BANK OF AMERICA NT & SA, PETITIONER, VS. COURT OF APPEALS, SECURITIES AND EXCHANGE COMMISSION, POTENCIANO ILUSORIO, JORGE GO, EDUARDO LOPEZ, EDGARDO T. KALAW, WILLIAM CARLOS UY,…

The Insular Bank of Asia and America
(IBAA) was established in accordance with a Memorandum of Agreement dated March 25, 1974 executed by three (3)
other banks, namely:  First Insular Bank
of Cebu, Bank of Asia, and
Bank of America NT & SA.  A fourth
bank, Dai-Ichi Kangyo Bank, acquired 10% of the issued capital stock of the new
bank shortly after its formation.^[1]

Some four years later, or more precisely on July 19, 1978, a
class action was commenced in the Securities & Exchange Commission against
(a) Bank of America NT & SA (hereafter simply BA), (b) Andrew Gotianun, and (c) six (6) other unknown defendants said to
be relatives of Gotianun and identified only as Mario
Doe, Danilo Doe, etc. 
The complaint described defendant Gotianun,
and his relatives “and their corporations” as owning and controlling
the Family Savings Bank, referred to them collectively as the “Family
Savings Bank Group.”^[2]
Also included among the defendants as “nominal party” was Manuel Escaler, the Corporate Secretary of IBAA.  The class suit was brought by about 40
persons, Potenciano Ilusorio,
Conrado Alcantara,
etc.  (private respondents herein),
allegedly constituting “a majority of the successors in interest of the
former Bank of Asia,” and calling themselves the ASIA GROUP.  The plaintiffs averred that since the subject
matter of the suit was “of common interest to all the stockholders of the
Insular Bank of Asia and America (IBAA),” and said stockholders “are
so numerous that it is impracticable to bring them all before the
Commission,” their complaint was being filed in their own behalf and in
behalf of “all other stockholders of INSULAR BANK OF ASIA AND AMERICA
similarly situated” as they.^[3]

In the complaint, BA was charged, essentially, with having violated
the Agreement of March 25, 1974 stipulating inter alia that “none of the parties * * shall sell their shares in
the consolidated bank to any other party without first offering the shares
proportionately to the other two or their nominees . . .” The basic
accusation against Gotianun and his Family Savings
Bank Group, on the other hand, was that, although aware of the Agreement of
March 25, 1974 and “in complete and utter disregard and violation
thereof,” they had induced their co-defendant BA “to sell to them, as
in fact they claim they have purchased, the IBAA shares of defendant BA.”^[4]
That illicit transfer, the complaint alleged, had made all said defendants
(except Escaler) liable to the plaintiffs for actual,
moral, and exemplary damages, as well as attorney’s fees, in the aggregate sum
of not less than P 16,000,000.00.^[5] The class action was docketed as SEC
Case No. 1613.

Answers were filed in due course by the defendants, and trial
commenced on the issues thus raised.

In the course of the proceedings, three (3) orders of SEC
Associate Commissioner Sixto de Guzman were rendered
and then challenged before this Court through special civil actions of certiorari.

The first was an Order dated September 17, 1979 which basically:^[6]

“(a) Indefinitely prohibited the Vice Chairman of the Board of
IBAA from exercising the functions of the chairman and presiding over meetings
in the latter’s absence;

(b)   Restricted the scope of
the duties and functions of the Executive Vice President;

(c)  Declared as suspended
all resolutions of the board which would increase or otherwise change the
participation of the respective representation of the various groups therein
prior to their adoption;

(d)  Directed that
‘henceforth no movements of officers, directors and members of the executive
committees may be made without prior consultation with and/or approval by this
Commission;’

(e)  Recognized the
continuing validity of the ** Memorandum of Agreement dated 25 March 1974.”

The order was impugned in two petitions filed in this Court by
“Benjamin Limso and Luis Aboitiz,
Jr., et al., representing the Insular Group in IBAA, ** docketed as G.R. No. 51678 and G.R. No. 51651,
respectively.”^[7]

The second order contested in this Court was a temporary
restraining order issued ex parte by Commissioner
de Guzman on July 19, 1978,
“preventing the enforcement for the time being of the sale complained of
and the exercise of rights thereunder.”^[8]
Invalidation thereof was sought through two other petitions subsequently filed
by Gotianum and BA on March 31, 1980 and April 8,
1980, respectively, it being alleged that Commissioner de Guzman had
“unjustifiably refused to act on the Motions to Lift/Dissolve ** (said
order of July 19, 1978)” separately presented by Gotianun
and BA in December, 1979.^[9]
The petitions were docketed in
this Court as G.R. No. 53493 and 53543, respectively.^[10]
In these cases, this Court issued on April 21, 1980 an injunctive writ, upon
bonds of P1 million each posted by BA and Gotianun,
forbidding Commissioner de Guzman to give “continued effect and force to
the ** Temporary Restraining Order of 19 July 1978,” and directing him
“to return to ** Gotianun all the certificates
of stock covering the IBAA shares in dispute for the purpose of registration of
the sale in the name of ** (said) Gotianun in the
corporate books **, save that no subsequent sale or assignment of his rights by
virtue thereof may be made without prior approval of the Court.”^[11]

The third order was that promulgated ex parte on December 17, 1979, abolishing the
IBAA board of directors and creating a management committee with the same
composition as the abolished board except that the four directors representing
BA were replaced.  The order was issued
on petition of the ASIA Group on the ground that BA, having wholly sold its
IBAA stocks, had no more interest in IBAA and would even be benefited if IBAA
suffered business paralyzation or losses.^[12]
This order was attacked by Gotianun through petitions
in intervention in G.R. Nos. 51651 and 51678, which were admitted. The petitions
in intervention theorized that the order was issued without power, and without
due process of law, besides being confiscatory. 
This Court issued a temporary restraining order enjoining implementation
of the Order of December 17, 1979.^[13]

After some time, a joint motion dated September 25, 1985 was
filed with the Securities and Exchange Commission in Case No. 1613 by the
plaintiffs therein (the ASIA GROUP, Potenciano Ilusorio, et al.), and one of the defendants, Andrew Gotianun, praying for the dismissal:  (1) of the complaint as against defendant
Andrew Gotianun in toto and with
prejudice, as well as (2) of Gotianun’s
“counterclaim against plaintiffs in toto and with
prejudice, ** (both) without pronouncements as to costs and attorney’s
fees.” The joint motion set out the following additional stipulations:

“4.  Plaintiffs hereby
reserve their right to pursue all their causes of action pleaded in the
complaint against Bank of America NT & SA, it being the position of the
plaintiffs that the defendants Bank of America NT & SA and Andrew Gotianun were sued on different causes of action (i.e.,
plaintiffs sued defendant Bank of America NT & SA for violation of contract
and sued defendant Andrew Gotianun for tort).  Furthermore, plaintiffs contend that
defendants Bank of America NT & SA and Andrew Gotianun
are not indispensable parties to the adjudication of the distinct, separate and
independent causes of action pleaded against
each one.  The plaintiffs, however, waive
their cause of action for rescission/annulment of the subject sale of IBAA
shares of stock by Bank of America NT & SA to Andrew Gotianun.  Defendant Andrew Gotianun
likewise reserves his right to pursue his cross-claim against defendant Bank of
America NT & SA.

5.   The parties ** (further)
agree and undertake to file immediately appropriate motions for the
withdrawal/dismissal with prejudice and without pronouncements as to costs and
attorney’s fees, all related cases now pending between them with the Supreme
Court.”

On the same day, September 25, 1989, the lawyers of petitioners
Benjamin Limso and of Eduardo Aboitiz,
et al., together with the lawyers of Andrew Gotianun,
and of Potenciano Ilusorio,
et al. (the ASIA GROUP, supra), filed with this Court separate
motions jointly praying for the dismissal of G.R. No. 51651 and G.R. No. 51678,
respectively, “with prejudice and without pronouncement as to costs and
attorney’s fees, the said parties having settled amicably the disputes between themselves
involved in SEC Case No. 1613 thereby rendering (the proceedings in both cases)
moot and academic.”^[14]

Another joint motion bearing the same date, September 25, 1985,
was also filed in this Court by the attorneys of Andrew Gotianun
and the ASIA GROUP, in G.R. No. 53493, also asking for the dismissal of the
petition “with prejudice and without pronouncement as to cost and
attorney’s fees, said parties having settled amicably all disputes between
themselves involved in SEC Case No. 1613 thereby rendering moot and academic
the above-entitled proceedings before this Honorable Court.”^[15]The
joint motion further stipulated that –

“Private respondents (i.e., the ASIA GROUP:  Potenciano Ilusorio, et al.)
hereby waive and renounce, absolutely and irrevocably, the restriction imposed,
for their benefit, by this Honorable Court in its Resolution of 21 April 1980
that petitioner may not sell or assign the IBAA shares in dispute without prior
approval of this Court,’ and private respondents, by reason of the amicable
settlement, now recognize the right of petitioner (Gotianun)
to enjoy and dispose of said shares of stock without other limitations than
those established by law.”

G.R. Nos. 51651, 51678 and 53493, were accordingly dismissed as
prayed for, by Resolution of this Court dated October 1, 1985.^[16]
With the dismissal of those three (3) cases, only G.R. No. 53543 was left
pending with this Court.

Said G.R. No. 53543 was decided by the Court en banc by
Resolution promulgated on November 5,
1985.  The resolution annulled
and set aside the SEC TRO of July 19,
1978 “effective as of April
21, 1980, when this Court enjoined the continued enforcement of the
said TRO.” The resolution^[17]
declared that it was not possible under the facts “to hold that the SEC
TRO of July 19, 1978 was, as of that time, issued by respondent (Associate
Commissioner) de Guzman with grave abuse of discretion,” there being then
“a prima facie showing that the plaintiffs in SEC
Case No. 1613 were entitled to an injunctive relief.” However, the Resolution
went on to say,

“The setting ** was altogether different 17 months later,
i.e., in December 1979, when motions to lift the SEC TRO of July 19, 1978 were filed in SEC Case
No. 1613.  The issues raised in the
motions were dependent upon factual questions on which extended hearings had
been held and evidence taken in SEC, aside from the numerous memoranda
submitted by the parties.  It may be
presumed that by and large, the SEC was then already in a position to act on
the motions, but it tarried and allowed protracted quibbling which effectively
extended the life of the TRO that had long been issued without the benefit of
hearing and without bond.  Its inaction
was an evasion of positive duty to resolve the motions with all deliberate
speed, amounting to a grave abuse of discretion under the circumstances and violative of the rule which frowns upon prolonged or
indefinite ‘temporary restraining
orders’ issued ex parte.  (See Board of Transportation vs. Castro, 125
SCRA 410).  Incidentally, it was the same
policy considerations which impelled the subsequent issuance on April 16,
1982 of Presidential
Decree No. 114 fixing twenty days as the maximum duration of an ex
parte restraining order and providing for its automatic termination.”

Now, with regard to the joint motion to dismiss in SEC Case No.
1613, an opposition was submitted by BA, dated October 4, 1985.^[18]
BA contended that the dismissal (1) of the complaint as against Gotianun and (2) of the latter’s counterclaim should not be
granted unless the complaint and Gotianun’s
cross-claim were also dismissed as
against BA.  BA argued that by thus moving for
dismissal, plaintiffs had “effectively conceded that the subject sale was
a lawful and valid sale and was not tainted with any legal infirmities,”
and “if the sale is considered valid and effective as against the buyer,
Andrew Gotianun, then it must likewise be considered
valid and effective as against the seller, BA,” what was involved being
“a single, indivisible sales transaction by virtue of which ** Gotianun acquired ownership from BA of the subject
shares,” and plaintiffs’ causes of action against BA and Gotianun “are not distinct, separate and
independent.” BA also pointed out that if the complaint against Gotianun were dismissed and the case against BA allowed to
proceed, Gotianun would be an indispensable party,
for if it were subsequently found that plaintiffs’ right of first refusal had
indeed been violated by BA, “the logical result arising from such a
finding is that the sale of the subject shares must be annulled or declared
invalid,” and the subject shares would have to be reverted to BA and the
purchase price thereof, returned by BA to Gotianun.

The opposition was overruled. 
By Order dated October 29,
1985, the SEC granted the joint motion and DISMISSED, with
prejudice, the complaint against defendant Andrew Gotianun
and the latter’s counterclaims against the plaintiffs in SEC Case No. 1613 —
leaving the action to proceed only as between the ASIA GROUP and BA.^[19] It found “the joint motion not to
be contrary to law, morals, good customs and public policy,” and declared
that since this Court, in the Resolution of October 1, 1985, supra, had dismissed G.R. Nos. 51651, 51678 and 53493 “for being
moot and academic because ‘the parties have settled amicably all disputed
between themselves,'” it had “no other alternative but to grant the
joint motion to dismiss.” BA moved for reconsideration.  Its motion was denied, by Order dated January 22, 1986.^[20]

BA went to the Court of Appeals. 
It filed with that Court a petition for certiorari under Rule 65 of the Rules of Court,
praying for invalidation of the Orders of October 29, 1985 and January 22, 1986 in SEC Case No. 1613.^[21]

The ASIA GROUP moved to dismiss the petition.  It contended that the orders sought to be annulled
had long become final, and the SEC had in truth acted in accordance with law.^[22]

The Court of Appeals dismissed the petition by a Resolution dated
January 8, 1987.^[23]
It ruled that –

1) the order of dismissal promulgated by the SEC on October 29,
1983 was a final one; appeal was available; for certiorari to lie, it must be shown that there
is no appeal or other plain, speedy and adequate remedy in the ordinary course
of law; where an appeal is lost for failure to take it timely, a special civil
action for certiorari cannot
substitute therefor;

2) even if the order were interlocutory, still certiorari would not lie because the order was
issued in the proper exercise of jurisdiction and  without grave abuse of discretion;

3) BA failed to exhaust its administrative remedies before
resorting to the special civil action of certiorari; it failed to appeal the order of
October 29, 1983 to the SEC en banc; and

4) laches had set in against BA; it
waited for 107 days from denial of its motion for reconsideration before it
filed its certiorari suit,
on May 9, 1986.

BA is before this Court once again, this time on an appeal by certiorari under Rule 45 from the judgment of
the Court of Appeals above mentioned.  It
brands as reversible error the conclusions of the Court of Appeals just described.  It also faults said Court for not passing upon the merits of its cause, i.e.,
that BA and Gotianun had been sued under a common cause of action; they are
indispensable parties in SEC Case No. 1613; the ASIA GROUP cannot waive its
right to proceed against Gotianun without likewise
waiving its right to proceed against BA, and the benefit of a dismissal of the
proceedings against Gotianun must necessarily extend
to and inure to the benefit of BA.

Whether from the adjective or the substantive aspect, BA’s
contentions lack merit.  They must be as
they hereby are rejected.

The concept of a final order or judgment is well known.  It is one that finally disposes of a case,
leaving nothing more to be done by the court (or quasi-court) in respect
thereto.^[24]
The challenged SEC Order of October
29, 1985 was such a final order, in the sense that it finally
disposed of the case as between the plaintiffs, the ASIA GROUP, and defendant
Andrew Gotianun and his relatives and business
partners.  It left nothing more for the
SEC to adjudicate in so far as the case affected the ASIA GROUP vis a vis Andrew Gotianun
and his group.

Implicit in the order of dismissal of the action as between the ASIA
and Gotianun groups — leaving the action to proceed
as between the ASIA GROUP and BA — is the proposition that the interest of the
Gotianun Group is distinct and severable from that of
BA, making applicable the rule set forth in Section 4, Rule 36 of the Rules of
Court on several judgments, viz.:

“SEC. 4.  Several judgments.–In an action against several defendants, the court may, when
a several judgment is proper, render judgment against one or more of them,
leaving the action to proceed against the others.”

Of course the party aggrieved by such a “several” or
separate judgment may disagree with the Court as to its propriety, in which
case he may seek its reversal by appealing therefrom.^[25]
But it is appeal that is the remedy against a final order or judgment,^[26]
not a special civil action of certiorari under Rule 65.  Appeal is
in fact antithetical to the special civil action of certiorari.  Section 1, Rule 65 clearly and explicitly
lays down the rule that certiorari
is proper only if “there is no appeal, nor any plain, speedy and adequate remedy in the ordinary course of
law;” and the rule has been consistently applied except only in those rare
instances where appeal is satisfactorily shown to be an inadequate remedy under
the circumstances.^[27]

In the case at bar, BA did not appeal, either to
the Commission en banc or to the Court of Appeals.  Actually, the law is that from an adverse
judgment or order of a Commissioner, an appeal may be taken to the Commission en
banc,^[28] and thence, to the Court of Appeals.^[29]
There is no showing whatever in this case that such an appeal could not have
been taken by BA on account of some insuperable cause, or that it would not
have been adequate in the premises.  BA
simply failed to avail, within the prescribed period, of that plain remedy
indicated by law from the adverse Order of October 29, 1985. 
As a result, the final Order of October 29, 1985 became final,^[30] and unalterable.

Having become final because never appealed, the Order of October 29, 1985 may no longer be
modified in any substantial respect.  The
issues thereby resolved may no longer be re-litigated.  Any attempt to do so through another action
or proceeding would be barred by the familiar doctrine of res adjudicata, even if the subsequent proceeding resorted to were the special
civil action of certiorari under
Rule 65.  Well known is the rule,
too, that certiorari as
a special civil action may not be resorted to as a substitute for a lost appeal
^[31]— whether the appeal prescribed by law
be by certiorari or by
writ of error.^[32]

Moreover, it seems quite indubitable that the cause of action of
the ASIA GROUP against BA is distinct and separate from its cause of action
against the latter’s co-defendants, the Gotianun
Group.  The violation by BA of its
contractual commitment under the Agreement of March 25, 1974, not to sell its stock in IBAA to any third person without first
offering it to the other parties to the agreement, is what constitutes ASIA GROUP’s cause of action against it.  On the other hand, the act of the Gotianun Group of inducing BA to sell, and actually
purchasing, its IBAA stock, despite
awareness of the provisions of the
Agreement, is what the complaint states to be the cause of action against
said Gotianun Group, from which allegation it is
necessarily inferred that if the Gotianun Group were
in reality unaware of the agreement, no cause of action could arise against
it.  In other words, it is not alone the
act of negotiating for, and subsequently consummating, the purchase of BA’s
stock in IBAA that would make the Gotianun Group
liable to the ASIA GROUP, but also the Gotianun
Group’s knowledge of the right of first refusal stipulated in the agreement; so
that the absence of such knowledge would remove any basis for holding the Gotianun Group responsible in damages to the ASIA
GROUP.  Stated otherwise, BA’s act of
selling its stock to the Gotianun Group without first
having offered it for sale to ASIA GROUP or the other parties to the Agreement
of March 25, 1974, is a
breach of the agreement and makes it liable in damages to said parties.  It does not however make the Gotianun Group necessarily liable; it would be liable only
if it bought the stock with knowledge of the prohibition in the agreement, not
if it was unaware thereof.  This was
indeed this Court’s view of the parties’ situation, pronounced in its
Resolution of November 5, 1985
in G.R. No. 53543,^[33]
viz.:

“(b) Gotianun allegedly was aware of
the stipulation in the Consolidation Agreement that the majority of the
successors in interest of the former stockholders of the defunct ASIA
(who have become IBAA stockholders) or their nominees had the right of first
refusal.  If really such was the case, Gotianun — in the absence of a waiver of said right —
could not be deemed a buyer in good faith. 
Conversely, if Gotianun was not aware of
ASIA Group’s right of first refusal, when he bought the BA shares in 1978, he
could claim to be a buyer in good faith regardless of whether there was a
waiver or not **.”

The waiver, therefore, of ASIA GROUP of its cause of action
against the Gotianun Group — evidently founded on
the acknowledgment that the latter had no knowledge of the right of first
refusal stipulated in the Agreement of March
25, 1974 — had no relevance and no possible effect on the ASIA GROUP’s right to proceed against BA for violation of such
right of first refusal.  Hence, the
correctness of the rendition by the SEC of the order approving the compromise
agreement between the ASIA and Gotianun Groups and
dismissing the former’s complaint against the latter
— an order in the nature of a several or separate judgment in accordance with
Section 4, Rule 36 of the Rules of Court, supra– cannot thus be gainsaid.

Besides, it would seem an obvious proposition that a plaintiff
has the right to choose which of several persons to implead
as defendants in, or to drop from, his complaint.  None of the defendants has the right to
compel said plaintiff to prosecute the action against a party if he does not
wish to do so.  Of course, the plaintiff
will have to suffer the consequences of any error he might commit in exercising
his option.  For the defendant that he
does not implead, or drops from the action, may well
be an indispensable party, in which event his action will have to be dismissed,
since according to the law, no final adjudication can be had of the action
without such an indispensable party.^[34]
The remedy of a co­-defendant who is not dropped, therefore, is not to insist
that the plaintiff continue to prosecute his action against the dropped
defendant, but to move for dismissal of the action against himself, or take
such appropriate action as might otherwise be proper.

WHEREFORE, the petition for review on certiorari
is DENIED, with costs against the petitioner.

SO ORDERED.

Gancayco and Medialdea, JJ., concur.

Cruz, J., no part.  Counsel in G.R. No. 51651.

Griño– Aquino,
J., on official leave.

^[1]  Rollo, pp.
8-9

^[2]
Id., p. 84

^[3]
Id., pp. 9; 83, 84 et seq.

^[4]
Id., pp. 90-91

^[5]
Id., pp. 93-95

^[6]
Id., p. 10

^[7]
Id., pp. 10-11.  The cases were deemed submitted for decision
in a Resolution dated November 10,
1980.

^[8]
Id., p. 9

^[9]
SEE Rollo, pp. 190-191

^[10]
Id., pp. 11-12

^[11]
Id., pp.12, 135-137

^[12]
Id., p. 192

^[13]
Id., p. 193

^[14]
Id., pp. 139-143

^[15]
Id., pp. 143-144

^[16]
Id., pp. 155-156

^[17]
Id., pp. 173-174, 186-196

^[18]
Id.,  pp.
147-153

^[19]
Id., pp. 154-156

^[20]
Id., p. 185

^[21]
Id., pp. 197-228

^[22]
Id., pp. 229-237

^[23]
Written for the Court by Coquia, J., with whom concurred Luciano and Cui, JJ.

^[24]
SEE Investments, Inc. v. Tobacco Industries, Inc., and Court
of Appeals (and cases therein cited), 147 SCRA 334 (1987)

^[25]
SEE Santos v. Pecson,
et al. (Dissenting Opinion), 79 Phil. 261, 165, 170,
cited in Feria, J., Civil Procedure, 1969 ed., p. 499

^[26]
Sec. 2, Rule 41, Rules of Court

^[27]
SEE Pan Realty Corp. v. C.A.,
et al. (and cases therein cited), G.R. No. 47726, Nov. 23, 1988

^[28]
PD 902-A, Sec. 6

^[29]
SEC. 29, B.P. Blg.
129

^[30]
This is not a mere play on words; it is a juridical actuality.  A “final” judgment (in the sense of
one that finally disposes of a case, leaving nothing more to be done by the
court as to its merits, and is therefore appealable)
becomes “final” “upon expiration of the period to appeal therefrom, if no appeal has been duly perfected” or,
an appeal therefrom having been taken, the judgment
of the appellate tribunal in turn becomes final and the records of the case are
returned to the court of origin.  Such a
judgment that has become “final,” is then correctly categorized as a
“final and executory judgment” in respect
to which, as the law explicitly provides, “execution shall issue as a
matter of right.” Investments, Inc. v. C.A.,
G.R. No.60036, Jan. 27,
1987, supra

^[31]
Mercado v. C.A., 162 SCRA 75; De la Cruz v. IAC, 134 SCRA 417; Balagtas Realty Corp. v. Romillo,
Jr., 130 SCRA 415; Lobete v. Sundiam, 123 SCRA 95

^[32]
SEE Pan Realty Corp. v. C.A.,
et al. (and cases therein cited), G.R. No. 47726, Nov. 23, 1988, supra

^[33]
SEE fonote 17
and related text, at pp 5-6. supra

^[34]
Sec 7, Rule 3; SEE Lim Tanhu v. Ramolete, 66 SCRA
231