Yujuico v. United Resources Asset Management
REITERATIONFacts
The Antecedents: Strategic Alliance Development Corporation (STRADEC) entered into a Loan Agreement with United Resources Asset Management, Inc. (URAMI) on December 28, 2000. Several STRADEC stockholders, including petitioner Aderito Z. Yujuico, executed Pledge Agreements pledging their STRADEC shares to URAMI to secure STRADEC's loan obligations. STRADEC failed to meet its payment obligations. Procedural History: On June 18, 2004, STRADEC and its stockholders received a notice of an impending auction sale of the pledged stocks, signed by Atty. Richard J. Nethercott, claiming to be URAMI's attorney-in-fact. On June 21, 2004, petitioner filed an injunction complaint (Civil Case No. 70027) before the RTC of Pasig City, seeking to stop the auction sale, arguing that Atty. Nethercott lacked authority. The RTC did not issue a temporary restraining order, and the auction proceeded on June 23, 2004, with URAMI as the winning bidder. On July 5, 2004, the RTC issued a writ of preliminary injunction preventing URAMI from appropriating the stocks. URAMI filed an answer on September 5, 2006, admitting the auction sale was void and that Atty. Nethercott lacked authority, thus URAMI could not be held liable. Petitioner filed a motion for summary judgment on May 29, 2007, based on URAMI's admissions. Proceedings were suspended by a temporary restraining order from the Supreme Court in G.R. No. 177068 from July 25, 2007, to October 13, 2008. URAMI changed counsel and, on February 23, 2009, filed an amended answer with counterclaim, retracting its previous admissions and claiming the auction was valid and Atty. Nethercott was authorized. Petitioner's motion to strike out the amended answer was denied, then granted on reconsideration by the RTC, which was later set aside for lack of leave of court. URAMI then filed a motion for leave to file an amended answer, which was granted by the RTC on November 10, 2009. Petitioner's motion for reconsideration was denied. Petitioner challenged these orders via certiorari before the Court of Appeals (CA-G.R. SP No. 117431), which affirmed the RTC's orders. The present appeal followed. The Petition: Petitioner argues that the Court of Appeals erred in sustaining the RTC's orders allowing URAMI to file its amended answer, contending that URAMI is barred by Section 4 of Rule 129 from contradicting its judicial admissions and that the amended answer was a ploy to delay proceedings.
Issue(s)
Whether the Court of Appeals erred in sustaining the RTC's orders allowing URAMI to file its amended answer. Whether URAMI is barred by Section 4 of Rule 129 of the Rules of Court from contradicting its judicial admissions in its original answer. Whether the amended answer was filed solely to delay the proceedings.
Ruling
The petition is denied. The Decision dated August 12, 2013, and Resolution dated January 29, 2014, of the Court of Appeals in CA-G.R. SP No. 117431 are affirmed.
Ratio Decidendi
On the allowance of the amended answer: The Court ruled that the rules of procedure allow amendments to pleadings liberally, especially before trial, to achieve substantial justice. While amendments generally require leave of court after a responsive pleading is filed, courts are impelled to grant such leave with liberality. The primary consideration is whether the motion for leave is made in bad faith or with intent to delay. The Court found that the RTC and Court of Appeals did not abuse their discretion in granting URAMI leave to file its amended answer. The Court reiterated its time-honored judicial policy of affording liberal treatment to amendments to pleadings, particularly when made before trial. The rules of procedure are tools to facilitate justice, not to frustrate the truth. To succumb to the petitioner's arguments would sanction an outcome inconsistent with the underlying purpose of procedural laws. The Court found no cause to overrule the grant of leave to URAMI to file its amended answer. This grant was consistent with the policy of liberal treatment of amendments, especially before trial, and served the interest of justice by allowing the case to be determined on its real facts. On the applicability of Section 4 of Rule 129: The Court clarified that matters involving amendment of pleadings are primarily governed by Rule 10, not Section 4 of Rule 129. However, even if Section 4 were applied, the Court found that the admissions in URAMI's original answer were a product of clear and patent mistake. This was evidenced by a URAMI Board Resolution dated June 21, 2004, which evinced Atty. Nethercott's authority to cause the foreclosure on the pledged stocks. The existence of this resolution rendered the original statement regarding Atty. Nethercott's lack of authority mistaken, if not baseless. On the alleged dilatory purpose of the amended answer: The Court disagreed with the petitioner's accusation that the amended answer was merely a ploy to delay proceedings. The Court noted that the amended answer aimed to correct factual allegations crucial to the proper disposition of the case. Furthermore, the delay in filing the motion for leave was not solely attributable to URAMI, as Supreme Court-issued temporary restraining orders had suspended proceedings for over a year. URAMI filed its motion for leave a little over three months after the TRO was lifted, indicating diligence rather than delay.
Main Doctrine
Courts should grant leave to amend pleadings liberally, especially before trial, to ensure cases are decided on their real facts and to prevent multiplicity of suits, provided the amendment is not made in bad faith or to delay proceedings. Admissions in a pleading can be corrected through amendment if shown to be a product of clear and patent mistake, even if not explicitly stated as such, especially when supported by evidence like a board resolution authorizing a prior action.