Lisam Enterprises v. Banco de Oro Unibank
REITERATIONFacts
The Antecedents: Petitioners Lisam Enterprises, Inc. (LEI) and Lolita A. Soriano filed a complaint for Annulment of Mortgage with Prayer for Temporary Restraining Order & Preliminary Injunction with Damages against respondents Banco de Oro Unibank, Inc. (BDO, formerly PCIB), Lilian S. Soriano, the Estate of Leandro A. Soriano, Jr., Register of Deeds of Legaspi City, and Jesus L. Sarte. Petitioners alleged that LEI acquired a parcel of land in 1993. In 1996, Spouses Lilian and Leandro Soriano, Jr., as president and treasurer of LEI, obtained a ₱20 Million loan from PCIB. To secure this loan, they executed a real estate mortgage over LEI's property without authority from LEI's board and allegedly used a falsified board resolution dated November 6, 1995, which bore the forged signature of Lolita A. Soriano as Corporate Secretary. Lolita A. Soriano denied signing such a resolution or appearing before a notary public to acknowledge it. Petitioners claimed PCIB was negligent in not verifying the board resolution's authenticity and issuance. Later, in August 1998, Spouses Soriano, allegedly with PCIB's instigation, executed a Deed of Assumption of Loans and Mortgage Obligations, making LEI assume the ₱20 Million personal debt of the Spouses Soriano. This was allegedly done using another falsified board resolution, again with Lolita A. Soriano's forged signature. Lolita A. Soriano discovered these transactions in April 1999 and demanded the Spouses Soriano pay their personal debt to free LEI's property. When ignored, petitioners filed a derivative suit with the Securities and Exchange Commission (SEC) for fraudulent scheme. Subsequently, a notice of auction sale was issued for September 7, 1999. Petitioners sought damages for moral shock and hurt pride. Procedural History: The Regional Trial Court (RTC) of Legaspi City issued a temporary restraining order and later a writ of preliminary injunction enjoining the auction sale. Respondents Lilian S. Soriano and the Estate of Leandro A. Soriano, Jr. filed an Answer, asserting they were authorized to mortgage the property and that the loan proceeds benefited LEI. Respondent PCIB filed a Motion to Dismiss on grounds of lack of legal capacity to sue, failure to state a cause of action, and litis pendencia. On November 11, 1999, the RTC dismissed petitioners' Complaint. Petitioners filed a Motion for Reconsideration and, while awaiting resolution, a Motion to Admit Amended Complaint, which corrected paragraph 13 to include a demand made by Lolita A. Soriano upon the Board of Directors of LEI to take legal steps, which the Board failed to do. On May 15, 2000, the RTC denied both motions, holding that the motion for reconsideration raised no new arguments and that the amended complaint absolutely changed the cause of action. The Petition: Petitioners filed a Petition for Review on Certiorari with the Supreme Court, assailing the RTC's dismissal of their complaint and denial of their motions, raising questions of law regarding their legal capacity to sue, litis pendencia, failure to state a cause of action, and the denial of the amended complaint.
Issue(s)
Whether the RTC erred in dismissing the action on the ground that petitioner Lolita A. Soriano has no legal capacity to sue as she is not a real party-in-interest, and whether the amended complaint sufficiently states a cause of action for a derivative suit. Whether the RTC erred in dismissing the action on the ground that there is another action pending between the same parties for the same cause (litis pendencia) and lack of jurisdiction. Whether the RTC erred in denying the admission of petitioners' amended complaint filed as a matter of right after the order of dismissal was issued but before its finality. Whether the RTC erred in dismissing the action instead of suspending it, following the doctrine laid down in Union Glass.
Ruling
The Supreme Court reversed and set aside the Resolution of the RTC dismissing the complaint and its Order denying the Motion for Reconsideration and Motion to Admit Amended Complaint. The RTC was directed to admit the Amended Complaint and to proceed with dispatch in trying the case.
Ratio Decidendi
On whether Lolita A. Soriano has no legal capacity to sue and whether the amended complaint sufficiently states a cause of action for a derivative suit: The Court enumerated the requisites for a derivative suit: (a) the party bringing the suit is a shareholder at the time of the complained act; (b) the party has exhausted intra-corporate remedies by demanding relief from the board, which failed or refused; and (c) the cause of action devolves on the corporation, with harm caused to it. The Court found that the amended complaint alleged all these requisites, specifically noting the allegation that Lolita A. Soriano demanded action from the LEI Board, which failed to act. Therefore, the amended complaint remedied the defect in the original complaint and sufficiently stated a cause of action. On the dismissal of the complaint for litis pendencia and lack of jurisdiction: Citing Saura v. Saura, Jr., the Court held that the complaint for annulment of mortgage filed with the regular courts, involving a mortgagee bank with no intra-corporate relationship with the stockholders, is properly filed with the regular courts. The Court also found no forum shopping because the issues in the SEC case (due execution, authenticity, or validity of board resolutions) were different from the issues in the RTC case (validity of the mortgage itself). Therefore, dismissal on these grounds was improper. Instead, the Court directed the RTC to proceed with the trial of the case with dispatch, noting that under R.A. No. 8799, regular courts now have jurisdiction over intra-corporate disputes. On the denial of the motion to admit amended complaint: The Court held that amendments to pleadings are generally favored and should be liberally allowed in furtherance of justice, especially in the early stages of a lawsuit before trial. While amendments after a responsive pleading is filed require leave of court, the 1997 Rules of Civil Procedure allow substantial amendments to the cause of action or defense if sought to serve the higher interests of substantial justice, prevent delay, and secure a just, speedy, and inexpensive disposition of actions. Since trial had not yet begun, admitting the amendment would not cause delay and would allow the issues to be threshed out. Thus, the denial was overruled and the amended complaint ordered admitted. The provided text does not contain any ratio decidendi related to the issue of dismissing the action instead of suspending it, following the doctrine laid down in Union Glass. Therefore, I am unable to provide a corresponding ratio for this issue.
Main Doctrine
A motion to admit an amended complaint, even if it substantially alters the cause of action or defense, may be allowed by the court if sought to serve the higher interests of substantial justice, prevent delay, and secure a just, speedy, and inexpensive disposition of actions and proceedings, especially when filed before the order of dismissal becomes final and executory and before trial has commenced. Furthermore, a derivative suit is sufficiently stated if the requisites of a shareholder status, exhaustion of intra-corporate remedies (including demand on the board), and harm to the corporation are alleged.