Title
Cariday Investment Corp. vs. Court of Appeals
Case
G.R. No. 83358
Decision Date
Aug 2, 1989
Forbes Park Association enforced deed restrictions, limiting CARIDAY's building to single-family use; Supreme Court upheld FPA's authority, denying CARIDAY's petition.
interpretation of restriction
residential building
leasing of building
A

Case Summary (G.R. No. 83358)

Factual Background

Cariday Investment Corporation owned a residence in the Forbes Park subdivision subject to a recorded Deed of Restrictions providing that “lots may be only used for residential purposes and not more than one single family residential building will be constructed thereon except that separate servants quarters may be built.” The Association’s rules reproduced and elaborated that restriction in Section 1(b), Article IV and in Art. VI, Sec. 1(c) set forth a separate rule on permissible uses and occupancy, forbidding commercial uses such as hotels and motels and authorizing enforcement measures including disconnection of water supply after notice. In June 1986 Cariday undertook “repairs” to its house; inspections in 1986 and May 1987 by the Association’s retained engineer reported additions and alterations and concluded the building “can be used by more than one family.” Cariday admitted the structure presented the exterior of a single-family dwelling but contained interior design enabling occupancy by two families.

Events Leading to Litigation

Without modifying the structure, Cariday leased one portion of the house on July 1, 1987 to an English tenant who occupied it on July 5, 1987, and leased the other portion on August 1, 1987 to Procter and Gamble for the accommodation of an American executive who proposed to move in September 2, 1987. Cariday notified the Association of the intended move on September 7, 1987. When the executive attempted entry on September 18, 1987, he was refused admission by subdivision security. The Association notified Cariday on September 19, 1987 (received September 21) that leasing to more than one tenant would violate the single-family restriction and threatened to disconnect the Association-supplied water service. Procter and Gamble rescinded its lease on October 6, 1987.

Trial Court Proceedings

On September 28, 1987 Cariday filed a complaint for injunction and damages in the Regional Trial Court of Makati, praying for a preliminary injunction to restrain the Association from cutting the water supply or preventing its tenants’ ingress and egress. The Association answered and opposed the injunction, asserting its rules empowered disconnection of water for deviations from approved plans and violations of the single-family restriction. On October 21, 1987 the trial court granted the writ of preliminary injunction upon Cariday’s filing of a P50,000 bond. The Association’s motion for reconsideration was denied at the trial level.

Court of Appeals Decision

The Association sought relief in the Court of Appeals, which annulled the writ of preliminary injunction. The Court of Appeals construed the restriction to mean that a residential house constructed as a single-family dwelling is to be occupied by a single family and observed that Section 1(c)’s express prohibition of hotels, motels, condominiums and similar multiple-occupancy establishments reinforced an intent to limit occupancy to one family. The appellate court held that the prohibition against multiple occupancy could not be circumvented by preserving a single-family exterior while configuring the interior for multiple families. The Court of Appeals also upheld the Association’s authority to refuse admission to additional tenants and to disconnect water service under the Association’s rules, specifically citing the clearance requirement in Art. VI, Sec. 14.

Petition to the Supreme Court and Core Issue

Cariday petitioned for review, contending that the recorded restriction and the Association’s rules limited only the style and number of buildings that might be constructed on a lot and did not categorically prohibit leasing the completed single-family dwelling to two or more tenants. The central legal issue presented to the Supreme Court was whether the covenant “not more than one single-family residential building will be constructed thereon” is properly interpreted as a restriction on the type and number of structures only, or as also restricting post-construction use and occupancy to a single family.

Ruling of the Supreme Court

The Supreme Court denied the petition and affirmed the Court of Appeals. The Court held that the restriction expressly defined both the permitted physical development of the lot and the residential occupancy of the building. The Court rejected Cariday’s argument that the words “one single-family residential building” addressed construction alone and did not limit occupancy. The Supreme Court found it plain from the language of the restriction and the Association’s rules that the prohibition sought to prevent overcrowding and the attendant strain on common facilities, deterioration of roads, sanitation and security problems in the subdivision, and that permitting multiple unrelated tenant families to occupy a building would frustrate those objectives.

Legal Basis and Reasoning of the Majority

The Court reasoned that the additional phrase “single family” immediately following “residential building” manifests an intent to limit occupancy, not merely to limit the number of buildings. The Court invoked principles of rational interpretation and of preventing circumvention: an external appearance of a single-family dwelling could not be made a device to effect multiple occupancy contrary to the recorded restriction. The Court acknowledged a cultural accommodation by recognizing that an extended family living together would fall within the concept of a single-family dwelling. The Court affirmed the Association’s enforcement powers under its rules, including refusal of entry without required clearance and disconnection of water following notice, and ordered denial of relief with costs against the petitioner.

Dissenting Opinions

Two justices filed separate dissents joined by another justice. Justice Medialdea dissented on the ground that the recorded restriction should be read as a limitation on the style and number of structures to be erected on a lot and not as a restriction on the manner of occupancy after completion. He emphasized that the Association’s rules separately and expressly addressed use and occupancy in Art. IV, Sec. 1(c), whi

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