5/30/2017 Ayala Corp vs Rosa-Diana Realty & Development Corp : 134284 : December 1, 2000 : J. De Leon, Jr.

: Second Division

SECONDDIVISION

[G.R.No.134284.December1,2000]

AYALA CORPORATION, petitioner, vs. ROSADIANA REALTY AND

DEVELOPMENTCORPORATION,respondent.

DECISION
DELEON,JR.,J.:

Beforeusisapetitionforreviewoncertiorariseekingthereversalofadecisionrenderedbythe
Court of Appeals in C.A. G.R. C.V. No. 4598 entitled, Ayala Corporation vs. RosaDiana Realty and
DevelopmentCorporation,dismissingAyalaCorporationspetitionforlackofmerit.
Thefactsofthecasearenotindispute:
Petitioner Ayala Corporation (hereinafter referred to as Ayala) was the registered owner of a
parceloflandlocatedinAlfaroStreet,SalcedoVillage,MakatiCitywithanareaof840squaremeters,
moreorlessandcoveredbyTransferCertificateofTitle(TCT)No.233435oftheRegisterofDeedsof
Rizal.
OnApril20,1976,AyalasoldthelottoManuelSymarriedtoVilmaPoandSyKaKiengmarried
to Rosa Chan. The Deed of Sale executed between Ayala and the buyers contained Special
ConditionsofSaleandDeedRestrictions.AmongtheSpecialConditionsofSalewere:
a)thevendeesshallbuildonthelotandsubmitthebuildingplanstothevendorbeforeSeptember30,
1976forthelattersapproval
b)theconstructionofthebuildingshallstartonorbeforeMarch30,1977andcompletedbefore1979.
Beforesuchcompletion,neitherthedeedofsaleshallberegisterednorthetitlereleasedevenifthe
purchasepriceshallhavebeenfullypaid
c)thereshallbenoresaleoftheproperty
TheDeedRestrictions,ontheotherhand,containedthestipulationthatthegrossfloorareaofthe
buildingtobeconstructedshallnotbemorethanfive(5)timesthelotareaandthetotalheightshall
notexceedfortytwo(42)meters.Therestrictionsweretoexpireintheyear2025.
ManuelSyandSyKaKiengfailedtoconstructthebuildinginviolationoftheSpecialConditionsof
Sale.Notwithstandingtheviolation,ManuelSyandSyKaKieng,inApril1989,wereabletosellthelot
to respondent RosaDiana Realty and Development Corporation (hereinafter referred to as Rosa
Diana) with Ayalas approval. As a consideration for Ayala to release the Certificate of Title of the
subjectproperty,RosaDiana,onJuly27,1989executedanUndertakingpromisingtoabidebysaid
specialconditionsofsaleexecutedbetweenAyalaandtheoriginalvendees.Uponthesubmissionof
the Undertaking, together with the building plans for a condominium project, known as The Peak,
Ayalareleasedtitletothelot,therebyenablingRosaDianatoregisterthedeedofsaleinitsfavorand
obtain Certificate of Title No. 165720 in its name. The title carried as encumbrances the special
conditionsofsaleandthedeedrestrictions.RosaDianas building plans as approved byAyala were
subject to strict compliance of cautionary notices appearing on the building plans and to the
restrictionsencumberingtheLotregardingtheuseandoccupancyofthesame.
Thereafter,RosaDianasubmittedtothebuildingofficialofMakatianothersetofbuildingplansfor
ThePeakwhichweresubstantiallydifferentfromthosethatitearliersubmittedtoAyalaforapproval.
While the building plans which RosaDiana submitted to Ayala for approval envisioned a 24meter
high, seven (7) storey condominium project with a gross floor area of 3,968.56 square meters, the
building plans which RosaDiana submitted to the building official of Makati, contemplated a 91.65
meter high, 38 storey condominium building with a gross floor area of 23,305.09 square meters.[1]
Needlesstosay,whilethefirstsetofbuildingplanscompliedwiththedeedrestrictions,thelatterset
exceededthesame.
During the construction of RosaDianas condominium project, Ayala filed an action with the
RegionalTrialCourt(RTC)ofMakati,Branch139forspecificperformance,withapplicationforawrit
ofpreliminaryinjunction/temporaryrestrainingorderagainstRosaDianaRealtyseekingtocompelthe
lattertocomplywiththecontractualobligationsunderthedeedofrestrictionsannotatedonitstitleas
wellaswiththebuildingplansitsubmittedtothelatter.Inthealternative,Ayalaprayedforrescission
ofthesaleofthesubjectlottoRosaDianaRealty.
ThelowercourtdeniedAyalasprayerforinjunctiverelief,thusenablingRosaDianatocomplete
the construction of the building. Undeterred, Ayala tried to cause the annotation of a notice of lis
pendensonRosaDianastitle.TheRegisterofDeedsofMakati,however,refusedregistrationofthe

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noticeoflispendens on the ground that the case pending before the trial court, being an action for
specificperformanceand/orrescission,isanactioninpersonamwhichdoesnotinvolvethetitle,use
or possession of the property.[2] The Land Registration Authority (LRA) reversed the ruling of the
RegisterofDeedssayingthatanactionforspecificperformanceorrescissionmaybeclassifiedasa
proceedingofanykindincourtdirectlyaffectingtitletothelandortheuseoroccupationthereoffor
whichanoticeoflispendensmaybeheldproper.[3]ThedecisionoftheLRA,however,wasoverturned
bytheCourtofAppealsinC.A.G.R.S.P.No.29157.InG.R.No.112774,Weaffirmedtherulingofthe
CAonFebruary16,1994saying

Weagreewithrespondentcourtthatthenoticeoflispendensisnotproperinthisinstance.Thecase
beforethetrialcourtisapersonalactionsincethecauseofactionthereofarisesprimarilyfromthe
allegedviolationoftheDeedofRestrictions.

Inthemeantime,Ayalacompleteditspresentationofevidencebeforethetrialcourt. RosaDiana
filed a Demurrer to Evidence averring that Ayala failed to establish its right to the relief sought
inasmuchas(a)Ayalaadmittedlydoesnotenforcethedeedrestrictionsuniformlyandstrictly(b)Ayala
haslostitsright/powertoenforcetherestrictionsduetoitsownactsandomissionsand(c)thedeed
restrictionsarenolongervalidandeffectiveagainstlotbuyersinAyalascontrolledsubdivision.
The trial court sustained RosaDianas Demurrer to Evidence saying that Ayala was guilty of
abandonmentand/orestoppelduetoitsfailuretoenforcethetermsofdeedofrestrictionsandspecial
conditionsofsaleagainstManuelSyandSyKaKieng.Thetrialcourtnotedthatnotwithstandingthe
violationofthespecialconditionsofsale,ManuelSyandSyKaKiengwereabletotransferthetitleto
RosaDiana with the approval of Ayala. The trial court added that Ayalas failure to enforce the
restrictionswithrespecttoTrafalgar,Shellhouse,Eurovilla,LPLPlaza,ParcRegent,LPLMansionand
Leronville which are located within Salcedo Village, shows that Ayala discriminated against those
which it wants to have the obligation enforced. The trial court then concluded that for Ayala to
discriminatelychoosewhichobligorwouldbemadetofollowcertainconditionsandwhichshouldnot,
didnotseemfairandlegal.
TheCourtofAppealsaffirmedtherulingofthetrialcourtsayingthattheappealissealedbythe
doctrineofthelawofthecaseinC.A.G.R.S.P.No.29157whereitwasstatedthat

]xxxAyalaisbarredfromenforcingtheDeedofRestrictionsinquestionpursuanttothedoctrineof
waiverandestoppel.Underthetermsofthedeedofsale,thevendeeSyKaKiengassumedfaithful
compliancewiththespecialconditionsofsaleandwiththeSalcedoVillageDeedofRestrictions.One
oftheconditionswasthatabuildingwouldbeconstructedwithinoneyear.However,SyKaKieng
failedtoconstructthebuildingasrequiredundertheDeedofSale.Ayaladidnothingtoenforcethe
termsofthecontract.Infact,itevenagreedtothesaleofthelotbySyKaKienginfavorofpetitioner
Realtyin1989orthirteen(13)yearslater.We,therefore,seenojustifiablereasonforAyalatoattempt
toenforcethetermsoftheconditionsofsaleagainstthepetitioner.

xxx

The Court of Appeals also cited C.A. G.R. C.V. No. 46488 entitled, Ayala Corporation vs. Ray
Burton Development Corporation which relied on C.A. G.R. S.P. No. 29157 in ruling that Ayala is
barred from enforcing the deed restrictions in dispute. Upon a motion for reconsideration filed by
hereinpetitioner,theCourtofAppealsclarifiedthatthecitationofthedecisioninAyalaCorporationvs.
RayBurtonDevelopmentCorporation,C.A.G.R.C.V.No.46488,February27,1996,wasmadenot
becausesaiddecisionisresjudicatatothecaseatbarbutratherbecauseitisprecedentialunderthe
doctrineofstaredecisis.
Upondenialofsaidmotionforreconsideration,Ayalafiledthepresentappeal.
AyalacontendsthatthepronouncementoftheCourtofAppealsinC.A.G.R.S.P.No.29157thatit
is estopped from enforcing the deed restrictions is merely obiter dicta inasmuch as the only issue
raisedintheaforesaidcasewastheproprietyofalispendensannotationonRosaDianascertificate
oftitle.
Ayala avers that RosaDiana presented no evidence whatsoever on Ayalas supposed waiver or
estoppelinC.A.G.R.S.P.No.29157.AyalalikewisepointedoutthatatthetimeC.A.G.R.S.P.No.
29157wasonappeal,theissuesofthevalidityandcontinuedviabilityofthedeedofrestrictionsand
theirenforceabilitybyAyalawerejoinedandthenbeingtriedbeforethetrialcourt.
Petitionersassignmentoferrorsinthepresentappealmayessentiallybesummarizedasfollows:
I.TheCourtofAppealsactedinamannernotinaccordwithlawandtheapplicabledecisionsofthe
Supreme Court in holding that the doctrine of the law of the case, or stare decisis, operated to
dismissAyalasappeal.
II.TheCourtofAppealserredasamatteroflawanddepartedfromtheacceptedandusualcourseof
judicial proceedings when it failed to expressly pass upon the specific errors assigned in Ayalas
appeal.
Adiscussiononthedistinctionsbetweenlawofthecase,staredecisisandobiterdictaisinorder.

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Thedoctrineofthelawofthecase has certain affinities with, but is clearly distinguishable from,

thedoctrinesofresjudicataandstaredecisis,principallyonthegroundthattheruleofthelawofthe
case operates only in the particular case and only as a rule of policy and not as one of law.[4] At
variance with the doctrine of stare decisis, the ruling adhered to in the particular case under the
doctrineofthelawofthecaseneednotbefollowedasaprecedentinsubsequentlitigationbetween
otherparties,neitherbytheappellatecourtwhichmadethedecisionfollowedonasubsequentappeal
inthesamecase,norbyanyothercourt.Therulingcoveredbythedoctrineofthelawofthecaseis
adheredtointhesinglecasewhereitarises,butisnotcarriedintoothercasesasaprecedent.[5]On
theotherhand,underthedoctrineofstaredecisis, onceapointoflaw has been established by the
court,thatpointoflawwill,generally,befollowedbythesamecourtandbyallcourtsoflowerrankin
subsequent cases where the same legal issue is raised.[6] Stare decisis proceeds from the first
principleofjusticethat,absentpowerfulcountervailingconsiderations,likecasesoughttobedecided
alike.[7]
The Court of Appeals, in ruling against petitioner Ayala Corporation stated that the appeal is
sealedbythedoctrineofthelawofthecase,referringtoG.R.No.112774entitledAyalaCorporation,
petitionervs.CourtofAppeals,etal.,respondents.TheCourtofAppealslikewisemadereferenceto
C.A.G.R.C.V.No.46488entitled,AyalaCorporationvs.RayBurtonDevelopmentCorporation,Inc.in
rulingagainstpetitionersayingthatitisjurisprudentialunderthedoctrineofstaredecisis.
ItmustbepointedoutthattheonlyissuethatwasraisedbeforetheCourtofAppealsinC.A.G.R.
S.P.No.29157waswhetherornottheannotationoflispendensisproper.TheCourtofAppeals,inits
decision, in fact stated the principal issue to be resolved is: whether or not an action for specific
performance, or in the alternative, rescission of deed of sale to enforce the deed of restrictions
governingtheuseofproperty,isarealorpersonalaction,oronethataffectstitletheretoanditsuseor
occupationthereof."[8]
In the aforesaid decision, the Court of Appeals even justified the cancellation of the notice of lis
pendens on the ground that Ayala had ample protection should it succeed in proving its allegations
regardingtheviolationofthedeedofrestrictions,withoutundulycurtailingtherightofthepetitionerto
fullyenjoyitspropertyinthemeantimethatthereisasyetnodecisionbythetrialcourt.[9]
Fromtheforegoing,itisclearthattheCourtofAppealswasawarethattheissueastowhether
petitionerisestoppedfromenforcingthedeedofrestrictionshasyettoberesolvedbythetrialcourt.
Though it did make a pronouncement that the petitioner is estopped from enforcing the deed of
restrictions,italsomentionedatthesametimethatthisparticularissuehasyettoberesolvedbythe
trialcourt.Notably,uponappealtothisCourt,WehaveaffirmedtherulingoftheCourtofAppealsonly
asregardstheparticularissueoftheproprietyofthecancellationofthenoticeoflispendens.
Weseenoreasonthen,howthelawofthecaseorstaredecisiscanbeheldtobeapplicablein
thecaseatbench.Ifatall,thepronouncementmadebytheCourtofAppealsthatpetitionerAyalais
barred from enforcing the deed of restrictions can only be considered as obiter dicta. As earlier
mentioned,theonlyissuebeforetheCourtofAppealsatthetimewastheproprietyoftheannotation
ofthelispendens.TheadditionalpronouncementoftheCourtofAppealsthatAyalaisestoppedfrom
enforcingthedeedofrestrictionsevenasitrecognizedthatthissaidissueisbeingtriedbeforethetrial
court was not necessary to dispose of the issue as to the propriety of the annotation of the lis
pendens.Adictumisanopinionofajudgewhichdoesnotembodytheresolutionordeterminationof
the court,andmade without argument, or full consideration of the point,nottheproffereddeliberate
opinionofthejudgehimself.[10]Itisnotnecessarilylimitedtoissuesessentialtothedecisionbutmay
also include expressions of opinion which are not necessary to support the decision reached by the
court.Meredictaarenotbindingunderthedoctrineofstaredecisis.[11]
WhiletheCourtofAppealsdidnoterrinrulingthatthepresentpetitionisnotbarredbyC.A.G.R.
C.V.No.46488entitledAyalaCorporationvs.RayBurtonDevelopmentInc.underthedoctrineofres
judicata, neither, however, can the latter case be cited as precedential under the doctrine of stare
decisis.Itmustbepointedoutthatatthetimetheassaileddecisionwasrendered,C.A.G.R.C.V.No.
46488 was on appeal with this Court. Significantly, in the decision We have rendered in Ayala
Corporationvs.RayBurtonDevelopmentCorporation[12]whichbecamefinalandexecutoryonJuly5,
1999wehaveclearlystatedthatAnexaminationofthedecisioninthesaidRosaDianacasereveals
thatthesoleissueraisedbeforetheappellatecourtwastheproprietyofthelispendens annotation.
However,theappellatecourtwentbeyondthesoleissueandmadefactualfindingsbereftofanybasis
intherecordtoinappropriatelyrulethatAYALAisinestoppelandhaswaiveditsrighttoenforcethe
subject restrictions. Such ruling was immaterial to the resolution of the issue of the propriety of the
annotation of the lis pendens. The finding of estoppel was thus improper and made in excess of
jurisdiction.
Comingnowtothemeritsofthecase,petitioneraversthattheCourtofAppealsdepartedfromthe
usualcourseofjudicialproceedingswhenitfailedtoexpresslypassuponthespecificerrorsassigned
initsappeal.PetitionerreiteratesitscontentionthatthetrialcourtsfindingsthatAyalahas waived its
righttoenforcethedeedofrestrictionsisnotsupportedbylawandevidence.
Wefindmeritinthepetition.

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ItisbasicthatfindingsoffactofthetrialcourtandtheCourtofAppealsareconclusiveuponthe
Supreme Court when supported by substantial evidence.[13] We are constrained, however, to review
thetrialcourtsfindingsoffact,whichtheCourtofAppealschosenottopassupon,inasmuchasthere
is ample evidence on record to show that certain facts were overlooked which would affect the
dispositionofthecase.
In its assailed decision of February 4, 1994, the trial court, ruled in favor of respondent Rosa
DianaRealtyonthegroundthatAyalahadnotactedfairlywhenitdidnotinstituteanactionagainst
theoriginalvendeesdespitethelattersviolationoftheSpecialConditionsofSalebutchoseinsteadto
fileanactionagainsthereinrespondentRosaDiana.Thetrialcourtaddedthatalthoughthe38storey
buildingofRosaDianaisbeyondthetotalheightrestriction,itwasnotviolativeoftheNationalBuilding
Code.Accordingtothetrialcourttheconstructionofthe38storeybuildingknownasThePeakhas
notbeenshowntohavebeenprohibitedbylawandneitherisitagainstpublicpolicy.
It bears emphasis that as complainant, Ayala had the prerogative to initiate an action against
violatorsofthedeedrestrictions.ThatRosaDianahadactedinbadfaithismanifestedbythefactthat
it submitted two sets of building plans, one which was in conformity with the deed restrictions
submitted to Ayala and MACEA, and the other, which exceeded the height requirement in the deed
restrictionstotheMakatibuildingofficialforthepurposeofprocuringabuildingpermitfromthelatter.
Moreover,theviolationofthedeedrestrictionscommittedbyrespondentcanhardlybedenominated
asaminorviolation.Itshouldbepointedoutthattheoriginalbuildingplanwhichwassubmittedtoand
approvedbypetitionerAyalaCorporation,envisionedatwentyfour(24)meterhigh,seven(7)storey
condominium whereas the respondents building plan which was submitted to and approved by the
buildingofficialofMakatiisthatofathirtyeight(38)storey,91.65metershigh,building.Atpresent,the
Peak building of respondent which actually stands at 133.65 meters with a total gross floor area of
23,305.09squaremeters,seriouslyviolatesthedimensionsindicatedinthebuildingplanssubmitted
byRosaDianatopetitionerAyalaforapprovalinasmuchasthePeakbuildingexceedstheapproved
height limit by about 109 meters and the allowable gross floor area under the applicable deed
restrictionsbyabout19,105squaremeters.Clearly,therewasagrossviolationofthedeedrestrictions
andevidentbadfaithbytherespondent.
Itmaynotbeamisstomentionthatthedeedrestrictionswererevisedinageneralmembership
meeting of the association of lot owners in Makati Central Business District the Makati Commercial
EstateAssociation,Inc.(MACEA)wherebydirectheightrestrictionswereabolishedinlieuoffloorarea
limits. Respondent, however, did not vote for the approval of this revision during the General
MembershipmeetingwhichwasheldonJuly11,1990attheManilaPoloClubPavilion,Makati,Metro
Manila and again on July 12, 1990 at the Hotel Mandarin Oriental, Makati, Metro Manila. Hence,
respondent continues to be bound by the original deed restrictions applicable to Lot 7, Block 1 and
annotated on its title to said lot. In any event, assuming arguendo that respondent voted for the
approvalofdirectheightrestrictionsinlieuoffloorarealimits,thetotalfloorareaofitsPeakbuilding
wouldstillbeviolativeofthefloorarealimitstotheextentofabout9,865squaremetersofallowable
floorareaundertheMACEArevisedrestrictions.
RespondentRosaDianaaversthatthereisnothingillegalorunlawfulinthebuildingplanswhichit
usedintheconstructionofthePeakcondominiuminasmuchasitbearstheimprimaturofthebuilding
official of Makati, who is tasked to determine whether building and construction plans are in
accordancewiththelaw,notably,theNationalBuildingCode.
Respondent RosaDiana, however, misses the point inasmuch as it has freely consented to be
boundbythedeedrestrictionswhenitenteredintoacontractofsalewithspousesManuelSyandSy
KaKieng.Whilerespondentclaimsthatitwasundertheimpressionthatthedeedrestrictionswereno
longer being enforced by Ayala, the Undertaking[14] it executed belies this same claim. In said
Undertaking,respondentagreedtoconstructandcompletetheconstructionofthehouseonsaidlotas
required under the special condition of sale. Respondent likewise bound itself to abide and comply
withxxxtheconditionoftherescissionofthesalebyAyalaLand,Inc.onthegroundsthereinstatedx
xx.
Contractual obligations between parties have the force of law between them and absent any
allegationthatthesamearecontrarytolaw,morals,goodcustoms,publicorderorpublicpolicy,they
mustbecompliedwithingoodfaith.Hence,Article1159oftheNewCivilCodeprovides

Obligationsarisingfromcontractshavetheforceoflawbetweenthecontractingpartiesandshouldbe
compliedwithingoodfaith.

Respondent RosaDiana insists that the trial court had already ruled that the Undertaking
executedbyitsChairmanandPresidentcannotvalidlybindRosaDianaandhence,itshouldnotbe
heldboundbythedeedrestrictions.
WeagreewithpetitionerAyalasobservationthatrespondentRosaDianasspecialandaffirmative
defenses before the trial court never mentioned anyallegation that its president and chairman were
notauthorizedtoexecutetheUndertaking.Itwasinappropriatethereforeforthetrialcourttorulethat
intheabsenceofanyauthorityorconfirmationfromtheBoardofDirectorsofrespondentRosaDiana,
itsChairmanandthePresidentcannotvalidlyenterintoanundertakingrelativetotheconstructionof

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thebuildingonthelotwithinoneyearfromJuly27,1989andinaccordancewiththedeedrestrictions.
Curiously,whilethetrialcourtstatedthatitcannotbepresumedthattheChairmanandthePresident
canvalidlybindrespondentRosaDianatoenterintotheaforesaidUndertakingintheabsenceofany
authorityorconfirmationfromtheBoardofDirectors,thetrialcourtheldthattheordinarypresumption
ofregularityofbusinesstransactionsisapplicableasregardstheDeedofSalewhichwasexecutedby
ManuelSyandSyKaKiengandrespondentRosaDiana.InthelightofthefactthatrespondentRosa
DiananeverallegedinitsAnswerthatitspresidentandchairmanwerenotauthorizedtoexecutethe
Undertaking,theaforesaidrulingofthetrialcourtiswithoutfactualandlegalbasisandsurprisingto
saytheleast.
ThefactalonethatrespondentRosaDianaconvenientlypreparedtwosetsofbuildingplanswith
one set which fully conformed to the Deed Restrictions and another in gross violation of the same
should have cautioned the trial court to conclude that respondent RosaDiana was under the
erroneousimpressionthattheDeedRestrictionswerenolongerenforceableandthatitneverintended
tobeboundbytheUndertakingsignedbyitsPresidentandChairman.Wereiteratethatcontractual
obligations have the force of law between parties and unless the same are contrary to public policy
moralsandgoodcustoms,theymustbecompliedbythepartiesingoodfaith.
Petitioner,initsPetition,praysthatjudgmentberendered:
a)orderingRosaDianaRealtyandDevelopmentCorporationtocomplywithitscontractualobligations
in the construction of the Peak by removing, or closing down and prohibiting RosaDiana from
using,selling,leasingorotherwisedisposingof,theportionsofareasthereofconstructedbeyondor
in excess of the approved height, as shown by the building plans submitted to, and approved by,
Ayala, including any other portion of the building constructed not in accordance with the said
buildingplans,duringtheeffectivityoftheDeedRestrictions
b)Alternatively,intheeventspecificperformancehasbecomeimpossible:
(1)Ordering the cancellation and rescission of the April 20, 1976 Deed of Sale by Ayala in
favoroftheoriginalvendeesthereofaswellasthesubsequentDeedofSaleexecutedby
suchoriginalvendeesinfavorofRosaDiana,andorderingRosaDianatoreturntoAyala
Lot7,Block1ofSalcedoVillage
(2)orderingthecancellationofTransferCertificateofTitleNo.165720(inthenameofRosa
Diana)anddirectingtheofficeoftheRegisterofDeedsofMakatitoissueanewtitleover
thelotinthenameofAyalaand
(3)orderingRosaDianatopayAyalaattorneysfeesintheamountofP500,000.00,exemplary
damagesintheamountofP5,000,000.00andthecostsofsuit.
It must be noted that during the trial respondent RosaDiana was able to complete the
construction of The Peak as a building with a height of thirty eight (38) floors or 133.65 meters and
withatotalgrossfloorareaof23,305.09squaremeters.Havingbeencompletedforanumberofyears
already,itwouldbereasonabletoassumethatitisnowfullytenanted.Consequently, the remedy of
specific performance by respondent is no longer feasible.However, neither can we grant petitioners
prayer for the cancellation and rescission of the April 20, 1976 Deed of Sale by petitioner Ayala in
favoroftheoriginalvendeesthereofaswellasthesubsequentDeedofSaleexecutedbytheoriginal
vendees in favor of respondent RosaDiana inasmuch as the original vendees were not even made
partiesinthecaseatbar.Moreover, petitionerAyala, having agreed to the resale of the property by
the original vendees, spouses Manuel Sy and Sy Ka Kieng, to respondent RosaDiana despite the
failureofManuelSyandSyKaKiengtocomplywiththeirobligationtoconstructabuildingwithinone
year from April 20, 1976, has effectively waived its right to rescind the sale of the subject lot to the
originalvendees.
FacedwiththesamequestionastotheproperremedyavailabletopetitionerinthecaseofAyala
Corporationvs.RayBurtonDevelopmentInc.,acasewhichisonallfourswiththecaseatbench,we
ruledthereinthatthepartyguiltyofviolatingthedeedrestrictionsmayonlybeheldalternativelyliable
forsubstituteperformanceofitsobligation,thatis,forthepaymentofdamages.Intheaforesaidcase
itwasobservedthattheConsolidatedandRevisedDeedRestrictions(CRDR)imposeddevelopment
chargesonconstructionswhichexceedtheestimatedGrossLimitspermittedundertheoriginalDeed
RestrictionsbutwhicharewithinthelimitsoftheCRDRs.
ThepertinentportionoftheDeedofRestrictionsreads:

3.DEVELOPMENTCHARGE

ForanybuildingconstructionwithintheGrossFloorArealimitsdefinedunderParagraphsC2.1toC
2.4above,butwhichwillresultinaGrossFloorAreaexceedingcertainstandardsdefinedin
ParagraphsC3.1Cbelow,theOWNERshallpayMACEA,priortotheconstructionofanynew
building,aDEVELOPMENTCHARGEasacontributiontoatrustfundtobeadministeredbyMACEA.
ThistrustfundshallbeusedtoimprovefacilitiesandutilitiesinMakatiCentralDistrict.

3.1.TheamountofthedevelopmentchargethatshallbeduefromtheOWNERshallbecomputedas
follows:

DEVELOPMENTCHARGE=Ax(BCD)
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where:

AisequaltotheAreaAssessmentwhichshallbesetatFiveHundredPesos(P500.00)until
December31,1990.EachJanuary1stthereafter,suchamountshallincreasebytenpercent(10%)
overtheAreaAssessmentchargedintheimmediatelyprecedingyearprovidedthatbeginning1995
andattheendofeverysuccessivefiveyearperiodthereafter,theincreaseintheAreaAssessment
shallbereviewedandadjustedbytheVENDORtocorrespondtotheaccumulatedincreaseinthe
constructioncostindexduringtheimmediatelyprecedingfiveyearsasbasedontheweightedaverage
ofwholesalepriceandwageindicesoftheNationalCensusandStatisticsOfficeandtheBureauof
LaborStatistics.

BisequaltotheGrossFloorAreaofthecompletedorexpandedbuildinginsquaremeters.

CisequaltotheestimatedGrossFloorAreapermittedundertheoriginaldeedrestrictions,derived
bymultiplyingthelotareabytheeffectiveoriginalFARshownbelowforeachlocation.

We then ruled in the aforesaid case that the development charges are a fair measure of
compensatory damages which therein respondent Ray Burton Development Inc. is liable to Ayala
Corporation.Thedispositiveportionofthedecisioninthesaidcasewhichissquarelyapplicabletothe
caseatbar,readsasfollows:

WHEREFORE,premisesconsidered,theassailedDecisionoftheCourtofAppealsdatedFebruary
27,1996,inCAG.R.C.V.No.46488,anditsResolutiondatedOctober7,1996arehereby
REVERSEDandSETASIDE,andinlieuthereof,judgmentisherebyrenderedfindingthat:

(1)TheDeedRestrictionsarevalidandpetitionerAYALAisnotestoppedfromenforcingthem
againstlotownerswhohavenotyetadoptedtheConsolidatedandRevisedDeed
Restrictions.

(2)HavingadmittedthattheConsolidatedandRevisedDeedRestrictionsaretheapplicable
DeedRestrictionstoRayBurtonDevelopmentCorporation,RBDCshouldbe,andis
boundbythesame.

(3)ConsideringthatRayBurtonDevelopmentCorporationsTrafalgarplazaexceedsthefloor
arealimitsoftheDeedRestrictions,RBDCisherebyorderedtopaydevelopment
chargesascomputedundertheprovisionsoftheconsolidatedandRevisedDeed
Restrictionscurrentlyinforce.

(4)RayBurtonDevelopmentcorporationisfurtherorderedtopayAYALAexemplarydamages
intheamountofP2,500,000.00attorneysfeesintheamountofP250,000.00.

SOORDERED.

Thereisnoreasonwhythesameruleshouldnotbefollowedinthecaseatbar,theremediesof
specificperformanceand/orrescissionprayedforbypetitionernolongerbeingfeasible.Inaccordance
withthepeculiarcircumstancesofthecaseatbar,thedevelopmentchargeswouldcertainlybeafair
measureofcompensatorydamagestopetitionerAyala.
Exemplary damages in the sum of P2,500,000.00 as prayed for by petitioner are also in order
inasmuchasrespondentRosaDianawasinevidentbadfaithwhenitsubmittedasetofbuildingplans
inconformitywiththedeedrestrictionstopetitionerAyalaforthesolepurposeofobtainingtitletothe
property, but only to prepare and later on submit another set of building plans which are in gross
violationoftheDeedRestrictions.PetitionerAyalaislikewiseentitledtoanawardofattorneysfeesin
thesumofP250,000.00.
WHEREFORE, the assailed Decision of the Court of Appeals dated December 4, 1997 and its
ResolutiondatedJune19,1998,C.A.G.R.C.V.No.4598,areREVERSEDandSETASIDE.Inlieu
thereof,judgmentisrendered
a)orderingrespondentRosaDianaRealtyandDevelopmentCorporationtopaydevelopmentcharges
as computed under the provisions of the consolidated and Revised Deed Restrictions currently in
forceand
b) ordering respondent RosaDiana Realty and Development Corporation to pay petitioner Ayala
Corporation exemplary damages in the sum of P2,500,000.00, attorneys fees in the sum of
P250,000.00andthecostsofthesuit.
SOORDERED.
Bellosillo,(Chairman),Mendoza,Quisumbing,andBuena,JJ.,concur.

[1] C.A. G.R. C.V. No. 45987 stated that the 2nd set of building plans contemplated a 91.65 meter high, 38 storey,
condominiumwithagrossfloorareaof23,305.09meters.However,theheightclearancepermitgrantedbyDepartmentof
TransportationandCommunicationsshowsthatRosaDianasoughtapermitforaproposed133.05meterhigh,30storey
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5/30/2017 Ayala Corp vs Rosa-Diana Realty & Development Corp : 134284 : December 1, 2000 : J. De Leon, Jr. : Second Division
building(Rollo,p.133)Itislikewiseinterestingtonotethatalthoughunderthe2ndsetofthebuildingplans,thegrossfloor
area of the building allegedly covers 23,305.09 square meters, the sanitary/plumbing permit issued by the Metropolitan
ManilaCommissionshowsthatthetotalareaofthebuildingisinfact32,208squaremeters(Rollo,p.129).
[2]C.A.Rollo,p.355.

[3]C.A.Rollo,pp.348350.

[4]5AmJur2d,AppealandError746.

[5]Allenvs.Bryant,155Cal256100P704.

[6]5AmJur2d,AppellateReview599citingSamselv.WheelerTransp.Servs.,246Kan336,789P2d541.

[7]5AmJur2d,AppellateReview599citingStateexrel.Moorev.Molpus(Miss)578So2d624.

[8]Rollo,p.322.

[9]Rollo,p.326.

[10]21C.J.S.311citingStatevs.Tingle,60S728,103Miss672InreHerlesestate,300NYS103,165Misc616.

[11]20AmJur2d,Courts39.

[12]294SCRA48,64[1998].

[13]Bansonvs.CourtofAppeals,246SCRA42,46[1995].

[14]Rollo,p.108.

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