G.R. No. 170783 ; June 18, 2012
Legaspi Towers 300, Inc., Lilia Marquinez Palanca, Rosanna D. Imai, Gloria Domingo and Ray Vincent, Petitioners, vs. Amelia P. Muer, Samuel M. Tanchoco, Romeo Tankiang, Rudel Panganiban, Dolores Agbayani, Arlenedal A. Yasuma, Godofredo M. Caguioa and Edgardo M. Salandanan, Respondents.

FACTS

Petitioners, the incumbent Board of Directors of Legaspi Towers 300, Inc., scheduled the annual meeting and election for April 2, 2004. The election committee found many proxy votes irregular and, due to lack of time for authentication, petitioners adjourned the meeting for lack of a quorum. Respondents, a rival group, challenged the adjournment and proceeded with the election, wherein they were elected as the new Board. They subsequently assumed management and filed a new General Information Sheet with the SEC.
Petitioners filed a Complaint for Declaration of Nullity of Elections with the RTC. They later filed an Amended Complaint, which was admitted. Before respondents could answer, petitioners filed an Urgent Motion to Admit a Second Amended Complaint. The Executive Judge issued a 72-hour TRO to maintain the status quo. The case was eventually raffled to Branch 3, presided by Judge De Castro.

ISSUE

Whether the Court of Appeals erred in affirming the trial court’s denial of petitioners’ Motion to Admit Second Amended Complaint.

RULING

The Supreme Court denied the petition and affirmed the Court of Appeals. The trial court did not commit grave abuse of discretion in denying the motion. The legal logic rests on the principle that amendments to pleadings are not a matter of right after a responsive pleading has been served, but are subject to the court’s discretion. Here, respondents had already filed their Answer to the Amended Complaint before petitioners sought to file a second amendment. The proposed Second Amended Complaint sought to substantially alter the cause of action by shifting from a challenge against individual respondents to a derivative suit filed in the name of the corporation itself. This constituted a substantial change, not a mere formal amendment.
The trial court correctly exercised its discretion to deny the motion, as allowing it would have prejudiced respondents by unduly delaying the proceedings after they had already submitted their defenses. The Court emphasized that the allowance of amendments is primarily addressed to the sound discretion of the trial court, and its decision will not be overturned absent a clear abuse. No such abuse was found, as the denial was based on the substantive nature of the change and the stage of the proceedings. The status quo order was correctly interpreted to mean the newly-elected board should continue managing the corporation pending resolution of the election’s validity.