7/27/2019 Ayala Corporation vs Rosa- Diana

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Ayala Corporation VS. ROSA DIANA REALTY Case Digest

Ayala Corporation VS. ROSA DIANA REALTY

346 SCRA 633

FACTS: In April 1976, appellant-petitioner entered into a transaction with Manuel Sy and Sy Ka Kiengwhere former sold a lot in Salcedo Village in Makati. The deed of sale had some encumbrances

contained in the Special Conditions of Sale (SCS) and Deed of Restrictions (DR), which should be

followed by the vendees. The stipulations in the SCS are:

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 on or before 1979, and

3) that there will be no resale of the lot.

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 deedof 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.

7/27/2019 Ayala Corporation vs Rosa- Diana

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ISSUE: Whether or not Rosa Diana committed a breach of contract.

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 submitting a different building plan to the building

administrator of Makati, which did not comply with the stipulations in the DR.

Contractual Obligations between parties have the force of law between them 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.

Thus, the assailed decision of the Court of Appeals is reversed and set aside.