G.R. No. L-71169, L-74376, L-76394, L-78182, L-82281 December 22, 1988
JOSE D. SANGALANG, et al., petitioners, vs. INTERMEDIATE APPELLATE COURT and AYALA CORPORATION, respondents.

FACTS

The consolidated petitions originated from complaints for specific performance and damages filed by residents of Bel-Air Village and the Bel-Air Village Association, Inc. (BAVA) against Ayala Corporation. The petitioners sought to enforce “deed restrictions” that were part of the original sales contracts for subdivision lots, which stipulated that lots were for residential use only and that owners automatically became members of BAVA, bound by its rules. The core dispute arose when Ayala Corporation, the successor developer, sold lots on the southern side of Jupiter Street, directly across from the residential village, to commercial entities. These sales allowed the construction of commercial buildings, which the petitioners argued violated the restrictive covenants intended to preserve the exclusive residential character of the entire Bel-Air area, including the ambiance and property values of their homes.
The petitioners contended that the original developer, Makati Development Corporation (later merged with Ayala), created a general building scheme for the entire subdivision, making the residential restrictions enforceable by any lot owner against another. They argued that the commercial development across Jupiter Street constituted a breach of this scheme. Ayala Corporation defended its actions by asserting that the lots sold for commercial use were part of a designated commercial block, separate from the residential village, and that the deed restrictions were personal covenants between the seller and each individual buyer, not enforceable by other lot owners.

ISSUE

The principal issue was whether the “deed restrictions” constituted real covenants (imposing a restrictive easement) that run with the land and are enforceable by any lot owner within the subdivision against any other, or whether they were merely personal obligations between the original seller and each buyer.

RULING

The Supreme Court ruled in favor of Ayala Corporation and upheld the decisions of the Intermediate Appellate Court. The legal logic centered on the nature of the covenants and the intent of the original parties. The Court held that for a restriction to be considered a real covenant (or easement) that runs with the land, it must be established that the original grantor intended to create a general building scheme for the benefit of all lots within a defined area. The deed restrictions in the Bel-Air sales contracts, while uniform, did not expressly state they were for the benefit of all lot owners or that they intended to create reciprocal rights among purchasers.
The Court found that the restrictions were primarily imposed by the developer-vendor upon individual buyers to control development and ensure membership in the homeowners’ association. They were contractual stipulations in pari delicto (in equal fault) and did not create an encumbrance on the title that would bind subsequent owners of other lots. The lots sold for commercial use were part of a pre-designated commercial zone, and the developer retained the right to sell them without residential restrictions. Consequently, the petitioners, as owners of residential lots, had no legal standing to enforce these personal covenants against the developer or the commercial lot owners. The right to enforce was personal to the original vendor, Ayala Corporation, which had waived it. The Court emphasized that zoning ordinances enacted by Makati, which classified the area as commercial, further supported the propriety of the commercial development.