Case Summary (G.R. No. 160867)
Administrative notices, early municipal action, and tenant litigation
Beginning in 1981 the City Engineer and Building Official repeatedly notified MTDC of serious defects and ordered repairs. HIBTAI challenged MTDC’s acquisition and authority in multiple suits (complaints filed in 1982 and thereafter), seeking injunctions and annulment of the sale and assignment; those suits were dismissed at trial and on appeal and ultimately affirmed by this Court in 1987. The tenants’ actions, and their withholding of rent, impeded MTDC’s capacity to undertake repairs.
1995–1996 inspection reports and closure order
In October 1995 MTDC requested an ocular inspection. OBO inspectors reported on November 3, 1995 extensive structural, electrical, sanitary/plumbing, and architectural defects and concluded the building’s structural integrity was questionable and required testing. The Building Official directed vacating and repairs (Nov. 10, 1995) and, after further reinspection, issued a closure order on January 24, 1996 with detailed requirements for structural testing, permits, and certification from the structural designer; the Mayor subsequently authorized city‑initiated repairs charged to MTDC if owners failed to act.
City‑initiated repair operations and temporary suspension
Notices to vacate were issued in June 1996. Felix Ong (HIBTAI officer) obtained a temporary restraining order (TRO) to enjoin city repair/demolition work. Nonetheless, on July 19, 1996, city personnel led by Engr. Melvin Balagot entered and commenced repair works—tearing down certain interior walls and allegedly removing structures—then suspended operations on July 22, 1996 because of the TRO. Balagot reported occupants had vacated except for a security guard and that the building was not safe for occupancy.
Nakpil’s complaint alleging unlawful demolition and loss
While abroad for medical treatment, Nakpil learned his office had been demolished. He filed suit in the RTC (Civil Case No. 65980) on Nov. 5, 1996 against MTDC for actual, moral, and exemplary damages, alleging forcible entry and demolition of his office, loss and alleged theft of personal property, unlawful deprivation of possession, and interruption of his long‑standing law practice in Room 204. He quantified losses and sought attorney’s fees and costs.
Trial testimony and evidence
Nakpil and tenant witnesses testified to forced entry, demolition and loss of books, furniture and equipment. MTDC presented evidence that city personnel and OBO employees conducted the repairs under municipal authority following the Mayor’s directive (contextualized by the Ozone fire concern) and that MTDC had applied for a demolition permit in March 1998 and later had the building demolished. An expert (Engr. Guillermo de Leon) had earlier opined in 1990 the building was structurally sound. Testimony established that tenants had resisted MTDC’s repair efforts and that HIBTAI had controlled collection of rents, using funds for litigation rather than repairs.
RTC disposition and appellate reversal
The RTC dismissed Nakpil’s complaint (May 20, 2001), finding Nakpil did not prove MTDC’s responsibility for the July 1996 actions, noting city employees performed the demolition/repair. The Court of Appeals reversed (Aug. 25, 2003), holding MTDC breached its obligations as lessor under Article 1654 (to deliver, repair, and maintain peaceful enjoyment) and awarded nominal damages of P50,000, denying actual, moral, and exemplary damages for lack of proof of quantum and bad faith.
Issues on review before the Supreme Court
The Supreme Court framed the principal issues as (1) whether MTDC is liable to Nakpil for actual, moral or exemplary damages for disturbance of possession, and (2) whether the CA’s award of P50,000 in nominal damages is supported by fact and law.
Governing legal standards: lessor obligations and public authority powers
The Court reiterated Article 1654’s threefold obligations of the lessor: deliver the leased thing fit for its intended use; make necessary repairs; and maintain the lessee in peaceful and adequate enjoyment for the contract term. Liability for breach in contract is governed by the rules on damages (e.g., Article 2201): an obligor acting in good faith is liable for material and probable consequences of breach; where bad faith, broader liability may be imposed. The Court also emphasized the role of the National Building Code (P.D. No. 1096): Sections 214–215 authorize the Building Official to order repair, vacation or demolition of buildings found dangerous or ruinous to life or safety, and the Implementing Rules (Rule II, Section 10) set procedures for custody and disposition of materials removed in repair/demolition.
Distinction between legal trespass and trespass in fact; warranty of peaceful enjoyment
Relying on Goldstein v. Roces and doctrinal commentaries, the Court distinguished mere trespass in fact (de mero hecho) by third persons from legal trespass (perturbacion de derecho) that casts doubt upon the lessor’s title or right and thus triggers the lessor’s obligation to guarantee peaceful enjoyment. Article 1654(3) protects the lessee from disturbances both by the lessor and by third parties where those disturbances amount to legal trespass. The Court emphasized that the lessor is not liable for every third‑party intrusion or act unless it constitutes legal trespass or the lessor’s own wrongful act or omission led to a substantive interference.
Application to the facts: authority and lawful action of city officials; tenant interference with MTDC
Applying these standards, the Court found no factual and legal basis to hold MTDC liable. The actions on July 19, 1996 were carried out by city personnel in the lawful exercise of duties under Sections 214–215 of the National Building Code, pursuant to municipal orders to repair/rehabilitate a dangerous building. MTDC had requested inspection and had been hindered from performing repairs because HIBTAI and members of the tenant association had resisted and litigated, withheld rents, and effectively controlled the premises. The Court concluded MTDC did not participate in or authorize the city’s repair operations and had sought to have the building repaired through the proper public authorities when tenant obstruction made private repair impossible.
Constructive eviction doctrine and its non‑application
The Court discussed constructive eviction: it requires (1) an act or omission by the landlord or someone acting under the landlord’s authority that permanently interferes with the tenant’s beneficial enjoyment; and (2) the tenant’s abandonment of possession within a reasonable time. The Court found neither element satisfied: the city’s personnel acted under municipal authority, not under MTDC’s direction or authority; and there was no showing Nakpil abandoned possession as required to constitute constructive eviction traceable to MTDC. The MTDC’s inability to make repairs, caused by tenant opposition, did not equate to a voluntarily wrongful act by MTDC depriving Nakpil of possession.
Failure of proof on damages and possession of removed materials
The Court also found Nakpil failed to establish actual damages with requisite proof and failed to show MTDC’s
Case Syllabus (G.R. No. 160867)
Title, Citation and Court
- Case: Bonifacio Nakpil v. Manila Towers Development Corporation (consolidated petitions)
- Reported at 533 Phil. 750.
- G.R. No. 160867 (Nakpil petition) and G.R. No. 160886 (MTDC petition).
- Decision date: September 20, 2006.
- First Division; opinion by Justice Callejo, Sr.; concurrence by Panganiban, C.J., Ynares‑Santiago, Austria‑Martinez, and Chico‑Nazario, JJ.
Parties and Principal Actors
- Bonifacio Nakpil: long‑time lessee of Room 204 (mezzanine floor) of the building at 777 Ongpin St., Sta. Cruz, Manila; used Room 204 as his law office since 1965; petitioner in G.R. No. 160867.
- Manila Towers Development Corporation (MTDC): assignee/purchaser of the property; respondent in G.R. No. 160867 and petitioner in G.R. No. 160886.
- Cheong Kiao Ang: original owner of the 14‑storey high rise building; leased to about 200 Filipino Chinese tenants circa 1964.
- House International Building Tenants Association, Inc. (HIBTAI): tenants’ association formed by building tenants; collected rentals from tenants and litigated title/purchase priority issues.
- Government Service Insurance System (GSIS): mortgagee; foreclosed and won at public auction; sold property to Centertown Marketing Corporation (CMC).
- Centertown Marketing Corporation (CMC): purchaser from GSIS, sold/assigned rights to MTDC for P21,000,000.00.
- City of Manila officials and personnel: City Engineer; Office of the Building Official (OBO); Officer‑in‑Charge Architect Juan A. Maravillas, Jr.; Engr. Melvin Q. Balagot, Chief, Slum Clearance and Demolition Services; Mayor of Manila; police and sheriffs who accompanied repair/demolition crews.
- Other tenant witnesses and participants: Atty. Samuel S. Samuela (building administrator), Amado Ramoneda (HIBTAI representative present at inspection), Felix Ong (HIBTAI president who filed petition for prohibition), Clemente Sy (claimed Barangay captain and HIBTAI president), Joseph Villanueva (tenant and lessee of Room 200), Carmelita Tan (tenant and ground floor/mezzanine store owner), Engr. Guillermo de Leon (ocular inspector in 1990).
Antecedent and Factual Background
- Building and tenancy:
- A 14‑storey building located at 777 Ongpin St., Sta. Cruz, Manila, was leased beginning around 1964 to approximately 200 Filipino Chinese tenants for residential and commercial uses.
- Nakpil leased Room 204 in the mezzanine floor as his law office since 1965 and had maintained the lease conditions.
- Ownership change and mortgage foreclosure:
- The property had been mortgaged to GSIS as security for a loan taken by owner Cheong Kiao Ang.
- GSIS foreclosed for nonpayment, purchased at public auction, then sold to CMC, which assigned all rights to MTDC for P21,000,000.00.
- HIBTAI objected, asserting members had priority purchase rights under P.D. No. 1517.
- Tenants’ conduct after sale:
- Tenants refused to pay rentals to MTDC and instead remitted rentals to HIBTAI.
- HIBTAI used rental funds in part to finance litigation challenging the sale/assignments and asserting purchase priorities.
Administrative Warnings, Inspections and Findings (1981–1996)
- Early administrative warnings:
- City Engineer wrote MTDC (through Luis Javellana) on June 29, 1981 requesting correction of building defects and again on July 10, 1981 urging immediate repairs, warning defects were serious and endangered tenants’ lives.
- 1995 request for inspection and ocular inspection:
- On October 12, 1995, Atty. Samuel S. Samuela (building administrator) requested an immediate ocular inspection from Architect Juan A. Maravillas, Jr., OIC, OBO, citing earlier 1981 orders that had been prevented by tenants’ suits and illegal tenant alterations.
- Ocular inspection was scheduled for and conducted on October 24, 1995 with prior notices to tenants and in the presence of HIBTAI representative Amado Ramoneda.
- Building Inspection Report (submitted November 3, 1995) — findings:
- Structural Aspect (Sec. 3.1 Rule VII‑IRR): prominent cracks on exterior/interior walls; signs of earthquake movement; decreased seismic resistance; feasible damage to beams and columns; structural integrity questionable; structural testing needed.
- Electrical Aspect (Sec. 3.3 Rule VII‑IRR): old and obsolete wiring not properly maintained; uncovered junction boxes exposing wiring connections; dangling extension cords and octopus wiring observed.
- Sanitary/Plumbing Aspect (Sec. 3.5 Rule VII‑IRR): defective sanitary/plumbing installations; poor drainage causing wastewater stagnation at back (ground floor); loss of trap seals in vacated 9th–11th floor fixtures allowing escape of sewer gas.
- Architectural Aspect (Sec. 3.6 Rule VII‑IRR): rusted/corroded steel frames and roofings; broken window glass panes and rusted steel casements; inadequate light and ventilation due to illegal constructions in required open spaces; illegal use of 14th floor as sauna (non‑conforming to City Ordinance).
- Other violations: non‑compliance with BP 344 (mobility for disabled persons); illegal construction at estero easement and required open spaces (violations of Sec. 3.8 Rule VII‑IRR).
- Recommendations of the City Building Official after inspection:
- Repair window glass/frames and remove illegally appended structures; discontinue sauna; replace old electrical wiring and fixtures; perform and submit results of structural testing and attach structural designer’s certification and plans before lifting any closure.
Administrative Orders, Closure and City Intervention (1995–1996)
- November 10, 1995: City Building Official wrote building administrator ordering tenants to vacate and MTDC to undertake necessary repairs and rehabilitation; warned of administrative sanctions under National Building Code (P.D. No. 1096) and possible legal action under Articles 482 and 694–707 of the Civil Code.
- MTDC did not respond to the November 10 letter.
- January 24, 1996: City Building Official issued a Closure Order to MTDC:
- Directed tenants to vacate within 15 days and ordered MTDC to apply for permits prior to repairs, include certification on structural stability, attach structural testing results, recommendations/evaluations, scope of project activities, repair/renovation and retrofitting plans.
- Stated order would be lifted only after defects were corrected substantially per Section 21, Rule VIII‑IRR, P.D. No. 1096, without prejudice to further Civil Code remedies.
- March 26, 1996 reinspection and recommendation:
- OBO recommended authorization for the City Engineer to make necessary repairs at MTDC’s expense and to order occupants to immediately vacate, citing MTDC’s adamant refusal to correct defects since 1981; risk of criminal/administrative liability for city officials if no action taken; examples including the Ozone case.
- Mayoral approval:
- The City Mayor approved the recommendation and directed the repairs be undertaken by the City Building Official with expenses charged to MTDC.
- Notices to tenants:
- On June 28, 1996, notices were issued to tenants giving fifteen (15) days to vacate for general repairs.
Tenants’ Legal Actions and Interim Court Orders
- HIBTAI litigation history:
- HIBTAI filed suit October 2, 1982 for injunction and damages against GSIS (dismissed January 31, 1983).
- HIBTAI filed Civil Case No. 83‑15875 (Feb 23, 1983) against CMC, MTDC and GSIS alleging priority under P.D. No. 1517; court dismissed; appellate court affirmed (Feb 4, 1986); petition for review to Supreme Court denied June 30, 1987 (House International Building Tenants Association, Inc. v. IAC).
- Pre‑repair injunctions in 1996:
- Felix Ong (tenant and HIBTAI president) filed petition for prohibition with plea for preliminary injunction/TRO and damages (Civil Case No. 96‑79267) seeking to enjoin repair/rehabilitation works; the trial court granted a TRO which temporarily restrained OBO work.
- Clemente Sy filed a similar petition against same respondents.
July 19–23, 1996 Repair/Entry Incident and Administrative Reports
- July 19, 1996 events:
- At approximately 4:00 p.m., a team led by Engr. Melvin Balagot (Chief, Slum Clearance & Demolition Services, OBO), accompanied by employees of the Office of the City Building Official and policemen, entered the building and commenced repairs, tearing down some structures.
- Demolition/repair activities were said to include dismantling interior walls, removal of cracked walls, use of crowbars/hammers; OBO reported most interior walls were already dismantled to give way for immediate replacement.
- Suspension and report:
- Repair works temporarily suspended July 22, 1996 due to the TRO issued in favor of Ong (Civil Case No. 96‑79267).
- July 23, 1996: Engr. Balagot’s report indicated all occupants had vacated except the ground floor security guard; interior walls had been dismantled; the building was reported not safe for occupancy at that time.
Nakpil’s Civil Complaint (Civil Case No. 65980, RTC Manila) and Allegations
- Filing and causes of action:
- Upon returning from U.S. medical treatment, Atty. Bonifacio Nakpil filed on November 5, 1996 a complaint in the Regional Trial Court (Manila), docketed Civil Case No. 65980, naming MTDC as defendant and seeking actual, moral and exemplary damages, attorney’s fees, litigation expenses, costs of suit and other reliefs.
- Factual allegations in complaint:
- MTDC, through its agents and representatives and policemen who accompanied the demolition team, forced the guard to open the gate; thereafter about 200 people armed with hammers and crowbars destroyed the mezzanine floor on July 19, 1996.
- Nakpil’s room (Room 204) was destroyed: walls and partitions hammered down; electricity cut off; personal belongings scattered, thrown away, or stolen, including law books and office equipment