Ortigas & Co., Limited Partnership v. Feati Bank and Trust Co.

,
G.R No. L-24670; December 14, 1979
Santos, J.;

The police power is superior to contractual stipulations between parties on the use of lands sold by subdivision even
if the said conditions are annotated in the Torrents Title.

Facts:
Plaintiff is a limited partnership engaged in real estate business developing and selling lots to the public. Sometime in
1952, the plaintiff sold two parcels of land known as Lots No.5 and 6, Block 31, of Highway Hills Subdivision, situated
in Mandaluyong Rizal to Agusto and Natividad Angeles which in turn transferred their rights to Emma Chavez, the
Deed of Sale includes the restriction that the parcel of land shall be used by the Buyer exclusively for residential
purposes. The said restriction was annotated in the Transfer Certificate of Titles of the two lots which was issued in the
name of Emma Chavez.

On February 24, 1960, a Resolution No. 27 was issued by the Municipal Council of Mandaluyong, Rizal which declared
the western part of Highway 54 (now EDSA) which covers Lot No. 5 and 6 as commercial and industrial zone.

On July 23, 1962, the defendants acquired Lot Nos. 5 and 6 and TCTs are then issued in its name and the building
restrictions were still annotated therein.

On May 5, 1963, defendants began laying the foundation and commenced the construction of a building on Lots no. 5
and 6, to be devoted to banking purposes, but which the defendant demanded to be stopped claiming that it is in
violation of the annotations in the TCTs which stated that the lots should be devoted to and used exclusively, for
residential purposes only.
They also alleged that the Municipal Council has no power to nullify the contractual obligations assumed by the
defendant corporation.

Issue:
Whether or not the resolution of the Municipal Council of Mandaluyong prevails over the restrictions constituting as
encumbrance to on the lots in question.

Ruling:
Yes. The Resolution No. 27 is a valid exercise of police power to safeguard or promote the health, safety, peace, good
order and general welfare of people in the locality prevails over the restrictions in the lots in question.

It should be stressed that while non-impairment of contracts is constitutionally guaranteed, the rule is not absolute,
since it has to be reconciled with the legitimate exercise of police power that is “the power to prescribe regulations to
promote the health, morals, peace, education, good order or safety and general welfare of the people.” It is described
as the most essential, insistent, and illimitable of powers and in the sense, the greatest and most powerful attribute of
the government.

In the present case, the Resolution No. 27 is passed in consideration of the location of the property which is in front of
the highway and that industrial and commercial complexes have flourished about the place. EDSA, main traffic artery
which runs through several cities and municipalities in the Metro Manila which results to noise and pollution which are
hardly conducive to the health, safety and welfare of the residents in its route. Having expressly granted the power to
adopt zoning and subdivision ordinances or regulations, the municipality of Mandaluyong through its Municipal Council
was reasonably justified under circumstances in passing the subject resolution.

Therefore, the police power is superior to the contractual stipulations between the parties on the use of lands sold by
subdivisions even of said conditions are annotated on the Torrens Title.