Ortigas & Co. sold land to Emilia Hermoso with restrictions that it be used exclusively for residential purposes. Later, a zoning ordinance reclassified the area as commercial. Ismael Mathay then leased the lot from Hermoso and built a car sales business. Ortigas & Co. sued, seeking demolition due to the violation of the deed restrictions. The Court of Appeals ruled that the zoning ordinance could impair prior contracts. The Supreme Court affirmed, holding that a valid exercise of police power through a zoning ordinance can be given retroactive effect over existing contracts.
Ortigas & Co. sold land to Emilia Hermoso with restrictions that it be used exclusively for residential purposes. Later, a zoning ordinance reclassified the area as commercial. Ismael Mathay then leased the lot from Hermoso and built a car sales business. Ortigas & Co. sued, seeking demolition due to the violation of the deed restrictions. The Court of Appeals ruled that the zoning ordinance could impair prior contracts. The Supreme Court affirmed, holding that a valid exercise of police power through a zoning ordinance can be given retroactive effect over existing contracts.
Ortigas & Co. sold land to Emilia Hermoso with restrictions that it be used exclusively for residential purposes. Later, a zoning ordinance reclassified the area as commercial. Ismael Mathay then leased the lot from Hermoso and built a car sales business. Ortigas & Co. sued, seeking demolition due to the violation of the deed restrictions. The Court of Appeals ruled that the zoning ordinance could impair prior contracts. The Supreme Court affirmed, holding that a valid exercise of police power through a zoning ordinance can be given retroactive effect over existing contracts.
Ortigas & Co. sold land to Emilia Hermoso with restrictions that it be used exclusively for residential purposes. Later, a zoning ordinance reclassified the area as commercial. Ismael Mathay then leased the lot from Hermoso and built a car sales business. Ortigas & Co. sued, seeking demolition due to the violation of the deed restrictions. The Court of Appeals ruled that the zoning ordinance could impair prior contracts. The Supreme Court affirmed, holding that a valid exercise of police power through a zoning ordinance can be given retroactive effect over existing contracts.
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Ortigas & Co. vs.
Court of Appeals
Facts: On August 25, 1976, Ortigas and Company sold to Emilia Hermoso a parcel of land located in Greenhills Subdivision, San Juan with several restrictions in the contract of sale that said lot be used exclusively for residential purpose only. The restrictions shall run with the land and shall be construed as real covenants until December 31, 2025 when they shall cease and terminate. Later on, in 1981, a zoning ordinance was issued by MMC (now MMDA) reclassifying the area as commercial. On June 8, 1948, private respondent Ismael Mathay III leased the subject lot from Hermoso and built a single storey building for Greenhills Autohaus, Inc., a car sales company. It is because the lease contract did not specify the purpose of the lease. On January 18, 1995, petitioner filed a complaint against Emilia Hermoso which sought the demolition of the constructed car sales company for having violated the terms and conditions of the Deed of Sale. Trial Court ruled in favour of Ortigas and Co. Mathay raised the issue to the Court of Appeals from which he sought favourable ruling.
Issue: Whether or not the zoning ordinance may impair contracts entered prior to its effectivity.
Held: Yes. The zoning ordinance, as a valid exercise of police power may be given effect over any standing contract. Hence, petition is denied. A law enacted in the exercise of police power to regulate or govern certain activities or transactions could be given retroactive effect and may reasonably impair vested rights or contracts. Police power legislation is applicable not only to future contracts, but equally to those already in existence. Non-impairment of contracts or vested rights clause will have to yield to the superior and legitimate exercise by the State of police power to promote the health, morals, peace, education, good order, safety, and general welfare of the people. Moreover, statutes in exercise of valid police power must be read into every contract. Noteworthy, in Sangalang vs. Intermediate Appellate Court, the Supreme Court already upheld subject ordinance as a legitimate police power measure.
