Docket No. : G.R. No.

126102, December 4, 2000

Petitioner: ORTIGAS & CO. LTD.

Respondent: THE COURT OF APPEALS and ISMAEL G. MATHAY III

Source: https://lawphil.net/judjuris/juri2000/dec2000/gr_126102_2000.html

Subject: Statutory Construction

Syllabus/ Part VII: Construction of Conflicting Provisions

Topic: B. Retroactivity of Statutes
2. Police Power

Facts:

Ponente: Justice Quisumbing

Jurisdiction: Supreme Court of the Philippines

Facts:
The case involves a dispute over a parcel of land located in Greenhills Subdivision IV, San Juan, Metro
Manila. In 1976, Ortigas & Company sold the land to Emilia Hermoso with specific contractual
restrictions, including an exclusive residential use requirement. Subsequently, in 1981, a zoning
ordinance (MMC Ordinance No. 81-01) was enacted, reclassifying a portion of the area, including the
land in question, as commercial.

In 1984, Ismael Mathay III entered into a lease agreement with Emilia Hermoso and J.P. Hermoso
Realty Corp. for the same parcel of land. Mathay III, acting as lessee, constructed a single-story
commercial building for his company, Greenhills Autohaus, Inc.

In 1995, Ortigas & Company filed a complaint against Emilia Hermoso, seeking the demolition of the
commercial structure, alleging violations of the contractual terms. The complaint was later amended to
include Mathay III and J.P. Hermoso Realty Corp. as defendants.

The trial court issued a preliminary injunction in June 1995, restraining Ortigas & Company from taking
any action against the construction. Mathay III subsequently filed a petition with the Court of Appeals,
arguing that the zoning ordinance effectively nullified the contractual restrictions, and thus the
preliminary injunction should be lifted.

The Court of Appeals granted Mathay III's petition, holding that the zoning ordinance superseded the
contractual restrictions, thereby justifying the dissolution of the preliminary injunction. Ortigas &
Company appealed this decision to the Supreme Court.

Issues:
1. Whether the Court of Appeals erred in nullifying the preliminary injunction issued by the trial
court.
2. Whether Mathay III, as a lessee, had the legal standing to challenge the validity of the deed of
sale.

Ruling:

The Supreme Court upheld the Court of Appeals' ruling, emphasizing the retroactive effect of the
zoning ordinance due to police power. It also affirmed Mathay III's standing as a real party in interest,
given his leasehold interest and possession of the property. Consequently, the appellate court's
decision was affirmed, and costs were imposed on Ortigas & Company.

1. Retroactivity of Statutes:The court acknowledged the general principle that laws are construed
as having prospective operation, and only laws existing at the time of contract execution are
applicable. "Lex prospicit, non respicit" is a Latin phrase that translates to "The law looks
forward, not backward."

However, exceptions exist, particularly concerning police power legislation. In this case, MMC
Ordinance No. 81-01, enacted to regulate land use for the welfare of the community, was
 deemed applicable retroactively to existing contracts.

2. Police Power: The court recognized the legitimate exercise of police power by the State to
promote the general welfare, including regulating land use. Such legislation can reasonably
impair contracts and is applicable not only to future contracts but also to those already in
existence. MMC Ordinance No. 81-01 was upheld as a valid exercise of police power, justifying
its retroactive effect on existing contracts.

Statutory Basis:
● The court relied on Sangalang vs. Intermediate Appellate Court, which upheld MMC Ordinance
No. 81-01 as a legitimate police power measure.
● It cited Ortigas & Co., Ltd. vs. Feati Bank & Trust Co. to support the precedence of zoning
ordinances over contractual restrictions, especially when retroactively applied.

Vocabulary Words to Remember:

"Lex prospicit, non respicit" is a Latin phrase that translates to "The law looks forward, not
backward." This phrase encapsulates the general principle that laws typically have prospective
application, meaning they apply to future events or transactions rather than past ones. In legal
contexts, it suggests that laws are generally not retroactive and do not affect situations or
contracts that occurred before their enactment.