BARFEL DEVT. CORP. VS.
CA
Facts: The defendants, as sellers, and plaintiff corporation as buyer by its President plaintiff Zaragoza
entered into an agreement to Buy and Sell two parcels of land with two houses erected thereon. Said
agreement bears a stipulation that the seller will apply the payment of the cash portion of the purchase
price to the removal of any and all liens on the properties; plaintiff paid a downpayment upon signing of
the aforesaid agreement; during the negotiation and conclusion of the agreement, the defendant
repeatedly warranted that except for a mortgage in favor of BPI and the deeds of restriction annotated at
the back of the title.
Sometime on June 1987, plaintiffs found out that defendants made a blatant misrepresentation, it was
discovered that the subject properties have a second mortgage with the PISO/Central Bank; having
informed of this discovery defendant Barrios advised plaintiff that the second mortgage obligation is
reduced and gave assurance that he will submit the necessary documents to support the same so that a
valid and acceptable arrangement could be worked out by the Central Bank for the released of the
second mortgage; the Phil Savings Bank gave notice that it has approved plaintiff corporations application
for the loan with which to pay subject properties under the agreement; the PSB sent a separate letter
whereby new titles to the subject properties would be transferred to the plaintiff corporation and the
mortgage in favor of PSB to be annotated thereon and the defendants expressed their conformity to the
aforesaid agreement.
Plaintiff sent a letter to the defendant to further ensure the consummation of the transaction; however, the
former received information that the latter had been negotiating to other parties; subsequently defendant
failed and refused to comply with their contractual transaction of securing the release of the second
mortgage. The malice, fraud and the gross and evident bad faith of the defendant is futher demonstrated
by the fact that, BPI advised that it was disauthorized by the defendant to consumnate the transaction.
Petitioner (as defendants) filed an answer and averred that it was aware of the liens on the property
including the mortgage to PISO, if full payment could not be affectual, of if the PISO mortgage is not
released within 10 days each have the option to terminate the agreement.
Plaintiff (herein private respondents) presented evidence and rested its case. During defendant’s (herein
petitioner) presentation of evidence, private respondent filed a motion for a leave to file an amended
complaint and motion to admit the same impleading PISO bank as additional party. Despite petitioner’s
opposition, the trial court issued an order admitting the amended complaint. Petitioner then proceeded to
the CA for a petition for certiorari and prohibition. CA’s ruled in favor of private respondent and denied the
motion for reconsideration.
Issue: W/N amendment to the complaint pleading a cause of action against a new or additional party can
be allowed after the private respondents (as plaintiff) had rested its case and petitioner (as defendants)
had commenced the presentation of their evidence
Ruling: A real interest has been defined as a present substantial interest, as distinguished from a mere
expectancy or a future, contigent, subordinate or consequential interest. Therefore, a party who has not
taken part in it cannot sue or be sued for performance or for cancellation thereof, unless he shows that he
has a real interest affected thereby.
Complete relief by private respondents against petitioners may be had even if PISO/Central Bank were
not impleaded as party defendant in the original case. PISO is not an indispensable or necessary party
without whom no final determination can be had of the action for specific performance with damages.
Moreover, the amendment sought by private respondents, which is to include a new party defendant at a
late stage in the proceeding, is not a formal but a substantial one. Private respondents will have to
present additional evidence on the PISO second mortgage. The effect would be to start trial anew with the
parties recasting their theories of the case. The correct amount of the second mortgage owed by
petitioners to PISO bank, would have to be litigated and this could be time consuming.
