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Tiu, et al. v. Philippine Bank of Communications, G.R. No. 151932, 19 August 2009.

[PERALTA, J.]

FACTS:

In a collection suit filed by PBCOM against petitioners Tiu, et al., the former demanded from the latter the full payment of its secured loan obligation. PBCOM’s claim is supported by a Suretyship Agreement signed by all members of the Board of Directors of Asian Water Resources, Inc. (AWRI), including petitioners. This was controverted in petitioners’ Answer saying that the Surety Agreement was falsified to insert the wordings “IN THEIR OWN CAPACITY” without their consent, attaching a certified copy of the same document from the Records Management and Archives Office in Davao City. PBCOM then filed a Reply and Answer to Counterclaim with Motion for Leave of Court to Substitute Annex “A” of the Complaint, wherein it attached the duplicate original copy retrieved from the file of the notary public. PBCOM also admitted its mistake in making the insertion and explained that it was made without the knowledge and consent of the notary public. PBCOM maintained that the insertion was not a falsification, but was made only to speak the truth of the parties’ intentions. The trial court allowed the substitution of the altered document. Petitioners move for reconsideration but was denied. The case was elevated to the Court of Appeals in a petition for certiorari under Rule 65 but only to affirm in toto the trial court’s assailed order.

ISSUE:

Is the Court of Appeals correct in affirming the trial court’s order allowing the substitution of the “falsified” actionable document, notwithstanding it appears to have substantially altered the cause of action?

HELD: YES.

[W]ith 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.

This Court has emphasized the import of Section 3, Rule 10 of the 1997 Rules of Civil Procedure in Valenzuela v. Court of Appeals, thus:

“Interestingly, Section 3, Rule 10 of the 1997 Rules of Civil Procedure amended the former rule 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.” 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.

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