G.R. No. 132655 - BF Corp. vs. EDSA Shangri-La Hotel and Resort, Inc.

In 1992, respondent Tetro Enterprises, Inc. filed a complaint for recovery of possession and damages before the RTC of San Fernando, Pampanga.
The subject matter involved a 12,643-square-meter lot in Barangay San Jose, San Fernando, Pampanga, allegedly wrongfully occupied by petitioner, the Republic of the Philippines represented by the DPWH, without observance of the legal process of expropriation or negotiated sale.
Respondent alleged that since 1974 petitioner constructed a road on the subject lot, thereby depriving it of possession without due process, and demanded the restoration of the lot to its original condition along with payment for past rentals and damages.

With the parties’ agreement that recovery of possession was no longer feasible, the RTC converted the action into an eminent domain/expropriation case.
An Order was issued creating a Board of Commissioners to assess the actual value of the subject lot for an amicable settlement or judicial determination.
In December 1995, the Board recommended a price range of P4,000.00 to P6,000.00 per square meter and, by March 29, 1996, the RTC fixed the value at P6,000.00 per square meter, amounting to a total compensation of P75,858,000.00.

Petitioner filed motions and appeals following the RTC’s decision. Notably, in May 2001 the CA modified the RTC award, holding the Republic liable to pay an amount of P252,869.00 plus six percent interest from 1974 until paid, while remanding the case for a further determination of damages for loss of use and enjoyment.
Subsequent petitions, including a petition for certiorari and prohibition, were filed by petitioner challenging orders and remands, but these were dismissed or denied at various levels including by the CA.

During the pre-trial conference held on March 21, 2006, issues regarding the extension of claims arose when respondent sought to amend its original complaint to include damages based on a professional appraisal of the land’s rental value.
The RTC admitted the amended complaint by an Order dated September 22, 2006 and later denied petitioner’s motion for reconsideration, thereby effectively increasing the claimed damages from the original amount of P147,840.00 to over P57 million.
Petitioner promptly moved for certiorari and prohibition before the CA, arguing that substantial amendments at a late stage constituted grave abuse of discretion.

The CA, in its Decision dated November 29, 2007, affirmed the RTC’s order admitting the amended complaint, holding that the amendment was within the provisions of Sections 2 and 3 of Rule 10 of the Rules on Civil Procedure and was not a new cause of action.
Petitioner raised four major errors in its petition for review, claiming reversible error regarding the allowance of the amendment, alleged bias and partiality, and the departure from the court’s original mandate to compute damages solely on the basis of the loss at the time of taking.
Ultimately, the Supreme Court granted the petition for review, reversed the CA decision, and held that the RTC committed grave abuse of discretion by allowing the substantial amendment of the complaint.

Whether the Court of Appeals erred in finding no grave abuse of discretion on the part of the RTC in admitting respondent’s amended complaint at a very late stage of the proceedings.
Whether the RTC, in allowing the amendment—which significantly increased the claim for damages—exceeded its jurisdiction given that the case was remanded solely for computing damages as of the time of the taking.
Whether respondent was entitled to include additional damages for rental value beyond what was originally alleged and prayed for in the complaint, taking into consideration the economic conditions and devaluation factors.
Whether there was manifest partiality or bias on the part of the trial court judge, particularly given the circumstances surrounding the conduct of the pre-trial conference and subsequent proceedings.