mellon bank v. magsino

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Republic of the Philippines

SUPREME COURT

Manila

THIRD DIVISION

G.R. No. 71479 October 18, 1990

MELLON BANK, N.A., petitioner,vs.HON. CELSO L. MAGSINO, in i! c"#"cit$ "! %re!i&in' ()&'e o* Br"ncCLI+ o* te Re'ion" -ri" Co)rt "t %"!i' MELCHOR (A/IER, (R.,/IC-ORIA (A/IER HEIRS O HONORIO %OBLAOR, (R., n"2e$3 E!"A)n"n %ob"&or, Honorio %ob"&or III, R"*"e %ob"&or, M"n)e %ob"&or,M". Re'in" %ob"&or, M". Conce#cion %ob"&or M". oore! %ob"&or.C. HAGEORN CO., INC. OMINGO (HOCSON, (R. (OSE MAR56E

ROBER-O GARINO ELNOR IN/ES-MEN- CO., INC. %ARAMO6N-INANCE COR%ORA-ION RAAEL CABALLERO "n& -RIARCIN/ES-MEN- "n& MANAGEMEN- CO., INC. respondents.

Romulo, Mabanta, Buenaventura, Sayoc & De los Angeles for petitioner.

Jose Buendia for respondent Jose Marque.

Raul !. "ornea & Associates for J#ocson and $arino.

Jesus !. Santos and "onrado %alera for ri'Arc (nvestment, etc.

Bernardo D. "alderon for respondent )!*+R and Rafael "aballero.

*aareno, Aada, Sabado & Dion for Movants.

Balgos & ere for aramount -inance "orporation.

Meer, Meer & Meer for agedorn.

Alberto %illarea for -.". agedorn & "o.

ERNAN, C.J.:

The issue in the instant special civil action of certiorari is whether or not, by virtueof the principle of election of remedies, an action filed in California, U.S.A., torecover real property located therein and to constitute a constructive trust on said



property precludes the filing in our jurisdiction of an action to recover thepurchase price of said real property.

On ay !", #$"", %olores &entosa re'uested the transfer of (#,))) from the*irst +ational an- of oundsville, est &irginia, U.S.A. to &ictoria /avier in

anila through the 0rudential an-. Accordingly, the *irst +ational an-re'uested the petitioner, ellon an-, to effect the transfer. Unfortunately thewire sent by ellon an- to anufacturers 1anover an-, a correspondent of0rudential an-, indicated the amount transferred as 2US(#,))),))).))2 insteadof US(#,))).)). 1ence anufacturers 1anover an- transferred one milliondollars less ban- charges of (3.4) to the 0rudential an- for the account of&ictoria /avier.

On /une 4, #$"", /avier opened a new dollar account 5+o. 4647 in the 0rudentialan- and deposited ($$$,$64."). 8mmediately their, &ictoria /avier and herhusband, elchor /avier, /r., made withdrawals from the account, deposited

them in several ban-s only to withdraw them later in an apparent plan to conceal,2launder2 and dissipate the erroneously sent amount.

On /une #6, #$"", /avier withdrew (6"9,))) from account +o. 464 andconverted it into eight cashier:s chec-s made out to the following; 5a7 *.C.1agedorn < Co., 8nc., two chee-s for the total amount of 0#,))),)))= 5b7 >lnor8nvestment Co., 8nc., two chec-s for 0#,))),)))= 5c7 0aramount *inanceCorporation, two chec-s for 0#,))),)))= and 5d7 . /avier, /r., two chec-s for06$3,))). The first si? chec-s were delivered to /ose ar'ue@ and 1onorio0oblador, /r.

8t appears that elchor /avier, /r. had re'uested /ose ar'ue@, a realtor, to loo-for properties for sale in the United States. ar'ue@ offered a #3)acre lot in theojave desert in California City which was owned by 1onorio 0oblador, /r./avier, without having seen the property, agreed to buy it for 04,!43,B))5US(64",6)97 although it was actually appraised at around (4B,9)).Conse'uently, as 0oblador:s agent, ar'ue@ e?ecuted in a-ati a deed ofabsolute sale in favor of the /aviers and had the document notari@ed in anilabefore an associate of 0oblador. ar'ue@ e?ecuted another deed of saleindicating receipt of the purchase price and sent the deed to the ern CountyDegistrar in California for registration.

8nasmuch as 0oblador had re'uested that the purchase price should not be paiddirectly to him, the payment of 04,))),))) was coursed through >lnor8nvestment Co., 8nc., allegedly 0oblador:s personal holding company= 0aramount*inance, allegedly headed by 0oblador:s brother, and *.C. 1agedorn, allegedly astoc- bro-erage with e?tensive dealings with 0oblador. The payment was madethrough the aforementioned si? cashier:s chec-s while the balance of 0!43,)))was paid in cash by /avier who did not even as- for a receipt.



The two chec-s totalling 0#,))),))) was delivered by 0oblador to *.C. 1agedornwith specific instructions to purchase Atlas, SC and 0hile? shares. The fourchec-s for 0!,))),))) with >lnor 8nvestment and 0aramount *inance as payeeswere delivered to the latter to purchase 2bearer2 notes.

eanwhile, in /uly, #$"", ellon an- filed a complaint doc-eted as +o. #6B)93in the Superior Court of California, County of ern, against elchor /avier, /ane%oe /avier, 1onorio 0oblador, /rn, and %oes 8 through &. 8n its first amendedcomplaint to impose constructive trust dated /uly #6, #$"", 1 ellon an- allegedthat it had mista-enly and inadvertently cause the transfer of the sum of($$$,))).)) to /ane %oe /avier= that it believes that the defendants hadwithdrawn said funds= that 2the defendants and each of them have used a portionof said funds to purchase real property located in ern County, California2= andthat because of defendants: -nowledge of ellon an-:s mista-e andinadvertence and their use of the funds to purchase the property, they and 2eachof them are involuntary or constructive trustees of the real property and of any

profits therefrom, with a duty to convey the same to plaintiff forthwith.2 8t prayedthat the defendants and each of them be declared as holders of the property intrust for the plaintiff= that defendants be compelled to transfer legal title andpossession of the property to the plaintiff= that defendants be made to pay thecosts of the suit, and that other reliefs be granted them.

On /uly !$, #$"", ellon an- also filed in the Court of *irst 8nstance of Di@al,ranch E, a complaint against the /avier spouses, 1onorio 0oblador, /r.,%omingo F. /hocson, /r., /ose ar'ue@, Doberto GariHo, >lnor 8nvestment Co.,8nc., *.C. 1agedorn < Co., 8nc. and 0aramount *inance Corporation. After itsamendment, Dafael Caballero and TriArc 8nvestment < anagement Company,

8nc. were also named defendants.

The amended and supplemental complaint alleged the facts set forth above andadded that Doberto GariHo, chief accountant of 0rudential an-, and who wasthe reference of rs. &entosa:s dollar remittances to &ictoria /avier, immediatelyinformed the /aviers of the receipt of US(#,))),))).))= that -nowing thefinancial circumstances of rs. &entosa and the fact that a mista-e had beencommitted, the /aviers, with undue haste, too- unlawful advantage of themista-e, withdrew the whole amount and transferred the same to a 2464 dollaraccount2= that, aided and abetted by 0oblador and %omingo F. /hocson, the/aviers 2compounded and completed the conversion2 of the funds by withdrawingfrom the account dollars or pesos e'uivalent to US ($"9,)))= that by force oflaw, the /aviers had been constituted trustees of an implied trust for the benefit of ellon an- with a clear duty to return to said ban- the moneys mista-enly paidto them= that, upon re'uest of ellon an- and anufacturers 1anover an-,0rudential an- informed the /aviers of the erroneous transmittal of one milliondollars first orally and later by letterdemand= that conferences between therepresentatives of the /aviers, led by /hocson and 0oblador, in the latter:scapacity as legal and financial counsel, and representatives of ellon an-,



proved futile as the /aviers claimed that most of the moneys had beenirretrievably spent= that the /aviers could only return the amount if the ellonan- should agree to ma-e an absolute 'uitclaim and waiver of future rightsagainst them, and that in a scheme to conceal and dissipate the funds, throughthe active participation of /ose ar'ue@, the /aviers bought the California

property of 0oblador.

8t further alleged that trust fund moneys totalling 04,))),))).)) were madepayable to 1agedorn 0aramount and >lnor= that 1agedorn on instructions of0oblador, purchased shares of stoc- at a stoc- e?change for 0#,))),))).)) butlater, it hastily sold said shares at a loss of appro?imately 0#9),))).)) to theprejudice of the plaintiff= that proceeds of the sale were deposited by 1agedorn inthe name of 0oblador andIor the law office of 0oblador, +a@areno, A@ada,Tomacru@ and 0aredes= that dividends declared on the shares were delivered by1agedorn to Caballero after the complaint had been filed and thereafter,Caballero deposited the dividends in his personal account= that after receiving

the 0#,))),))).)) trust money, 0aramount issued promissory notes uponmaturity of which 0aramount released the amount to un-nown persons= that>lnor also invested 0#,))),))).)) in 0aramount for which the latter also issuedpromissory notes= that after the filing of the complaint, counsel for plaintiffre'uested 0aramount not to release the amount after maturity= that in evidentbad faith, >lnor transferred the nonnegotiable 0aramount promissory notes toTriArc. that when the notes matured, 0aramount delivered the proceeds of0#,))),))).)) to TriArc= that 0oblador -new or should have -nown that theattorney:s fees he received from the /aviers came from the trust funds= and thatdespite formal demands even after the filing of the complaint, the defendantsrefused to return the trust funds which they continued concealing and dissipating.

8t prayed that; 5a7 the /aviers, 0oblador, >lnor, /hocson and GariHo be ordered toaccount for and pay jointly and severally unto the plaintiff US($$$,))).)) plusincrements, additions, fruits and interests earned by the funds from receiptthereof until fully paid= 5b7 the other defendants be ordered to account for and payunto the plaintiff jointly and severally with the /aviers to the e?tent of the amountswhich each of them may have received directly or indirectly from theUS($$$,))).)) plus increments, additions, fruits and interests= 5c7 ar'ue@ beheld jointly and severally liable with 0oblador for the amount received by thelatter for the sale of the #3)acre lot in California City= and 5d7 defendants beli-ewise held liable jointly and severally for attomey:s fees and litigation e?pensesplus e?emplary damages.

8n due course, the defendants filed their answers and hearing of the caseensued. 8n his testimony, /ose ar'ue@ stated that 0rudential an- and TrustCompany chec-s +os. !94) and !94# in the respective amounts of 0#)),)))and 0$)),))) payable to *. C. 1agedorn were delivered to him by elchor/avier, /r. as partial consideration for the sale of 0oblador:s property in California.

After receiving the chec-s, 1agedorn purchased shares of Atlas ining, 0hile?,



arcopper and San iguel Corporation for Account +o. 4))), which, accordingto *red 1agedorn belonged to the law office of 0oblador. :

*.C. 1agedorn < Co., 8nc. then sold the shares for 0B"6,6$)."9 as evidenced by1SC chec- +o. 44$"43 for 06)),))) and 1SC chec- +o. 44$"4" for

06"6,6$)."9 payable to 2cash2. ellon an- traced these chec-s to Account!B!9# of the 0hilippine &eterans an- in the name of Cipriano A@ada,0oblador:s law partner and counsel to the /aviers. 4

An employee of the 0hilippine &eterans an- thereafter introduced the specimensignature cards for Account +o. !B!9# thereby confirming A@ada:s ownership ofthe account. %efendants objected to this testimony on the grounds of A@ada:sabsence, the confidentiality of the ban- account, and the best evidence rule. Thecourt overruled the objection. Another employee of the 0hilippine &eterans an-then presented the ledger card for Account +o. !B!9#, a chec- deposit slip anda daily report of returned items. The defendants objected but they were again

overruled by the court.

ellon an- then subpoenaed >rlinda aylosis of the 0hilippine &eterans an-to show that A@ada deposited 1SC chec-s +o. 44$"43 and 44$"4" amountingto 0B"6,6$)."9 in his personal current account with said ban-. 8t alsosubpoenaed 0ilologo Ded, /r. of 1ong-ong < Shanghai an-ing Corporation toprove that said amount was returned by A@ada to 1agedorn.

The testimonies of these witnesses were objected to by the defense on thegrounds of res inter alios acta, immateriality, irrelevancy and confidentiality. Toresolve the matter, the court ordered the parties to submit memoranda. The

defendants: objections were also discussed at the hearing on /uly #4, #$B!. *orthe first time, 0oblador:s counsel raised the matter of 2election of remedies.2 ;

At the /uly !), #$B! hearing, the lower court, then presided by /udge >ficio Acosta, conditionally allowed the testimonies of aylosis and Ded. aylosisafffirmed that A@ada deposited chec-s +os. 44$"43 and 44$"4" in the totalamount of 0B"6,6$)."9 in his personal account with the 0hilippine &eteransan- but almost simultaneously, A@ada issued his 0& chec- for the sameamount in favor of 1agedorn Conse'uently, A@ada:s chec- initially bounced. *orhis part, Ded testified that A@ada:s chec- for 0B"6,6$)."9 was received by the1ong-ong < Shanghai an-ing Corporation and credited to the account of1agedorn .

The defendants then moved to stri-e off the testimonies of aylosis and Dedfrom the record. %efendant 0aramount *inance Corporation, which is not a partyto the California case, thereafter filed its memorandum raising the matter of2election of remedies2. 8t averred that inasmuch as the ellon an- had filed inCalifornia an action to impose constructive trust on the California property and torecover the same, ellon an- can no longer try to regain the purchase price of



the same property through Civil Case +o. !3B$$. The other defendants adopted0aramount:s stand.

After ellon an- filed its reply to the memorandum of 0aramount, onSeptember #), #$B!, /udge Acosta issued a resolution ordering that the

testimonies of aylosis and Ded and the documents they testified on, which wereconditionally allowed, be stric-en from the records. < /udge Acosta e?plained;

After a judicious evaluation of the arguments of the parties the Court is of theview that in cases where money held in trust was diverted by the trustee, underthe 2rule of trust pursuit2 the beneficiary 2may elect whether to accept the trustestate in its new form or hold the trustee responsible for it in its original condition25Fathrop vs. 1ampton, 4# Cal. #"= Jodos vs. arefalos 6B 8daho !$#= ahle vs.1asselbrach 36 + >'. 446, 9# Sections 9)B"3 Am /ur. !d p. 6"97, and that2an election to pursue one remedy waives and bars pursuit of any inconsistentremedy25"3 Am /ur. !d S!947. The instant complaint among others is for therecovery of the purchase price of the ern property as held in trust for the plaintiff while in the California case the plaintiff maintains that the ern property is held in

trust for the plaintiff, which positions are inconsistent with each other. +either canthe plaintiff now abandon his complaint for the recovery of the ern property andpursue his complaint for the recovery of the purchase price of said property for 2if he has first sought to follow the res, the plaintiff cannot thereafter hold the trusteepersonally responsible2 and 2when once there has been an election to do one oftwo things, you cannot retract it and do the other thing. The election once madeis finally made.2 5*owler vs. owvery Savings an- ##4 +.K. 69), !# +.>. #"!, 6FDA #69, #) Am. S.D. 6"$. ! Silv. !B), !4, Abb. +. Cos. #44)39 C. /. p. $B)+ote 4!7.

The fact that the California case has been stayed pending determination of theinstant case only means that should this case be dismissed, the California casecan proceed to its final determination.

*urthermore, when the plaintiff filed the California case for the transfer of legaltitle and possession of the ern property to the plaintiff it in effect ratified thetransaction for 2by ta-ing the proceeds or product of a wrongful transfer of trustproperty or funds, the beneficiary ratifies the transaction2 5oard ofCommissioner vs. Strawn LCA3 OhioM #9" *. 6$, "3 Am /ur. !d Section !947.Conse'uently the purchase price of the California property received by defendant0oblador from /avier is no longer the proper subject matter of litigation and themovement and disposition of the purchase price is therefore within the scope ofthe absolutely confidential nature of ban- deposits as provided by Sec. !, D.A.#6)9 as amended by 0% +o. #"$!.

ellon an- moved for reconsideration, alleging that said order prevented the

presentation of evidence on the purchase price of the California property= that theCalifornia case cannot be considered a waiver of the pursuit of the purchaseprice as even if said case was filed fifteen days prior to the filing of the originalcomplaint in this case, e?cept for the /aviers, no other defendants raised in theiranswers the affirmative defense of the filing of the California case= that after theamendment of the complaint, none of the defendants raised the matter of2election of remedies2 in their answers= that reali@ing this procedural error,0aramount sought the amendment of its answer to reflect the 2defence2 of



2election of remedies2= that, disregarding its previous orders allowing evidenceand testimonies on Account +o. !B!9#, the court made a turnabout and ruledthat the testimonies on said account were irrelevant and confidential underDepublic Act +o. #6)9= that 0hilippine law and jurisprudence does not re'uire theelection of remedies for they favor availment of all remedies= that even United

States jurisprudence frowns upon election of remedies if it will lead to anine'uitable result= that, as held by this Court in Radio/ealt# vs. Javier , 7 therecan be no binding election of remedies before the decision on the merits is had=that until ellon an- gets full recovery of the trust moneys, any contention ofelection of remedy is premature, and that, the purchase price being the subject of litigation, in'uiring into its movement, including its deposit in ban-s, is allowedunder Depublic Act +o. #6)9.

%efendants filed their respective comments and oppositions to the motion forreconsideration. 8n its reply, the ellon an- presented proof to the effect that inthe California case, defendants filed motions to sta-e out the crosscomplaint of

ellon an-, for summary judgment and to stay or dismiss the action on theground of inconvenient forum but the first two motions and the motion to dismisswere denied 2without prejudice to renew upon determination of the 0hilippineaction.2 The motion to stay proceedings was 2granted until determination of the0hilippine action.2 8

On October !B, #$B4, the lower court, through /udge Acosta, denied the motionfor reconsideration and ordered the continuation of the hearing 5Dollo, p. #B!7.The plaintiff filed a motion for the reconsideration of both the September #), #$B!and October !B, #$B4 orders. After the parties had filed comments, oppositionand reply, the court, through /udge Celso F. agsino, denied ellon an-:s

second motion for reconsideration on the ground that it was 2prescribed by the#$B4 8nterim Dules of Court2 in an order dated /uly $, #$B9. 9

The court ruled that the determination of the relevancy of the testimonies ofaylosis and Ded was 2premised directly and principally2 on whether or notellon an- could still recover the purchase price of the California propertynotwithstanding the filing of the case in California to recover title and possessionof the said property. After 'uoting the resolution of September #), #$B!, theCourt ruled that it was a 2final order or a definitive judgment with respect to theclaim of plaintiff for the recovery2 of the purchase price of the California property.8t stated;

The adjudication in the Order of September #), #$B! and the Order of October!B, #$B4, which has the effect of declaring that plaintiff has no cause of actionagainst the defendants for the recovery of the proceeds of the sale of ernproperty in the amount of Three illion Three 1undred *ifty Thousand 0esos504,9)),))).)) LsicM7 for having filed a complaint for the recovery of the ernproperty in the Superior Court of California, County of ern is a final anddefinitive disposition of the claim of the plaintiff to recover in the instant action theproceeds of sale of said property against the defendants. The issue of 2electionof remedy2 by the plaintiff was lengthily and thoroughly discussed and argued by



the parties before the rendition of the resolution of September #), #$B!, and inthe motion for reconsideration and oppositions thereto before its resolution in theOrder of October !B, #$B4. Suc# issue is a substantive one as it refers to t#ee0istence of plaintiffs cause of action to recover t#e proceeds of t#e sale of t#e1ern property in t#is action, and t#at issue /as presented to t#e "ourt as if amotion to dismiss or a preliminary #earing of an affirmative defense on t#eground t#at plaintiff #as no cause of action, and /as resolved against plaintiff int#e +rder of September 23, 2456, after a full #earing of all t#e parties. Said Order of September #), #$B! has the effect of putting an end to the controversybetween the parties as to the right of plaintiff to claim or recover the proceeds ofthe sale of the ern property from the defendants. 8t is therefore an adjudicationupon the merits. 10

1ence, ellon an- filed the instant petition for certiorari claiming that theresolution of September #), #$B! and the orders of October !B, #$B4 and /uly $,#$B9 are void for being unlawful and oppressive e?ercises of legal authority,subversive of the fair administration of justice, and in e?cess of jurisdiction. Thepetition is founded on its allegations that; 5a7 the resolution of September #),

#$B! is interlocutory as it does not dispose of Civil Case +o. !3B$$ completely;5b7 the evidence stric-en from the records is relevant on the basis of theallegations of the amended and supplemental complaint, and 5c7 the doctrine ofelection of remedies, which has long been declared obsolete in the UnitedStates, is not applicable in this case.

ith the e?ception of the /aviers, all the respondents filed their respectivecomments on the petition. 1aving failed to file said comment, the /aviers: counselof record, A@ada, Tomacru@ < Cacanindin, 11 was re'uired to show cause whydisciplinary action should not be ta-en against it. And, having also failed to showcause, it was fined 04)).

8n his motion for reconsideration of the resolution imposing said fine, Cipriano A@ada alleged that in Civil Case +o. !3B$$, the /aviers were indeed representedby the law firm of 0oblador, A@ada, Tomacru@ < Cacanindin but he was never thelawyer of the /aviers: in his personal capacity= that after the death of 1onorio0oblador, /r., he had withdrawn from the partnership= that he is the counsel of the

Administratri? of the >state of 1onorio 0oblador, /r. for which he had filed acomment, and that should the Court still re'uire him to file comment for the/aviers despite the lac- of clientlawyer relationship, he would adopt thecomment he had filed for the said Administratri?. 1

8n its effort to locate the /aviers so that their side could be heard, we re'uired thepetitioner to furnish us with the /aviers: address as well as the name and addressof their counsel. 1: 8n compliance therewith, counsel for petitioner manifested thatthe /aviers had two -nown addresses in San /uan, etro anila and inSampaloc, anila= that since their conviction in Crim. Case +o. CCC&88 !43$0.C. of the 0asig Degional Trial Court, the /aviers had gone into hiding andwarrants for their arrest still remain unserved= 14 that the /aviers: counsel ofrecord in Civil Case +o. !3B$$ is Atty. Cipriano A@ada= that the same counsel



appeared for the /aviers in Criminal Case +o. 4$B9# of the 0asig Degional TrialCourt which is a ta? evasion case filed by the Depublic of the 0hilippines, andthat during the hearings of the civil and ta? evasion cases against the /aviers,

Atty. Cipriano A@ada, /r. represented them. 1;

8nasmuch as copies of the resolution re'uiring comment on the petition and thepetition itself addressed to elchor /avier were returned with the notations2moved2 and 2deceased2, the Court re'uired that said copies be sent to rs./avier herself and that petitioner should inform the Court of the veracity of/avier:s death. 1< A copy of the resolution addressed to rs. /avier was returnedalso with the notation 2deceased.2 17

Counsel for petitioner accordingly informed the Court that he learned that the/aviers had fled the country and that he had no way of verifying whether elchor/avier had indeed died. 18

8n view of these circumstances, the /aviers: comment on the petition shall bedispensed with as the Court deems the pleadings filed by the parties sufficientbases for resolving this case. The /aviers shall be served copies of this decisionin accordance with Section 3, Dule #4 of the Dules of Court by delivering saidcopies to the cler- of court of the lower court, with proof of failure of bothpersonal service and service by mail.

e hold that the lower court gravely abused its discretion in ruling that theresolution of September #), #$B! is a 2final and definitive disposition2 ofpetitioner:s claim for the purchase price of the ern property. The resolution isinterlocutory and means no more than what it states in its dispositive portionthe

testimonies of aylosis and Ded and the documents they testified on, should bestric-en from the record.

That the resolution discusses the commonlaw principle of election of remedies,a subject matter which shall be dealt with later, is beside the point. 8t isinterlocutory because the issue resolved therein is merely the admissibility of theplaintiff:s evidence. 19 As such, it does not dispose of the case completely butleaves something more to be done upon its merits. 0 There are things left undonein Civil Case +o. !3B$$ after the issuance of the September #), #$B! resolutionnot only because of its e?plicit dispositive portion but also due to the fact thateven until now, the case is still pending and being heard. 1

*urthermore, the lower court:s holding in its /uly $, #$B9 order that petitioner:ssecond motion for reconsideration is proscribed by the #$B4 8nterim Dules ofCourt which disallows such motion on a final order or judgment, should berectified. As e?plained above, the resolution of September #), #$B! is not a finalone. 8t also contains conclusions on procedural matters which, if left unchec-ed,would prejudice petitioner:s substantive rights.



8n effect, therefore, the /uly $, #$B9 order is a shortcut disposition of Civil Case+o. !3B$$ in total disregard of petitioner:s right to a thorough ventilation of itsclaims. y putting a premium on procedural technicalities over the resolution ofthe merits of the case, the lower court rode roughshod over the basic judicialtenet that litigations should, as much as possible, be decided on their merits and

not on technicalities.

The trial court:s patent grave abuse of discretion thereforeforces us to e?ercise supervisory authority to correct its errors notwithstandingthe fact that ordinarily, this Court would not entertain a petition for certiorari'uestioning the legality and validity of an interlocutory order. :

Despondents: principal objection to the testimonies of aylosis and Ded is theiralleged irrelevance to the issues raised in Civil Case +o. !3B$$. The fallacy ofthis objection comes to fore upon a scrutiny of the complaint. 0etitioner:s theorytherein is that after the /aviers had maliciously appropriated unto themselves($$$,))), the other private respondents conspired and participated in theconcealment and dissipation of said amount. The testimonies of aylosis and

Ded are therefore needed to establish the scheme to hide the erroneously sentamount.

0rivate respondents: protestations that to allow the 'uestioned testimonies toremain on record would be in violation of the provisions of Depublic Act +o. #6)9on the secrecy of ban- deposits, is unfounded. Section ! of said law allows thedisclosure of ban- deposits in cases where the money deposited is the subjectmatter of the litigation. 4 8nasmuch as Civil Case +o. !3B$$ is aimed atrecovering the amount converted by the /aviers for their own benefit, necessarily,an in'uiry into the whereabouts of the illegally ac'uired amount e?tends towhatever is concealed by being held or recorded in the name of persons other

than the one responsible for the illegal ac'uisition.

;

e view respondents: reliance on the procedural principle of election of remediesas part of their ploy to terminate Civil Case +o. !3B$$ prematurely. ith thee?ception of the /aviers, respondents failed to raise it as a defense in theiranswers and therefore, by virtue of Section !, Dule $ of the Dules of Court, suchdefense is deemed waived. < +otwithstanding its lengthy and thoroughdiscussion during the hearing and in pleadings subse'uent to the answers, theissue of election of remedies has not, contrary to the lower court:s assertion,been elevated to a 2substantive one.2 1aving been waived as a defense, itcannot be treated as if it has been raised in a motion to dismiss based on thenone?istence of a cause of action.

oreover, granting that the defense was properly raised, it is inapplicable in thiscase. 8n its broad sense, election of remedies refers to the choice by a party toan action of one of two or more coe?isting remedial rights, where several suchrights arise out of the same facts, but the term has been generally limited to achoice by a party between inconsistent remedial rights, the assertion of onebeing necessarily repugnant to, or a repudiation of, the other. 8n its technical and



more restricted sense, election of remedies is the adoption of one of two or morecoe?isting remedies, with the effect of precluding a resort to the others. 7

As a technical rule of procedure, the purpose of the doctrine of election ofremedies is not to prevent recourse to any remedy, but to prevent double redress

for a single wrong.8

8t is regarded as an application of the law of estoppel, uponthe theory that a party cannot, in the assertion of his right occupy inconsistentpositions which form the basis of his respective remedies. 1owever, when acertain state of facts under the law entitles a party to alternative remedies, bothfounded upon the 8dentical state of facts, these remedies are not consideredinconsistent remedies. 8n such case, the invocation of one remedy is not anelection which will bar the other, unless the suit upon the remedy first invo-edshall reach the stage of final adjudication or unless by the invocation of theremedy first sought to be enforced, the plaintiff shall have gained an advantagethereby or caused detriment or change of situation to the other. 9 8t must bepointed out that ordinarily, election of remedies is not made until the judicial

proceedings has gone to judgment on the merits.:0

Consonant with these rulings, this Court, through /ustice /..F. Deyes, opinedthat while some American authorities hold that the mere initiation of proceedingsconstitutes a binding choice of remedies that precludes pursuit of alternativecourses, the better rule is that no binding election occurs before a decision on themerits is had or a detriment to the other party supervenes. :1 This is because theprinciple of election of remedies is discordant with the modern proceduralconcepts embodied in the Code of Civil 0rocedure which 0ermits a party to see-inconsistent remedies in his claim for relief without being re'uired to electbetween them at the pleading stage of the litigation. :

8t should be noted that the remedies pursued in the California case and in CivilCase +o. !3B$$ are not e?actly repugnant or inconsistent with each other. 8fever, they are merely alternative in view of the inclusion of parties in the lattercase who are not named defendants in the former. The causes of action,although they all stem from the erroneous transmittal of dollars, are distinct asshown by the complaints lengthily set out above. The bar of an election ofremedies does not apply to the assertion of distinct causes of action againstdifferent persons arising out of independent transactions. ::

As correctly pointed out by the petitioner, the doctrine of election of remedies isnot favored in the United States for being harsh. :4 8ts application with regard totwo cases filed in two different jurisdictions is also circumscribed by

jurisprudence on abatement of suits. Thus, in Broo7s )rection "o. v. 8illiam R.Montgomery & Associates, (nc ., :; it is held;

The pendency of an action in the courts of one state or country is not a bar to theinstitution of another action between the same parties and for the same cause ofaction in a court of another state or country, nor is it the duty of the court in whichthe latter action is brought to stay the same pending a determination of the earlier



action, even though the court in which the earlier action is brought has jurisdiction sufficient to dispose of the entire controversy. +evertheless,sometimes stated as a matter of comity not of right, it is usual for the court inwhich the later action is brought to stay proceedings under such circumstancesuntil the earlier action is determined.

1owever, in view of the fact that the California court wherein the case forrecovery of the ern property was first filed against the /aviers had stayedproceedings therein until after the termination of Civil Case +o. !3B$$, the courtbelow can do no less than e?pedite the disposition of said case.

e cannot dispose of this case without condemning in the strongest termspossible the acts of chicanery so apparent from the records. The respectiveliabilities of the respondents are still being determined by the court below. emust warn, however, against the use of technicalities and obstructive tactics todelay a just settlement of this case. The ta-ing advantage of the petitioner:smista-e to gain sudden and undeserved wealth is mar-ed by circumstances so

bra@en and shoc-ing that any further delay will reflect poorly on the -ind of justiceour courts dispense. The possible involvement of lawyers in this sorry schemestamps a blac- mar- on the legal profession. The 8ntegrated ar of the0hilippines 5807 must be made aware of the ostensible participation, if notinstigation, in the spiriting away of the missing funds. The 80 must ta-e theproper action at the appropriate time against all lawyers involved in anymisdeeds arising from this case.

1>D>*OD>, the resolution of September #), #$B! and the orders of October!B, #$B! and /uly $, #$B9 are hereby annulled. The lower court is ordered toproceed with dispatch in the disposition of Civil case +o. !3B$$, considering that

thirteen 5#47 years have gone by since the original erroneous remittance.

Service of this decision on the /avier spouses shall be in accordance withSection 3, Dule #4 of the Dules of Court. A copy of this decision shall be servedon the 8ntegrated ar of the 0hilippines.

The decision is immediately e?ecutory. Costs against private respondents.

SO OD%>D>%.

$utierre, Jr., -eliciano, Bidin and "ortes,JJ., concur.

ootnote!

# Dollo, p. #)#.

! Civil Case +o. !3B$$.



4) "olonial !easing "o. of *e/ )ngland, (nc. v. racy , 99" 0. !d 34$, !"3 Or. ##$4= /o#nson v. Dave:s Auto"enter , !9" Or. 46, 6"3 0. !d #$).

4# Radio/ealt#, (nc. vs. !avin, F#B934, April !", #$34, " SCDA B)6.

4! $iron vs. ousing Aut#ority of t#e "ity of +pelousas, supra.

44 American Savings and !oan Association of ouston v. Music7, 94# S.. !d 9B# citing "ustom !easing(nc. vs. e0as Ban7 & r. "o. of Dallas, 6$# S.. !d B3$.

46 *e/port *e/s S#ipbuilding and Dry Doc7 "o. vs. Director, +ffice of 8or7ers: "ompensation rogram,;.S. Dept. of !abor , 9B4 *. !d #!"4, certiorari denied $$ S. Ct. #!4!# 66) U.S. $#9, 9$ F. >d. !d 639;Strauss v. Di"icco, 6)B +.K.S. !d B#), 36 A.%. !d $"$= Mc"rary v. aylor , 9"$ S.. !d 46".

49 9"3 S.. !d !"4.

mellon bank v. magsino

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