Tiu vs PBCOM
G.R. no. 151932
August 19, 2009
Peralta, J:
Facts:
Asian Water Resources, Inc. (AWRI), represented by herein petitioners, applied for a real estate
loan with the respondent PBCOM secured by TCT No. T-13020 to fund its purified water
distribution business. AWRI applied for additional capitalization with respondent secured by a
Surety Agreement signed by Petitioners in their capacity as Directors. All copies of the Surety
Agreement, except two, were kept by Respondent. Of the two copies kept by the notary public,
one copy was retained for his notarial file and the other was sent to the Records Management
and Archives Office, through the Office of the RTC Clerk of Court. When AWRI failed to fulfill its
obligations to respondent, the latter filed a compliant for collection against petitioners before the
RTC. Petitioners filed their answer stating that they are not personally liable as they signed in
their capacities as officers of AWRI and that the Surety Agreement attached to the complaint as
Annexes “A” to “A-2” were falsified as the words “in his personal capacity” did not yet appear in
the document when petitioners signed. Petitioners attached to their answer a photocopy of the
Surety Agreement where the words “in their personal capacity” were not present. When
Respondent checked their records, it was discovered that Kenneth Cabaung added the words
through mistake. Respondent filed a Reply and Answer to Counterclaim with Motion for Leave
of Court to Substitute Annex “A” of the Complaint which was granted by the RTC. Petitioners
filed a Motion for Reconsideration and opposition which was denied. On appeal to the CA, the
dismissal was affirmed.
Issues:
Whether or not the substitution of Annex “A” was proper
Held:
The Court denied the petition. With respect to PBCOM’s right to amend its complaint, including
the documents annexed thereto, after petitioners have filed their answer, Section 3, Rule 10 of
the Rules of Court specifically allows amendment by leave of court.
Under the 1997 rules, "the amendment may substantially alter the cause of action or defense."
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.
The granting of leave to file amended pleading is a matter particularly addressed to the sound
discretion of the trial court; and that discretion is broad, subject only to the limitations that the
amendments should not substantially change the cause of action or alter the theory of the case,
or that it was not made to delay the action. Nevertheless, as enunciated in Valenzuela, even if
the amendment substantially alters the cause of action or defense, such amendment could still
be allowed when it is sought to serve the higher interest of substantial justice; prevent delay;
and secure a just, speedy and inexpensive disposition of actions and proceedings.
The courts should be liberal in allowing amendments to pleadings to avoid a multiplicity of suits
and in order that the real controversies between the parties are presented, their rights
determined, and the case decided on the merits without unnecessary delay. This liberality is
greatest in the early stages of a lawsuit, especially in this case where the amendment was
made before the trial of the case, thereby giving the petitioners all the time allowed by law to
answer and to prepare for trial.
In the present case, there was no fraudulent intent on the part of PBCOM in submitting the
altered surety agreement. In fact, the bank admitted that it was a mistake on their part to have
submitted it in the first place instead of the original agreement. It also admitted that, through
inadvertence, the copy that was attached to the complaint was the copy wherein the words "IN
HIS PERSONAL CAPACITY" were inserted to conform to the bank’s standard practice. This
alteration was made without the knowledge of the notary public. PBCOM’s counsel had no idea
that what it submitted was the altered document, thereby necessitating the substitution of the
surety agreement with the original thereof, in order that the case would be judiciously resolved.
