Keramik Industries Inc. vs. Hon.

Buenaventura Guerrero (as presiding judge of CFI Rizal Branch 14) and GSIS
Ponente: Aquino, J. DOCTRINE: Motion for submission of amended complaint with alternative cause of action, when not dismissible: The motion for submission of an amendment complaint with an alternative cause of action, when the latter does not change the theory, and is related to the major premise, of the complaint to be amended should not be dismissed. To do so would be tantamount to making the complainant file a separate action for the same issue, and is repugnant to the discouragement against multiplicity of suits. QUICK FACTS: Keramik defaulted on its loan from the GSIS, which then foreclosed on Keramik's mortgages. Keramik sued for nullification of extrajudicial foreclosure or, alternatively, for return of the extra 2M above Keramik's debt that GSIS earned at the sale. Keramik later moved, since the properties were destroyed by a storm, to amend the complaint so that the alternative claim was to let the insurance cover their indebtedness. RTC denied, SC overturned, allowed motion. FACTS: Nature: Special civil action for certiorari with the Supreme Court from a decision of the Court of First Instance of Rizal in Pasig. Plaintiff: Keramik Industries Inc. Respondent: Judge Guerrero and GSIS Facts: - On 7 Oct 1964, Keramik Industrial Inc. obtained a loan from the GSIS amounting to 2.4M pesos. To secure it, Keramik mortgaged several properties, including lands and machineries, to GSIS. Keramik subsequently defaulted. - On 2 Mar 1971, public auction was for the foreclosed properties. GSIS was the highest bidder at 5,129,145 pesos. Its claim against Keramik at the time was 3,461,138.09 pesos. - On 17 Aug 1972, Keramik sued GSIS in the CFI of Rizal. It asked for either nullification of the extrajudicial foreclosure or, in the alternative, that GSIS pay it 1,668,006.91 pesos which was allegedly the difference between GSIS' bid and the actual mortgage debt. Other minor reliefs were sought. The GSIS answered the complaint. No pre-trial has as yet been held. - On 26 Mar 1974, Keramik filed a motion for the admission of its amended complaint. The amendment refers to the insurance in the sum of P2,400,000 which Keramik had allegedly secured from the GSIS for the mortgaged buildings, machineries and equipment. The insurance was an additional security for the loan. Keramik alleged that it inadvertently failed to mention in its original complaint the insurance and that typhoon Yoling totally damaged the insured properties. Its alternative contention was that the proceeds of the insurance and the excess premiums paid should be deducted from its indebtedness because the GSIS was in effect both the insurer and the insured. The GSIS opposed, supposedly because the amendment altered the plaintiff's causes of action by injecting "new, distinct and entirely foreign causes of action". - On 31 May 1974, the lower court, in its minute order sustained the opposition and denied the admission of the amended complaint. Keramik went directly on certiorari to the SC, claiming grave abuse of discretion by the CFI in not admitting its complaint. ISSUE: WoN the amended complaint is admissible. DECISION: Yes. HELD:

Keramik's alternative cause of action is predicated on the major premise that the GSIS, as mortgagee, should not enrich itself unjustly at its expense. Keramik's theory is that the mortgaged properties and the proceeds of the insurance were more than sufficient to cover its aggregate debt to the GSIS and the latter should therefore, as bidder at the foreclosure sale, refund to the mortgagor the difference between bid price and actual debt. The amended complaint regarding the insurance did not change Keramik's theory of the case and did not introduce a new cause of action. The causes of action remained the same. The prayers of the two complaints are the same. The new matter only amplified or enlarged Keramik's alternative cause of action for the recovery of the surplus or excess (Sec. 4, Rule 68 ROC). Whether Keramik's theory is sustainable would depend on evidence and applicable law. To deny the admission of Keramik's amended complaint would mean it has to bring a separate action to compel the GSIS to credit the proceeds of the insurance against its mortgage debt. That would be repugnant to the rule discouraging multiplicity of suits. A separate action for that purpose would amount to splitting a cause of action. To allow the amendment would further justice and would not prejudice the GSIS since it could controvert the new matters constituting the amendment in an amended answer and during the trial.