Enriquez vs. Ramos

A prior action for the recovery of a down payment made by check does not constitute splitting of a single cause of action where the foreclosure suit concerns a separate and distinct debt — the unpaid mortgage balance — secured by real estate mortgage. The two claims arise from different obligations and are therefore independent causes of action.

Rodrigo Enriquez and the spouses Urbano Dizon and Aurea Soriano de Dizon were the owners of eleven parcels of land in Bago Bantay, Quezon City, covered by certificates of title. Socorro A. Ramos purchased these parcels for P101,000, paying P5,000 down (P2,500 in cash and P2,500 by check drawn against the Philippine National Bank) and agreeing to pay the P96,000 balance within ninety days. The balance was secured by a mortgage over the eleven parcels, with an additional mortgage on a lot in the Malinta Estate executed by Ramos as attorney-in-fact of her children and as judicial guardian of her minor child. The mortgage contract was notarized on 24 November 1958.

On 24 November 1958, Rodrigo Enriquez and the spouses Urbano Dizon and Aurea Soriano de Dizon sold to Socorro A. Ramos, by a notarial deed of even date, eleven parcels of land situated in Bago Bantay, Quezon City, covered by their corresponding certificates of title, for the stipulated price of P101,000. The vendee paid P5,000 down — P2,500 in cash and P2,500 by a check drawn against the Philippine National Bank — and agreed to satisfy the balance of P96,000 within ninety days. To secure the said balance, Ramos, in the same deed of sale, mortgaged the eleven parcels in favor of the vendors. By way of additional security, Ramos, acting as attorney-in-fact of her children Enrique, Antonio, Milagros, and Lourdes, and as judicial guardian of her minor child Angelita Ramos, executed another mortgage on Lot No. 409 of the Malinta Estate.

Ramos stopped payment on the P2,500 check issued as part of the down payment. On 24 February 1959, the vendors filed an action against her in the Court of First Instance of Manila for the recovery of the P2,500 represented by the dishonored check. Thereafter, because of the vendee-mortgagor's failure to comply with some conditions of the mortgage, the vendors-mortgagees filed a separate action for foreclosure in the Court of First Instance of Quezon City on 29 April 1959.

Ramos moved to dismiss the foreclosure action, alleging that the plaintiffs had previously filed the Manila suit for the P2,500 check, that the mortgage debt was already accrued and demandable at the time the first suit was filed, and that the plaintiffs were therefore guilty of splitting a single cause of action. Upon opposition by the plaintiffs, the motion to dismiss was denied, but Ramos repleaded the same averments as a special defense in her answer. After trial, on 16 December 1959, the Court of First Instance of Quezon City rendered judgment against Ramos, ordering her to pay P96,000 with 12% interest from 24 February 1959 until payment, 10% of the amount due as attorney's fees, and the costs of the suit, and further decreeing the foreclosure sale of the mortgaged properties in case of non-payment within ninety days. Ramos appealed directly to the Supreme Court on points of law.

• Splitting of Cause of Action: Ramos argued that the plaintiffs had previously filed an action against her in the Court of First Instance of Manila on 24 February 1959 for the recovery of P2,500 paid by check as part of the down payment, and that at the time the first suit was filed, the mortgage debt was already accrued and demandable. She maintained that the plaintiffs were guilty of splitting a single cause of action, and that under section 4 of Rule 2 of the Rules of Court, the filing of the first action was a defense that could be pleaded in abatement of the second suit.
• Absence of Fixed Period: Ramos insisted that the obligation not having fixed a period, although one was intended, the court below should have first set a date of maturity before ordering payment or foreclosure.

• Splitting of Cause of Action: Whether the prior filing of an action for recovery of P2,500 paid by check constitutes splitting of a single cause of action such that the subsequent foreclosure suit should be dismissed under section 4 of Rule 2 of the Rules of Court.
• Maturity Date of the Obligation: Whether the mortgage contract failed to fix a period of maturity for the P96,000 obligation, thereby requiring the court to set a due date before ordering payment or foreclosure.

• Splitting of Cause of Action: No. The P2,500 claim was a distinct debt not covered by the mortgage security, arising from the unlawful stopping of payment on a check, while the foreclosure action concerned the non-payment of the P96,000 balance guaranteed by the mortgage. The two causes of action being different, section 4 of Rule 2 does not apply.
• Maturity Date of the Obligation: No. The stipulation that the obligation was payable within ninety days from the date of the contract, with 12% interest per annum in case of default, clearly fixed a date of maturity; the 12% stipulation was merely a penalty designed to induce timely payment.

• Splitting of Cause of Action: The first complaint filed against Ramos in the Court of First Instance of Manila was based on her having unlawfully stopped payment of the P2,500 check she had issued in favor of the vendors. The complaint in the foreclosure action, by contrast, was for non-payment of the P96,000 balance guaranteed by the mortgage. The P2,500 claim was a distinct debt not covered by the security; and since the mortgage was constituted on lands situated in Quezon City, the vendors could not seek foreclosure in the Manila courts. The two causes of action being different, section 4 of Rule 2 — which bars the splitting of a single cause of action — does not apply. The foreclosure suit was therefore properly entertained independently of the earlier collection action.
• Maturity Date of the Obligation: The mortgage contract expressly stipulated that the P96,000 obligation was to be "without interest, payable within ninety (90) days from this date, provided that in case of default it shall bear interest at the rate of 12% per annum." This provision clearly fixed a date of maturity — ninety days from the date of the contract. The stipulated 12% interest in case of default was nothing more than a penalty designed to induce the debtor to pay on or before the expiration of the ninety-day period. There was thus no indeterminate period requiring judicial intervention to set a due date before ordering payment or foreclosure.

• Splitting a Single Cause of Action — Under section 4 of Rule 2 of the Rules of Court, a party may not split a single cause of action into separate suits; the filing of one action on a claim operates as a bar to any subsequent action on the same claim. In this case, the Court clarified that the doctrine applies only where the two suits arise from the same cause of action. Where the claims are distinct debts — one arising from the dishonor of a check and the other from non-payment of a mortgage balance — there is no splitting, even if both relate to the same underlying sale transaction. The test is whether the claims are the same in substance, not merely whether they originate from a common transaction.

• "The claim for P2,500.00 was, therefore, a distinct debt not covered by the security; and since the mortgage was constituted on lands situated in Quezon City, the appellees could not ask for its foreclosure in the Manila courts. The two causes of action being different, section 4 of Rule 2 does not apply." — This passage articulates the ratio decidendi on the splitting issue: the two claims were distinct debts, and venue constraints independently justified separate filings.

• "clearly fixes a date of maturity, the stipulated twelve per cent in case of default being nothing more than a penalty, designed to induce the debtor to pay on or before the expiration of the ninety (90) days." — This defines the Court's interpretation of the mortgage stipulation: a fixed ninety-day period constitutes a definite maturity date, and the default interest rate functions as a penalty clause rather than evidence of an indeterminate term.

• Section 4, Rule 2, Rules of Court — Provides that if two or more suits are instituted on the basis of a single cause of action, the filing of one operates as a bar to the others. The Court held this provision inapplicable because the P2,500 check claim and the P96,000 mortgage foreclosure were distinct causes of action arising from different debts.

Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Barrera, Paredes, Dizon, Regala, and Makalintal, JJ., concur.