Ortigas & Co., Limited Partnership v. Feati Bank and Trust Co.

,
G.R No. L-24670; December 14, 1979
Santos, J.;

The police power is superior to contractual stipulations between parties on the use of lands
sold by subdivision even if the said conditions are annotated in the Torrents Title.

Facts:
Plaintiff is a limited partnership engaged in real estate business developing and selling lots to
the public. Sometime in 1952, the plaintiff sold two parcels of land known as Lots No.5 and 6,
Block 31, of Highway Hills Subdivision, situated in Mandaluyong Rizal Agusto and Natividad
Angeles which in turn transferred their rights to Emma Chavez, upon the execution of the deeds
of sale, the following stipulations and restrictions are indicated therein:

1. The parcel of land subject of this deed of sale shall be used by the Buyer exclusively for
residential purposes, and she shall not be entitled to take or remove soli, stones or
gravel from it or nay other units belonging to the Seller.
The restrictions are annotated in the the TCTs of the two lots which was issued in the name of
Emma Chavez.
Eventually, the defendants acquired Lot Nos. 5 and 6 and TCTs are then issued in its name. The
building restrictions were also annotated therein.

Plaintiff claims that restrictions were imposed in

Defendant alleges that the area along the western part of EDSA, has been declared a
commercial and industrial resolution No. 21 of the Municipal Council of Mandaluyong Rizal.

Issue: Whether or not the Resolution can nullify or supersede the contractual obligations
assumed by the defendant-appelle.

Ruling:
Yes. The Local Autonomy Act, empowers a Municipal Council to adopt a zoning and subdivision
ordinances or regulations for the municipality. Clearly, the Resolution No. 27 is a regulatory
measure within the ambit of the word regulations under the provision.

With regard to the contention that said resolution

cannot nullify the contractual obligations assumed by the
defendantappellee—
referring to the restrictions
1.
2.
3.
incorporated in the deeds of sale and later in the
corresponding Transfer Certificates of Title issued to
defendantappellee—
it should be stressed, that while nonimpairment
of contracts is constitutionally guaranteed, the
rule is not absolute, since it has to be reconciled with the
legitimate exercise of police power, i.e., “the power to
prescribe regulations to promote the health, morals, peace,
education, good order or safety and general welfare of the
people.”