G.R. No. 80511 - Costabella Corporation vs. Court of Appeals

Case Summary (G.R. No. 80511)

Property Identification and Physical Setting

Petitioner’s parcels: Lots Nos. 5122 and 5124 of the Opon Cadastre. Private respondents’ parcels: Lots Nos. 5123‑A and 5123‑C of the Opon Cadastre. The disputed passage traversed petitioner’s beachfront land, providing access between respondents’ properties and the public/provincial road; petitioner’s property is used for a commercial hotel and resort operation, implicating considerations of security, privacy, and business viability.

Key Dates and Procedural Posture (Constitutional Framework)

Relevant events and filings: petitioner first closed the old passageway in 1981 during hotel construction, temporarily opened an alternative route, then fenced the property during a later construction phase (circa August 1982), prompting respondents’ injunction suit on September 2, 1982. Trial court decision: March 15, 1984. Court of Appeals decision: May 30, 1986; CA resolution denying reconsideration: October 27, 1987. Final disposition by the Supreme Court: January 25, 1991. The case is decided under the 1987 Constitution as the applicable constitutional framework, with substantive property law analysis grounded in the New Civil Code.

Applicable Law and Jurisprudential Authorities

Primary statutory provisions: New Civil Code (notably Articles 622, 649, 650 and related provisions on servitudes/easements). Controlling principles cited include that an easement of right of way is a discontinuous servitude (and, per Article 622 jurisprudence, cannot be acquired by prescription) and the statutory requisites and limitations governing compulsory rights of way (Arts. 649–650). The Court also references established jurisprudence and commentators (Manresa, Tolentino, Francisco) regarding necessity, adequacy, and the “least prejudicial” rule.

Factual Background and Parties’ Contentions

Respondents alleged the closed passage was an “ancient road right of way” existing before World War II and used continuously by them, the community, and the public; they sought reopening of the passage and demolition of an alleged dike. Petitioner denied any established ancient road and characterized prior use as permissive (tolerance) by petitioner and predecessors; petitioner defended closure on grounds of security, privacy, and convenience for hotel guests and contended respondents had another existing outlet to the public road. Petitioner further described its beachfront works as a breakwater beneficial to the community, not an unlawful dike.

Trial Court Ruling and Relief Awarded

The trial court found a vested right in the respondents over the passage by virtue of long existence and community use, concluding petitioner had violated that vested right. Relief ordered: (1) reopening and perpetual availability of the passage to plaintiffs and the public unless a substantially equivalent alternative was provided; (2) monthly indemnity payments to specified plaintiffs for expenditures incurred due to the closure; (3) attorney’s fees of P15,000 and costs.

Court of Appeals Disposition and Rationale

The Court of Appeals recognized the legal precept that an easement of right of way cannot be acquired by prescription (i.e., discontinuous servitude), but in equity treated the requested servitude as a compulsory easement legally demandable by owners of a dominant estate lacking adequate outlet. The CA therefore granted respondents a right of way over petitioner’s land unless petitioner provided another passage equally accessible and convenient, remanded for determination of just indemnity to petitioner, and set aside the trial court’s awards of actual damages and attorney’s fees. On reconsideration the CA emphasized equitable considerations, noting the old road’s antiquity and the inconvenience of the alternate route, while stating respondents would pay for damages to petitioner and petitioner could regulate use to protect its property and customers.

Issue Presented to the Supreme Court

Whether the private respondents had acquired an easement of right of way—either by prescription, by grant, or as a compulsory right of way under Articles 649–650 of the New Civil Code—such that petitioner was legally required to reopen and permit passage through its property.

Supreme Court Legal Analysis — Nature of Easement and Prescription

The Court reaffirmed settled law that an easement of right of way is a discontinuous servitude and, pursuant to the Civil Code and controlling jurisprudence, cannot be acquired by prescription. The Court criticized the CA’s remedial approach: although the CA correctly stated the rule against acquisition by prescription, it erred in subsequently converting the dispute into one for a compulsory right of way without satisfying statutory requisites.

Supreme Court Legal Analysis — Requisites for Compulsory Right of Way (Art. 649–650)

The Court set out the four statutory prerequisites a claimant must prove to demand a compulsory right of way under Article 649: (1) the dominant estate is surrounded by other immovables and lacks an adequate outlet to a public highway; (2) payment of proper indemnity is to be made; (3) the isolation is not due to the proprietor’s own acts; and (4) the servitude is to be established at the point least prejudicial to the servient estate (Article 650). The burden of proof lies squarely with the owner of the dominant estate.

Application of the Statutory Requisites to the Case Facts

Applying those requisites, the Court found respondents failed to prove any of them: (1) respondents did not prove lack of an adequate outlet—indeed, the CA itself acknowledged there was another outlet and that “legally the old road could be closed”; (2) respondents never manifested a willingness to indemnify petitioner fully for a compulsory servitude; (3) respondents did not show that any isolation of their properties was not caused by their own or their predecessors’ acts; and (4) respondents failed to demonstrate that the claimed pa

Case Syllabus (G.R. No. 80511)

Facts

Petitioner Costabella Corporation owns Lots Nos. 5122 and 5124 of the Opon Cadastre, Sitio Buyong, Maribago, Lapu-Lapu City, upon which it constructed a resort and hotel.
Private respondents own adjoining properties identified as Lots Nos. 5123-A and 5123-C of the Opon Cadastre.
Prior to petitioner's hotel construction, the private respondents and the public used a passageway traversing petitioner's property to go between their properties and the provincial/public road.
In 1981 petitioner closed the original passageway when it began hotel construction but opened an alternative route across its property, which the private respondents used.
In or about August 1982, petitioner constructed the second phase of its beach hotel and fenced its property, thereby closing the alternative passageway and preventing the private respondents from traversing any part of petitioner's property.
As a direct consequence, the private respondents filed an action for injunction with damages on September 2, 1982, alleging (a) closure of an "ancient road right of way" existing before World War II and used by them, the community, and the public; (b) deprivation of access to their properties and consequent damages; and (c) construction of a dike on the beach fronting petitioner’s property without permit, obstructing residents/fishermen and trapping debris that prevented use of their properties.
Complaints prayed for reopening of the original passageway and demolition of the alleged dike.

Petitioner's Answer and Defenses

Petitioner denied the existence of an ancient road across its property and asserted that any past use was by tolerance, temporary, intermittent, gratuitous, and as an act of neighborliness by petitioner and predecessors-in-interest.
Petitioner justified enclosure to ensure safety, security, privacy, and convenience of its hotel patrons.
Petitioner alleged that private respondents had another existing and adequate access to the public road through other properties, so they were not entirely dependent on the subject passageway.
Regarding the alleged dike, petitioner stated it had built a breakwater on the foreshore (not a dike), which benefitted the community by providing mooring for boats at low tide; debris accumulation was natural due to tides and waves.
Petitioner contended the private respondents failed to implead other property owners allegedly traversed by the ancient road, who were indispensable parties.

Procedural History

Complaint filed September 2, 1982 before the Court of First Instance of Cebu (later referenced as Regional Trial Court of Lapu-Lapu City).
Trial court rendered decision on March 15, 1984.
Both parties appealed to the Court of Appeals.
Court of Appeals issued decision dated May 30, 1986 (modified trial court decision) and later denied petitioner's motion for partial reconsideration by resolution dated October 27, 1987.
Petitioner filed petition for review on certiorari to the Supreme Court (G.R. No. 80511).
Supreme Court decision issued January 25, 1991.

Trial Court Ruling (March 15, 1984)

Trial court found private respondents had acquired a vested right over the passageway based on its long existence and continuous use by the private respondents and the community.
Trial court held petitioner's closure violated private respondents' vested right.
Reliefs ordered:
- To open and make available the road to plaintiffs and the general public at all times unless defendant provided another road equally accessible and convenient.
- To pay Katipunan Lumber Co., Inc. P5,000.00 per month beginning January 1983, and to pay Perfecta Guangco P200.00 per month beginning September 1982, representing expenditures to access other beach resorts, continuing until the passageway was opened or an equally accessible road provided.
- To pay attorney’s fees of P15,000.00 and costs.

Court of Appeals Decision and Resolution (May 30, 1986; Oct 27, 1987)

Court of Appeals held the trial court’s finding that private respondents acquired a vested right by prescription was without basis because an easement of right of way is discontinuous and, under Article 622 of the New Civil Code, may be acquired only by title, not by prescription.
Nonetheless, in the exercise of equity jurisdiction, the Court of Appeals treated the easement sought as a compulsory easement legally demandable by an owner of a dominant estate from the owner of the servient estate.
Appellate Court rulings:
- Granted private respondents the right to an easement of way using the passageway in question unless petitioner provided another passageway equally accessible and convenient.
- Remanded the case to trial court to determine just and proper indemnity payable to petitioner for the easement.
- Set aside trial court’s award of actual damages and attorney’s fees.
On partial reconsideration, the Court of Appeals denied petitioner's motion and explained:
- While another outlet existed (constructed in 1979), the closed old road had existed for over 30 years; legally it could be closed, but equitably plaintiffs should be given a chance to pay for a more convenient outlet through defendant’s land at a point least prejudicial to defendant.
- Plaintiffs t