Ayala Land vs Ray Burton

GR No. 126699, 29 SCRA 48

FACTS: On March 20, 1984, KARAMFIL bought from AYALA a piece of land. The transaction was
documented in a Deed of Sale of even date, with certain special conditions and restrictions on the use or
occupancy of the land. 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.
On February 18, 1988, KARAMFIL sold the lot to PALMCREST. This deed was submitted to AYALA for
approval. AYALA gave its written conformity to the sale but reflecting in its approval the same special
conditions/restrictions as in the previous sale. PALMCREST in turn sold the lot to Ray Burton Development
Corporation (RBDC), now respondent, on April 11, 1988. 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. Since the building was well within the 42-meter height restriction, AYALA approved the
architectural plans. The September 21, 1990 issue of the Business World magazine featured the "Trafalgar
Plaza" as a modern 27-storey structure which will soon rise in Salcedo Village, Makati City. Stunned by this
information, AYALA, through counsel, then sent a letter to RBDC demanding the latter to cease the
construction of the building which dimensions do not conform to the previous plans it earlier approved.

After trial on the merits, the trial court rendered a Decision on April 28, 1994 in favor of RBDC.
Dissatisfied, AYALA appealed to the Court of Appeals which affirmed the judgment of the trial court

ISSUE: Whether or not the trial court and the appellate court erred in rendering judgement in favor of
RBDC.

HELD: The erroneous annotation of the 23-meter height restriction in RBDC's title was explained by Jose
Cuaresma, AYALA's Assistant Manager for Marketing and Sales. Jose Cuaresma further clarified that the
correct height restriction imposed by AYALA on RBDC was 42 meters. This height ceiling, he said, is based
on the deed of restrictions attached as annex to the deed of sale, and the same has been uniformly
imposed on the transferees beginning from the original deed of sale between AYALA and KARAMFIL.

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," 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, 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. 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, AYALA relied on RBDC's false representations
and released the said title. Hence, RBDC was in bad faith.

In the instant case, the stipulations in the Deed Restrictions and Special Conditions are plain and
unambiguous which leave no room for interpretation