Case Digest: Ayala Corporation v. Rosa-Diana Realty and Development Corporation

AYALA CORPORATION, petitioner, vs.
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.’

Rosa-Diana submitted to Ayala for approval envisioned a 24-meter high, 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.