Lisam vs. BDO case and prevent the unnecessary expense.

This liberality is greatest

G.R. No. 143264, April 23, 2012
FACTS:
On or about 28 March 1996, Defendant Spouses Soriano (herein
Spouses) in their personal capacity obtained a P20 Million loan from
co-Defendant PCIB (Now BDO) and executed a third-party mortgage
using the residential property owned by plaintiff Lisam Enterprises,
Inc. (herein LEI).
Lolita Soriano (herein Soriano) who represents LEI claims that the
Spouses falsified the Board Resolution or Corporate Resolution to
borrow and the corresponding Secretary Certificate where it states
that the latter is allowed to execute a real estate mortgage over the
said residential property. Also, she claims that she never signed any
of the said documents and that her signature was forged.
She then filed a derivative suit against defendants Spouses.
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. Unless there are circumstances such as inexcusable delay
which might justify a refusal of permission to amend.
In the case at bar, it would have been more fitting for the trial court
to extend such liberality towards petitioners by admitting the
amended complaint which was filed before the order dismissing the
original complaint became final and executory. It is quite apparent
that since trial proper had not yet even begun, allowing the
amendment would not have caused any delay but rather, doing so
would have served the higher interest of justice.
Moreover, a reading of the amended complaint will reveal that all the
foregoing requisites of a derivative suit had been alleged therein.
Hence, the amended complaint remedied the defect in the original
complaint and now sufficiently states a cause of action.

On 25 September 1999, Defendant Spouses filed an answer to
Petitioner Soriano’s complaint.
On 28 September, co-defendant PCIB filed a Motion to Dismiss the
Complaint where one of the grounds is failure to state cause of action
because LEI failed to comply with one of the requisites of a
derivative suit which is that she has tried to exhaust intra-corporate
remedies. For example, she has made a demand on the board of
directors for the appropriate relief but the latter has failed or refused
to heed her plea.
Hence, while awaiting resolution of the motion for reconsideration,
petitioners also filed, on January 4, 2000, a Motion to Admit
Amended Complaint including the following statement:
Therefore, co-defendant PCIB should not complain that it would be
unfair to that admit the amended complaint after they pointed out a
defect in the original complaint. They should have been well aware
that due to the changes made by the new Rules, amendments may
now substantially alter the cause of action or defense. It should not
have been a surprise to them that petitioners would redress the defect
in the original complaint by substantially amending the same.
RULE 10 SECTION 3
General Rule: Substantial amendments may be made only upon
leave of court.
Exception: If the Substantial Amendment is made before the
responsive pleading is served. 

That plaintiff Soriano likewise made demands upon the Board of Exception to the Exception:
Directors of LEI to make legal steps to protect the interest of the
corporation from said fraudulent transaction, but unfortunately, until a. With intent to delay
now, no such legal step was ever taken by the Board, hence, this b. Confer jurisdiction on the court
action for the benefit and in behalf of the corporation. c. Pleading stated no cause of action from the beginning

On 15 May, the trial court denied the motion to admit the amended
complaint because no new argument had been raised and the same
absolutely changed petitioners' cause of action.

ISSUE: WON the trial court erred when it denied the said motion.

RULING: Yes.

Section 3, Rule 10 of the Rules of Court provides that after a

responsive pleading is served, 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.

In other words, when a responsive pleading has been filed, substantial

amendments to the complaint is not a matter of right but a matter of
judicial discretion

In Valenzuela vs CA, 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.

Furthermore, amendments to pleadings are generally favored and

should be liberally allowed in furtherance of justice in order that
every case, may so far as possible, be determined on its real facts ,
avoid a multiplicity of suits and in order to speed up the trial of the