Ortigas & Co., Limited Partnership, Vs. Feati Bank And Trust Co. G.R. No. L-24670 December 14, 1979

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ORTIGAS & CO., LIMITED PARTNERSHIP, vs. FEATI BANK AND TRUST CO.

G.R. No. L-24670 December 14, 1979

EN BANC, SANTOS, J.

 

Constitutional Law; Non-impairment of Contracts; Superiority of Police Power of the State 

 

While non-impairment of contracts is constitutionally guaranteed, the rule is not absolute since it must be reconciled with the legitimate exercise of police power. Legitimate measures of Police Power prevails over the contract stipulations.

Plaintiff Ortigas & Co., Limited Partnership is engaged in real estate business, specifically the Highway Hills Subdivision along Epifanio de los Santos Avenue, Mandaluyong, Rizal. Plaintiff sold Lots 5 and 6 of the subdivision through installment agreements in 1952, with restrictions on use and construction. Vendees later transferred the lots to Emma Chavez, and upon full payment, plaintiff executed deeds of sale. Building restrictions were annotated in TCTs issued to Emma Chavez, to be exclusive for residential purposes only. 

Feati then acquired Lot 5 directly from Emma Chavez and Lot 6 from Republic Flour Mills. Feati started construction of a building on both lots to be devoted for banking purposes but could also be for residential use. Ortigas sent a written demand to stop construction but Feati continued contending that the building was being constructed according to the zoning regulations as stated in Municipal Resolution 27 declaring the area along the West part of EDSA to be a commercial and industrial zone. 

 

Whether Resolution No. 27, series of 1960, declaring the area a commercial and industrial zone, is a valid exercise of police power. 

YES.  The resolution is a regulatory measure within the municipality's power to adopt zoning and subdivision ordinances. Resolution No. 27 was obviously passed in exercise of police power to safeguard health, safety, peace and order and the general welfare of the people in the locality as it would not be a conducive residential area considering the amount of traffic, pollution, and noise which results in the surrounding industrial and commercial establishments. The municipality was justified in passing the resolution to promote the health, safety, peace, good order, and general welfare of the people in the are 

 

Whether the resolution can nullify or supersede the contractual obligations assumed by defendant-appellee.

YES. Resolution No. 27 prevails over the contract stipulations. Section 3 of RA 2264 of the Local Autonomy Act empowers a Municipal Council to adopt zoning and subdivision ordinances or regulations for the Municipality. Although non-impairment of contracts is constitutionally guaranteed, it is not absolute since it has to be reconciled with the legitimate exercise of police power, e.g. the power to promote health, morals, peace, education, good order or safety and general welfare of the people. The public welfare when clashing with the individual right to property should prevail through the state’s exercise of its police power.

 

 

 

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