Corinthian Gardens Association, Inc. vs. Spouses Tanjangco and Spouses Cuaso

A homeowners association that conditions construction on its approval of building plans, payment of bonds and fees, and periodic inspection for compliance is negligent where its imprimatur assures compliance yet fails to prevent encroachment on an adjoining lot, its claim of mere table inspection being no excuse and its receipt of benefits entailing correlative duties to all members.

Corinthian Gardens Association, Inc. manages Corinthian Gardens Subdivision in Quezon City and enforces a Manual of Rules and Regulations governing construction by its homeowner-members. Spouses Reynaldo and Maria Luisa Tanjangco own Lots 68 and 69 in the subdivision, while Spouses Frank and Teresita Cuaso own adjacent Lot 65. Under the Manual, no new construction may start unless building plans are approved by the Association and builder's cash bond and pre-construction fees are paid, with on-going construction subject to inspection by the Association's representative for compliance with approved plans.

Spouses Reynaldo and Maria Luisa Tanjangco own Lots 68 and 69 covered by Transfer Certificates of Title No. 242245 and No. 282961 in Corinthian Gardens Subdivision, Quezon City, managed by Corinthian Gardens Association, Inc. Spouses Frank and Teresita Cuaso own adjacent Lot 65. Before constructing their house, the Cuasos needed a relocation survey, and Corinthian referred Geodetic Engineer Democrito De Dios, who had conducted prior surveys for the subdivision's developer and operated as D.M. De Dios Realty and Surveying. Before, during and after construction, Corinthian conducted periodic ocular inspections to determine compliance with approved plans pursuant to its Manual of Rules and Regulations.

The Cuasos then built their house through C.B. Paraz & Construction Co., Inc. as builder. After construction, their perimeter fence was found to have encroached on the Tanjangcos' Lot 69 by 87 square meters. No amicable settlement was reached. The Tanjangcos demanded demolition, and upon the Cuasos' failure and refusal, filed suit for Recovery of Possession with Damages. The Cuasos in turn filed a third-party complaint attributing negligence to C.B. Paraz for failing to ascertain proper specifications, to Engr. De Dios for an inaccurate relocation survey, and to Corinthian for approving the relocation survey and building plans without verifying accuracy and for vouching for Engr. De Dios' integrity and competence.

Thereafter the Regional Trial Court found the 87-square-meter encroachment but treated the Cuasos as builders in good faith, giving the Tanjangcos the option to sell and the Cuasos the option to buy within sixty days from receipt of decision, failing which the wall would be demolished at the Cuasos' expense, with P2,000.00 monthly rentals from filing of the complaint. It held C.B. Paraz grossly negligent and ordered moral and exemplary damages and attorney's fees, while dismissing the claims against Corinthian and Engr. De Dios. On appeal the Court of Appeals instead found the Cuasos in bad faith in land-grabbing the portion as of April 5, 1989, authorized demolition and increased rentals and damages, and apportioned 5% contribution each to Corinthian, C.B. Paraz and Engr. De Dios.

• Scope of Approval and Inspection: Petitioner argued that approval of the Cuasos' building plan was not tainted with negligence because it approved only architectural, structural and sanitary plans, not the survey relocation plan, whose purpose was only to ensure compliance with the Manual of Rules and Regulations and whose inspection was limited to table inspection only.
• Non-Submission of Survey Plan: Petitioner maintained that the survey relocation plan was never submitted for its approval, so failure to verify boundaries could not be attributed to it.
• Builder's Bond and Good Faith: Petitioner argued that acceptance of the builder's bond did not automatically make it liable for encroachment and damages, and that it approved the building plan with good faith and due diligence required under the circumstances.
• Increase of Rentals: Petitioner maintained that there was no legal basis to increase unilaterally and without proof the rentals prayed for in the complaint from P2,000.00 to P10,000.00.

• Negligence in Approval and Inspection: Respondents Tanjangcos countered that Corinthian was negligent in approving the Cuasos' building plan, and that its claim of mere table inspections bolstered negligence by unilaterally restricting coverage contrary to its own Manual of Rules and Regulations.
• Bond, Fees and Duty to Members: Respondents Tanjangcos argued that acceptance of a builder's bond affirms that a homeowner can hold the Association liable for consequences of plan approval, and that regular collection of membership dues obliges Corinthian to protect members' rights and interests.
• Judicial Notice of Rentals: Respondents Tanjangcos maintained that courts can take judicial notice of general increases in real estate rentals, considering the value of the lot in Corinthian Gardens Subdivision and deprivation for almost two decades.
• Finality and Non-Entitlement to Relief: Respondents Tanjangcos countered against the Cuasos' plea for injunction that only Corinthian's appeal was pending, that the CA judgment had become final as to the non-appealing Cuasos, C.B. Paraz and Engr. De Dios, and that a non-appealing party cannot obtain affirmative relief.

• Negligence and Contribution: Whether there is legal basis to hold petitioner Corinthian Gardens Association, Inc. liable to contribute 5% of the judgment sums on account of the encroachment made by Spouses Cuaso.
• Increase of Rentals: Whether there is legal basis to increase the reasonable compensation for use and enjoyment of the encroached portion from P2,000.00 as prayed for to P10,000.00.

• Negligence and Contribution: Yes. Negligence was established, Corinthian having failed to exercise requisite diligence in ensuring compliance with its Manual of Rules and Regulations, thereby contributing to the Tanjangcos' injury.
• Increase of Rentals: Yes. The P10,000.00 monthly rental was sustained, both lower courts having found deprivation of possession and use supported by evidence, with deprivation lasting more than two decades through no fault of respondents.

• Negligence and Contribution: The action is governed by quasi-delict, requiring proof by preponderance of (1) damages, (2) fault or negligence, and (3) causal connection. The 87-square-meter encroachment found by both courts deprived the Tanjangcos of use of their lot, satisfying damage. Applying the ordinary prudent person or discreet paterfamilias standard, Corinthian failed to use reasonable care in approving plans and conducting periodic inspections. By its own Manual, no construction could start without Association approval and bond and fees, with sanctions including denial of entry of materials and cut-off of water, and on-going construction including perimeter walls subject to inspection for compliance. Reliance on mere table inspection would defeat the rules' purpose, while the imprimatur assured the Cuasos everything was in order. Receipt of builder's bond, pre-construction and membership fees entailed correlative obligations to all members, not only the Cuasos. Thus failure to prevent encroachment despite inspection constituted negligence at least contributing to injury, warranting 5% contribution.
• Increase of Rentals: Courts may fix reasonable rent for use and occupation, but must base the amount on evidence adduced, not mere judicial notice of a controverted factual matter without hearing. Here both the RTC and CA uniformly found rent due because the Tanjangcos were deprived of possession and use, a finding based on evidence below. Consistent with allowance of increased rentals where owners were long denied benefits and possession, deprivation for more than two decades through no fault of the Tanjangcos left no cogent reason to disturb the CA's P10,000.00 monthly rental.

• Quasi-delict; elements under Article 2176 — Whoever by act or omission causes damage to another through fault or negligence, there being no pre-existing contractual relation, is obliged to pay damages. A plaintiff must prove by preponderance of evidence (1) damages suffered, (2) fault or negligence of defendant or one for whom he must respond, and (3) causal connection between fault or negligence and damages. Applied here to hold the Association liable where its negligent approval and inspection contributed to deprivation of the neighbor's lot.
• Negligence; paterfamilias standard — Negligence is the failure to use that reasonable care and caution which an ordinary person would have used in the same situation, judged not by the actor's personal judgment but by what would be reckless or blameworthy in a person of ordinary intelligence and prudence, including an inadvertent act creating unreasonable risk foreseeable to an ordinary prudent person. Applied to find the Association negligent for limiting itself to table inspection despite authority and duty to ensure compliance.
• Finality as to non-appealing parties; no affirmative relief without appeal — Failure to appeal renders the judgment final and executory as to that party, operating as acceptance of the ruling, and an appeal by one party does not inure to a non-appealing party; an appellee who is not an appellant may defend the judgment but cannot seek its modification or reversal. Applied to bar the Cuasos, C.B. Paraz and Engr. De Dios from contesting bad faith, demolition and damages after partial entry of judgment.
• Preliminary injunction to stay execution; requisites — Entitlement requires a clear and unmistakable right to be protected, material and substantial invasion thereof, and urgent necessity to prevent serious damage; injunction does not lie against a final and executory decision absent facts rendering execution unjust or inequitable or a change in parties' situation. Applied to deny the Cuasos' plea where their right to maintain the fence was declared inferior to the right to demolition.
• Reasonable rent; evidence required, not mere judicial notice — While courts may fix reasonable rent for use and occupation, the amount must rest on evidence adduced, as courts cannot take judicial notice of controverted rental value which is a factual matter requiring hearing and proof. Applied to sustain the increased rental because deprivation and basis were supported by the record and long duration, not on judicial notice alone.

• "ART. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter." — States the governing tort provision and frames the three elements the Tanjangcos had to prove by preponderance of evidence.
• "Did the defendant in committing the alleged negligent act use that reasonable care and caution which an ordinary person would have used in the same situation? If not, then he is guilty of negligence." — Provides the canonical test for negligence applied to measure Corinthian's conduct against the discreet paterfamilias standard.
• "Corinthian cannot and should not be allowed to justify or excuse its negligence by claiming that its approval of the Cuasos’ building plans was only limited to a so-called "table inspection;" and not actual site measurement." — Rejects the Association's principal defense and anchors liability on its approval power and inspection duty under its Manual.
• "A court cannot take judicial notice of a factual matter in controversy." — Limits judicial notice in fixing rentals and explains why the award must still rest on evidence of deprivation and value.

• Child Learning Center, Inc. vs. Tagorio, G.R. No. 150920, November 25, 2005 — Cited as authority for the three elements of quasi-delict under Article 2176 that plaintiff must prove by preponderance of evidence.
• Fernando vs. Court of Appeals, G.R. No. 92087, May 8, 1992 — Cited, together with Picart vs. Smith, for the definition of negligent act and the paterfamilias standard for determining negligence.
• Spouses Badillo vs. Tayag, 448 Phil. 606 (2003) — Cited as instructive that reasonable rent must be based on evidence adduced, not on mere judicial notice or appreciation of land values.
• Spouses Catungal vs. Hao, 407 Phil. 309 (2001) — Cited to support reasonableness of increased rentals where owners were long denied benefits and possession of property.
• Acebedo Optical Company, Inc. vs. Court of Appeals, 385 Phil. 956 (2000) — Cited for the rule that an appellee who is not an appellant cannot seek modification or reversal or claim affirmative relief.
• Almeida vs. Court of Appeals, G.R. No. 159124, January 17, 2005 — Cited for the requisites of injunctive relief in denying the Cuasos' application for restraining order and injunction.

• Article 2176, New Civil Code — Governs quasi-delict; applied to require proof of damages, fault or negligence, and causation, and to hold Corinthian liable where its negligent approval and inspection contributed to encroachment injury.
• Articles 449, 450, 451 and 549, New Civil Code — Confer rights of landowners against builders in bad faith, including demolition after reimbursement of necessary preservation expenses; applied by the CA to allow Tanjangcos to demand demolition of the perimeter wall.
• Rule 45, Rules of Civil Procedure — Mode of petition for review on certiorari; invoked by Corinthian to assail the CA Decision and Resolution.
• Section 3, Construction Rules and Art. IV, Section 3(d), Manual of Rules and Regulations of Corinthian — Require Association approval, bond and fees before construction and subject on-going construction including perimeter walls to inspection for compliance; relied upon to establish Corinthian's authority, duty and negligence.

CONSUELO YNARES-SANTIAGO, Associate Justice, Chairperson; MA. ALICIA AUSTRIA-MARTINEZ, Associate Justice; MINITA V. CHICO-NAZARIO, Associate Justice; RUBEN T. REYES, Associate Justice.