The Learning Child, Inc. (TLC) v. Ayala Alabang Village Association (AAVA), G.R. No.

134269
Date: July 7, 2010 | Ponente: Leonardo-De Castro, J.

Doctrine: Contracts Clause; Limitations on the use of land imposed by contract yield to reasonable
exercise of police power and, hence, zoning ordinances are superior to contractual restrictions on the
use of property.

Summary: The case is 3 consolidated petitions for review on certiorari concerning the operation of The
Learning Child, a preparatory AND grade school located in Ayala Alabang Village. AAVA filed an
injunction case against TLC and the spouses Alfonso for violating the Deed of Restrictions which limits
the use of the lot to a preparatory (nursery and kindergarten) school. The Supreme Court held that
AAVA’s and ALI’s insistence on (1) the enforcement of the Deed of Restriction or (2) the obtainment of
the approval of the affected residents for any modification of the Deed of Restrictions is reasonable
absent any interest or zoning purpose asserted by the Municipality contrary to that of the subdivision
developer in declaring the subject property as institutional.

Deed of Restrictions Metropolitan Manila Muntinlupa Zoning Muntinlupa Resolution

Commission Ordinance Ordinance No. 91-39 No. 94-179
No. 81-01
“USE AND OCCUPANCY Classified Ayala Reclassified the subject Corrected a
– The property shall be Alabang Village for property as typographical error in
used exclusively for zoning purposes as a “institutional” the description of a
the establishment and low-density residential parcel of land under
maintenance thereon area, thereby limiting the heading
of a preparatory the use of the subject “Institutional Zone” in
(nursery and property to the Appendix B of
kindergarten) school, establishment or Ordinance No. 91-39 ,
which may include operation of a nursery adjusting the
such installations as an and kindergarten description “Lot 25,
office for school school, which should Block 1, Phase V, Ayala
administration, not exceed two Alabang” to “Lot 25,
playground and garage classrooms. Block 3, Phase V, Ayala
for school vehicles.” Alabang”

Facts:
 Sale of Lot 25, Block 3, Phase V, Ayala Alabang – Ayala Land Inc. (ALI) sold this parcel of land to
spouses Yuson. They then sold it to spouses Alfonso. A Deed of Restrictions was annotated on the
TCT which expressly provides that, “the property shall be used exclusively for the establishment and
maintenance thereon of a preparatory (nursery and kindergarten) school.” ALI turned over the right
and power to enforce the restrictions on the properties in the Ayala Alabang Village to the
association of homeowners, the AAVA.
 Establishment of TLC and Expansion – In 1989, the spouses opened on the same lot The Learning
Child Pre-school which initially consisted of nursery and kindergarten classes. In 1991, it was
expanded to include a grade school program, the School of the Holy Cross.
 AAVA Protest – The AAVA filed with the RTC of Makati an action for injunction against TLC and the
spouses Alfonso, alleging breach of contract by the defendant spouses of the Deed of Restrictions.
 RTC of Makati – Rendered a Decision in favour of AAVA, emphasizing that the restrictions were in
reality an easement which an owner of a real estate may validly impose under Article 688 of the Civil
Code.
 Motion for Reconsideration – TLC alleged that with the passage of Muntinlupa Zoning Ordinance
No. 91-39 which reclassified the subject property as “institutional,” there ceased to be legal basis for
the RTC to uphold the Deed of Restrictions. RTC agreed and set aside its earlier Decision. Citing
Ortigas & Co. Limited Partnership v. Feati Bank & Trust Co., it decreed that while the non-
impairment of contracts is constitutionally guaranteed, the rule is not absolute since it has to be
reconciled with the legitimate exercise of police power by the municipality.
 CA – Upon appeal by the AAVA, it set aside the Resolution of the RTC and reinstated the previous
decision in favour of AAVA. TLC and spouses Alfonso filed a Motion for Reconsideration from this
Decision but was denied.
 Motion to Intervene – Aquino, et al., students of TLC, alleging that they are minor children who
suffer from various learning disabilities and behavioural disorders benefiting from TLC’s full-inclusion
program, filed a Motion for Leave to Intervene and their own Motion for Reconsideration with the
CA. The CA denied their Motions for being proscribed by Section 2, Rule 19 of the 1997 Rules on Civil
Procedure.
 Zoning Ordinance Case – In the meantime, the Municipality of Muntinlupa passed Resolution No.
94-179 correcting an alleged typo on abovementioned Ordinance No. 91-39, effectively placing Lot
25, Block 3, Phase V (herein subject lot) under the “Institutional Zone.”
o HLURB – According to the Housing and Land Use Regulatory Board (HLURB), the Resolution
was not a mere correction of a typo but an actual rezoning of the property into an
institutional area and would require the conduct of public hearings.
o Office of the President – The Office of the President set aside this conclusion of the HLURB
and declared Resolution No. 94-179 as a valid corrective issuance. It further held that the
Deed of Restrictions had lost its force and effect in view of the passage of Ordinance No. 91-
39.
o CA – The CA upheld the validity of Resolution No. 94-179 but held that the Office of the
President erred; that Ordinance No. 91-39 did not have the effect of nullifying the Deed of
Restrictions inasmuch as there is no conflict between the two.

Issues/Ratio:

 WON the CA is correct in upholding the validity of Muntinlupa Resolution No. 94-179  YES, being
a mere corrective issuance, it is not invalidated by the lack of notice and hearing as AAVA contends.
o Both the Official Zoning Map of Muntinlupa and that of the Ayala Alabang Village show that
the subject lot is classified as “institutional.” The official zoning map is an indispensable and
integral part of a zoning ordinance, without which said ordinance would be considered void.
o It is clear that there was a typo and the Court is merely affirming the correction made by the
same entity which committed the error.
o The authority of the HLURB is subordinate to that of the Office of the President and the acts
of the former may be set aside by the latter.

 WON the CA was correct in denying Aquino, et al.’s Motion to Intervene  MOOT, since their
motion was filed in 1998, Aquino, et al., would no longer be in grade school at this time.
o For the sake of argument, the Court finds no reversible error in CA’s denial of their Motion.
The motion was filed three months after the CA had already rendered its Decision.
 o Section 2, Rule 19 of the 1997 Rules on Civil Procedure clearly imports that intervention
cannot be allowed when the trial court has already rendered its Decision, and much less, as
in the instant case, when even the CA had rendered its own Decision on appeal.

 WON TLC and the spouses Alfonso should be enjoined from continuing the operation of a grade
school in the subject property  YES, sub-issues below:

 WON Muntinlupa Municipal Ordinance No. 91-39, as corrected by Muntinlupa Resolution No. 91-
179, has the effect of nullifying the provisions of the Deed of Restrictions on the subject property
 NO, there is a way to harmonize the seemingly opposing provisions.
o TLC and spouses Alfonso: Reclassification of properties is a valid exercise of the state’s
police power, with which contractual obligations should be reconciled.
o AAVA: Even where the exercise of police power is valid, the same does not operate to
automatically negate all other legal relationships in existence since the better policy is to
reconcile the conflicting rights.
o Review of jurisprudence:
 Ortigas & Co. Limited Partnership v. Feati Bank & Trust Co: The Court, in upholding
the exercise of police power attendant in the reclassification of the subject property
therein over the Deed of Restrictions over the same property, took into
consideration the prevailing conditions in the area. “Resolution was passed in the
exercise of police power to safeguard or promote the health, safety, peace, good
order and general welfare of the people in the locality.”
 Co v. Intermediate Appellate Court: The Court denied the applicability of
reclassification. “This is not to suggest that a zoning ordinance cannot affect existing
legal relationships for it is settled that it can legally do so, being an exercise of police
power. As such, it is superior to the impairment clauses. xxx The zoning ordinance in
question, while valid as a police measure, was not intended to affect existing rights
protected by the impairment clause. It is always a wise policy to reconcile
apparently conflicting rights under the Constitution and to preserve both instead of
nullifying one against the other.”
 Presley v. Bel-Air Village Association: The Court allowed the operation of the Hot
Pan de Sal Store despite the Deed of Restrictions, but not without examining the
surrounding area like in Ortigas.
o SC: The subject property, though declared as an institutional lot, nevertheless lies within a
residential subdivision and is surrounded by residential lots. TLC’s student population had
swelled to 350 students. The greater traffic will affect adjacent property owners’ enjoyment
and use of their own properties. AAVA’s insistence on the enforcement of the Deed of
Restrictions is thus reasonable. Also, the Municipality of Muntinlupa did not appear to have
any special justification for declaring the subject lot as an institutional property.

 WON AAVA is estopped from enforcing the Deed of Restrictions  NO

o TLC and spouses Alfonso: The AAVA had allegedly abrogated said restrictions by its own
acts.
o However, TLC and the spouses Alfonso failed to prove by clear and convincing evidence the
gravity of AAVA’s acts so as to bar the latter from insisting compliance.
 o The circumstances around the enumerated acts of AAVA also show that there was no
intention on the part of AAVA to abrogate the Deed of Restrictions nor to waive its right to
have said restrictions enforced.
o Finally, a thorough examination of the records of the case shows that AAVA consistently
insisted upon compliance with the Deed of Restrictions.

Ruling: TLC and the spouses Alfonso are ordered to CEASE AND DESIST from the operation of the
Learning Child School beyond nursery and kindergarten. The current students will be allowed to finish
their elementary studies up to their graduation in Grade 7. Enrollment of new grade school students will
no longer be permitted.