CONTECH CONSTRUCTION TECHNOLOGY & DEVELOPMENT CORPORATION, JERRY A. KHO, WEIJEN A. KHO AND WILLEN A. KHO, PETITIONERS, VS. COURT OF APPEALS AND GREENBELT SQUARE, INC., RESPONDENTS.

This is a petition for certiorari and prohibition with
preliminary injunction to annul and set aside the decision dated July 24, 1987
of the Court of Appeals^[1]
directing the Regional Trial Court of Pasig, Branch CLXIV in Civil Case No.
45321 to admit the amended complaint of respondent Greenbelt Square, Inc. and
to proceed with the trial of said case.

It appears on record that on August 8, 1980, petitioner Contech
Construction Technology & Development Corporation, as contractor, and
private respondent Greenbelt
Square, Inc., as owner, entered into an Agreement whereby the former undertook
the construction, equipping, furnishing and supplying of materials for a
theater and restaurant building for a consideration of P20,069,694.00.^[2]

Pursuant to said Agreement, petitioners secured from the
Philippine British Assurance Co., Inc. (Phil?British for brevity), a bond
of P2,000,000.00 under Bond No. 0746 to guarantee the payment of the labor and
materials used in connection with the construction project,^[3] from
the Metropolitan Insurance Co. (Metropolitan for brevity); P4,000,000.00 under
Surety No. 80/G(13)00853 to secure the full and faithful performance of the
petitioners^[4]
and Surety No. 80/G(10)00457 for P2,000,000.00 to guarantee the supply of
Cement and steel bars needed for said project.^[5]

On October 21, 1981, respondent Corporation terminated the
Agreement upon petitioners’ failure to comply with the terms and conditions of
said Agreement.^[6] Respondent Corporation, likewise, sent
Phil-British and Metropolitan notices of claim for petitioners’ failure to
perform their part of the Agreement.

Petitioners, thereafter, withdrew their men and equipments from
the construction site and respondent Corporation contracted the services of
R.N. Construction Co., Inc. to finish the building project. However, upon petitioners’ refusal to pay
their obligation to respondent Corporation, the latter, on March 24, 1982,
simultaneously filed with the Court of First Instance of Rizal two separate
complaints against petitioners and their sureties for breach of contract.

In the first complaint which was docketed as Civil Case No.
45321, respondent Corporation had petitioners and Phil-British as party
defendants for the collection of a sum of money, while the second complaint
which was docketed as Civil Case No. 45322, petitioners and Metropolitan were
also party defendants for the collection of a sum of money.

On June 3, 1982, petitioners filed a motion to dismiss the second
complaint on the ground of the pendency of the first complaint likewise between
the same parties for the same cause, which motion was denied by the trial
court. However, upon appeal to the
Intermediate Appellate Court,^[7] the
appellate court on May 4, 1984 held that there was a splitting of a cause of
action when the two complaints were filed simultaneously, hence, the orders of
the trial court dated May 17, 1983 and July 25, 1983 denying the motion to
dismiss and the motion for reconsideration were nullified. Said decision of the appellate court became
final on August 2, 1984.

On August 8, 1984, respondent Corporation filed before the lower
court where the first complaint was pending, a motion for leave to amend its
complaint and to consolidate the two cases, which motion was denied on October
3, 1984. Accordingly, respondent
Corporation filed a motion for reconsideration on October 29, 1984, which was
also denied on January 13, 1987.

Thereafter, respondent corporation filed a petition for certiorari
and mandamus with the appellate court alleging grave abuse of discretion
on the part of the trial court in denying its motion to amend the complaint.

The appellate court, on July 24, 1987, rendered a decision giving
due course to respondent Corporation’s petition and directed the trial court to
admit the amended complaint of the respondent corporation. Consequently, petitioner filed a motion for
reconsideration on August 11, 1987 which was denied on August 27, 1987.

Hence, this petition.

Petitioners contend that the appellate court acted without
jurisdiction or with grave abuse of discretion amounting to lack of
jurisdiction in admitting the amended complaint of the respondent Corporation,
considering that the previous dismissal of the second complaint for violating
the rule against splitting a cause of action barred its reinstitution by the
amendment of the first complaint.

Section 2, Rule 10 of the Revised Rules of Court provides that:

“A party may amend his pleading once as a matter of course at
any time before a responsive pleading is served or, if the pleading is one to
which no responsive pleading is permitted and the action has not been placed
upon the trial calendar, he may so amend it at any time within ten (10) days
after it is served.”

Under this rule, a party is given a right to file an amended
pleading within the time and upon the conditions specified in the rule and
without the necessity of obtaining leave of court since a party may amend his
pleading once as a matter of course at any time before a responsive pleading is
served. This rule expressly authorizes
the amendment of pleadings in order that all matters in the action in dispute
between the parties may be completely determined in a single proceeding. The amended complaint, in the instant case,
was filed not to delay nor alter the cause of action of the first complaint but
rather to obviate the splitting of the cause of action and to obtain a speedy
determination of the controversy in one proceeding without regard to
technicality. The amended complaint
merely impleaded Metropolitan as a party defendant in the first complaint and
included in said complaint the cause of action alleged in the second complaint
which was already dismissed. Furthermore, petitioners had not yet filed any responsive pleading to
the first complaint when respondent corporation filed the motion to amend its
complaint. As correctly held by the
appellate court:

“It is a recognized rule of procedure that pleadings shall be
construed liberally so as to render substantial justice to the parties and in
order that actual merits of the controversy may speedily be determined without
regard to technicalities and in the most expeditious and inexpensive
manner. The judicial attitude has
always been favorable and liberal in allowing amendments to a pleading. The rationale behind the rule is to avoid
multiplicity of suits and in order that the real controversies between the
parties are presented, their rights are determined and the case decided on the
merits without unnecessary delay. When
the situation is such that if the proposed amendment is not allowed, another
action would be instituted, thus making two actions, two trials, and two
appeals possible and probable, the said amendment should be admitted. Hence, should the trial court find the
allegations in the pleadings to be inadequate, it should allow the party
concerned to file proper amendments to pleadings in accordance with the mandate
of the Rules of Court that amendments to pleadings are favored and should be
liberally allowed.

Applying the foregoing principles to the instant case, there is no
doubt that the respondent Court committed a grave and serious abuse of
discretion in not admitting the amended complaint. The records of the case indicate that the motion for leave to
admit the amended complaint was filed before a responsive pleading was
filed. In fact, no responsive pleading
has yet been filed by the private respondents. Their opposition filed on August 15, 1984 is not a responsive pleading
within the contemplation of the rule. Consequently, the filing by the petitioner of an amended complaint was
erroneously denied by the respondent Court, the same being a matter of
right. Indeed, in such a situation, an
error of the trial court in refusing such amendment is controllable by mandamus.

Moreover, the Court, after assiduously examining and comparing the
original and amended complaint, is of the opinion that the amendment sought to
be included did not in any manner change the cause of action nor was it
intended for delay, which considerations appear to be the only ground for
denying a motion for leave to amend under section 3 of Rule 10 of the Rules of
Court.”^[8]

Petitioners also contend that the rule of conclusiveness of
judgment is applicable in this case in
view of the finality of the judgment of the appellate court dismissing
the second complaint which was being reintroduced by a mere amendment of
the first complaint. In said judgment,
it was held that there was a splitting of a cause of action in the first and
second complaint, therefore the rule against splitting of a cause of action barred
the second complaint as enunciated in the cases of Jimenez vs. Camara^[9] and City of Bacolod vs. San Miguel Brewery,^[10] resulting in an outright denial of the amended complaint.

We do not agree.

The rulings in the aforementioned cases are not applicable in the
case at bar since both cases
refer to a situation wherein the second complaint, which cause of action should
be included in the first complaint, was filed after a final decision was
rendered on the merits. In this case,
the first and second complaint were not yet set for pre-trial or trial because
petitioners had not yet filed any responsive pleading to both complaints,
therefore the amendment should be allowed since said amendment will not delay
the proceeding and there was no change in respondent Corporation’s cause of
action.

WHEREFORE, the petition for certiorari
and prohibition with preliminary injunction is hereby DENIED for lack of merit.

SO ORDERED.

Narvasa, C.J., (Chairman), and
Regalado, J., concur.

Padilla, J., no part, in view of prior relationship with private respondent.  

^[1]
In CA-G.R. SP No. 11226, penned by Justice Justo P. Torres, Jr. with the
concurrence of Justice Josue N. Bellosillo and Justice Oscar M. Herrera.

^[2]
Id., at p. 87.

^[3]
Id., at pp. 91-92.

^[4]
Id., at pp. 62-63.

^[5]
Id., at pp. 64-65.

^[6]
Id., at p. 66.

^[7]
AC-G.R. SP No. 01578, penned by Justice Lino M. Patajo and concurred in by
Justice Simeon M. Gopengco and Justice Jose F. Racela, Jr.

^[8]
CA’s Decision, pp. 6-7; Rollo, pp. 30-31.

^[9]
107 Phil. 590.

^[10]
29 SCRA 819.