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SECOND DIVISION G.R. No.

131175 August 28, 2001

SPOUSES JOVITO VALENZUELA and NORMA VALENZUELA, SPOUSES ALFREDO QUIAZON and BELLA GONZALES QUIAZON, SPOUSES EDUARDO DE GUZMAN and JULIETA DE GUZMAN, DE GUZMAN DEVELOPMENT CORPORATION, SKYFREIGHT BROKERAGE, INC., ATTY. ROMULO R. BOBADILA and WEB-HEGG CONSTRUCTION RESOURCES, INCORPORATED, petitioners, vs. HONORABLE COURT OF APPEALS and SPOUSES MANUEL T. DE GUIA and LETICIA MARIANO DE GUIA and the REGISTER OF DEEDS OF PARAAQUE CITY, METRO MANILA, respondents. BUENA, J.: In resolving the propriety of the amendment of the complaint in the present case, which motion to amend was filed after the lapse of fifteen years from the filing of the initiatory pleading sought to be amended, this Court painstakingly considered not only the peculiar circumstances obtaining, but also accorded premium to the legal truism that "adjective law is not the counterfoil of substantive law" and that the rules of procedure must not be perverted into engines of injustice.1 Sought to be reversed in the instant petition for review on certiorari is the decision2 of the Court of Appeals dated 15 August 1997 in C.A. G.R. SP. No. 44185, which nullified and set aside the orders dated 11 November 19963and 06 February 1997 of the Regional Trial Court (RTC) of Pasay City, Branch 231, in Civil Case No. PQ-9412-P. The subject orders of the RTC denied private respondents' motion to admit amended complaint dated 18 March 1997. Similarly impugned is the resolution4 of the Court of Appeals dated 24 October 1997, denying private respondents' motion for reconsideration. The factual antecedents and proceedings unfold. On 10 September 1981, herein private respondents spouses Manuel and Leticia De Guia filed a complaint forspecific performance and damages docketed as Civil Case No. PQ-9412-P5 against herein petitioners spouses Jovito and Norma Valenzuela before the then Court of First Instance of Rizal in Pasay City. The complaint prayed, among others, that the Spouses Valenzuela be ordered to execute in favor of private respondents the necessary deed of sale covering the two (2) parcels of land allegedly subject of a contract to sell between said parties. On 16 September 1981, private respondents spouses De Guia, upon discovering that the subject real properties were sold and transferred by the spouses Valenzuela to herein co-petitioners spouses Alfredo and Bella Gonzales Quiazon, filed Civil Case No. PQ 9432-P6 for annulment of sale, cancellation of title and damages, against spouses Valenzuela, spouses Quiazon, and the Register of Deeds of Pasay City. In the complaint, private respondents spouses De Guia prayed specifically for the annulment of the deed of sale executed by the spouses Valenzuela in favor of the spouses Quiazon, cancellation of TCT Nos. 39396 and 39397 in the name of spouses Quiazon, and the reinstatement of TCT No. 39142 in the name of the spouses Valenzuela, or in the alternative, the reconveyance of the subject properties by the spouses Quiazon to spouses Valenzuela. On 13 October 1981, private respondents spouses De Guia amended their complaint in Civil Case No. PQ-9432-P impleading Webb-Hegg Construction Resources, Inc. as additional defendant.

On 19 January 1983, spouses De Guia filed in Civil Case No. PQ-9432-P a Motion to Admit Second Amended Complaint impleading as additional defendant Gerardo Villacorta. Prior to the resolution of such pending motion, Civil Case No. PQ-9432-P was transferred to the Regional Trial Court of Makati, Branch 133 pursuant to the Judiciary Reorganization Law (B.P. Blg. 129). As a result of the transfer of the case, Civil Case No. PQ-9432-P was redocketed as Civil Case No. 2723. On 20 May 1983, the RTC of Makati, Branch 133 issued an order admitting the second amended complaint. Upon motion of the defendants therein, however, Civil Case No. 2723 was returned to. RTC-Pasay, where herein private respondents spouses De Guia filed a motion to admit third amended complaint seeking to implead spouses De Guzman, De Guzman Development Corporation, Skyfreight Brokerage, Inc. and Lawyer Romeo Bobadilla, as additional defendants. On 30 May 1984, the RTC-Pasay issued an omnibus order7 denying the motion to admit the third amended complaint and declaring as automatically vacated the order of RTC-Makati, Branch 133, which admitted the second amended complaint. Upon denial of their motion for reconsideration, private respondents spouses De Guia then filed a petition for certiorari and prohibition before the appellate court, docketed as CA G.R. SP. No. 04518. On 27 March 1990, after a preliminary hearing on the affirmative defenses of pendency of another action and splitting a cause of action, the lower court issued an order dismissing the complaint in Civil Case No. PQ-9432-P. Private respondents spouses De Guia appealed the dismissal of said case before the Court of Appeals which on 30 March 1994, affirmed the dismissal order of the lower court. Aggrieved, private respondents spouses De Guia filed a petition before the Supreme Court assailing the decision of the Court of Appeals. In a Resolution dated 24 July 1995, the High Court dismissed the petition for having been filed beyond the reglementary period. Private respondents moved to reconsider, which motion the Supreme Court denied via a resolution dated 30 September 1995. Upon motion of spouses Quiazon in Civil Case Nos. PQ-9412-P and PQ-9432-P, the lower court issued an order dated 17 January 1996 directing the cancellation of the Notice of Lis Pendens under Entry No. 81-11596 and Entry No. 81-12186 and the Adverse Claim under Entry No. 81-11601 on TCT Nos. 39386 and 39397 in the name of spouses Quiazon. On 02 February 1996, private respondents sought to reconsider the trial court's order. On 18 March 1996, private respondents filed a motion to admit amended complaint in Civil Case No. PQ-9412-P. Prior to the resolution of the two pending motions, private respondents filed a motion for the inhibition of the presiding judge of Branch 117, RTC-Pasay. In an order dated 17 April 1996, the court granted the motion for inhibition resulting in the re-raffle of Civil Case No. PQ-9412-P to Branch 231, presided by Judge Cesar Z. Ylagan. In an order dated 11 November 1996, Judge Ylagan denied the motion to admit amended complaint prompting herein private respondents spouses De Guia to file a motion for reconsideration which the lower court denied. Private respondents elevated the lower court's order denying the motion to admit amended complaint to the Court of Appeals. On 15 August 1997, the Court of Appeals rendered the assailed decision the decretal portion of which declares:

"WHEREFORE, the instant petition for certiorari and mandamus is hereby GRANTED. Consequently, the orders dated November 11, 1996 and February 6, 1997 are SET ASIDE and respondent is ordered to admit petitioners' amended complaint dated March 18,1997." On 05 November 1997, the RTC-Pasay, Branch 231 issued an order8 admitting the amended complaint, pursuant to the decision of the Court of Appeals dated 15 August 1997. Herein petitioners filed with the lower court a manifestation with motion to reconsider9 to the effect that they would file a "petition for review on certiorari" before the Supreme Court, to which manifestation private respondents filed an opposition. Petitioners then filed a reply to the opposition after which the lower court, in an order dated 23 January, decreed "that the admission of the amended complaint and service of summons are hereby held in abeyance until after the Supreme Court has resolved the case before it which has effectively placed this court on notice." On 17 December 1997, herein petitioners filed the instant petition where this Court is tasked in the main to resolve the propriety of the amendment of the complaint in Civil Case No. PQ-9412-P. Petitioners argue, among others, that the amendment should not be allowed inasmuch as the introduction of amendments to the complaint in Civil Case No. PQ-9412-P would, in effect, "radically and substantially change the cause of action and theory" of the case. The Court sanctions the amendment of the complaint and resolves to strike down the petition. At the this point, a review of the pertinent provisions regarding amendments is in order. Section 1, Rule 10 of the 1997 Rules of Civil Procedure explicitly provides: "SECTION 1. Amendment in general. - Pleadings may be amended by adding or striking out an allegation or the name of any party, or by correcting a mistake in the name of a party or a mistaken or inadequate allegation or description in any other respect, so that the actual merits of the controversy may speedily be determined, without regard to technicalities, and in the most expeditious and inexpensive manner." (emphasis ours) Equally important is Section 3, Rule 10 of the Rules: "SECTION 3. Amendments by leave of court. - Except as provided in the next preceding section, substantial amendments may be made only upon leave of court. But such leave may be refused if it appears to the court that the motion was made with intent to delay. Orders of the court upon the matters provided in this section shall be made upon motion filed in court, and after notice to the adverse party, and an opportunity to be heard." Petitioners contend that the foregoing provisions of the 1997 Rules of Civil Procedure cannot be applied in the case at bar. We do not agree. Elementary is the rule in this jurisdiction that one does not have a vested right in procedural rules, thus: "Statutes regulating the procedure of courts will be considered as applicable to actions pending and undetermined at the time of their passage. Procedural laws are retroactive in that sense and to that extent. The fact that procedural statutes may somehow affect the litigants' rights may not preclude their retroactive application to pending actions. The retroactive application of procedural laws is not violative of any right of a person who may feel that he is adversely affected. Nor is the retroactive application of procedural statutes constitutionally objectionable. The reason is that as a general rule, no vested right may attach to, nor arise from procedural laws. It has been held that "a person has no vested right in any particular remedy, and a litigant cannot insist on the application to the trial of his case, whether civil or criminal, of any other than the existing rules of procedure."10 (emphasis ours)

Interestingly, Section 3, Rule 10 of the 1997 Rules of Civil Procedure11 amended the former rule12 in such manner that the phrase "or that the cause of action or defense is substantially altered" was stricken-off and not retained in the new rules. The clear import of such amendment in Section 3, Rule 10 is that under the new rules, "the amendment may (now) substantially alter the cause of action or defense."13 This should only be true, however, when despite a substantial change or alteration in the cause of action or defense, the amendments sought to be made shall serve the higher interests of substantial justice, and prevent delay and equally promote the laudable objective of the rules which is to secure a "just, speedy and inexpensive disposition of every action and proceeding. Thus, granting arguendo that the amendment of the complaint in Civil Case No. PQ-9432-P would substantially alter or change the cause of action or defense in said controversy, this Court nonetheless holds that in the higher interest of substantial justice, the introduction of amendments to the complaint is apropos at this particular instance to forestall further delay in the resolution of the actual merits of the parties' respective claims and defenses. To reiterate, the Rules of Court seek to eliminate undue reliance on technical rules and to make litigation as inexpensive, as practicable and as convenient as can be done.14 Rules of procedure, after all, are but tools designed to facilitate the attainment of justice, such that when rigid application of the rules tends to frustrate rather than promote substantial justice, the Supreme Court is empowered to suspend their operation.15 This Court will not hesitate to set aside technicalities in favor of what is fair and just.16 As the records would readily reveal, the instant case Civil Case No. PQ-9412-P has already dragged and suffered protracted delay for a span of twenty years, borne by countless legal skirmishes between the party litigants involving principally entanglement on technical niceties and procedural rules. In fact, the procedural incidents and interlocutory matters relating to this controversy, to wit, Civil Case No. PQ-9412-P and its related case Civil Case No. PQ-9432-P, have reached no less than the portals of this Court at least twice first, as to the specific issue of the propriety of admission of a third amended complaint in Civil Case No. PQ-9432 and second, as to the particular query on the validity of the dismissal of Civil Case No. PQ-9432-P, on the ground of litis pendentia. By and large, due to the multifarious procedural incidents involving these two suits, albeit issues concededly not to be outrightly dismissed as less important, the actual merits of the controversy have yet to reach their full adjudication, resolution and determination. Under these circumstances, particularly considering the dismissal of Civil Case No. PQ-9432-P on ground of litis pendentia, the disallowance of the amendment of the complaint in Civil Case No. PQ-9412-P would, to our mind, necessarily result in an even greater delay in the disposition and adjudication of the actual merits of the case, which run counter to the hallowed office and cardinal objective of the Rules to provide, at each possible instance, an expeditious and full resolution of issues involving the respective rights and liabilities of the parties under substantive law. True enough, the delay that has so characterized the adjudication of the merits of this case which original complaint was filed practically two decades ago has not escaped the attention of this Court. Thus, in the interest of substantial justice, this Court allows the introduction of amendments to the complaint in Civil Case No. PQ-9412-P so as to afford the party-litigants the full and genuine opportunity to substantiate their respective claims and defenses and for the trial court to finally resolve the matters relating to the merits of the case. Besides, the defendants sought to be impleaded in Civil Case No. PQ-9412-P are not left without justifiable recourse. To this end, the law in no uncertain terms provide for the necessary legal implements and the adoption of effective means and defenses sanctioned by the Rules, wherein both parties in the controversy may very well advance and protect their respective legal interests. By

sanctioning the introduction of amendments to the complaint, the issues shall at last be viewed, so to speak, in the clear light of day and substantial matters therein shall not anymore be lost in the abyss of technicalities and procedural jargon. On this matter, the discourse of the Court of Appeals is elucidating: "With the dismissal of Civil Case No. PQ-9432-P in which petitioners (herein private respondents spouses De Guia) seek the annulment of the sale made by spouses Valenzuela in favor of spouses Quiazon, complete relief could be obtained by petitioners only by the admission of the amended complaint. Without the amendment, a favorable judgment for petitioners would be meaningless, if not futile, as the properties covered by the contract to sell which they seek to enforce had already been sold to spouses Quiazon, who are among those sought to be impleaded as additional defendants in the amended complaint. "x x x The inquiry should be as to whether or not the amendment is necessary to enable the parties, particularly petitioners, to obtain complete relief in just one proceeding. As above stated, the non-inclusion of spouses Quiazon and others who may have acquired rights or interest in the properties in question will render the relief originally sought in Civil Case No. PQ-9412-P incomplete without the sale or transfer to spouses Quiazon being nullified; hence, the need for the amendment. x x x "x x x Needless to state, the court is of the considered opinion that admission of the amended complaint is not only necessary to afford complete relief to the parties; it will also forestall any further need to institute other actions or proceedings arising from the transaction subject matter of Civil Case No. PQ-9412-P. x x x" Inasmuch as herein private respondents, in its amended complaint, likewise pray for reconveyance of the real property, considering that the subject parcels of land were transferred in the name of spouses Quiazon who notably were not impleaded in the original complaint in Civil Case No. PQ9412-P, it bears to stress that "owners of property over which reconveyance is asserted are indispensable parties without whom no relief is available and without whom the court can render no valid judgment."17 Additionally, petitioners stubbornly maintain that the principle of res judicata, specifically the doctrine of conclusiveness of judgment, should find application in the instant case so as to preclude the court from resolving anew the propriety of the amendment in Civil Case No. PQ-9412-P, which issue, according to petitioner, was previously passed upon and determined in Civil Case No. PQ-9432-P. The contention is without basis. Res judicata, either in the concept of bar by former judgment or conclusiveness of judgment, cannot be applied to the present case. In Vda. De Cruzo vs. Carriaga, Jr.,18 this Court speaking through Mr. Justice Florenz Regalado, inked an enlightening discourse on the subject: "The doctrine of res judicata thus lays down two main rules which may be stated as follows: 1) The judgment or decree of a court of competent jurisdiction on the merits concludes the parties and their privies to the litigation and constitutes a bar to a new action or suit involving the same cause of action either before the same or any other tribunal; and 2) Any right, fact, or matter in issue directly adjudicated or necessarily involved in the determination of an action before a competent court in which a judgment or decree isrendered on the merits is conclusively settled by the judgment therein and cannot again be litigated between the parties and their privies whether or not the claim or demand, purpose or subject matter of the

two suits is the same. These two main rules mark the distinction between the principles governing the two typical cases in which a judgment may operate as evidence. In speaking of these cases, the first general rule above stated, and which corresponds to the aforequoted paragraph (b) of Section 49, is referred to as 'bar by former judgment' while the second general rule, which is embodied in paragraph (c) of the same section, is known as 'conclusiveness of judgment.' "Stated otherwise, when we speak of res judicata in its concept as a 'bar by former judgment.' the judgment rendered in the first case is an absolute bar to the subsequent action wince said judgment is conclusive not only as to the matters offered and received to sustain that judgment but also as to any other matter which might have been offered for that purpose and which could have been adjudged therein. This is the concept in which the term res judicata is more commonly and generally used and in which it is understood as the bar by prior judgment constituting a ground for a motion to dismiss in civil cases. "On the other hand, the less familiar concept or less terminological usage of res judicata as a rule on conclusiveness of judgment refers to the situation where the judgment in the prior action operates as an estoppel only as to the matters actually determined therein or which were necessarily included therein. Consequently, since other admissible and relevant matters which the parties in the second action could properly offer are not concluded by the said judgment, the same is not a bar to or a ground for dismissal of the second action. "At bottom, the other elements being virtually the same, the fundamental difference between the rule of res judicata as a bar by former judgment and as merely a rule on the conclusiveness of judgment is that, in the first, there is an identity in the cause of action in both cases involved whereas, in the second, the cause of action in the first case is different from that in the second case." (emphasis ours) Proceeding from the foregoing disquisition, the principle of res judicata, requires the concurrence of the following requisites:19 "a) The former judgment or order must be final; "b) It must be a judgment or order on the merits, that is, it was rendered after a consideration of the evidence or stipulations submitted by the parties at the trial of the case; "c) It must have been rendered by a court having jurisdiction over the subject matter and the parties; and "d) There must be, between the first and second actions, identity of parties, of subject matter and of cause of action. This requisite is satisfied if the two actions are substantially between the same parties." (emphasis ours) For want of the second requisite, to wit, that the judgment must be rendered on the merits, the instant case is thus removed from the operation of the principle of res judicata. Stated differently, if the judgment is not on the merits, it cannot be considered as a conclusive adjudication of the controversy. Consequently, a judgment dismissing an action for want of jurisdiction, or because of the pendency of another action between the same parties and for the same cause, or a judgment absolving a defendant because he was not served with summons, or a dismissal on the ground of misjoinder cannot operate as res adjudicata on the merits.20

To this end, it must be noted that the dismissal of Civil Case No. PQ-9432-P was due to litis pendentia or the pendency of another action, obviously referring to Civil Case No. PQ-9412-P. Applying the foregoing doctrines, the judgment dismissing Civil Case No. PQ-9432-P, on the ground of litis pendentia, cannot be considered an adjudication on the merits.21 Clearly then, res judicata cannot apply. WHEREFORE, premises considered, the assailed decision of the Court of Appeals in C.A. G.R. SP. No. 44185 is AFFIRMED and the instant petition is DENIED for lack of merit. Accordingly, the Regional Trial Court of Pasay City Branch 231, is hereby ordered to admit herein private respondents' amended complaint in Civil Case No. PQ-9412-P, to issue the necessary summons to all impleaded defendants therein and to resolve the case with dispatch. SO ORDERED. Bellosillo, Mendoza, Quisumbing and De Leon, Jr., JJ ., concur. THIRD DIVISION G.R. No. 148120 October 24, 2003

RODRIGO QUIRAO, MONICA QUIRAO, ROBERTO QUIRAO, EDILBERTO QUIRAO, JESUS GOLE, GERARDO QUIRAO, LAMBERTO VALDEZ & FEDERICO QUIRAO, petitioners, vs. LYDIA QUIRAO & LEOPOLDO QUIRAO, JR., respondents. DECISION PUNO, J.: The issue in this Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court is whether Branch 21 of the Regional Trial Court of Mambusao, Capiz should admit the amended answer of petitioners. Respondents Lydia Quirao and Leopoldo Quirao, Jr. filed before the trial court a complaint for recovery of possession, ownership and damages against petitioners Rodrigo Quirao, Monica Quirao, Roberto Quirao, Edilberto Quirao, Gerardo Quirao, Jesus Gole, Lamberto Valdez, Federico Quirao and Avelino Ngitngit.1Respondents claimed that the late Leopoldo Quirao was the owner of the sugarland, subject matter of the controversy. Respondent Lydia is his widow, while Leopoldo, Jr. is his legitimate son and compulsory heir. They alleged that in 1988, petitioners forcibly took possession of the sugarland and appropriated for themselves its income. They prayed for the issuance of a writ of Preliminary Mandatory Injunction for petitioners to vacate the property.2 In their Answer, petitioners claimed that the subject property was owned by their grandfather, Segundo Clarito; that petitioner Rodrigo Quirao had been in possession of the land even before the Second World War; and that Leopoldo Quirao never possessed it. They further alleged that petitioners Jesus Gole, Avelino Ngitngit and Lamberto Valdez were recipients of Emancipation Patents issued by the government.3 A few months after their Answer, petitioners filed a Motion to Dismiss the complaint citing a Deed of Extra-Judicial Partition with Sale of the subject property purportedly executed by respondents in favor of a certain Carlito de Juan ("de Juan"). Petitioners contended that since respondents no

longer own the property, they lack the standing to file the complaint.4 They further alleged that it was only after they filed their Answer that they learned of the existence of the deed. The trial court denied the motion to dismiss for lack of merit.5 The case underwent pre-trial. Petitioners' second counsel, who took over the case, filed an amended pre-trial brief which reiterated the allegation that respondents were not the real parties in interest as they had sold the property to de Juan. Trial ensued and after respondents rested their case, petitioners filed a "Motion for Leave of Court to Admit Attached Amended Answer."6 They sought the amendment of their Answer by adding the alternative defense that even if respondents were the owners of the property by inheritance from Leopoldo Quirao, they (respondents) executed a Deed of Extra-Judicial Partition of Property with Sale in favor of de Juan. They further claimed that in turn, de Juan sold part of the property to them.7 The second sale appears to be evidenced by a Deed of Sale8 involving part of the subject property executed by de Juan and petitioners. It also appears that Rodrigo made a partial payment of P50,000.00, evidenced by the receipt signed by de Juan.9 Respondents opposed the motion on the grounds that: (1) it is dilatory and (2) the amendments are substantial and cannot be allowed as the parties have already undergone a pre-trial conference.10 The motion was again denied by the trial court. It ratiocinated that the amendments will prejudice the respondents since they had already rested their case and the alleged facts were already existing and known to the petitioners when they filed their answer.11 Petitioners' motion for reconsideration12 was likewise denied.13
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Petitioners repaired to the Court of Appeals which also dismissed their petition for lack of merit. The appellate court ruled that the amendments are basically the same issues raised in their motion to dismiss and are substantial ones which may properly be refused. It cited Batara vs. Court of Appeals,14 where we held that the negligence and ignorance of petitioners' previous counsels cannot qualify as "transcendental matters" which can outweigh technicalities.15 Petitioners filed a motion for reconsideration16 but their efforts were in vain.17 Thus, this petition based on the following grounds: A. THE OMISSION AND INACTION SEPARATELY AND INDIVIDUALLY COMMITTED BY EACH OF PETITIONERS' THREE PREVIOUS LAWYERS CONSTITUTE MERELY SIMPLE NEGLIGENCE WHICH, AS A GENERAL RULE, SHOULD BIND THEM. HOWEVER, WHEN PUT AND CONSIDERED TOGETHER, SUCH OMISSION AND INACTION ARE TRANSFORMED INTO AND COULD BE RIGHTFULLY CONSIDERED AS GROSS AND RECKLESS AND, HENCE, SHOULD NOT AND COULD NEVER BIND THEM. IT IS HUMBLY SUBMITTED THAT EVEN AT THIS LATE STAGE OF THE PROCEEDING, THE AMENDMENTS SOUGHT TO BE INTRODUCED IN THE ORIGINAL ANSWER MAY STILL BE LAWFULLY ALLOWED; OTHERWISE, PETITIONERS WOULD BE DEPRIVED OF THEIR PROPERTY WITHOUT DUE PROCESS OF LAW; B. IN THE HIGHER INTEREST OF SUBSTANTIAL JUSTICE, THE AMENDMENTS SOUGHT TO BE INTRODUCED IN THE ORIGINAL ANSWER SHOULD HAVE BEEN LIBERALLY ALLOWED SINCE THIS COURSE OF ACTION WOULD RESULT IN THE RESOLUTION OF THE CASE BELOW BASED ON PURE MERITS, RATHER THAN ON PURE TECHNICALITY. MOREOVER, THE RIGHTS OF RESPONDENTS COULD BE AMPLY PROTECTED, AND WHATEVER DELAY HAS ALREADY BEEN INCURRED IS NEVER SOLELY ATTRIBUTABLE TO PETITIONERS; C. THE COURT A QUO HAS LIBERALLY CONSTRUED THE RULES IN FAVOR OF RESPONDENTS AND STRICTLY CONSTRUED THEM AGAINST PETITIONERS; and

D. IN ITS DECISION, THE COURT OF APPEALS COMMITTED THE FOLLOWING ERRORS: 1) IT RULED THAT THE MATTER SOUGHT TO BE INTRODUCED IN THE ORIGINAL ANSWER IS THE SAME ISSUE ALLEGED IN PETITIONERS' MOTION TO DISMISS WHICH WAS DENIED BY THE COURT A QUO; 2) IT FAILED TO DISCUSS THE THIRD GROUND EVEN AS THIS WAS EXPLICITLY RAISED BEFORE IT; AND 3) IT APPLIED THE JURISPRUDENCE LAID IN (sic) DOWN IN THE BATARA CASE.18 The Rules of Court allow amendments of pleadings as a matter of right before a responsive pleading is served;19otherwise, leave of court must first be obtained.20 Our case law teaches us that amendments to pleadings are favored and should be liberally allowed in furtherance of justice. This liberality is greatest in the early stages of a lawsuit, decreases as it progresses, and changes at times to a strictness amounting to a prohibition. Amendments are likewise subject to the limitation that they are not dilatory.21 Thus, trial courts are given the discretion to grant leave of court to file amended pleadings, and their exercise of this discretion will normally not be disturbed on appeal, unless there is evident abuse thereof.22 In the case at bar, petitioners filed their motion for leave of court to admit amended answer only after respondents have rested their case. Petitioners argue that the error was due to the oversight of the three previous counsels. Petitioners' fourth counsel also claims that he learned of the alternative defense late as his clients (petitioners herein) did not inform him of the Deed of Sale.23 Allegedly, they relied on the advice of their previous counsels that the said deed of sale "was a mere scrap of paper because it was not signed by Carlito de Juan."24Respondents contend that petitioners' motion is too late in the day. Petitioners' motion for admission of amended answer may be a little tardy but this by itself is not a cause for its denial. Their amended answer alleges that respondents no longer own the subject property having sold the same to de Juan who, in turn, sold the property to petitioners. These allegations, if correct, are vital to the disposition of the case at bar. The interest of justice and equity demand that they be considered to avoid a result that is iniquitous. Truth cannot be barred by technical rules. For this reason, our ruling case law holds that amendments to pleadings are generally favored and should be liberally allowed in furtherance of justice so that every case may so far as possible be determined on its real facts and in order to prevent the circuity of action.25
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We should always bear in mind that rules of procedure are mere tools designed to facilitate the attainment of justice. Their strict and rigid application especially on technical matters, which tends to frustrate rather than promote substantial justice, must be avoided. Technicality, when it deserts its proper office as an aid to justice and becomes its great hindrance and chief enemy, deserves scant consideration from the courts.26 IN VIEW WHEREOF, the petition is GRANTED. Branch 21 of the Regional Trial Court of Mambusao, Capiz is directed to admit the amended answer. SO ORDERED. Panganiban, Sandoval-Gutierrez, Corona, and Carpio-Morales, JJ., concur. FIRST DIVISION G.R. No. 133657 May 29, 2002

REMINGTON INDUSTRIAL SALES CORPORATION, petitioner, vs. THE COURT OF APPEALS and BRITISH STEEL (ASIA), LTD., respondents. YNARES-SANTIAGO, J.: Before us is a petition for review under Rule 45 of the Rules of Court assailing the decision of the Court of Appeals in CA-G.R. SP No. 44529 dated February 24, 19981, which granted the petition for certiorari filed by respondent British Steel Asia Ltd. (British Steel) and ordered the dismissal of petitioner Remington Industrial Sales Corporations (Remington) complaint for sum of money and damages. Also assailed in this petition is the resolution2 of the Court of Appeals denying petitioners motion for reconsideration. The facts of the case, as culled from the records, are as follows: On August 21, 1996, petitioner filed a complaint3 for sum of money and damages arising from breach of contract, docketed as Civil Case No. 96-79674, before the sala of Judge Marino M. De la Cruz of the Regional Trial Court of Manila, Branch 22. Impleaded as principal defendant therein was Industrial Steels, Ltd. (ISL), with Ferro Trading GMBH (Ferro) and respondent British Steel as alternative defendants. ISL and respondent British Steel separately moved for the dismissal of the complaint on the ground that it failed to state a cause of action against them. On April 7, 1997, the RTC denied the motions to dismiss,4 as well as the ensuing motion for reconsideration.5 ISL then filed its answer to the complaint. On the other hand, respondent British Steel filed a petition for certiorari and prohibition before the Court of Appeals,6 docketed as CA-G.R. SP No. 44529. Respondent claimed therein that the complaint did not contain a single averment that respondent committed any act or is guilty of any omission in violation of petitioners legal rights. Apart from the allegation in the complaints "Jurisdictional Facts" that: 1.05. Defendants British Steel (Asia) Ltd. and Ferro Trading Gmbh, while understood by the plaintiff as mere suppliers of goods for defendant ISL, are impleaded as party defendants pursuant to Section 13, Rule 3 of the Revised Rules of Court.7 no other reference was made to respondent that would constitute a valid cause of action against it. Since petitioner failed to plead any cause of action against respondent as alternative defendant under Section 13, Rule 3,8 the trial court should have ordered the dismissal of the complaint insofar as respondent was concerned. Meanwhile, petitioner sought to amend its complaint by incorporating therein additional factual allegations constitutive of its cause of action against respondent. Pursuant to Section 2, Rule 109 of the Rules of Court, petitioner maintained that it can amend the complaint as a matter of right because respondent has not yet filed a responsive pleading thereto.10 Subsequently, petitioner filed a Manifestation and Motion11 in CA-G.R. SP No. 44529 stating that it had filed a Motion to Admit Amended Complaint together with said Amended Complaint before the trial court. Hence, petitioner prayed that the proceedings in the special civil action be suspended. On January 29, 1998, the trial court ruled on petitioners Motion to Admit Amended Complaint thus:

WHEREFORE, the Amended Complaint is NOTED and further proceedings thereon and action on the other incidents as aforementioned are hereby held in abeyance until final resolution by the Honorable Court of Appeals (Special 6th Division) of the petition for certiorari and prohibition of petitioner (defendant British) and/or Manifestations and Motions of therein private respondent, herein plaintiff. SO ORDERED.12 Thereafter, on February 24, 1998, the Court of Appeals rendered the assailed decision in CA-G.R. SP No. 44529 as follows: WHEREFORE, this Court grants the writ of certiorari and orders the respondent judge to dismiss without prejudice the Complaint in Civil Case No. 96-79674 against petitioner British Steel (Asia) Ltd. Costs against private respondent. SO ORDERED.13 In the same decision, the Court of Appeals addressed petitioners prayer for suspension of proceedings in this wise: The incident which transpired after the filing of the instant petition for certiorari and prohibition are immaterial in the resolution of this petition. What this Court is called upon to resolve is whether the lower court committed grave abuse of discretion when it denied petitioners motion to dismiss the complaint against it. The admission or rejection by the lower court of said amended complaint will not, insofar as this Court is concerned, impinge upon the issue of whether or not said court gravely abused its discretion in denying petitioners motion to dismiss.14 Petitioner filed a motion for reconsideration of the appellate courts decision, which was denied in a resolution dated April 28, 1998. Hence, this petition, anchored on the following grounds: -ITHE HON. COURT OF APPEALS ERRED IN ORDERING THE DISMISSAL OF THE COMPLAINT AGAINST THE PRIVATE RESPONDENT FOR LACK OF CAUSE OF ACTION UNDER THE ORIGINAL COMPLAINT EVEN AS SAID COMPLAINT WAS ALREADY AMENDED AS A MATTER OF RIGHT AND SUFFICIENT CAUSES OF ACTION ARE AVERRED IN THE AMENDED COMPLAINT, IN GROSS VIOLATION OF SEC. 2, RULE 10 OF THE 1997 RULES OF CIVIL PROCEDURE. -IITHE HON. COURT OF APPEALS ERRED IN HOLDING THAT IF THE PETITIONER WANTS TO PURSUE ITS CASE AGAINST THE PRIVATE RESPONDENT, IT HAS TO REFILE THE COMPLAINT, THUS PRE-EMPTING THE RIGHT OF THE LOWER COURT TO RULE ON THE AMENDED COMPLAINT AND COMPELLING THE PETITIONER TO LITIGATE ITS CAUSES OF ACTION AGAINST THE PRIVATE RESPONDENT AS AN ALTERNATIVE DEFENDANT IN A SEPARATE ACTION, THEREBY ABETTING MULTIPLICITY OF SUITS.15

The basic issue in this case is whether or not the Court of Appeals, by granting the extraordinary writ of certiorari, correctly ordered the dismissal of the complaint for failure to state a cause of action, despite the fact that petitioner exercised its right to amend the defective complaint under Section 2, Rule 10 of the Rules of Court. Stated differently, the query posed before us is: can a complaint still be amended as a matter of right before an answer has been filed, even if there was a pending proceeding for its dismissal before the higher court? Section 2, Rule 1016 of the Revised Rules of Court explicitly states that a pleading may be amended as a matter of right before a responsive pleading is served. This only means that prior to the filing of an answer, the plaintiff has the absolute right to amend the complaint whether a new cause of action or change in theory is introduced.17 The reason for this rule is implied in the subsequent Section 3 of Rule 1018. Under this provision, substantial amendment of the complaint is not allowed without leave of court after an answer has been served, because any material change in the allegations contained in the complaint could prejudice the rights of the defendant who has already set up his defense in the answer. Conversely, it cannot be said that the defendants rights have been violated by changes made in the complaint if he has yet to file an answer thereto. In such an event, the defendant has not presented any defense that can be altered19 or affected by the amendment of the complaint in accordance with Section 2 of Rule 10. The defendant still retains the unqualified opportunity to address the allegations against him by properly setting up his defense in the answer. Considerable leeway is thus given to the plaintiff to amend his complaint once, as a matter of right, prior to the filing of an answer by the defendant. The right granted to the plaintiff under procedural law to amend the complaint before an answer has been served is not precluded by the filing of a motion to dismiss20 or any other proceeding contesting its sufficiency. Were we to conclude otherwise, the right to amend a pleading under Section 2, Rule 10 will be rendered nugatory and ineffectual, since all that a defendant has to do to foreclose this remedial right is to challenge the adequacy of the complaint before he files an answer. Moreover, amendment of pleadings is favored and should be liberally allowed in the furtherance of justice in order to determine every case as far as possible on its merits without regard to technicalities. This principle is generally recognized to speed up trial and save party litigants from incurring unnecessary expense, so that a full hearing on the merits of every case may be had and multiplicity of suits avoided.21 In this case, the remedy espoused by the appellate court in its assailed judgment will precisely result in multiple suits, involving the same set of facts and to which the defendants would likely raise the same or, at least, related defenses. Plainly stated, we find no practical advantage in ordering the dismissal of the complaint against respondent and for petitioner to re-file the same, when the latter can still clearly amend the complaint as a matter of right. The amendment of the complaint would not prejudice respondents or delay the action, as this would, in fact, simplify the case and expedite its disposition. The fact that the other defendants below has filed their answers to the complaint does not bar petitioners right to amend the complaint as against respondent. Indeed, where some but not all the defendants have answered, the plaintiff may still amend its complaint once, as a matter of right, in respect to claims asserted solely against the non-answering defendant, but not as to claims asserted against the other defendants.22 Furthermore, we do not agree with respondents claim that it will be prejudiced by the admission of the Amended Complaint because it had spent time, money and effort to file its petition before the

appellate court.23 We cannot see how the result could be any different for respondent, if petitioner merely re-filed the complaint instead of being allowed to amend it. As adverted to earlier, amendment would even work to respondents advantage since it will undoubtedly speed up the proceedings before the trial court. Consequently, the amendment should be allowed in the case at bar as a matter of right in accordance with the rules. WHEREFORE, the petition is GRANTED. The assailed decision and resolution of the Court of Appeals in CA-G.R. SP No. 44529 dated February 24, 1998 and April 28, 1998, respectively, are REVERSED and SET ASIDE. The Regional Trial Court of Manila, Branch 22 is further ordered to ADMIT petitioners Amended Complaint in Civil Case No. 96-79674 and to conduct further proceedings in said case. SO ORDERED. Davide, Jr., C.J., Puno, Kapunan, and Austria-Martinez, JJ., concur. FIRST DIVISION

G.R. No. 119511 November 24, 1998 WILFREDO P. VERZOSA and PILAR MARTINEZ, petitioners, vs. COURT OF APPEALS, HON. NICODEMO FERRER, and FE GIRON USON, respondents.

PANGANIBAN, J.: What constitutes the status quo ante in the application of an injunctive writ, in the event a complaint's subsequently amended? The Case This is the main question raised in the present Petition for Review seeking to set aside the consolidated January 31, 1994 Decision 1 of the Court of Appeals 2 in CA-GR SP No. 26626 and CAGR SP No. 27300, which dismissed the petitions in this wise: Succinctly put, petitioners have failed to show any grave abuse of discretion, or any act without or in excess of jurisdiction, on the part of respondent judge in issuing the assailed orders. WHEREFORE, the instant petitions are hereby dismissed for lack of merit. Also assailed is the public respondent's February 28, 1995 Reconsideration 3 denying the Motion for Reconsideration. Facts of the Case

The undisputed facts, as narrated by the Court of Appeals (CA) and reiterated by petitioners, are as follows: 4 Records reveal that Fe Giron Uson is the owner of a parcel of land consisting of 19,955 square meters located at Baquioen, Sual, Pangasinan, covered by O.C.T. No. 12783. She mortgaged the land to Wilfredo Verzosa. Fe Uson failed to pay her entire obligation to Verzosa, prompting the latter to have the mortgage foreclosed. On July 21, 1988, the Provincial Sheriff of Pangasinan set the foreclosure sale on August 17, 1988 at 10:00 A.M. To prevent the Office of the Provincial Sheriff from proceeding with the foreclosure sale, Fe Uson, on August 12, 1988, filed with the Regional Trial Court, Branch 37, Lingayen, Pangasinan, a complaint against Wilfredo Verzosa and the Provincial Sheriff, docketed as Civil Case No. 16590, for annulment of mortgage with prayer for the issuance of a writ of preliminary injunction. On August 22, 1988, defendant Verzosa filed a motion to dismiss the complaint. On June 8, 1989, the complaint was dismissed on the ground that it was not personally verified by plaintiff Fe Uson. On June 27, 1989, Fe Uson filed a motion for reconsideration which was granted by the court. On June 29, 1989, she filed her amended complaint which bears the proper verification. Meantime, Verzosa wrote the Provincial Sheriff to proceed with the foreclosure of mortgage. Whereupon, Fe Uson, through counsel, wrote the Provincial Sheriff requesting him to discontinue the foreclosure sale in deference to "the said pending case and to the action to be taken by the Honorable Presiding Judge of the Court. On July 4, 1989, the foreclosure sale was conducted by the sheriff. The property was sold to Verzosa being the highest bidder. Thereafter, the Sheriff's Certificate of Sale was approved by Executive Judge Antonio Belen and issued to Verzosa. On September 5, 1989, the trial court issued an order admitting the amended complaint of Fe Uson. At this point, Verzosa filed with the Court of Appeals CA-G.R. SP No. 18898 for certiorari. He alleged that the said order, admitting the amended complaint was issued with grave abuse of discretion. On June 20, 1990, the Sheriffs Certificate of Sale was registered in the Registry of Deeds of Alaminos, Pangasinan. On July 5, 1990, or after the expiration of the redemption period of one year, the defendant Sheriff issued the Sheriff's Final Deed of Sale. Thus, O.C.T. No. 12783 in

Fe Uson's name was cancelled and in lieu thereof, T.C.T. No. 11087 was issued in the name of Wilfredo Verzosa. On July 12, 1990, Verzosa sold the land to Pilar Martinez. As a result, Verzosa's T.C.T. No. 11087 was cancelled and T.C.T. No. 11107 was issued to Martinez. Meantime, on October 16, 1990, or after one year from the filing of Verzosa's petition for certiorariwith the Court of Appeals, the said court dismissed the petition, thus sustaining the validity of respondent court's order dated September 5, 1989 admitting Fe Uson's amended complaint. On May 20, 1991, Fe Uson filed her second amended complaint impleading as additional defendants the Register of Deeds of Alaminos, Pangasinan and Pilar Martinez and praying, among others, the annulment of the latter's title T.C.T. No. 11107. On August 20, 1991, upon Uson's application for preliminary injunction embodied in her Second Amended Complaint (which was opposed by Verzosa and Martinez), respondent court issued an order directing the latter to cease and desist from entering, making constructions and performing any act of possession or ownership over the land in question covered by O.C.T. No. 12783, upon posting by plaintiff Uson of a bond of P10,000.00. Defendant Martinez filed a motion for consideration which was denied on September 18, 1991. On October 30, 1991, after hearing and upon posting of a bond in the amount of P10,000.00 by Uson, respondent Judge issued an order directing defendants Verzosa and Martinez and/or any and other persons acting under their command to desist and cease from entering, intruding and making constructions on the land covered by O.C.T. No. 12783. On November 22, 1991, respondent judge, acting on Verzosa's motion for clarification of the order dated September 18, 1991, issued an order to the effect that the status quo being maintained is the possession of plaintiff Fe Uson of the land and that such status quo does not refer to defendant Pilar Martinez being the registered owner of T.C.T. No. 11107. It should be noted that the Complaint alleged that Private Respondent Uson mortgaged the property to Verzosa for P25,000, and that the remaining, unpaid balance was P915.75, an amount she was willing to consign to the trial court. 5 Petitioners challenged by certiorari the two orders of the trial court. Because the CA dismissed their petition, petitioners availed themselves of the present recourse. 6 Public Respondent's Ruling In dismissing the petition for certiorari, the Court of Appeals held that "the last peaceable uncontested status that preceded the controversy [was] that point . . . when private respondent Fe Uson was the registered owner of the land in dispute mortgaged to petitioner Verzosa. As owner of

this property, Fe Uson has every right to protect her rights as such. Clearly, the issuance of the writ would certainly preserve that status quo." 7 In debunking petitioners' theory that the status quo referred to the period when Martinez had already purchased the property from Verzosa, the Court of Appeals held that "the property was registered in her name two years after the start of the controversy, or when private respondent filed her complaint against Verzosa." 8 Thus, the CA sustained the following findings of the trial court: 9 For as long as the instant case (Civil Case No. 16590) remains pending, no act of the defendants subsequent to the filing of this case can make TCT No. 11107 in the name of defendant Pilar Martinez, and the alleged possession of the latter of the property in question, valid and be considered the status quo." Issues Petitioners raise the following issues for the consideration of the Court: 10 I The Court of Appeals erred in not taking into account or dealing squarely with the nature, effects and proper interpretation and/or application of the doctrine on amendment of pleadings/complaints to the instant case. II The Court of Appeals erred when it concurred with the Respondent judge that the status quo should be reckoned at the time of the filing of the original complaint. III The Court of Appeals erred when it completely disregarded the legal implications and effects of foreclosure, foreclosure sale, expiration of the redemption period, the consolidation of ownership to your petitioner and the sale to Pilar Martinez. IV The Court of Appeals erred when it concurred with the respondent judge in granting an injunction to restrain consummated acts, and in forcing a transfer of possession from Pilar Martinez to private respondent Fe Uson who has not shown her right thereto. The present controversy hinges on two questions. First, is private respondent entitled to an injunctive writ? Second, what is the status quo ante that the said writ seeks to preserve? The Court's Ruling The petition is devoid of merit. First Issue: Issuance of the Injunctive Writ Petitioners primarily allege that the injunctive writ was wrongfully issued in favor of private respondent, as the latter had a doubtful, unclear and unadjudicated right for recovery of the property which had been mortgaged, foreclosed and sold to a third party. We disagree. An injunctive writ may be issued when the following requisites are established: 1. The invasion of the right is material and substantial;

2. The right of complainant is clear and unmistakable;


3. There is an urgent and permanent necessity for the writ to prevent serious damage. 11

The foregoing requisites are present in this case. The undisputed owner of the property which was mortgaged to Petitioner Verzosa was private respondent who, upon learning of the scheduled foreclosure, immediately filed a Complaint to annul the mortgage, praying that a restraining order be issued to restrain such foreclosure. Private respondent insisted that she had paid her P25,000 debt, except for the remaining unpaid balance of P915.75 which she was willing to consign to the court. In other words, she had title to and possession of the property and she claimed to have paid her obligation, except for the nominal unpaid balance which she was willing to consign judicially. Hence, she had a clear and unmistakable right to protect her title to and possession of the mortgaged property by enjoining the foreclosure sale. Given the above factual allegations, it is clear that private respondent was entitled to the injunctive writ. Second Issue: Status Quo Ante The "status quo" is the last actual peaceful uncontested situation which precedes a controversy, and its preservation is the office of an injunctive writ. 12 Petitioners insist that the status quo refers to the point when Pilar Martinez was already the owner of the property, having purchased it from Verzosa. We cannot sustain the petitioners, for Martinez' claim to the property is precisely the bone of contention. Private respondent, the origin owner of the property, filed a Complaint against Wilfredo Verzosa and the provincial sheriff for the annulment of mortgage and the issuance of an injunctive writ to prevent the foreclosure of the property and the subsequent transfer of ownership. Although the Complaint was subsequently amended, the controversy began when the first Complaint was filed. Nevertheless, Petitioner Verzosa and the sheriff proceeded with the foreclosure before the filing of the Amended Complaint. Worse, Verzosa sold the property to Martinez one week later. Now, Verzosa and Martinez claim that thestatus quo to be preserved refers to the time before the filing of the second Complaint and after Martinez had acquired the property from Verzosa. Petitioners contend that the controversy started only when the Amended Complaint was filed, because the previous Complaints were expunged from the records. Petitioners invoke Ruymann v. Director of Lands, 13 in which the Court ruled that the filing of an amended pleading does not retroact to the date of the filing of the original. Citing other jurisprudence, such as Waje v. Court of Appeals 14 and Paradise v. Ng, 15 petitioners contend that the original pleading is deemed abandoned when it is amended. The cited cases offer scant support to the thesis of petitioners. In Ruymann, the Court held that "an amendment to a complaint which introduces a new or different cause of action, making a new or different demand, is equivalent to a fresh suit upon a new cause of action, and the statute of limitations continues to run until the amendment is filed." 16 In the said case, a complaint for injunction was amended to include a larger tract of land which had not been included in the original suit. The Court held that "the suit will be deemed to have been commenced upon the date of amendment, in determining whether the defendant had acquired title by adverse possession to the portion of the tract of land not included in the original complaint (Montgomery v. Shaver, 40 Oregon

244)." 17 It is clear therein that the Complaint was amended to include a new or different cause of action or demand; hence, it was as if a new complaint was filed. It follows that when the amended complaint does not introduce new issues, causes of action, or demands, the suit is deemed to have commenced on the date the original complaint was filed, not on the date of the filing of the amended complaint. In other words, for demands already included in the original complaint, the suit is deemed to have commenced upon the filing of such original complaint. In short, for purposes of determining the commencement of a suit, the original, complaint is deemed abandoned and superseded by the amended complaint only if the amended complaint introduces a new or different cause of action or demand. Hence, it has been held that "an amendment which merely supplements and amplifies the facts originally alleged relates back to the date of the commencement of the action and is not barred by the statute of limitations, the period of which expires after service of the original complaint but before service of amendment." 18 It is the actual filing in court that controls and not the date of the formal admission of the amended pleading. 19 The Court inRepublic v. Marsman 20 elucidated: While in the procedural sense, especially in relation to the possible necessity of and time for the filing of responsive and other corresponding pleadings, an amended complaint is deemed filed only as of the date of its admission, . . ., the self-evident proposition [is] that for practical reasons and to avoid the complications that may arise from undue delays in the admission thereof, such an amended complaint must be considered as filed, for the purpose of such a substantive matter as prescription, on the date it is actually filed with the court, regardless of when it is ultimately formally admitted by the court. After all, the only purpose of requiring leave of and formal admission by the court of an amended pleading after issues have already been joined as to the original ones is to prevent the injection of other issues which ought either to be considered as barred already or made the subject of another proceeding, if they are not anyway indispensable for the resolution of the original ones and no unnecessary multiplicity of suits would result; so, when the court ultimately admits the amendment, the legal effect, for substantive purposes, of such admission retroacts as a rule to the date of its actual filing. In the instant case, the Amended Complaint did not introduce a new or different cause of action or demand. The original Complaint was amended only to rectify the lack of verification and thereafter to implead Martinez, who had purchased the contested property from Verzosa. In the same vein, Waje and Paradise do not apply because the Amended Complaints therein alleged new causes of action. Similarly unavailing is petitioners' contention that the injunctive writ was applied retroactively and, hence, violative of Ruymann and other subsequent cases. To repeat, Ruymann was wrongly applied by petitioners. There being no new issues introduced in the Amended Complaint herein, the present suit is deemed to have commenced on the date of the filing of the original Complaint. Hence, the CA was correct in upholding the trial court that the status quo was the situation of the parties at the time of the filing of the original Complaint. Finally, petitioners assert that Respondent Court violated the well-entrenched doctrine that consummated acts can no longer be restrained by injunction. As earlier noted, despite the fact that Pilar Martinez already had title to and possession of the disputed property, the CA affirmed the order of the trial court enjoining her from "entering, intruding and making construction and/or performing

any act of ownership or possession and any activity over the land . . .; " Petitioners cite the following ruling in Reyes v. Harty: 21 It is a universal principle of the law that an injunction will not issue to restrain the performance of an act already done. It is undisputed proof in this case, presented by the plaintiffs themselves, that, at the time this [case] was tried, the plaintiffs had been completely dispossessed, the defendant being in full and complete possession of the lands in question . . . . Again, the case cited by petitioner is incongruous with the factual milieu of the present controversy. In that case, the party praying for an injunctive writ had been completely dispossessed of the land in question prior to the commencement of the action. In the case at bar, private respondent was still the owner and was in possession of the property at the time the original Complaint was filed. The rule is that a court should not by means of preliminary injunction transfer the property in litigation from the possession of one party to another where the legal title is in dispute and the party having possession asserts ownership thereto. 22 When private respondent filed the original Complaint, she had title to and possession of the property and was asserting ownership thereto. Where the acts have been performed prior to the filing of the injunction suit, the general rule is that consummated acts can no longer be restrained by injunction. However, "where the acts are performed after the injunction suit is brought, a defendant may not as [a matter] of right proceed to perform the acts sought to be restrained and then be heard to assert in the suit that the injunction will not lie because he has performed these acts before final hearing has been had, but after the beginning of the action. A defendant thus acts at his peril." 23 It has been held that "[t]he general rule of law is that, where a defendant completes, after the beginning of an action, the act thereby sought to be restrained, and before the issue of any final order or decree, the court has the power to, and may, compel, by a mandatory injunction, the restoration of the former condition of things and thereby prevent the giving of an advantage by reason of the wrongful act. And where a defendant does an act thus sought to be restrained, he proceeds at his peril, and the court in which the action is pending may compel a restoration of the former status or grant to the plaintiff such relief as may be proper." 24 In this case, an action was brought to enjoin Petitioner Verzosa from proceeding with the mortgage sale, yet he proceeded to do so while the action was still pending. Such conduct is reprehensible. "If one in the face of a pending suit for injunction, does the thing sought to be enjoined, he cannot thus outwit equity and the court, but must restore the status quo. . . . Even where an injunction has not been issued, if the suit is one for injunction, the defendant, if he does the thing sought to be enjoined does so at his peril." 25 Hence, in proceeding with the mortgage sale and subsequently selling the property to Pilar Martinez, Petitioner Verzosa was acting at his peril. Clearly, the Respondent Court did not err in sustaining the Decision of the lower court that the status quo to be maintained was the situation when title to and possession of the property were still with Private Respondent Uson. The precise ruling of the appellate court is aptly reproduced hereunder:
When the present Civil Case No. 16590 was commenced on August 12, 1988, the property in dispute was still covered by Original Certificate of Title No. 12783, in the name of plaintiff Fe Giron Uson, and there is no dispute that the possession of the said property was still with the plaintiff. That is the status quo sought to be maintained in the questioned preliminary injunction. It is, therefore, incorrect for defendant Wilfredo P. Verzosa to claim that the status quo refers to Transfer Certificate of Title No. 11107 in the name of Pilar Martinez, which is precisely what is sought to be annul[l]ed in the present case, and that the possessor of the property is defendant Pilar Martinez who may possibly have entered into the property while the present case has long been pending,

and by virtue of the purported sale of the same to her by defendant Verzosa, whose claim of ownership thereof is, in turn, based on the sheriff's sale which is also the very subject matter of the present case for annulment. 26

WHEREFORE, the petition is DENIED for lack of merit and the assailed Decision of the Court of Appeals is AFFIRMED. SO ORDERED. Davide, Jr., Bellosillo, Vitug and Quisumbing, JJ., concur. SECOND DIVISION G.R. No. 135442 August 31, 2000

MA. LOUISA T. QUE, petitioner, vs. COURT OF APPEALS, RTC-Br. 158, PASIG CITY, and NICOLAAS J. KLAVER, respondents. DECISION BELLOSILLO, J.: NICOLAAS JOHANNES KLAVER, private respondent, entered into a Contract to Sell with Golden Dragon Real Estate Corporation (GDREC) on 4 August 1992 involving Unit No. 1902-A of the Wack Wack Twin Towers. After paying the full purchase price, he executed a Conditional Deed of Sale over the same unit in favor of petitioner Ma. Louisa T. Que. On 11 September 1995 respondent Klaver filed a Complaint for specific performance and damages against petitioner Que before the Regional Trial Court of Pasig City1 for alleged violation of the provisions of their contract, referring primarily to her failure to pay the full purchase price and her taking possession of the property without his consent. On 11 October 1995 Klaver amended his Complaint by impleading GDREC and its officers Juan Miguel Vasquez and Mariel R. Cruz. As amended, he also sought to recover damages from them and for Que to surrender possession of the unit to GDREC which, in turn, should execute an Absolute Deed of Sale in his favor. On 6 November 1995 Que filed a Motion to Dismiss on the ground that the amendment to the original Complaint impleading GDREC as additional defendant transformed the case to one cognizable by the Housing and Land Use Regulatory Board (HLURB), and since the claim against her was merely incidental, it must be resolved by the HLURB together with the claim against GDREC. On 16 November 1995 Klaver filed a Manifestation seeking the dismissal without prejudice of his Complaint against GDREC, Vasquez and Cruz. Subsequently, he moved to file an Amended Complaint. On 17 November 1995 Klaver lodged a Complaint with the HLURB against GDREC and its officers for unsound real estate practices consisting mainly in their unwarranted delay in the delivery of Unit No. 1902-A to him.2 On 29 January 1996 GDREC filed a Third Party Complaint against Que on

account of her alleged previous undertaking to assume responsibility for any and all claims which could arise on account of the transfer of possession of the unit to her. Que asserted in her Answer that she had fully paid, if not overpaid, for the unit such that Klaver had lost all rights over it. She counterclaimed for damages against him. Going back to the case pending before the trial court, Que filed her Comment to Klaver's Manifestation contending that upon the previous amendment of the complaint which included GDREC as co-defendant, the trial court ipso facto lost jurisdiction over the case and, corollarily, authority to entertain his Manifestation. In its order of 8 May 1996 the trial court dismissed without prejudice the amended Complaint against GDREC, Vasquez and Cruz, denied Que's Motion to Dismiss, granted Klaver's Motion to File Amended Complaint, and admitted the Amended Complaint solely against Que.3 On 26 July 1996 the lower court denied reconsideration. Que questioned the Orders of 8 May 1996 and 26 July before the Court of Appeals in a Petition for Certiorari.4 On 29 May 1998 the Court of Appeals denied Que's petition and rejected her motion for reconsideration on 18 September 1998. Is the trial court vested with jurisdiction over the case filed by Klaver against Que despite the inclusion of GDREC and its officers in the Amended Complaint? Que alleges that when Klaver amended his Complaint for the first time, his original Complaint was deemed superseded. It disappeared from the records of the case.5 She thus argues that Klaver's cause of action in his first Amended Complaint, being one for specific performance against GDREC, was beyond the jurisdiction of the trial court but vested in the HLURB. The trial court could not have validly acquired jurisdiction over her alone to the exclusion of GDREC because both parties are indispensable for a complete resolution of the case. She further argues that when Klaver amended his Complaint the second time, his evident purpose was to confer jurisdiction anew on the trial court over his cause of action against her. She then invites attention to the circumstance that Klaver's Complaint before the HLURB was dismissed on 1 August 1996.6 The HLURB found that Klaver had in fact been overpaid by Que amounting to P100,000.00. This ruling was affirmed by the HLURB on 12 January 19987and by the Office of the President on 15 December 1999.8 The case is now pending before the Court of Appeals.9On these accounts, she submits that this Court should not allow the case before the trial court to proceed. Klaver contends on the other hand that upon the filing of the original Complaint the trial court acquired jurisdiction over the subject matter thereof which jurisdiction continued with the filing of the first Amended Complaint that substantially reproduced the same causes of action against Que, i.e., specific performance and damages. He maintains that inasmuch as his cause of action against Que was independent of the cause of action against GDREC, the inclusion of GDREC in the first Amended Complaint merely resulted in misjoinder of a cause of action and party which he remedied by dropping GDREC from the case before the trial court and proceeding only against Que.10 The petition must be denied. It is settled that jurisdiction of courts over the subject matter of the litigation is conferred by law and determined by the allegations in the complaint.11 Klaver's original Complaint contained the following pertinent allegations: (a) Klaver and Que agreed that possession of Unit 1902-A would be transferred to Que only upon full payment of the purchase price not later than 31 May 1995; (b) Sometime in February 1995 Que was able to get the keys of the unit from GDREC without the knowledge and written permission of Klaver and started making improvements on the premises; and, (c) Que unilaterally decided to withhold payment of the full purchase

price.12 Klaver thus prayed that (a) Que be ordered to vacate the unit; (b) the amount of P200,000.00 Que previously paid be forfeited in his favor; (c) Que be declared a builder in bad faith and that the improvements she had introduced on the premises be retained by him without indemnification; and, (d) Que be ordered to pay damages, attorneys fees and costs of suit. Undoubtedly, Klaver's Complaint against Que for specific performance and damages was within the jurisdiction of the trial court. Subsequently, Klaver amended his Complaint to implead GDREC and its officers. In determining whether a different cause of action is introduced by amendments to the complaint, what must be ascertained is whether the defendants shall be required to answer for a liability or legal obligation wholly different from that stated in the original complaint. An amendment will not be considered as stating a new cause of action if the fact alleged in the amended complaint shows substantially the same wrong with respect to the same matter but is more fully and differently stated, or where averments which were implied are made express, or the subject of the controversy or the liability sought to be enforced remains the same.13 The amended Complaint against GDREC and its officers made the following material allegations: (a) The true intent and agreement of the parties to the contract to sell was that the sale of the unit would include two (2) parking lots; and, (b) Despite the clear import of the contract to sell, GDREC failed to deliver the premises to Klaver and arbitrarily turned over the possession of the unit to Que. On the other hand, the first and second amended Complaints with regard to Que alleged substantially the same causes of action as the original Complaint. Consequently, we agree with Klaver and the Court of Appeals that the trial court's jurisdiction continued even with the first and second amendments of his Complaint because the amended Complaints averred substantially the same causes of action against Que. Also worth noting is that the Complaint against Que is distinct from the Complaint against GDREC and its officers before the HLURB. The first basically pertains to non-performance by the buyer of her obligations to Klaver, whereas the second deals with non-performance by the seller of its own obligations to the buyer, such that Klaver properly sued them before different fora. Jurisdiction once acquired is not lost upon the instance of the parties but continues until the case is terminated.14 Viewed from another perspective, we start our analysis with the original Complaint of Klaver against Que which, as aforementioned, was within the jurisdiction of the trial court. The first amended Complaint alleged substantially the same causes of action against Que and new causes of action against GDREC and its officers. Insofar as the causes of action directed against Que are concerned, they are still within the jurisdiction of the trial court. Yet, with regard to the causes of action against GDREC and its officers, the HLURB had competence over them pursuant to Sec. 1, PD 1344, "Empowering the National Housing Authority to issue Writ of Execution in the Enforcement of its Decision under Presidential Decree No. 957." At any rate, the filing of the first amended Complaint did not result in ousting the trial court of its jurisdiction over the entire case because it retained jurisdiction over the cause of action filed against Que. In the analogous case of Espejo v. Malate,15 two (2) issues were alleged in the original Complaint before the then Court of First Instance: the principal one, the issue of ownership over the land in dispute, and the secondary but no less important one, the issue of who has prior possession thereof. The Court ruled that the trial court had no jurisdiction over the first issue, the land being public land, but the trial court had jurisdiction over the second issue of prior possession. The trial court explained -

x x x x The issue of who has the prior possession being unmistakably alleged in the original complaint, the trial court acquired jurisdiction over the case insofar as said issue is concerned x x x x The trial court having acquired jurisdiction over the subject matter as well as over the nature of the action on the original complaint, it could validly issue an order to amend the original complaint. The deletion of the issue of ownership from the original complaint and the amended complaint having limited the issue to prior possession did not substantially alter the theory of the complainant x x x x Besides, a superficial examination of the original complaint and the amended complaint would show that both pleadings are virtually identical x x x x However, we observe that in the proceedings before the HLURB, Que argued that Klaver sold to her two (2) parking lots such that his delivery to her of only one (1) parking lot justified her refusal to pay the balance of the purchase price for the unit. The HLURB resolved this issue in this manner Complainant (private respondent) has clearly failed to deliver or place under the control of Mrs. Que the second parking lot mentioned in the Conditional Deed of Sale. As such, Mrs. Que has the right to rescind the contract or demand a reduction of the price pursuant to Art. 1530 of the Civil Code. When the purchase price in the Conditional Deed of Sale is accordingly reduced through the subtraction of the value of the undelivered parking lot which has been estimated at P350,000.00, Mrs. Que would even have overpaid the purchase price even without having to pay the last amortization of P250,000.00, and would thus have acquired ownership of all rights pertaining to condominium unit No. 1902-A, and thus, she should not be disturbed in her possession of unit No. 1902-A x x x x16 The ruling was thereafter affirmed by the HLURB with modification by imposing a fine of P10,000.00 on GDREC for violation of Secs. 17, 18 and 2517 of PD 957, "The Subdivision and Condominium Buyers Protective Decree." The Office of the President sustained the HLURB. This case is now pending before the Court of Appeals. Klaver's causes of action against Que before the Regional Trial Court of Pasig City involve the following: (1) Que and Klaver agreed that possession of the unit would be transferred to Que only upon full payment of the purchase price not later than 31 May 1995; (2) Sometime in February 1995 Que got the keys of the unit from GDREC without the knowledge and written permission of Klaver and started making improvements on the premises; and, (3) Que unilaterally decided to withhold payment of the full purchase price. Klaver prayed that: (a) Que be ordered to vacate the unit; (b) the amount of P200,000.00 Que had previously paid be forfeited in his favor; (c) Que be declared a builder in bad faith and that the improvements she had introduced on the premises be retained by him without indemnification; and, (d) Que be ordered to pay damages, attorneys fees and costs of suit. There is no question that the case still being litigated before the Court of Appeals from the decision of the HLURB and the Office of the President is prejudicial to the case pending before the trial court. An affirmance by the appellate court or by this Court of the HLURB ruling with respect specifically to the right of Que to possess and own Unit 1902-A would warrant the dismissal of the case before the trial court. But if the final ruling in the HLURB case were otherwise, the trial court could then proceed to resolve Klaver's prayers therein. Thus, although we affirm the ruling of the Court of Appeals on the jurisdiction of the trial court over the case filed by Klaver against Que, resolution thereon by the trial court on the merits should be held in abeyance until the issues presented in the HLURB case shall have been finally settled.

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals of 29 May 1998 which affirmed theOrder of the Regional Trial Court of Pasig City-Br. 158 dismissing without prejudice the Amended Complaintagainst Golden Dragon Real Estate Corporation and its officers; denying petitioner Ma. Louisa T. Ques Motion to Dismiss; granting private respondent Nicolaas J. Klavers Motion for Leave to File Amended Complaint and admitting his Amended Complaint, as well as the Court of Appeals Resolution of 18 September 1998 which denied reconsideration are AFFIRMED, with the MODIFICATION that the trial court is directed to defer action on Civil Case No. 65287 instituted by private respondent against petitioner until the HLURB case shall have been finally resolved. No costs. SO ORDERED. Mendoza, Quisumbing, Buena and De Leon, Jr., JJ., concur.

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