Ayala Corporation VS. ROSA DIANA REALTY Case Digest Ayala Corporation VS.

ROSA DIANA REALTY 346 SCRA 633

FACTS: In April 1976, appellant-petitioner entered into a transaction with Manuel Sy and Sy Ka Kieng where former sold a lot in Salcedo Village in Makati. The deed of sale had some encumbrances contained in the Special Conditions of Sale (SCS) and Deed of Restrictions (DR), which should be followed by the vendees. The stipulations in the SCS are:

1) a building proposal must be submitted to Ayala which must be in accordance with the DR, 2) the construction of the building must be completed on or before 1979, and 3) that there will be no resale of the lot.

The DR specified the limits in height and floor area of the building to be constructed. However, Sy and Kieng, failed to build a building but nonetheless with the permission of Ayala, the vendees sold the said lot to the respondent, Rosa Diana Realty. Respondent Company agreed to abode by the SCS and the DR stipulations. Prior to the construction, Rosa Diana submitted a building plan to Ayala complying with the DR but it also passed a different building plan to the building administrator of Makati, which did not comply with the stipulations in the DR. While the building, The Peak, was being constructed, Ayala filed a case praying that: 1) Rosa Diana, be compelled to comply with the DR and build the building in accordance with the building plan submitted to Ayala; or 2) on the alternative, the rescission of the deed of sale.

The trial court ruled in favor of the respondent and thus, Rosa Diana was able to complete the construction of The Peak. Undeterred, Ayala filed before the Register of Deeds (RD) of Makati a cause of annotation lis pendens. RD refused to grant Ayala such registration for in the lower court; the case is of personal action for a specific performance and/or rescission. However, the Land Registration Authority (LRA) reversed RDs ruling. The appellate court upheld the RDs ruling stating that the case before the trial court is a personal action for the cause of action arises from the alleged violation of the DR. The trial court sustained the respondents point saying that Ayala was guilty of abandonment and/or estoppels due to its failure to enforce the terms of the DR and SCS against Sy and Kieng. Ayala discriminately chose which obligor would be made to follow certain conditions, which is not fair and legal. On appeal, the CA affirmed the lower courts ruling. Hence, this petition.

ISSUE: Whether or not Rosa Diana committed a breach of contract.

RULING: Yes, the Supreme Court ruled that Rosa Diana committed a breach of contract by submitting a building plan to Ayala complying with the DR and submitting a different building plan to the building administrator of Makati, which did not comply with the stipulations in the DR.

Contractual Obligations between parties have the force of law between them and absent any allegation that the same are contrary to law, morals, good customs, public order or public policy, they must complied with in good faith.

Thus, the assailed decision of the Court of Appeals is reversed and set aside.