Case Summary (G.R. No. 134284)
Petitioner
Ayala Corporation (hereinafter “Ayala”) seeks enforcement of deed restrictions and special conditions of sale or, in the alternative, rescission of the sale.
Respondent
Rosa-Diana Realty and Development Corporation (hereinafter “Rosa-Diana”) acquired the property from the original vendees and constructed a high-rise condominium project called “The Peak.”
Key Dates
• April 20, 1976 – Deed of Sale by Ayala to original vendees with conditions and restrictions
• April 1989 – Original vendees sell to Rosa-Diana; Rosa-Diana executes an Undertaking to abide by original conditions
• July 27, 1989 – Title released to Rosa-Diana with encumbrances (conditions and restrictions)
• December 1, 2000 – Decision by the Supreme Court applying the 1987 Constitution
Applicable Law
1987 Philippine Constitution; New Civil Code provisions on contracts (Art. 1159); National Building Code; doctrines of estoppel, waiver, law of the case, stare decisis, and obiter dicta.
Facts
Ayala’s deed to original vendees imposed:
- Special Conditions of Sale – mandatory submission and approval of building plans (by Sept. 30, 1976), commencement (by Mar. 30, 1977), completion (by 1979), prohibition on resale until compliance.
- Deed Restrictions – maximum floor‐area ratio (FAR) of 5:1 and height not to exceed 42 m, expiring 2025.
Original vendees failed to build. Ayala approved their 1989 resale to Rosa-Diana on condition of an Undertaking to comply with original conditions. Rosa-Diana submitted two sets of building plans: one compliant with restrictions (7 stories, 24 m, FAR < 5) for Ayala’s approval; another for Makati building officials (38 stories, 91.65 m, FAR ~ 27.8), grossly exceeding restrictions.
Procedural History
• RTC Makati denied Ayala’s request for injunctive relief in an action for specific performance or rescission.
• Register of Deeds refused lis pendens annotation; LRA reversed; Court of Appeals overturned LRA, holding lis pendens inapplicable.
• Supreme Court in G.R. No. 112774 (1994) affirmed only the lis pendens ruling, without addressing restriction enforcement.
• Trial court sustained Rosa-Diana’s demurrer to evidence, finding Ayala’s waiver and estoppel.
• Court of Appeals affirmed, invoking law of the case and stare decisis based on prior dicta on estoppel.
Issue
Whether Ayala remains entitled to enforce the original deed restrictions and special conditions of sale against Rosa-Diana, despite prior inaction against original vendees, and whether prior pronouncements barred enforcement.
Supreme Court’s Review of Prior Pronouncements
– The Supreme Court clarified that earlier appellate comments on Ayala’s estoppel were obiter dicta, made unnecessary to resolve the lis pendens issue.
– The doctrines of law of the case and stare decisis did not preclude full adjudication of restriction enforcement.
– A binding precedent (Ray Burton case, G.R. C.V. No. 46488) subsequently held similar estoppel rulings improper, as they were immaterial to the issues decided.
Distinction among Doctrines
– Law of the Case – applies only to the same case and does not establish binding precedent elsewhere.
– Stare Decisis – binds courts on essential rulings in prior cases of higher jurisdiction.
– Obiter Dicta – nonessential judicial remarks not binding under stare decisis.
Findings on Respondent’s Bad Faith
• Rosa-Diana’s submission of two divergent building plans demonstrated intentional circumvention of deed restrictions.
• The actual constructed Peak (133.65 m, 38 stories, 23,305 m²) far exceeded approved limits by decades of compliance.
• The non-voting by Rosa-Diana at the 1990 MACEA meeting did not free it from original restrictions, nor did subsequent association revisions apply to it.
Trial Court’s Error on Undertaking
– The trial court wrongly invalidate
Case Syllabus (G.R. No. 134284)
Citation
- G.R. No. 134284, December 01, 2000; 400 Phil. 511; 98 OG No. 15, 1791 (April 15, 2002); 98 OG No. 29, 3899 (July 22, 2002)
- Second Division; decision by Justice De Leon, Jr.
Facts
- Ayala Corporation (Ayala) owned Lot 7, Block 1, Salcedo Village, Makati City (840 sq m), covered by TCT No. 233435.
- April 20, 1976: Ayala sold the lot to Manuel Sy (and spouse) and Sy Ka Kieng (and spouse) under a Deed of Sale with Special Conditions of Sale and Deed Restrictions.
- Special Conditions of Sale:
- Submit building plans to Ayala by September 30, 1976.
- Start construction by March 30, 1977; complete by 1979.
- No registration or title release before completion, even if fully paid.
- No resale of the property.
- Deed Restrictions (expire 2025):
- Gross floor area ≤ 5× lot area.
- Building height ≤ 42 meters.
- Original vendees failed to build; April 1989: with Ayala’s approval, sold to Rosa-Diana Realty and Development Corporation (Rosa-Diana).
- July 27, 1989: Rosa-Diana executed an Undertaking to abide by the original special conditions and deed restrictions.
- Ayala released the title; Rosa-Diana obtained TCT No. 165720 with the restrictions annotated.
- Rosa-Diana submitted two divergent building plans:
- To Ayala: compliant 7‐storey, 24 m high, gross floor area 3,968.56 sq m.
- To Makati building official: non‐compliant 38‐storey, 91.65 m (actually 133.65 m), gross floor area 23,305.09 sq m (32,208 sq m per sanitary permit).
Procedural History
- Ayala filed for specific performance or rescission and injunctive relief (TRO/preliminary injunction) before RTC Makati, Branch 139; injunctive relief denied.
- Ayala sought to annotate lis pendens; Register of Deeds refused; LRA reversed; CA in C.A. G.