Republic of the Philippines whatsoever can be recognized in favor of appellants, because they are in fact nothing but

SUPREME COURT squatters, who settled on the land without any agreement with the owner paying neither rents to
Manila
EN BANC
G.R. No. L-16084 November 30, 1962
JOHN O. YU, plaintiff-appellee,
vs.
MAXIMO DE LARA, JUAN PANLILIO, LUCIA RIVERO, FLORENTINO ROQUE and DOMINGO
SAMSON, defendants-appellants.
Ceferino R. Magat for plaintiff-appellee.
A. Agustines for defendants-appellants
MAKALINTAL, J.:
This is an ejectment case, decided first by the Justice of the Peace Court of Caloocan and, on
appeal, Court of First Instance of Rizal, Pasig branch, ordered the defendants "to vacate the
premises in petition, to pay the monthly rental of P115.00 to begin from the time this action was
filed up to the time they the premises, and to pay the costs."
The pertinent facts are the subject of stipulation below, Lot No. 14, block No. 51-C of the Grace
Park subdivision with an area of 682.5 meters, is the disputed property. It was originally
registered in 1916 (O.C.T. No. 868 of the Registry of Deeds of Rizal), subsequently acquired by
the Philippine Realty Corporation (T.C.T. No. 22104) and sold by it on 28 November 1956 to
plaintiff-appellant John O. Yu, a Filipino citizen, who obtained T.C.T 11267 in his name. In 1945
several persons settled on the property and constructed houses thereon without mission from, or
contract with, the Philippine Corporation, then the registered owner. On various dates thereafter,
between 1947 and 1952, appellants here brought the houses of those settlers and continued in
occupancy thereof without paying any rents to the owner of the land. In February 1957
plaintiff-appellee advised them in writing to vacate within 30 days, and in view of their refusal
filed a complaint of unlawful detainer within the statutory period of one year.
him, nor land taxes to the government, and who impliedly recognized their squatters' status by
purchasing only the houses built by the original settlers. Their occupancy of the land was at the
owner's sufference, and their acts were merely tolerated which could not affect the owner's
possession (Arts. 537 and 1119, Civil Code).
Appellants next contend that since there is no showing that there was any promise on their part,
express or implied, to return the land to appellee, or that they failed to do so after their right to
retain it had expired, they cannot be considered as unlawfully withholding possession within the
meaning of Section 1 of Rule 72. The implication of the argument is that this action of unlawful
detainer was improperly brought against them in the Justice of the Peace Court of Caloocan. 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 fiction for ejectment is the property remedy against him. In any
event, whatever might be said on this point in so far as it relates to the original jurisdiction of the
Justice of the Peace Court — and hence to the appellate jurisdiction Court of First Instance — it
does not appear that the question was raised in the former court at all. Consequently the latter
court could take cognizance of the case — as one for recovery by the owner of the right of
possession in the exercise of its original jurisdiction, pursuant to section 11 of Rule 40.
The third and last contention of appellants is that the Court of First Instance lacked jurisdiction to
this case because there were prejudicial question pending before us on appeal in cases G.R.
Nos. L-12614 and L-12615 concerning the same property. The issue in those two cases was the
propriety of the registration of appellants' adverse claim to the said land, which was resolved
against them by the Land Registration Commissioner. In the first place the issue was not
prejudicial in nature: it could not affect appellee's right to the possess his land, which has nothing
to do with the registration or non-registrability of appellants' alleged adverse and secondly, the
said cases have already been decided by us on January 29, 1960, by upholding the action by
the Land Registration Commissioner.
The judgment appealed from is affirmed, with costs against appellants.

The first point raised by appellants is that the Philippine Realty Corporation had lost possession
of the property by abandonment, under Article 555, paragraph 1, of the Civil Code, in failing to
take the action against them and showing them lack of interest in said property since they
started their occupancy. The circumstances adverted to are insufficient to constitute
abandonment, which requires not only physical relinquishment of the thing but also a clear
intention not to reclaim or reassume ownership or enjoyment thereof. Indeed, abandonment
which according to Manresa (Vol. 4, 5th ed., p. 277) convert the thing into res nullius, ownership
of which may be acquired by occupation, can hardly apply to land, as to which said mode of
acquisition is not available (Art. 714, Civil Code), let alone to registered land, to which "no title . .
. in derogation to that of the registered owner shall be acquired by occupation, can hardly apply
to land, as to which said mode of acquisition is not available (Art. 714, Civil Code), let alone to
registered land, to which "no title . . . in derogation to that of the registered owner shall be
acquired by prescription or adverse possession." (Sec. 46, Act No. 496). No possessory rights
 Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 76217 September 14, 1989
GERMAN MANAGEMENT & SERVICES, INC., petitioner,
vs.
HON. COURT OF APPEALS and ERNESTO VILLEZA, respondents.
G.R. No. L-76216September 14, 1989
GERMAN MANAGEMENT & SERVICES, INC., petitioner,
vs.
HON. COURT OF APPEALS and ORLANDO GERNALE, respondents.
Alam, Verano & Associates for petitioner.
Francisco D. Lozano for private respondents.
FERNAN, C.J.:
Spouses Cynthia Cuyegkeng Jose and Manuel Rene Jose, residents of
Pennsylvania, Philadelphia, USA are the owners of a parcel of land situated in Sitio
Inarawan, San Isidro, Antipolo, Rizal, with an area of 232,942 square meters and
covered by TCT No. 50023 of the Register of Deeds of the province of Rizal issued
on September 11, 1980 which canceled TCT No. 56762/ T-560. The land was
originally registered on August 5, 1948 in the Office of the Register of Deeds of Rizal
as OCT No. 19, pursuant to a Homestead Patent granted by the President of the
Philippines on July 27, 1948, under Act No. 141.
On February 26, 1982, the spouses Jose executed a special power of attorney
authorizing petitioner German Management Services to develop their property
covered by TCT No. 50023 into a residential subdivision. Consequently, petitioner on
February 9,1983 obtained Development Permit No. 00424 from the Human
Settlements Regulatory Commission for said development. Finding that part of the
property was occupied by private respondents and twenty other persons, petitioner
advised the occupants to vacate the premises but the latter refused. Nevertheless,
petitioner proceeded with the development of the subject property which included the
portions occupied and cultivated by private respondents.
Private respondents filed an action for forcible entry against petitioner before the
Municipal Trial Court of Antipolo, Rizal, alleging that they are mountainside farmers of
Sitio Inarawan, San Isidro, Antipolo, Rizal and members of the Concerned Citizens of
Farmer's Association; that they have occupied and tilled their farmholdings some
twelve to fifteen years prior to the promulgation of P.D. No. 27; that during the first
week of August 1983, petitioner, under a permit from the Office of the Provincial
Governor of Rizal, was allowed to improve the Barangay Road at Sitio Inarawan, San
Isidro, Antipolo, Rizal at its expense, subject to the condition that it shag secure the
needed right of way from the owners of the lot to be affected; that on August 15, 1983
and thereafter, petitioner deprived private respondents of their property without due
process of law by: (1) forcibly removing and destroying the barbed wire fence
enclosing their farmholdings without notice; (2) bulldozing the rice, corn fruit bearing
trees and other crops of private respondents by means of force, violence and
intimidation, in violation of P.D. 1038 and (3) trespassing, coercing and threatening to
harass, remove and eject private respondents from their respective farmholdings in
violation of P.D. Nos. 316, 583, 815, and 1028. 1
On January 7,1985, the Municipal Trial Court dismissed private respondents'
complaint for forcible entry. 2 On appeal, the Regional Trial Court of Antipolo, Rizal,
Branch LXXI sustained the dismissal by the Municipal Trial Court. 3
Private respondents then filed a petition for review with the Court of Appeals. On July
24,1986, said court gave due course to their petition and reversed the decisions of
the Municipal Trial Court and the Regional Trial Court. 4
The Appellate Court held that since private respondents were in actual possession of
the property at the time they were forcibly ejected by petitioner, private respondents
have a right to commence an action for forcible entry regardless of the legality or
illegality of possession. 5 Petitioner moved to reconsider but the same was denied by
the Appellate Court in its resolution dated September 26, 1986. 6
Hence, this recourse.
The issue in this case is whether or not the Court of Appeals denied due process to
petitioner when it reversed the decision of the court a quo without giving petitioner the
opportunity to file its answer and whether or not private respondents are entitled to file
a forcible entry case against petitioner. 7
We affirm. The Court of Appeals need not require petitioner to file an answer for due
process to exist. The comment filed by petitioner on February 26, 1986 has
sufficiently addressed the issues presented in the petition for review filed by private
respondents before the Court of Appeals. Having heard both parties, the Appellate
Court need not await or require any other additional pleading. Moreover, the fact that
petitioner was heard by the Court of Appeals on its motion for reconsideration SO ORDERED.
negates any violation of due process.

Notwithstanding petitioner's claim that it was duly authorized by the owners to

develop the subject property, private respondents, as actual possessors, can
commence a forcible entry case against petitioner because ownership is not in issue.
Forcible entry is merely a quieting process and never determines the actual title to an
estate. Title is not involved. 8

In the case at bar, it is undisputed that at the time petitioner entered the property,
private respondents were already in possession thereof . There is no evidence that
the spouses Jose were ever in possession of the subject property. On the contrary,
private respondents' peaceable possession was manifested by the fact that they even
planted rice, corn and fruit bearing trees twelve to fifteen years prior to petitioner's act
of destroying their crops.

Although admittedly petitioner may validly claim ownership based on the muniments
of title it presented, such evidence does not responsively address the issue of prior
actual possession raised in a forcible entry case. It must be stated that regardless of
the actual condition of the title to the property, the party in peaceable quiet
possession shall not be turned out by a strong hand, violence or terror. 9 Thus, a
party who can prove prior possession can recover such possession even against the
owner himself. Whatever may be the character of his prior possession, if he has in his
favor priority in time, he has the security that entitles him to remain on the property
until he is lawfully ejected by a person having a better right by accion publiciana or
accion reivindicatoria. 10

Both the Municipal Trial Court and the Regional Trial Court have rationalized
petitioner's drastic action of bulldozing and destroying the crops of private
respondents on the basis of the doctrine of self-help enunciated in Article 429 of the
New Civil Code. 11 Such justification is unavailing because the doctrine of self-help
can only be exercised at the time of actual or threatened dispossession which is
absent in the case at bar. When possession has already been lost, the owner must
resort to judicial process for the recovery of property. This is clear from Article 536 of
the Civil Code which states, "(I)n no case may possession be acquired through force
or intimidation as long as there is a possessor who objects thereto. He who believes
that he has an action or right to deprive another of the holding of a thing, must invoke
the aid of the competent court, if the holder should refuse to deliver the thing."

WHEREFORE, the Court resolved to DENY the instant petition. The decision of the
Court of Appeals dated July 24,1986 is hereby AFFIRMED. Costs against petitioner.
 Republic of the Philippines
Supreme Court
Manila 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 Decision1 and Order,2 respectively
dated October 24, 2001 and January 18, 2002, of the Regional Trial Court (RTC) of
SECOND DIVISION Iloilo City, Branch 24.

ANITA MONASTERIO-PE and the SPOUSES G.R. No. 151369

ROMULO TAN and EDITHA PE-TAN,
The instant petition stemmed from an action for ejectment filed by herein respondent
Petitioners,
Jose Juan Tong (Tong) through his representative Jose Y. Ong (Ong) against herein
Present:
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
- ​versus​ -
CARPIO, ​J.​ , ​Chairperson​, (MTCC), Branch 3, Iloilo City and docketed as Civil Case No. 2000(92).

NACHURA,
In the Complaint, it was alleged that Tong is the registered owner of two parcels of
JOSE JUAN TONG, herein represented by his
BRION,​* land known as Lot Nos. 40 and 41 and covered by Transfer Certificate of Title (TCT)
Attorney-in-Fact, JOSE Y. ONG,
PERALTA, and Nos. T-9699 and T-9161, together with the improvements thereon, located at
Respondent.
Barangay Kauswagan, City Proper, Iloilo City; herein petitioners are occupying the
ABAD, ​JJ.​ 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
Promulgated: 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
March 23, 2011 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
x--------------------------------------------------x 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)
DECISION 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 barangay conciliation as Tong was
bent on filing the ejectment case before conciliation proceedings could be validly
made.4
PERALTA, J.: 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 on certiorari 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 Resolution17 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 one-year 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.

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, premises considered, judgment is hereby rendered in favor of plaintiffs and
against the defendants ordering: (a) the defendants and all persons claiming rights under her to
remove the overhang constructions measuring 2.70 sq. m. and the adobe block wall measuring
1.59 sq.m. respectively on lot 18 of the plaintiffs and to peacefully surrender its possession to
the plaintiffs; (b) ordering the defendants to pay the plaintiffs the sum of Ten Thousand Pesos
(P10,000.00) as and by way of attorneys fees; plus the costs of suit.
SO ORDERED.
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, premises considered, the decision appealed from is hereby REVERSED and
SET ASIDE. This case is hereby DISMISSED, without prejudice to the filing of the appropriate
actions, without costs.
SO ORDERED.
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. WHETHER OR NOT GAINING ENTRY WITHOUT THE KNOWLEDGE OR CONSENT OF
THE OWNER OR REMAINING RESIDENT OF ANOTHER WITHOUT PERMISSION IS
DISPOSSESSION BY STEALTH;
2. WHETHER OR NOT ENTRY SECURED BY STRATEGY OR STEALTH BECOMES
UNLAWFUL AND DE FACTO POSSESSION COMMENCES ONLY UPON DEMAND;
3. WHETHER OR NOT THERE IS A DISTINCTION BETWEEN FORCIBLE ENTRY BY MEANS
OF STEALTH AND FORCIBLE ENTRY BY MEANS OF FORCE, INTIMIDATION OR THREAT;
4. WHETHER OR NOT PETITIONER CAN INVOKE SUPREME COURT RULINGS IN
UNLAWFUL DETAINER CASES;
5. WHETHER OR NOT THE PRIVATE RESPONDENT IS THE AUTHORIZED PARTY IN THE
CASE OF CO-OWNERSHIP AS OBTAINED IN THIS CASE;
6. WHETHER OR NOT THE CHARACTER OF THE POSSESSION ACQUIRED IN BAD FAITH
WAS INHERITED BY THE PRIVATE RESPONDENT AND DID NOT CHANGE;
7. WHETHER OR NOT THE DECISION OF THE RESPONDENT COURT OF APPEALS IS
BASED ON SPECULATION SURMISE OR CONJECTURE OR MISAPPREHENSION OF
FACTS.
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:
Let it be emphasized that the matter subject of the present action is that portion only of Lot No.
18 allegedly encroached by the defendant-appellant and not Lot 18 in its entirety.
While there was a finding of encroachment on Lot No. 18 as per the Commissioners Report and
Engineers Report dated December 27, 1995 and December 29, 1995, respectively,
plaintiff-appellees failed to recount the circumstances as to how and when defendant-appellant
allegedly forcibly entered Lot No. 18. Neither was there any evidence ever proffered by them to
prove that defendant-appellant made or at least ordered the introduction of the said
improvements or construction. According to them, the Magbag spouses gave them the right to
administer, occupy and to have physical possession in the concept of an owner, Lot No. 18 on
June 17, 1994 until the title to the said lot was transferred to their names on October 28, 1994
and they have just discovered the encroachment on Lot No. 18 only on August 23, 1994 when
they had the boundaries of Lots Nos. 17 and 18 resurveyed. Defendant-appellant, on the other
hand, averred that the questioned improvements and constructions encroaching on Lot No. 18
were already there since 1956, and this averment was not controverted by the plaintiff-appellees
at all. Thus, the truth is that, when defendant-appellant acquired Lot No. 18, the adobe wall,
overhang and window grill were already there encroaching on Lot No. 18 as it was the late
Salvacion (sic)[12] Beltran who built the same. In fact, even up to the present,
defendant-appellant is still in possession of the herein questioned premises which means that
plaintiff-appellees were never in possession of the same. The latter, therefore, cannot be said to
be in prior physical possession. The demand made on the defendant-appellant is here of no
moment as it is a well-entrenched jurisprudence that demand to vacate is not necessary in
forcible entry cases (Menez vs. Militante, 41 Phil. 44).
Consequently, for failure of the plaintiff-appellees to circumstantiate prior physical possession on
the herein subject premises and the fact of entry on the same by the defendant-appellant by
force, intimidation, violence or stealth, the present action for forcible entry must exigently fail. complaint which recites as a fact any overt act on the part of the petitioners which showed that
Moreover, this Court notes that at the time the improvements were made, the late Salvacion (sic) they permitted or tolerated respondent to occupy a portion of their property.
Beltran was still the registered owner of both Lots Nos. 17 and 18. Thus while it may be true that
defendant-appellant is now the administrator of Lot No. 17, defendant-appellant cannot be made After a finding that the petitioners failed to make a case for ejectment, we find it unnecessary to
to answer for the encroachments on Lot No. 18 for the same were done by the late Salvacion dwell on the other assignments of error.
(sic) Beltran who had all the right and power to introduce the improvements as she was then the
registered owner of both Lots Nos. 17 and 18 at the time the same were made. While WHEREFORE, the petition is DENIED and the assailed decision of respondent Court of Appeals
plaintiff-appellees can recover possession of the herein questioned premises, they cannot do so is hereby AFFIRMED.
in the guise of an action for forcible entry. For where the complaint fails to specifically aver facts
constitutive of forcible entry or unlawful detainer, as where it does not state how entry was SO ORDERED.
effected or how and when dispossession started, the action should either be ACCION
PUBLICIANA or ACCION REINVINDICATORIA for which the lower court has no jurisdiction
(See Sarona, et al. vs. Villegas, et al., March 27, 1968, Banayos vs. Susana Realty, Inc.
L-30336, June 30, 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]

The jurisdictional facts must appear on the face of the complaint. When the complaint fails to
aver facts constitutive of forcible entry or unlawful detainer, as where it does not state how entry
was effected or how and when dispossession started, as in the case at bar, the remedy should
either be an accion publiciana or an accion reivindicatoria in the proper regional trial court.

If private respondent is indeed the owner of the premises subject of this suit and she was
unlawfully deprived of the real right of possession or the ownership thereof, she should present
her claim before the regional trial court in an accion publiciana or an accion reivindicatoria, and
not before the municipal trial court in a summary proceeding of unlawful detainer or forcible
entry. For even if one is the owner of the property, the possession thereof cannot be wrested
from another who had been in the physical or material possession of the same for more than
one year by resorting to a summary action for ejectment. This is especially true where his
possession thereof was not obtained through the means or held under the circumstances
contemplated by the rules on summary ejectment.

We have held that in giving recognition to the action for forcible entry and unlawful detainer, the
purpose of the law is to protect the person who in fact has actual possession, and in case of a
controverted proprietary right, the law requires the parties to preserve the status quo until one or
the other sees fit to invoke the decision of a court of competent jurisdiction upon the question of
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
SECOND DIVISION
[G.R. No. 126699. August 7, 1998]
AYALA CORPORATION, petitioner, vs. RAY BURTON DEVELOPMENT CORPORATION,
respondent.
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] Psd-6086, 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 KARAMFIL-PALMCREST 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
42-meter 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-storey
structure 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 re-examination 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 "B-1"). 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 AYALA-KARAMFIL
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 Rosa-Diana 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 or
representation 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 them
cunningly 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 1st 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
the Area 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 of
P2,500,000.00.
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.
SECOND DIVISION
[G.R. No. 126699. August 7, 1998]
AYALA CORPORATION, petitioner, vs. RAY BURTON DEVELOPMENT CORPORATION,
respondent.
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] Psd-6086, 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 KARAMFIL-PALMCREST 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
42-meter 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-storey
structure 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 re-examination 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 "B-1"). 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 AYALA-KARAMFIL
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 Rosa-Diana 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 or
representation 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 them
cunningly 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 1st 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
the Area 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 of
P2,500,000.00.
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.
THE PEOPLE OF THE PHILIPPINES, PLAINTIFF AND APPELLEE,
Vs.
TITO PLETCHA
APPEAL from a judgment of the Court of First Instance, Bacolod, Negros Occidental. J.V.
Presbitero, J.
The fact are started in the opinion of the Court.
Atty. Mercedes M. Respicio, for accused and appellant.
Solicitor General Estelito P. Mendoza, Assistant Solicitor General Nathaniel P. De Pano, Jr., and
Solicitor Conception T. Agapinan, for plaintiff and appellee.
G.R. 19029 | 1977-06-27
Sison, J.:
Tito Plecha, Jr., a civic-conscious farmer, invoking “self-help” in defense of the land he owns for
19 years, fought off and prevented a corporation’s crew of 8 men who without any court order
was insisting to fence 4 hectares of his land, as a result of which resistance he was prosecuted
and convicted of grave coercion (2 months and 1 day, P100 fine, cost) by the Municipal Court of
Murcia, Negros Occidental in its decision dated Sept. 23, 1975.
Epitomizing his appeal on the protective mantle of Art. 429 of the Civil Code, appellant ask Us
for a reversal, on the ground that the law give him as the owner the right to use reasonable force
to exclude any person threatening his peaceful ownership. We note this is a new provision of the
Civil Code.
The People ask for affirmance on the ground that the appellant should not have done anything
by himself to resist but should have gone to court instead to enjoin the group of 8 men from
disturbing his ownership.
We are thus called to determine if the fact herein justify the application of Art.429 (Civil Code)
and if so, excluding appellant from conviction and the plenty imposed.
Appellant inherit the land from the father 19 years ago and he maintains that for him to stand his
ground and ward off such invasion, even with the use of a bolo, is not at all taking the law into
his hands, but on the contrary a legitimate exercise of a private citizen’s “self-help” right place in
his hands, by Art.429, Civil Code.
He brought the case on appeal to the CFI of Negros Occidental, 12th Judicial District, Branch III,
but in as much as the crime of grave coercion falls within the concurrent jurisdiction of the
municipal courts and the Courts of First Instance, the case was elevated to this Tribunal.
Appellant is charge of preventing 8 men (Godofredo Cuachon, Manuel Paguntalan, Pedri
Funtes, Alfredo Fuentes, Doroteo Fuentes, Carlos Baligorio, Arsenio Verino and Cresencio
Pasco), all workers of the Radeco Corporation from fencing a 4-hectare area of the hacienda
owned by the Radeco Corporation and over which portion appellant claims and was in actual
possession and ownership.
According to the prosecution, in the morning of June 10, 1973, this group under the supervision
of Godofredo Cuachon was constructing a fence made of bamboo poles and wire on a piece of
land in Hacienda Gaspit allegedly leased by Redeco Corporation from a certain Lapinco.
Claiming actual possession and ownership, the appellant asked the group to desist from fencing
pending a resurvey he proposed, but he was totally ignored. The appellant came back with a
bolo, without any chance, however, to actually use it or threaten them, because as soon as the
group saw him they ran away (p.3, Tsn, June 3, 1975). The 8 men fled, leaving behind their
“poles, wires and bolos to dig holes in the ground” (pp. 4-13, Tsn, Dec 17, 1974) and instead
filed the complaint for grave coercion under Art. 286 of the Revised Penal Code. Missing
therefore is the element of “violence” which the appellant should have used to fall under this
Article.
The accused categorically denied having intimidated complainants. He testified that, having
notice that the fence, if constructed, would encroach on his land, he told Godofredo Cuachon,
the overseer, to have the titled land resurveyed to determine the exact boundary of each other
property.
The further testified that he was positive the land sought to be fenced was an integral part of the
land he inherited from his father 1954 and which he has been for 19 years possessing,
occupying and cultivating the same without any interruption or obstruction. Incidentally there is a
pending case for damages regarding same land between the appellant and Peter Lopinco, the
predecessor-in-interest of the Redeco Corporation (pp.4-13, Tsn. Dec. 17, 1974).
Appellant made this lone assignment of error:
“The court a quo erred in concluding that the acts of the accused in defense of his property
constituted grave coercion.”
We agree with His Honor; the trial judge with his statement that ours is a government of laws
and not of men and that no person may take the law into his hands. There is no dispute about
this principle. But neither is this the issue before Us. His Honored may have overlooked that the
rationale of the statute penalizing “grave coercion” is precisely to enforce the rule of the law
(People vs. Mangosing, CA-G,R. No. 1107-R, April 29, 1948), So that no one may take the law
into his hands. Coercion is committed by unauthorized compelling of another, whether just or
unjust, its essence being an attack on the individual liberty (6 Viada, 5th Ed., p. 80).
His Honor must have known that the above principle is by no means absolute. And had the trial
court taken note of this, appeal would have been unnecessary, because under Art. 429 of the
New Civil Code:
“ The owner or lawful possessor of a thing has the right to exclude any person from the
enjoyment and disposal thereof. For this purpose, he may use such force as may be reasonably
necessary to repel or prevent an actual or threatened unlawful physical invasion or usurpation of
his property”
The above-quoted law confirms the right of the appellant, an owner and lawful possessor, to use
reasonable force to repel an invasion or usurpation, actual, threatened or physical, of his
property. The principle of self defense and the protective measures related thereto, covers not
only his life, but also his liberty and property.
“The principle of self-help authorizes the lawful possessor to use force, not only to prevent a
threatened unlawful invasion or usurpation thereof; it is a sort of self-defense. It is lawful to repel
force by force. He who merely uses force to defend his possession does not possess by force.
The use of such necessary force to protect propriety or possessory rights constitute a justifying
circumstances under the Penal Code.” (Tolentino, A., Civil Code of the Philippines, Vol. II, Ed.
1972, pp. 58-59)
Corollary to this is what Constitution provides in Sec. 1 Art. IV:
“Sec.1. No person shall be deprived of life, liberty or property without due process of law, nor,
shal any person be denied the equal protection of the laws.”
Did the accused have real and actual interest in the parcel of the land sought to be fenced? In its
attempt to deny applicability of Art. 429 of the Civil Code to the accused, the People contends
that there is no categorical statement of appellant asserting claim to the land being fenced by the
Radeco Corporation (p.3, Appellee’s Brief).
We disagree. The appellant has real interest on that parcel of land sought to be fenced by virtue
of his 19 year uninterrupted and open occupation. The court a quo itself sustain the appellant in
its decision when it said:
“Indeed it is deplorable that one is to be dispossessed of a thing which he had come to
sentimentally consider as his own after a long occupation” (p. 2, Decision).
His Honor should have taken into account the situation of appellant, a poor farmer, pitted against
the giant of a corporation, the farmer just fighting for his small piece of land passed on from his
father. There was no necessity for him to file first a case in court to protect his property, in the
light of the strong testimonial evidence coming from the prosecution as follows:
On cross-examination, Godofredo Cuachon, a witness for prosecution, declared:
“COURT:
Q: Yes, but my question is, did the accused tell the reason why he stopped you?
A: Because he does not want us to fence.
Q: Why?
A: Because he said it is his land.”
On Cross-examination, Manuel Paguntalan, also a witness for prosecution, testified:
COURT:
Q: Now, You said that the accused Tito Pletcha, Jr. shouted to you to stop fencing. Did he tell
you why you should stop fencing there?
A: Yes sir.
Q: What was the reason given by the accused?
A: Because he claims the land to be his own.” (p. 11, Tsn, Nov. 19, 1974, underscoring
supplied).
So from the admission of Cuachon and Paguntalan, there is not a scintilla of doubt that the
appellant made a valid claim on the land being invaded. He could not have been as pugnacious
as the way he did if he did not believe that he had genuine interest in the land being fenced, an
only inheritance from his father.
On direct examination, appellant testified:
“COURT:
Q: Godofredo Cuachon testified before the court that you shouted to them to stop fencing
because if they will not stop fencing, something will happen to them. What can you say to that?
A: I did not shout to them as alleged by them but I told that if possible to go to Peter Lopincio
and Mr. Manaloto to have the adjacent land surveyed before fencing so that my plants will not be
destroyed including that of my father’s because they were planting sugar cane.” (p. 8, Tsn, Dec.
17, 1974).
The prosecution contends that the appellant repeatedly made mention only of his plants and not
of his ownership (pp. 2-5, Appellee’s Brief). But that is not so. Here the accused does not only
refer to his plants being destroyed. Having noticed that the complainants were including inside
their fence part of the land containing his plants, he requested them to have a resurvey made
because he believed that they had gone beyond their boundary limits and had encroached upon
considerable portion of his land.
On direct examination, Pletcha testified:
COURT:
Q: With respect to this land which was fenced by Godofredo Cuachon on June 10, 1973, was
this particular land found inside your land?
A: Yes sir. Because some of my plants which they destroyed were planted with sugar cane” (p.
10, Tsn, Dec. 17, 1974).
Again on cross-examination, Pletcha testified:
COURT:
Q: Mr. Pletcha, it is not a fact that Godofredo Cuachon and his men were closing their sugar
cane fields because you were planting your bananas inside the sugar cane fields?
A: Their sugar cane plants are far from my house.
ATTY. BITANGA, JR:
That does not the answer the question I request that the witness be directed to answer the
question, Your Honor,
COURT:
Alright, answer the question.
WITNESS:
A: It was because they destroyed my banansa plants. That is why I replanted them and also my
coconuts.
Q: And you planted your banana plants inside the sugar cane field even though the sugar canes
are already growing?
A: I replanted bananas to those they have destroyed. In fact there were still bananas standing.
Q: Aside from banana inside the sugar cane filed, can you also sow mongo, soybeans and other
plants inside the sugar cane filed?
A: There was no mongo, soybeans. What I sow were agho trees which they cut and plow with
their tractors.
Q: And you sow those agho inside the sugar cane filed
A: Just inside my plants.
Q: Even though there were sugar cane growing?
A: Yes Sir. Because they have taken possession of about 4 hectares of my land which is quite
far from my house. (pp. 14-15, Tsn, Dec. 17, 1974).
On the whole, we are of the considered opinion that there is basis for appellant to consider and
believe in good faith that a portion of the land being fenced by the Radeco Corporation is part
and parcel of the 24 hectares which was bequeathed to him by his father. And this land has
been in his possession en concepto dueno since 1954 and had been planted by him with
bananas and agoho trees. By virtue of this long possession, the appellant has pro tanto
acquired at least in his favor the color of title thereto.
“Art. 436. Actual possession under claim of ownership raises a disputable presumption of
ownership. The true owner must resort to judicial process for the recovery of property.”
“Art. 541. A prossessor in the concept of owner has in his favor the legal presumption that he
possesses with a just title and he cannot be obliged to show or prove it.”
In view of this presumption, his right should be respected by all, including the group of 8
intruding laborers. Inasmuch as this right was disregarded or violated, the appellant was justified
to retaliate in self-defense invoking the principle of self-help as embodied in Art.429 of the New
Civil Code, especially in the absence of evidence he used force in so doing.
Subject to the restraint that it does not deteriorate to abuse and open the door to violence, chaos
and disorder, a person in the defense of his property is entitled under the law to meet force with
necessary force when the need arises. We liken appellant’s land as part of his home where
tradition says, “even the king and his constables cannot trespass” without his consent. Appellant
cannot just be expected to close his eyes and fold his hands while other person trespass his
land. In the instant case, the complainants had already begun seriously segregating a four
hectare portion of his land by fencing it.
The trial court a quo opined that the Pletcha, Jr. should have ventilated his case in the proper
agencies (p. 2, Decision). We disagree on this point. It is the corporation which has all the time,
legal facilities and money to question appellant’s possession or ownership. Appellant has only
his courage and the traditional manliness of the Filipino to rely upon for the moment.
Dr. Arturo M. Tolentino, Civil Law Commentator, classifies actual invasion of property:
“It may consist of a mere disturbance of possession or of a real dispossession. In the case of
mere disturbance of possession, force may be used against it at anytime as long as it continues.
If the invasion consist of real dispossession, force to regain possession can be use only
immediately after the dispossession. (Toentino, Civil Code of the Philippines, 1972 Ed., p. 59).
But once possession has been lost, even if wrongfully or illegally, and the usurper’s possession
has become firm by the lapse of time, the lawful possessor must resort to judicial process for the
recovery of the property (Art. 433, New Civil Code) for the must invoke the order of the
competent court” (Art. 536).
In the instant case, the usurper’s possession has not yet become complete and the
complainants were in the act of building fence. Such an act constitutes force in contemplation of
law. This act of trespass justified the appellant to shoo them away, even means of a bolo,
because they refused to be generous, patient, nay compassionate.
We therefore conclude that appellant need not rush to the court to seek redress before
reasonably resisting the invasion of his property. The situation required immediate action and
Art. 429 gave him the self-executory mechanics of self-defense and self-reliance. We find that it
was not the appellant, who enjoys the legal presumption of just title, who took the law into his
hands, but it was the complainants for trying to scare away the appellant by acts of vandalism
and strategy.
WHEREFORE, the judgment appealed from is hereby reversed in toto and the appellant, Tito
Pletcha, Jr. is hereby acquitted and set at immediate liberty, with the cancelation of his bail
bond. No costs.
SO ORDERED.