Case Summary (G.R. No. 147076)
Key Dates and Procedural Posture
Decision under review by the Supreme Court was rendered on June 17, 2004. The cases consolidated for trial in the Regional Trial Court of Quezon City were Criminal Case No. Q-89-2412 (People v. Tabian, et al.) and Civil Case No. Q-88-768 (Act Theater v. MWSS). The RTC rendered its decisions on May 5, 1997; the Court of Appeals affirmed the civil decision on January 31, 2001; the Supreme Court denied the petition for review.
Applicable Law
Governing constitutional framework: the 1987 Constitution (applicable because the decision date is after 1990). Statutory and code provisions cited and applied: Presidential Decree No. 401 as amended by Batas Pambansa Blg. 876 (criminal prohibition on tampering with water and power meters), Article 429 of the Civil Code (owner’s right to exclude), and Article 19 of the Civil Code (standard of conduct in exercise of rights). The decision also considered precedent cited in the pleadings and lower-court rulings.
Facts Found by the Trial Court
On September 22, 1988, four employees of Act Theater were apprehended by Quezon City police for alleged tampering of a water meter. MWSS cut off Act Theater’s water service the next day. Act Theater filed a civil complaint for injunction with damages, alleging that MWSS acted arbitrarily, whimsically and capriciously by disconnecting water without prior notice and that the disconnection adversely affected health and sanitation and caused other losses, including expenses to secure an alternative water source and a forced deposit to restore service.
Procedural Outcome in Lower Courts
The RTC jointly tried the criminal and civil actions. The RTC acquitted the four employees for lack of evidence in the criminal case. In the civil case, the RTC ordered MWSS to pay Act Theater P25,000.00 as actual/compensatory damages, to return P200,000.00 deposited by Act Theater for restoration of water service, dismissed MWSS’s counterclaim for undercollection, ordered MWSS to pay costs and P5,000.00 attorney’s fees, and made permanent an earlier mandatory injunction. The Court of Appeals affirmed the civil judgment.
Issues Presented to the Supreme Court
MWSS raised three principal issues: (1) whether the Court of Appeals validly affirmed the RTC decision; (2) whether the award of attorney’s fees was valid; and (3) whether the appellate court correctly applied Article 19 of the Civil Code without properly considering Article 429 (the proprietor’s right to exclude) in justifying disconnection of water service.
Supreme Court’s Ruling (Disposition)
The Supreme Court denied the petition for review and affirmed the Court of Appeals decision in toto. The Court upheld the RTC’s awards of P25,000.00 actual/compensatory damages, reimbursement of P200,000.00 deposited for restoration, and P5,000.00 attorney’s fees. The Supreme Court also corrected an obvious typographical error in the Court of Appeals’ opinion that had mistakenly reflected attorney’s fees as P500,000.00 instead of the P5,000.00 actually awarded by the RTC.
Legal Reasoning — Exercise of Proprietary Rights vs. Standards of Conduct
The Court recognized that MWSS, as owner/operator of the water utility, possessed the proprietary right under Article 429 of the Civil Code to exclude others from the use of its property, including the right to disconnect service. However, the Court emphasized that the right to exclude is not absolute and must be exercised within the limits imposed by Article 19 of the Civil Code, which requires that every person, in exercising rights and performing duties, act with justice, give everyone his due, and observe honesty and good faith. The Court held that the manner of exercise of a right, if arbitrary or unjust and causing damage, constitutes a legal wrong giving rise to liability.
Application of Article 19 to the Facts
Applying Article 19, the Supreme Court agreed with the RTC and CA findings that MWSS’s act of cutting off Act Theater’s water service without meaningful prior notice and without affording Act Theater appropriate opportunity to be heard was arbitrary and injurious. The Court accepted the factual findings that the MWSS notice of investigation was given only a few hours before disconnection, that Act Theater’s assistant manager was not permitted to represent the company at MWSS’s office, and that disconnection occurred at midnight the following day. These circumstances supported the conclusion t
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Procedural History
- Petition for review on certiorari filed by Metropolitan Waterworks and Sewerage System (MWSS) seeking reversal and setting aside of the Court of Appeals (CA) Decision dated January 31, 2001 in CA-G.R. CV No. 58581.
- The CA had affirmed the civil aspect of the Regional Trial Court (RTC) of Quezon City, Branch 77 Decision dated May 5, 1997 directing MWSS to pay Act Theater, Inc. damages and attorney's fees.
- The litigation arose from consolidated cases: Criminal Case No. Q-89-2412 (People of the Philippines v. Rodolfo Tabian, et al., for violation of P.D. No. 401, as amended by B.P. Blg. 876) and Civil Case No. Q-88-768 (Act Theater, Inc. v. MWSS).
- Criminal and civil cases were jointly tried in the RTC because they arose from the same factual circumstances.
- The petition to the Supreme Court raised three principal issues challenging the CA's affirmation of the RTC decision.
Factual Background
- On September 22, 1988, four employees of Act Theater, Inc.—Rodolfo Tabian, Armando Aguilar, Arnel Concha, and Modesto Ruales—were apprehended by Quezon City police for allegedly tampering with a water meter in violation of P.D. No. 401, as amended by B.P. Blg. 876.
- Following the apprehension, Act Theater’s water service connection was cut off by MWSS.
- Act Theater filed Civil Case No. Q-88-768, a complaint for injunction with damages, alleging MWSS acted arbitrarily, whimsically, and capriciously in cutting off its water service without prior notice.
- As a consequence of the disconnection, Act Theater alleged adverse effects on health and sanitation of its patrons and surrounding premises; it was compelled to contract another source of water for several days.
- Act Theater was required to deposit P200,000.00 with MWSS for the restoration of its water services after the disconnection.
Disposition Below — RTC Decision (May 5, 1997)
- Criminal Case No. Q-89-2412: The four accused employees were acquitted for failure of the prosecution to prove guilt beyond reasonable doubt.
- Civil Case No. Q-88-768: The RTC ordered:
- MWSS to pay actual or compensatory damages of P25,000.00 to Act Theater, Inc.;
- MWSS to return the P200,000.00 deposited by Act Theater for restoration of water services after the disconnection on September 23, 1988;
- Dismissal of MWSS’s counterclaim for undercollection amounting to P530,759.96 for lack of merit;
- MWSS to pay costs of suit;
- MWSS to pay Act Theater P5,000.00 as attorney's fees;
- The mandatory injunction previously issued to Act Theater to be made permanent.
Disposition Below — Court of Appeals Decision (January 31, 2001)
- The CA affirmed the RTC decision in its entirety, finding no cogent reason to reverse the appealed decision, stating it was in conformity with law and evidence.
- The CA’s opinion, in quoting the RTC dispositive portion, mistakenly typed attorney's fees as P500,000 in one portion; however, the CA expressly affirmed that the attorney's fees awarded by the RTC were P5,000, alongside damages and refund of P200,000, as correctly reflected in its dispositive portion.
Issues Presented by Petitioner to the Supreme Court
- Whether the CA validly affirmed the RTC decision in resolving the petitioner’s appeal.
- Whether the CA validly upheld the award of attorney's fees.
- Whether the CA correctly applied Article 19 of the New Civil Code without considering the applicability of Article 429 of the same Code.
Legal Provisions and Authorities Cited
- Article 429, Civil Code: Grants owner or lawfu