Republic of the Philippines therein. 4 Defendant-appellee bought Lot No.

rein. 4 Defendant-appellee bought Lot No. 5 directly from Emma Chavez, "free from all liens and
SUPREME COURT encumbrances as stated in Annex 'D', 5 while Lot No. 6 was acquired from Republic Flour Mills
Manila through a "Deed of Exchange," Annex "E". 6 TCT No. 101719 in the name of Republic Flour Mills
likewise contained the same restrictions, although defendant-appellee claims that Republic Flour
Mills purchased the said Lot No. 6 "in good faith. free from all liens and encumbrances," as stated in
EN BANC the Deed of Sale, Annex "F" 7 between it and Emma Chavez.

G.R. No. L-24670 December 14, 1979 Plaintiff-appellant claims that the restrictions annotated on TCT Nos. 101509, 101511, 101719,
101613, and 106092 were imposed as part of its general building scheme designed for the
beautification and development of the Highway Hills Subdivision which forms part of the big landed
ORTIGAS & CO., LIMITED PARTNERSHIP, plaintiff- estate of plaintiff-appellant where commercial and industrial sites are also designated or established.
appellant, vs. 8
FEATI BANK AND TRUST CO., defendant-appellee.
Ramirez & Ortigas for appellant. Defendant-appellee, upon the other hand, maintains that the area along the western part of Epifanio
Tañada, Teehankee & Carreon for appellee. de los Santos Avenue (EDSA) from Shaw Boulevard to Pasig River, has been declared a commercial
and industrial zone, per Resolution No. 27, dated February 4, 1960 of the Municipal Council of
SANTOS, J.: Mandaluyong, Rizal. 9 It alleges that plaintiff-appellant 'completely sold and transferred to third
persons all lots in said subdivision facing Epifanio de los Santos Avenue" 10 and the subject lots
An appeal interposed on June 23, 1965 by plaintiff-appellant, Ortigas & Co., Limited Partnership, thereunder were acquired by it "only on July 23, 1962 or more than two (2) years after the area ...
from the decision of the Court of First Instance of Rizal, Branch VI, at Pasig, Hon. Andres Reyes had been declared a commercial and industrial zone ... 11
presiding, which dismissed its complaint in Civil Case No. 7706, entitled, "Ortigas & Company,
Limited Partnership, plaintiff, v. Feati Bank and Trust Company, defendant," for lack of merit. On or about May 5, 1963, defendant-appellee began laying the foundation and commenced the
construction of a building on Lots Nos. 5 and 6, to be devoted to banking purposes, but which
defendant-appellee claims could also be devoted to, and used exclusively for, residential purposes.
The following facts — a reproduction of the lower court's findings, which, in turn, are based on a The following day, plaintiff-appellant demanded in writing that defendant-appellee stop the
stipulation of facts entered into by the parties are not disputed. Plaintiff (formerly known as "Ortigas, construction of the commerical building on the said lots. The latter refused to comply with the
Madrigal y Cia") is a limited partnership and defendant Feati Bank and Trust Co., is a corporation duly demand, contending that the building was being constructed in accordance with the zoning
organized and existing in accordance with the laws of the Philippines. Plaintiff is engaged in real regulations, defendant-appellee having filed building and planning permit applications with the
estate business, developing and selling lots to the public, particularly the Highway Hills Subdivision Municipality of Mandaluyong, and it had accordingly obtained building and planning permits to
along Epifanio de los Santos Avenue, Mandaluyong, Rizal. 1 proceed with the construction.12

On the basis of the foregoing facts, Civil Case No. 7706, supra, was submitted in the lower court for
On March 4, 1952, plaintiff, as vendor, and Augusto Padilla y Angeles and Natividad Angeles, as
decision. The complaint sought, among other things, the issuance of "a writ of preliminary injunction
vendees, entered into separate agreements of sale on installments over two parcels of land, known
as Lots Nos. 5 and 6, Block 31, of the Highway Hills Subdivision, situated at Mandaluyong, Rizal. On
... restraining and enjoining defendant, its agents, assigns, and those acting on its or their behalf
July 19, 1962, the said vendees transferred their rights and interests over the aforesaid lots in favor
from continuing or completing the construction of a commercial bank building in the premises ...
of one Emma Chavez. Upon completion of payment of the purchase price, the plaintiff executed the
corresponding deeds of sale in favor of Emma Chavez. Both the agreements (of sale on installment)
involved, with the view to commanding the defendant to observe and comply with the building
and the deeds of sale contained the stipulations or restrictions that:
restrictions annotated in the defendant's transfer certificate of title."

1.The parcel of land subject of this deed of sale shall be used the Buyer exclusively for residential In deciding the said case, the trial court considered, as the fundamental issue, whether or not the
purposes, and she shall not be entitled to take or remove soil, stones or gravel from it or any other resolution of the Municipal Council of Mandaluyong declaring Lots Nos. 5 and 6, among others, as
lots belonging to the Seller. part of the commercial and industrial zone of the municipality, prevailed over the building
restrictions imposed by plaintiff-appellant on the lots in question. 13 The records do not show that a
writ of preliminary injunction was issued.
2.All buildings and other improvements (except the fence) which may be constructed at any time in
said lot must be, (a) of strong materials and properly painted, (b) provided with modern sanitary
The trial court upheld the defendant-appellee and dismissed the complaint, holding that the subject
installations connected either to the public sewer or to an approved septic tank, and (c) shall not be
restrictions were subordinate to Municipal Resolution No. 27, supra. It predicated its conclusion on
at a distance of less than two (2) meters from its boundary lines. 2
the exercise of police power of the said municipality, and stressed that private interest should "bow
down to general interest and welfare. " In short, it upheld the classification by the Municipal Council
The above restrictions were later annotated in TCT Nos. 101509 and 101511 of the
of the area along Epifanio de los Santos Avenue as a commercial and industrial zone, and held that
Register of Deeds of Rizal, covering the said lots and issued in the name of Emma
the same rendered "ineffective and unenforceable" the restrictions in question as against defendant-
Chavez.3
appellee.14 The trial court decision further emphasized that it "assumes said resolution to be valid,
considering that there is no issue raised by either of the parties as to whether the same is null and
Eventually, defendant-appellee acquired Lots Nos. 5 and 6, with TCT Nos. 101613
void. 15
and 106092 issued in its name, respectively and the building restrictions were also
annotated
On March 2, 1965, plaintiff-appellant filed a motion for reconsideration of the above decision, 16
which motion was opposed by defendant-appellee on March 17, 1965.17 It averred, among others, in
the motion for reconsideration that defendant- appellee "was duty bound to comply with the same section declares that the power exists "(A)ny provision of law to the contrary
conditions of the contract of sale in its favor, which conditions were duly annotated in the Transfer notwithstanding ... "
Certificates of Title issued in her (Emma Chavez) favor." It also invited the trial court's attention to its
claim that the Municipal Council had (no) power to nullify the contractual obligations assumed by the An examination of Section 12 of the same law 34 which prescribes the rules for its interpretation
defendant corporation." 18 likewise reveals that the implied power of a municipality should be "liberally construed in its favor"
and that "(A)ny fair and reasonable doubt as to the existence of the power should be interpreted in
The trial court denied the motion for reconsideration in its order of March 26, 1965. 19 favor of the local government and it shall be presumed to exist." The same section further mandates
that the general welfare clause be liberally interpreted in case of doubt, so as to give more power to
On April 2, 1965 plaintiff-appellant filed its notice of appeal from the decision dismissing the local governments in promoting the economic conditions, social welfare and material progress of the
complaint and from the order of March 26, 1965 denying the motion for reconsideration, its record on people in the community. The only exceptions under Section 12 are existing vested rights arising out
appeal, and a cash appeal bond." 20On April 14, the appeal was given due course 21 and the records of a contract between "a province, city or municipality on one hand and a third party on the other,"
of the case were elevated directly to this Court, since only questions of law are raised. 22 in which case the original terms and provisions of the contract should govern. The exceptions,
clearly, do not apply in the case at bar.
Plaintiff-appellant alleges in its brief that the trial court erred — 2. With regard to the contention that said resolution cannot nullify the contractual obligations
I. When it sustained the view that Resolution No. 27, series of 1960 of the Municipal Council of assumed by the defendant-appellee – referring to the restrictions incorporated in the deeds of sale
Mandaluyong, Rizal declaring Lots Nos. 5 and 6, among others, as part of the commercial and and later in the corresponding Transfer Certificates of Title issued to defendant-appellee – it should
industrial zone, is valid because it did so in the exercise of its police power; and be stressed, that while non-impairment of contracts is constitutionally guaranteed, the rule is not
II.When it failed to consider whether or not the Municipal Council had the power to nullify the absolute, since it has to be reconciled with the legitimate exercise of police power, i.e., "the power to
contractual obligations assumed by defendant-appellee and when it did not make a finding that the prescribe regulations to promote the health, morals, peace, education, good order or safety and
building was erected along the property line, when it should have been erected two meters away general welfare of the people. 35 Invariably described as "the most essential, insistent, and
from said property line. 23 illimitable of powers" 36 and "in a sense, the greatest and most powerful attribute of government, 37
the exercise of the power may be judicially inquired into and corrected only if it is capricious,
The defendant-appellee submitted its counter-assignment of errors. In this connection, We already 'whimsical, unjust or unreasonable, there having been a denial of due process or a violation of any
had occasion to hold in Relativo v. Castro 24 that "(I)t is not incumbent on the appellee, who other applicable constitutional guarantee. 38 As this Court held through Justice Jose P. Bengzon in
occupies a purely defensive position, and is seeking no affirmative relief, to make assignments of Philippine Long Distance Company vs. City of Davao, et al. 39 police power "is elastic and must be
error, "The only issues to be resolved, therefore, are: (1) whether Resolution No. 27 s-1960 is a valid responsive to various social conditions; it is not, confined within narrow circumscriptions of
exercise of police power; and (2) whether the said Resolution can nullify or supersede the contractual precedents resting on past conditions; it must follow the legal progress of a democratic way of life."
obligations assumed by defendant-appellee. We were even more emphatic in Vda. de Genuino vs. The Court of Agrarian Relations, et al., 40 when
We declared: "We do not see why public welfare when clashing with the individual right to property
1.The contention that the trial court erred in sustaining the validity of Resolution No. 27 as an should not be made to prevail through the state's exercise of its police power.
exercise of police power is without merit. In the first place, the validity of the said resolution was
never questioned before it. The rule is that the question of law or of fact which may be included in Resolution No. 27, s-1960 declaring the western part of highway 54, now E. de los Santos Avenue
the appellant's assignment of errors must be those which have been raised in the court below, and (EDSA, for short) from Shaw Boulevard to the Pasig River as an industrial and commercial zone, was
are within the issues framed by the parties. 25 The object of requiring the parties to present all obviously passed by the Municipal Council of Mandaluyong, Rizal in the exercise of police power to
questions and issues to the lower court before they can be presented to the appellate court is to safeguard or promote the health, safety, peace, good order and general welfare of the people in the
enable the lower court to pass thereon, so that the appellate court upon appeal may determine locality, Judicial notice may be taken of the conditions prevailing in the area, especially where lots
whether or not such ruling was erroneous. The requirement is in furtherance of justice in that the Nos. 5 and 6 are located. The lots themselves not only front the highway; industrial and commercial
other party may not be taken by surprise. 26 The rule against the practice of blowing "hot and cold" complexes have flourished about the place. EDSA, a main traffic artery which runs through several
by assuming one position in the trial court and another on appeal will, in the words of Elliot, prevent cities and municipalities in the Metro Manila area, supports an endless stream of traffic and the
deception. 27 For it is well-settled that issues or defenses not raised 28 or properly resulting activity, noise and pollution are hardly conducive to the health, safety or welfare of the
litigated 29 or pleaded 30 in the Court below cannot be raised or entertained on residents in its route. Having been expressly granted the power to adopt zoning and subdivision
appeal. ordinances or regulations, the municipality of Mandaluyong, through its Municipal 'council, was
reasonably, if not perfectly, justified under the circumstances, in passing the subject resolution.
In this particular case, the validity of the resolution was admitted at least impliedly, in the stipulation
of facts below. when plaintiff-appellant did not dispute the same. The only controversy then as stated The scope of police power keeps expanding as civilization advances, stressed this Court, speaking
by the trial court was whether or not the resolution of the Municipal Council of Mandaluyong ... which thru Justice Laurel in the leading case of Calalang v. Williams et al., 41 Thus-
declared lots Nos. 4 and 5 among others, as a part of the commercial and industrial zone of the
municipality, prevails over the restrictions constituting as encumbrances on the lots inquestion. 31 As was said in the case of Dobbins v. Los Angeles (195 US 223, 238 49 L. ed. 169), 'the right to
Having admitted the validity of the subject resolution below, even if impliedly, plaintiff-appellant exercise the police power is a continuing one, and a business lawful today may in the future,
cannot now change its position on appeal. because of changed situation, the growth of population or other causes, become a menace to the
public health and welfare, and be required to yield to the public good.' And in People v. Pomar (46
But, assuming arguendo that it is not yet too late in the day for plaintiff-appellant to raise the issue Phil. 440), it was observed that 'advancing civilization is bringing within the scope of police power of
of the invalidity of the municipal resolution in question, We are of the opinion that its posture is the state today things which were not thought of as being with in such power yesterday. The
unsustainable. Section 3 of R.A. No. 2264, otherwise known as the Local Autonomy Act," 32 development of civilization), the rapidly increasing population, the growth of public opinion, with an
empowers a Municipal Council "to adopt zoning and subdivision ordinances or regulations"; 33 for increasing desire on the part of the masses and of the government to look after and care for the
the municipality. Clearly, the law does not restrict the exercise of the power through an ordinance. interests of the individuals of the state, have brought within the police power many questions for
Therefore, granting that Resolution No. 27 is not an ordinance, it certainly is a regulatory measure regulation which formerly were not so considered. 42 (Emphasis, supplied.)
within the intendment or ambit of the word "regulation" under the provision. As a matter of fact the
Thus, the state, in order to promote the general welfare, may interfere with personal liberty, with running with the land are binding on all subsequent purchasers ... " However, Section 23 of the
property, and with business and occupations. Persons may be subjected to all kinds of restraints and zoning ordinance involved therein contained a proviso expressly declaring that the ordinance was
burdens, in order to secure the general comfort health and prosperity of the state 43 and to this not intended "to interfere with or abrogate or annul any easements, covenants or other agreement
fundamental aim of our Government, the rights of the individual are subordinated. 44 between parties." 58 In the case at bar, no such proviso is found in the subject resolution.

The need for reconciling the non-impairment clause of the Constitution and the valid exercise of It is, therefore, clear that even if the subject building restrictions were assumed by the defendant-
police power may also be gleaned from Helvering v. Davis 45 wherein Mr. Justice Cardozo, speaking appellee as vendee of Lots Nos. 5 and 6, in the corresponding deeds of sale, and later, in Transfer
for the Court, resolved the conflict "between one welfare and another, between particular and Certificates of Title Nos. 101613 and 106092, the contractual obligations so assumed cannot prevail
general, thus — over Resolution No. 27, of the Municipality of Mandaluyong, which has validly exercised its police
Nor is the concept of the general welfare static. Needs that were narrow or parochial a century ago power through the said resolution. Accordingly, the building restrictions, which declare Lots Nos. 5
may be interwoven in our day with the well-being of the nation What is critical or urgent changes and 6 as residential, cannot be enforced.
with the times. 46
IN VIEW OF THE FOREGOING, the decision appealed from, dismissing the complaint, is hereby
The motives behind the passage of the questioned resolution being reasonable, and it being a " AFFIRMED. "without pronouncement as to costs.
legitimate response to a felt public need," 47 not whimsical or oppressive, the non-impairment of
contracts clause of the Constitution will not bar the municipality's proper exercise of the power. Now SO ORDERED.
Chief Justice Fernando puts it aptly when he declared: "Police power legislation then is not likely to
succumb to the challenge that thereby contractual rights are rendered nugatory." 48
Makasiar, Antonio, Concepcion, Jr., Fernandez, Guerrero, De Castro and Melencio-Herrera, JJ., concur.
Furthermore, We restated in Philippine American Life Ins. Co. v. Auditor General49 that laws and Teehankee * and Aquino,JJ., took no part.
reservation of essential attributes of sovereign power are read into contracts agreed upon by the
parties. Thus — Separate Opinions

BARREDO, J., concurring:

Not only are existing laws read into contracts in order to fix obligations as between the parties, but
the reservation of essential attributes of sovereign power is also read into contracts as a postulate of I hold it is a matter of public knowledge that the place in question is commercial. It would be worse if
the legal order. The policy of protecting contracts against impairments presupposes the maintenance the same were to be left as residential and all around are already commercial.
of a government by virtue of which contractual relations are worthwhile – a government which FERNANDO, C.J., concurring:
retains adequate authority to secure the peace and good order of society.
The exhaustive and lucid opinion of the Court penned by Justice Guillermo S. Santos commends itself
Again, We held in Liberation Steamship Co., Inc. v. Court of Industrial Relations, 50 through Justice for approval. I feel no hesitancy, therefore, in yielding concurrence, The observation, however, in the
J.B.L. Reyes, that ... the law forms part of, and is read into, every contract, unless clearly excluded dissent of Justice Vicente Abad Santos relative to restrictive covenants calls, to my mind, for further
therefrom in those cases where such exclusion is allowed." The decision in Maritime Company of the reflection as to the respect to which they are entitled whenever police power legislation, whether on
Philippines v. Reparations Commission, 51 written for the Court by Justice Fernando, now Chief the national or local level, is assailed. Before doing so, however, it may not be amiss to consider
Justice, restates the rule. further the effect of such all-embracing attribute on existing contracts.

One last observation. Appellant has placed unqualified reliance on American jurisprudence and 1.Reference was made in the opinion of the Court to Philippine American Life Insurance Company v.
authorities 52 to bolster its theory that the municipal resolution in question cannot nullify or Auditor General. 1 The ponente in that case was Justice Sanchez. A concurrence came from me. It
supersede the agreement of the parties embodied in the sales contract, as that, it claims, would contained this qualification: "It cannot be said, without rendering nugatory the constitutional
impair the obligation of contracts in violation of the Constitution. Such reliance is misplaced. guarantee of non-impairment, and for that matter both the equal protection and due process clauses
which equally serve to protect property rights, that at the mere invocation of the police power, the
In the first place, the views set forth in American decisions and authorities are not per se controlling objection on non-impairment grounds automatically loses force. Here, as in other cases where
in the Philippines, the laws of which must necessarily be construed in accordance with the intention governmental authority may trench upon property rights, the process of balancing, adjustment or
of its own lawmakers and such intent may be deduced from the language of each law and the harmonization is called for. 2 After referring to three leading United States Supreme Court decisions,
context of other local legislation related thereto. 53 and Burgess, et al v. Magarian, et al., 55 two Of Home Building and Loan Association v. Blaisdell, 3 Nebbia v. New York, 4 and Norman v. Baltimore
the cases cited by plaintiff-appellant, lend support to the conclusion reached by the trial court, i.e. and Ohio Railroad Co., 5 I stated: "All of the above decisions reflect the view that an enactment of a
that the municipal resolution supersedes/supervenes over the contractual undertaking between the police power measure does not per se call for the overruling of objections based on either due
parties. Dolan v. Brown, states that "Equity will not, as a rule, enforce a restriction upon the use of process or non-impairment based on either due process or non-impairment grounds. There must be
property by injunction where the property has so changed in character and environment as to make that balancing, or adjustment, or harmonization of the conflicting claims posed by an exercise of
it unfit or unprofitable for use should the restriction be enforced, but will, in such a case, leave the state regulatory power on the one hand and assertion of rights to property, whether of natural or of
complainant to whatever remedy he may have at law. 56 (Emphasis supplied.) Hence, the remedy of juridical persons, on the other. 'That is the only way by which the constitutional guarantees may
injunction in Dolan vs. Brown was denied on the specific holding that "A grantor may lawfully insert serve the high ends that call for their inclusion in the Constitution and thus effectively preclude ally
in his deed conditions or restrictions which are not against public policy and do not materially impair abusive exercise of governmental authority." 6 Nor did my concurrence stop there: "In the opinion of
the beneficial enjoyment of the estate. 57 Applying the principle just stated to the present the Blaisdell case, penned by the then Chief Justice Hughes, there was this understandable stress on
controversy, We can say that since it is now unprofitable, nay a hazard to the health and comfort, to balancing or harmonizing, which is called for in litigations of this character: 'The policy of protecting
use Lots Nos. 5 and 6 for strictly residential purposes, defendants- appellees should be permitted, on contracts against impairment presupposes the maintenance of a government by virtue of which
the strength of the resolution promulgated under the police power of the municipality, to use the contractual relations are worthwhile a government which retains adequate authority to secure the
same for commercial purposes. In Burgess v. Magarian et al. it was, held that "restrictive covenants peace and good order of society. This principle of harmonizing the constitutional prohibition with the
necessary residuum of state power has had progressive recognition in the decisions of this Court.' 1965, 15 SCRA 244. But Resolution No. 27, cannot be described as promotive of the health, morals,
Also to the same effect: 'Undoubtedly, whatever is reserved of state power must be consistent with peace, education, good order or safety and general welfare of the people of Mandaluyong. On the
the fair intent of the constitutional limitation of that power. The reserve power cannot be construed contrary, its effect is the opposite. For the serenity, peace and quite of a residential section would by
so as to destroy the limitation, nor is the limitation to be construed to destroy the reserved power in the resolution be replaced by the chaos, turmoil and frenzy of commerce and industry. Where there
its essential aspects. 'They must be construed in harmony with each other. This principle precludes a would be no industrial and noise pollution these bane of so-called progress would now pervade and
construction which would permit the State to adopt as its policy the repudiation of debts or the suffocate the environment to the detriment of the ecology. To characterize the ordinance as an
destruction of contracts or the denial of means to enforce them. But it does not follow that conditions exercise of police power would be retrogressive. It will set back all the efforts of the Ministry of
may not arise in which a temporary restraint of enforcement may be consistent with the spirit and Human Settlements to improve the quality of life especially in Metro Manila. It will make Metro
purpose of the constitutional provision and thus be found to be within the range of the reserved Manila, not the city of man as envisioned by its Governor but a city of commerce and industry.
power of the State to protect the vital interests of the community.' Further on, Chief Justice Hughes
likewise stated: 'It is manifest from this review of our decisions that there has been a growing Considering, therefore, that Resolution No, 2-1 was not enacted in the legitimate exercise of police
appreciation of public needs and of the necessity of finding ground for a rational compromise power, it cannot impair the restrictive covenants which go with the lands that were sold by the
between individual rights and public welfare. " 7 This is the concluding paragraph of my concurrence plaintiff-appellant. I vote for the reversal of the appealed decision.
in the Philippine American Life Insurance Co. case: "If emphasis be therefore laid, as this concurring
opinion does, on the pressing and inescapable need for such an approach whenever a possible #Separate Opinions BARREDO, J., concurring:
collision between state authority and an assertion of constitutional right to property may exist, it is
not to depart from what sound constitutional orthodoxy dictates. It is rather to abide by what is I hold it is a matter of public knowledge that the place in question is commercial. It would be worse if
compels. In litigations of this character then, perhaps much more so than in other disputes, where the same were to be left as residential and all around are already commercial.
there is a reliance on a constitutional provision, the judiciary cannot escape what Holmes fitly
referred to as the sovereign prerogative of choice, the exercise of which might possibly be impugned FERNANDO, C.J., concurring:
if there be no attempt, however slight, at such an effort of adjusting or reconciling the respective
claims of state regulatory power and constitutionally protected rights." 8 The exhaustive and lucid opinion of the Court penned by Justice Guillermo S. Santos commends itself
for approval. I feel no hesitancy, therefore, in yielding concurrence, The observation, however, in the
I adhere to such a view. This is not to say that there is a departure therefrom in the able and dissent of Justice Vicente Abad Santos relative to restrictive covenants calls, to my mind, for further
scholarly opinion of Justice Santos. It is merely to stress what to my mind is a fundamental postulate reflection as to the respect to which they are entitled whenever police power legislation, whether on
of our Constitution. The only point I would wish to add is that in the process of such balancing and the national or local level, is assailed. Before doing so, however, it may not be amiss to consider
adjustment, the present Constitution, the Philippine American Life Insurance Co. decision having further the effect of such all-embracing attribute on existing contracts.
been promulgated under the 1935 Charter, leaves no doubt that the claim to property rights based
on the non-impairment clause has a lesser weight. For as explicitly provided by our present 1.Reference was made in the opinion of the Court to Philippine American Life Insurance Company v.
fundamental law: "The State shall promote social Justice to ensure the dignity, welfare, and security Auditor General. 1 The ponente in that case was Justice Sanchez. A concurrence came from me. It
of all the people. Towards this end, the contained this qualification: "It cannot be said, without rendering nugatory the constitutional
guarantee of non-impairment, and for that matter both the equal protection and due process clauses
State shall regulate the acquisition, ownership, use, enjoyment, and disposition of private property, which equally serve to protect property rights, that at the mere invocation of the police power, the
and equitably diffuse property ownership and profits. 9 objection on non-impairment grounds automatically loses force. Here, as in other cases where
governmental authority may trench upon property rights, the process of balancing, adjustment or
2.Now as to restrictive convenants, accurately included by Hart and Sacks under the category of harmonization is called for. 2 After referring to three leading United States Supreme Court decisions,
"private directive arrangements. " 10 Through them people are enable to agree on how to order their Home Building and Loan Association v. Blaisdell, 3 Nebbia v. New York, 4 and Norman v. Baltimore
affairs. They could be utilized to govern their affairs. They could be utilized to govern their future and Ohio Railroad Co., 5 I stated: "All of the above decisions reflect the view that an enactment of a
conduct. It is a well-known fact that the common law relies to a great extent on such private police power measure does not per se call for the overruling of objections based on either due
directive arrangements to attain a desirable social condition. More specifically, such covenants are process or non-impairment based on either due process or non-impairment grounds. There must be
an important means of ordering one aspect of property relationships. Through them, there could be
delimitation of land use rights. It is quite understandable why the law should ordinarily accord them
deference, It does so, it has been said, both on grounds of morality and utility. Nonetheless, there are that balancing, or adjustment, or harmonization of the conflicting claims posed by an exercise of
limits to the literal enforcement of their terms. To the extent that they ignore technological or state regulatory power on the one hand and assertion of rights to property, whether of natural or of
economic progress, they are not automatically entitled to judicial protection. Clearly, they must juridical persons, on the other. 'That is the only way by which the constitutional guarantees may
"speak from one point of time to another." 11 The parties, like all mortal, do not have the power of serve the high ends that call for their inclusion in the Constitution and thus effectively preclude ally
predicting the future with unfailing certainty. In cases therefore where societal welfare calls for police abusive exercise of governmental authority." 6 Nor did my concurrence stop there: "In the opinion of
power legislation, the parties adversely affected should realize that arrangements dealing with the Blaisdell case, penned by the then Chief Justice Hughes, there was this understandable stress on
property rights are not impressed with sanctity. That approach, in my view, was the guiding principle balancing or harmonizing, which is called for in litigations of this character: 'The policy of protecting
of the opinion of the Court. f fence my full and entire concurrence. contracts against impairment presupposes the maintenance of a government by virtue of which
contractual relations are worthwhile a government which retains adequate authority to secure the
ABAD SANTOS, J:, dissenting: peace and good order of society. This principle of harmonizing the constitutional prohibition with the
necessary residuum of state power has had progressive recognition in the decisions of this Court.'
Although Resolution No. 27, series of 1960, of the Municipal Council of Mandaluyong, Rizal, is valid Also to the same effect: 'Undoubtedly, whatever is reserved of state power must be consistent with
until otherwise declared, I do not believe that its enactment was by virtue of the police power of that the fair intent of the constitutional limitation of that power. The reserve power cannot be construed
municipality. I do not here dispute the concept of police power as stated in Primicias vs. Fugoso, 80 so as to destroy the limitation, nor is the limitation to be construed to destroy the reserved power in
Phil. 77 (1948) for as a matter of fact I accept it. And I agree also that it is elastic and must be its essential aspects. 'They must be construed in harmony with each other. This principle precludes a
responsive to various social conditions, etc. as ruled in PLDT vs. City of Davao, L-23080, Oct. 26, construction which would permit the State to adopt as its policy the repudiation of debts or the
destruction of contracts or the denial of means to enforce them. But it does not follow that conditions Human Settlements to improve the quality of life especially in Metro Manila. It will make Metro
may not arise in which a temporary restraint of enforcement may be consistent with the spirit and Manila, not the city of man as envisioned by its Governor but a city of commerce and industry.
purpose of the constitutional provision and thus be found to be within the range of the reserved
power of the State to protect the vital interests of the community.' Further on, Chief Justice Hughes Considering, therefore, that Resolution No, 2-1 was not enacted in the legitimate exercise of police
likewise stated: 'It is manifest from this review of our decisions that there has been a growing power, it cannot impair the restrictive covenants which go with the lands that were sold by the
appreciation of public needs and of the necessity of finding ground for a rational compromise plaintiff-appellant. I vote for the reversal of the appealed decision.
between individual rights and public welfare. " 7 This is the concluding paragraph of my concurrence
in the Philippine American Life Insurance Co. case: "If emphasis be therefore laid, as this concurring
opinion does, on the pressing and inescapable need for such an approach whenever a possible
collision between state authority and an assertion of constitutional right to property may exist, it is
not to depart from what sound constitutional orthodoxy dictates. It is rather to abide by what is
compels. In litigations of this character then, perhaps much more so than in other disputes, where
there is a reliance on a constitutional provision, the judiciary cannot escape what Holmes fitly
referred to as the sovereign prerogative of choice, the exercise of which might possibly be impugned
if there be no attempt, however slight, at such an effort of adjusting or reconciling the respective
claims of state regulatory power and constitutionally protected rights." 8

I adhere to such a view. This is not to say that there is a departure therefrom in the able and
scholarly opinion of Justice Santos. It is merely to stress what to my mind is a fundamental postulate
of our Constitution. The only point I would wish to add is that in the process of such balancing and
adjustment, the present Constitution, the Philippine American Life Insurance Co. decision having
been promulgated under the 1935 Charter, leaves no doubt that the claim to property rights based
on the non-impairment clause has a lesser weight. For as explicitly provided by our present
fundamental law: "The State shall promote social Justice to ensure the dignity, welfare, and security
of all the people. Towards this end, the
State shall regulate the acquisition, ownership, use, enjoyment, and disposition of private property,
and equitably diffuse property ownership and profits. 9

2.Now as to restrictive convenants, accurately included by Hart and Sacks under the category of
"private directive arrangements. " 10 Through them people are enable to agree on how to order their
affairs. They could be utilized to govern their affairs. They could be utilized to govern their future
conduct. It is a well-known fact that the common law relies to a great extent on such private
directive arrangements to attain a desirable social condition. More specifically, such covenants are
an important means of ordering one aspect of property relationships. Through them, there could be
delimitation of land use rights. It is quite understandable why the law should ordinarily accord them
deference, It does so, it has been said, both on grounds of morality and utility. Nonetheless, there are
limits to the literal enforcement of their terms. To the extent that they ignore technological or
economic progress, they are not automatically entitled to judicial protection. Clearly, they must
"speak from one point of time to another." 11 The parties, like all mortal, do not have the power of
predicting the future with unfailing certainty. In cases therefore where societal welfare calls for police
power legislation, the parties adversely affected should realize that arrangements dealing with
property rights are not impressed with sanctity. That approach, in my view, was the guiding principle
of the opinion of the Court. f fence my full and entire concurrence.

ABAD SANTOS, J:, dissenting:

Although Resolution No. 27, series of 1960, of the Municipal Council of Mandaluyong, Rizal, is valid
until otherwise declared, I do not believe that its enactment was by virtue of the police power of that
municipality. I do not here dispute the concept of police power as stated in Primicias vs. Fugoso, 80
Phil. 77 (1948) for as a matter of fact I accept it. And I agree also that it is elastic and must be
responsive to various social conditions, etc. as ruled in PLDT vs. City of Davao, L-23080, Oct. 26,
1965, 15 SCRA 244. But Resolution No. 27, cannot be described as promotive of the health, morals,
peace, education, good order or safety and general welfare of the people of Mandaluyong. On the
contrary, its effect is the opposite. For the serenity, peace and quite of a residential section would by
the resolution be replaced by the chaos, turmoil and frenzy of commerce and industry. Where there
would be no industrial and noise pollution these bane of so-called progress would now pervade and
suffocate the environment to the detriment of the ecology. To characterize the ordinance as an
exercise of police power would be retrogressive. It will set back all the efforts of the Ministry of