CIVIL PROCEDURE TOPIC:

CASE TITLE: GR No.: 98177

BARFEL DEV’T CORP vs. Date: June 8, 1993
COURT OF APPEALS Ponente: PADILLA, J.
SUMMARY
As a general policy, liberality in allowing amendments is greatest in the early stages of a law suit, decreases as
it progresses and changes at times to a strictness amounting to a prohibition. This is further restricted by the
condition that the amendment should not prejudice the adverse party or place him at a disadvantage.
FACTS
An agreement to buy two parcels of land with houses erected on each was concluded between the parties at bar.
The subject properties were burdened by certain issues, such as mortgage annotated in favor of BPI and Deed of
Restrictions annotated at the back of the title. These issues, as alleged in the case at bar were not kept secret by the
defendants to the petitioners herein. The transaction progresses. It had not been long before it came to the knowledge
of the defendant (Victor S. Barrios) that petitioner (Barfel) had learned of a second mortgage on the property in favor
of PISO Bank in the amount of P2, 571, 400. Barrios adviced plaintiff that the second mortgage was reduced to
P54,000, he gave assurance upon the same and that he will submit the necessary documents to support the same
so that legal valid and acceptable arrangement could be worked out with PISO Bank for the release of the second
mortgage. The transaction progresses. It had not been long though before the became quite shaky for the parties at
bar. Malice, fraud and gross evident bad faith on the part of the defendant became more evident. Thus, the action
for specific performance with damages was instituted by the petitioner at bar. Pre – trial was concluded by the trial
court. Private respondents in the case at bar presented their evidence and rested their case but as it is now
petitioner’s turn of presenting evidence, private respondent filed a motion for a leave to file an amended complaint
and motion to admit the same. The amendment consisted of impleading PISO bank as additional party defendant
and compel it to accept payment of the existing second mortgage from private respondent Reginas, since allegedly
no complete relief can be had unless the second mortgage in favor of said PISO bank is released. Despite petitioners'
opposition, an order was issued by the trial court admitting the amended complaint. Motion for reconsideration was
denied as well which prompted petitioners to proceed to the Court of Appeals on a petition for certiorari and
prohibition raising the issue of whether an amendment to the complaint pleading a cause of action against a new or
additional party can be allowed after the private respondents had rested their case and petitioners had commenced
the presentation of their evidence. The CA sustained respondent’s contentions. The matter was then raised to the
Supreme Court. The Court observed that the CA erred in applying Rule 10 Section 3 of the Rules of Court in the
controversy at bar. The Court observed that the amendment in the case at bar was made with the clear intention to
cause delay and substantially alter private petitioner’s cause of action. The Court observed that the amendment will
bring into the case the controversy or dispute between PISO and the respondent herewith as to how much is still due
under the mortgage. The Court ruled in favor of the petitioner herewith as it granted the petition for review. The Court
reversed and set aside the decision of the CA and remanded the case to the court of origin for continuation of
presentation of evidence by petitioner herein. The Court maintained that to grant the inclusion of the respondent’s
controversy with PISO Bank as another cause of action in the case at bar would indeed change the theory of the
case, let alone delay the proceedings on the original case of action founded on specific performance with damages.
It is well to note that a complete relief by private respondents against petitioners may be had even if PISO/Central
Bank were not impleaded as party defendant in the original case. PISO is not an indispensable or necessary party
without whom no final determination can be had of the action for specific performance with damages. Moreover, the
amendment sought by private respondents, which is to include a new party defendant at a late stage in the proceeding
is not a formal but a substantial one. Private respondents will have to present additional evidence on the PISO second
mortgage. The effect would be to start trial anew with the parties recasting their theories of the case. The correct
amount of the second mortgage owed by petitioners to PISO bank (apparently a controverted point), would have to
be litigated and this could be time consuming.

As a general policy, liberality in allowing amendments is greatest in the early stages of a law suit, decreases as
it progresses and changes at times to a strictness amounting to a prohibition. This is further restricted by the
condition that the amendment should not prejudice the adverse party or place him at a disadvantage.

RULING OF LOWER COURTS

RTC: The RTC granted the respondent’s motion for a leave to file an amended complaint and motion to admit as an
additional party defendant PISO bank and compel it to accept payment of the existing second mortgage from private
respondent Reginas.
CA: The CA sustained respondent’s contentions as it agrees with the ruling of the RTC.

CONTENTION OF THE PARTIES

Respondents: PISO Bank is a proper party under Section 8 of Rule 3 of the Revised Rules of Court. For the
defendants Barfel Development Corporation and the spouses Barrios to be able to comply with its obligation under
the Agreement to Buy/Sell dated 19 June 1987 and the letter-agreement dated 9 July 1987 and the related Deed of
Sale, there had to be a determination of the amount really due PISO Bank and corresponding order for said bank to
accept the payment of plaintiff corporation to extinguish the obligation secured by the mortgage, before the
consummation of said transaction can be effected.

Petitioners: Intent to delay is clearly apparent with the course of action of respondents. The pretext given is that
PISO has to joined as a co-defendant so that it can be compelled to accept the payment of whatever would be
determined as the correct balance of the PISO mortgage. The amendment will bring into the case the controversy
or dispute between PISO and the petitioners as to how much is still due under the mortgage. But why is the dispute
brought out only now? It was not as if the private respondents learned of the dispute only at the time they sought
the amendment. As earlier pointed out when they filed the Complaint, they already knew about it.
ISSUE/S
Should the amendment be allowed in light of the liberality involving the same as mandated by the Rules of
Court?
RATIO
As a general policy, liberality in allowing amendments is greatest in the early stages of a law suit, decreases as
it progresses and changes at times to a strictness amounting to a prohibition. This is further restricted by the
condition that the amendment should not prejudice the adverse party or place him at a disadvantage.

RULING
SC: The Court reversed and set aside the decision of the CA and remanded the case to the court of origin for
continuation of presentation of evidence by petitioner herein. The Court maintained that to grant the inclusion of the
respondent’s controversy with PISO Bank as another cause of action in the case at bar would indeed change the
theory of the case, let alone delay the proceedings on the original case of action founded on specific performance
with damages.

RELEVANT PROVISIONS

Pajarillaga