Republic of the Philippines Raul S. Sison Law Offices for petitioner.

SUPREME COURT
Manila Sergio L. Guadiz for private respondents.

EN BANC G.R. No. L-76394:

G.R. No. 71169 December 22, 1988 Raul S. Sison Law Offices for petitioner.

JOSE D. SANGALANG and LUTGARDA D. Gruba, Tanlimco Lamso and Apuhin Law Offices
SANGALANG, petitioners, FELIX C. GASTON for respondents.
and DOLORES R. GASTON, JOSE V. BRIONES
and ALICIA R. BRIONES, and BEL-AIR G.R. No. L-78182:
VILLAGE ASSOCIATION, INC.,intervenors-
petitioners,
vs. Funk & Associates for petitioners.
INTERMEDIATE APPELLATE COURT, and
AYALA CORPORATION, respondents. Tee Tomas & Associates for respondents.

G.R. No. 74376 December 22, 1988 G.R. No. L-82281:

BEL-AIR VILLAGE ASSOCIATION, Funk & Associates for petitioner.

INC., petitioner,
vs. Castillo, Laman, Tan & Associates for private
THE INTERMEDIATE APPELLATE COURT, respondents.
ROSARIO DE JESUS TENORIO, and CECILIA
GONZALVEZ,respondents.

G.R. No. 76394 December 22,1988 SARMIENTO, J.:

BEL-AIR VILLAGE ASSOCIATION, Before the Court are five consolidated

INC., petitioner,
vs.
THE COURT OF APPEALS, and EDUARDO and
BUENA ROMUALDEZ respondents.
G.R. No. 78182 December 22, 1988
petitions, 1 docketed as G.R. Nos. 71169, 74376,
76394, 78182, and 82281 hereof, in the nature of
appeals (by certiorari under Rule 45 of the Rules
of Court) from five decisions of the Court of
Appeals, denying specific performance and
damages.

BEL-AIR VILLAGE ASSOCIATION, The proceedings were commenced at the first

INC., petitioner, instance by Jose Sangalang, joined by his wife
vs. Lutgarda Sangalang, both residents of No. 110
COURT OF APPEALS, DOLORES FILLEY, and J. Jupiter Street, Makati, Metro Manila (G.R. No.
ROMERO & ASSOCIATES, respondents. 71169) to enforce by specific performance
restrictive easement upon property, specifically
G.R. No. 82281 December 22, 1988 the Bel- Air Village subdivision in Makati, Metro
Manila, pursuant to stipulations embodied in the
BEL-AIR VILLAGE ASSOCIATION, deeds of sale covering the subdivision, and for
INC, petitioner, damages. Later, the Sangalangs were joined by
vs. Felix Gaston, a resident of No. 64 Jupiter Street of
COURT OF APPEALS, VIOLETA MONCAL, and the same municipality, and by Mr. and Mrs. Jose
MAJAL DEVELOPMENT and Alicia Briones, both of No. 66 Jupiter Street.
CORPORATION, respondents. Pending further proceedings, the Bel-Air Village
Association, Inc. (BAVA), an incorporated
homeowners' association, entered its appearance
Sangco, Anastacio, Castaneda & Duran Law as plaintiff-in-intervention.
Office for petitioners & private intervenors-
petitioners.
BAVA itself had brought its own complaints, four
in number, likewise for specific performance and
Raul S. Sison Law Offices for intervenor-petitioner damages to enforce the same 'deed restrictions.'
Bel-Air Village Association, Inc. Renato L. Dela (See G.R. Nos. 74376, 76394, 78182, and 82281.)
Fuente for respondent Ayala Corporation.
ANTECEDENTS FACTS
G.R. No. L-74376:
I. G.R. No. 71169
1
The facts are stated in the decision appealed
from. We quote:
xxxxxxxxx
(1) Bel-Air Village is located north of
Buendia Avenue extension (now Sen. Gil J.
Puyat Ave.) across a stretch of commercial
block from Reposo Street in the west up to
Zodiac Street in the east, When Bel-Air
Village was planned, this block between
Reposo and Zodiac Streets adjoining
Buendia Avenue in front of the village was
designated as a commercial block.
(Copuyoc TSN, p. 10, Feb. 12, 1982).
(2) Bel-Air Village was owned and developed
into a residential subdivision in the 1950s
by Makati Development Corporation
(hereinafter referred to as MDC), which in
1968 was merged with appellant Ayala
Corporation.
(3) Appellees-spouses Sangalang reside at
No. 11O Jupiter Street between Makati
Avenue and Reposo Street; appellees-
spouses Gaston reside at No. 64 Jupiter
Street between Makati Avenue and Zodiac
Street; appellees-spouses Briones reside at
No. 66 Jupiter Street also between Makati
Avenue and Zodiac Street; while appellee
Bel-Air Village Association, Inc. (hereinafter
referred to as BAVA) is the homeowners'
association in Bel-Air Village which takes
care of the sanitation, security, traffic
regulations and general welfare of the
village.
(4) The lots which were acquired by
appellees Sangalang and spouse Gaston
and spouse and Briones and spouse in
1960, 1957 and 1958, respectively, were all
sold by MDC subject to certain conditions
and easements contained in Deed
Restrictions which formed a part of each
deed of sale. The pertinent provisions in
said Deed Restrictions, which are common
to all lot owners in Bel-Air Village, are as
follows:
I-BEL-AIR ASSOCIATION
The owner of this lot/s or his successors in
interest is required to be and is
automatically a member of the Bel-Air
Association and must abide by such rules
and regulations laid down by the
Association in the interest of the sanitation,
security and the general welfare of the
community.
The association will also provide for and
collect assessments, which will constitute as
a lien on the property junior only to liens of
2
the government for taxes and to voluntary
mortgages for sufficient consideration
entered into in good faith.
II-USE OF LOTS
Subject to such amendments and additional
restrictions, reservations, servitudes, etc.,
as the Bel- Air Association may from time to
time adopt and prescribe, this lot is subject
to the following restrictions:
a. This lot/s shall not be subdivided.
However, three or more lots may be
consolidated and subdivided into a lesser
number of lots provided that none of the
resulting lots be smaller in area than the
smallest lot before the consolidation and
that the consolidation and subdivision plan
be duly approved by the governing body of
the Bel-Air Association.
b. This lot/s shall only be used for
residential purposes.
c. Only one single family house may be
constructed on a single lot, although
separate servants' quarters or garage may
be built.
d. Commercial or advertising signs shall not
be placed, constructed, or erected on this
lot. Name plates and professional signs of
homeowners are permitted so long as they
do not exceed 80 x 40 centimeters in size.
e. No cattle, pigs, sheep, goats, ducks,
geese, roosters or rabbits shall be
maintained in the lot, except that pets may
be maintained but must be controlled in
accordance with the rulings of the
Association. The term "pets' includes
chickens not in commercial quantities.
f. The property is subject to an easement of
two (2) meters within the lot and adjacent
to the rear and sides thereof not fronting a
street for the purpose of drainage, sewage,
water and other public facilities as may be
necessary and desirable; and the owner,
lessee or his representative shall permit
access thereto by authorized
representatives of the Bel-Air Association or
public utility entities for the purposes for
which the easement is created.
g. This lot shall not be used for any immoral
or illegal trade or activity.
h. The owner and/or lessee of this lot/s shall
at all times keep the grass cut and trimmed
to reduce the fire hazard of the property.
 xxx xxx xxx
VI-TERM OF RESTRICTIONS
The foregoing restrictions shall remain in
force for fifty years from January 15, 1957,
unless sooner cancelled in its entirety by
two thirds vote of members in good
standing of the Bel-Air Association.
However, the Association may, from time to
time, add new ones, amend or abolish
particular restrictions or parts thereof by
majority rule.
VII--ENFORCEMENT OF RESTRICTIONS
The foregoing restrictions may be enjoined
and/or enforced by court action by the Bel-
Air Association, or by the Makati
Development Corporation or its assigns, or
by any registered owner of land within the
boundaries of the Bel-Air Subdivision (Sub-
division plan PSD-49226 and Lot 7-B, Psd-
47848) or by any member in good standing
of the Bel-Air association." (Exh. 1 -b; Exh.
22, Annex "B"). (Appellant's Brief, pp. 4- 6)
(5) When MDC sold the above-mentioned
lots to appellees' predecessors-in-interest,
the whole stretch of the commercial block
between Buendia Avenue and Jupiter Street,
from Reposo Street in the west to Zodiac
Street in the east, was still undeveloped.
Access, therefore, to Bel-Air Village was
opened to all kinds of people and even
animals. So in 1966, although it was not
part of the original plan, MDC constructed a
fence or wall on the commercial block along
Jupiter Street. In 1970, the fence or wall was
partly destroyed by typhoon "Yoling." The
destroyed portions were subsequently
rebuilt by the appellant. (Copuyoc TSN, pp.
31-34, Feb. 12, 1982). When Jupiter Street
was widened in 1972 by 3.5 meters, the
fence or wall had to be destroyed. Upon
request of BAVA, the wall was rebuilt inside
the boundary of the commercial block.
(Copuyoc TSN, pp. 4447, Feb. 12,1982).
(6) When the appellant finally decided to
subdivide and sell the lots in the
commercial block between Buendia and
Jupiter, BAVA wrote the appellant on May 9,
1972, requesting for confirmation on the
use of the commercial lots. The appellant
replied on May 16, 1972, informing BAVA of
the restrictions intended to be imposed in
the sale and use of the lots. Among these
restrictions are: that the building shall have
a set back of 19 meters; and that with
respect to vehicular traffic along Buendia
Avenue, entrance only will be allowed, and
along Jupiter Street and side streets, both
entrance and exit will be allowed.
3
(7) On June 30, 1972, appellant informed
BAVA that in a few months it shall subdivide
and sell the commercial lots bordering the
north side of Buendia Avenue Extension
from Reposo Street up to Zodiac Street.
Appellant also informed BAVA that it had
taken all precautions and will impose upon
the commercial lot owners deed restrictions
which will harmonize and blend with the
development and welfare of Bel-Air Village.
Appellant further applied for special
membership in BAVA of the commercial lot
owners. A copy of the deed restrictions for
the commercial lots was also enclosed. The
proposed deed restrictions shall include the
19 meter set back of buildings from Jupiter
Street, the requirement for parking space
within the lot of one (1) parking slot for
every seventy five (75) meters of office
space in the building and the limitation of
vehicular traffic along Buendia to entrance
only, but allowing both vehicular entrance
and vehicular exit through Jupiter Street and
any side street.
In its letter of July 10, 1972, BAVA
acknowledged the above letter of appellant
and informed the latter that the application
for special membership of the commercial
lot owners in BAVA would be submitted to
BAVA's board of governors for decision.
(8) On September 25, 1972, appellant
notified BAVA that, after a careful study, it
was finally decided that the height
limitation of buildings on the commercial
lots shall be increased from 12.5 meters to
15 meters. Appellant further informed BAVA
that Jupiter Street shall be widened by 3.5
meters to improve traffic flow in said street.
BAVA did not reply to said letter, but on
January 22, 1973, BAVA wrote a letter to the
appellant informing the latter that the
Association had assessed the appellant, as
special member of the association, the
amount of P40,795.00 (based on 81,590
square meters at P.50 per square meter)
representing the membership dues to the
commercial lot owners for the year 1973,
and requested the appellant to remit the
amount which its board of governors had
already included in its current budget. In
reply, appellant on January 31, 1973
informed BAVA that due to the widening of
Jupiter Street, the area of the lots which
were accepted by the Association as
members was reduced to 76,726 square
meters. Thus, the corresponding dues at
P.50 per square meter should be reduced to
P38,363.00. This amount, therefore, was
remitted by the appellant to BAVA. Since
then, the latter has been collecting
membership dues from the owners of the
commercial lots as special members of the
Association. As a matter of fact, the dues
 were increased several times. In 1980, the
commercial lot owners were already being
charged dues at the rate of P3.00 per
square meter. (Domingo, TSN, p. 36, March
19, 1980). At this rate, the total
membership dues of the commercial lot
owners amount to P230,178. 00 annually
based on the total area of 76,726 square
meters of the commercial lots.
(9) Meantime, on April 4, 1975, the
municipal council of Makati enacted its
ordinance No. 81, providing for the
zonification of Makati (Exh. 18). Under this
Ordinance, Bel-Air Village was classified as a
Class A Residential Zone, with its boundary
in the south extending to the center line of
Jupiter Street (Exh. 18-A).
Thus, Chapter III, Article 1, Section 3.03,
par. F. of the Ordinance provides:
F. Bel-Air Village area, as bounded on the N
by Polaris and Mercedes streets and on the
NE by Estrella Street; on the SE by Epifanio
de los Santos Avenue and on the SW by the
center line of Jupiter Street. Then bounded
on the N by the abandoned MRR Pasig Line;
on the E by Makati Avenue; on the S by the
center line of Jupiter Street and on the W by
the center line of Reposo Street." (Exh. 18-
A)
Similarly, the Buendia Avenue Extension
area was classified as Administrative Office
Zone with its boundary in the North-North
East Extending also up to the center line of
Jupiter Street (Exh. 18b).
Thus, Chapter III, Article I, Section 3.05, par. C. of
the Ordinance provides:
C. The Buendia Avenue Extension areas, as
bounded on the N-NE by the center line of
Jupiter Street, on the SE by Epifanio de los
Santos Avenue; on the SW by Buendia
Avenue and on the NW by the center line of
Reposo Street, then on the NE by Malugay
Street; on the SE by Buendia Avenue and on
the W by Ayala Avenue Extension." (Exh. 18-
B)
The Residential Zone and the Administrative
Office Zone, therefore, have a common
boundary along the center line of Jupiter
Street.
The above zoning under Ordinance No. 81
of Makati was later followed under the
Comprehensive Zoning Ordinance for the
National Capital Region adopted by the
Metro Manila Commission as Ordinance 81
-01 on March 14, 1981 (Exh. 19). However,
under this ordinance, Bel-Air Village is
4
simply bounded in the South-Southeast by
Jupiter Street-not anymore up to the center
line of Jupiter Street (Exh. B). Likewise, the
blockdeep strip along the northwest side of
Buendia Avenue Extension from Reposo to
EDSA was classified as a High Intensity
Commercial Zone (Exh. 19-c).
Thus, the Zoning District Boundaries -Makati, in
Annex B of the Ordinance provides:
R-I-Low Intensity Residential
xxxxxxxxx
4. Bel-Air 1, 3, 4
Bounded on the North -- J.P. Rizal and
Amapola St.
South - Rockwell
Northwest - P. Burgos
Southeast - Jupiter
Southwest - Epifanio de los Santos Ave.
(EDSA)
5. Bel-Air 2
Bounded on the Northwest - J.P.
Rizal
Southwest - Makati Avenue
South --- Jupiter
Southeast -- Pasig Line
East - South Avenue" (Exh. 19-b)
xxxxxxxxx
C-3-High Intensity Commercial Zone
2. A block deep strip along the northwest
side of Buendia Ave. Ext. from Reposo to
EDSA." (Exh, 19-c)
Under the above zoning classifications,
Jupiter Street, therefore, is a common
boundary of Bel-Air Village and the
commercial zone.
(10) Meanwhile, in 1972, BAVA had installed
gates at strategic locations across Jupiter
Street which were manned and operated by
its own security guards who were employed
to maintain, supervise and enforce traffic
regulations in the roads and streets of the
 village. (Villavicencio, TSN, pp, 22-25, Oct.
30, 1980; BAVA Petition, par. 11, Exh. 17).
Then, on January 17, 1977, the Office of the
Mayor of Makati wrote BAVA directing that,
in the interest of public welfare and for the
purpose of easing traffic congestion, the
following streets in Bel-Air Village should be
opened for public use:
Amapola Street - from Estrella Street to
Mercedes Street
Amapola Street -junction of Palma Street
gate going to J. Villena Street
Mercedes Street -- from EDSA to Imelda
Avenue and Amapola junction
Zodiac Street - from Mercedes Street to
Buendia Avenue
Jupiter Street -- from Zodiac Street to
Reposo Street connecting Metropolitan
Avenue to Pasong Tamo and V. Cruz
Extension intersection
Neptune Street - from Makati Avenue to
Reposo Street Orbit Street - from F. Zobel-
Candelaria intersection to Jupiter Street
Paseo de Roxas - from Mercedes Street to
Buendia Avenue (Exh. 17, Annex A, BAVA
Petition)
On February 10, 1977, BAVA wrote the
Mayor of Makati, expressing the concern of
the residents about the opening of the
streets to the general public, and requesting
specifically the indefinite postponement of
the plan to open Jupiter Street to public
vehicles. (Exh. 17, Annex B, BAVA Petition).
However, BAVA voluntarily opened to the
public Amapola, Mercedes, Zodiac, Neptune
and Paseo de Roxas streets. (Exh. 17-A,
Answer of Makati par. 3-7).
Later, on June 17,1977, the Barangay
Captain of Bel-Air Village was advised by
the Office of the Mayor that, in accordance
with the agreement entered into during the
meeting on January 28, 1 977, the Municipal
Engineer and the Station Commander of the
Makati Police were ordered to open for
public use Jupiter Street from Makati Avenue
to Reposo Street. Accordingly, he was
requested to advise the village residents of
the necessity of the opening of the street in
the interest of public welfare. (Exh. 17,
Annex E, BAVA Petition).
5
Then, on June 10, 1977, the Municipal
Engineer of Makati in a letter addressed to
BAVA advised the latter to open for
vehicular and pedestrian traffic the entire
portion of Jupiter Street from Makati Avenue
to Reposo Street (Exh. 17, BAVA Petition,
par. 14).
Finally, on August 12, 1977, the municipal
officials of Makati concerned allegedly
opened, destroyed and removed the gates
constructed/located at the corner of Reposo
Street and Jupiter Street as well as the
gates/fences located/constructed at Jupiter
Street and Makati Avenue forcibly, and then
opened the entire length of Jupiter Street to
public traffic. (Exh. 17, BAVA Petition, pars.
16 and 17).
(11) Before the gates were-removed, there
was no parking problem or traffic problem in
Jupiter Street, because Jupiter Street was
not allowed to be used by the general public
(Villavicencio, TSN, pp. 24-25, Oct. 30,
1980). However, with the opening of Zodiac
Street from Estrella Street to Jupiter Street
and also the opening to the public of the
entire length of Jupiter Street, there was a
tremendous increase in the volume of traffic
passing along Jupiter Street coming from
EDSA to Estrella Street, then to Zodiac
Street to Jupiter Street, and along the entire
length of Jupiter Street to its other end at
Reposo Street. (Villavicencio, TSN, pp. 30-
32, Oct. 30, 1980).
In the meantime, the purchasers of the
commercial lots between Jupiter Street and
Buendia Avenue extension had started
constructing their respective buildings in
1974-1975. They demolished the portions of
the fence or wall standing within the
boundary of their lots. Many of the owners
constructed their own fences or walls in lieu
of the wall and they employed their own
security guards. (TSN, p. 83, Feb. 20,1981;
TSN, pp. 53-54; 72-74, March 20,1981; TSN,
pp. 54-55, July 23, 1981).
(12) Then, on January 27, 1978, appellant
donated the entire Jupiter Street from
Metropolitan Avenue to Zodiac Street to
BAVA (Exh. 7)- However, even before 1978,
the Makati Police and the security force of
BAVA were already the ones regulating the
traffic along Jupiter Street after the gates
were opened in 1977. Sancianco TSN, pp.
26-30, Oct. 2,1981).
In October, 1979, the fence at the corner of
Orbit and Neptune Streets was opened and
removed (BAVA Petition, par. 22, Exh. 17).
The opening of the whole stretch of Orbit
Street from J.P. Rizal Avenue up to Imelda
 Avenue and later to Jupiter Street was
agreed to at the conference attended by the
President of BAVA in the office of the Station
Commander of Makati, subject to certain
conditions, to wit:
Defendant is ordered to pay to the plaintiffs-
spouses Sangalang the following damages:
1. The sum of P500,000.00 as actual and
consequential damages;

That, maintenance of Orbit St. up to Jupiter 2. The sum of P2,000,000.00 as moral

St. shall be shouldered by the Municipality damages;
of Makati.
3. The sum of P500,000.00 as exemplary
That, street lights will be installed and damages;
maintenance of the same along Orbit St.
from J.P. Rizal Ave. up to Jupiter St. shall be 4. The sum of P100,000.00 as attorney's
undertaken by the Municipality. fees; and

That for the security of the residents of San 5. The costs of suit.
Miguel Village and Bel-Air Village, as a result
of the opening of Orbit Street, police
outposts shall be constructed by the ON INTERVENORS FELIX and DOLORES
Municipality of Makati to be headed by GASTON'S COMPLAINT:
personnel of Station No. 4, in close
coordination with the Security Guards of Defendant is ordered to pay to the spouses
San Miguel Village and Bel-Air Village." (CF. Felix and Dolores Gaston, the following
Exh. 3 to Counter-Affidavit, of Station damages:
Commander, Ruperto Acle p. 253, records)"
(Order, Civil Case No. 34948, Exh. 17-c). 1 . The sum of P400,000.00 as
consequential damages;
(13) Thus, with the opening of the entire
length of Jupiter Street to public traffic, the 2 The sum of P500,000.00 as moral
different residential lots located in the damages;
northern side of Jupiter Street ceased to be
used for purely residential purposes. They 3 The sum of P500,000.00 as exemplary
became, for all purposes, commercial in damages:
character.
4 The sum of P50,000.00 as attorney's fees;
(14) Subsequently, on October 29, 1979, and
the plaintiffs-appellees Jose D. Sangalang
and Lutgarda D. Sangalang brought the 5 The costs of suit.
present action for damages against the
defendant-appellant Ayala Corporation
predicated on both breach of contract and ON INTERVENORS JOSE and ALICIA
on tort or quasi-delict A supplemental BRIONES' COMPLAINT:
complaint was later filed by said appellees
seeking to augment the reliefs prayed for in Defendant is ordered to pay to the spouses
the original complaint because of alleged Jose and Alicia Briones, the following
supervening events which occurred during damages:
the trial of the case. Claiming to be similarly
situated as the plaintiffs-appellees, the 1 . The sum of P400,000.00 as
spouses Felix C. Gaston and Dolores R. consequential damages;
Gaston, Jose V. Briones and Alicia R. Briones,
and the homeowners' association (BAVA) 2 The sum of P500,000.00 as moral
intervened in the case. damages;

(15) After trial on the merits, the then Court 3 The sum of P500,000.00 as exemplary
of First Instance of Rizal, Pasig, Metro damages;
Manila, rendered a decision in favor of the
appellees the dispositive portion of which is 4 The sum of P50,000.00 as attorney's fees;
as follows: and

WHEREFORE, judgment is hereby 5 The costs of suit.

accordingly rendered as follows:
ON INTERVENOR BAVA'S COMPLAINT:
ON PLAINTIFFS' COMPLAINT:

6
 Defendant is ordered to pay intervenor
BAVA, the following damages:
1. The sum of P400,000.00 as consequential
damages;
2. The sum of P500,000.00 as exemplary
damages;
3. The sum of P50,000.00 as attorney's
fees; and
4. The costs of suit.
The above damages awarded to the
plaintiffs and intervenors shall bear legal
interest from the filing of the complaint.
Defendant is further ordered to
restore/reconstruct the perimeter wall at its
original position in 1966 from Reposo Street
in the west to Zodiac Street in the east, at
its own expense, within SIX (6) MONTHS
from finality of judgment.
SO ORDERED.
(Record on Appeal, pp. 400-401) 2
xxxxxxxxx
On appeal, the Court of Appeals 3 rendered
a reversal, and disposed as follows:
ACCORDINGLY, finding the decision
appealed from as not supported by the facts
and the law on the matter, the same is
hereby SET ASIDE and another one entered
dismissing the case for lack of a cause of
action. Without pronouncement as to costs.
SO ORDERED. 4
II. G.R. No. 74376
This petition was similarly brought by BAVA to
enforce the aforesaid restrictions stipulated in the
deeds of sale executed by the Ayala Corporation.
The petitioner originally brought the complaint in
the Regional Trial Court of Makati, 5 principally for
specific performance, plaintiff [now, petitioner]
alleging that the defendant [now, private
respondent] Tenorio allowed defendant [Tenorio's
co-private respondent] Gonzalves to occupy and
convert the house at 50 Jupiter Street, Bel-Air
Village, Makati, Metro Manila, into a restaurant,
without its knowledge and consent, and in
violation of the deed restrictions which provide
that the lot and building thereon must be used
only for residential purposes upon which the
prayed for main relief was for 'the defendants to
permanently refrain from using the premises as
commercial and to comply with the terms of the
7
Deed Restrictions." 6 The trial court dismissed the
complaint on a procedural ground, i.e., pendency
of an Identical action, Civil Case No. 32346,
entitled "Bel-Air Village Association, Inc. v. Jesus
Tenorio." The Court of Appeals 7affirmed, and
held, in addition, that Jupiter Street "is classified
as High density commercial (C-3) zone as per
Comprehensive Zoning Ordinance No. 81-01 for
National Capital Region," 8 following its own
ruling in AC-G.R. No. 66649, entitled "Bel-Air
Village Association, Inc. vs. Hy-Land Realty &
Development Corporation, et al."
III. G.R. No. 76394
xxxxxxxxx
Defendants-spouses Eduardo V. Romualdez,
Jr. and Buena Tioseco are the owners of a
house and lot located at 108 Jupiter St.,
Makati, Metro Manila as evidenced by
Transfer Certificate of Title No. 332394 of
the Registry of Deeds of Rizal. The fact is
undisputed that at the time the defendants
acquired the subject house and lot, several
restrictions were already annotated on the
reverse side of their title; however, for
purposes of this appeal we shall quote
hereunder only the pertinent ones, to wit:
(b,) This lot/shall be used only for residential
purposes.
xxxxxxxxx
IV. Term of Restriction
The foregoing restriction(s) shall remain in
force for fifty years from January 15, 1957,
unless sooner cancelled in its entirety by
two-thirds vote of the members in good
standing of the Bel-Air Association.
However, the Association may from time to
time, add new ones, amend or abolish
particular restrictions or parts thereof by
majority rule.
During the early part of 1979, plaintiff noted
that certain renovations and constructions
were being made by the defendants on the
subject premises, for which reason the
defendants were advised to inform the
plaintiff of the kind of construction that was
going on. Because the defendants failed to
comply with the request of the plaintiff, the
latter's chief security officer visited the
subject premises on March 23, 1979 and
found out that the defendants were putting
up a bake and coffee shop, which fact was
confirmed by defendant Mrs. Romualdez
herself. Thereafter, the plaintiff reminded
defendants that they were violating the
deed restriction. Despite said reminder, the
defendants proceeded with the construction
 of the bake shop. Consequently, plaintiff
sent defendants a letter dated April 30,
1979 warning them that if they will not
desist from using the premises in question
for commercial purposes, they will be sued
for violations of the deed restrictions.
Despite the warning, the defendants
proceeded with the construction of their
bake shop. 9
xxxxxxxxx
The trial court 10 adjudged in favor of BAVA. On
appeal, the Court of Appeals 11 reversed, on the
strength of its holding in AC-G.R. No. 66649
earlier referred to.
BAVA then elevated the matter to the Court by a
petition for review on certiorari. The
Court 12 initially denied the petition "for lack of
merit, it appearing that the conclusions of the
respondent Court of Appeals that private
respondents' bake and coffee shop lies within a
commercial zone and that said private
respondents are released from their obligations
to maintain the lot known as 108 Jupiter Street
for residential purposes by virtue of Ordinance
No. 81 of the Municipality of Makati and
Comprehensive Zoning Ordinance No. 81-01 of
the Metropolitan Manila Commission, are in
accord with law and jurisprudence," 13 for which
BAVA sought a reconsideration. Pending
resolution, the case was referred to the Second
Division of this Court, 14 and thereafter, to the
Court En Banc en consulta. 15 Per our Resolution,
dated April 29, 1988, we consolidated this case
with G.R. Nos. 74376 and 82281. 16
IV. G.R. No. 78182.
xxxxxxxxx
The case stemmed from the leasing by
defendant Dolores Filley of her building and
lot situated at No. 205 Reposo Street, Bel-
Air Village Makati, Metro Manila to her co-
defendant, the advertising firm J. Romero
and Associates, in alleged violation of deed
restrictions which stipulated that Filley's lot
could only be used for residential purposes.
Plaintiff sought judgment from the lower
court ordering the defendants to
"permanently refrain" from using the
premises in question "as commercial" and
to comply with the terms of the deed
restrictions.
After the proper proceedings, the court
granted the plaintiff the sought for relief
with the additional imposition of exemplary
damages of P50,000.00 and attorney's fees
of P10,000.00. The trial court gave
emphasis to the restrictive clauses
8
contained in Filley's deed of sale from the
plaintiff, which made the conversion of the
building into a commercial one a violation.
Defendants now seek review and reversal on
three (3) assignments of errors, namely:
I.
THE TRIAL COURT ERRED IN NOT FINDING
THAT THE REGULATIONS PROMULGATED BY
THE MUNICIPAL AUTHORITIES IN MAKATI
AND THE MINISTRY OF HUMAN
SETTLEMENT'S CHANGING THE CHARACTER
OF THE AREAS IN QUESTION HAD
RENDERED THE RESTRICTIVE EASEMENT ON
THE TITLE OF THE APPELLANTS VACATED.
II.
THE COURT ERRED IN NOT RULING THAT
BECAUSE THE APPELLEE(S) HAD ALLOWED
THE USE OF THE PROPERTY WITHIN THE
VILLAGE FOR NON- RESIDENTIAL PURPOSES,
IT IS NOW ESTOPPED FROM ENFORCING THE
RESTRICTIVE PROHIBITIONS SUBJECT
MATTER OF THIS CASE.
III.
THE COURT ERRED IN NOT FINDING THAT
THERE EXISTED A BILATERAL CONTRACT
BETWEEN THE PARTIES AND THAT SINCE
APPELLEE HAD NOT PERFORMED ITS
OBLIGATIONS UNDER THIS ARRANGEMENT
THE APPELLANT IN TURN WAS UNDER NO
OBLIGATION TO ANNOTATE THE
RESTRICTIVE PROHIBITIONS ON THE BACK
OF THE TITLE.
Appellants anchor their appeal on the
proposition that the Bel-Air Village area,
contrary to plaintiff- appellee's pretension of
being a strictly residential zone, is in fact
commercial and characterize the
restrictions contained in appellant Filley's
deed of sale from the appellee as
completely outmoded, which have lost all
relevance to the present-day realities in
Makati, now the premier business hub of the
nation, where there is a proliferation of
numerous commercial enterprises
established through the years, in fact even
within the heart of so-called "residential"
villages. Thus, it may be said that
appellants base their position on the
inexorable march of progress which has
rendered at naught the continued efficacy
of the restrictions. Appellant on the other
hand, relies on a rigid interpretation of the
contractual stipulations agreed upon with
appellant Filley, in effect arguing that the
restrictions are valid ad infinitum.
 The lower court quite properly found that
other commercial establishments exist in
the same area (in fact, on the same street)
but ignored it just the same and said-
The fact that defendants were able to prove
the existence of several commercial
establishments inside the village does not
exempt them from liability for violating
some of the restrictions evidently choosing
to accord primacy to contractual
stipulation. 17
xxxxxxxxx
The Court of Appeals 18 overturned the lower
court, 19 likewise based on AC-G.R. No. 66649.
The respondent Court observed also that J.
Romero & Associates had been given authority to
open a commercial office by the Human
Settlements Regulatory Commission.
V. G.R. No. 82281
The facts of this case have been based on
stipulation. We quote:
COMES NOW, the Parties, assisted by their
respective counsel and to this Honorable
Court, respectfully enter into the following
stipulations of facts, to wit:
1. The parties admit the personal
circumstances of each other as well as their
capacities to sue and be sued.
2. The parties admit that plaintiff BAVA for
short) is the legally constituted
homeowners' association in Bel-Air
Subdivision, Makati, Metro Manila.
3. The parties admit that defendant Violets
Moncal is the registered owner of a parcel of
land with a residential house constructed
thereon situated at No. 104 Jupiter Street,
Bel-Air Village, Makati, Metro Manila; that as
such lot owner, she is a member of the
plaintiff association.
4. The parties admit that defendant Majal
Development Corporation (Majal for short)
is the lessee of defendant Moncal's house
and lot located at No. 104 Jupiter Street.
5. The parties admit that a deed restrictions
is annotated on the title of defendant
Moncal, which provides, among others, that
the lot in question must be used only for
residential purposes;' that at time Moncal
purchased her aforesaid lot in 1959 said
deed restrictions was already annotated in
the said title.
9
6. The parties admit that when Moncal
leased her subject property to Majal, she did
not secure the consent of BAVA to lease the
said house and lot to the present lessee.
7. The parties admit that along Jupiter
Street and on the same side where Moncal's
property is located, there are restaurants,
clinics placement or employment agencies
and other commercial or business
establishments. These establishments,
however, were sued by BAVA in the proper
court.
8. The parties admit that at the time Moncal
purchased the subject property from the
Makati Development Corporation, there was
a perimeter wall, running along Jupiter
Street, which wall was constructed by the
subdivision owner; that at that time the
gates of the entrances to Jupiter Street were
closed to public traffic. In short, the entire
length of Jupiter which was inside the
perimeter wall was not then open to public
traffic
9. The parties admit that subsequent
thereto, Ayala tore down the perimeter wall
to give way to the commercial building
fronting Buendia Avenue (now Gil J. Puyat
Avenue).
10. The parties admit that on August 12,
1977, the Mayor of Makati forcibly opened
and removed the street gates constructed
on Jupiter Street and Reposo Street, thereby
opening said streets to the public.
11. The parties admit plaintiffs letters of
October 10, 23 and 31, 1984; as well as
defendants' letters-reply dated October 17
and 29, 1984. 20
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The trial court 21 dismissed the petitioner's
complaint, a dismissal affirmed on
appeal, 22 According to the appellate court, the
opening of Jupiter Street to human and vehicular
traffic, and the commercialization of the
Municipality of Makati in general, were
circumstances that had made compliance by
Moncal with the aforesaid "deed restrictions"
"extremely difficult and unreasonable," 23 a
development that had excused compliance
altogether under Article 1267 of the Civil Code.
VI. The cases before the Court; the
Court's decision.
In brief, G.R. Nos. 74376, 76394, 78182, and
82281 are efforts to enforce the "deed
restrictions" in question against specific residents
(private respondents in the petitions) of Jupiter
Street and with respect to G.R. No. 78182,
Reposo Street. The private respondents are
alleged to have converted their residences into
commercial establishments (a restaurant in G.R.
No. 74376, a bakery and coffee shop in G.R. No.
76394, an advertising firm in G.R. No. 78182; and
a construction company, apparently, in G.R. No.
82281) in violation of the said restrictions. 24
Their mother case, G. R. No. 71169 is, on the
other hand, a petition to hold the vendor itself,
Ayala Corporation (formerly Makati Development
Corporation), liable for tearing down the
perimeter wall along Jupiter Street that had
therefore closed its commercial section from the
residences of Bel-Air Village and ushering in, as a
consequence, the full "commercialization" of
Jupiter Street, in violation of the very restrictions
it had authored.
As We indicated, the Court of Appeals dismissed
all five appeals on the basis primarily of its ruling
in AC-G.R. No. 66649, "Bel-Air Village, Inc. v. Hy-
Land Realty Development Corporation, et al.," in
which the appellate court explicitly rejected
claims under the same 'deed restrictions" as a
result of Ordinance No. 81 enacted by the
Government of the Municipality of Makati, as well
as Comprehensive Zoning Ordinance No. 8101
promulgated by the Metropolitan Manila
Commission, which two ordinances allegedly
allowed the use of Jupiter Street both for
residential and commercial purposes. It was
likewise held that these twin measures were valid
as a legitimate exercise of police power.
The Court of Appeals' reliance on Ordinance Nos.
81. and 8101 is now assailed in these petitions,
particularly the Sangalang, et al. petition.
Aside from this fundamental issue, the petitioners
likewise raise procedural questions. G.R. No.
71169, the mother case, begins with one.
1. G.R. No. 71169
In this petition, the following questions are
specifically put to the Court:
May the Honorable Intermediate Appellate
Court reverse the decision of the trial court
on issues which were neither raised by
AYALA in its Answers either to the Complaint
or Supplemental Complaint nor specifically
assigned as one of the alleged errors on
appeal? 25
May the Honorable Intermediate Appellate
Court arbitrarily ignore the decisive findings
of fact of the trial court, even if
uncontradicted and/or documented, and
premised mainly on its own unsupported
conclusions totally reverse the trial court's
decision? 26
10
May the Honorable Intermediate Appellate
Court disregard the trial court's documented
findings that respondent Ayala for its own
self-interest and commercial purposes
contrived in bad faith to do away with the
Jupiter Street perimeter wall it put up three
times which wall was really intended to
separate the residential from the
commercial areas and thereby insure the
privacy and security of Bel Air Village
pursuant to respondent Ayala's express
continuing representation and/or covenant
to do so?27
a.
The first question represents an attack on the
appellate court's reliance on Ordinances Nos. 81
and 81-01, a matter not supposedly taken up at
the trial or assigned as an error on appeal. As a
rule, the Court of Appeals (then the Intermediate
Appellate Court) may determine only such
questions as have been properly raised to it, yet,
this is not an inflexible rule of procedure. In
Hernandez v. Andal, 28 it was stated that "an
unassigned error closely related to an error
properly assigned, or upon which the
determination of the question raised by the error
properly assigned is dependent, will be
considered by the appellate court
notwithstanding the failure to assign it as
error." 29
In Baquiran v. Court of Appeals, 30 we referred to
the " modern trend of procedure . . . according]
the courts broad discretionary power" 31 and in
which we allowed consideration of matters
"having some bearing on the issue submitted
which the parties failed to raise or the lower court
ignore[d]. 32 And in Vda. de Javellana v. Court of
Appeals, 33 we permitted the consideration of a
'patent error' of the trial court by the Court of
Appeals under Section 7, of Rule 51, of the Rules
of Court, 34 although such an error had not been
raised in the brief. But what we note is the fact
that the Ayala Corporation did raise the zoning
measures as affirmative defenses, first in its
answers 35 and second, in its brief, 36 and
submitted at the trial as exhibits. 37 There is
accordingly no cause for complaint on the part of
the petitioners for Ayala's violation of the Rules.
But while there was reason for the consideration,
on appeal, of the said zoning ordinances in
question, this Court nevertheless finds as
inaccurate the Court of Appeals' holding that
such measures, had "in effect, [made] Jupiter
Street ... a street which could be used not only
for residential purposes," 38 and that "[It lost its
character as a street for the exclusive benefit of
those residing in Bel-Air Village completely." 39
Among other things, there is a recognition under
both Ordinances Nos. 81 and 8 1-01 that Jupiter
Street lies as the boundary between Bel-Air
Village and Ayala Corporation's commercial
section. And since 1957, it had been considered
as a boundary not as a part of either the
residential or commercial zones of Ayala
Corporation's real estate development projects.
Thus, the Bel-Air Village Association's articles of
incorporation state that Bel-Air Village is
'bounded on the NE., from Amapola St., to de los
Santos Ave., by Estrella St., on the SE from
Extrella St., to Pedestrian Lane by E. De los
Santos Ave., on the SW., from Pedestrian Lane to
Reposo St., by Jupiter Street
. . . . 40 Hence, it cannot be said to have been "for
the exclusive benefit" of Bel-Air Village residents.
We come to the perimeter wall then standing on
the commercial side of Jupiter Street the
destruction of which opened the street to the
public. The petitioners contend that the opening
of the thoroughfare had opened, in turn, the
floodgates to the commercialization of Bel-Air
Village. The wall, so they allege, was designed
precisely to protect the peace and privacy of Bel-
Air Village residents from the din and uproar of
mercantile pursuits, and that the Ayala
Corporation had committed itself to maintain it. It
was the opinion of the Court of Appeals, as we
said, that Ayala's liability therefor, if one existed,
had been overtaken by the passage of
Ordinances Nos. 81 and 82-01, opening Jupiter
Street to commerce.
It is our ruling, we reiterate, that Jupiter Street
lies as a mere boundary, a fact acknowledged by
the authorities of Makati and the National
Government and, as a scrutiny of the records
themselves reveals, by the petitioners
themselves, as the articles of incorporation of
Bel-Air Village Association itself would confirm. As
a consequence, Jupiter Street was intended for
the use by both -the commercial and residential
blocks. It was not originally constructed,
therefore, for the exclusive use of either block,
least of all the residents of Bel-Air Village, but, we
repeat, in favor of both, as distinguished from the
general public.
When the wall was erected in 1966 and rebuilt
twice, in 1970 and 1972, it was not for the
purpose of physically separating the two blocks.
According to Ayala Corporation, it was put up to
enable the Bel-Air Village Association "better
control of the security in the area, 41 and as the
Ayala Corporation's "show of goodwill " 42 a view
we find acceptable in the premises. For it cannot
be denied that at that time, the commercial area
was vacant, "open for [sic] animals and people to
have access to Bel-Air Village." 43 There was
hence a necessity for a wall.
In any case, we find the petitioners' theory, that
maintaining the wall was a matter of a
contractual obligation on the part of Ayala, to be
pure conjecture. The records do not establish the
11
existence of such a purported commitment. For
one, the subdivision plans submitted did not
mention anything about it. For another, there is
nothing in the "deed restrictions" that would
point to any covenant regarding the construction
of a wall. There is no representation or promise
whatsoever therein to that effect.
With the construction of the commercial buildings
in 1974, the reason for which the wall was built-
to secure Bel-Air Village from interlopers had
naturally ceased to exist. The buildings
themselves had provided formidable curtains of
security for the residents. It should be noted that
the commercial lot buyers themselves were
forced to demolish parts of the wall to gain
access to Jupiter Street, which they had after all
equal right to use.
In fine, we cannot hold the Ayala Corporation
liable for damages for a commitment it did not
make, much less for alleged resort to
machinations in evading it. The records, on the
contrary, will show that the Bel-Air Village
Association had been informed, at the very
outset, about the impending use of Jupiter Street
by commercial lot buyers. We quote:
xxxxxxxxx
1. Exh. I of appellee, the memorandum of
Mr. Carmelo Caluag, President of BAVA,
dated May 10, 1972, informing the BAVA
Board of Governors and Barrio Council
members about the future use of Jupiter
Street by the lot owners fronting Buendia
Avenue. The use of Jupiter Street by the
owners of the commercial lots would
necessarily require the demolition of the
wall along the commercial block adjoining
Jupiter Street.
2. Exh. J of appellee, the minutes of the joint
meeting of BAVA Board of Governors and
the Bel-Air Barrio Council where the matter
that "Buendia lot owners will have equal
rights to use Jupiter Street," and that Ayala's
"plans about the sale of lots and use of
Jupiter Street" were precisely taken up. This
confirms that from the start BAVA was
informed that the commercial lot owners
will use Jupiter Street and that necessarily
the wall along Jupiter Street would be
demolished.
3. Exh. 10, the letter of Mr. Demetrio
Copuyoc to the President of BAVA, dated
May 16, 1972, expressly stating that
vehicular entrance and exit to the
commercial lots would be allowed along
Jupiter and side streets.
4. Exhs. 27, 27-A, 27-B, the letter of Atty.
Salvador J. Lorayes dated June 30, 1972,
 with enclosed copy of proposed restriction
for the commercial lots to BAVA. He
proposed restriction again expressly stated
that "Vehicular entrances and exits are
allowed thru Jupiter and any side streets."
5. Exh. L of appellee, the minutes of the
meeting of the members of BAVA, dated
August 26, 1972, where it is stated
"Recently, Ayala Corporation informed the
Board that the lots fronting Buendia Avenue
will soon be offered for sale, and that future
lot owners will be given equal rights to use
Jupiter Street as well as members of the
Association."
6. Exh. 25, the letter of Atty. Lorayes dated
September 25, 1972, informing BAVA of the
widening of Jupiter Street by 3.5 meters to
improve traffic flow in said street to benefit
both the residents of Bel-Air and the future
owners of the commercial lots. 44
The petitioners cannot successfully rely on the
alleged promise by Demetrio Copuyoc, Ayala's
manager, to build a "[f]ence along Jupiter with
gate for entrance and/or exit 45 as evidence of
Ayala's alleged continuing obligation to maintain
a wall between the residential and commercial
sections. It should be observed that the fence
referred to included a "gate for entrance and or
exit" which would have defeated the purpose of a
wall, in the sense the petitioners would put in
one, that is to say, an impenetrable barrier. But
as Ayala would point out subsequently, the
proposed fence was not constructed because it
had become unnecessary when the commercial
lot owners commenced constructions thereon.
Be that as it may, the Court cannot visualize any
purported obligation by Ayala Corporation to
keep the wall on the strength of this supposed
promise alone. If truly Ayala promised anything
assuming that Capuyoc was authorized to bind
the corporation with a promise it would have
been with respect to the fence. It would not have
established the pre-existing obligation alleged
with respect to the wall.
Obligations arise, among other things, from
contract. 46 If Ayala, then, were bound by an
obligation, it would have been pursuant to a
contract. A contract, however, is characterized by
a "meeting of minds between two persons . 47 As
a consensual relation, it must be shown to exist
as a fact, clearly and convincingly. But it cannot
be inferred from a mishmash of circumstances
alone disclosing some kind of an
"understanding," when especially, those
disparate circumstances are not themselves
incompatible with contentions that no accord had
existed or had been reached. 48
12
The petitioners cannot simply assume that the
wall was there for the purpose with which they
now give it, by the bare coincidence that it had
divided the residential block from the commercial
section of Bel-Air. The burden of proof rests with
them to show that it had indeed been built
precisely for that objective, a proof that must
satisfy the requirements of our rules of evidence.
It cannot be made to stand on the strength of
plain inferences.
b.
This likewise answers the petitioners' second
query, whether or not the Court of Appeals had
"arbitrarily ignore(d) the decisive findings of the
trial court." 49 i.e., findings pointing to alleged
acts performed by the Ayala Corporation proving
its commitment to maintain the wall abovesaid.
Specifically, the petitioners refer to, among other
things: (1) Ayala's alleged announcement to Bel-
Air Village Association members that "[the
perimeter wall along Jupiter Street will not be
demolished," 50 (2) Ayala's alleged commitment
"during the pendency of the case in the trial
court" to restore the wall; (3) alleged assurances
by Copuyoc that the wall will not be removed; (4)
alleged contrivances by the corporation to make
the association admit as members the
commercial lot buyers which provided them
equal access to Jupiter Street; and (5) Ayala's
donation to the association of Jupiter Street for
"private use" of Bel-Air residents. 51
682 (1903), where it was held that "whether the
plaintiffs services were solicited or whether they
were offered to the defendant for his assistance,
inasmuch as these services were accepted and
made use of by the latter, we must consider that
there was a tacit and mutual consent as to the
rendition of services." (At 686.) In that case, the
defendant had enormously benefitted from the
services that entitled the plaintiff to
compensation on the theory that no one may
unjustly enrich himself at the expense of another
(Solutio indebiti) The facts of this case differ.
As we stated, the Ayala Corporation's alleged
conduct prior to or during the proceedings below
are not necessarily at war with claims that no
commitment had been in fact made.
With respect to Ayala's alleged announcement
before the association, the Court does not agree
that Ayala had categorically assumed as an
obligation to maintain the wall "perpetually," i.e.,
until the year 2007 (the expiration date under the
"deed restrictions.") There is nothing in its
statement that would bare any commitment. In
connection with the conference between the
parties "during the pendency" of the trial, it is to
be noted that the Ayala Corporation denies
having warranted the restoration of the said wall
therein. What, on the other hand, appears in the
records is the fact that Ayala did make that
promise, but provided that the Mayor allowed it.
It turned out, however, that the Mayor balked at
the Idea. 52 But assuming that Ayala did promise
to rebuild the wall (in that conference), it does
not seem to us that it did consequently promise
to maintain it in perpetuity.
It is unfair to say, as the trial court did, that the
Ayala had "contrived to make future commercial
lot owners special members of BAVA and thereby
acquire equal right with the regular members
thereof to use Jupiter Street 53 since, as we
stated, the commercial lot buyers have the right,
in any event, to make use of Jupiter Street,
whether or not they are members of the
association. It is not their memberships that give
them the right to use it. They share that right
with Bel-Air residents from the outset.
The objective of making the commercial lot
owners special members of the Bel-Air Village
Association was not to accord them equal access
to Jupiter Street and inferentially, to give them
the right to knock down the perimeter wall. It
was, rather, to regulate the use of the street
owing precisely to the "planned" nature of Ayala's
development project, and real estate
development in general, and this could best be
done by placing the commercial lot owners under
the association's jurisdiction.
Moreover, Ayala's overtures with the association
concerning the membership of commercial lot
buyers therein have been shown to be neither
perfidious nor unethical nor devious
(paraphrasing the lower court). We quote anew:
xxxxxxxxx
(7) On June 30, 1972, appellant informed
BAVA that in a few months it shall subdivide
and sell the commercial lots bordering the
north side of Buendia Avenue Extension
from Reposo Street up to Zodiac Street.
Appellant also informed BAVA that it had
taken all precautions and will impose upon
the commercial lot owners deed restrictions
which will harmonize and blend with the
development and welfare of Bel-Air Village.
Appellant further applied for special
membership in BAVA of the commercial lot
owners. A copy of the deed restrictions for
the commercial lots was also enclosed. The
proposed deed restrictions shall include the
19 meter set back of buildings from Jupiter
Street, the requirement for parking space
within the lot of one (1) parking slot for
every seventy five (75) meters of office
space in the building and the limitation of
vehicular traffic along Buendia to entrance
only, but allowing both vehicular entrance
and vehicular exit through Jupiter Street and
any side street.
13
In its letter of July 10, 1972, BAVA acknowledged
the above letter of appellant and informed the
latter that the application for special membership
of the commercial lot owners in BAVA would be
submitted to BAVA's board of governors for
decision.
(8) On September 25,1972, appellant
notified BAVA that, after a careful study, it
was finally decided that the height
limitation of buildings on the commercial
lots shall be increased from 12.5 meters to
15 meters. Appellant further informed BAVA
that Jupiter Street shall be widened by 3.5
meters to improve traffic flow in said street.
BAVA did not reply to said letter, but on
January 22, 1973, BAVA wrote a letter to the
appellant informing the latter that the
Association had assessed the appellant, as
special member of the association, the
amount of P40,795.00 (based on 81,590
square meters at P.50 per square meter)
representing the membership dues of the
commercial lot owners for the year 1973,
and requested the appellant to remit the
amount which its board of governors had
already included in its current budget. In
reply, appellant on January 31, 1973
informed BAVA that due to the widening of
Jupiter Street, the area of the lots which
were accepted by the Association as
members was reduced to 76,726 square
meters. Thus, the corresponding due at P.50
per square meter should be reduced to
P38,363.00. This amount, therefore, was
remitted by the appellant to BAVA. Since
then, the latter has been collecting
membership dues from the owners of the
commercial lots as special members of the
Association. As a matter of fact, the dues
were increased several times. In 1980, the
commercial lot owners were already being
charged dues at the rate of P3.00 per
square meter. (Domingo, TSN, p. 36, March
19, 1980). At this rate, the total
membership dues of the commercial lot
owners amount to P230,178.00 annually
based on the total area of 76,726 square
meters of the commercial lots. 54
xxxxxxxxx
The alleged undertaking, finally, by Ayala in the
deed of donation (over Jupiter Street) to leave
Jupiter Street for the private use of Bel-Air
residents is belied by the very provisions of the
deed. We quote:
xxxxxxxxx
IV. That the offer made by the DONOR had
been accepted by the DONEE subject to the
condition that the property will be used as a
street for the use of the members of the
 DONEE, their families, personnel, guests,
domestic help and, under certain
reasonable conditions and restrictions, by
the general public, and in the event that
said lots or parts thereof cease to be used
as such, ownership thereof shall
automatically revert to the DONOR. The
DONEE shall always have Reposo Street,
Makati Avenue, and Paseo de Roxas open
for the use of the general public. It is also
understood that the DONOR shall continue
the maintenance of the street at its expense
for a period of three years from date
hereof." (Deed of Donation, p. 6, Exh. 7) 55
xxxxxxxxx
The donation, on the contrary, gave the general
public equal right to it.
The Court cannot then say, accepting the
veracity of the petitioners' facts" enumerated
above, that the Ayala Corporation may be held
liable for specific performance of a demandable
obligation, let alone damages.
The Court adds that Ayala can hardly be held
responsible for the alleged deterioration of "living
and environmental conditions" 56 of the Bel-Air
area, as a consequence of "Ayala's authorized
demolition of the Jupiter perimeter wall in 1974-
1975. " 57 We agree with Ayala that until 1976,
"there was peace and quiet" at Jupiter Street, as
the petitioners' (Sangalang, Gaston, and Briones)
complaints admit. Hence, the degeneration of
peace and order in Bel-Air cannot be ascribed to
the destruction of the wall in 1974 and 1975.
What Ayala submits as the real cause was the
opening of Jupiter Street to vehicular traffic in
1977., 58 But this was upon orders of the Mayor,
and for which the homeowners' association had
precisely filed suit (Civil Case No. 34998) 59 to
contest the act of the Mayor.
c.
This likewise disposes of the third question
presented. The petitioners' reliance on Ayala's
alleged conduct (proving its alleged
commitment), so we have ruled, is not well-
taken. Ayala's alleged acts do not, by
themselves, reflect a commitment to maintain
the wall in dispute. It cannot be therefore said
that the Court of Appeals "arbitrarily
ignore(d]" 60 the lower court's findings. Precisely,
it is the duty of the appellate court to review the
findings of the trial judge, be they of fact or
law. 61 It is not bound by the conclusions of the
judge, for which reason it makes its own findings
and arrives at its own conclusions. Unless a grave
abuse of discretion may be imputed to it, it may
accept or reject the lower tribunal's
determinations and rely solely on the records.
14
Accordingly, the Court affirms the Court of
Appeals' holding that the Ayala Corporation, in its
dealings with the petitioners, the Bel-Air Village
Association in particular, had "acted with justice,
gave the appellees [petitioners] their due and
observed honesty and good faith." 62 "Therefore,
under both Articles 19 and 21 of the Civil Code,
the appellant [Ayala] cannot be held liable for
damages." 63
2. G.R. Nos. 74376, 76394, 78182,
& 82281
Our decision also resolves, quite anticlimactically,
these companion cases. But we do so for various
other reasons. In the Sangalang case, we absolve
the Ayala Corporation primarily owing to our
finding that it is not liable for the opening of
Jupiter Street to the general public. Insofar as
these petitions are concerned, we likewise
exculpate the private respondents, not only
because of the fact that Jupiter Street is not
covered by the restrictive easements based on
the "deed restrictions" but chiefly because the
National Government itself, through the Metro
Manila Commission (MMC), had reclassified
Jupiter Street into high density commercial (C-3)
zone, 64 pursuant to its Ordinance No. 81-01.
Hence, the petitioners have no cause of action on
the strength alone of the said "deed restrictions.
In view thereof, we find no need in resolving the
questions raised as to procedure, since this
disposition is sufficient to resolve these cases.
It is not that we are saying that restrictive
easements, especially the easements herein in
question, are invalid or ineffective. As far as the
Bel-Air subdivision itself is concerned, certainly,
they are valid and enforceable. But they are, like
all contracts, subject to the overriding demands,
needs, and interests of the greater number as the
State may determine in the legitimate exercise of
police power. Our jurisdiction guarantees sanctity
of contract and is said to be the "law between the
contracting parties, 65 but while it is so, it cannot
contravene 'law, morals, good customs, public
order, or public policy. 66 Above all, it cannot be
raised as a deterrent to police power, designed
precisely to promote health, safety, peace, and
enhance the common good, at the expense of
contractual rights, whenever necessary. In
Ortigas & Co., Limited Partnership v. Feati Bank
and Trust Co., 67 we are told:
xxxxxxxxx
2. With regard to the contention that said
resolution cannot nullify the contractual
obligations assumed by the defendant-
appellee referring to the restrictions
incorporated in the deeds of sale and later
in the corresponding Transfer Certificates of
Title issued to defendant-appellee it should
 be stressed, that while non-impairment of Undoubtedly, the MMC Ordinance represents a
contracts is constitutionally guaranteed, the legitimate exercise of police power. The
rule is not absolute, since it has to be petitioners have not shown why we should hold
reconciled with the legitimate exercise of otherwise other than for the supposed "non-
police power, i.e., "the power to prescribe impairment" guaranty of the Constitution, which,
regulations to promote the health, morals, as we have declared, is secondary to the more
peace, education, good order or safety and compelling interests of general welfare. The
general welfare of the people.' Invariably Ordinance has not been shown to be capricious
described as "the most essential, insistent, or arbitrary or unreasonable to warrant the
and illimitable of powers" and "in a sense, reversal of the judgments so appealed. In that
the greatest and most powerful attribute of connection, we find no reversible error to have
government," the exercise of the power been committed by the Court of Appeals.
may be judicially inquired into and
corrected only if it is capricious, whimsical, WHEREFORE, premises considered, these
unjust or unreasonable, there having been a petitions are DENIED No pronouncement as to
denial of due process or a violation of any costs.
other applicable constitutional guarantee.
As this Court held through Justice Jose P. IT IS SO ORDERED.
Bengson in Philippine Long Distance
Company vs. City of Davao, et al. police
power 'is elastic and must be responsive to
various social conditions; it is not confined
within narrow circumscriptions of
precedents resting on past conditions; it
must follow the legal progress of a
democratic way of life.' We were even more
emphatic in Vda. de Genuino vs. The Court
of agrarian Relations, et al., when We
declared: "We do not see why public welfare
when clashing with the individual right to
property should not be made to prevail
through the state's exercise of its police
power."

Resolution No. 27, 1960 declaring the

western part of High way 54, now E. de los
Santos Avenue (EDSA, for short) from Shaw
Boulevard to the Pasig River as an industrial
and commercial zone, was obviously passed
by the Municipal Council of Mandaluyong,
Rizal 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. Judicial notice
may be taken of the conditions prevailing in
the area, especially where Lots Nos. 5 and 6
are located. The lots themselves not only
front the highway; industrial and
commercial complexes have flourished
about the place. EDSA, a main traffic artery
which runs through several cities and
municipalities in the Metro Manila area,
supports an endless stream of traffic and
the resulting activity, noise and pollution
are hardly conducive to the health, safety or
welfare of the residents in its route. Having
been expressly granted the power to adopt
zoning and subdivision ordinances or
regulations, the municipality of
Mandaluyong, through its Municipal Council,
was reasonably, if not perfectly, justified
under the circumstances, in passing the
subject resolution. 68

xxxxxxxxx
15
 CARPIO,

CORONA,

CARPIO MORALES, VELASCO, JR., NACHURA,

LEONARDO-DE CASTRO,

BRION,

PERALTA,*

BERSAMIN,

DEL CASTILLO,

ABAD,

VILLARAMA, JR.,

PEREZ, and

MENDOZA, JJ.

Promulgated:

February 25, 2010

x-------------------------------------------------------------------
-----------x

DECISION

NACHURA, J.:

This is a petition for review on certiorari under

Rule 45 of the Rules of Court, seeking to reverse,
EN BANC
annul, and set aside the Decision[1] dated
February 28, 2006 and the Resolution[2] dated
February 7, 2007 of the Court of Appeals (CA)
MACTAN-CEBU INTERNATIONAL AIRPORT (Cebu City), Twentieth Division, in CA-G.R. CV No.
AUTHORITY and AIR TRANSPORTATION OFFICE, 65796.

Petitioners,

- versus - The antecedent facts and proceedings are as

follows:
BERNARDO L. LOZADA, SR., and the

HEIRS OF ROSARIO MERCADO, namely, VICENTE

LOZADA, MARIO M. LOZADA, MARCIA L. GODINEZ, Subject of this case is Lot No. 88-SWO-25042 (Lot
VIRGINIA L. FLORES, BERNARDO LOZADA, JR., No. 88), with an area of 1,017 square meters,
DOLORES GACASAN, SOCORRO CAFARO and more or less, located in Lahug, Cebu City. Its
ROSARIO LOZADA, represented by MARCIA original owner was Anastacio Deiparine when the
LOZADA GODINEZ, same was subject to expropriation proceedings,
initiated by the Republic of the Philippines
Respondents. (Republic), represented by the then Civil
Aeronautics Administration (CAA), for the
G.R. No. 176625
expansion and improvement of the Lahug Airport.
Present: The case was filed with the then Court of First
Instance of Cebu, Third Branch, and docketed as
PUNO, C.J., Civil Case No. R-1881.

16
 As early as 1947, the lots were already occupied
by the U.S. Army. They were turned over to the
Surplus Property Commission, the Bureau of
Aeronautics, the National Airport Corporation and
then to the CAA.
During the pendency of the expropriation
proceedings, respondent Bernardo L. Lozada, Sr.
acquired Lot No. 88 from Deiparine.
Consequently, Transfer Certificate of Title (TCT)
No. 9045 was issued in Lozadas name.
On December 29, 1961, the trial court rendered
judgment in favor of the Republic and ordered
the latter to pay Lozada the fair market value of
Lot No. 88, adjudged at P3.00 per square meter,
with consequential damages by way of legal
interest computed from November 16, 1947the
time when the lot was first occupied by the
airport. Lozada received the amount of P3,018.00
by way of payment.
The affected landowners appealed. Pending
appeal, the Air Transportation Office (ATO),
formerly CAA, proposed a compromise settlement
whereby the owners of the lots affected by the
expropriation proceedings would either not
appeal or withdraw their respective appeals in
consideration of a commitment that the
expropriated lots would be resold at the price
they were expropriated in the event that the ATO
would abandon the Lahug Airport, pursuant to an
established policy involving similar cases.
Because of this promise, Lozada did not pursue
his appeal. Thereafter, Lot No. 88 was transferred
and registered in the name of the Republic under
TCT No. 25057.
The projected improvement and expansion plan
of the old Lahug Airport, however, was not
pursued.
Lozada, with the other landowners, contacted
then CAA Director Vicente Rivera, Jr., requesting
to repurchase the lots, as per previous
agreement. The CAA replied that there might still
be a need for the Lahug Airport to be used as an
emergency DC-3 airport. It reiterated, however,
the assurance that should this Office dispose and
resell the properties which may be found to be no
longer necessary as an airport, then the policy of
this Office is to give priority to the former owners
subject to the approval of the President.
On November 29, 1989, then President Corazon
C. Aquino issued a Memorandum to the
Department of Transportation, directing the
transfer of general aviation operations of the
Lahug Airport to the Mactan International Airport
17
before the end of 1990 and, upon such transfer,
the closure of the Lahug Airport.
Sometime in 1990, the Congress of the
Philippines passed Republic Act (R.A.) No. 6958,
entitled An Act Creating the Mactan-Cebu
International Airport Authority, Transferring
Existing Assets of the Mactan International
Airport and the Lahug Airport to the Authority,
Vesting the Authority with Power to Administer
and Operate the Mactan International Airport and
the Lahug Airport, and For Other Purposes.
From the date of the institution of the
expropriation proceedings up to the present, the
public purpose of the said expropriation
(expansion of the airport) was never actually
initiated, realized, or implemented. Instead, the
old airport was converted into a commercial
complex. Lot No. 88 became the site of a jail
known as Bagong Buhay Rehabilitation Complex,
while a portion thereof was occupied by
squatters.[3] The old airport was converted into
what is now known as the Ayala I.T. Park, a
commercial area.
Thus, on June 4, 1996, petitioners initiated a
complaint for the recovery of possession and
reconveyance of ownership of Lot No. 88. The
case was docketed as Civil Case No. CEB-18823
and was raffled to the Regional Trial Court (RTC),
Branch 57, Cebu City. The complaint substantially
alleged as follows:
(a) Spouses Bernardo and Rosario Lozada were
the registered owners of Lot No. 88 covered by
TCT No. 9045;
(b) In the early 1960s, the Republic sought to
acquire by expropriation Lot No. 88, among
others, in connection with its program for the
improvement and expansion of the Lahug Airport;
(c) A decision was rendered by the Court of First
Instance in favor of the Government and against
the land owners, among whom was Bernardo
Lozada, Sr. appealed therefrom;
(d) During the pendency of the appeal, the
parties entered into a compromise settlement to
the effect that the subject property would be
resold to the original owner at the same price
when it was expropriated in the event that the
Government abandons the Lahug Airport;
 (e) Title to Lot No. 88 was subsequently
transferred to the Republic of the Philippines (TCT
No. 25057);
(f) The projected expansion and improvement of
the Lahug Airport did not materialize;
(g) Plaintiffs sought to repurchase their property
from then CAA Director Vicente Rivera. The latter
replied by giving as assurance that priority would
be given to the previous owners, subject to the
approval of the President, should CAA decide to
dispose of the properties;
(h) On November 29, 1989, then President
Corazon C. Aquino, through a Memorandum to
the Department of Transportation and
Communications (DOTC), directed the transfer of
general aviation operations at the Lahug Airport
to the Mactan-Cebu International Airport
Authority;
(i) Since the public purpose for the expropriation
no longer exists, the property must be returned
to the plaintiffs.[4]
In their Answer, petitioners asked for the
immediate dismissal of the complaint. They
specifically denied that the Government had
made assurances to reconvey Lot No. 88 to
respondents in the event that the property would
no longer be needed for airport operations.
Petitioners instead asserted that the judgment of
condemnation was unconditional, and
respondents were, therefore, not entitled to
recover the expropriated property
notwithstanding non-use or abandonment
thereof.
After pretrial, but before trial on the merits, the
parties stipulated on the following set of facts:
(1) The lot involved is Lot No. 88-SWO-25042 of
the Banilad Estate, situated in the City of Cebu,
containing an area of One Thousand Seventeen
(1,017) square meters, more or less;
(2) The property was expropriated among
several other properties in Lahug in favor of the
Republic of the Philippines by virtue of a Decision
dated December 29, 1961 of the CFI of Cebu in
Civil Case No. R-1881;
(3) The public purpose for which the property
was expropriated was for the purpose of the
Lahug Airport;
18
(4) After the expansion, the property was
transferred in the name of MCIAA; [and]
(5) On November 29, 1989, then President
Corazon C. Aquino directed the Department of
Transportation and Communication to transfer
general aviation operations of the Lahug Airport
to the Mactan-Cebu International Airport
Authority and to close the Lahug Airport after
such transfer[.][5]
During trial, respondents presented Bernardo
Lozada, Sr. as their lone witness, while petitioners
presented their own witness, Mactan-Cebu
International Airport Authority legal assistant
Michael Bacarisas.
On October 22, 1999, the RTC rendered its
Decision, disposing as follows:
WHEREFORE, in the light of the foregoing, the
Court hereby renders judgment in favor of the
plaintiffs, Bernardo L. Lozada, Sr., and the heirs of
Rosario Mercado, namely, Vicente M. Lozada,
Marcia L. Godinez, Virginia L. Flores, Bernardo M.
Lozada, Jr., Dolores L. Gacasan, Socorro L. Cafaro
and Rosario M. Lozada, represented by their
attorney-in-fact Marcia Lozada Godinez, and
against defendants Cebu-Mactan International
Airport Authority (MCIAA) and Air Transportation
Office (ATO):
1. ordering MCIAA and ATO to restore to plaintiffs
the possession and ownership of their land, Lot
No. 88 Psd-821 (SWO-23803), upon payment of
the expropriation price to plaintiffs; and
2. ordering the Register of Deeds to effect the
transfer of the Certificate of Title from
defendant[s] to plaintiffs on Lot No. [88],
cancelling TCT No. 20357 in the name of
defendant MCIAA and to issue a new title on the
same lot in the name of Bernardo L. Lozada, Sr.
and the heirs of Rosario Mercado, namely:
Vicente M. Lozada, Mario M. Lozada, Marcia L.
Godinez, Virginia L. Flores, Bernardo M. Lozada,
Jr., Dolores L. Gacasan, Socorro L. Cafaro and
Rosario M. Lozada.
No pronouncement as to costs.
SO ORDERED.[6]
Aggrieved, petitioners interposed an appeal to
the CA. After the filing of the necessary appellate
briefs, the CA rendered its assailed Decision
dated February 28, 2006, denying petitioners
appeal and affirming in toto the Decision of the
RTC, Branch 57, Cebu City. Petitioners motion for
reconsideration was, likewise, denied in the
questioned CA Resolution dated February 7,
2007.
Hence, this petition arguing that: (1) the
respondents utterly failed to prove that there was
a repurchase agreement or compromise
settlement between them and the Government;
(2) the judgment in Civil Case No. R-1881 was
absolute and unconditional, giving title in fee
simple to the Republic; and (3) the respondents
claim of verbal assurances from government
officials violates the Statute of Frauds.
The petition should be denied.
Petitioners anchor their claim to the
controverted property on the supposition that the
Decision in the pertinent expropriation
proceedings did not provide for the condition that
should the intended use of Lot No. 88 for the
expansion of the Lahug Airport be aborted or
abandoned, the property would revert to
respondents, being its former owners. Petitioners
cite, in support of this position, Fery v.
Municipality of Cabanatuan,[7] which declared
that the Government acquires only such rights in
expropriated parcels of land as may be allowed
by the character of its title over the properties
If x x x land is expropriated for a particular
purpose, with the condition that when that
purpose is ended or abandoned the property
shall return to its former owner, then, of course,
when the purpose is terminated or abandoned
the former owner reacquires the property so
expropriated. If x x x land is expropriated for a
public street and the expropriation is granted
upon condition that the city can only use it for a
public street, then, of course, when the city
abandons its use as a public street, it returns to
the former owner, unless there is some statutory
provision to the contrary. x x x. If, upon the
contrary, however, the decree of expropriation
gives to the entity a fee simple title, then, of
course, the land becomes the absolute property
of the expropriator, whether it be the State, a
province, or municipality, and in that case the
non-user does not have the effect of defeating
the title acquired by the expropriation
proceedings. x x x.
When land has been acquired for public use in
fee simple, unconditionally, either by the exercise
of eminent domain or by purchase, the former
owner retains no right in the land, and the public
use may be abandoned, or the land may be
devoted to a different use, without any
19
impairment of the estate or title acquired, or any
reversion to the former owner. x x x.[8]
Contrary to the stance of petitioners, this Court
had ruled otherwise in Heirs of Timoteo Moreno
and Maria Rotea v. Mactan-Cebu International
Airport Authority,[9] thus
Moreover, respondent MCIAA has brought to our
attention a significant and telling portion in the
Decision in Civil Case No. R-1881 validating our
discernment that the expropriation by the
predecessors of respondent was ordered under
the running impression that Lahug Airport would
continue in operation
As for the public purpose of the expropriation
proceeding, it cannot now be doubted. Although
Mactan Airport is being constructed, it does not
take away the actual usefulness and importance
of the Lahug Airport: it is handling the air traffic
both civilian and military. From it aircrafts fly to
Mindanao and Visayas and pass thru it on their
flights to the North and Manila. Then, no
evidence was adduced to show how soon is the
Mactan Airport to be placed in operation and
whether the Lahug Airport will be closed
immediately thereafter. It is up to the other
departments of the Government to determine
said matters. The Court cannot substitute its
judgment for those of the said departments or
agencies. In the absence of such showing, the
Court will presume that the Lahug Airport will
continue to be in operation (emphasis supplied).
While in the trial in Civil Case No. R-1881 [we]
could have simply acknowledged the presence of
public purpose for the exercise of eminent
domain regardless of the survival of Lahug
Airport, the trial court in its Decision chose not to
do so but instead prefixed its finding of public
purpose upon its understanding that Lahug
Airport will continue to be in operation. Verily,
these meaningful statements in the body of the
Decision warrant the conclusion that the
expropriated properties would remain to be so
until it was confirmed that Lahug Airport was no
longer in operation. This inference further implies
two (2) things: (a) after the Lahug Airport ceased
its undertaking as such and the expropriated lots
were not being used for any airport expansion
project, the rights vis--vis the expropriated Lots
Nos. 916 and 920 as between the State and their
former owners, petitioners herein, must be
equitably adjusted; and (b) the foregoing
unmistakable declarations in the body of the
Decision should merge with and become an
intrinsic part of the fallo thereof which under the
premises is clearly inadequate since the
dispositive portion is not in accord with the
findings as contained in the body thereof.[10]
Indeed, the Decision in Civil Case No. R-1881
should be read in its entirety, wherein it is
apparent that the acquisition by the Republic of
the expropriated lots was subject to the condition
that the Lahug Airport would continue its
operation. The condition not having materialized
because the airport had been abandoned, the
former owner should then be allowed to reacquire
the expropriated property.[11]
On this note, we take this opportunity to revisit
our ruling in Fery, which involved an
expropriation suit commenced upon parcels of
land to be used as a site for a public market.
Instead of putting up a public market, respondent
Cabanatuan constructed residential houses for
lease on the area. Claiming that the municipality
lost its right to the property taken since it did not
pursue its public purpose, petitioner Juan Fery,
the former owner of the lots expropriated, sought
to recover his properties. However, as he had
admitted that, in 1915, respondent Cabanatuan
acquired a fee simple title to the lands in
question, judgment was rendered in favor of the
municipality, following American jurisprudence,
particularly City of Fort Wayne v. Lake Shore &
M.S. RY. Co.,[12] McConihay v. Theodore Wright,
[13] and Reichling v. Covington Lumber Co.,[14]
all uniformly holding that the transfer to a third
party of the expropriated real property, which
necessarily resulted in the abandonment of the
particular public purpose for which the property
was taken, is not a ground for the recovery of the
same by its previous owner, the title of the
expropriating agency being one of fee simple.
Obviously, Fery was not decided pursuant to our
now sacredly held constitutional right that private
property shall not be taken for public use without
just compensation.[15] It is well settled that the
taking of private property by the Governments
power of eminent domain is subject to two
mandatory requirements: (1) that it is for a
particular public purpose; and (2) that just
compensation be paid to the property owner.
These requirements partake of the nature of
implied conditions that should be complied with
to enable the condemnor to keep the property
expropriated.[16]
More particularly, with respect to the element of
public use, the expropriator should commit to use
the property pursuant to the purpose stated in
the petition for expropriation filed, failing which,
20
it should file another petition for the new
purpose. If not, it is then incumbent upon the
expropriator to return the said property to its
private owner, if the latter desires to reacquire
the same. Otherwise, the judgment of
expropriation suffers an intrinsic flaw, as it would
lack one indispensable element for the proper
exercise of the power of eminent domain,
namely, the particular public purpose for which
the property will be devoted. Accordingly, the
private property owner would be denied due
process of law, and the judgment would violate
the property owners right to justice, fairness, and
equity.
In light of these premises, we now expressly hold
that the taking of private property, consequent to
the Governments exercise of its power of
eminent domain, is always subject to the
condition that the property be devoted to the
specific public purpose for which it was taken.
Corollarily, if this particular purpose or intent is
not initiated or not at all pursued, and is
peremptorily abandoned, then the former
owners, if they so desire, may seek the reversion
of the property, subject to the return of the
amount of just compensation received. In such a
case, the exercise of the power of eminent
domain has become improper for lack of the
required factual justification.[17]
Even without the foregoing declaration, in the
instant case, on the question of whether
respondents were able to establish the existence
of an oral compromise agreement that entitled
them to repurchase Lot No. 88 should the
operations of the Lahug Airport be abandoned,
we rule in the affirmative.
It bears stressing that both the RTC, Branch 57,
Cebu and the CA have passed upon this factual
issue and have declared, in no uncertain terms,
that a compromise agreement was, in fact,
entered into between the Government and
respondents, with the former undertaking to
resell Lot No. 88 to the latter if the improvement
and expansion of the Lahug Airport would not be
pursued. In affirming the factual finding of the
RTC to this effect, the CA declared
Lozadas testimony is cogent. An octogenarian
widower-retiree and a resident of Moon Park,
California since 1974, he testified that
government representatives verbally promised
him and his late wife while the expropriation
proceedings were on-going that the government
shall return the property if the purpose for the
expropriation no longer exists. This promise was
made at the premises of the airport. As far as he
could remember, there were no expropriation
proceedings against his property in 1952 because
the first notice of expropriation he received was
in 1962. Based on the promise, he did not hire a
lawyer. Lozada was firm that he was promised
that the lot would be reverted to him once the
public use of the lot ceases. He made it clear that
the verbal promise was made in Lahug with other
lot owners before the 1961 decision was handed
down, though he could not name the government
representatives who made the promise. It was
just a verbal promise; nevertheless, it is binding.
The fact that he could not supply the necessary
details for the establishment of his assertions
during cross-examination, but that When it will
not be used as intended, it will be returned back,
we just believed in the government, does not
dismantle the credibility and truthfulness of his
allegation. This Court notes that he was 89 years
old when he testified in November 1997 for an
incident which happened decades ago. Still, he is
a competent witness capable of perceiving and
making his perception known. The minor lapses
are immaterial. The decision of the competency
of a witness rests primarily with the trial judge
and must not be disturbed on appeal unless it is
clear that it was erroneous. The objection to his
competency must be made before he has given
any testimony or as soon as the incompetency
becomes apparent. Though Lozada is not part of
the compromise agreement,[18] he nevertheless
adduced sufficient evidence to support his claim.
[19]
As correctly found by the CA, unlike in Mactan
Cebu International Airport Authority v. Court of
Appeals,[20] cited by petitioners, where
respondent therein offered testimonies which
were hearsay in nature, the testimony of Lozada
was based on personal knowledge as the
assurance from the government was personally
made to him. His testimony on cross-examination
destroyed neither his credibility as a witness nor
the truthfulness of his words.
Verily, factual findings of the trial court,
especially when affirmed by the CA, are binding
and conclusive on this Court and may not be
reviewed. A petition for certiorari under Rule 45
of the Rules of Court contemplates only questions
of law and not of fact.[21] Not one of the
exceptions to this rule is present in this case to
warrant a reversal of such findings.
21
As regards the position of petitioners that
respondents testimonial evidence violates the
Statute of Frauds, suffice it to state that the
Statute of Frauds operates only with respect to
executory contracts, and does not apply to
contracts which have been completely or
partially performed, the rationale thereof being
as follows:
In executory contracts there is a wide field for
fraud because unless they be in writing there is
no palpable evidence of the intention of the
contracting parties. The statute has precisely
been enacted to prevent fraud. However, if a
contract has been totally or partially performed,
the exclusion of parol evidence would promote
fraud or bad faith, for it would enable the
defendant to keep the benefits already delivered
by him from the transaction in litigation, and, at
the same time, evade the obligations,
responsibilities or liabilities assumed or
contracted by him thereby.[22]
In this case, the Statute of Frauds, invoked by
petitioners to bar the claim of respondents for
the reacquisition of Lot No. 88, cannot apply, the
oral compromise settlement having been partially
performed. By reason of such assurance made in
their favor, respondents relied on the same by
not pursuing their appeal before the CA.
Moreover, contrary to the claim of petitioners,
the fact of Lozadas eventual conformity to the
appraisal of Lot No. 88 and his seeking the
correction of a clerical error in the judgment as to
the true area of Lot No. 88 do not conclusively
establish that respondents absolutely parted with
their property. To our mind, these acts were
simply meant to cooperate with the government,
particularly because of the oral promise made to
them.
The right of respondents to repurchase Lot No. 88
may be enforced based on a constructive trust
constituted on the property held by the
government in favor of the former. On this note,
our ruling in Heirs of Timoteo Moreno is
instructive, viz.:
Mactan-Cebu International Airport Authority is
correct in stating that one would not find an
express statement in the Decision in Civil Case
No. R-1881 to the effect that the [condemned] lot
would return to [the landowner] or that [the
landowner] had a right to repurchase the same if
the purpose for which it was expropriated is
ended or abandoned or if the property was to be
used other than as the Lahug Airport. This
omission notwithstanding, and while the inclusion
of this pronouncement in the judgment of
condemnation would have been ideal, such
precision is not absolutely necessary nor is it
fatal to the cause of petitioners herein. No doubt,
the return or repurchase of the condemned
properties of petitioners could be readily justified
as the manifest legal effect or consequence of
the trial courts underlying presumption that
Lahug Airport will continue to be in operation
when it granted the complaint for eminent
domain and the airport discontinued its activities.
The predicament of petitioners involves a
constructive trust, one that is akin to the implied
trust referred to in Art. 1454 of the Civil Code, If
an absolute conveyance of property is made in
order to secure the performance of an obligation
of the grantor toward the grantee, a trust by
virtue of law is established. If the fulfillment of
the obligation is offered by the grantor when it
becomes due, he may demand the reconveyance
of the property to him. In the case at bar,
petitioners conveyed Lots No. 916 and 920 to the
government with the latter obliging itself to use
the realties for the expansion of Lahug Airport;
failing to keep its bargain, the government can
be compelled by petitioners to reconvey the
parcels of land to them, otherwise, petitioners
would be denied the use of their properties upon
a state of affairs that was not conceived nor
contemplated when the expropriation was
authorized.
Although the symmetry between the instant
case and the situation contemplated by Art. 1454
is not perfect, the provision is undoubtedly
applicable. For, as explained by an expert on the
law of trusts: The only problem of great
importance in the field of constructive trust is to
decide whether in the numerous and varying fact
situations presented to the courts there is a
wrongful holding of property and hence a
threatened unjust enrichment of the defendant.
Constructive trusts are fictions of equity which
are bound by no unyielding formula when they
are used by courts as devices to remedy any
situation in which the holder of legal title may not
in good conscience retain the beneficial interest.
In constructive trusts, the arrangement is
temporary and passive in which the trustees sole
duty is to transfer the title and possession over
the property to the plaintiff-beneficiary. Of
course, the wronged party seeking the aid of a
court of equity in establishing a constructive trust
must himself do equity. Accordingly, the court will
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exercise its discretion in deciding what acts are
required of the plaintiff-beneficiary as conditions
precedent to obtaining such decree and has the
obligation to reimburse the trustee the
consideration received from the latter just as the
plaintiff-beneficiary would if he proceeded on the
theory of rescission. In the good judgment of the
court, the trustee may also be paid the necessary
expenses he may have incurred in sustaining the
property, his fixed costs for improvements
thereon, and the monetary value of his services
in managing the property to the extent that
plaintiff-beneficiary will secure a benefit from his
acts.
The rights and obligations between the
constructive trustee and the beneficiary, in this
case, respondent MCIAA and petitioners over Lots
Nos. 916 and 920, are echoed in Art. 1190 of the
Civil Code, When the conditions have for their
purpose the extinguishment of an obligation to
give, the parties, upon the fulfillment of said
conditions, shall return to each other what they
have received x x x In case of the loss,
deterioration or improvement of the thing, the
provisions which, with respect to the debtor, are
laid down in the preceding article shall be applied
to the party who is bound to return x x x.
On the matter of the repurchase price, while
petitioners are obliged to reconvey Lot No. 88 to
respondents, the latter must return to the former
what they received as just compensation for the
expropriation of the property, plus legal interest
to be computed from default, which in this case
runs from the time petitioners comply with their
obligation to respondents.
Respondents must likewise pay petitioners the
necessary expenses they may have incurred in
maintaining Lot No. 88, as well as the monetary
value of their services in managing it to the
extent that respondents were benefited thereby.
Following Article 1187[24] of the Civil Code,
petitioners may keep whatever income or fruits
they may have obtained from Lot No. 88, and
respondents need not account for the interests
that the amounts they received as just
compensation may have earned in the meantime.
In accordance with Article 1190[25] of the Civil
Code vis--vis Article 1189, which provides that (i)f
a thing is improved by its nature, or by time, the
improvement shall inure to the benefit of the
creditor x x x, respondents, as creditors, do not
have to pay, as part of the process of restitution,
the appreciation in value of Lot No. 88, which is a
natural consequence of nature and time.[26]

WHEREFORE, the petition is DENIED. The

February 28, 2006 Decision of the Court of
Appeals, affirming the October 22, 1999 Decision
of the Regional Trial Court, Branch 87, Cebu City,
and its February 7, 2007 Resolution are
AFFIRMED with MODIFICATION as follows:

1. Respondents are ORDERED to return to

petitioners the just compensation they received
for the expropriation of Lot No. 88, plus legal
interest, in the case of default, to be computed
from the time petitioners comply with their
obligation to reconvey Lot No. 88 to them;

2. Respondents are ORDERED to pay petitioners

the necessary expenses the latter incurred in
maintaining Lot No. 88, plus the monetary value
of their services to the extent that respondents
were benefited thereby;

3. Petitioners are ENTITLED to keep whatever

fruits and income they may have obtained from
Lot No. 88; and

4. Respondents are also ENTITLED to keep

whatever interests the amounts they received as
just compensation may have earned in the
meantime, as well as the appreciation in value of
Lot No. 88, which is a natural consequence of
nature and time;

In light of the foregoing modifications, the case

is REMANDED to the Regional Trial Court, Branch
57, Cebu City, only for the purpose of receiving
evidence on the amounts that respondents will
have to pay petitioners in accordance with this
Courts decision. No costs.

SO ORDERED.

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