CASE #8

G.R. No. 209359, October 17, 2018

METROHEIGHTS SUBDIVISION HOMEOWNERS ASSOCIATION, INC., 
vs.
CMS CONSTRUCTION AND DEVELOPMENT CORPORATION, TOMASITO T. CRUZ,
TITA F. CRUZ, SIMONETTE F. CRUZ, ANGEL T. CRUZ, ERNESTO T. CRUZ AND
METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM (MWSS)

FACTS:
On June 29, 1992, petitioner Metroheights Subdivision Homeowners Association, Inc.
(MSHAI) filed with the Regional Trial Court (RTC) of Quezon City a complaint for
damages with prayer for a temporary restraining order and/or writ of preliminary
injunction and writ of preliminary mandatory injunction 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 alleged that it sought the assistance of respondent MWSS to address the
insufficient supply of water in its subdivision. MWSS advised the improvement and
upgrading of its private internal water distribution lines. On November 16, 1990,
petitioner entered into a contract with MWSS for the new water service connection, and
the latter awarded the project to a contractor which implemented the same, the cost of
which was solely shouldered by contribution from petitioner's members and that since
then, there was already sufficient and strong water pressure twenty-four (24) hours a
day in the petitioner's subdivision.

However, in April 1992, CMS Construction made diggings and excavations, and started
to lay water pipes along Fisheries Street and Morning Star Drive in Sanville Subdivision,
petitioner's neighboring subdivision. In the process, CMS, with the knowledge and
consent of MWSS but without petitioner's knowledge and consent, unilaterally cut-off
and disconnected the latter's new and separate water service connection on Visayas
Avenue, that resulted to petitioner's members being waterless that lasted for three (3)
days, and that petitioner's polyvinyl chloride (PVC) pipes and radius elbow stolen by
respondent CMS Construction's workers. Upon the discovery of the illegal cutting of the
water connection, petitioners immediately complained to the respondents and
demanded for the restoration. CMS Construction only made a temporary reconnection
with the use of a 2-inch rubber hose to the new water line it constructed at Sanville
Subdivision; and that despite petitioner's verbal and written demands, respondents have
failed to restore the water line connection in its original state and to return the missing
PVC pipes and radius elbow.

On March 30, 1999, the RTC rendered a Decision favoring the plaintiff. Defendants are
hereby ordered to jointly and severally pay plaintiff. They also found out that
respondents did not have the authority to simply cut, disconnect and transfer petitioner's
water supply with impunity, without notice to or without getting its consent; and that
respondents acted in bad faith.
Respondent MWSS filed its notice of appeal while respondents CMS Construction and
the Cruzes filed a motion for new trial which the RTC granted. On May 18, 2006, the
RTC issued a Decision which affirmed its earlier Decision dated March 30, 1999.

The RTC found that respondents' claim of damnum absque injuria was not tenable.
Under the principle of damnum absque injuria, the legitimate exercise of a person's
right, even if it causes loss to another, does not automatically result in an actionable
injury and the law does not prescribe a remedy for the loss. However, this principle
admits of exception as when there is an abuse of a person's right. The exercise of one's
right should be done in a manner that will not cause injustice to another. Since water is
a basic necessity, the lack thereof not only caused inconvenience but posed health
concerns as well. Notice to petitioner of the interruption of the water supply should have
been made prior to the implementation of the project.

Respondents' motion for reconsideration was denied prompting them to file an appeal
with the CA, which they granted, revising and setting aside the RTC decision. The
complaint is hereby DISMISSED for lack of merit.

The CA found that the respondents' rehabilitation project was not undertaken without
any notice at all; that respondents' actions were merely consequential to the exercise of
their rights and obligations to manage and maintain the water supply system, an
exercise which includes water rehabilitation and improvement within the area, pursuant
to a prior agreement for the water supply system; and that the alleged abuse of right
was not sufficiently established.

Petitioner's motion for reconsideration was denied by the CA. Hence, this petition for
review on certiorari filed by petitioner, raising the following issues:

ISSUE:
Whether respondents are liable for damages for the cutting off, disconnection and
transfer of petitioner's existing separate water service connection on Visayas Avenue
without the latter's knowledge and consent which also resulted in petitioner's subdivision
being waterless.

RULING:
Yes, respondents must be held liable in accordance with Article 19 of the New Civil
Code that deals with the principle of abuse of rights, thus: Art. 19. Every person must, in
the exercise of his rights and in the performance of his duties, act with justice, give
everyone his due, and observe honesty and good faith.

"The principle of abuse of rights departs from the classical theory that 'he who uses a
right injures no one.' The modern tendency is to depart from the classical and traditional
theory, and 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 was intended to expand the concept of torts by
granting adequate legal remedy for the untold number of moral wrongs which is
impossible for human foresight to provide, specifically in statutory law. If mere fault or
negligence in one's acts can make him liable for damages for injury caused thereby,
with more reason should abuse or bad faith make him liable. The absence of good faith
is essential to abuse of right. Good faith is an honest intention to abstain from taking
any unconscientious advantage of another, even through the forms or technicalities of
the law, together with an absence of all information or belief of fact which would render
the transaction unconscientious. In business relations, it means good faith as
understood by men of affairs."

"While Article 19 of the New Civil Code may have been intended as a mere declaration
of principle, the 'cardinal law on human conduct' expressed in said article has given rise
to certain rules, e.g. that where a person exercises his rights but does so arbitrarily or
unjustly or performs his duties in a manner that is not in keeping with honesty and good
faith, he opens himself to liability. 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."

The CA found that the rehabilitation project was not undertaken without notice to
petitioner, which was contrary to the RTC's finding that there was no notice given to
petitioner. The matter of whether there was notice to petitioner is factual. It is
elementary that a question of fact is not appropriate for a petition for review on certiorari
under Rule 45 of the Rules of Court. The parties may raise only questions of law
because the Supreme Court is not a trier of facts. However, we may review the findings
of fact by the CA when they are contrary to those of the trial court, as in this case.

We do not agree with the CA's finding that respondents' actions were merely
consequential to the exercise of their rights and obligations to manage and maintain the
water supply system. "Having the right should not be confused with the manner by
which such right is to be exercised." Article 19 of the New Civil Code sets the standard
in the exercise of one's rights and in the performance of one's duties, i.e., he must act
with justice, give everyone his due, and observe honesty and good faith. "The exercise
of a right ends when the right disappears, and it disappears when it is abused,
especially to the prejudice of others. The mask of a right without the spirit of justice
which gives it life is repugnant to the modem concept of social law." Here it was
established, as shown by the above discussions, that respondents indeed abused their
right.

WHEREFORE, the petition for review on certiorari is GRANTED. The Decision dated

October 10, 2012 and the Resolution dated September 30, 2013 of the Court of Appeals
in CA-G.R. CV No. 89085 are hereby REVERSED and SET ASIDE. The Decisions,
dated March 30, 1999 and May 18, 2006, of the Regional Trial Court, Branch 77, of
Quezon City are hereby AFFIRMED with MODIFICATION.
CASE #9
G.R. No. 207004, June 06, 2018
ASTRID A. VAN DE BRUG, MARTIN G. AGUILAR AND GLENN G. AGUILAR
vs. 
PHILIPPINE NATIONAL BANK

FACTS:
The late spouses Aguilar, borrowing clients of Philippine National Bank (PNB) obtained
a sugar crop loans sometime between the late 1970's and the early 1980's to secure
real estate mortgage over four registered parcels of land situated at Escalante, Negros
Occidental. However, the spouses failed to pay their obligations with the bank the
mortgage was foreclosed in 1985 and subsequently, ownership of the subject four
pieces of property was consolidated under the name of PNB.

Upon the enactment of RA 7202 on February 29, 1992, the late Romulus Aguilar wrote
to PNB on July 5, 1995, stating that: "Since our indebtedness with the PNB had been
foreclosed, we are asking your good Office for a reconsideration of our account based
on the Sugar Restitution Law."

PNB informed the late Evelyn Aguilar that while the subject loan account was covered
by the provisions of RA 7202 and have been audited by the Commission on Audit
(COA), spouses are still required to comply with the following matters: (1) to arrange
and implement restructuring of accounts within sixty (60) days from receipt of the notice,
(2) to signify her conformity to the computation of the account, and (3) to submit the ten
(10) year crop production for the period 1974/1975 to 1984/1985.

Plaintiffs-appellees, the Aguilars, claimed that they complied with the stated
requirements and that subsequently, PNB furnished them with Statements of Accounts,
the earliest of which was the COA audited statement as of December 15, 1996 and the
latest was as of November 30, 1999, which reflected a P2,236,337.91 total amount due.

Aguilars adduced that inasmuch as the subject lots were already conveyed voluntarily
by PNB to the Department of Agrarian Reform (DAR), they were advised by the bank to
follow-up the payment for these pieces of realty with the Land Bank of the Philippines
(LBP) in order for PNB to apply the proceeds of the sale to the account of the late
spouses. They were likewise assured by PNB that if the proceeds from LBP would
exceed the obligations of the late spouses, the excess amount would be returned to
them.

Following the November 23, 1999 Memorandum of Valuation, the Aguilars requested
PNB to commence restructuring of the loan account. Through letters, Glenn Aguilar
also made mention of an allegedly similar case, docketed as Civil Case No. 7212
entitled Sps. Fred and Mildred Pfleider vs. PNB, et al., then pending before RTC,
Branch 45, Bacolod City, wherein PNB purportedly entered into a compromise
agreement with Sps. Pfleider, notwithstanding consolidation of the foreclosed property
under the bank's name.

PNB replied and stated, among other matters, that: "Since PNB has already acquired
the properties at the foreclosure sale, it can now exercise its rights as owner of these
properties, including the right to convey the same to the DAR and to receive the
proceeds thereof from Land Bank of the Philippines, without any right to the excess
proceeds, if any, inuring/accruing to your favor. Hence, the case for implementation of
RA 7202 requirements enumerated based on its September 17, 1997 letter.”

PNB argued that the Aguilars have no cause of action against PNB because whatever
rights the Aguilars have under RA 7202 were already forfeited when they failed to
comply with the requirements. They further contended that the Aguilars cannot invoke
the compromise agreement it entered into with Sps. Fred and Mildred Pfleider in Civil
Case No. 7212 because the Aguilars were not parties to the case.

RTC rendered judgment in favor of the Plaintiffs and against the Defendant justifying
that the judgment in favor of the Aguilars as in keeping with public policy behind RA
7202.

Appeal was made and CA granted reversing the RTC Decision. The CA found that the
account of the late spouses Aguilar qualified under the law because indisputably, their
sugar crop loans were obtained within the period covered by the law. However, based
on PNB's recomputation applying 12% per annum interest, which was audited and
certified by the Commission on Audit (COA), the Aguilars were not entitled to restitution
absent any excess payment after recomputation.

ISSUE:
Whether or not the Aguilars were entitled to the benefits of RA 7202.

RULING:
No. As provided in Section 3 of RA 7202, quoted above, and Section 6 of the IRR,
quoted below, the Aguilars are entitled to: (1) condonation of interest charged in excess
of 12% per annum and all penalties and surcharges; (2) recomputation of their sugar
crop loans, and if there is interest in excess of 12% per annum, interests, penalties and
surcharges, application of the excess payment as an offset and/or as payment for the
late spouses Aguilar's outstanding loan obligations; and (3) restructuring or amortization
of the recomputed loans for a period of 13 years inclusive of a three-year grace period
on the principal, effective upon the approval of RA 7202.

Pursuant to the IRR definition of terms, there appears to be no excess interest with
respect to the RA 7202 accounts of the late spouses Aguilar because the actual interest
payment or interest collected amounted to only P12,658.22, as of December 15, 1996,
while the recomputed interest at 12% per annum totaled P689,944.52. Thus, with the
actual interest collected not being more than the recomputed interest of the principal of
the loans of the late spouses Aguilar covered by RA 7202 (amounting to P270,351.62),
there could be no excess payment and there would be no amount that could be
restituted to the Aguilars. This is clear from Section 9 of the IRR wherein only sugar
producers who have net excess payments after recomputation of their loans and
application of excess interests, penalties and surcharges against their outstanding loan
obligations shall be entitled to restitution.

To be clear, sugar producers, who were entitled to restitution, were given a period of
180 calendar days from the effectivity of the IRR to file their claims for restitution of
sugar losses with the BSP

The Aguilars take the position that the total amount of P3,212,012.48, which PNB
received from the Land Bank of the Philippines (LBP) based on the Memorandum of
Valuation of Lot 3587 located at Magsaysay, Escalante City fixing the lot's value at
P1,957,684.31 and the Memorandum of Valuation of Lot 3749 located at Pinapugasan,
Escalante City fixing the lot's value at P1,254,328.17 pursuant to PNB's VOS to DAR of
the said lots, should be deducted from their total outstanding loan obligations (for RA
7202 and non-RA 7202 accounts) in the amount of P2,236,337.91 as of the date of
foreclosure of the collaterals as per Statement of Account marked Exhibit "G."

To this Court, this position of the Aguilars cannot be justified under RA 7202 and its
IRR. To recall, Section 6 of the IRR, in part, provides that:

Section 6 of the IRR, in part, provides that: where sugar producers have no outstanding
loan balance with said financial institutions as of the date of effectivity of RA No. 7202
(i.e. sugar producers who have fully paid their loans through foreclosure of collateral),
said producers shall be entitled to the benefits of recomputation in accordance with
Sections 3 and 4 of RA No. 7202, but the said financial institutions, instead of refunding
the interest in excess of twelve (12%) per cent per annum, interests, penalties and
surcharges, apply the excess payment as an offset and/or as payment for the
producers' outstanding loan obligations.

Such issue is, however, before the Court, thus: Does PNB have an obligation to accord
the Aguilars the same treatment as it accorded the spouses Pfleider regarding the
crediting of the VOS or CARP proceeds of their respective agricultural lots against their
respective sugar crop loans covered by RA 7202?

Regarding law, as PNB's source of obligation, the CA correctly ruled that the Aguilars
are not entitled to restitution under RA 7202. Thus, RA 7202 cannot be invoked as the
statutory basis to compel PNB to treat the Aguilars similarly with the spouses Pfleider.

To make PNB liable under the principle of abuse of rights, the Aguilars have the burden
to prove the requisites enumerated above. They claim that they are similarly
circumstanced as the spouses Pfleider and there was no reason for PNB to treat them
differently.
it was incumbent upon the Aguilars, to make PNB liable for damages based on the
principle of abuse of rights, to prove that PNB acted in bad faith and that its sole intent
was to prejudice or injure them. The Aguilars, however, failed in this regard.

Also, the Court notes from the duly notarized Compromise Agreement between the
spouses Pfleider and PNB dated December 30, 1999 that the accounts of the former to
the latter were crop loans ("sugar and sugar-related loans") and, thus, covered by RA
7202, unlike the accounts of the Aguilars which included non-RA 7202 accounts, as
mentioned in the narration of facts. Since the Aguilars were delinquent in their accounts,
including their non-RA 7202 accounts, and the mortgaged properties of the Aguilars
similarly secured the non-RA 7202 accounts, PNB had no option but to foreclose the
mortgage.

CASE #10
CECILIO PE, ET AL.,
vs.
ALFONSO PE

FACTS:
Plaintiffs are the parents, brothers and sisters of one Lolita Pe, who is 24 years old and
unmarried. Defendant, Alfonso Pe, on the other hand, is a married man. Because of the
similarity in their family name, defendant became close to the plaintiffs who regarded
him as a member of their family. Defendant frequented the house of Lolita on the
pretext that he wanted her to teach him how to pray the rosary. The two eventually fell
in love with each other and conducted clandestine love affairs. When the rumors about
their illicit affairs reached the knowledge of her parents, defendant was forbidden from
going to their house and even from seeing Lolita. Nevertheless, defendant continued his
love affairs with Lolita until she disappeared from the parental home.

Plaintiffs then brought an action to recover moral, compensatory, exemplary and

corrective damages. They based their action on Article 21 of the New Civil Code, which
provides that “Any person who wilfully causes loss or injury to another in a manner
which is contrary to morals, good customs or public policy shall compensate the latter
for the damage.” Defendant set up as a defense that the facts alleged therein, even if
true, do not constitute a valid cause of action.

ISSUE:
Whether or not defendant commit injury to Lolita’s family in a manner contrary to
morals, good customs and public policy as contemplated in Article 21 of the New Civil
Code?

RULING:
YES. Alfonso committed an injury to Lolita’s family in a manner contrary to morals, good
customs and public policy contemplated in Article 20 of the Civil Code. The wrong
caused by Alfonso is immeasurable considering the fact that he is a married man.
The defendant took advantage of the trust of the plaintiffs and even used the praying of
rosary as a reason to get close with Lolita. The defendant tried to win Lolita’s affection
thru an ingenious scheme or trickery, seduced Lolita to the extent of making her fall in
love with him. No other conclusion can be drawn from this chain of events than that
defendant not only deliberately, but through a clever strategy, succeeded in winning the
affection and love of Lolita to the extent of having illicit relations with her.

CASE #11
BEATRIZ P. WASSMER
vs.
FRANCISCO X. VELEZ

FACTS:
Francisco Velez and Beatriz Wassmer applied for a Marriage License. The wedding
was to take place on September 4, 1954. All the necessary preparations were
undertaken for the said event. However, two days before the wedding, Francisco left a
note for Beatriz informing her that the wedding will not push through because his mother
opposed the union. The following day, he sent her a telegram stating that he will be
returning very soon. Francisco never showed up and has not been heard since then.
Beatriz subsequently sued Francisco for damages. The trial court ordered Francisco to
pay Beatriz actual, moral and exemplary damages.

Francisco filed a petition for relief from orders, judgment and proceedings and motion
for new trial and reconsideration which was denied by the trial court. Francisco
appealed to the Supreme Court, asserting that the judgment is contrary to law as there
is no provision in the Civil Code authorizing an action for breach of promise to marry.

ISSUE:
Whether or not Francisco be held liable to pay Beatriz damages for breach of promise
to marry?

RULING:
Yes. Francisco may be held liable under Article 21 of the Civil Code, which provides:
"Any person who wilfully causes loss or injury to another in a manner that is contrary to
morals, good customs or public policy shall compensate the latter for the damage."

Mere breach of promise to marry is not an actionable wrong. But to formally set a
wedding and go through all the preparation and publicity, only to walk out of it when the
matrimony is about to be solemnized, is quite different. Surely this is not a case of mere
breach of promise to marry. This is palpably and unjustifiably contrary to good customs
for which defendant must be held answerable in damages in accordance with Article 21.