Remman Enterprises, Inc. vs. Court of Appeals

A lower estate is obliged to receive only waters that naturally and without the intervention of man descend from higher estates; where the waters flowing from a higher estate are artificially collected in man-made lagoons, any damage occasioned thereby entitles the owner of the lower estate to compensation, and the defense of fortuitous event is unavailing where the defendant's negligence intervened to "humanize" the occurrence.

Remman Enterprises, Inc. (REMMAN) and Crispin E. Lat are adjoining landowners in Barangay Bugtong Na Pulo, Lipa City. Lat's 1.8-hectare property is agricultural and planted mostly with fruit trees, while REMMAN occupies fifteen hectares, six of which are devoted to a piggery business. REMMAN's land is one and a half meters higher in elevation than Lat's, making Lat's property the lower estate naturally susceptible to water flow from REMMAN's land.

Sometime in July 1984, Lat noticed that REMMAN's waste disposal lagoon was already overflowing and inundating one-fourth of his plantation. He made several representations with REMMAN, but these went unheeded. The overflow of acidic, malodorous, and polluted water containing pig manure continued from June 1984 to March 1985, progressively flooding nearly one hectare of Lat's plantation to ankle depth. As a result, the trees growing on the flooded portion started to wither and die, including one jackfruit tree, fifteen coconut trees, one hundred twenty-two coffee trees, and an unspecified number of mango trees, bananas, and vegetables. The acidity of the soil in Lat's plantation increased because of the contaminated water.

On 14 March 1985, Lat filed a complaint for damages with preliminary mandatory injunction against REMMAN, alleging that the overflow of water heavy with pig manure from REMMAN's piggery farm caused the destruction of his crops. REMMAN denied all allegations and raised as an affirmative defense that measures such as the construction of additional lagoons had already been adopted to contain the waste water and prevent damage to adjoining estates. REMMAN also sought the production of Lat's income tax returns for years 1982–1986, contending that these would settle the issue of alleged damages, but the trial court quashed the subpoena duces tecum issued for that purpose.

After conducting an ocular inspection with representatives of both parties present, the trial court established that waste water containing pig manure was continuously flowing from REMMAN's piggery farm to Lat's plantation, flooding one hectare to ankle depth. The trial court rendered an inventory of dead and rotten trees and plants found in Lat's property, and Lat testified on the approximate annual harvest and fair market value thereof. REMMAN presented no opposition or controverting evidence on the matter. The trial court found REMMAN negligent, noting its failure to monitor water levels in the lagoons during heavy downpours, its failure to augment existing lagoons despite the piggery having grown to a capacity of 11,000 heads, and its repeated failure to comply with promises made to Lat. The trial court ordered REMMAN to indemnify Lat ₱186,975.00 for lost profits for three crop years and ₱30,000.00 as attorney's fees. The Court of Appeals affirmed this decision in toto, finding that REMMAN's negligence was the proximate cause of the damage and that Lat's property was practically made a catch-basin of polluted water from REMMAN's piggery.

• Liability Not Established: Petitioner argued that its liability for the damages suffered by Lat was not clearly established.
• Rejection of Income Tax Returns Request: Petitioner contended that the trial court and the Court of Appeals should not have rejected its request for the production of Lat's income tax returns, asserting that had these been produced, the issue of alleged damages would have been settled.
• Damages Not Satisfactorily Proven: Petitioner contended that the damages allegedly sustained by Lat were not satisfactorily established, arguing that actual and compensatory damages require evidentiary proof and that no evidence was presented as to the necessity of the award.
• Fortuitous Event: Petitioner complained that the damages, if any, were due to a fortuitous event, invoking the heavy rains as an act of God.
• Review of Factual Findings: Petitioner maintained that the factual findings of the lower courts were subject to review and reversal under enumerated exceptions, including when the conclusion is grounded on speculation, when the inference is manifestly mistaken, when there is grave abuse of discretion, when the judgment is based on misapprehension of facts, when the CA overlooked relevant facts, when the CA's conclusions are unsupported by evidence, when facts of substance were overlooked, and when the findings are not in accord with reasonable inferences from the evidence.

• Liability for Damages: Whether petitioner's liability for the damages suffered by Lat was clearly established.
• Production of Income Tax Returns: Whether the trial court and the Court of Appeals erred in rejecting petitioner's request for the production of Lat's income tax returns.
• Sufficiency of Proof of Damages: Whether the damages allegedly sustained by Lat were satisfactorily established.
• Fortuitous Event: Whether the damages were due to a fortuitous event, exempting petitioner from liability.

• Liability for Damages: Yes. Petitioner's negligence in maintaining the level of waste water in its lagoons was the proximate cause of the damage to Lat's plantation, as established during the ocular inspection and affirmed by the Court of Appeals.
• Production of Income Tax Returns: No. The matter was moot, having been laid to rest in an earlier case involving the same parties where the Court affirmed the quashal of the subpoena duces tecum, as income tax returns could not reflect the total amount of damages suffered by Lat from the flooded portion of his plantation.
• Sufficiency of Proof of Damages: Yes. The trial court's ocular inspection inventory of dead and rotten trees, Lat's testimony on approximate annual harvest and fair market value, and the absence of any controverting evidence from petitioner sufficiently established the damages.
• Fortuitous Event: No. Even assuming the heavy rains constituted an act of God, petitioner's negligence intervened to "humanize" the fortuitous event, rendering it liable for the ensuing damages.

• Liability for Damages: During the ocular inspection conducted by the lower court with representatives of both parties present, it was established that waste water containing pig manure was continuously flowing from REMMAN's piggery farm to Lat's plantation, flooding one hectare to ankle depth. The overflow persisted from June 1984 to March 1985, destroying numerous fruit trees and crops. The Court of Appeals found negligence on the part of REMMAN arising from its failure to monitor water levels in the lagoons during heavy downpours, its failure to augment existing lagoons despite the piggery having grown to 11,000 heads, and its repeated failure to comply with promises made to Lat. The appellate court concluded that REMMAN's negligence was the proximate cause of the damage, as Lat's property was practically made a catch-basin of polluted water that could have been prevented.

• Production of Income Tax Returns: The Court ruled the argument moot, citing an earlier resolution in G.R. No. 95561 involving the same parties where the Court affirmed the CA's quashal of the subpoena duces tecum. The appellate court had explained that income tax returns would not necessarily prove or disprove the damages, as income losses from the flooded portion could be offset by profits from the rest of the plantation or other income sources, and conversely, losses from unrelated sources would have no bearing on the income from the particular flooded portion. The tax returns per se could not reflect the total amount of damages suffered by Lat.

• Sufficiency of Proof of Damages: The factual findings of the trial court supported its conclusions on damages. After the ocular inspection, the trial court rendered an inventory of dead and rotten trees and plants found in Lat's property. Lat testified on the approximate annual harvest and fair market value thereof. Significantly, REMMAN presented no opposition or controverting evidence on the matter. The trial court held that the inventory and itemized valuation placed by Lat, unrebutted by REMMAN, was the more accurate indicator of the amount prayed for as damages, and that if the valuation were unreasonable, REMMAN should have presented controverting evidence. Lat was also subjected to extensive cross and re-cross examination on the amount of damages.

• Fortuitous Event: The Court deferred to the findings of the lower courts, holding that even assuming the heavy rains constituted an act of God, REMMAN's negligence intervened to "humanize" the fortuitous event, rendering it liable. Citing National Power Corporation vs. Court of Appeals, the Court reiterated that where a human factor—negligence or imprudence—has intervened, the occurrence is removed from the rules applicable to acts of God. Furthermore, under Article 637 of the Civil Code and Article 50 of the Water Code of the Philippines, the natural easement obliges lower estates to receive only waters which naturally and without the intervention of man descend from higher estates. Where the waters flowing from a higher estate are artificially collected in man-made lagoons, any damage occasioned thereby entitles the owner of the lower estate to compensation.

• Natural Easement for Waters — Under Article 637 of the Civil Code and Article 50 of the Water Code of the Philippines, lower estates are obliged to receive waters which naturally and without the intervention of man descend from higher estates, as well as the stones or earth they carry. The owner of the lower estate cannot construct works impeding this easement, and the owner of the higher estate cannot make works increasing the burden. The Court applied this doctrine to distinguish between naturally descending waters (covered by the easement) and artificially collected waters in man-made lagoons (not covered), holding that damage from the latter entitles the lower estate owner to compensation.

• Humanized Fortuitous Event — Where a party's negligence intervenes in an otherwise natural occurrence such as heavy rains, the fortuitous event is "humanized" and the party cannot invoke act of God or force majeure to escape liability. The effect of the force majeure is deemed to have, even if only partly, resulted from the participation of man, removing the occurrence from the rules applicable to acts of God. The Court applied this doctrine to reject REMMAN's defense that the damages were caused by a fortuitous event, because its negligence in maintaining its waste lagoons was a concurrent human factor.

• Proximate Cause — Negligence that is the direct and proximate cause of damage renders the negligent party liable. The Court found that REMMAN's failure to monitor lagoon water levels, failure to augment waste disposal facilities despite the piggery's growth to 11,000 heads, and repeated failure to honor promises to Lat constituted negligence that was the proximate cause of the flooding and destruction of Lat's crops.

• "Even assuming that the heavy rains constituted an act of God, by reason of their negligence, the fortuitous event became humanized, rendering appellants liable for the ensuing damages." — This passage articulates the doctrine of humanized fortuitous event, the Court's ratio decidendi for rejecting the defense of force majeure where negligence has intervened.

• "As worded, the two (2) aforecited provisions impose a natural easement upon the lower estate to receive the waters which naturally and without the intervention of man descend from higher states. However, where the waters which flow from a higher state are those which are artificially collected in man-made lagoons, any damage occasioned thereby entitles the owner of the lower or servient estate to compensation." — This passage defines the boundary of the natural easement doctrine, distinguishing naturally descending waters from artificially collected waters, and is the controlling formulation for determining liability in analogous cases.

• "Appellee's property was practically made a catch-basin of polluted water and other noxious substances emptying from appellant's piggery which could have been prevented had it not been for the negligence of appellant." — This passage, quoted from the Court of Appeals, encapsulates the finding of negligence as proximate cause and the preventability of the damage, central to the affirmance of liability.

• National Power Corporation vs. Court of Appeals, 233 SCRA 649 (1993) — Cited as controlling authority for the doctrine that where negligence intervenes in a fortuitous event, the occurrence is "humanized" and the party cannot invoke act of God to escape liability. The Court applied this principle to reject REMMAN's defense of force majeure.

• Article 637, Civil Code — Provides that lower estates are obliged to receive waters which naturally and without the intervention of man descend from higher estates, as well as stones or earth carried with them. The owner of the lower estate cannot construct works impeding this easement, and the owner of the higher estate cannot make works increasing the burden. The Court applied this provision to hold that the natural easement does not cover artificially collected waters in man-made lagoons, and damage from such waters entitles the lower estate owner to compensation.

• Article 50, Water Code of the Philippines (Presidential Decree No. 1067) — Contains a provision similar to Article 637 of the Civil Code, stating that lower estates are obliged to receive water which naturally and without the intervention of man flows from higher estates. The owner of the lower estate cannot construct works impeding this natural flow unless an alternative method of drainage is provided, and the owner of the higher estate cannot make works increasing this natural flow. The Court cited this provision alongside Article 637 to establish that the natural easement applies only to naturally descending waters, not artificially collected waste water.

Mendoza, Quisumbing, Buena, and De Leon, Jr., JJ., concurred.