar, Gaw
Ching is merely a lessee.

Third, the action filed by respondent to annul the sale was with preliminary injunction
which the RTC denied; hence, it was only after such denial that demolition was
continued.

Lastly, Gaw Ching had ample notice of demolition order and had adequate time to
remove his belongings from the premises if he was minded to obey the order of
demolition. He chose not to obey that order. If he did suffer any losses – the trial court
did not believe his claims that he did – he had only himself to blame.
 CASIL V. CA

Facts:
 Private Respondent, Anita Lorenzana, is a lessee of a government property
located on Bilibid Viejo Street in Manila.

 Vicente Jimenez et. Al.v. Carmelo S. Camara et. Al.
Overview:
The rule is that where the covenant or contract is entire and the breach total, there can
be only one action.

*appeal is certified by the CA from the decision of CFI

Facts:
·       Petitioner (including Vicente Jimenez, later attorney-in-fact of Golez) are owners of 24
lots which they mortgaged with PNB;
·       Because they were not able to pay, PNB foreclosed the property with right of
redemption;
·       Petitioners renounced their right of redemption of the said lot to Adriano Golez
·       In order to redeem said property to the bank, petitioner and Golez obtained the
intervention and services of Carmelo Camara;
·       A contract was then executed between PNB and Camara where the former promised to
sell all his rights and interests in the mortgaged properties to the latter for P55,160.00;
·       Since conformity of judgment debtors was needed, conformity was given by petitioner,
subject to the condition that Camara should reconvey to Adriano Golez whatever rights
and interests Camara may acquire from the bank;
·        A lease contract between the petitioners and Golez, on one side, and Camara, on the
other, was made for the 7 lots for two years ending on November 1941 while the other
17 lots remained in possession of the petitioners;
·       Consequently, Camara paid of all the debts of petitioners to the bank and a deed of
absolute sale was made in Camara’s favor and he registered all 24 lots under his name,
without notice to the petitioners, notwithstanding his commitment under said contracts
(to reconvey them to Adriano Golez);
·       After the expiration of the lease contract,  Camara refused to relinquish possession of
the 7 lots, a complaint was filed before the CFI of Negros Occ.
·       CFI decided in favor of Camara but SC, subsequently, decided in favor of Golez (the
lease contract was merely to accommodate redemption of the subject property from the
PNB) and the SC ordered Golez to pay Camara the necessary payment for redemption;
·       So, in compliance, Golez deposited with the CFI of Negros Occ. a PNB Cashier’s Check
but another question was raised by Camara at the CFI:
(1)  won deposit in check was valid, and
(2)  won reconveyance is for the whole 24 lots or only 7 of them;
·       The CFI sustained the validity of deposit in check and the reconveyance for the 24
lots;
·       Camara appealed the CFI decision until it eventually reached the SC again;
·       While pending in the SC, assignees of Golez filed in CFI of Negros Occ against Camara,
the reconveyance of the 17 remaining lots;
·       Camara filed a motion to dismiss on ground of violation of splitting of causes of action;

Lower court ruling:

CFI of Negros Occ: Dismissed the complaint.
There is splitting of cause of action since their predecessor in interest (Adriano Golez)
has already sought for recovery of the 7 lots and also demanded therein the
reconveyance of the other 17 lots.

Issue: WON there is splitting of causes of action

Ruling: Yes, there was a splitting of causes of action.

*petitioner contention*
Petitioners (assignees of Golez) argue that there is no splitting of causes of action
because the issue involved in the one previous case was for recovery of possession of
the 7 lots subject of the lease contract which already expired while the present case is
for the reconveyance of the 17 lots mentioned in the contract where Camara is to
convey all rights and interests in the property he may obtain from the bank.

This is not exactly the case. The two contracts are not separate from or independent of
each other. They are both part of a single transaction: to carry out and facilitate the
redemption from the PNB of the mortgaged properties. The lease contract was resorted
to provide a mode of payment to the bank of the delivery of 1,000 piculs of sugar a
year, which is the agreed rental of 7 of the mortgaged lots.

In fine, both actions are founded on one and the same contract, and the rule is that
where the covenant or contract is entire and the breach total, there can be only one
action.