G.R. No. 33695 May 15, 1989
MANUFACTURER’S BANK & TRUST CO., petitioner, vs. DIVERSIFIED INDUSTRIES, INC., and ALFONSO TAN, respondents.

FACTS

Manufacturers Bank & Trust Co. filed a complaint for sum of money against Diversified Industries, Inc. and Alfonso Tan. The bank alleged that on December 17, 1963, it granted the defendants a loan of P125,000.00 under an Agreement for Credit in Current Account, which matured on February 26, 1965. As of June 25, 1965, an outstanding balance of P100,119.21 remained unpaid. The complaint included a claim for attorney’s fees equivalent to 10% of the total sum due, as stipulated in the agreement.
In their original Answer, the defendants admitted the execution of the loan agreement but denied paragraphs 3 and 4 of the complaint, which pertained to the loan’s maturity, the outstanding balance, and the claim for attorney’s fees. They professed to have no “sufficient knowledge or information to form a belief” regarding these allegations. The bank moved for judgment on the pleadings, arguing that the Answer failed to tender an issue. The defendants opposed the motion and subsequently filed a motion for leave to amend their Answer to introduce new denials and affirmative defenses, including that Tan was merely a guarantor and that the loan term had been extended.

ISSUE

Whether the trial court correctly granted the motion for judgment on the pleadings and denied the motion for leave to amend the Answer.

RULING

Yes, the trial court correctly granted judgment on the pleadings and denied the motion for amendment. Under Section 1, Rule 19 of the Rules of Court, judgment on the pleadings is proper when an answer fails to tender an issue or admits the material allegations of the complaint. The defendants’ original Answer, by merely stating a lack of knowledge or information regarding the maturity of the loan and the outstanding balance, did not effectively deny these material allegations. Matters clearly stated in the attached loan agreement and necessarily within the defendants’ knowledge—such as the due date and their own liability—cannot be denied through a perfunctory disclaimer. Such a plea is tantamount to an admission.
Furthermore, the denial of the motion for leave to amend was a proper exercise of judicial discretion. Amendments are not a matter of right but are subject to the court’s discretion, especially when sought after a motion for judgment on the pleadings has been filed and the proposed amendments are intended to delay or are patently unmeritorious. The proposed amended defenses, such as Tan’s claim of being only a guarantor, were contradicted by the clear terms of the agreement he admitted signing, which established joint and several liability. The Supreme Court thus affirmed the judgment on the pleadings but modified the trial court’s decision to correctly reflect the defendants’ solidary liability and the stipulated 10% interest rate per annum, as expressly provided in the contract.