G.R. No.

170446

March 23, 2011

EDGEWATER REALTY DEVELOPMENT, INC., Petitioner

vs.

METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM and MANILA WATER

COMPANY, INC., Respondents.

DECISION

ABAD, J.:

Facts:

This case is about demand of landowener, on whose land a large number of informal settlers
have to compel the water utility company to discontinue providing water to such settlers.

Edgewater Realty Development, Inc., (ERDI) a realty company, owned several parcels of land
in Tumana, Concepcion, Marikina City filed a complaint for ejectment against about 200 informal
settlers that then occupied portions of its land but, despite a final court decision evicting them,
the settlers refused to leave. On April 14, 1994 ERDI and the Municipality of Marikina executed
a Memorandum of Agreement (MOA), identifying one of ERDI’s own properties as an
emergency relocation site. ERDI rescinded the same and filed an action before the Marikina
Regional Trial Court (RTC) for confirmation of the rescission of the MOA and for injunction
against the Municipality, identifying one of ERDI’s own properties as an emergency relocation
site.

On August 5, 1997 the RTC rendered a decision, confirming the rescission of the MOA and
ordering the Municipality to remove all structures, constructions, and projects that it introduced
on ERDI’s property and to pay damages. The RTC decision was affirmed by the Court of
Appeals (CA) and later by the Supreme Court. On May 7, 1998 the MTC which tried the
ejectment case issued a break-open and demolition order in the case and appointed a Special
Sheriff to implement the order. The ERDI also applied for a writ of execution of the August 5,
1997 RTC decision. However, it wrote the Metropolitan Waterworks and Sewerage System
(MWSS) on September 13, 1995 a letter to formalize a water distribution system in the area but
asked that it hold actual implementation of such system until an agreement was signed.

As ERDI’s received information that some of the settlers already have water connections while
the others had pending application for theirs. ERDI filed a complaint for injunction with prayer for
temporary retraining order (TRO) and preliminary injunction against MWSS before the RTC of
Quezon City, praying that it order MWSS to disconnect all water connections in ERDI’s
properties and to refrain from putting in place any further connections without its prior consent.
ERDI amended its complaint to join Manila Water Company, Inc. (MWCI) as additional party
defendant based on the concession agreement between the latter company and MWSS since
MWCI gave the sole right to manage and operate the MWSS water facilities in Marikina,
including those in ERDI properties and so RTC allowed the amendment and the inclusion of
MWCI in the coverage of the preliminary injunction.

The RTC did rendered judgement declaring the water connections on ERDI’s land illegal and
permanently enjoined MWSS and MWCI from installing water connections on it. MWCI denied
that it installed a water system in the area. After it assumed operations, the settlers got
clearances from the Marikina City Government and so MWCI allowed them to apply for the
registration of their illegal connections. MWSS averred that ERDI had no cause of action against
it since it provided connections to some of the occupants only after the Municipality issued
clearances to them through the Marikina Settlement Office. The RTC did rendered judgement
declaring the water connections on ERDI’s land illegal and permanently enjoined MWSS and
MWCI from installing water connections on it. However, the RTC did not ordered the removal of
existing water connections, pointing out that ERDI’s remedy is to await the eviction of the
settlers pursuant to the decision in the ejectment case. While the RTC dismissed MWSS’s
counterclaim, it allowed MWCI to collect payment of water bills by settlers who had existing
water connection, prior to the court issuance of the writ of preliminary in the case.

ISSUE:

1. Whether or not the CA erred in failing to rule that MWSS and MWCI can be compelled to
dismantle existing water connections on ERDI’s land that was occupied by informal settlers; and

2. Whether or not MWCI can collect payment of bills for water connections on that land.
RULING:

1. Those water connections were either a) installed by MWSS or MWCI and, therefore,
cannot be regarded as illegal or b) illegally installed by the settlers themselves but were
subsequently ratified by the water utility company. To be considered illegal under the
purview of R.A. 8041, the water connections must be unauthorized by the water utility
company, not by any other entity. Nor can ERDI invoke the charter of MWSS13 as
source of its right to compel MWSS or MWCI to remove the existing connections. The
rights and the remedies for removal of illegal connections under that charter belong to
the water utilities, not to ERDI. Undoubtedly, it was this provision of the MOA that
opened the way for settlers to apply with the MWSS for water connections. While the
witness for ERDI testified that he did not know when the construction of the water lines
began, it may be assumed that the same took place during the time the MOA was still in
force. No evidence has been presented to show that the water system on ERDI’s land
was put in place during the pendency of the earlier ejectment case. Consequently, it
cannot be said that the water connections were illegal from the beginning.

2. ERDI contends that MWCI should not be allowed to collect payments for the water bills
of its customers on ERDI’s land. But, having ruled that MWSS and MWCI put the water
service in place on that land for certain customers there when this was still permitted,
there is no valid reason for such water service to be severed before the informal settlers
concerned are properly evicted. And if it is not severed, it would be unreasonable to
prevent MWCI from collecting from its customers the cost of its service.

FALLO: WHEREAS, the Court DENIES the petition and hereby AFFIRMS the Decision
of the Court of Appeals in CA- G.R CV 69925 dated June 27, 2005.
G.R Nos. 180849 and 187143

November 16 2011

PHILIPPINE NATIONAL BANK, Petitioner

vs

DAN PADAO, Respondent

DECISION

MENDOZA, J.:

On August 21, 1981, Padao was hired by PNB as a clerk at its Dipolog City Branch. He
was later designated as a credit investigator in an acting capacity on November 9, 1993.
He was ultimately promoted to the position of Loan and Credit Officer IV.

In 1994, PNB became embroiled in a scandal involving "behest loans" as anomalous

loans were being granted by its officers. In line with this, Padao was administratively
charged with Dishonesty, Grave Misconduct, Gross Neglect of Duty, Conduct Prejudicial
to the Best Interest of the Service, and violation of R.A. No. 3019 (Anti-Graft and Corrupt
Practices Act). The case against Padao was grounded on his having allegedly presented
a deceptively positive status of the business, credit standing/rating and financial
capability of 13 loan applicants. After due investigation, PNB found Padao guilty of gross
and habitual neglect of duty and ordered him dismissed from the bank. Padao appealed
to the banks Board of Directors. Velasco, Padaos colleague, was also held guilty of the
offenses charged, and was similarly meted the penalty of dismissal. Her motion for
reconsideration, however, was later granted by the bank, and was reinstated.

ISSUE:

Whether the position of a credit investigator is one imbued with the trust and confidence
of the employer.
HELD: Under the 1987 Constitution on social justice and protection of labor underscore the
importance and economic significance of labor. Article II, Section 18 stated labor as a primary
social economic force “it shall protect the rights of the workers and promote their welfare”. The
Labor Code declares as policy that the State shall afford protection to labor, promote full
employment, ensure equal work opportunities regardless of sex, race or creed, and regulate the
relations between workers and employers. The State shall assure the rights of workers to self-
organization, collective bargaining, security of tenure, and just and humane conditions of work.
While it is an employer’s basic right to freely select or discharge its employees, if only as a
measure of self-protection against acts inimical to its interest, the law sets the valid grounds for
termination as well as the proper procedure to be followed when terminating the services of an
employee. Thus, in cases of regular employment, the employer is prohibited from terminating
the services of an employee except for a just or authorized cause. Subject to the constitutional
right of workers to security of tenure and their right to be protected against dismissal except for
a just and authorized cause and without prejudice to the requirement of notice under Article 283
of this Code, the employer shall furnish the worker whose employment is sought to be
terminated a written notice containing a statement of the causes for termination and shall afford
the latter ample opportunity to be heard and to defend himself with the assistance of his
representative if he so desires in accordance with company rules and regulations promulgated
pursuant to guidelines set by the Department of Labor and Employment. In this case, Padao
was dismissed by PNB for gross and habitual neglect of duties under Article 282 (b) of the
Labor Code. Gross negligence connotes want of care in the performance of one’s duties, while
habitual neglect implies repeated failure to perform one’s duties for a period of time, depending
on the circumstances. Gross negligence has been defined as the want or absence of or failure
to exercise slight care or diligence, or the entire absence of care. It evinces a thoughtless
disregard of consequences without exerting any effort to avoid them. The role that a credit
investigator plays in the conduct of a bank’s business cannot be overestimated. The amount of
loans to be extended by a bank depends upon the report of the credit investigator on the
collateral being offered. If a loan is not fairly secured, the bank is at the mercy of the borrower
who may just opt to have the collateral foreclosed. If the scheme is repeated a hundredfold, it
may lead to the collapse of the bank. Petitioner himself admits that the position of
appraiser/inspector is "one of the most serious [and] sensitive job[s] in the banking operations."
He should have been aware that accepting such a designation, he is obliged to perform the task
at hand by the exercise of more than ordinary prudence. Padao’s repeated failure to discharge
his duties as a credit investigator of the bank amounted to gross and habitual neglect of duties
under Article 282 (b) of the Labor Code. He not only failed to perform what he was employed to
do, but also did so repetitively and habitually, causing millions of pesos in damage to PNB.
Thus, PNB acted within the bounds of the law by meting out the penalty of dismissal, which it
deemed appropriate given the circumstances.

FALLO: WHEREAS petitions in G.R no. 180849 and G.R no. 187143 are GRANTED. The June
21, 2001 Decision of the Executive Labor Arbiter is hereby ordered REINSTATED, with the
MODIFICATION that the award of financial assistance is DELETED.