CASE NO.

02
Ortigas & Co., Ltd. Partnership v. Feati Bank and Trust Co.
G.R. No. L-24670 December 23, 1979

Facts:

This case involves a dispute between Ortigas Co., Limited Partnership (plaintiff-
appellant) and Feati Bank and Trust Co. (defendant-appellee) over the construction
of a commercial bank building on two parcels of land in the Highway Hills
Subdivision in Mandaluyong, Rizal. The plaintiff, a real estate developer, had sold
the lots to vendees who later transferred their rights to Emma Chavez. The deeds of
sale contained restrictions that the land should be used exclusively for residential
purposes and that any buildings constructed should meet certain specifications.
These restrictions were annotated in the transfer certificates of title (TCTs) issued to
Emma Chavez and subsequently to the defendant-appellee.

Issue:

The main issue in the case is whether the municipal resolution, Resolution No. 27,
which allows the commercial use of the lots, supersedes the building restrictions
agreed upon by the parties.

Ruling:

The Supreme Court upheld the trial court's decision. It held that the validity of the
resolution was not questioned before the trial court and therefore cannot be raised
on appeal. The court ruled in favor of the defendant-appellee, stating that the
municipal resolution is a valid exercise of police power and therefore supersedes the
building restrictions.

Ratio:

The court explained that police power is the power of the state to promote the general
welfare and may interfere with personal liberty, property, and business. The court
cited previous cases that recognized the evolving nature of police power and its
ability to regulate new issues brought about by advancing civilization and changing
societal needs. The court emphasized that the non-impairment clause of the
Constitution does not bar the proper exercise of police power, as long as the motives
behind the exercise are reasonable and in response to a felt public need.

The court further stated that existing laws and the reservation of essential attributes
of sovereign power are read into contracts, and the policy of protecting contracts
against impairments presupposes the maintenance of a government with adequate
authority to secure the peace and good order of society. The court also noted that
American jurisprudence and authorities are not per se controlling in the Philippines,
and the intention of local lawmakers must be considered in interpreting laws.
Summary:

In summary, the Supreme Court upheld the trial court's decision in favor of the
defendant-appellee. The court ruled that the municipal resolution allowing the
commercial use of the lots supersedes the building restrictions agreed upon by the
parties. The court emphasized the validity of police power and its ability to regulate
for the general welfare. The court also highlighted the importance of considering the
intention of local lawmakers in interpreting laws.