Rellosa vs. Pellosis

A person who exercises a legal right in a manner that disregards the norms of justice, honesty, and good faith, causing damage to another, commits a legal wrong under Article 19 of the Civil Code and may be held liable for damages. The existence of a valid order or right does not immunize the actor from liability when the right is exercised prematurely and in disregard of another's legal recourse, such as implementing a demolition order before the appeal period has expired.

Respondents were lessees of a parcel of land owned by Marta Reyes, located at San Pascual Street, Malate, Manila, upon which they had built their houses that underwent continuous improvements over the years. After Marta's death, the land was inherited by her son Victor Reyes, who informed respondents sometime in 1986 that, having been lessees for more than twenty years, they would have a right of first refusal to buy the land. The dispute is set against the statutory framework of the Building Code (PD 1096) and its Implementing Rules, which provide a fifteen-day appeal period for parties adversely affected by rulings of the Office of the Building Official.

Respondents Gonzalo Pellosis, Inesita Moste, and Danilo Radam were lessees of a parcel of land owned by Marta Reyes, located at San Pascual Street, Malate, Manila, upon which they had built their houses. The houses underwent continuous improvements over the years. After Marta's demise, the land was inherited by her son Victor Reyes. Sometime in 1986, Victor informed respondents that, having been lessees of the land for more than twenty years, they would have a right of first refusal to buy the land. Sometime in the early part of 1989, without respondents' knowledge, the land they occupied was sold to petitioner Cynthia Ortega, who was able to ultimately secure title to the property in her name.

On 25 May 1989, Cynthia Ortega filed a petition for condemnation, docketed Condemnation Case No. 89-05-007, with the Office of the Building Official, City of Manila, seeking condemnation of the structures on the land. On 31 May 1989, respondents filed with the Regional Trial Court of Manila a suit for the "Declaration of Nullity of the Sale," docketed as Civil Case No. 89-49176, predicated upon their right of first refusal, which they claimed was impinged upon by the sale of the land to petitioner Ortega without their knowledge.

After due hearing in the condemnation case, the Office of the Building Official issued a resolution dated 27 November 1989 ordering the demolition of respondents' houses. Copies of the resolution were served upon respondents and their counsel on 07 December 1989. The following day, on 08 December 1989, Cynthia Ortega, together with her father and co-petitioner Vicente Rellosa, hired workers to commence the demolition of respondents' houses. Due to the timely intervention of a mobile unit of the Western Police District, the intended demolition did not take place following talks between petitioner Rellosa and counsel, who pleaded that the demolition be suspended since the order sought to be implemented was not yet final and executory.

On 11 December 1989, respondents filed their appeal contesting the order of the Office of the Building Official. On 12 December 1989, petitioners once again hired workers and proceeded with the demolition of respondents' houses. The order of the Office of the Building Official was eventually upheld on appeal by the Department of Public Works and Highways in its decision of 14 March 1990. Petitioners also pointed out that the structures subject of the demolition order were declared to be dangerous structures by the Office of the Building Official and, as such, could be abated to avoid danger to the public.

• Premature Demolition Not Actionable: Petitioners contended that the appellate court gravely erred in ruling that the premature demolition of respondents' houses entitled them to the award of damages.
• Subsequent Affirmance of Demolition Order: Petitioners pointed out that the order of the Office of the Building Official was eventually upheld on appeal by the Department of Public Works and Highways in its decision of 14 March 1990, which should negate liability.
• Dangerous Structures Justifying Abatement: Petitioners added that the structures subject of the demolition order were declared to be dangerous structures by the Office of the Building Official and, as such, could be abated to avoid danger to the public.

N/A — The decision does not recount respondents' specific arguments on appeal.

• Abuse of Rights under Article 19: Whether petitioners' implementation of the demolition order before it became final and executory constituted an abuse of rights under Article 19 of the Civil Code, entitling respondents to damages.
• Propriety of Damages Award: Whether the Court of Appeals correctly awarded moral and exemplary damages to respondents for the premature demolition of their houses.

• Abuse of Rights under Article 19: Yes. Petitioners' precipitate action in demolishing respondents' houses before the expiration of the fifteen-day appeal period constituted an abuse of rights under Article 19 of the Civil Code, which requires every person to act with justice, give everyone his due, and observe honesty and good faith.
• Propriety of Damages Award: Yes, but with modification. The award of damages was proper, but the amounts of P75,000.00 exemplary damages and P75,000.00 moral damages for each respondent were excessive and were reduced to P20,000.00 each.

• Abuse of Rights under Article 19: The Court reasoned that while petitioner might verily be the owner of the land, with the right to enjoy and to exclude any person from the enjoyment and disposal thereof, the exercise of these rights is not without limitations. The abuse of rights rule established in Article 19 of the Civil Code requires every person to act with justice, to give everyone his due, and to observe honesty and good faith. When a right is exercised in a manner which discards these norms resulting in damage to another, a legal wrong is committed for which the actor can be held accountable. The Court emphasized that the issue is not so much about the existence of the right or validity of the order of demolition as the question of whether or not petitioners have acted in conformity with, and not in disregard of, the standard set by Article 19 of the Civil Code. At the time petitioners implemented the order of demolition, barely five days after respondents received a copy thereof, the same was not yet final and executory. The law provided for a fifteen-day appeal period in favor of a party aggrieved by an adverse ruling of the Office of the Building Official, but by the precipitate action of petitioners in demolishing the houses of respondents prior to the expiration of the period to appeal, the latter were effectively deprived of this recourse. The fact that the order of demolition was later affirmed by the Department of Public Works and Highways was of no moment. The action of petitioners up to the point where they were able to secure an order of demolition was not condemnable, but implementing the order unmindful of the right of respondents to contest the ruling was a different matter and could only be held utterly indefensible.
• Propriety of Damages Award: The Court found the award of P75,000.00 exemplary damages and another of P75,000.00 moral damages for each respondent to be rather excessive given the circumstances, and reduced the awards to the reasonable amounts of P20,000.00 exemplary damages and P20,000.00 moral damages for each respondent.

• Abuse of Rights (Article 19, Civil Code) — Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith. This provision is not just a declaration of principle, for it can in itself constitute, when unduly ignored or violated, a valid source of a cause of action or defense. When a right is exercised in a manner which discards these norms resulting in damage to another, a legal wrong is committed for which the actor can be held accountable. The Court applied this doctrine to hold petitioners liable for implementing a demolition order before it became final and executory, thereby depriving respondents of their right to appeal.

• "Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith." — This passage quotes Article 19 of the Civil Code and establishes the foundational principle that the abuse of rights rule is not merely declaratory but can itself constitute a valid source of a cause of action or defense.
• "When a right is exercised in a manner which discards these norms resulting in damage to another, a legal wrong is committed for which the actor can be held accountable." — This passage articulates the operative rule for determining liability under Article 19, which the Court applied to petitioners' premature implementation of the demolition order.
• "The action of petitioners up to the point where they were able to secure an order of demolition was not condemnable but implementing the order unmindful of the right of respondents to contest the ruling was a different matter and could only be held utterly indefensible." — This passage distinguishes between the lawful procurement of a demolition order and the wrongful implementation of that order in disregard of the respondents' right to appeal, which is the crux of the Court's ruling.

• Albenson Enterprises Corporation vs. Court of Appeals, 217 SCRA 16 — Cited in support of the proposition that Article 19 of the Civil Code requires every person to act with justice, give everyone his due, and observe honesty and good faith, and that violation of this standard can give rise to liability.

• Article 19, Civil Code — Provides that every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith. The Court applied this provision as the basis for holding petitioners liable for damages for the premature demolition of respondents' houses.
• Article 428, New Civil Code — Defines ownership as the right to enjoy and dispose of a thing without other limitations than those established by law. The Court acknowledged petitioner's ownership rights but held that the exercise of these rights is not without limitations.
• Article 429, New Civil Code — Provides that the owner or lawful possessor of a thing has the right to exclude any person from the enjoyment and disposal thereof. The Court recognized this right but held that its exercise must conform to the standards set by Article 19.
• Paragraph 23, Implementing Rules and Regulations of PD 1096 (Building Code) — Provides for a fifteen-day appeal period for parties adversely affected by a ruling of the Office of the Building Official. The Court applied this provision to determine that the demolition order was not yet final and executory when petitioners implemented it.

Justices Melo, Panganiban, and Gonzaga-Reyes concurred. Justice Sandoval-Gutierrez was on leave.

N/A — No dissenting opinions are noted in the case text.