SECOND DIVISION

[G.R. No. 151369, March 23 : 2011]

ANITA MONASTERIO-PE AND THE SPOUSES ROMULO TAN AND EDITHA PE-TAN,
PETITIONERS, VS. JOSE JUAN TONG, HEREIN REPRESENTED BY HIS ATTORNEY-INFACT, JOSE Y. ONG, RESPONDENT.
DECISION
PERALTA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking
the reversal and nullification of the Decision[1] and Order,[2] respectively dated October 24, 2001
and January 18, 2002, of the Regional Trial Court (RTC) of Iloilo City, Branch 24.
The instant petition stemmed from an action for ejectment filed by herein respondent Jose Juan
Tong (Tong) through his representative Jose Y. Ong (Ong) against herein petitioners Anita
Monasterio-Pe (Anita) and the spouses Romulo Tan and Editha Pe-Tan (Spouses Tan). The suit
was filed with the Municipal Trial Court in Cities (MTCC), Branch 3, Iloilo City and docketed as
Civil Case No. 2000(92).
In the Complaint, it was alleged that Tong is the registered owner of two parcels of land known
as Lot Nos. 40 and 41 and covered by Transfer Certificate of Title (TCT) Nos. T-9699 and T9161, together with the improvements thereon, located at Barangay Kauswagan, City Proper,
Iloilo City; herein petitioners are occupying the house standing on the said parcels of land
without any contract of lease nor are they paying any kind of rental and that their occupation
thereof is simply by mere tolerance of Tong; that in a letter dated December 1, 1999, Tong
demanded that respondents vacate the house they are occupying, but despite their receipt of
the said letter they failed and refused to vacate the same; Tong referred his complaint to
the Lupon of Barangay Kauswagan, to no avail.[3]
In their Answer with Defenses and Counterclaim, herein petitioners alleged that Tong is not the
real owner of the disputed property, but is only a dummy of a certain alien named Ong Se Fu,
who is not qualified to own the said lot and, as such, Tong's ownership is null and void;
petitioners are the true and lawful owners of the property in question and by reason thereof
they need not lease nor pay rentals to anybody; a case docketed as CA-G.R. CV No. 52676 (RTC
Civil Case No. 20181) involving herein petitioner Pe and respondent is pending before the Court
of Appeals (CA) where the ownership of the subject property is being litigated; respondent
should wait for the resolution of the said action instead of filing the ejectment case; petitioners
also claimed that there was, in fact, no proper barangayconciliation as Tong was bent on filing
the ejectment case before conciliation proceedings could be validly made. [4]
On March 19, 2001, the MTCC rendered judgment in favor of herein respondent, the dispositive
portion of which reads as follows:
WHEREFORE, judgment is rendered, finding the defendants Anita Monasterio-Pe, and Spouses
Romulo Tan and Editha Pe-Tan to be unlawfully withholding the property in litigation, i.e., Lot.
Nos. 40 and 41 covered by TCT Nos. T-9699 and 9161, respectively, together with the buildings
thereon, located at Brgy. Kauswagan, Iloilo City Proper, and they are hereby ordered together
with their families and privies, to vacate the premises and deliver possession to the plaintiff
and/or his representative.
The defendants are likewise ordered to pay plaintiff reasonable compensation for the use and
occupancy of the premises in the amount of P15,000.00 per month starting January, 2000 until
they actually vacate and deliver possession to the plaintiff and attorney's fees in the amount of
P20,000.00.
Costs against the defendants.
SO DECIDED.[5]
Aggrieved by the above-quoted judgment, petitioners appealed the decision of the MTCC with
the RTC of Iloilo City.
In its presently assailed Decision, the RTC of Iloilo City, Branch 24 affirmed in its entirety the

appealed decision of the MTCC.

Hence, the instant petition for review on certiorari.
At the outset, it bears emphasis that in a petition for review on certiorari under Rule 45 of the
Rules of Court, only questions of law may be raised by the parties and passed upon by this
Court.[6] It is a settled rule that in the exercise of this Court's power of review, it does not
inquire into the sufficiency of the evidence presented, consistent with the rule that this Court is
not a trier of facts.[7] In the instant case, a perusal of the errors assigned by petitioners would
readily show that they are raising factual issues the resolution of which requires the examination
of evidence. Certainly, issues which are being raised in the present petition, such as the
questions of whether the issue of physical possession is already included as one of the issues in
a case earlier filed by petitioner Anita and her husband, as well as whether respondent complied
with the law and rules on barangay conciliation, are factual in nature.
Moreover, the appeal under Rule 45 of the said Rules contemplates that the RTC rendered the
judgment, final order or resolution acting in its original jurisdiction. [8] In the present case, the
assailed Decision and Order of the RTC were issued in the exercise of its appellate jurisdiction.
Thus, petitioners pursued the wrong mode of appeal when they filed the present petition for
review oncertiorari with this Court. Instead, they should have filed a petition for review with the
CA pursuant to the provisions of Section 1,[9] Rule 42 of the Rules of Court.
On the foregoing bases alone, the instant petition should be denied.
In any case, the instant petition would still be denied for lack of merit, as discussed below.
In their first assigned error, petitioners contend that the RTC erred in holding that the law
authorizes an attorney-in-fact to execute the required certificate against forum shopping in
behalf of his or her principal. Petitioners argue that Tong himself, as the principal, and not Ong,
should have executed the certificate against forum shopping.
The Court is not persuaded.
It is true that the first paragraph of Section 5,[10] Rule 7 of the Rules of Court, requires that the
certification should be signed by the "petitioner or principal party" himself. The rationale behind
this is because only the petitioner himself has actual knowledge of whether or not he has
initiated similar actions or proceedings in different courts or agencies. [11] However, the rationale
does not apply where, as in this case, it is the attorney-in-fact who instituted the action. [12] Such
circumstance constitutes reasonable cause to allow the attorney-in-fact to personally sign the
Certificate of Non-Forum Shopping. Indeed, the settled rule is that the execution of the
certification against forum shopping by the attorney-in-fact is not a violation of the requirement
that the parties must personally sign the same.[13] The attorney-in-fact, who has authority to
file, and who actually filed the complaint as the representative of the plaintiff, is a party to the
ejectment suit.[14] In fact, Section 1,[15] Rule 70 of the Rules of Court includes the representative
of the owner in an ejectment suit as one of the parties authorized to institute the proceedings.
In the present case, there is no dispute that Ong is respondent's attorney-in-fact. Hence, the
Court finds that there has been substantial compliance with the rules proscribing forum
shopping.
Petitioners also aver that the certificate against forum shopping attached to the complaint in
Civil Case No. 2000(92) falsely stated that there is no other case pending before any other
tribunal involving the same issues as those raised therein, because at the time the said
complaint was filed, Civil Case No. 20181 was, in fact, still pending with the CA (CA-G.R. CV No.
52676), where the very same issues of ejectment and physical possession were already
included.
Corollarily, petitioners claim that the MTCC has no jurisdiction over Civil Case No. 2000(92) on
the ground that the issue of physical possession raised therein was already included by
agreement of the parties in Civil Case No. 20181. As such, petitioners assert that respondent is
barred from filing the ejectment case, because in doing so he splits his cause of action and
indirectly engages in forum shopping.
The Court does not agree.
The Court takes judicial notice of the fact that the disputed properties, along with three other
parcels of land, had been the subject of two earlier cases filed by herein petitioner Anita and her

husband Francisco against herein respondent and some other persons. The first case is for
specific performance and/or rescission of contract and reconveyance of property with damages.
It was filed with the then Court of First Instance (CFI) of Iloilo City and docketed as Civil Case
No. 10853. The case was dismissed by the CFI. On appeal, the Intermediate Appellate Court
(IAC) upheld the decision of the trial court. When the case was brought to this Court, [16] the
decision of the IAC was affirmed. Subsequently, the Court's judgment in this case became final
and executory per Entry of Judgment issued on May 27, 1991.
Subsequently, in 1992, the Spouses Pe filed a case for nullification of contract, cancellation of
titles, reconveyance and damages with the RTC of Iloilo City. This is the case presently cited by
petitioners. Eventually, the case, docketed as Civil Case No. 20181, was dismissed by the lower
court on the ground of res judicata. The RTC held that Civil Case No. 10853 serves as a bar to
the filing of Civil Case No. 20181, because both cases involve the same parties, the same
subject matter and the same cause of action. On appeal, the CA affirmed the dismissal of Civil
Case No. 20181. Herein petitioner Anita assailed the judgment of the CA before this Court, but
her petition for review on certiorari was denied via a Resolution[17] dated January 22, 2003. On
June 25, 2003, the said Resolution became final and executory. The Court notes that the case
was disposed with finality without any showing that the issue of ejectment was ever raised.
Hence, respondent is not barred from filing the instant action for ejectment.
In any case, it can be inferred from the judgments of this Court in the two aforementioned
cases that respondent, as owner of the subject lots, is entitled to the possession thereof. Settled
is the rule that the right of possession is a necessary incident of ownership. [18] Petitioners, on
the other hand, are consequently barred from claiming that they have the right to possess the
disputed parcels of land, because their alleged right is predicated solely on their claim of
ownership, which is already effectively debunked by the decisions of this Court affirming the
validity of the deeds of sale transferring ownership of the subject properties to respondent.
Petitioners also contend that respondent should have filed an accion publiciana and not an
unlawful detainer case, because the one-year period to file a case for unlawful detainer has
already lapsed.
The Court does not agree.
Sections 1 and 2, Rule 70 of the Rules of Court provide:
Section 1. Who may institute proceedings and when. - Subject to the provisions of the next
succeeding section, a person deprived of the possession of any land or building by force,
intimidation, threat, strategy, or stealth, or a lessor, vendor, vendee, or other person against
whom the possession of any land or building is unlawfully withheld after the expiration or
termination of the right to hold possession, by virtue of any contract, express or implied, or the
legal representatives or assigns of any such lessor, vendor, vendee, or other person, may, at any
time within one (1) year after such unlawful deprivation or withholding of possession, bring an
action in the proper Municipal Trial Court against the person or persons unlawfully withholding or
depriving of possession, or any person or persons claiming under them, for the restitution of
such possession, together with damages and costs.
Section 2. Lessor to proceed against lessee only after demand. - Unless otherwise stipulated,
such action by the lessor shall be commenced only after demand to pay or comply with the
conditions of the lease and to vacate is made upon the lessee, or by serving written notice of
such demand upon the person found on the premises, or by posting such notice on the premises
if no person be found thereon, and the lessee fails to comply therewith after fifteen (15) days in
the case of land or five (5) days in the case of buildings.

Respondent alleged in his complaint that petitioners occupied the subject property by his mere
tolerance. While tolerance is lawful, such possession becomes illegal upon demand to vacate by
the owner and the possessor by tolerance refuses to comply with such demand. [19] Respondent
sent petitioners a demand letter dated December 1, 1999 to vacate the subject property, but
petitioners did not comply with the demand. A person who occupies the land of another at the
latter's tolerance or permission, without any contract between them, is necessarily bound by an
implied promise that he will vacate upon demand, failing which a summary action for ejectment
is the proper remedy against him.[20] Under Section 1, Rule 70 of the Rules of Court, the oneyear period within which a complaint for unlawful detainer can be filed should be counted from
the date of demand, because only upon the lapse of that period does the possession become
unlawful.[21]Respondent filed the ejectment case against petitioners on March 29, 2000, which

was less than a year from December 1, 1999, the date of formal demand. Hence, it is clear that
the action was filed within the one-year period prescribed for filing an ejectment or unlawful
detainer case.
Neither is the Court persuaded by petitioners' argument that respondent has no cause of action
to recover physical possession of the subject properties on the basis of a contract of sale
because the thing sold was never delivered to the latter.
It has been established that petitioners validly executed a deed of sale covering the subject
parcels of land in favor of respondent after the latter paid the outstanding account of the former
with the Philippine Veterans Bank.
Article 1498 of the Civil Code provides that when the sale is made through a public instrument,
the execution thereof shall be equivalent to the delivery of the thing which is the object of the
contract, if from the deed the contrary does not appear or cannot clearly be inferred. In the
instant case, petitioners failed to present any evidence to show that they had no intention of
delivering the subject lots to respondent when they executed the said deed of sale. Hence,
petitioners' execution of the deed of sale is tantamount to a delivery of the subject lots to
respondent. The fact that petitioners remained in possession of the disputed properties does not
prove that there was no delivery, because as found by the lower courts, such possession is only
by respondent's mere tolerance.
Lastly, the Court does not agree with petitioners' assertion that the filing of the unlawful
detainer case was premature, because respondent failed to comply with the provisions of the
law on barangay conciliation. As held by the RTC, Barangay Kauswagan City Proper, through
its Pangkat Secretary and Chairman, issued not one but two certificates to file action after
herein petitioners and respondent failed to arrive at an amicable settlement. The Court finds no
error in the pronouncement of both the MTCC and the RTC that any error in the previous
conciliation proceedings leading to the issuance of the first certificate to file action, which was
alleged to be defective, has already been cured by the MTCC's act of referring back the case to
the Pangkat Tagapagkasundo of Barangay Kauswagan for proper conciliation and mediation
proceedings. These subsequent proceedings led to the issuance anew of a certificate to file
action.
WHEREFORE, the instant petition is DENIED. The assailed Decision and Order of the Regional
Trial Court of Iloilo City, Branch 24, are AFFIRMED.
SO ORDERED.

THIRD DIVISION
[G.R. No. 143173. March 28, 2001]

SPS. PEDRO ONG AND VERONICA ONG, petitioners, vs.

SOCORRO
PAREL
AND
HON.
COURT
OF
APPEALS, respondents.
DECISION
GONZAGA-REYES, J.:

The instant petition for review on certiorari seeks the annulment of the
decision of the respondent Court of Appeals [1] dated December 14, 1999
affirming the decision of the Regional Trial Court which reversed and set
aside the judgment of the Metropolitan Trial Court of Manila, Branch 15, for
forcible entry, as well as the resolution dated May 4, 2000 denying
petitioners motion for reconsideration.[2]
Spouses Pedro and Veronica Ong are the registered owners of Lot
No.18, Block 2 of the subdivision plan II of Rizal Park subdivision, situated
in Sta Cruz, Manila covered by TCT No. 218597, having purchased the
property from the spouses Emilio Magbag and Norma B. Pascual in
1994. Adjacent to Lot No. 18 is Lot No.17 consisting of about 109 sq.
meters covered by TCT No. 125063 registered under the name of Visitacion
Beltran, grandmother of respondent Socorro Parel.
On May 25, 1995, the Ong spouses filed an action for forcible entry
against defendant Parel before the Metropolitan Trial Court of Manila,
Branch 15, docketed as Civil Case No. 148332, alleging among other
things that defendant Parel through strategy and stealth constructed an
overhang and hollow block wall along the common boundary of the parties
adjoining lot, i.e., beyond Lot No. 17 owned by Parel and inside Lot No.18
owned by plaintiffs spouses Ong, thereby illegally depriving plaintiffs of
possession of the said portion of their lot; that plaintiffs discovered
respondents illegal possession of their lot on August 23, 1994 when they had
the boundaries of their lot resurveyed; that plaintiffs made various demands
from the defendants to remove the constructions they introduced in the said
lot of the plaintiffs and vacate the same, the last of which demands having
been made on December 19, 1994.

Defendant Parel denied the material allegations of the complaint and

alleged that the overhang and hollow block wall had already been in
existence since 1956 and that these structures are within the boundary of lot
17 owned by him.
The parties moved for an ocular inspection of the subject lot which was
granted by the trial court. The trial court designated the Branch Clerk of
Court as Commissioner while defendant Parel employed the services of
Geodetic Engr. Mariano V. Flotildes who made the relocation survey on
November 28, 1995 in the presence of both parties. Thereafter, the
Commissioner reported that defendants wall protrudes 1 meters into
plaintiffs property and a window sill overhangs by about meter deep into
plaintiffs premises and the eaves of the main residential building extends
into the plaintiffs premises. The Geodetic Engineers Report, confirmed that
the house of the defendant encroached plaintiffs property by an area of 2.7
sq. m., and the adobe and hollow block wall by an area of 1.59 sq. m.,
respectively, resulting to a total encroachment of 4.29 sq. m., more or less
into the plaintiffs property.
On April 12, 1996, the Metropolitan Trial Court rendered judgment in
favor of the plaintiffs spouses Ong; the dispositive portion reads: [3]
WHEREFORE,premisesconsidered,judgmentisherebyrenderedinfavor
ofplaintiffsandagainstthedefendantsordering:(a)thedefendantsandall
personsclaimingrightsunderhertoremovetheoverhangconstructions
measuring2.70sq.m.andtheadobeblockwallmeasuring1.59sq.m.
respectivelyonlot18oftheplaintiffsandtopeacefullysurrenderits
possessiontotheplaintiffs;(b)orderingthedefendantstopaytheplaintiffs
thesumofTenThousandPesos(P10,000.00)asandbywayofattorneys
fees;plusthecostsofsuit.
SOORDERED.
Respondent Parel filed an appeal with the Regional Trial Court,
docketed as Civil Case No. 96-78666. On October 3, 1996, the regional trial
court[4] dismissed the case for failure of the Ong spouses to prove prior
physical possession of the subject lot, the dispositive portion reads: [5]
WHEREFORE,premisesconsidered,thedecisionappealedfromishereby
REVERSEDandSETASIDE.ThiscaseisherebyDISMISSED,without
prejudicetothefilingoftheappropriateactions,withoutcosts.
SOORDERED.

Spouses Ong moved for a reconsideration which was also denied in a

resolution dated August 1, 1997.[6]
Aggrieved by the above decision, petitioners spouses Ong elevated the
matter to the Court of Appeals by way of a petition for review. The
respondent Court of Appeals in a decision dated December 14, 1999 denied
the petition. The appellate court adopted the lower courts findings that the
alleged encroachments were made by the late Visitacion Beltran at a time
when she still owned both lots or when she had all the right and the power to
introduce the improvements; thus the introduction of the said construction
could not be equated with strategy and stealth giving rise to forcible entry. It
added that what is involved in a forcible entry case is merely the issue of
material possession or possession de facto which the petitioner miserably
proved in their favor. It further pointed out that it was admitted by the
petitioners in their petition that this case involves a boundary dispute and
not lot 18 in its entirety, and the encroachment was discovered only upon a
relocation survey of the property; such controversy could not be threshed
out in an ejectment suit in view of the summary nature of the action, and the
MTC, accordingly, is without jurisdiction to entertain the same. Petitioners
moved for a reconsideration which was also denied in a resolution dated
May 4, 2000. Hence, this petition.
Petitioners assign the following issues for consideration: [7]
1.WHETHERORNOTGAININGENTRYWITHOUTTHE
KNOWLEDGEORCONSENTOFTHEOWNERORREMAINING
RESIDENTOFANOTHERWITHOUTPERMISSIONIS
DISPOSSESSIONBYSTEALTH;
2.WHETHERORNOTENTRYSECUREDBYSTRATEGYOR
STEALTHBECOMESUNLAWFULANDDEFACTOPOSSESSION
COMMENCESONLYUPONDEMAND;
3.WHETHERORNOTTHEREISADISTINCTIONBETWEEN
FORCIBLEENTRYBYMEANSOFSTEALTHANDFORCIBLE
ENTRYBYMEANSOFFORCE,INTIMIDATIONORTHREAT;
4.WHETHERORNOTPETITIONERCANINVOKESUPREME
COURTRULINGSINUNLAWFULDETAINERCASES;
5.WHETHERORNOTTHEPRIVATERESPONDENTISTHE
AUTHORIZEDPARTYINTHECASEOFCOOWNERSHIPAS
OBTAINEDINTHISCASE;

6.WHETHERORNOTTHECHARACTEROFTHEPOSSESSION
ACQUIREDINBADFAITHWASINHERITEDBYTHEPRIVATE
RESPONDENTANDDIDNOTCHANGE;
7.WHETHERORNOTTHEDECISIONOFTHERESPONDENT
COURTOFAPPEALSISBASEDONSPECULATIONSURMISEOR
CONJECTUREORMISAPPREHENSIONOFFACTS.
Petitioners essentially allege that the act of entering and trespassing
upon a parcel of land, or of constructing improvements upon a parcel of land
without the knowledge or permission of the person who owns or administers
it is an act of dispossession and usurpation of real property by means of
strategy or stealth; that private respondent is a usurper or encroacher who
constructed a portion of her house and adobe and hollow block wall on the
land of the petitioners with no bona fide claim and without the consent of
the owner.
The petition has no merit.
Section 1, Rule 70 of the Rules of Court requires that in actions for
forcible entry the plaintiff is allegedly deprived of the possession of any land
or building by force, intimidation, threat, strategy, or stealth and that the
action is filed any time within one year from the time of such unlawful
deprivation of possession. This requirement implies that in such cases, the
possession of the land by the defendant is unlawful from the beginning as he
acquires possession thereof by unlawful means. The plaintiff must allege
and prove that he was in prior physical possession of the property in
litigation until he was deprived thereof by the defendant. The one year
period within which to bring an action for forcible entry is generally counted
from the date of actual entry on the land, [8] except that when entry was made
through stealth, the one year period is counted from the time the plaintiff
learned thereof.[9] If the alleged dispossession did not occur by any of the
means stated in section 1, Rule 70, the proper recourse is to file a plenary
action to recover possession with the regional trial court. [10]
In their complaint, petitioners Ong spouses aver that through stealth and
strategy respondent constructed the controversial overhang and hollow
block wall along the common boundary of the parties adjoining lots
which encroached on petitioners Lot No. 18. Stealth is defined as any secret,
sly, or clandestine act to avoid discovery and to gain entrance into or remain
within residence of another without permission. [11] However, petitioners failed to
establish that respondents encroached upon their property through stealth as it was not shown when and
how the alleged entry was made on the portion of their lot.

On the other hand, respondents claim that the said structures were
already existing on the lot at the time petitioners brought the same from the
Magbag spouses in 1994, was sustained by the lower court since petitioners
admitted in their petition that they discovered such encroachment only after
a relocation survey on their lot on August 23, 1994. We find no reason to
disturb the respondent courts factual conclusion that the alleged
encroachments were made by the late Visitacion Beltran at a time when she
still owned both lots nos. 17 and 18 or when she had all the right and power
to do so. Private respondent in her affidavit submitted before the court had
affirmed that her grandmother, Visitacion Beltran, was the registered owner
of the parcel of land covered by TCT No. 125163 (Lot No. 17) with
improvements which include the window sill overhang and the old adobe
wall which were constructed as early as 1956 and these improvements are
adjacent to the private alley from Elias Street which has to be opened and
maintained as long as there exists building thereon; that the maintenance of
such alley was made as an encumbrance in petitioners title (TCT No.
218597) when they bought the adjacent Lot no. 18. Petitioners failed to
present evidence to the contrary.
It becomes clear that this is not a proper case for forcible entry wherein
one party unlawfully deprives another of possession of the property subject
of the litigation; it is a boundary dispute wherein the adobe wall, overhang
and window grill on the respondents side of the property encroach a total of
4.29 meters, more or less, upon the petitioners side of the property. We
affirm with approval of the observations of the Regional Trial Court, in this
wise:
Letitbeemphasizedthatthemattersubjectofthepresentactionisthat
portiononlyofLotNo.18allegedlyencroachedbythedefendantappellant
andnotLot18initsentirety.
WhiletherewasafindingofencroachmentonLotNo.18asperthe
CommissionersReportandEngineersReportdatedDecember27,1995and
December29,1995,respectively,plaintiffappelleesfailedtorecountthe
circumstancesastohowandwhendefendantappellantallegedlyforcibly
enteredLotNo.18.Neitherwasthereanyevidenceeverprofferedbythem
toprovethatdefendantappellantmadeoratleastorderedtheintroduction
ofthesaidimprovementsorconstruction.Accordingtothem,theMagbag
spousesgavethemtherighttoadminister,occupyandtohavephysical
possessionintheconceptofanowner,LotNo.18onJune17,1994untilthe
titletothesaidlotwastransferredtotheirnamesonOctober28,1994and
theyhavejustdiscoveredtheencroachmentonLotNo.18onlyonAugust
23,1994whentheyhadtheboundariesofLotsNos.17and18
resurveyed.Defendantappellant,ontheotherhand,averredthatthe

questionedimprovementsandconstructionsencroachingonLotNo.18
werealreadytheresince1956,andthisavermentwasnotcontrovertedby
theplaintiffappelleesatall.Thus,thetruthisthat,whendefendant
appellantacquiredLotNo.18,theadobewall,overhangandwindowgrill
werealreadythereencroachingonLotNo.18asitwasthelateSalvacion
(sic)[12]Beltranwhobuiltthesame.Infact,evenuptothepresent,
defendantappellantisstillinpossessionofthehereinquestionedpremises
whichmeansthatplaintiffappelleeswereneverinpossessionofthe
same.Thelatter,therefore,cannotbesaidtobeinpriorphysical
possession.Thedemandmadeonthedefendantappellantishereofno
momentasitisawellentrenchedjurisprudencethatdemandtovacateisnot
necessaryinforcibleentrycases(Menezvs.Militante,41Phil.44).
Consequently,forfailureoftheplaintiffappelleestocircumstantiateprior
physicalpossessiononthehereinsubjectpremisesandthefactofentryon
thesamebythedefendantappellantbyforce,intimidation,violenceor
stealth,thepresentactionforforcibleentrymustexigentlyfail.Moreover,
thisCourtnotesthatatthetimetheimprovementsweremade,thelate
Salvacion(sic)BeltranwasstilltheregisteredownerofbothLotsNos.17
and18.Thuswhileitmaybetruethatdefendantappellantisnowthe
administratorofLotNo.17,defendantappellantcannotbemadetoanswer
fortheencroachmentsonLotNo.18forthesameweredonebythelate
Salvacion(sic)Beltranwhohadalltherightandpowertointroducethe
improvementsasshewasthentheregisteredownerofbothLotsNos.17
and18atthetimethesameweremade.Whileplaintiffappellees
canrecoverpossessionofthehereinquestionedpremises,theycannotdoso
intheguiseofanactionforforcibleentry.Forwherethecomplaintfailsto
specificallyaverfactsconstitutiveofforcibleentryorunlawfuldetainer,as
whereitdoesnotstatehowentrywaseffectedorhowandwhen
dispossessionstarted,theactionshouldeitherbeACCIONPUBLICIANA
orACCIONREINVINDICATORIAforwhichthelowercourthasno
jurisdiction(SeeSarona,etal.vs.Villegas,etal.,March27,1968,Banayos
vs.SusanaRealty,Inc.L30336,June30,1976).
In view of the failure of the petitioners to allege, much less prove, with
specificity that the respondents unlawfully entered their portion of the lot
either by force, intimidation, threat, strategy, or stealth this action for
forcible entry must necessarily fall. We declared in the case of Sarmiento vs.
Court of Appeals:[13]
Thejurisdictionalfactsmustappearonthefaceofthecomplaint.Whenthe
complaintfailstoaverfactsconstitutiveofforcibleentryorunlawful
detainer,aswhereitdoesnotstatehowentrywaseffectedorhowandwhen

dispossessionstarted,asinthecaseatbar,theremedyshouldeitherbe
anaccionpublicianaoranaccionreivindicatoriaintheproperregionaltrial
court.
Ifprivaterespondentisindeedtheownerofthepremisessubjectofthissuit
andshewasunlawfullydeprivedoftherealrightofpossessionorthe
ownershipthereof,sheshouldpresentherclaimbeforetheregionaltrial
courtinanaccionpublicianaoranaccionreivindicatoria,andnotbefore
themunicipaltrialcourtinasummaryproceedingofunlawfuldetaineror
forcibleentry.Forevenifoneistheowneroftheproperty,thepossession
thereofcannotbewrestedfromanotherwhohadbeeninthephysicalor
materialpossessionofthesameformorethanoneyearbyresortingtoa
summaryactionforejectment.Thisisespeciallytruewherehispossession
thereofwasnotobtainedthroughthemeansorheldunderthecircumstances
contemplatedbytherulesonsummaryejectment.
Wehaveheldthatingivingrecognitiontotheactionforforcibleentryand
unlawfuldetainer,thepurposeofthelawistoprotectthepersonwhoinfact
hasactualpossession,andincaseofacontrovertedproprietaryright,thelaw
requiresthepartiestopreservethestatusquountiloneortheotherseesfitto
invokethedecisionofacourtofcompetentjurisdictionuponthequestionof
ownership."
Petitioners contention that although they denominated their complaint as
one for forcible entry based on the ground of stealth, the allegations in the
body of the complaint sufficiently established a cause of action for unlawful
detainer, does not persuade us. In unlawful detainer, one unlawfully
withholds possession thereof after the expiration or termination of his right
to hold possession under any contract, express or implied. In the instant
case, the complaint does not allege that the possession of respondent ever
changed from illegal to legal anytime from their alleged illegal entry before
plaintiffs made the demand to vacate. There was no averment in the
complaint which recites as a fact any overt act on the part of the petitioners
which showed that they permitted or tolerated respondent to occupy a
portion of their property.
After a finding that the petitioners failed to make a case for ejectment,
we find it unnecessary to dwell on the other assignments of error.
WHEREFORE, the petition is DENIED and the assailed decision of
respondent Court of Appeals is hereby AFFIRMED.
SO ORDERED.

Melo, (Chairman),
JJ., concur.

Vitug,

Panganiban, and Sandoval-Gutierrez,

SECOND DIVISION
[G.R. No. 126699. August 7, 1998]
AYALA
CORPORATION, petitioner,
vs. RAY
DEVELOPMENT CORPORATION, respondent.

BURTON

DECISION
MARTINEZ, J.:

Petitioner Ayala Corporation (AYALA) is the owner of the Ayala estate

located in Makati City. The said estate was originally a raw land which was
subdivided for sale into different lots devoted for residential, commercial and
industrial purposes. The development of the estate consisted of road and
building construction and installation of a central sewerage treatment plant
and drainage system which services the whole Ayala Commercial Area.
On March 20, 1984, Karamfil Import-Export Company Ltd. (KARAMFIL)
bought from AYALA a piece of land identified as Lot 26, Block 2 consisting of
1,188 square meters, located at what is now known as H.V. de la Costa
Street, Salcedo Village, Makati City. The said land, which is now the subject of
this case, is more particularly described as follows:

A parcel of land (Lot 26, Block 2, of the subdivision plan [LRC] Psd6086, being a portion of Block D, described as plan [LRC] Psd-5812
LRC [GLRO] Rec. No. 2029) situated in the Municipality of Makati,
Province of Rizal, Is. of Luzon. Bounded on the NE., points 2 to 3 by
Lot 31, Block 2 (Creek 6.00 m. wide) of the subdivision plan, on the
SE., points 3 to 4 by Lot 27, Block 2 of the Subdivision plan; on the
SW, points 4 to 5, by proposed Road, 17.00 m. wide (Block C[LRC]
Psd-5812); points 5 to 1 by Street Lot 2 (17.00 m. wide) of the

subdivision plan. On the NW, points 1 to 2 by Lot 25, Block 2 of the

subdivision plan. x x x beginning, containing an area of ONE
THOUSAND ONE HUNDRED EIGHTY EIGHT (1,188) SQUARE
METERS.
The transaction was documented in a Deed of Sale [1] of even date, which
provides, among others, that the vendee would comply with certain special
conditions and restrictions on the use or occupancy of the land, among which
are Deed Restrictions:[2]

a) The total height of the building to be constructed on the lot shall

not be more than forty-two (42) meters, nor shall it have a total gross
floor area of more than five (5) times the lot area; and
b) The sewage disposal must be by means of connection into the
sewerage system servicing the area.
Special Conditions:[3]

a) The vendee must obtain final approval from AYALA of the building
plans and specifications of the proposed structures that shall be
constructed on the land;
b) The lot shall not be sold without the building having been
completed; and
c) Any breach of the stipulations and restrictions entitles AYALA to
rescission of the contract.
As a result of the sale, a Transfer Certificate of Title No. 132086 [4] was
issued in the name of KARAMFIL. The said special conditions and restrictions
were attached as an annex to the deed of sale and incorporated in the
Memorandum of Encumbrances at the reverse side of the title of the lot as
Entry No. 2432/T-131086.
On February 18, 1988, KARAMFIL sold the lot to Palmcrest Development
and Realty Corporation (PALMCREST) under a Deed of Absolute Sale [5] of
even date. This deed was submitted to AYALA for approval in order to obtain
the latters waiver of the special condition prohibiting the resale of the lot until
after KARAMFIL shall have constructed a building thereon. AYALA gave its
written conformity to the sale but reflecting in its approval the same special
conditions/restrictions as in the previous sale. AYALAs conformity was
annotated on the deed of sale. [6]PALMCREST did not object to the stipulated
conditions and restrictions.[7]

PALMCREST in turn sold the lot to Ray Burton Development Corporation

(RBDC), now respondent, on April 11, 1988, with the agreement that AYALA
retains possession of the Owners Duplicate copy of the title until a building is
erected on said parcel of land in accordance with the requirements and/or
restrictions of AYALA.[8] The Deed of Absolute Sale[9] executed on the said date
was also presented to AYALA for approval since no building had yet been
constructed on the lot at the time of the sale. As in the KARAMFILPALMCREST transaction, AYALA gave its conformity to the sale, subject to
RBDCs compliance with the special conditions/restrictions which were
annotated in the deed of sale, thus:
With our conformity, subject to the compliance by the Vendees of the Special
Conditions of Sale on the reverse side of the Deed of Sale dated March 20,
1984 per Doc. No. 140, Page No. 29, Book No. 1, Series of 1984 of the
Notary Public Silverio Aquino.[10]
The conditions and restrictions of the sale were likewise entered as
encumbrances at the reverse side of the Transfer Certificate of Title No.
155384 which was later issued in the name of RBDC. [11] Like PALMCREST,
RBDC was not also averse to the aforesaid conditions and restrictions. [12]
Sometime in June of 1989, RBDC submitted to AYALA for approval a set
of architectural plans for the construction of a 5-storey office building on the
subject lot, with a height of 25.85 meters and a total gross floor area of
4,989.402 square meters.[13] The building was to be known as Trafalgar Tower
but later renamed Trafalgar Plaza. Since the building was well within the 42meter height restriction, AYALA approved the architectural plans.
Upon written request[14] made by RBDC, AYALA likewise agreed to release
the owners copy of the title covering the subject lot to the China Banking
Corporation as guarantee of the loan granted to RBDC for the construction of
the 5-storey building.
Meanwhile, on November 28, 1989, RBDC, together with the Makati
Developers Association, Inc. (MADAI), of which RBDC is a member, and other
lot owners, filed a complaint against AYALA before the Housing and Land Use
Regulatory Board (HLRB), docketed as HLRB Case No. REM-A-0818
(OAALA-REM-111489-4240). The complaint sought the nullification of the very
same Deed Restrictions incorporated in the deeds of sale of the lots
purchased by the complainants from AYALA and annotated on their
certificates of title, on the grounds, inter alia, that said restrictions purportedly:
(a) place unreasonable control over the lots sold by AYALA, thereby depriving
the vendees of the full enjoyment of the lots they bought, in violation of Article
428 of the Civil Code; (b) have been superseded by Presidential Decree No.
1096 (the National Building Code) and Metro Manila Commission Zoning
Ordinance No. 81-01; (c) violate the constitutional provision on equal
protection of the laws, since the restrictions are imposed without regard to
reasonable standards or classifications; and (d) are contracts of
adhesion[15] since AYALA would not sell the lots unless the buyers agree to the
deed restrictions. The complaint also alleged that AYALA is in estoppel from

enforcing the restrictions in question when it allowed the construction of other

high-rise buildings in Makati City beyond the height and floor area
limits. AYALA was further charged with unsound business practice.
Early in June of 1990, RBDC made another set of building plans for
Trafalgar Plaza and submitted the same for approval, this time to the Building
Official of the Makati City Engineers Office, [16] not to AYALA. In these plans,
the building was to be 26-storey high, or a height of 98.60 meters, with a
total gross floor area of 28,600 square meters. After having obtained the
necessary building permits from the City Engineers Office, RBDC began to
construct Trafalgar Plaza in accordance with these new plans.
On July 11, 1990, the majority of the lot owners in the Makati City area,
including the Salcedo and Legaspi Village areas, in a general assembly of the
Makati Commercial Estate Association, Inc. (MACEA), approved the revision
of the Deed Restrictions, which revision was embodied in the Consolidated
and Revised Deed Restrictions[17] (Revised Deed Restrictions) wherein direct
height restrictions were abolished in favor of floor area limits computed on the
basis of floor area ratios (FARs). In the case of buildings devoted solely to
office use in Salcedo Village such as the Trafalgar Plaza the same could have
a maximum gross floor area of only eight (8) times the lot area. Thus, under
the Revised Deed Restrictions, Trafalgar Plaza could be built with a maximum
gross floor area of only 9,504 square meters (1,188 sq. m. the size of the
subject lot multiplied by 8). Even under the Revised Deed Restrictions,
Trafalgar would still exceed 19,065 square meters of floor area on the basis of
a FARs of 8:1. RBDC did not vote for the approval of the Revised Deed
Restrictions and, therefore, it continued to be bound by the original Deed
Restrictions.
In the meantime, on August 22, 1990, the HLRB En Banc rendered a
decision[18] (a) upholding the Deed Restrictions; (b) absolving AYALA from the
charge of unsound business practice; and (c) dismissing HLRB Case No.
REM-A-0818. MADAI and RBDC separately appealed the decision to the
Office of the President, which appeal was docketed as O.P. Case No. 4476.
While the appeal was pending before the Office of the President, the
September 21, 1990 issue of the Business World magazine[19] featured the
Trafalgar Plaza as a modern 27-storeystructure which will soon rise in
Salcedo Village, Makati City. Stunned by this information, AYALA, through
counsel, then sent a letter [20] to RBDC demanding the latter to cease the
construction of the building which dimensions do not conform to the previous
plans it earlier approved. RBDC, through counsel, replied with a series of
letters[21] requesting for time to assess the merits of AYALAs demand.
For failing to heed AYALAs bidding, RBDC was sued on January 25, 1991
before the Regional Trial Court of Makati City (Branch 148). AYALAs
complaint for Specific Performance or Rescission, docketed as Civil Case No.
91-220, prayed inter alia that judgment be rendered
xxxxxxxxx

b. Ordering the defendant to comply with its contractual obligations

and to remove or demolish the portions or areas of the Trafalgar
Tower/Plaza Building constructed beyond or in excess of the
approved height as shown by building plans approved by the plaintiff,
including any other portion of the building constructed not in
accordance with the building plans and specifications submitted to
and approved by plaintiff.
c. Alternatively, in the event specific performance becomes
impossible:
i) Ordering the cancellation and rescission of the Deed of Sale dated
March 20, 1984 (Annex A hereof) and ordering defendant to return to
plaintiff Lot 26, Block 2 of Salcedo Village;
ii) Ordering the cancellation of Transfer Certificate of Title No. 155384
(in the name of defendant) and directing the Makati Register of
Deeds to issue a new title over the Lot in the name of plaintiff; and
d. Ordering defendant to pay plaintiff attorneys fees in the amount
of P500,000.00, exemplary damages in the amount of P5,000.00 and the
costs of the instant suit..[22]
In its answer (with counterclaim) to the complaint, RBDC denied having
actual or constructive notice of the Deed Restrictions imposed by AYALA on
the subject lot. RBDC alleged in essence that even if said deed restrictions
exist, the same are not economically viable and should not be enforced
because they constitute unreasonable restrictions on its property rights and
are, therefore, contrary to law, morals, good customs, public order or public
policy. Moreover, RBDC claimed that the enforcement of the deed restrictions
has also been arbitrary or discriminatory since AYALA has not made any
action against a number of violators of the deed restrictions.
Meantime, the appeal of MADAI in O.P. Case No. 44761 was considered
resolved when it entered into a compromise agreement with AYALA wherein
the latter adopted and acknowledged as binding the Revised Deed
Restrictions of July 11, 1990.[23] On the other hand, RBDCs appeal was
dismissed in an Order dated February 13, 1992, for the reason that, insofar as
the disposition of the appealed (HLRB) decision is concerned, there is virtually
no more actual controversy on the subject of the Deed Restrictions because
the same has been overriden by the Revised (Deed) Restrictions which the
appellee Ayala Corporation has in fact acknowledged as binding and in full
force and effect x x x. [24] Accordingly, aside from dismissing RBDCs appeal,
the Order of February 13, 1992 also set aside the appealed HLRB
decision. From this order, AYALA sought a reconsideration or clarification,
noting, inter alia, that while the said order has ruled that AYALA can no longer
enforce the Deed Restrictions against RBDC, it does not expressly state that
RBDC is bound by the Revised Deed Restrictions.Clarifying this matter, the

Office of the President issued a Resolution dated April 21, 1992, [25] modifying
the February 13, 1992 order, ruling: (1) that RBDC is bound by the original
Deed Restrictions, but it has the option to accept and be bound by the
Revised Deed Restrictions in lieu of the former; and (2) that the HLRB
decision dated 22 August 1990, to the extent that it absolved Ayala from the
charge of unsound business practice, subject of the basic complaint, is
affirmed. This time RBDC moved for a reconsideration of the April 21, 1992
Order, but the motion was denied in a Resolution dated October 15, 1993.
[26]
Another Resolution of March 21, 1994 [27] was issued denying with finality
RBDCs second motion for reconsideration.
AYALA then filed a Manifestation[28] in Civil Case No. 91-220, informing the
trial court of the pertinent rulings/resolutions in the proceedings before the
HLRB and the Office of the President, which rulings, AYALA suggested,
amount to res judicata on the issue of the validity and enforceability of the
Deed Restrictions involved in the said civil case.
After trial on the merits, the trial court rendered a Decision on April 28,
1994 in favor of RBDC, the dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered in

favor of the defendant and against the plaintiff, and as a
consequence:
1. The instant case is hereby dismissed;
2. The motion/application for the annotation of the lis pendens
is hereby DENIED;
3. The motion/application to hold defendant in continuing
contempt is hereby also DENIED;
4. No damages is awarded to any of the parties;
5. Plaintiff is hereby ordered to pay the defendant P30,000.00
for and as attorneys fees and litigation expenses;
With costs against plaintiff.
SO ORDERED.[29]
The trial courts decision is based on its findings that: (1) RBDC had
neither actual nor constructive notice of the 42-meter height limitation of the
building to be constructed on the subject lot; (2) even if the Deed Restrictions
did exist, AYALA is estopped from enforcing the same against RBDC by
reason of the formers failure to enforce said restrictions against other violators
in the same area; (3) the Deed Restrictions partake of the nature of a contract
of adhesion; (4) since the Trafalgar Plaza building is in accord with the

minimum requirements of P.D. No. 1096 (The National Building Code), the
Deed Restrictions may not be followed by RBDC; and (5) the rulings of the
HLRB and the Office of the President do not have binding effect in the instant
case.
Dissatisfied, AYALA appealed to the Court of Appeals which affirmed the
judgment of the trial court in a Decision [30] dated February 27, 1996 in CA-G.R.
CV No. 46488. AYALAs motion for reconsideration was likewise denied in the
Resolution[31] of October 7, 1996.
AYALA now interposes the present petition for review on certiorari, citing
several errors in the decision of the Court of Appeals, some of which involve
questions of fact.
The resolution of factual issues raised in the petition would certainly call
for a review of the Court of Appeals findings of fact. As a rule, the reexamination of the evidence proffered by the contending parties during the
trial of the case is not a function that this Court normally undertakes inasmuch
as the findings of fact of the Court of Appeals are generally binding and
conclusive on the Supreme Court.[32] The jurisdiction of this Court in a petition
for review on certiorari under Rule 45 of the Revised Rules of Court is limited
to reviewing only errors of law.[33] A reevaluation of factual issues by this Court
is justified when the findings of fact complained of are devoid of support by
the evidence on record, or when the assailed judgment is based on
misapprehension of facts.[34]
The present petition has shown that certain relevant facts were
overlooked by the Court of Appeals, which facts, if properly appreciated,
would justify a different conclusion from the one reached in the assailed
decision.
The principal error raised here by petitioner AYALA pertains to the Court
of Appeals finding that RBDC did not have actual or constructive notice of the
42-meter height restriction, since what was annotated on its (RBDCs) title is
the erroneous 23-meter height limit which, according to AYALAs own witness,
Jose Cuaresma, was not applicable to RBDC. [35] Thus, the Court of Appeals
concluded, RBDC has the right to enjoy the subject property as if no
restrictions and conditions were imposed thereon.[36]
The above finding and conclusion of the Court of Appeals, AYALA
submits, are based on surmises and conjectures which are contrary to the
evidence on record and (RBDCs) own admissions. [37]
There is merit in AYALAs submission.
The erroneous annotation of the 23-meter height restriction in RBDCs title
was explained by Jose Cuaresma, AYALAs Assistant Manager for Marketing
and Sales. Cuaresma testified that when the deed of sale between
PALMCREST and RBDC was submitted to the Register of Deeds of Makati
and the corresponding title was issued in the name of RBDC, the Register of

Deeds annotated the wrong height limit in Entry No. 2432 on the said title, but
he emphasized that the incorrect annotation does not apply to RBDC. [38]
Jose Cuaresma further clarified that the correct height restriction imposed
by AYALA on RBDC was 42 meters.[39] This height ceiling, he said, is based
on the deed of restrictions attached as annex to the deed of sale, [40] and
the same has been uniformly imposed on the transferees beginning
from the original deed of sale between AYALA and KARAMFIL. [41]
This clarificatory statement of Jose Cuaresma should have cautioned the
Court of Appeals from making the unfounded and sweeping conclusion that
RBDC can do anything it wants on the subject property as if no restrictions
and conditions were imposed thereon, on the mistaken premise that RBDC
was unaware of the correct 42-meter height limit. It must be stressed that
Cuaresmas testimony is bolstered by documentary evidence and
circumstances of the case which would show that RBDC was put on notice
about the 42-meter height restriction.
The record reveals that the subject Lot 26 was first sold by AYALA to
KARAMFIL under a deed of sale (Exhibit "A") dated March 20, 1984 and duly
notarized by Notary Public Silverio Aquino. Attached to the deed of sale is an
appendix of special conditions/restrictions (deed restrictions), which
provides, inter alia, that the building to be constructed on the lot must have a
total height of not more than 42 meters, and that any building plans and
specifications of the proposed structures must have the approval of
AYALA. The deed restrictions were incorporated in the memorandum of
encumbrances at the reverse side of the title of the lot as Entry No.
2432. When the lot was sold by KARAMFIL to PALMCREST, the deed of sale
(Exhibit "B") on this transaction bears an annotation of AYALA's conformity to
the transfer, with the condition that the approval was "subject to the
compliance by the vendee of the special conditions of sale on the reverse
side of the deed of sale dated March 20, 1984, per Doc. No. 140, Page No.
29, Book No. 1, Series of 1984 of Notary Public Silverio F. Aquino" (Exhibit "B1"). PALMCREST later resold the lot to RBDC by virtue of a deed of sale
(Exhibit "C"), to which AYALA's approval was also annotated therein (Exhibit
"C-1"), but with the same explicit inscription that RBDC, as vendee, must
comply with the special deed restrictions appended to the AYALAKARAMFIL deed of sale of March 20, 1984. All these three (3) deeds of sale
and the accompanying special deed restrictions imposing a 42-meter height
limit, were duly registered with the Register of Deeds. Thus, RBDC cannot
profess ignorance of the 42-meter height restriction and other special
conditions of the sale.
Verily, the deed restrictions are integral parts of the PALMCREST-RBDC
deed of sale, considering that AYALA's required conformity to the transfer,
as annotated therein, was conditioned upon RBDC's compliance of the
deed restrictions. Consequently, as a matter of contractual obligation, RBDC
is bound to observe the deed restrictions which impose a building height of
not more than 42 meters.

Moreover, RBDC was fully aware that it was bound by the 42-meter height
limit. This is shown by the fact that, pursuant to the special
conditions/restrictions of the sale, it submitted to AYALA, for approval, building
plans for a 5-storey structure with a height of 25.85 meters. Certainly, RBDC
would not have submitted such plans had it truly believed that it was restricted
by a lower 23-meter height ceiling, in the same manner that RBDC did not
seek AYALAs approval when it later made another set of building plans for
the 26-storey Trafalgar Plaza, knowing that the same would be disapproved
for exceeding the 42-meter height restriction. The fact that RBDC was later
issued a building permit from the Makati City Engineer's Office for the
construction of the Trafalgar Plaza is not a valid justification to disregard the
stipulated contractual restriction of 42 meters.
Another error which AYALA claims to have been committed by the Court
of Appeals is the latters finding that AYALA, under the principle of estoppel, is
now barred from enforcing the deed restrictions because it had supposedly
failed to act against other violators of the said restrictions. AYALA argues that
such finding is baseless and is contrary to the Civil Code provisions on
estoppel and applicable jurisprudence.
We agree with the petitioner.
In support of its finding that estoppel operates against AYALA, the Court
of Appeals merely cited its decision dated November 17, 1993, in CA-G.R. SP
No. 29157, entitled Rosa-Diana Realty and Development Corporation,
Petitioner vs. Land Registration Authority and Ayala Corporation,
Respondents, and reiterated its findings therein, to wit:

Also, Ayala is barred from enforcing the deed of restrictions in

question, pursuant to the doctrines of waiver and estoppel. Under the
terms of the deed of sale, the vendee Sy Ka Kieng assumed faithful
compliance with the special conditions of sale and with the Salcedo
Village deed of restrictions. One of the conditions was that a building
would be constructed within one year. Ayala did nothing to enforce
the terms of the contract. In fact, it even agreed to the sale of the lot
by Sy Ka Kieng in favor of the petitioner realty in 1989, or thirteen
(13) years later. We, therefore, see no justifiable reason for Ayala to
attempt to enforce the terms of the conditions of the sale against the
petitioner. It should now be estopped from enforcing the said
conditions through any means.
xxxxxxxxx

Even assuming that petitioner RDR violated the floor area and height
restrictions, it is markedly significant that Ayala disregarded the fact
that it had previously allowed and tolerated similar and repeated
violations of the same restrictive covenants by property owners which
it now seeks to enforce against the herein petitioner. Some examples

of existing buildings in Salcedo Village that greatly exceeded the

gross floor area (5 times lot area) and height (42 meters) limitations
are (Rollo, p. 32):
(1) Pacific Star (Nauru Center Building 29 stories and 112.5 meters
high)
(2) Sagittarius Building 16 stories
(3) Shell House Building 14 stories
(4) Eurovilla Building 15 stories
(5) LPL Plaza Building 18 stories
(6) LPL Tower Building 24 stories.[42]
An examination of the decision in the said Rosa Diana case reveals that
the sole issue raised before the appellate court was the propriety of the lis
pendens annotation. However, the appellate court went beyond the sole issue
and made factual findings bereft of any basis in the record to inappropriately
rule that AYALA is in estoppel and has waived its right to enforce the 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.
Moreover, the decision in CA-G.R. SP No. 29157 is not binding on the
parties herein, simply because, except for Ayala, RBDC is not a party in that
case. Section 49, Rule 39 of the Revised Rules of Court (now Sec. 47, Rule
39 of the 1997 Rules of Civil Procedure) provides in part:

Sec. 49. Effect of judgments. The effect of a judgment or final order

rendered by a court or judge of the Philippines, having jurisdiction to
pronounce the judgment or order, may be as follows:
(a) x x x;
(b) In other cases the judgment or order is, with respect to the matter
directly adjudged or as to any other matter that could have been
raised in relation thereto, conclusive between the parties and their
successors in interest by title subsequent to the commencement of
action or special proceeding, litigating for the same thing and
under the same title and in the same capacity; (emphasis
supplied)
(c) x x x.

The clear mandate of the above-quoted rule is that a final judgment or

order of a court is conclusive and binding only upon the parties to a
case and their successors in interest. Both the present case and the RosaDiana case, however, involve different parties who are not litigating for the
same thing nor under the same title and in the same capacity. Hence,
the Rosa-Diana decision cannot have binding effect against either party to the
instant case.
In any case, AYALA asserts that a few gross violators of the deed
restrictions have been, or are being, proceeded against. [43] AYALA admits,
though, that there are other violations of the restrictions but these are of a
minor nature which do not detract from substantial compliance by the lot
owners of the deed restrictions. AYALA submits that minor violations are
insufficient to warrant judicial action, thus:

As a rule, non-objection to trivial breaches of a restrictive covenant

does not result in loss of the right to enforce the covenant by
injunction, and acquiescence in violations of a restrictive covenant
which are immaterial and do not affect or injure one will not preclude
him from restraining violations thereof which would so operate as to
cause him to be damaged. (20 Am Jur. 2d Sec. 271, p. 835;
underscoring provided).
Occasional and temporary violations by lot owners of a covenant
forbidding the use of property for mercantile purposes are not sufficient as a
matter of law to warrant a finding of a waiver or abandonment of the right to
enforce the restriction. A waiver in favor of one person and for a limited
purpose is not a waiver as to all persons generally. (id., at 836; underscoring
provided).[44]
It is the sole prerogative and discretion of AYALA to initiate any action
against violators of the deed restrictions. This Court cannot interfere with the
exercise of such prerogative/discretion.
How AYALA could be considered in estoppel as found by both the trial
court and the Court of Appeals, was not duly established. Under the doctrine
of estoppel, an admission orrepresentation is rendered conclusive upon
the person making it, and cannot be denied or disproved as against the
person relying thereon. A party may not go back on his own acts and
representations to the prejudice of the other party who relied upon them.
[45]
Here, we find no admission, false representation or concealment that can
be attributed to AYALA relied upon by RBDC.
What is clear from the record, however, is that RBDC was the party guilty
of misrepresentation and/or concealment when it resorted to the fraudulent
scheme of submitting two (2) sets of building plans, one (1) set conformed to
the Deed Restrictions, which was submitted to and approved by AYALA,
[46]
while another set violated the said restrictions, and which it presented to the
Makati City Building Official in order to secure from the latter the necessary

building permit.[47] It is noteworthy that after the submission of the second set
of building plans to the Building Official, RBDC continued to make
representations to AYALA that it would build the five-storey building in
accordance with the first set of plans approved by AYALA, obviously for the
purpose of securing the release of the title of the subject lot to obtain bank
funding. AYALA relied on RBDC's false representations and released the said
title. Hence, RBDC was in bad faith.
AYALA further assigns as error the finding of the respondent court that,
while the Deed of Sale to Ray Burton (RBDC) did not appear to be a contract
of adhesion, however, the subject Deed Restrictions annotated therein
appeared to be one.[48] The only basis for such finding is that the Deed
Restrictions and Special Conditions were pre-printed and prepared by AYALA,
and that RBDCs participation thereof was only to sign the Deed of Sale with
the said restrictions and conditions.[49]
The respondent court erred in ruling that the Deed Restrictions is a
contract of adhesion.
A contract of adhesion in itself is not an invalid agreement. This type of
contract is as binding as a mutually executed transaction. We have
emphatically ruled in the case of Ong Yiu vs. Court of Appeals, et. al.[50] that
contracts of adhesion wherein one party imposes a ready-made form of
contract on the other x x x are contracts not entirely prohibited. The one who
adheres to the contract is in reality free to reject it entirely; if he adheres he
gives his consent. This ruling was reiterated in Philippine American General
Insurance Co., Inc. vs. Sweet Lines, Inc., et. al.,[51] wherein we further
declared through Justice Florenz Regalado that not even an allegation of
ignorance of a party excuses non-compliance with the contractual stipulations
since the responsibility for ensuring full comprehension of the provisions of a
contract of carriage (a contract of adhesion) devolves not on the carrier but on
the owner, shipper, or consignee as the case may be.
Contracts of adhesion, however, stand out from other contracts (which are
bilaterally drafted by the parties) in that the former is accorded inordinate
vigilance and scrutiny by the courts in order to shield the unwary from
deceptive schemes contained in ready-made covenants. As stated by this
Court, speaking through Justice J.B.L. Reyes, in Qua Chee Gan vs. Law
Union and Rock Insurance Co., Ltd.: [52]
The courts cannot ignore that nowadays, monopolies, cartels and
concentration of capital, endowed with overwhelming economic power,
manage to impose upon parties dealing with themcunningly prepared
agreements that the weaker party may not change one whit, his participation
in the agreement being reduced to the alternative to take it or leave it labeled
since Raymond Saleilles contracts by adherence (contracts d adhesion) in
contrast to those entered into by parties bargaining on an equal footing. Such
contracts (of which policies of insurance and international bill of lading are
prime examples) obviously call for greater strictness and vigilance on the part
of the courts of justice with a view to protecting the weaker party from

abuses and imposition, and prevent their becoming traps for the unwary.
[53]
(Emphasis supplied)
The stringent treatment towards contracts of adhesion which the courts are
enjoined to observe is in pursuance of the mandate in Article 24 of the New
Civil Code that "(i)n all contractual, property or other relations, when one of
the parties is at a disadvantage on account of his moral dependence,
ignorance, indigence, mental weakness, tender age or other
handicap, the courts must be vigilant for his protection."
Thus, the validity and/or enforceability of a contract of adhesion will have
to be determined by the peculiar circumstances obtaining in each case and
the situation of the parties concerned.
In the instant case, the stipulations in the Deed Restrictions and Special
Conditions are plain and unambiguous which leave no room for
interpretation. Moreover, there was even no attempt on the part of RBDC to
prove that, in the execution of the Deed of Sale on the subject lot, it was a
weaker or a disadvantaged party on account of its moral dependence,
ignorance, mental weakness or other handicap. On the contrary, as testified to
by Edwin Ngo, President of RBDC, the latter is a realty firm and has been
engaged in realty business,[54] and that he, a businessman for 30 years,
[55]
represented RBDC in the negotiations and in the eventual purchase of the
subject lot from PALMCREST.[56] Edwin Ngo's testimony proves that RBDC
was not an unwary party in the subject transaction. Instead, Edwin Ngo has
portrayed RBDC as a knowledgeable realty firm experienced in real
estate business.
In sum, there is more than ample evidence on record pinpointing RBDCs
violation of the applicable FAR restrictions in the Consolidated and Revised
Deed Restrictions (CRDRs) when it constructed the 27-storey Trafalgar
Plaza. The prayer of petitioner is that judgment be rendered as follows:

a. Ordering Ray Burton to comply with its contractual obligations in

the construction of Trafalgar Plaza by removing or demolishing the
portions of areas thereof constructed beyond or 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 building plans;
b. Alternatively, in the event specific performance becomes
impossible:
(1) ordering the cancellation and rescission of the March 20, 1984
Deed of Sale and all subsequent Deeds of Sale executed in favor of
the original vendees successors-in-interest and ordering Ray Burton
to return to Ayala Lot 26, Lot 2 of Salcedo Village;

(2) ordering the cancellation of Transfer Certificate of Title No.

155384 (in the name of defendant) and directing the Office of the
Register of Deeds of Makati to issue a new title over the lot in the
name of Ayala; and
x x x x x x x x x.[57]
However, the record reveals that construction of Trafalgar Plaza began in
1990, and a certificate of completion thereof was issued by the Makati City
Engineers Office per ocular inspection on November 7, 1996. [58] Apparently
Trafalgar Plaza has been fully built, and we assume, is now fully tenanted.
The alternative prayers of petitioner under the CRDRs, i.e., the demolition of
excessively built space or to permanently restrict the use thereof, are no
longer feasible.
Thus, we perforce instead rule that RBDC may only be held alternatively
liable for substitute performance of its obligations the payment of damages. In
this regard, we note that the CRDRs impose development charges on
constructions which exceed the estimated Gross Limits permitted under the
original Deed Restrictions but which are within the limits of the CRDRs.
In this regard, we quote hereunder pertinent portions of The Revised
Deed Restrictions, to wit:

"3. DEVELOPMENT CHARGE

For any building construction within the Gross Floor Area limits
defined under Paragraphs C-2.1 to C-2.4 above, but which will result
in a Gross Floor Area exceeding certain standards defined in
Paragraphs C-3.1-C below, the OWNER shall pay MACEA, prior to
the start of construction of any new building or any expansion of an
existing building, a DEVELOPMENT CHARGE as a contribution to a
trust fund to be administered by MACEA. This trust fund shall be
used to improve facilities and utilities in the Makati Central Business
District.
3.1 The amount of the development charge that shall be due from
the OWNER shall be computed as follows:
DEVELOPMENT CHARGE = A x (B - C - D)
where:
A - is equal to the Area Assessment which shall be set at Five Hundred Pesos
(P500.00) until December 31, 1990. Each January 1 thereafter, such amount
shall increase by ten percent (10%) over the Area Assessment charged in the
immediately preceding year; provided that, beginning 1995 and at the end of
every successive five-year period thereafter, the increase in theArea
st

Assessment shall be reviewed and adjusted by the VENDOR to correspond to

the accumulated increase in the construction cost index during the
immediately preceding five years as based on the weighted average of
wholesale price and wage indices of the National Census and Statistics Office
and the Bureau of Labor Statistics.

B - is equal to the total Gross Floor Area of the completed or

expanded building in square meters.
C - is equal to the estimated Gross Floor Area permitted under the original
deed restrictions, derived by multiplying the lot area by the effective original
FAR shown below for each location:"[59]
Accordingly, in accordance with the unique, peculiar circumstance of the
case at hand, we hold that the said development charges are a fair measure
of compensatory damages which RBDC has caused in terms of creating a
disproportionate additional burden on the facilities of the Makati Central
Business District.
As discussed above, Ray Burton Development Corporation acted in bad
faith in constructing Trafalgar Plaza in excess of the applicable restrictions
upon a double submission of plans and exercising deceit upon both AYALA
and the Makati Engineer's Office, and thus by way of example and correction,
should be held liable to pay AYALA exemplary damages in the sum
ofP2,500,000.00.
Finally, we find the complaint to be well-grounded, thus it is AYALA which
is entitled to an award of attorney's fees, and while it prays for the amount
of P500,000.00, we award the amount of P250,000.00 which we find to be
reasonable under the circumstances.
WHEREFORE, premises considered, the assailed Decision of the Court
of Appeals dated February 27, 1996, in CA-G.R. CV No. 46488, and its
Resolution dated October 7, 1996 are hereby REVERSED and SET ASIDE,
and in lieu thereof, judgment is hereby rendered finding that:

(1) The Deed Restrictions are valid and petitioner AYALA is not
estopped from enforcing them against lot owners who have not yet
adopted the Consolidated and Revised Deed Restrictions;
(2) Having admitted that the Consolidated and Revised Deed
Restrictions are the applicable Deed Restrictions to Ray Burton
Development Corporations Trafalgar Plaza, RBDC should be, and is,
bound by the same;
(3) Considering that Ray Burton Development Corporations Trafalgar
Plaza exceeds the floor area limits of the Deed Restrictions, RBDC is
hereby ordered to pay development charges as computed under the

provisions of the Consolidated and Revised Deed Restrictions

currently in force.
(4) Ray Burton Development Corporation is further ordered to pay
AYALA exemplary damages in the amount of P2,500,000.00,
attorneys fees in the amount of P250,000.00, and the costs of suit.
SO ORDERED.
Regalado (Chairman), Melo, Puno, and Mendoza, JJ.,concur

THIRD DIVISION
[G.R. No. 134692. August 1, 2000]
ELISEO FAJARDO, JR., and MARISSA
FAJARDO, petitioners, vs. FREEDOM TO BUILD,
INC., respondent.
DECISION

VITUG, J.:
Freedom To Build, Incorporated, an owner-developer and seller
of low-cost housing, sold to petitioner-spouses, a house and lot
designated Lot No. 33, Block 14, of the De la Costa Homes in
Barangka, Marikina, Metro Manila. The Contract to Sell
executed between the parties, contained a Restrictive
Covenant providing certain prohibitions, to wit:
[1]

"Easements. For the good of the entire community, the

homeowner must observe a two-meter easement in front.
No structure of any kind (store, garage, bodega, etc.)
may be built on the front easement.
"x x x.............................x x x.............................x x x
"Upward expansion. A second storey is not prohibited.
But the second storey expansion must be placed above
the back portion of the house and should not extend
forward beyond the apex of the original building.
"x x x.............................x x x.............................x x x
"Front expansion: 2nd Storey: No unit may be extended
in the front beyond the line as designed and implemented
by the developer in the 60 sq. m. unit. In other words, the
2nd floor expansion, in front, is 6 meters back from the
front property line and 4 meters back from the front wall
of the house, just as provided in the 60 sq. m. units."
[2]

The above restrictions were also contained in Transfer

Certificate of Title No. N-115384 covering the lot issued in the
name of petitioner-spouses.
The controversy arose when petitioners, despite repeated
warnings from respondent, extended the roof of their house to
the property line and expanded the second floor of their house
to a point directly above the original front wall. Respondent
filed before the Regional Trial Court, National Capital Judicial
Region, Branch 261, Pasig City, an action to demolish the
unauthorized structures.
[3]

After trial, judgment was rendered against petitioners; thus:

"WHEREFORE, premises considered, defendant

spouses Eliseo B. Fajardo, Jr., and Marissa F. Fajardo
are hereby directed to immediately demolish and remove
the extension of their expanded housing unit that
exceeds the limitations imposed by the Restrictive
Covenant, otherwise the Branch Sheriff of this Court shall
execute this decision at theexpense of the defendants.
"As to damages and attorney's fees, it appearing from
the records of this case that no evidence to sustain the
same was adduced by either of the parties, the Court
deems itproper not to award any.
"SO ORDERED."

[4]

On appeal to it, the Court of Appeals affirmed the decision of

the trial court.
In their petition for review to this Court, the spouses contest the
judgment of the courts below. Adjacent owners reportedly have
no objection to the construction, and have even expressed
interest in undertaking a similar expansion in their respective
residences. Moreover, the couple's two children, a son and a
daughter, might soon get married and then share, with their
families, living quarters with petitioners. The latter also assail
the personality of private respondent to question the
construction which have effectively relinquished its ownership,
right or interest over the subdivision upon the execution of the
Deed of Absolute Sale in favor of the individual homeowners.
Per the contract between Freedom to Build Incorporated and
the De la Costa Low Income Project Homeowners' Association
(hereinafter homeowners' association), petitioners aver, the
enforcement of the prohibitions contained in the "Restrictive
Covenant" originally residing on respondent is now lodged in
the homeowners' association. Petitioners maintain that it is
incumbent upon the homeowners' association, not on
respondent, to enforce compliance with the provisions of the
covenant.
A perusal of the provisions of the covenant would show that the
restrictions therein imposed were intended "For the protection and benefit of the De La Costa Low
Income Housing Project, and of all the persons who may
now, or hereafter become owners of any part of the

project, and as part of the consideration for the

conveyance of the housing unit, these restrictions are
promulgated in order that; the intents and purposes for
which the project was designed shall be upheld; to wit:
subsequent duly approved sale and assignments of
housing units shall be made only to low income families;
a certain level of privacy shall be observed; a community
spirit shall be fostered; and an undisturbed possession
and occupancy at the homeowners shall be maintained."

[5]

Restrictive covenants are not, strictly speaking, synonymous

with easements. While it may be correct to state that restrictive
covenants on the use of land or the location or character of
buildings or other structures thereon may broadly be said to
create easements or rights, it can also be contended that such
covenants, being limitations on the manner in which one may
use his own property, do not result in true easements, but a
case of servitudes (burden), sometimes characterized to be
negative easements or reciprocal negative easements.
Negative easement is the most common easement created by
covenant or agreement whose effect is to preclude the owner
of the land from doing an act, which, if no easement existed, he
would be entitled to do.
[6]

[7]

[8]

Courts which generally view restrictive covenants with disfavor

for being a restriction on the use of one's property, have,
nevertheless, sustained them where the covenants are
reasonable, not contrary to public policy, or to law, and not
in restraint of trade. Subject to these limitations, courts
enforce restrictions to the same extent that will lend judicial
sanction to any other valid contractual relationship. In general,
frontline restrictions on constructions have been held to be
valid stipulations.
[9]

[10]

[11]

[12]

[13]

[14]

[15]

The provisions in a restrictive covenant prescribing the type of

the building to be erected are crafted not solely for the purpose
of creating easements, generally of light and view, nor as a
restriction as to the type of construction, but may also be
aimed as a check on the subsequent uses of the
building conformably with what the developer originally might
have intended the stipulations to be. In its Memorandum,
respondent states in arguing for the validity of the restrictive
covenant that the [16]

[17]

"x x x restrictions are not without specific purpose. In a

low cost-socialized housing, it is of public knowledge that
owners-developers are constrained to build as many
number of houses on a limited land area precisely to
accommodate marginalized lot buyers, providing as
much as possible the safety, aesthetic and decent living
condition by controlling overcrowding. Such project has
been designed to accommodate at least 100 families per
hectare."
[18]

There appears to be no cogent reasons for not upholding

restrictive covenants aimed to promote aesthetics, health, and
privacy or to prevent overcrowding.
Viewed accordingly, the statement of petitioners that their
immediate neighbors have not opposed the construction is
unavailing to their cause, the subject restrictive covenant not
being intended for the benefit of adjacent owners but to
prescribe the uses of the building, i.e., to ensure, among other
things, that the structures built on De la Costa Homes
Subdivision would prevent overcrowding and promote privacy
among subdivision dwellers. The argument then of petitioners
that expansion is necessary in order to accommodate the
individual families of their two children must fail for like reason.
Nor can petitioners claim good faith; the restrictive covenants
are explicitly written in the Contract To Sell and annotated at
the back of the Transfer Certificate of Title.
Petitioners raise the issue of the personality of respondent to
enforce the provisions of the covenant. Broadly speaking, a suit
for equitable enforcement of a restrictive covenant can only be
made by one for whose benefit it is intended. It is not thus
normally enforceable by one who has no right nor interest in
the land for the benefit of which the restriction has been
imposed. Thus, a developer of a subdivision can enforce
restrictions, even as against remote grantees of lots, only if he
retains part of the land. There would have been merit in the
argument of petitioners - that respondent, having relinquished
ownership of the subdivision to the homeowners, is precluded
from claiming any right or interest on the same property - had
not the homeowners' association, confirmed by its board of
directors, allowed respondent to enforce the provisions of the
restrictive covenant.
[19]

[20]

[21]

Finally, petitioners argue that for lack of a specific provision,

prescribing the penalty of demolition in the "Restrictive
Covenant" in the event of a breach thereof, the prayer of
respondent to demolish the structure should fail. This argument
has no merit; Article 1168 of the New Civil Code states:
"When the obligation consists in not doing and the obligor
does what has been forbidden him, it shall be undone at
his expense."
This Court is not unaware of its ruling in Ayala Corporation vs.
Ray Burton Development Corporation, which has merely
adjudged the payment of damages in lieu of demolition. In the
aforementioned case, however, the elaborate mathematical
formula for the determination of compensatory damages which
takes into account the current construction cost index during
the immediately preceding 5 years based on the weighted
average of wholesale price and wage indices of the National
Census and Statistics Office and the Bureau of Labor Statistics
is explicitly provided for in the Deed of Restrictions entered into
by the parties. This unique and peculiar circumstance, among
other strong justifications therein mentioned, is not extant in the
case at bar.
[22]

In sum, the Court holds that (1)....The provisions of the Restrictive Covenant are
valid;
(2)....Petitioners must be held to be bound thereby; and
(3)....Since the extension constructed exceeds the floor
area limits of the Restrictive Covenant, petitionerspouses can be required to demolish the structure to the
extent that it exceeds the prescribed floor area limits.
WHEREFORE, the assailed decision, dated 13 July 1998, of
the Court of Appeals in CA-G.R. CV No. 50085, sustaining that
of the court a quo, is AFFIRMED. No costs.
SO ORDERED.
Melo, (Chairman), Panganiban, Purisima, and GonzagaReyes, JJ., concur.