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G.R. No. 71169 December 22, 1988

Jose Sangalang and wife, herein petitioners are residents of Jupiter Street, Makati
Metro Manila. Sangalang and the other petitioners who are also residents of Jupiter
Street initially filed a case against Ayala to enforce by specific performance
restrictive easement upon property pursuant to stipulations embodied in the deeds
of sale covering the subdivision, and for damages. The other petitions were also
for the enforcement of the aforesaid restrictions stipulated in the deeds of sale
executed by the Ayala Corporation.
The lots which were acquired by the petitioners, were all sold by MDC subject to
certain conditions and easements contained in Deed Restrictions which formed a
part of each deed of sale. 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. Altough it was not part of the original plan, MDC
constructed a fence or wall on the commercial block along Jupiter.
In 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. Under the zoning classifications, Jupiter Street,
therefore, is a common boundary of Bel-Air Village and the commercial zone.
Gates had been installed by BAVA (Bell-Arat 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. Then, on January 17, 1977, the Office of the Mayor of Makati directed that,
in the interest of public welfare and for the purpose of easing traffic congestion, the
streets in Bel-Air Village should be opened for public use. The other streets in BelAir Village were voluntarily opened except Jupiter Street. 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. Finally, 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.
Petitioners brought the present action for damages against the defendant-appellant
Ayala Corporation predicated on both breach of contract and on tort or quasi-delict.
After trial on the merits, the then Court of First Instance favored the petitioners and
awarded damages. 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,
On appeal, CA reversed the lower court, finding the decision appealed from as not
supported by the facts and the law on the matter, it was set aside and another one
entered dismissing the case for lack of a cause of action.
1. Whether or not Ayala Corporation is liable for damages as a result of the
destruction of the perimeter wall.
2. Whether or not the exercise of police power is valid.
1. NO. Jupiter Street lies as the boundary between Bel-Air Village and Ayala
Corporation's commercial section, 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, hence it cannot be said to have been "for the exclusive
benefit" of Bel-Air Village residents.
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, and as the Ayala
Corporation's "show of goodwill". That maintaining the wall was a matter of a
contractual obligation on the part of Ayala, to be pure conjecture. 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.
2. Yes. While non-impairment of contracts is constitutionally guaranteed, the rule is
not absolute, since it has to be reconciled with the legitimate exercise of police
power, i.e., "the power to prescribe regulations to promote the health, morals,
peace, education, good order or safety and general welfare of the people.'
Invariably described as "the most essential, insistent, and illimitable of powers" and
"in a sense, the greatest and most powerful attribute of government," the exercise
of the power may be judicially inquired into and corrected only if it is capricious,
whimsical, unjust or unreasonable, there having been a denial of due process or a
violation of any other applicable constitutional guarantee. 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.