AYALA CORPORATION, petitioner, vs.
Rosa-Diana submitted to Ayala for approval envisioned a 24-meter high,
ROSA-DIANA REALTY AND DEVELOPMENT CORPORATION,
respondent.
December 1, 2000
FACTS:
Petitioner, Ayala Corporation, was the registered owner of a parcel of land
located in Alfaro Street, Salcedo Village, Makati City with an area of 840
square meters, more or less, and covered by Transfer Certificate of Title (TCT)
No. 233435 of the Register of Deeds of Rizal.
On April 20, 1976, Ayala sold the lot to Manuel Sy married to Vilma Po and Sy
Ka Kieng married to Rosa Chan. The Deed of Sale executed between Ayala
and the buyers contained special conditions of sale and deed restrictions. The
Deed Restrictions contained the stipulation that the gross floor area of the
building to be constructed shall not be more than five (5) times the lot area and
the total height shall not exceed forty-two (42) meters. The restrictions were to
expire in the year 2025.
The buyers Sy and Kieng failed to construct the building in violation of the
Special Conditions of Sale. Notwithstanding the violation, in April 1989 they
were able to sell the lot to respondent Rosa-Diana Realty and Development
Corporation with Ayala’s approval and with the same special conditions and
restrictions.
In consideration for Ayala to release the Certificate of Title of the property,
Rosa Diana, on July 27, 1989, executed an Undertaking promising to abide by
the special conditions of sale executed by Ayala with the original buyers. Upon
submission of the Undertaking together with the building plans for a
condominium project, known as “The Peak”, Ayala released title to the lot,
thereby enabling Rosa-Diana to register the deed of sale in its favor and
obtain Certificate of Title No. 165720 in its name. The title carried as
encumbrances the special conditions of sale and the deed restrictions. Rosa-
Diana’s building plans as approved by Ayala were ‘subject to strict compliance
of cautionary notices appearing on the building plans and to the restrictions
encumbering the Lot regarding the use and occupancy of the same.’
seven-(7) storey condominium project with a gross floor area of 3,968.56
square meters. It, however, submitted a different set of building plan of “The
Peak” to the building official of Makati that contemplated a 91.65-meter high,
38-storey condominium building with a gross floor area of 23,305.09 square
meters. The construction of the building ensued.
Thereafter, Ayala prayed for rescission of the sale of the subject lot to Rosa-
Diana Realty. The lower court denied Ayala’s prayer for injunctive relief, thus
enabling Rosa-Diana to complete the construction of the building. Undeterred,
Ayala tried to cause the annotation of a notice of lis pendens on Rosa-Diana’s
title. The Register of Deeds of Makati, however, refused registration of the
notice of lis pendens on the ground that the case pending before the trial
court, being an action for specific performance and/or rescission, is an action
in personal, which does not involve the title, use or possession of the property.
The Land Registration Authority (LRA) reversed the ruling of the Register of
Deeds saying that an action for specific performance or recession may be
classified as a proceeding of any kind in court directly affecting title to the land
or the use or occupation thereof for which a notice of lis pendens may be held
proper.
The decision of the LRA, nevertheless, was overturned by the Court of
Appeals citing its decision under the doctrine of stare decisis in Ayala
Corporation vs. Ray Burton Development Corporation, a case similar to the
present case. Ayala however contended that the pronouncement by the CA in
its case with Ray Burton Development Corporation is merely an obiter dictum
in as much as the only issue raised in the present case was the propriety of
the lis pendens annotation on the Certificate of Title of the subject lot.
ISSUE:
Whether or not the Court of Appeals erred in dismissing Ayala’s appeal based
on its decision on Ayala vs. Ray Burton Development Corporation under the
doctrine of stare decisis.
HELD:
Yes. There is no reason how the law of the case or stare decisis can be held
to be applicable in the case at bar. If at all, the pronouncement made by the
Court of Appeals that petitioner Ayala is barred from enforcing the deed of
restrictions can only be considered as an obiter dicta. As earlier mentioned,
the only issue before the Court of Appeals at the time was the propriety of the
annotation of the lis pendens. The additional pronouncement of the Court of
Appeals that Ayala is estopped from enforcing the deed of restrictions even as
it recognized that the said issue is being tried before the trial court was not
necessary to dispose of the issue as to the propriety of the annotation of the lis
pendens. A dictum is an opinion of the judge, which does not embody the
resolution or determination of the court, and made without argument, or full
consideration of the point, not the proffered deliberate opinion of the judge
himself. It is not necessarily limited to the issues essential to the decision but
may also include expressions or opinion, which are not necessary to support
the decision reached by the court. Mere dicta are not binding under the
doctrine of stare decisis.
The appellate court’s decision in Ayala vs. Ray Burton cannot also be cited as
a precedent under the doctrine of stare decisis. It must be pointed out that the
time the presently assailed decision of the CA was rendered, the Ayala vs.
Ray Burton case was on appeal to the Court. As held by the Court in Ayala vs.
Ray Burton, the CA went beyond the sole issue raised before it and made
factual findings without any basis in the record to rule inappropriately that
Ayala is in estoppel and has waived its right to enforce the subject restrictions.
Thus, the assailed Decision and Resolution of the Court of Appeals was
reversed and set aside. Rosa Diana was also ordered to pay Ayala
development charges and damages.
The DR specified the limits in height and floor area of the building to be
constructed. However, Sy and Kieng, failed to build a building but nonetheless
with the permission of Ayala, the vendees sold the said lot to the respondent,
Rosa Diana Realty. Respondent Company agreed to abode by the SCS and
the DR stipulations. Prior to the construction, Rosa Diana submitted a building
plan to Ayala complying with the DR but it also passed a different building plan
to the building administrator of Makati, which did not comply with the
stipulations in the DR. While the building, “The Peak,” was being constructed,
Ayala filed a case praying that: 1) Rosa Diana, be compelled to comply with
the DR and build the building in accordance with the building plan submitted to
Ayala; or 2) on the alternative, the rescission of the deed of sale.
The trial court ruled in favor of the respondent and thus, Rosa Diana was able
to complete the construction of “The Peak.” Undeterred, Ayala filed before the
Register of Deeds (RD) of Makati a cause of annotation lis pendens. RD
refused to grant Ayala such registration for in the lower court; the case is of
personal action for a specific performance and/or rescission. However, the
Land Registration Authority (LRA) reversed RD’s ruling. The appellate court
upheld the RD’s ruling stating that the case before the trial court is a personal
action for the cause of action arises from the alleged violation of the DR. The
trial court sustained the respondent’s point saying that Ayala was guilty of
abandonment and/or estoppels due to its failure to enforce the terms of the DR
and SCS against Sy and Kieng. Ayala discriminately chose which obligor
would be made to follow certain conditions, which is not fair and legal. On
appeal, the CA affirmed the lower court’s ruling. Hence, this petition.

Ayala Corporation VS. ROSA DIANA REALTY Case Digest Ayala ISSUE: Whether or not Rosa Diana committed a breach of contract.
Corporation VS. ROSA DIANA REALTY 346 SCRA 633
RULING: Yes, the Supreme Court ruled that Rosa Diana committed a breach
of contract by submitting a building plan to Ayala complying with the DR and
FACTS: In April 1976, appellant-petitioner entered into a transaction with
submitting a different building plan to the building administrator of Makati,
Manuel Sy and Sy Ka Kieng where former sold a lot in Salcedo Village in
which did not comply with the stipulations in the DR.
Makati. The deed of sale had some encumbrances contained in the Special
Conditions of Sale (SCS) and Deed of Restrictions (DR), which should be
Contractual Obligations between parties have the force of law between them
followed by the vendees. The stipulations in the SCS are:
and absent any allegation that the same are contrary to law, morals, good
customs, public order or public policy, they must complied with in good faith.
1) a building proposal must be submitted to Ayala which must be in
accordance with the DR, 2) the construction of the building must be completed
Thus, the assailed decision of the Court of Appeals is reversed and set aside.
on or before 1979, and 3) that there will be no resale of the lot.