Abella vs. Municipality of Naga

A municipality closing a municipal road, street, or any part thereof must indemnify any person prejudiced thereby, and where economic prejudice from loss of access is stipulated, nominal indemnity within the agreed limit is properly awarded even if the closure was undertaken as an exercise of police power.

Concepcion Abella owned property in Naga fronting P. Prieto Street and adjoining the public market area. Section 2246 of the Revised Administrative Code governed the closure of municipal roads, streets, and thoroughfares, expressly conditioning any closure upon indemnification of prejudiced persons.

Concepcion Abella owned property in the Municipality of Naga, now Naga City, abutting P. Prieto Street and situated beside the public market. The portion of the municipal street at issue ran between the public market and her property and provided her property with access to P. Prieto Street.

Thereafter, the defendant municipality, by resolution, ordered the closing of that part of the municipal street and used the closed thoroughfare to expand the market. Immediately after passage of the resolution, permanent, semi-permanent, as well as temporary constructions were allowed by the municipality along the sidewalk of Abella's property and abutting said property, facing P. Prieto Street and extending out into the middle of the same street. According to the agreed statement of facts, this deprived her property of access to the street and consequently retarded her reconstructions.

Abella filed suit in the Court of First Instance of Camarines Sur alleging two causes of action, and the parties submitted the case upon an agreed statement of facts. The stipulation further provided that if any damages were to be awarded to plaintiff, the same should not exceed P300. The trial court awarded P300 on the first cause of action based on prejudice from the street closure and dismissed the second cause of action.

• Police Power: Respondent countered that it acted and exercised its police power, prompted to preserve the peace and good order of the community and promote the general welfare, and this being the case, it believed it was not liable for damages.

• Basis of Liability: Whether the municipality may avoid liability for closing a municipal street on the ground that it acted in the exercise of police power for the general welfare.
• Prejudice and Indemnity: Whether the plaintiff, having been economically damaged by deprivation of access to P. Prieto Street, was entitled to indemnity under the statute governing closure of municipal streets.

• Basis of Liability: No. Liability did not depend on unlawfulness, lack of authority, or invasion of property rights, but on the express statutory requirement of indemnity upon closure.
• Prejudice and Indemnity: Yes. Prejudice was established by the stipulated deprivation of access and retardation of reconstruction, and the P300 indemnity within the stipulated limit was proper.

• Basis of Liability: The municipality missed the point by invoking police power because it was not charged with any unlawful act, with acting without authority, or with invasion of property rights. The lower court's decision rested on Section 2246 of the Revised Administrative Code, which provides that no municipal road, street, or any part thereof shall be closed without indemnifying any person prejudiced thereby. Lawful exercise of authority therefore did not displace the accompanying statutory duty to indemnify.
• Prejudice and Indemnity: The only remaining question was whether plaintiff was prejudiced by the municipal action. Economic damage was admitted by the stipulation of facts, and no dispute existed that the indemnity assessed was within the bounds of the damages suffered. The P300 award was in fact characterized as seemingly nominal judged by the described adverse effects on plaintiff's interests from conversion of P. Prieto Street into a market.

• Indemnity upon closure of municipal streets — Where a statute provides that no municipal road, street, or part thereof shall be closed without indemnifying any person prejudiced thereby, a municipality effecting such closure incurs liability to indemnify prejudice caused, regardless of the lawfulness of the closure or its justification as police-power regulation. The doctrine was applied to sustain indemnity for loss of street access and retardation of reconstruction following conversion of the closed street into a market extension.

• "which provides that no municipal road, street, etc. or any part thereof 'shall be closed without indemnifying any person prejudiced thereby.'" — States the controlling statutory rule that supplied the basis of liability, independent of the municipality's invocation of police power.
• "As a consequence of this resolution, and immediately after the passage of the same, — says the agreement — permanent, semi-permanent, as well as temporary constructions were allowed by the defendant municipality of Naga along the sidewalk of Plaintiff's property and abutting to said property, facing P. Prieto Street, and extending out in the middle of the same street, hence depriving the plaintiff's property of access to said street, and consequently retarding her reconstructions." — Recites the stipulated facts establishing prejudice through loss of access caused by the closure and market expansion.
• "The appeal is absolutely without merit, and the appealed decision will be affirmed, with costs against the appellant." — Announces the dispositive rejection of the police-power defense and affirmance of the indemnity award.

• Section 2246, Revised Administrative Code — Provides that no municipal road, street, or any part thereof shall be closed without indemnifying any person prejudiced thereby; applied as the direct basis for holding the municipality liable for prejudice caused by closing part of P. Prieto Street and converting it into a market.

Paras, C.J., Feria, Pablo, Padilla, Reyes, Jugo and Bautista Angelo, JJ., concur.