A.M. No. RTJ-09-2179, RTJ-10-2234

Case Summary (A.M. No. RTJ-09-2179, RTJ-10-2234)

Facts — Construction of Concession 4 and Dispute

LEMANS purchased Concession 3 (an upper-level unit/space) and thereafter constructed an additional structure (Concession 4) on the roof deck above Concession 3. LEMANS secured a building permit and commenced construction in October 1990 despite objections from Legaspi Towers. Legaspi Towers denied entry of construction materials and petitioned the municipal building official to cancel the permit. The building official refused to cancel the permit, citing apparent compliance and the application’s having been signed by Legaspi Towers’ then-president. LEMANS sought and obtained a writ of mandatory injunction from the RTC to complete construction; Legaspi Towers filed a third‑party complaint to nullify the building permit. The trial court, after interlocutory orders and trial, eventually ordered Legaspi Towers to exercise an option to appropriate the additional structure or agree to its leasing terms; the Court of Appeals affirmed the RTC; both parties elevated separate petitions to the Supreme Court.

Procedural History and Threshold Procedural Issues

The RTC issued interlocutory orders (May 24, 2002; August 19, 2002) ruling Article 448 and Depra applicable and finding LEMANS a builder in good faith; LEMANS filed a certiorari petition to the Court of Appeals contesting those interlocutory orders (CA-G.R. SP No. 73621), which denied relief on certiorari grounds.
The trial court later rendered the October 25, 2005 decision addressing main reliefs. The Court of Appeals affirmed the RTC decision (May 26, 2011), but dismissed LEMANS’ appeal for non‑compliance with briefing requirements and held that Concession 4 was a nuisance but that LEMANS had been declared a builder in good faith; it also found the building permit valid as a ministerial issuance if requirements appeared satisfied. Motions for reconsideration were denied.
Two separate petitions for review under Rule 45 reached the Supreme Court: G.R. No. 199353 (LEMANS) and G.R. No. 199389 (Legaspi Towers). The Supreme Court considered whether Article 448 (builders in good faith) and Depra should govern the dispute and addressed the procedural consequences of interlocutory orders and of remedies available to parties aggrieved by them.

Legal Issue(s) Presented

Whether Article 448 of the Civil Code (and the Depra v. Dumlao doctrine applying Arts. 448 and 546) applies to a condominium unit owner who constructed an additional structure on the roof deck of a condominium building, given the Condominium Act and the Master Deed/By‑Laws.
Whether the condominium corporation (Legaspi Towers) may abate or demolish Concession 4 as an illegal construction in light of the Condominium Act, the Master Deed and By‑Laws, and Article 699 (remedies against public nuisance).

Ownership of the Airspace and Effect of the Condominium Scheme

The Supreme Court affirmed the lower courts’ finding that Legaspi Towers owns the airspace above Concession 3 because, under RA 4726 (Condominium Act) and the Master Deed, a condominium unit is bounded by its interior surfaces (per Section 6 and relevant definitions) and does not include structural elements such as roofs or the airspace above the building. The airspace above Concession 3 is thus a common area (part of the condominium project’s common areas) unless the enabling/master deed expressly provides otherwise. The Master Deed for Legaspi Towers specified building stories and the deck roof and did not permit an additional third level; the Master Deed and By‑Laws therefore restrict unilateral structural additions. As a result, the airspace is not necessarily incident to ownership of Concession 3.

Applicability of Article 448, Article 546 and Depra v. Dumlao — Court’s Analysis

Article 448 and the Depra doctrine apply where the owner of land and the builder are distinct persons not bound by a specific regime or contract governing the property. Article 448 gives the landowner the option to appropriate improvements built in good faith upon payment of indemnity or to compel purchase of the land subject to exceptions.
The Supreme Court held Articles 448 and 546 inapplicable to properties recorded under Section 4 of the Condominium Act because a condominium unit owner is already in a statutory co‑ownership relationship with the other unit owners through the condominium corporation; the condominium scheme and the Master Deed/By‑Laws form a special law and contract governing rights and remedies among the parties. Specialia generalibus non derogant: a special law (Condominium Act) and the controlling contractual documents (Master Deed and By‑Laws) prevail over the Civil Code’s general builders‑in‑good‑faith regime.
The Court emphasized that application of Article 448 in the condominium context could produce iniquitous results: it might force other owners or the condominium corporation to accept or subsidize illegal structural modifications, or leave the condominium’s structural integrity threatened. The special statutory and contractual framework provides separate remedies and governance for such intra‑condominium conflicts.

Contractual and Statutory Requirements — Master Deed, By‑Laws, and Consent

The Master Deed and By‑Laws of Legaspi Towers explicitly set out the building’s configuration (number of storeys and the deck roof), and the By‑Laws require member approval for extraordinary structural improvements costing over a threshold or involving structural modification.
Under Section 4 of the Condominium Act, amendments to the master deed or revocation require registration of an instrument executed by the registered owner and consent of registered holders; LEMANS did not secure the required consent of registered owners nor an amendment to the Master Deed. LEMANS’ internal arrangement with the then‑president of Legaspi Towers could not bind the condominium corporation or its membership because corporate action must be exercised through the board (Corporation Code §23) and by the statutory/contractual processes of the condominium corporation.

Remedies Available to the Condominium Corporation and Abatement Authority

The By‑Laws grant the Board of Directors authority to enjoin, abate, or remedy violations of the Master Deed and to assess abatement costs, interest, costs and attorneys’ fees against the defaulting member. Article 699 of the Civil Code provides remedies against nuisances, including abatement without judicial proceedings.
Relying on the Condominium Act and the Master Deed/By‑Laws, the Supreme Court concluded that Legaspi Towers is entitled to abate and to require the removal of Concession 4 at the expense of LEMANS. The Court therefore ordered demolition/removal of Concession 4 and rejected application of Article 448’s alternative remedies to LEMANS.

Procedural Considerations — Interlocutory Orders, Remedies, and Scope of Review

The Supreme Court reviewed procedural rulings concerning interlocutory orders. It reiterated that interlocutory orders are generally not appealable and may be challenged via Rule 65 certiorari (extraordinary remedy) or by raising them on appeal from the final judgment; LEMANS had sought certiorari previously but the Court of Appeals concluded error did not amount to lack or excess of jurisdiction. The Supreme Court observed it is not procedurally barred from addressing interlocutory matters when reviewing the final judgment under Rule 45 because Rule 45 allows the Supreme Court to correct errors of judgment.
The Court noted LEMANS’ claim that prior interlocutory pronouncements fixed its status as a builder in good faith did not bind the Supreme Court, particularly where interlocutory rulings did not finally

Case Syllabus (A.M. No. RTJ-09-2179, RTJ-10-2234)

Case Caption and Core Parties

Consolidated petitions under Rule 45: G.R. No. 199353 (Leviste Management System, Inc. a.k.a. LEMANS as petitioner) and G.R. No. 199389 (Legaspi Towers 200, Inc. as petitioner).
Principal parties: Leviste Management System, Inc. (LEMANS) and Legaspi Towers 200, Inc. (Legaspi Towers).
Other named respondents and third-party respondents: Vivian Y. Locsin and Pitong Marcorde; Engr. Nelson Q. Irasga in his capacity as Municipal Building Official of Makati; Hon. Jose P. De Jesus in his capacity as Secretary of the Department of Public Works and Highways.
Decision penned by Justice Leonardo-De Castro; concurrence by Del Castillo, Jardeleza, and Tijam, JJ.; Chief Justice Sereno on leave.

Factual Background

Legaspi Towers is a condominium building on Paseo de Roxas, Makati City, consisting of seven floors, with a unit on the roof deck and two levels above said unit called Concession 2 and Concession 3.
Use and occupancy governed by the Master Deed with Declaration of Restrictions of Legaspi Towers, which is annotated on the developer’s transfer certificate of title.
Concession 3 originally owned by Leon Antonio Mercado; on 9 March 1989 LEMANS, through Conrad Leviste, purchased Concession 3.
In 1989 LEMANS decided to build an additional unit (Concession 4) on the roof deck above Concession 3; secured a building permit and commenced construction in October 1990.
Legaspi Corporation (developer/management) notified LEMANS the construction was illegal and withheld entry of construction materials; Legaspi Corporation wrote the Building Official Irasga to request cancellation of LEMANS’ permit.
Irasga denied cancellation, stating the applicant complied with requirements and that the application was signed by the then president of Legaspi Corporation.
LEMANS filed a complaint with the RTC on 20 February 1991 seeking writ of mandatory injunction to allow completion; RTC issued the writ on 3 April 1991.
Legaspi Corporation later filed a Third Party Complaint (7 October 1991) against Irasga and De Jesus to nullify the building permit for Concession 4.

Trial Court Proceedings and Key Evidence

Parties presented and formally offered evidence before RTC; before main judgment the RTC issued an interlocutory Order dated 24 May 2002 applying Article 448 of the Civil Code and the Depra v. Dumlao doctrine.
The RTC’s May 24, 2002 and August 19, 2002 Orders found LEMANS not owner of the air space above its unit and applied Depra v. Dumlao because both parties appeared to be in good faith.
LEMANS filed a Rule 65 certiorari petition against the interlocutory orders; the Court of Appeals denied certiorari on March 4, 2004 (CA G.R. SP No. 73621), holding the rulings were errors of judgment not jurisdictional.
LEMANS adduced evidence that actual construction cost of Concession 4 was P800,897.96 and that fair market value of Concession 4 was P6,000,000.00.
RTC’s October 25, 2005 Decision (the Assailed Decision) ordered Legaspi Towers to exercise its option to appropriate the additional structure within 60 days after finality by paying proper indemnity; if Legaspi Towers chose not to appropriate, parties to agree terms of lease or court to fix terms; third party complaint and counterclaims dismissed; costs against the plaintiff.

Court of Appeals Disposition

Consolidated appeals to CA by LEMANS and Legaspi Towers resulted in CA Decision dated May 26, 2011 affirming the RTC decision.
CA dismissed LEMANS’ appeal for failure to comply with Section 13, Rule 44 in relation to Section 1(f), Rule 50 of the Rules of Court (subject index of brief lacked digest of arguments and list of authorities).
Because of LEMANS’ procedural default, CA did not resolve LEMANS’ substantive issue on valuation (actual cost vs market value).
CA held Concession 4 to be a nuisance but found LEMANS declared a builder in good faith and noted Legaspi Towers did not contest that declaration; therefore Concession 4 could not be demolished.
CA affirmed validity of the building permit, reasoning that issuance may be ministerial where application and plans appear to conform to regulatory requirements.
CA denied motions for reconsideration in Resolution dated November 17, 2011.

Petitions to the Supreme Court and Issues Presented

LEMANS’ petition (G.R. No. 199353) raised: (I) CA erred in failing to apply Depra v. Dumlao doctrine when it refused to rule on proper valuation for purchase price if Legaspi Towers exercises option; (II) CA erred by disregarding evidence already submitted and part of record when refusing to rule on valuation.
Legaspi Towers’ petition (G.R. No. 199389) raised: CA erred in not holding Legaspi Towers has right to demolish Concession 4 as illegal construction; CA erred in not holding that the building permit of Concession 4 is not validly issued.
Central legal question before the Supreme Court: whether Article 448 of the Civil Code and the Depra v. Dumlao ruling are applicable to the parties’ situation involving a condominium unit and common areas regulated under the Condominium Act and the condominium’s Master Deed and By-Laws.

Procedural Law on Interlocutory Orders Addressed by the Court

Supreme Court emphasized the interlocutory nature of RTC’s May 24, 2002 Order; interlocutory orders are generally not immediately appealable per Rule 41, Section 1.
The proper remedy against interlocutory orders is a special civil action for certiorari under Rule 65, subject to strict requirements of grave abuse of discretion amounting to lack or excess of jurisdiction and lack of plain, speedy, adequate remedy.
Parties may instead await final judgment and then assail interlocutory orders on appeal from the final judgment.
The Court noted LEMANS had filed certiorari petitions to the Court of Appeals against the RTC interlocutory orders, but those CA rulings were not elevated to this Court in that proceeding.
This Court explained that a petition for review under Rule 45 is the appropriate vehicle before the Supreme Court to review alleged errors of judgment in the final judgment and that it may exam