PHILIPPINE PORTS AUTHORITY vs WILLIAM GOTHONG AND 2. You shall pay a monthly rental rate of P12.

15 per square
ABOITIZ (WG&A), INC. meter or an aggregate monthly rental amount
of P886,950.00;
(28 January 2008)
DOCTRINE: 3. All structures/improvements introduced in the leased
premises shall be turned over to PPA;

NATURE: Petition for review on certiorari 4. Water, electricity, telephone and other utility expenses
PONENTE: Austria-Martinez, J. shall be for the account of William, Gothong & Aboitiz,
Inc.;
FACTS:
5. Real Estate tax/insurance and other government dues
Petitioner William Gothong & Aboitiz, Inc. (WG&A), is a and charges shall be borne by WG&A.
duly organized domestic corporation engaged in the
shipping industry. Respondent Philippine Ports Authority The contract was eventually conformed to and signed by
(PPA), upon the other hand, is a government-owned and the WG&A, through its President/Chief Executive Officer
controlled company created and existing by virtue of the Endika Aboitiz, Jr.
provisions of P.D. No. 87 and mandated under its charter PPA surrendered possession of the Marine Slip Way in favor
to operate and administer the country's sea port and port of WG&A.
facilities. Believing that the said lease already expired on June 30,
Lease contract of Veterans Shipping Corporation over the 2001, PPA sent a letter to petitioner WG&A dated
Marine Slip Way in the North Harbor expired on December November 12, 2001 directing the latter to vacate the
31, 2000. contested premises not later than November 30, 2001 and
WG&A requested respondent PPA for it to be allowed to to turnover the improvements made therein pursuant to
lease and operate the said facility. the terms and conditions agreed upon in the contract.
President Estrada issued a memorandum dated December November 28, 2001 - WG&A commenced an Injunction
18, 2000 addressed to the Secretary of the Department of suit before the Regional Trial Court of Manila. WG&A
Transportation and Communication (DOTC) and the claims that the PPA unjustly, illegally and prematurely
General Manager of PPA, stating that the Economic terminated the lease contract. It likewise prayed for the
Coordinating Council (ECC) has approved the request of issuance of a temporary restraining order to arrest
WG&A to lease the Marine Slip Way from January 1 to June the evacuation. In its complaint, petitioner also sought
30, 2001 or until such time that respondent PPA turns over recovery of damages for breach of contract and
its operations to the winning bidder for the North Harbor attorney's fees.
Modernization Project. December 11, 2001 - WG&A amended its complaint for
A Contract of Lease was prepared by respondent PPA the first time. The complaint was still denominated as
containing the following terms: one for Injunction with prayer for TRO. In the said
1. The lease of the area shall take effect on amended pleading, WG&A incorporated statements to the
January 1 to June 30, 2001 or until such time that effect that PPA is already estopped from denying that the
PPA turns over its operation to the winning bidder correct period of lease is "until such time that the North
for the North Harbor modernization; Harbor Modernization Project has been bidded out to and
operations turned over to the winning bidder. It likewise
included, as its third cause of action, the additional relief
 in its prayer, that should the petitioner be forced to vacate NO, the CA did not err in finding that the RTC committed grave
the said facility, it should be deemed as entitled to be abuse of discretion when it denied the admission of the second
refunded of the value of the improvements it introduced in amended complaint of WG&A.
the leased property.
RATIO/RULING:
PPA submitted its answer on January 23, 2002.
The TRO sought by the WG&A was denied by the trial court
by way of an order dated January 16, 2002. The RTC applied the old Section 3, Rule 10 of the Rules of Court:
WG&A filed an MR for the order denying its petition for
TRO Section 3. Amendments by leave of court. after the case
Immediately after, WG&A filed a Motion to Admit is set for hearing, substantial amendments may be made
Attached Second Amended Complaint. This time, only upon leave of court. But such leave may be refused if
however, the complaint was already captioned as one for it appears to the court that the motion was made with
Injunction with Prayer for Temporary Restraining Order intent to delay the action or that the cause of action or
and/or Writ of Preliminary Injunction and damages and/or defense is substantially altered. Orders of the court upon
for Reformation of Contract. It included as its fourth the matters provided in this section shall be made upon
cause of action and additional relief in its prayer, the motion filed in court, and after notice to the adverse party,
reformation of the contract as it failed to express or and an opportunity to be heard.
embody the true intent of the contracting parties.
The admission of the second amended complaint met instead of the provisions of the 1997 Rules of Civil Procedure,
strong opposition from PPA. It said that the reformation amending Section 3, Rule 10, to wit:
sought for by the petitioner constituted substantial
amendment, which if granted, will substantially alter the SECTION 3. Amendments by leave of court. Except as
latter's cause of action and theory of the case. provided in the next preceding section, substantial
TC: March 22, 2002 - Judge Gonong issued an Order amendments may be made only upon leave of court.
denying the Admission of the Second Amended But such leave may be refused if it appears to the
Complaint. court that the motion was made with intent to
WG&A filed an MR of said order but the same was again delay. Orders of the court upon the matters provided in
denied in an order dated April 26, 2002. this section shall be made upon motion filed in court, and
CA: Set aside the RTC orders and directed the RTC to after notice to the adverse party, and an opportunity to be
admit respondent's second amended complaint heard.
pursuant to Section 3, Rule 10 of the 1997 Rules of Civil
Procedure The Court cites Valenzuela v. Court of Appeals,
ISSUE/S:
The clear import of such amendment in Section 3, Rule 10
Whether the CA erred in ruling that the RTC committed grave
is that under the new rules, "the amendment may (now)
abuse of discretion when it denied the admission of the second
substantially alter the cause of action or defense." This
amended complaint.
should only be true, however, when despite a substantial change
HELD: or alteration in the cause of action or defense, the amendments
sought to be made shall serve the higher interests of substantial
justice, and prevent delay and equally promote the laudable
objective of the rules which is to secure a just, speedy and October 24, 2002 and its Resolution dated May 15, 2003 are
inexpensive disposition of every action and proceeding. hereby AFFIRMED in toto.

The application of the old Rules by the RTC almost five years after VOTE: 3rd Division, Corona (C.J),Ynares-Santiago,
its amendment by the 1997 Rules of Civil Procedure patently Nachura, and Reyes, JJ., concur.
constitutes grave abuse of discretion.
ADDITIONAL NOTES:

DISPOSITION: WHEREFORE, the petition is DENIED for lack of