Tiu v. Philippine Bank of Communications
REITERATIONFacts
1. The Antecedents: In June 1993, Asian Water Resources, Inc. (AWRI), represented by petitioners Henry Ching Tiu, Christopher Halin Go, and George Co, obtained a real estate loan from Philippine Bank of Communications (PBCOM), secured by collateral. In August 1996, AWRI sought a larger loan, and PBCOM required the directors to execute a Surety Agreement, making them personally liable for the obligation. Subsequently, AWRI offered to assign its properties to PBCOM as dacion en pago for the loan, which PBCOM denied. PBCOM then demanded full payment from the petitioners. 2. Procedural History: PBCOM filed a collection case against the petitioners (Civil Case No. 99-352) in the RTC. Petitioners alleged that the Surety Agreement was falsified, claiming the phrase "In his personal capacity" was intercalated without their consent. They presented a certified photocopy from the Records Management and Archives Office supporting this claim. PBCOM, after retrieving its file copy which also lacked the phrase, admitted the insertion was made by a loans clerk upon the auditor's instruction, without the notary's knowledge. PBCOM moved to substitute the altered Annexes "A" to "A-2" of the complaint with the original Surety Agreement. The RTC granted this motion, and denied petitioners' motion for reconsideration. Petitioners then filed a petition for certiorari with the Court of Appeals (CA), which dismissed their petition and affirmed the RTC's orders. This led to the present petition for review on certiorari. 3. The Petition: The petitioners seek review on certiorari under Rule 45 of the Rules of Court, arguing that the CA erred in affirming the RTC's order allowing the substitution of the allegedly falsified document. They contend that the RTC's action, by allowing the substitution of the document upon which PBCOM's cause of action was founded, was an error of jurisdiction or grave abuse of discretion. Petitioners also argue that the CA exceeded its jurisdiction by ruling on the merits of the case and the parties' obligations based on the surety agreement, thereby violating their right to due process. They assert that the substitution effectively removed their ability to present the falsified document as evidence and prejudiced their defenses.
Issue(s)
Whether the Regional Trial Court (RTC) committed grave abuse of discretion amounting to lack or excess of jurisdiction in allowing the substitution of the altered Surety Agreement with the original thereof. Whether the Court of Appeals (CA) erred in affirming the RTC's Order allowing the substitution of the document, and whether the CA exceeded its jurisdiction by ruling on the parties' obligations based on the Surety Agreement. Whether the Petition for Certiorari under Rule 65 is the proper remedy to question the RTC's act of allowing the substitution of the document.
Ruling
The petition is denied. The Decision of the Court of Appeals affirming the Orders of the Regional Trial Court is affirmed.
Ratio Decidendi
On the issue of substitution of the Surety Agreement: The Supreme Court held that the RTC did not err in allowing the substitution of the altered surety agreement with the original. Section 7, Rule 8 of the Rules of Court mandates that when an action or defense is based upon a written instrument, the original or a copy thereof shall be attached to the pleading as an exhibit. Furthermore, Section 3, Rule 10 of the Rules of Court allows substantial amendments to pleadings by leave of court. The Court emphasized that the granting of leave to file an amended pleading is a matter addressed to the sound discretion of the trial court, and such discretion should be exercised liberally in furtherance of justice to avoid multiplicity of suits and to ensure that cases are decided on their merits without unnecessary delay. In this case, PBCOM admitted the mistake in submitting the altered document and sought to substitute it with the original, which is the best evidence of the parties' stipulations. The Court found no fraudulent intent on PBCOM's part, and the substitution was made to ensure a judicious resolution of the case. The substitution did not prejudice the petitioners, as they could still present the altered documents as part of their evidence, and it tended to expedite the determination of the controversy. On the CA's ruling on the parties' obligations: The Supreme Court agreed with the petitioners that the CA should not have made determinations regarding the parties' respective rights based on the surety agreement. The CA, in its decision, went beyond the issues presented in the petition for certiorari, which was limited to whether the RTC committed grave abuse of discretion. The CA effectively preempted the RTC's determination of the merits of the case. However, this observation did not alter the outcome of the petition before the Supreme Court, as the core issue of the RTC's discretion in allowing the substitution was correctly resolved. On the nature of Certiorari: The Court reiterated that a Petition for Certiorari under Rule 65 is intended for the correction of errors of jurisdiction or grave abuse of discretion amounting to lack or excess of jurisdiction. It is not a remedy to correct errors of procedure or findings of fact or conclusions of law by the trial court. The RTC's act of allowing the substitution of the document involved a matter of judgment and discretion, which is not a proper subject for a petition for certiorari. The petitioners failed to establish that the RTC acted without or in excess of its jurisdiction, or with grave abuse of discretion.
Main Doctrine
The RTC did not err in allowing the substitution of an altered surety agreement with the original thereof, as it was a matter of discretion aimed at serving the higher interest of substantial justice and ensuring the speedy disposition of the case, and the substitution did not prejudice the petitioners.