REPUBLIC OF THE PHILIPPINES, PETITIONER, VS. ANDRES L. AFRICA, VICTOR AFRICA, LOURDES A. AFRICA, NATHALIE A AFRICA-VERCELES, JOSE ENRIQUE A. AFRICA, PAUL DELFIN A. AFRICA, ROSAR…

Republic versus Africa

The Case

This is the Republic of the Philippines against Andres L. Africa and the other private respondents, a petition for certiorari and prohibition brought to reverse the Sandiganbayan's refusal to admit an amended complaint in the Republic's long-running suit to recover shares of stock in Eastern Telecommunications Philippines, Incorporated, alleged to be held in trust for former President Ferdinand Marcos and Mrs. Imelda Marcos. The case matters for one clean procedural reason: it fixes the boundary between amendment as a matter of right and amendment by leave of court when only some defendants have answered.

Procedural History

The Republic, through the Presidential Commission on Good Government, filed the original complaint before the Sandiganbayan for recovery of 3,305 shares of stock registered in the names of the private respondents. All of the private respondents eventually answered except Andres L. Africa, Racquel S. Dinglasan, Evelyn A. Romero, and Rosario Songco, against whom there was no valid service of summons. Andres L. Africa and Rosario Songco later died.

The Republic moved for leave to file an amended complaint to implead the heirs of the two deceased defendants and to properly summon Dinglasan and Romero. The Sandiganbayan denied that motion because it was not properly set for hearing, and denied reconsideration. The Republic filed a second motion for leave, this time with a notice of hearing, attaching an amended complaint dated July 1, 2005. The Sandiganbayan again denied it, citing the Republic's repeated delays and extensions, and denied reconsideration. The Republic then came to the Supreme Court by petition for certiorari and prohibition.

Facts

The Republic sued to recover 3,305 shares of Eastern Telecommunications stock registered in the names of the private respondents, alleging the shares were held in trust for the Marcoses. The complaint stated that the addresses of the private respondents were unknown and asked that summons be served through named relatives and through Attorneys Victor Africa and Juan de Ocampo at the Telecoms Plaza in Makati City.

All of the private respondents answered except Andres L. Africa, Racquel S. Dinglasan, Evelyn A. Romero, and Rosario Songco, because no valid summons reached them. In the meantime, Andres L. Africa and Rosario Songco died.

Seeking to implead the heirs of the two deceased defendants and to properly summon Dinglasan and Romero, the Republic filed its first motion for leave in January 2005, but it was denied for failure to set the motion for hearing. Its second motion, filed in July 2005 with a proper notice of hearing, met the same fate. The Sandiganbayan recounted the Republic's history of extensions and concluded that leave to amend was a matter peculiarly within its sound discretion, which it would not exercise in the Republic's favor.

Issues

• Whether or not the Republic's motion to amend its complaint falls under amendment as a matter of right rather than amendment by leave of court.
• Whether or not the fact that most of the private respondents had already answered barred the Republic from amending its complaint once, as a matter of right, against the non-answering defendants.
• Whether or not the Sandiganbayan gravely abused its discretion in denying the Republic's motion for leave to file the amended complaint.

Applicable Provisions

Section 2 of Rule 10 of the Rules of Court provides:

A party may amend his pleading once as a matter of right at any time before a responsive pleading is served and thereafter, only upon leave of court.

This is the provision the Court holds actually governs, because the proposed amendments concern only defendants who had not yet answered.

Section 3 of Rule 10 of the Rules of Court, on amendments by leave of court, is the provision the parties and the Sandiganbayan mistakenly assumed applied, and the Court corrects that assumption.

Section 11 of Rule 3 of the Rules of Court, which the Republic invoked below, provides:

Parties may be dropped or added by order of the court on motion of any party or on its own initiative at any stage of the action and on such terms as are just.

This is the rule on adding parties that the Republic relied upon in seeking to implead the heirs and to summon the remaining defendants.

Ruling

On the first issue, the Court held that the parties and the Sandiganbayan were mistaken in assuming the case fell under amendment by leave of court. It falls under amendment as a matter of right. Under Section 2 of Rule 10, a party may amend once as a matter of right before a responsive pleading is served, and only thereafter upon leave of court.

On the second issue, the Court held that the fact that most of the private respondents had already answered did not bar the Republic from amending its complaint once, as a matter of right, against the non-answering defendants. Quoting its earlier ruling in Siasoco against the Court of Appeals:

Indeed, where some but not all the defendants have answered, plaintiffs may amend their Complaint once, as a matter of right, in respect to claims asserted solely against the non-answering defendants, but not as to claims asserted against the other defendants.

Since the proposed amendments pertained only to the non-answering private respondents, they could still be made as a matter of right.

On the third issue, because the amendment was a matter of right, its exercise did not depend on the discretion or liberality of the Sandiganbayan. The Sandiganbayan therefore gravely abused its discretion in denying the motion for leave to file the amended complaint.

Doctrine

A party may amend its pleading once as a matter of right at any time before a responsive pleading is served, and thereafter only upon leave of court. Where some but not all of the defendants have answered, the plaintiff may amend its complaint once, as a matter of right, as to claims asserted solely against the non-answering defendants, but not as to claims against the defendants who have already answered. Being a matter of right, the amendment does not depend on the discretion or liberality of the court, and denying it amounts to grave abuse of discretion.

Disposition

The Republic won. The Supreme Court reversed and set aside the two Sandiganbayan resolutions and ordered the Sandiganbayan to admit the Republic's July 1, 2005 amended complaint.

Remember This

Memorize the line: where some but not all defendants have answered, the plaintiff may amend once as a matter of right against the non-answering defendants only. Examiners use this case to test the distinction between Section 2 and Section 3 of Rule 10, and whether a court's denial of a matter-of-right amendment is grave abuse of discretion.