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METROHEIGHTS SUBDIVISION HOMEOWNERS ASSOCIATION v. CMS CONSTRUCTION

FACTS:

The case is about a complaint filed by petitioner Metroheights Subdivision Homeowners Association, Inc. against respondents CMS Construction and Development Corporation (CMS Construction), Tomasito Cruz, Tita Cruz, Simonette Cruz, Angel Cruz, Ernesto Cruz (the Cruzes), and Metropolitan Waterworks and Sewerage System (MWSS). Petitioner sought the assistance of MWSS to address the insufficient water supply in their subdivision and entered into a contract with MWSS for a new water service connection. CMS Construction, with the knowledge and consent of MWSS but without petitioner's knowledge and consent, cut off and disconnected petitioner's water service connection. This resulted in three days of waterlessness for petitioner's members and the theft of PVC pipes and radius elbow. Despite petitioner's demands, respondents failed to restore the water connection and return the stolen items. MWSS claimed that they entered into a contract with CMS Construction for the improvement of water distribution in several subdivisions, including Metroheights Subdivision. CMS Construction and the Cruzes argued that they were not responsible for the water disruption and that petitioner was consulted on the rehabilitation project. The RTC ruled in favor of petitioner, ordering respondents to pay damages and attorney's fees.

The petitioner, Metroheights Realty and Development Corporation (Metroheights), filed an application with respondent Metropolitan Waterworks and Sewerage System (MWSS) to transfer the location of their water service connection. This request was approved by MWSS, and Metroheights had uninterrupted water supply.

However, respondent CMS Construction, along with the Cruzes, entered into a contract with MWSS for the mainlaying and rehabilitation of existing water mains and appurtenances in Sanville Subdivision, Quezon City. As part of the project, Metroheights' existing water service connection on Visayas Avenue was cut off, disconnected, and transferred without their knowledge or consent. As a result, the subdivision was left without water supply for three days.

Metroheights filed a complaint against MWSS, CMS Construction, and the Cruzes, seeking damages for their actions. The Regional Trial Court (RTC) held MWSS, CMS Construction, and the Cruzes jointly and severally liable for damages, ruling that there was an abuse of right under Article 19 of the New Civil Code. The RTC found that Metroheights was not given prior notice of the project and that the lack of water supply caused inconvenience and health concerns.

However, the Court of Appeals (CA) reversed the RTC's decision, finding that there was no abuse of right committed by the respondents. The CA ruled that there was notice given to Metroheights prior to the project, and that the actions of the respondents were justified in the exercise of their managing and maintaining the water supply system.

Metroheights filed a petition for review on certiorari before the Supreme Court, arguing that the CA erred in finding no abuse of right, absolving the respondents of any civil liability, and dismissing their complaint.

In the case of Alonzo v. Capulong (G.R. No. L-2254, July 31, 1948), the Supreme Court discussed the principle of abuse of rights under Article 19 of the Civil Code. The plaintiff, Alonzo, filed a complaint against the defendant, Capulong, to recover damages for the alleged wrongful demolition of his building. Alonzo claimed that Capulong carried out the demolition without any lawful or justifiable reason, causing him financial losses. Capulong, on the other hand, argued that he had the right to demolish the building as it was an obstruction to the construction of a road. The trial court dismissed Alonzo's complaint, ruling that Capulong acted within his rights. However, the Supreme Court reversed the decision and held that Capulong abused his right. It emphasized that while Article 19 of the Civil Code may have been intended as a mere declaration of principle, it has given rise to certain rules, including the principle that a person who exercises his rights arbitrarily or unjustly may be held liable for damages. The Court found that Capulong failed to prove the existence of a valid reason for demolishing the building and, therefore, should be held liable for damages caused to Alonzo.

ISSUES:

  1. Whether or not the respondent gave notice to the petitioner regarding the rehabilitation project.

  2. Whether the defendant presented sufficient evidence to prove that notices and warnings were sent to the plaintiff.

  3. Whether the actions of the defendants in cutting off and disconnecting the plaintiff's water connection without their consent and notification violated Article 19 of the New Civil Code.

  4. Whether the respondents are liable for damages to the petitioner.

  5. Whether the directors and stockholders of respondent CMS Construction are personally liable for the debts of the corporation.

RULING:

  1. The Court of Appeals (CA) found that the rehabilitation project was undertaken with notice to the petitioner, contrary to the trial court's finding. The CA relied on the testimonies of the respondents' witnesses who claimed that there was notice given to the homeowners and barangays affected by the project. However, the CA failed to consider the testimony of one of the respondents' witnesses who admitted that there was no notice given by their company to the petitioner. The lack of notice, even a generalized one, was established, and therefore, there was no notice given by the respondents to the petitioner regarding the rehabilitation project.

  2. The defendant failed to provide any competent and sufficient evidence to prove that notices and warnings were sent to the plaintiff. The court found that not a single piece of evidence, original or duplicate, was produced in court to show that notices or warnings of disconnection were sent. Therefore, the court could not believe the defendant's claim that it conducted its business in such a manner.

  3. The actions of the defendants in cutting off and disconnecting the plaintiff's water connection without their consent and notification violated Article 19 of the New Civil Code. The court acknowledged that the inconvenience of the temporary stoppage of water supply in the plaintiff's area was inevitable due to the process of changing the water pipe size. However, the defendants proceeded with the disconnection without the plaintiff's consent or notification, causing prejudice and injury to the plaintiff's members. The court held that such actions were done in total disregard of the standards set by Article 19 and entitled the plaintiff to damages.

  4. The respondents MWSS and CMS Construction are held liable for damages to the petitioner. The petitioner is awarded actual damages in the amount of P161,541.85, exemplary damages in the amount of P100,000.00, and attorney's fees in the amount of P50,000.00.

  5. The directors and stockholders of respondent CMS Construction, the Cruzes, are not personally liable for the debts of the corporation as they did not commit any acts that make them personally liable.

PRINCIPLES:

  • Abuse of rights: The absence of good faith is essential to abuse of right. Good faith means an honest intention to abstain from taking any unconscientious advantage of another, even through the forms or technicalities of the law.

  • Indemnity for damages: The modern tendency is to grant indemnity for damages in cases where there is an abuse of rights, even when the act is not illicit.

  • Article 19 of the New Civil Code: Article 19 expands the concept of torts by granting legal remedy for moral wrongs. It holds that if mere fault or negligence in one's acts can make him liable for damages, with more reason should abuse or bad faith make him liable. The elements of an abuse of rights under Article 19 are: (1) there is a legal right or duty; (2) which is exercised in bad faith; (3) for the sole intent of prejudicing or injuring another.

  • Review of findings of fact: The Supreme Court may review the findings of fact made by the CA when they are contrary to those of the trial court. However, a question of fact is not appropriate for review in a petition for review on certiorari.

  • The failure to provide notices and warnings before disconnecting a utility service can be deemed arbitrary, injurious, and prejudicial, justifying the award of damages under Article 19 of the New Civil Code. (MWSS v. Act Theater, Inc.)

  • The exercise of rights should be in accordance with the standards set by Article 19 of the New Civil Code, which requires acting with justice and giving others what is due to them. Having a right should not be confused with the manner in which it is exercised.

  • Article 19 of the New Civil Code sets the standard for the exercise of rights and performance of duties.

  • The exercise of a right ends when the right is abused, especially to the prejudice of others.

  • Section 31 of the Corporation Code governs the personal liability of officers for the debts of the corporation.

  • Actual damages must be duly proved with a reasonable degree of certainty.

  • Exemplary damages may be imposed by way of example or correction for the public good.

  • Nominal damages cannot co-exist with actual or compensatory damages.

  • Legal interest at the rate of 6% per annum is imposed on monetary awards computed from the finality of the decision until full payment.