G.R. No. 160867 - Nakpil vs. Manila Towers Development Corp.

Case Summary (G.R. No. 160867)

Summary of Facts and Historical Background

The building, a 14-storey high-rise constructed in 1964, was leased to about 200 Filipino-Chinese tenants, including Nakpil. The property was mortgaged to GSIS, which foreclosed and sold the building to Centertown Marketing Corporation (CMC), which assigned rights to MTDC for P21,000,000. The tenants, through HIBTAI, claimed priority rights to purchase the building but were unsuccessful in their legal challenges, including petitions filed up to the Supreme Court in 1987. The tenants withheld rents and remitted them to the HIBTAI instead of MTDC.

Building Defects and Government Orders for Repair

In 1981, the City Engineer of Manila warned MTDC of serious structural defects in the building that endangered tenants' safety. After repeated requests for repairs, legal suits filed by HIBTAI prevented MTDC from proceeding with repairs. Several inspections confirmed multiple substantial structural and safety defects, including cracks, obsolete electrical wiring, defective plumbing, corrosion, illegal constructions, and violations of building codes and ordinances. Despite warnings and repair orders, MTDC did not initially perform the required repairs.

City Government's Intervention and Demolition Order

In 1995, MTDC requested an ocular inspection by the City Building Official, who confirmed the building’s dangerous condition and ordered the tenants to vacate for repairs. MTDC ignored initial orders, prompting the issuance of a closure order in January 1996 and later a directive to undertake repairs. The City Building Official recommended authorizing city repair works, with expenses to be charged to MTDC. The City Mayor approved the recommendation, and notices for tenant eviction for repairs were issued in 1996.

Tenants' Legal Actions and Temporary Restraining Orders

Felix Ong and Clemente Sy, representing tenants’ associations, filed petitions for prohibition and injunctive relief to stop MTDC and city government from conducting repairs, resulting in a temporary restraining order (TRO) issued by the Regional Trial Court (RTC). Despite the TRO, government personnel entered the building on July 19, 1996, and commenced partial demolition and repair work, including destruction of walls and partitions on some floors.

Alleged Destruction of Nakpil’s Law Office and Damages Claimed

Nakpil, absent due to medical treatment abroad, returned to find his law office demolished and contents lost or destroyed. He filed a complaint against MTDC for actual, moral, and exemplary damages, alleging unlawful deprivation of possession and destruction of property without court order. Nakpil quantified his losses, including books, furniture, equipment, and claimed interruption of his practice.

MTDC’s Defense and Trial Court Decision

MTDC contended that the repairs and demolition were initiated by the City of Manila pursuant to public safety concerns following a tragic fire incident elsewhere, and that MTDC was prevented by tenant actions from effecting repairs themselves. The trial court dismissed Nakpil’s complaint, finding no proof that MTDC was responsible for the demolition or loss of personal property since the repair activities were conducted by city government personnel.

Court of Appeals’ Decision

The Court of Appeals (CA) reversed the RTC ruling, finding MTDC liable for nominal damages due to breach of its obligations as lessor under Article 1654 of the Civil Code to perform necessary repairs and maintain peaceful enjoyment of the leased premises. The CA ruled that MTDC’s failure resulted in disturbance of Nakpil’s possession, but no actual or moral damages were awarded due to insufficient evidence of loss or bad faith.

Issues Presented for the Supreme Court

Whether MTDC is liable for actual, moral, and exemplary damages to Nakpil for the demolition and disturbance of possession.
Whether the award of P50,000.00 as nominal damages has factual and legal basis.

Applicable Law and Legal Principles

Article 1654 of the 1987 Philippine Civil Code, outlining the lessor’s obligations to:
(1) Deliver the leased property fit for its intended use;
(2) Make necessary repairs;
(3) Maintain peaceful and adequate enjoyment of the leased property.
Breach of contract defined as failure without legal excuse to comply with contractual terms.
Distinction between legal and factual trespass: liability arises only when lessee’s legal possession is disturbed by the lessor or those acting with authority thereof.
National Building Code (P.D. No. 1096), Sections 214 and 215, authorizing the City Building Official to order repair, vacation, or demolition of dangerous or ruinous buildings for public safety.

Supreme Court’s Analysis and Ruling

The Court rejected the CA’s finding of breach and liability against MTDC on the basis that:

The disturbance and demolition of the building were conducted by employees of the City Engineer and the City Building Official under lawful public authority and municipal orders, not by MTDC.
MTDC’s failure to repair the building was substantially due to interference by tenants and HIBTAI, who resisted repairs and withheld rentals.
MTDC had

Case Syllabus (G.R. No. 160867)

Case Background and Facts

A 14-storey building located at 777 Ongpin St., Manila, was owned by Cheong Kiao Ang and leased out to around 200 Filipino-Chinese tenants, some of whom used their units for residential or commercial purposes. Among these tenants was Atty. Bonifacio Nakpil, who leased Room 204 as his law office.
The tenants later organized into the House International Building Tenants Association, Inc. (HIBTAI).
The property was mortgaged with the GSIS; upon Ang’s failure to pay the loan, GSIS foreclosed the mortgage, acquired the property at public auction, and eventually sold it to Manila Towers Development Corporation (MTDC).
HIBTAI claimed priority to purchase the property under Presidential Decree No. 1517 and protested the sale.
Tenants refused to pay rent to MTDC and instead sent payments to HIBTAI.
The Manila City Engineer and Building Official issued warnings and requests for urgent repairs in 1981 due to serious defects that endangered tenants’ safety.
Multiple lawsuits by HIBTAI were filed against GSIS, CMC, MTDC, asserting tenants’ priority rights and questioning ownership; these suits were consistently dismissed by courts up to the Supreme Court in 1987.
In 1995, upon request by the building administrator (Samuel Samuela), the Office of the Building Official conducted an ocular inspection, confirming structural, electrical, sanitary, and architectural defects rendering the building unsafe for occupancy.
The City Building Official issued orders to vacate the building and undertake repairs, warning of administrative sanctions and legal consequences for non-compliance.
MTDC failed to respond or undertake repairs, partly due to persistent tenant opposition and legal actions preventing access.
City authorities commanded repairs and later issued a Closure Order with detailed requirements including structural testing, certifications, and permits prior to repairs.
The City Engineer recommended the City be authorized to effect repairs and order tenants to vacate to protect lives.
City hall approved the recommendation and directed the immediate repair of the building, expenses to be charged to MTDC.
Notices were sent to tenants to vacate within 15 days in June 1996.
While Atty. Nakpil was abroad for medical treatment, representatives of the City, led by Engr. Melvin Balagot, entered the building and commenced repairs on July 19, 1996, tearing down some interior walls and structures.
Repair works were interrupted by a Temporary Restraining Order (TRO) issued on petition of tenants’ representatives.
Nakpil filed suit against MTDC for actual, moral, exemplary damages, attorney’s fees, and other reliefs, alleging unlawful deprivation of possession and destruction of his law office.
MTDC answered denying liability, asserting that city authorities had lawfully undertaken repairs/remediation due to building deterioration.
Testimony showed the building was deemed safe in 1990 after inspection; however, serious deteriorations were noted later.
Tenants described forcible entry and destruction of property during the City’s repair efforts, with allegations of looting.
The RTC dismissed Nakpil’s complaint, holding MTDC not liable as building repairs/demolition was carried out by city authorities.
The Court of Appeals reversed, awarding Nakpil nominal damages of P50,000, but denied actual and moral damages due to insufficient proof.
Both parties elevated the case to the Supreme Court through separate petitions for review.

Issues Presented

Whether MTDC, as lessor, is liable to Atty. Nakpil, the lessee,