Manila Electric Company vs. Leyva

An easement of right of way cannot be acquired by prescription where the origin of the use is mere tolerance or license of the landowner, because acts of possessory character performed by mere tolerance do not constitute possession under claim of title and do not start the prescriptive period. Furthermore, secondary evidence of the contents of an alleged lost written instrument is inadmissible absent strict proof of the document’s former existence and due execution.

Between 1929 and 1930, the Manila Electric Company (MERALCO) erected two transmission steel towers on a 5,216.60-square-meter parcel of land in Cainta, Rizal, then owned by spouses Nazario Crisostomo and Maria Escusar. In 1931, the property was registered under Original Certificate of Title No. 4416 in the name of Nazario Crisostomo; the certificate bore no annotation of any encumbrance or easement. Upon the spouses’ death, title passed to their daughter Bibiana Crisostomo Vda. de Eladio Leyva under Transfer Certificate of Title No. 8144. Ultimately, the property devolved by inheritance to the eight Leyva children and the widow Eduarda Vda. de Leyva. MERALCO continued to operate the towers and their high-voltage cable lines on the land throughout this period. The land was later subdivided, with Tower 76 situated on Lot 1-K (TCT No. 297168) and Tower 77 on Lot 2-V-6 (TCT No. 338524), both owned in common by the Leyva family.

• The Property and the Towers: Nazario Crisostomo and Maria Escusar owned a parcel of land in Cainta, Rizal, measuring 5,216.60 square meters at the corner of Ortigas Avenue and the road to the town center. Between 1929 and 1930—before OCT 4416 issued in 1931—MERALCO erected two transmission steel towers (later renumbered 76 and 77) carrying high-voltage power lines on the land. The OCT bore no annotation of an encumbrance. Following the deaths of the original owners and their daughter Bibiana, the Leyva heirs acquired the property by succession; the land was subdivided, and the towers stood on two lots covered by separate TCTs in the names of the Leyvas.

• The Lawsuit: On August 4, 1973, the Leyvas filed suit for damages, alleging that the presence of the high-voltage lines made the property dangerous and practically unusable, depriving them of profits and benefits. They prayed for temperate damages, annual compensation for loss of use from August 11, 1973 onward, attorney’s fees, and exemplary damages.

• MERALCO’s Defense of a Written Grant: In its answer, MERALCO asserted it had obtained a perpetual easement of right of way for the towers by direct grant from Nazario Crisostomo, paying US$12.40 for the privilege. However, MERALCO did not present the original grant document, claiming all copies were destroyed during the war. To prove its content, MERALCO offered the deposition of Leland Gardner, a retired MERALCO field auditor, who testified that he had seen a receipt for US$7.50 signed by Crisostomo for the towers and assumed, based on standard operating procedure, that a written grant was executed.

• Gardner’s Deposition as Secondary Evidence: Gardner conceded the alleged grants were not public documents and no copies survived. He did not personally handle payments or witness the execution of any grant; he received data from the right-of-way department personnel after the transactions and sent it to the Manila office, where entries were made in a report. He assumed a grant existed because it was routine practice to require one after payment. He did not testify with personal knowledge that Nazario Crisostomo executed any contract.

• Events After the War: Sometime after the war, the Leyvas complained to MERALCO about the occupation of their land. In 1968, MERALCO initiated negotiations to purchase the entire lot but unilaterally suspended discussions, citing a possible alternative site. After MERALCO refused their demand for compensation, the Leyvas commenced the present action in 1973.

• Lower Courts’ Findings: The trial court found no valid easement and awarded the Leyvas P200,000.00 in temperate damages for the period 1930 to August 10, 1973; P6,000.00 annually from August 11, 1973 as compensation for loss of use; legal interest; P10,000.00 in attorney’s fees; and costs. The appellate court affirmed in toto, ruling the Gardner deposition inadmissible as secondary evidence because no competent proof established the execution or former existence of the written grant, and that MERALCO’s occupation began as mere tolerance and could not mature into an easement by prescription.

• Acquisition by Title: MERALCO maintained that it had acquired a perpetual easement of right of way by virtue of a direct grant from the original registered owner, Nazario Crisostomo, for which a consideration of US$12.40 was paid in the 1929–1930 period. It contended that the deposition of Leland Gardner was admissible as secondary evidence of the lost original document under Section 4, Rule 130 of the Rules of Court.

• Acquisition by Prescription: In the alternative, MERALCO argued that even absent a written grant, its open, continuous, and uninterrupted possession and operation of the transmission towers for over 43 years since 1930 vested it with an easement by prescription.

• Prescription and Laches of the Action: MERALCO claimed that the Leyvas’ causes of action were barred either by the statute of limitations or by laches, given the decades-long visible and notorious use of the property.

• Propriety of Damages: MERALCO assigned as error the trial court’s award of P200,000.00 as temperate damages for the period 1930–1973, the annual compensation of P6,000.00 for loss of use, and the grant of attorney’s fees.

• Inadmissible Secondary Evidence: The Leyvas countered that the Gardner deposition did not satisfy the requisites of Section 4, Rule 130 because there was no proof of the due execution and former existence of the alleged written grant. Gardner’s testimony consisted of assumptions based on a receipt he saw and routine office procedure, not personal knowledge of Crisostomo’s execution of any contract. The offer of secondary evidence was nothing more than an assumption piled upon another assumption.

• Mere Tolerance, Not Adverse Possession: The Leyvas argued that MERALCO’s initial and continued use of the property originated in the mere tolerance or license of the owner, which under Articles 444 and 1942 of the Civil Code cannot constitute possession under claim of title and therefore cannot ripen into an easement by prescription.

• Action Not Barred: The Leyvas pointed to their post-war complaints, the 1968 purchase negotiations, and MERALCO’s refusal of their demand for compensation before suit was filed in 1973 as proof that the action was timely and that the utility was never lulled into believing its occupation was uncontested.

• Entitlement to Damages: They asserted that the high-voltage lines rendered the land practically off-limits, precluding any profitable use while the Leyvas continued to bear the burden of real property taxes, and that MERALCO unjustly profited from the arrangement without paying compensation.

• Existence of a Written Grant: Whether MERALCO proved that it had acquired a perpetual easement by title through a written grant from the original owner, Nazario Crisostomo, and whether the Gardner deposition was properly admitted as secondary evidence.

• Acquisition of Easement by Prescription: Whether MERALCO acquired a valid easement of right of way by prescription based on its continuous possession and operation of the transmission towers for over 43 years.

• Prescription and Laches of the Action: Whether the Leyvas’ complaint was barred by prescription or laches.

• Damages and Attorney’s Fees: Whether the award of temperate damages, annual compensation for loss of use, and attorney’s fees was warranted under the circumstances.

• Existence of a Written Grant: No contract or grant was proven. The Gardner deposition was correctly excluded as secondary evidence. Section 4, Rule 130 of the Rules of Court requires that, before secondary evidence of a lost document’s contents may be admitted, the offering party must first prove the former existence of the instrument and its proper execution or genuineness. Gardner never positively stated that Crisostomo executed a grant; he merely saw an internal receipt and extrapolated—based on corporate routine—that a written grant must have been executed. Such inference upon inference does not constitute competent proof of the existence or due execution of a contract.

• Acquisition of Easement by Prescription: Prescription did not vest MERALCO with an easement. Under the Civil Code (Articles 444 and 1942, later 1119 and 1120, and their current counterparts), acts of a possessory character performed by one who holds by mere tolerance or license of the owner do not constitute possession “en concepto de dueño” (under claim of title) and are legally incapable of starting the prescriptive period, whether for ownership or for any lesser real right. The origin of MERALCO’s use was presumed to be the mere tolerance of Nazario Crisostomo absent any contrary proof of a right asserted from the inception. Thus, no matter how long continued, such tolerated acts cannot give rise to a prescriptive easement. Applying Cuaycong v. Benedicto (37 Phil. 781) and Cortes v. Palanca Yu-Tibo (2 Phil. Rep. 24), the Court found no adverse possession that could ripen into a real right.

• Prescription and Laches of the Action: The complaint was not barred. The evidence showed that the Leyvas complained against MERALCO’s occupation after the war, that MERALCO negotiated for the purchase of the lot in 1968 but suspended the negotiations, and that suit was filed in 1973 upon refusal of their demand for compensation. These acts negated any inference that the Leyvas slept on their rights or that MERALCO’s occupation transformed into an unchallenged prescriptive right. Laches did not lie because no inequity or prejudice operated against MERALCO given its awareness of the owners’ objections.

• Damages and Attorney’s Fees: The monetary awards were affirmed. The high-voltage electric current made the property effectively off-limits for any productive use, depriving the Leyvas of all profits and benefits while obliging them to continue paying real property taxes and other levies, while MERALCO reaped commercial benefit from the operation. Temperate damages, ongoing annual compensation for loss of use from the date of the complaint, legal interest, and a moderate award of attorney’s fees were proper to redress the prolonged deprivation.

• Possession by Mere Tolerance Does Not Give Rise to Prescription — Acts of a possessory character performed by one who holds by mere tolerance or license of the owner do not constitute possession under claim of title (en concepto de dueño) and, no matter how long continued, cannot start the period of prescription for the acquisition of ownership or any real right, including an easement. The principle applies equally to prescription of the fee and prescription of lesser real interests. The Court relied on the settled rule in Cuaycong v. Benedicto, 37 Phil. 781, 792–793, and Cortes v. Palanca Yu-Tibo, 2 Phil. Rep. 24, 38.

• Requisites for Secondary Evidence of a Lost Document — Under Section 4, Rule 130 of the Rules of Court, before secondary evidence of the contents of a lost or destroyed writing may be admitted, the proponent must satisfactorily prove the former existence of the document and its proper execution or genuineness. A witness’s speculative assumption based on office procedure, absent personal knowledge of the document’s execution, is insufficient.

• “It is a fundamental principle of the law in this jurisdiction concerning the possession of real property that such possession is not affected by acts of a possessory character which are ‘merely tolerated’ by the possessor, or which are due to his license … Possession, under the Civil Code, to constitute the foundation of a prescriptive right, must be possession under claim of title (en concepto de dueño) or to use the common law equivalent of the term, it must be adverse. Acts of a possessory character performed by one who holds by mere tolerance of the owner are clearly not en concepto de dueño and such possessory acts, no matter how long so continued, do not start the running of the period of prescription.” — quoting Cuaycong v. Benedicto, 37 Phil. 781, 792–793.

• “Aggravating the situation, plaintiffs remain as owners only to be liable to payment of real estate taxes and other related dues and levies. Meanwhile, the MERALCO does nothing except to reap benefits and profits in its business concern to the prejudice of plaintiffs; or as Manresa has pined — ‘to the annulment of right’ of ownership of plaintiffs. For this plaintiffs should not be without redress.”

• Cuaycong v. Benedicto, 37 Phil. 781 — Followed. Established the principle that possession by mere tolerance does not constitute the adverse possession required for prescriptive acquisition of ownership or real rights. Applied here to negate MERALCO’s claim of a prescriptive easement.

• Cortes v. Palanca Yu-Tibo, 2 Phil. Rep. 24 — Followed. Reinforced that the rule excluding tolerated acts from the concept of adverse possession applies equally to prescription of real rights as it does to prescription of the fee.

• Ayala de Roxas v. Maglonso, 8 Phil. Rep. 745 — Cited by the appellate court as additional authority for the tolerance doctrine.

• Municipality of Nueva Caceres v. Director of Lands and Roman Catholic Bishop of Nueva Caceres, 24 Phil. Rep. 485 — Cited as further support for the same principle.

• Civil Code, Articles 444 and 1942 (now Civil Code of the Philippines, Arts. 1119–1120) — These articles state that acts merely tolerated by the owner of a thing do not affect possession. The Court applied this rule to hold that MERALCO’s tolerated use could not serve as the foundation for an easement acquired by prescription.

• Section 4, Rule 130 of the Rules of Court — Governs the admissibility of secondary evidence when the original writing has been lost or destroyed. The Court held MERALCO failed to comply with the foundational requirement of proving due execution and former existence of the alleged grant before offering the deposition.

Narvasa, Cruz, Gancayco, and Griño-Aquino, JJ.