Tatlonghari v. Bangko Kabayan-Ibaan Rural Bank
REITERATIONFacts
The Antecedents: Pedro V. Ilagan filed a civil case against respondent Bangko Kabayan-Ibaan Rural Bank, Inc. (the bank) and the Provincial Sheriff of Batangas Province, seeking the annulment of a special power of attorney (SPA), promissory notes, and a real estate mortgage. Pedro alleged that notices of Sheriffs Sale were posted against him and herein petitioners Spouses Ernesto and Eugenia Tatlonghari (Sps. Tatlonghari), as well as Matilde Valdez and Crispin Brual, for the satisfaction of Pedro's alleged indebtedness to the bank, which Pedro denied obtaining. Sps. Tatlonghari later joined the case upon Pedro's representation that a falsified SPA was used to mortgage their property. Valdez and Brual died during the proceedings, and their estates and heirs were sought to be included as defendants. Sps. Tolentino A. Sandoval and Evelyn C. Sandoval (Sps. Sandoval) were also included as plaintiffs, having purchased Valdez's mortgaged property. Eugenia Ilagan, Pedro's spouse, was also included as a plaintiff. Procedural History: Sps. Tatlonghari, after discovering evidence suggesting co-plaintiff Tolentino's involvement in the anomalous transactions, engaged their own counsel, Atty. Marlito I. Villanueva. Atty. Villanueva filed a motion for leave to file a third amended complaint on behalf of Sps. Tatlonghari, alleging that their property was consolidated in favor of the bank and that the previous complaints lacked specific allegations and prayers for reconveyance of their property, which was distinct from the mortgaged property. The Regional Trial Court (RTC) denied the motion, citing delay in adjudication and the lack of Atty. Salva's signature, who was considered the counsel of record. The Court of Appeals (CA) affirmed the RTC's denial, finding no grave abuse of discretion and upholding the RTC's ruling on the counsel of record issue. The Petition: Sps. Tatlonghari filed a petition for review on certiorari before the Supreme Court, assailing the CA's decision and resolution.
Issue(s)
Whether the Court of Appeals erred in upholding the denial of Sps. Tatlonghari's motion for leave to file a third amended complaint. Whether the Court of Appeals erred in finding that there was no valid substitution of counsels of record insofar as Sps. Tatlonghari were concerned.
Ruling
The petition is GRANTED. The Decision dated January 29, 2015 and the Resolution dated August 5, 2015 rendered by the Court of Appeals in CA-G.R. SP No. 126390 are REVERSED and SET ASIDE. The Regional Trial Court of Batangas City, Branch 7 is directed to ADMIT petitioners' third amended complaint and continue with the proceedings with utmost dispatch.
Ratio Decidendi
On the denial of the motion for leave to file a third amended complaint: The Court held that procedural rules allow amendments to pleadings, and motions for leave to file amended pleadings should be treated with liberality in the interest of justice to determine every case on its real facts and prevent multiplicity of suits. Such leave may be refused if the motion is made with intent to delay, but in this case, the Sps. Tatlonghari alleged that the previous complaints lacked material averments for their cause of action and a prayer for reconveyance of their property. A review of the records confirmed that the First and Second Amended Complaints were indeed bereft of specific allegations pertaining to Sps. Tatlonghari's personal involvement and claims against the bank, focusing instead on the causes of action of other plaintiffs. Therefore, it would have been more prudent for the RTC to allow the amendment to prevent circuitry of action and unnecessary expense. The Court found no evidence that the delay was attributable to Sps. Tatlonghari or that they acted in bad faith. Since the motion was filed before trial, allowing the amendment would facilitate the determination of the case on its real facts and afford complete relief to all parties. On the issue of substitution of counsels: The Court clarified that there is no rule requiring the written consent of a former attorney prior to substitution. Section 26, Rule 138 of the Rules of Court provides that a client may dismiss or substitute an attorney at any time, and the rule only requires written notice of the change to the adverse party. The Court emphasized that it is the client's sole prerogative to choose their counsel, and this cannot be negated by a non-existent requirement of written consent from the previous attorney. As Atty. Villanueva had entered his appearance for Sps. Tatlonghari and filed their motion, he should be recognized as their new counsel of record, fully authorized to act on their behalf. The RTC and CA erred in insisting on Atty. Salva's continued representation despite the client's clear intent to substitute.
Main Doctrine
A motion for leave to file a third amended complaint should be granted liberally in the interest of justice to determine the case on its real facts and prevent multiplicity of suits, provided it is not made with bad faith or intent to delay, and the court should be circumspect in denying such a motion, especially when filed before trial. Furthermore, a client may substitute counsel at any time, and only notice to the adverse party is required, not the written consent of the former counsel.