Abuse of Rights When Public Works Infringe on Private Water Connections

The Supreme Court recently reminded public utilities and contractors that having a right to undertake infrastructure projects does not authorize them to disregard the rights of affected property owners. In Metroheights Subdivision Homeowners Association, Inc. v. CMS Construction and Development Corporation (G.R. No. 209359, October 17, 2018), the Court held that cutting off a private subdivision's water connection without prior notice constituted an abuse of rights under Article 19 of the Civil Code, entitling the homeowners to damages.

The Facts

Metroheights Subdivision had long suffered from insufficient water supply. In 1990, the homeowners' association contracted with the Metropolitan Waterworks and Sewerage System (MWSS) for a new water service connection tapped from Visayas Avenue. The members themselves shouldered the cost of about P190,000. After the new connection was installed, the subdivision enjoyed sufficient water pressure 24 hours a day.

In April 1992, CMS Construction, under a contract with MWSS, began laying water pipes in the neighboring Sanville Subdivision. Without the knowledge or consent of the homeowners' association, CMS cut off and disconnected the subdivision's separate water connection on Visayas Avenue. The homeowners were left waterless for three days. When the association's officers discovered what happened, they complained and demanded restoration. CMS only made a temporary reconnection using a 2-inch rubber hose.

The Issue

The central question was whether the respondents should be held liable for damages for cutting off and transferring the subdivision's water connection without prior notice and consent.

The Ruling

The Supreme Court ruled in favor of the homeowners' association, reversing the Court of Appeals. The Court found that the respondents abused their rights under Article 19 of the Civil Code, which provides: "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 elements of abuse of rights. The Court reiterated the three elements for an abuse of rights claim: (1) there is a legal right or duty; (2) which is exercised in bad faith; and (3) for the sole intent of prejudicing or injuring another.

No notice was given. The Court found that no notice, not even a generalized one, was given to the homeowners' association about the rehabilitation project. Although CMS's president claimed that permissions were sought from the Office of the City Engineer and affected homeowners' associations, he admitted on cross-examination that his company gave no written notice to the petitioner. The alleged meetings were never substantiated by documentary evidence. The Court noted that if notices had indeed been sent, copies would have been produced in court.

The standard of conduct. The Court emphasized that "having the right should not be confused with the manner by which such right is to be exercised." Even if the respondents had the right to undertake the rehabilitation project, they should have exercised that right with justice and good faith. Since water is a basic necessity, the unexpected loss of supply for three days caused not only inconvenience but also health concerns. The respondents proceeded with the cutting and disconnection despite knowing that the temporary stoppage was "highly inevitable."

Liability and damages. The Court held MWSS and CMS Construction jointly and severally liable, but absolved the individual Cruz respondents, who were directors and stockholders of CMS, because the homeowners failed to show that the Cruzes committed acts that would make them personally liable under the Corporation Code. The Court did not specify the exact provision, but the principle applied is that corporate officers are not automatically personally liable for the corporation's acts absent a showing of willful and knowing assent to unlawful acts, gross negligence, or bad faith.

The Court awarded actual damages of P161,541.85 (the amount duly proved by checks paid to the contractor), exemplary damages of P100,000, and attorney's fees of P50,000, with legal interest at 6% per annum from finality of the decision. Nominal damages were not awarded since actual damages were already granted.

Practical takeaways

• Public utilities and contractors must give prior notice to affected property owners before undertaking works that will disrupt essential services like water supply. A mere claim that notice was given is insufficient—documentary proof matters.
• The exercise of a legal right is not absolute. Under Article 19 of the Civil Code, rights must be exercised with justice, honesty, and good faith. Abuse of a right, even in the course of a legitimate project, can give rise to liability for damages.
• For property owners, keep records of all payments and contracts related to service connections. Actual damages must be proved with reasonable certainty—here, the association recovered only the amount supported by checks.
• Corporate officers are not automatically personally liable for the corporation's tortious acts. Personal liability requires a showing of willful and knowing assent to unlawful acts, gross negligence, or bad faith.
• When a disruption occurs, document the loss and act promptly. The homeowners' immediate complaint and demand for restoration were crucial in establishing the respondents' failure to act in good faith.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.