Ortigas & Co. v. Court of Appeals
REITERATIONFacts
The Antecedents: Petitioner Ortigas & Company sold a parcel of land to Emilia Hermoso with restrictive covenants annotated on the title, limiting its use to residential purposes and requiring seller approval for building plans. In 1981, the Metropolitan Manila Commission (MMC) enacted MMC Ordinance No. 81-01, reclassifying a portion of the area where the lot is located as commercial. Private respondent Ismael Mathay III leased the lot and constructed a commercial building for a car sales company. Procedural History: Petitioner filed a complaint for demolition of the commercial structure, seeking a writ of preliminary injunction. The Regional Trial Court (RTC) issued the writ. Private respondent filed a motion to set aside, which was denied. Private respondent then filed a special civil action for certiorari with the Court of Appeals (CA), alleging grave abuse of discretion by the RTC. The CA nullified the writ of preliminary injunction, holding that MMC Ordinance No. 81-01 effectively nullified the residential restrictions. The CA denied petitioner's motion for reconsideration. The Petition: Petitioner seeks to reverse the CA decision, arguing that the appellate court erred in setting aside the RTC's writ of preliminary injunction solely on the ground that the zoning ordinance nullified the building restrictions. Petitioner also contends that private respondent, as a lessee, lacks legal capacity to question the deed's conditions and is barred by estoppel or waiver, and that the CA failed to address factual questions.
Issue(s)
Whether the Court of Appeals erred in holding that the trial court committed grave abuse of discretion when it refused to apply MMC Ordinance No. 81-01 to the case. Whether private respondent Mathay III, as a mere lessee, has the legal capacity and locus standi to question the conditions of the deed of sale.
Ruling
The petition is denied. The challenged decision of the Court of Appeals affirming the nullification of the writ of preliminary injunction is affirmed. Costs against the petitioner.
Ratio Decidendi
On the issue of whether the Court of Appeals erred in holding that the trial court committed grave abuse of discretion when it refused to apply MMC Ordinance No. 81-01: The Supreme Court affirmed the Court of Appeals, holding that the trial court committed grave abuse of discretion. The Court reiterated the principle that laws enacted in the exercise of police power can be given retroactive effect and may impair vested rights or contracts, as police power legislation is superior to the non-impairment clause. Statutes in the exercise of valid police power must be read into every contract, and such ordinances are applicable not only to future contracts but also to those already in existence. The Court found the trial court's reliance on Co vs. Intermediate Appellate Court misplaced, as the present case involved urban residential land reclassified as commercial by a valid police power measure, unlike the agricultural land in Co. The restrictive stipulations in the contract of sale, even if annotated on the title, must yield to the zoning ordinance, as stipulations cannot contravene public policy. Therefore, the restrictions limiting the lot to residential use were deemed extinguished by the retroactive operation of the zoning ordinance and could no longer be enforced. On the issue of whether private respondent Mathay III, as a mere lessee, has the legal capacity and locus standi to question the conditions of the deed of sale: The Supreme Court ruled that private respondent Mathay III is a real party in interest. A real party in interest is defined as the party who stands to be benefited or injured by the judgment or the party entitled to the avails of the suit, possessing a material interest in the issue and to be affected by the decree. As the lessee in possession of the lot and the one who constructed the commercial structure, Mathay III is directly affected by the demolition sought by the petitioner. His business would suffer if the injunction were not dissolved, making his interest substantial and not merely incidental. Furthermore, by impleading Mathay III as a defendant in the amended complaint, petitioner Ortigas & Company recognized his standing and cannot subsequently question it. The Court also cited Article 1311 of the Civil Code regarding contracts taking effect between parties, but noted that when a plaintiff impleads a party as a defendant, he cannot question that party's standing.
Main Doctrine
Restrictive covenants in a deed of sale annotated on a title, limiting property use to residential purposes, are extinguished by a subsequent zoning ordinance reclassifying the area as commercial, as police power legislation enacted for public welfare overrides contractual stipulations and the non-impairment clause.