Labor Restrictive Covenants

8/10/2019 Labor Restrictive Covenants

http://slidepdf.com/reader/full/labor-restrictive-covenants 1/63

SECOND DIVISION

DAISY B. TIU,

Petitioner,

G.R. No. 163512

- er!"! -

Pre!ent#

$UISU%BING, &., C'(ir)er!on,

CARPIO,

CARPIO %ORA*ES,

TINGA, (n+

VE*ASCO, &R., &&.

P*ATINU% P*ANS PI*., INC.,

Re!)on+ent.

Pro"/(te+#



0er"(r 2, 244

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

DECISION

$UISU%BING, &.#

0or reie7 on 8ertior(ri (re t'e De8i!ion91: +(te+ &(n"(r 24, 244; o< t'e Co"rt o<

A))e(! in CA-G.R. CV No. ;=2, (n+ it! Re!o"tion92: +(te+ %( ;, 244; +enin/

re8on!i+er(tion. T'e Co"rt o< A))e(! '(+ (>re+ t'e +e8i!ion93: +(te+ 0er"(r

2, 2442 o< t'e Re/ion( Tri( Co"rt ?RTC@ o< P(!i/ Cit, Br(n8' 261, in (n (8tion <or

+((/e!, or+erin/ )etitioner to )( re!)on+ent P144,444 (! i"i+(te+ +((/e!.

T'e ree(nt <(8t! (re (! <oo7!#

Re!)on+ent P(tin" P(n! P'ii))ine!, In8. i! ( +oe!ti8 8or)or(tion en/(/e+ in

t'e )re-nee+ in+"!tr. 0ro 1= to 1==, )etitioner D(i! B. Ti" 7(! it! Dii!ion

%(retin/ Dire8tor.

On &(n"(r 1, 1==3, re!)on+ent re-'ire+ )etitioner (! Senior A!!i!t(nt Vi8e-

Pre!i+ent (n+ Territori( O)er(tion! e(+ in 8'(r/e o< it! on/on/ (n+ A!e(n

o)er(tion!. T'e )(rtie! ee8"te+ ( 8ontr(8t o< e)oent (i+ <or e e(r!.9;:

On Se)teer 16, 1==5, )etitioner !to))e+ re)ortin/ <or 7or. In Noeer 1==5,

!'e e8(e t'e Vi8e-Pre!i+ent <or S(e! o< Pro<e!!ion( Pen!ion P(n!, In8., (

8or)or(tion en/(/e+ (!o in t'e )re-nee+ in+"!tr.

Con!e"ent, re!)on+ent !"e+ )etitioner <or +((/e! e<ore t'e RTC o< P(!i/ Cit,

Br(n8' 261. Re!)on+ent (e/e+, (on/ ot'er!, t'(t )etitioner! e)oent 7it'

Pro<e!!ion( Pen!ion P(n!, In8. io(te+ t'e non-inoeent 8("!e in 'er 8ontr(8t

o< e)oent, to 7it#

. NON INVO*VE%ENT PROVISION T'e E%P*OYEE <"rt'er "n+ert(e! t'(t +"rin/'i!F'er en/(/eent 7it' E%P*OYER (n+ in 8(!e o< !e)(r(tion <ro t'e Co)(n,

7'et'er o"nt(r or <or 8("!e, 'eF!'e !'( not, <or t'e net TO ?2@ e(r!

t'ere(<ter, en/(/e in or e inoe+ 7it' (n 8or)or(tion, (!!o8i(tion or entit,

7'et'er +ire8t or in+ire8t, en/(/e+ in t'e !(e "!ine!! or eon/in/ to t'e

!(e )re-nee+ in+"!tr (! t'e E%P*OYER. An re(8' o< t'e <ore/oin/ )roi!ion



!'( ren+er t'e E%P*OYEE i(e to t'e E%P*OYER in t'e (o"nt o< One "n+re+

T'o"!(n+ Pe!o! ?P144,444.44@ <or (n+ (! i"i+(te+ +((/e!.95:

Re!)on+ent t'"! )r(e+ <or P144,444 (! 8o)en!(tor +((/e!H P244,444 (!

or( +((/e!H P144,444 (! ee)(r +((/e!H (n+ 25 o< t'e tot( (o"nt +"e

)"! P1,444 )er 8o"n!e! 8o"rt ())e(r(n8e, (! (ttorne! <ee!.

Petitioner 8o"ntere+ t'(t t'e non-inoeent 8("!e 7(! "nen<or8e(e <or

ein/ (/(in!t )"i8 or+er or )"i8 )oi8# 0ir!t, t'e re!tr(int i)o!e+ 7(! "8'

/re(ter t'(n 7'(t 7(! ne8e!!(r to (Jor+ re!)on+ent ( <(ir (n+ re(!on(e

)rote8tion. Petitioner 8onten+e+ t'(t t'e tr(n!<er to ( ri( 8o)(n 7(! (n

(88e)te+ )r(8ti8e in t'e )re-nee+ in+"!tr. Sin8e t'e )ro+"8t! !o+ t'e

8o)(nie! 7ere ore or e!! t'e !(e, t'ere 7(! not'in/ )e8"i(r or "ni"e to

)rote8t. Se8on+, re!)on+ent +i+ not ine!t in )etitioner! tr(inin/ or i)roeent.

At t'e tie )etitioner 7(! re8r"ite+, !'e (re(+ )o!!e!!e+ t'e no7e+/e (n+

e)erti!e re"ire+ in t'e )re-nee+ in+"!tr (n+ re!)on+ent enete+ treen+o"!

<ro it. T'ir+, ( !tri8t ())i8(tion o< t'e non-inoeent 8("!e 7o"+ (o"nt to (

+e)ri(tion o< )etitioner! ri/'t to en/(/e in t'e on 7or !'e ne7.

In ")'o+in/ t'e (i+it o< t'e non-inoeent 8("!e, t'e tri( 8o"rt r"e+

t'(t ( 8ontr(8t in re!tr(int o< tr(+e i! (i+ )roi+e+ t'(t t'ere i! ( iit(tion ")on

eit'er tie or )(8e. In t'e 8(!e o< t'e )re-nee+ in+"!tr, t'e tri( 8o"rt <o"n+ t'e

t7o-e(r re!tri8tion to e (i+ (n+ re(!on(e. T'e +i!)o!itie )ortion o< t'e

+e8i!ion re(+!#

ERE0ORE, K"+/ent i! 'ere ren+ere+ in <(or o< t'e )(intiJ (n+

(/(in!t t'e +e<en+(nt, or+erin/ t'e (tter to )( t'e <oo7in/#

1. t'e (o"nt o< One "n+re+ T'o"!(n+ Pe!o! ?P144,444.44@ <or (n+ (! +((/e!,

<or t'e re(8' o< t'e non-inoeent )roi!ion ?Ite No. @ o< t'e 8ontr(8t o<

e)oentH

2. 8o!t! o< !"it.

T'ere ein/ no !">8ient ei+en8e )re!ente+ to !"!t(in t'e /r(nt o<

(ttorne! <ee!, t'e Co"rt +ee! it )ro)er not to (7(r+ (n.

SO ORDERED.96:

On ())e(, t'e Co"rt o< A))e(! (>re+ t'e tri( 8o"rt! r"in/. It re(!one+ t'(t

)etitioner entere+ into t'e 8ontr(8t on 'er o7n 7i (n+ oition. T'"!, !'e o"n+

'er!e< to <" not on 7'(t 7(! e)re!! !ti)"(te+ in t'e 8ontr(8t, "t (!o (

it! 8on!e"en8e! t'(t 7ere not (/(in!t /oo+ <(it', "!(/e, (n+ (7. T'e ())e(te



8o"rt (!o r"e+ t'(t t'e !ti)"(tion )ro'iitin/ non-e)oent <or t7o e(r! 7(!

(i+ (n+ en<or8e(e 8on!i+erin/ t'e n(t"re o< re!)on+ent! "!ine!!.

Petitioner oe+ <or re8on!i+er(tion "t 7(! +enie+. en8e, t'i! ())e(

8ertior(ri 7'ere )etitioner (e/e! t'(t t'e Co"rt o< A))e(! erre+ 7'en#

A.

L 9IT SUSTAINED: TE VA*IDITY O0 TE NON-INVO*VE%ENT C*AUSE IN

PETITIONERS CONTRACT CONSIDERING TAT TE PERIOD 0IMED TEREIN IS VOID

0OR BEING O00ENSIVE TO PUB*IC PO*ICY

B.

L 9IT SUSTAINED: TE AARD O0 *I$UIDATED DA%AGES CONSIDERING TAT IT

BEING IN TE NATURE O0 A PENA*TY TE SA%E IS EMCESSIVE, INI$UITOUS ORUNCONSCIONAB*E9:

P(in !t(te+, t'e 8ore i!!"e i! 7'et'er t'e non-inoeent 8("!e i! (i+.

Petitioner (er! t'(t t'e non-inoeent 8("!e i! oJen!ie to )"i8 )oi8 !in8e

t'e re!tr(int i)o!e+ i! "8' /re(ter t'(n 7'(t i! ne8e!!(r to (Jor+ re!)on+ent (

<(ir (n+ re(!on(e )rote8tion. S'e (++! t'(t !in8e t'e )ro+"8t! !o+ in t'e )re-

nee+ in+"!tr (re ore or e!! t'e !(e, t'e tr(n!<er to ( ri( 8o)(n i!

(88e)t(e. Petitioner (!o )oint! o"t t'(t re!)on+ent +i+ not ine!t in 'er tr(inin/

or i)roeent. At t'e tie !'e Koine+ re!)on+ent, !'e (re(+ '(+ t'e no7e+/e(n+ e)erti!e re"ire+ in t'e )re-nee+ in+"!tr. 0in(, )etitioner (r/"e! t'(t (

!tri8t ())i8(tion o< t'e non-inoeent 8("!e 7o"+ +e)rie 'er o< t'e ri/'t to

en/(/e in t'e on 7or !'e no7!.

Re!)on+ent 8o"nter! t'(t t'e (i+it o< ( non-inoeent 8("!e '(! een

!"!t(ine+ t'e S")ree Co"rt in ( on/ ine o< 8(!e!. It 8onten+! t'(t t'e

in8"!ion o< t'e t7o-e(r non-inoeent 8("!e in )etitioner! 8ontr(8t o<

e)oent 7(! re(!on(e (n+ nee+e+ !in8e 'er Ko /(e 'er (88e!! to t'e

8o)(n! 8on+enti( (retin/ !tr(te/ie!. Re!)on+ent (++! t'(t t'e non-inoeent 8("!e ere enKoine+ 'er <ro en/(/in/ in )re-nee+ "!ine!! (in to

re!)on+ent! 7it'in t7o e(r! <ro )etitioner! !e)(r(tion <ro re!)on+ent. S'e

'(+ not een )ro'iite+ <ro (retin/ ot'er !eri8e )(n!.



A! e(r (! 1=16, 7e (re(+ '(+ t'e o88(!ion to +i!8"!! t'e (i+it o< ( non-

inoeent 8("!e. In 0err(ini . G!e,9: 7e !(i+ t'(t !"8' 8("!e 7(!

"nre(!on(e re!tr(int o< tr(+e (n+ t'ere<ore (/(in!t )"i8 )oi8. In 0err(ini, t'e

e)oee 7(! )ro'iite+ <ro en/(/in/ in (n "!ine!! or o88")(tion in t'e

P'ii))ine! <or ( )erio+ o< e e(r! (<ter t'e terin(tion o< 'i! e)oent

8ontr(8t (n+ "!t r!t /et t'e 7ritten )eri!!ion o< 'i! e)oer i< 'e 7ere to +o!o. T'e Co"rt r"e+ t'(t 7'ie t'e !ti)"(tion 7(! in+ee+ iite+ (! to tie (n+

!)(8e, it 7(! not iite+ (! to tr(+e. S"8' )ro'iition, in eJe8t, <or8e! (n e)oee

to e(e t'e P'ii))ine! to 7or !'o"+ 'i! e)oer re<"!e to /ie ( 7ritten

)eri!!ion.

In G. %(rtini, *t+. . G(i!er(n,9=: 7e (!o +e8(re+ ( !ii(r !ti)"(tion (! oi+ <or

ein/ (n "nre(!on(e re!tr(int o< tr(+e. T'ere, t'e e)oee 7(! )ro'iite+ <ro

en/(/in/ in (n "!ine!! !ii(r to t'(t o< 'i! e)oer <or ( )erio+ o< one e(r.

Sin8e t'e e)oee 7(! e)oe+ on in 8onne8tion 7it' t'e )"r8'(!e (n+ e)orto< ((8(, (on/ t'e (n "!ine!!e! o< t'e e)oer, t'e Co"rt 8on!i+ere+ t'e

re!tr(int too ro(+ !in8e it eJe8tie )reente+ t'e e)oee <ro 7orin/ in (n

ot'er "!ine!! !ii(r to 'i! e)oer een i< 'i! e)oent 7(! iite+ on to

one o< it! "ti<(rio"! "!ine!! (8tiitie!.

o7eer, in De C(!tio . Ri8'on+,914: 7e ")'e+ ( !ii(r !ti)"(tion (! e/(,

re(!on(e, (n+ not 8ontr(r to )"i8 )oi8. In t'e !(i+ 8(!e, t'e e)oee 7(!

re!tri8te+ <ro o)enin/, o7nin/ or '(in/ (n 8onne8tion 7it' (n ot'er +r"/!tore

7it'in ( r(+i"! o< <o"r ie! <ro t'e e)oer! )(8e o< "!ine!! +"rin/ t'e tiet'e e)oer 7(! o)er(tin/ 'i! +r"/!tore. e !(i+ t'(t ( 8ontr(8t in re!tr(int o<

tr(+e i! (i+ )roi+e+ t'ere i! ( iit(tion ")on eit'er tie or )(8e (n+ t'e

re!tr(int ")on one )(rt i! not /re(ter t'(n t'e )rote8tion t'e ot'er )(rt re"ire!.

0in(, in Con!"t( . Co"rt o< A))e(!,911: 7e 8on!i+ere+ ( non-inoeent 8("!e

in (88or+(n8e 7it' Arti8e 1346912: o< t'e Cii Co+e. 'ie t'e 8o)(in(nt in t'(t

8(!e 7(! (n in+e)en+ent (/ent (n+ not (n e)oee, !'e 7(! )ro'iite+ <or one

e(r <ro en/(/in/ +ire8t or in+ire8t in (8tiitie! o< ot'er 8o)(nie! t'(t

8o)ete 7it' t'e "!ine!! o< 'er )rin8i)(. e note+ t'erein t'(t t'e re!tri8tion +i+

not )ro'iit t'e (/ent <ro en/(/in/ in (n ot'er "!ine!!, or <ro ein/

8onne8te+ 7it' (n ot'er 8o)(n, <or (! on/ (! t'e "!ine!! or 8o)(n +i+ not8o)ete 7it' t'e )rin8i)(! "!ine!!. 0"rt'er, t'e )ro'iition ())ie+ on <or one

e(r (<ter t'e terin(tion o< t'e (/ent! 8ontr(8t (n+ 7(! t'ere<ore ( re(!on(e

re!tri8tion +e!i/ne+ to )reent (8t! )reK"+i8i( to t'e e)oer.



Con<or( t'en 7it' t'e (<oreentione+ )rono"n8eent!, ( non-inoeent

8("!e i! not ne8e!!(ri oi+ <or ein/ in re!tr(int o< tr(+e (! on/ (! t'ere (re

re(!on(e iit(tion! (! to tie, tr(+e, (n+ )(8e.

In t'i! 8(!e, t'e non-inoeent 8("!e '(! ( tie iit# t7o e(r! <ro t'e tie

)etitioner! e)oent 7it' re!)on+ent en+!. It i! (!o iite+ (! to tr(+e, !in8e it

on )ro'iit! )etitioner <ro en/(/in/ in (n )re-nee+ "!ine!! (in to

re!)on+ent!.

%ore !i/ni8(nt, !in8e )etitioner 7(! t'e Senior A!!i!t(nt Vi8e-Pre!i+ent (n+

Territori( O)er(tion! e(+ in 8'(r/e o< re!)on+ent! on/on/ (n+ A!e(n

o)er(tion!, !'e '(+ een )ri to 8on+enti( (n+ 'i/' !en!itie (retin/

!tr(te/ie! o< re!)on+ent! "!ine!!. To (o7 'er to en/(/e in ( ri( "!ine!! !oon

(<ter !'e e(e! 7o"+ (e re!)on+ent! tr(+e !e8ret! "ner(e e!)e8i( in ('i/' 8o)etitie (retin/ enironent. In !", 7e n+ t'e non-inoeent

8("!e not 8ontr(r to )"i8 7e<(re (n+ not /re(ter t'(n i! ne8e!!(r to (Jor+ (

<(ir (n+ re(!on(e )rote8tion to re!)on+ent.913:

In (n eent, Arti8e 1346 o< t'e Cii Co+e )roi+e! t'(t )(rtie! to ( 8ontr(8t (

e!t(i!' !"8' !ti)"(tion!, 8("!e!, ter! (n+ 8on+ition! (! t'e ( +ee

8onenient, )roi+e+ t'e (re not 8ontr(r to (7, or(!, /oo+ 8"!to!, )"i8

or+er, or )"i8 )oi8.

Arti8e 115=91;: o< t'e !(e Co+e (!o )roi+e! t'(t oi/(tion! (ri!in/ <ro

8ontr(8t! '(e t'e <or8e o< (7 et7een t'e 8ontr(8tin/ )(rtie! (n+ !'o"+ e

8o)ie+ 7it' in /oo+ <(it'. Co"rt! 8(nnot !ti)"(te <or t'e )(rtie! nor (en+ t'eir

(/reeent 7'ere t'e !(e +oe! not 8ontr(ene (7, or(!, /oo+ 8"!to!, )"i8

or+er or )"i8 )oi8, <or to +o !o 7o"+ e to (ter t'e re( intent o< t'e )(rtie!,

(n+ 7o"+ r"n 8ontr(r to t'e <"n8tion o< t'e 8o"rt! to /ie <or8e (n+ eJe8t t'ereto.

915: Not ein/ 8ontr(r to )"i8 )oi8, t'e non-inoeent 8("!e, 7'i8'

)etitioner (n+ re!)on+ent <ree (/ree+ ")on, '(! t'e <or8e o< (7 et7een t'e,

(n+ t'"!, !'o"+ e 8o)ie+ 7it' in /oo+ <(it'.916:

T'"!, (! 'e+ t'e tri( 8o"rt (n+ t'e Co"rt o< A))e(!, )etitioner i! o"n+ to )(

re!)on+ent P144,444 (! i"i+(te+ +((/e!. 'ie 7e '(e e"it( re+"8e+

i"i+(te+ +((/e! in 8ert(in 8(!e!,91: 7e 8(nnot +o !o in t'i! 8(!e, !in8e it

())e(r! t'(t een <ro t'e !t(rt, )etitioner '(+ not !'o7n t'e e(!t intention to

<" t'e non-inoeent 8("!e in /oo+ <(it'.



ERE0ORE, t'e )etition i! DENIED <or (8 o< erit. T'e De8i!ion +(te+ &(n"(r

24, 244;, (n+ t'e Re!o"tion +(te+ %( ;, 244;, o< t'e Co"rt o< A))e(! in CA-G.R.

CV No. ;=2, (re A00IR%ED. Co!t! (/(in!t )etitioner.

SO ORDERED.

*EONARDO A. $UISU%BING

A!!o8i(te &"!ti8e

E CONCUR#

ANTONIO T. CARPIO

A!!o8i(te &"!ti8e

CONCITA CARPIO %ORA*ES

A!!o8i(te &"!ti8e

DANTE O. TINGA

A!!o8i(te &"!ti8e

PRESBITERO &. VE*ASCO, &R.

A!!o8i(te &"!ti8e



A T T E S T A T I O N

I (tte!t t'(t t'e 8on8"!ion! in t'e (oe De8i!ion '(+ een re(8'e+ in

8on!"t(tion e<ore t'e 8(!e 7(! (!!i/ne+ to t'e 7riter o< t'e o)inion o< t'e Co"rt!

Dii!ion.

*EONARDO A. $UISU%BING

A!!o8i(te &"!ti8e

C'(ir)er!on

C E R T I 0 I C A T I O N

P"r!"(nt to Se8tion 13, Arti8e VIII o< t'e Con!tit"tion, (n+ t'e Dii!ion

C'(ir)er!on! Atte!t(tion, I 8erti< t'(t t'e 8on8"!ion! in t'e (oe De8i!ion '(+

een re(8'e+ in 8on!"t(tion e<ore t'e 8(!e 7(! (!!i/ne+ to t'e 7riter o< t'e

o)inion o< t'e Co"rt! Dii!ion.



REYNATO S. PUNO

C'ie< &"!ti8e

91: Roo, )). 5-6;. Penne+ A!!o8i(te &"!ti8e Dei(' Vi+(on-%(/toi!, 7it'

A!!o8i(te &"!ti8e! &o!e *. S(io, &r. (n+ (i S. A+"7('i+ 8on8"rrin/.

92: I+. (t 66.

93: Re8or+!, Vo. I, )). 213-21=.

9;: I+. (t 15-1.

95: I+. (t 16.

96: I+. (t 21=.

9: Roo, ). ;;.

9: 3; P'i. 6=, 1; ?1=16@.

9=: 3= P'i. 124, 125 ?1=1@.

914: ;5 P'i. 6=, 63 ?1=2;@.

911: G.R. No. 1;5;;3, %(r8' 1, 2445, ;53 SCRA 32, ;5.

912: Art. 1346. T'e 8ontr(8tin/ )(rtie! ( e!t(i!' !"8' !ti)"(tion!, 8("!e!,

ter! (n+ 8on+ition! (! t'e ( +ee 8onenient, )roi+e+ t'e (re not 8ontr(r

to (7, or(!, /oo+ 8"!to!, )"i8 or+er, or )"i8 )oi8.

913: See Oen+orJ . Ar('(!o, 3 P'i. 55, 5=2 ?1=1@.

91;: Art. 115=. Oi/(tion! (ri!in/ <ro 8ontr(8t! '(e t'e <or8e o< (7 et7een

t'e 8ontr(8tin/ )(rtie! (n+ !'o"+ e 8o)ie+ 7it' in /oo+ <(it'.

915: P'ii))ine Co"ni8(tion! S(teite Cor)or(tion . Goe Tee8o, In8., G.R.

No!. 1;32; 1;33;, %( 25, 244;, ;2= SCRA 153, 16;.

916: D"n8(n A!!o8i(tion o< Det(i(n-PTGO . G(o e8oe P'ii))ine!, In8.,

G.R. No. 162==;, Se)teer 1, 244;, ;3 SCRA 3;3, 356.





E(!eent!. 0or t'e /oo+ o< t'e entire 8o"nit, t'e 'oeo7ner "!t o!ere (

t7o-eter e(!eent in <ront. No !tr"8t"re o< (n in+ ?!tore, /(r(/e, o+e/(, et8.@

( e "it on t'e <ront e(!eent.

............................. .............................

U)7(r+ e)(n!ion. A !e8on+ !tore i! not )ro'iite+. B"t t'e !e8on+ !tore

e)(n!ion "!t e )(8e+ (oe t'e (8 )ortion o< t'e 'o"!e (n+ !'o"+ not

eten+ <or7(r+ eon+ t'e ()e o< t'e ori/in( "i+in/.

............................. .............................

0ront e)(n!ion# 2n+ Store# No "nit ( e eten+e+ in t'e <ront eon+ t'e ine

(! +e!i/ne+ (n+ i)eente+ t'e +eeo)er in t'e 64 !. . "nit. In ot'er

7or+!, t'e 2n+ Qoor e)(n!ion, in <ront, i! 6 eter! (8 <ro t'e <ront )ro)ert

ine (n+ ; eter! (8 <ro t'e <ront 7( o< t'e 'o"!e, K"!t (! )roi+e+ in t'e 64

!. . "nit!.92:

T'e (oe re!tri8tion! 7ere (!o 8ont(ine+ in Tr(n!<er Certi8(te o< Tite No. N-

1153; 8oerin/ t'e ot i!!"e+ in t'e n(e o< )etitioner-!)o"!e!.

T'e 8ontroer! (ro!e 7'en )etitioner!, +e!)ite re)e(te+ 7(rnin/! <ro

re!)on+ent, eten+e+ t'e roo< o< t'eir 'o"!e to t'e )ro)ert ine (n+ e)(n+e+ t'e

!e8on+ Qoor o< t'eir 'o"!e to ( )oint +ire8t (oe t'e ori/in( <ront 7(.93:

Re!)on+ent e+ e<ore t'e Re/ion( Tri( Co"rt, N(tion( C()it( &"+i8i( Re/ion,

Br(n8' 261, P(!i/ Cit, (n (8tion to +eoi!' t'e "n("t'orie+ !tr"8t"re!.

A<ter tri(, K"+/ent 7(! ren+ere+ (/(in!t )etitioner!H t'"!#

ERE0ORE, )rei!e! 8on!i+ere+, +e<en+(nt !)o"!e! Ei!eo B. 0(K(r+o, &r., (n+

%(ri!!( 0. 0(K(r+o (re 'ere +ire8te+ to ie+i(te +eoi!' (n+ reoe t'e



eten!ion o< t'eir e)(n+e+ 'o"!in/ "nit t'(t e8ee+! t'e iit(tion! i)o!e+

t'e Re!tri8tie Coen(nt, ot'er7i!e t'e Br(n8' S'eriJ o< t'i! Co"rt !'( ee8"te

t'i! +e8i!ion (t t'e e)en!e o< t'e +e<en+(nt!.

A! to +((/e! (n+ (ttorne! <ee!, it ())e(rin/ <ro t'e re8or+! o< t'i! 8(!e t'(t

no ei+en8e to !"!t(in t'e !(e 7(! (++"8e+ eit'er o< t'e )(rtie!, t'e Co"rt

+ee! it )ro)er not to (7(r+ (n.

SO ORDERED.9;:

On ())e( to it, t'e Co"rt o< A))e(! (>re+ t'e +e8i!ion o< t'e tri( 8o"rt.

In t'eir )etition <or reie7 to t'i! Co"rt, t'e !)o"!e! 8onte!t t'e K"+/ent o< t'e

8o"rt! eo7. A+K(8ent o7ner! re)orte+ '(e no oKe8tion to t'e 8on!tr"8tion, (n+

'(e een e)re!!e+ intere!t in "n+ert(in/ ( !ii(r e)(n!ion in t'eir re!)e8tie

re!i+en8e!. %oreoer, t'e 8o")e! t7o 8'i+ren, ( !on (n+ ( +("/'ter, i/'t !oon

/et (rrie+ (n+ t'en !'(re, 7it' t'eir <(iie!, iin/ "(rter! 7it' )etitioner!. T'e

(tter (!o (!!(i t'e )er!on(it o< )ri(te re!)on+ent to "e!tion t'e 8on!tr"8tion

7'i8' '(e eJe8tie rein"i!'e+ it! o7ner!'i), ri/'t or intere!t oer t'e

!"+ii!ion ")on t'e ee8"tion o< t'e Dee+ o< A!o"te S(e in <(or o< t'e

in+ii+"( 'oeo7ner!. Per t'e 8ontr(8t et7een 0ree+o to B"i+ In8or)or(te+(n+ t'e De ( Co!t( *o7 In8oe ProKe8t oeo7ner! A!!o8i(tion ?'erein(<ter

'oeo7ner! (!!o8i(tion@, )etitioner! (er, t'e en<or8eent o< t'e )ro'iition!

8ont(ine+ in t'e Re!tri8tie Coen(nt ori/in( re!i+in/ on re!)on+ent i! no7

o+/e+ in t'e 'oeo7ner! (!!o8i(tion. Petitioner! (int(in t'(t it i! in8"ent

")on t'e 'oeo7ner! (!!o8i(tion, not on re!)on+ent, to en<or8e 8o)i(n8e 7it'

t'e )roi!ion! o< t'e 8oen(nt.

A )er"!( o< t'e )roi!ion! o< t'e 8oen(nt 7o"+ !'o7 t'(t t'e re!tri8tion! t'erein

i)o!e+ 7ere inten+e+ -

0or t'e )rote8tion (n+ enet o< t'e De *( Co!t( *o7 In8oe o"!in/ ProKe8t, (n+

o< ( t'e )er!on! 7'o ( no7, or 'ere(<ter e8oe o7ner! o< (n )(rt o< t'e

)roKe8t, (n+ (! )(rt o< t'e 8on!i+er(tion <or t'e 8one(n8e o< t'e 'o"!in/ "nit,

t'e!e re!tri8tion! (re )ro"/(te+ in or+er t'(tH t'e intent! (n+ )"r)o!e! <or 7'i8'

t'e )roKe8t 7(! +e!i/ne+ !'( e ")'e+H to 7it# !"!e"ent +" ())roe+ !(e



(n+ (!!i/nent! o< 'o"!in/ "nit! !'( e (+e on to o7 in8oe <(iie!H (

8ert(in ee o< )ri(8 !'( e o!ere+H ( 8o"nit !)irit !'( e <o!tere+H (n+

(n "n+i!t"re+ )o!!e!!ion (n+ o88")(n8 (t t'e 'oeo7ner! !'( e

(int(ine+.95:

Re!tri8tie 8oen(nt! (re not, !tri8t !)e(in/, !nono"! 7it' e(!eent!. 'ie

it ( e 8orre8t to !t(te t'(t re!tri8tie 8oen(nt! on t'e "!e o< (n+ or t'e

o8(tion or 8'(r(8ter o< "i+in/! or ot'er !tr"8t"re! t'ereon ( ro(+ e !(i+ to

8re(te e(!eent! or ri/'t!, it 8(n (!o e 8onten+e+ t'(t !"8' 8oen(nt!, ein/

iit(tion! on t'e (nner in 7'i8' one ( "!e 'i! o7n )ro)ert,96: +o not re!"t

in tr"e e(!eent!,9: "t ( 8(!e o< !erit"+e! ?"r+en@, !oetie! 8'(r(8terie+ to

e ne/(tie e(!eent! or re8i)ro8( ne/(tie e(!eent!. Ne/(tie e(!eent i! t'e

o!t 8oon e(!eent 8re(te+ 8oen(nt or (/reeent 7'o!e eJe8t i! to

)re8"+e t'e o7ner o< t'e (n+ <ro +oin/ (n (8t, 7'i8', i< no e(!eent ei!te+, 'e

7o"+ e entite+ to +o.9:

Co"rt! 7'i8' /ener( ie7 re!tri8tie 8oen(nt! 7it' +i!<(or <or ein/ (

re!tri8tion on t'e "!e o< one! )ro)ert, '(e, neert'ee!!, !"!t(ine+ t'e9=:

7'ere t'e 8oen(nt! (re re(!on(e,914: not 8ontr(r to )"i8 )oi8,911: or to (7,

912: (n+ not in re!tr(int o< tr(+e.913: S"Ke8t to t'e!e iit(tion!, 8o"rt! en<or8e

re!tri8tion! to t'e !(e etent t'(t 7i en+ K"+i8i( !(n8tion to (n ot'er (i+

8ontr(8t"( re(tion!'i).91;: In /ener(, <rontine re!tri8tion! on 8on!tr"8tion! '(e

een 'e+ to e (i+ !ti)"(tion!.915:

T'e )roi!ion! in ( re!tri8tie 8oen(nt )re!8riin/ t'e t)e o< t'e "i+in/ to e

ere8te+ (re 8r(<te+ not !oe <or t'e )"r)o!e o< 8re(tin/ e(!eent!, /ener( o<

i/'t (n+ ie7, nor (! ( re!tri8tion (! to t'e t)e o< 8on!tr"8tion,916: "t ( (!o

e (ie+ (! ( 8'e8 on t'e !"!e"ent "!e! o< t'e "i+in/91: 8on<or( 7it'

7'(t t'e +eeo)er ori/in( i/'t '(e inten+e+ t'e !ti)"(tion! to e. In it!

%eor(n+", re!)on+ent !t(te! in (r/"in/ <or t'e (i+it o< t'e re!tri8tie

8oen(nt t'(t t'e -

re!tri8tion! (re not 7it'o"t !)e8i8 )"r)o!e. In ( o7 8o!t-!o8i(ie+ 'o"!in/,

it i! o< )"i8 no7e+/e t'(t o7ner!-+eeo)er! (re 8on!tr(ine+ to "i+ (! (n

n"er o< 'o"!e! on ( iite+ (n+ (re( )re8i!e to (88oo+(te (r/in(ie+ ot

"er!, )roi+in/ (! "8' (! )o!!ie t'e !(<et, (e!t'eti8 (n+ +e8ent iin/

8on+ition 8ontroin/ oer8ro7+in/. S"8' )roKe8t '(! een +e!i/ne+ to

(88oo+(te (t e(!t 144 <(iie! )er 'e8t(re.91:



T'ere ())e(r! to e no 8o/ent re(!on! <or not ")'o+in/ re!tri8tie 8oen(nt!

(ie+ to )roote (e!t'eti8!, 'e(t', (n+ )ri(8 or to )reent oer8ro7+in/.

Vie7e+ (88or+in/, t'e !t(teent o< )etitioner! t'(t t'eir ie+i(te nei/'or!

'(e not o))o!e+ t'e 8on!tr"8tion i! "n((iin/ to t'eir 8("!e, t'e !"Ke8t

re!tri8tie 8oen(nt not ein/ inten+e+ <or t'e enet o< (+K(8ent o7ner! "t to

)re!8rie t'e "!e! o< t'e "i+in/, i.e., to en!"re, (on/ ot'er t'in/!, t'(t t'e

!tr"8t"re! "it on De ( Co!t( oe! S"+ii!ion 7o"+ )reent oer8ro7+in/ (n+

)roote )ri(8 (on/ !"+ii!ion +7eer!. T'e (r/"ent t'en o< )etitioner! t'(t

e)(n!ion i! ne8e!!(r in or+er to (88oo+(te t'e in+ii+"( <(iie! o< t'eir t7o

8'i+ren "!t <(i <or ie re(!on. Nor 8(n )etitioner! 8(i /oo+ <(it'H t'e re!tri8tie

8oen(nt! (re e)i8it 7ritten in t'e Contr(8t To Se (n+ (nnot(te+ (t t'e (8 o<

t'e Tr(n!<er Certi8(te o< Tite.

Petitioner! r(i!e t'e i!!"e o< t'e )er!on(it o< re!)on+ent to en<or8e t'e )roi!ion!

o< t'e 8oen(nt. Bro(+ !)e(in/, ( !"it <or e"it(e en<or8eent o< ( re!tri8tie

8oen(nt 8(n on e (+e one <or 7'o!e enet it i! inten+e+.91=: It i! not t'"!

nor( en<or8e(e one 7'o '(! no ri/'t nor intere!t in t'e (n+ <or t'e enet

o< 7'i8' t'e re!tri8tion '(! een i)o!e+.924: T'"!, ( +eeo)er o< ( !"+ii!ion

8(n en<or8e re!tri8tion!, een (! (/(in!t reote /r(ntee! o< ot!, on i< 'e ret(in!

)(rt o< t'e (n+.921: T'ere 7o"+ '(e een erit in t'e (r/"ent o< )etitioner! -

t'(t re!)on+ent, '(in/ rein"i!'e+ o7ner!'i) o< t'e !"+ii!ion to t'e

'oeo7ner!, i! )re8"+e+ <ro 8(iin/ (n ri/'t or intere!t on t'e !(e )ro)ert

- '(+ not t'e 'oeo7ner! (!!o8i(tion, 8onre+ it! o(r+ o< +ire8tor!, (o7e+

re!)on+ent to en<or8e t'e )roi!ion! o< t'e re!tri8tie 8oen(nt.

0in(, )etitioner! (r/"e t'(t <or (8 o< ( !)e8i8 )roi!ion, )re!8riin/ t'e )en(t

o< +eoition in t'e Re!tri8tie Coen(nt in t'e eent o< ( re(8' t'ereo<, t'e

)r(er o< re!)on+ent to +eoi!' t'e !tr"8t"re !'o"+ <(i. T'i! (r/"ent '(! no

eritH Arti8e 116 o< t'e Ne7 Cii Co+e !t(te!#

'en t'e oi/(tion 8on!i!t! in not +oin/ (n+ t'e oi/or +oe! 7'(t '(! een

<ori++en 'i, it !'( e "n+one (t 'i! e)en!e.



T'i! Co"rt i! not "n(7(re o< it! r"in/ in A(( Cor)or(tion !. R( B"rton

Deeo)ent Cor)or(tion,922: 7'i8' '(! ere (+K"+/e+ t'e )(ent o< +((/e!

in ie" o< +eoition. In t'e (<oreentione+ 8(!e, 'o7eer, t'e e(or(te

(t'e(ti8( <or"( <or t'e +eterin(tion o< 8o)en!(tor +((/e! 7'i8' t(e!

into (88o"nt t'e 8"rrent 8on!tr"8tion 8o!t in+e +"rin/ t'e ie+i(te )re8e+in/ 5

e(r! (!e+ on t'e 7ei/'te+ (er(/e o< 7'oe!(e )ri8e (n+ 7(/e in+i8e! o< t'eN(tion( Cen!"! (n+ St(ti!ti8! O>8e (n+ t'e B"re(" o< *(or St(ti!ti8! i! e)i8it

)roi+e+ <or in t'e Dee+ o< Re!tri8tion! entere+ into t'e )(rtie!. T'i! "ni"e (n+

)e8"i(r 8ir8"!t(n8e, (on/ ot'er !tron/ K"!ti8(tion! t'erein entione+, i! not

et(nt in t'e 8(!e (t (r.

In !", t'e Co"rt 'o+! t'(t -

[email protected]'e )roi!ion! o< t'e Re!tri8tie Coen(nt (re (i+H

[email protected]! "!t e 'e+ to e o"n+ t'ereH (n+

[email protected] t'e eten!ion 8on!tr"8te+ e8ee+! t'e Qoor (re( iit! o< t'e Re!tri8tie

Coen(nt, )etitioner-!)o"!e! 8(n e re"ire+ to +eoi!' t'e !tr"8t"re to t'e

etent t'(t it e8ee+! t'e )re!8rie+ Qoor (re( iit!.

ERE0ORE, t'e (!!(ie+ +e8i!ion, +(te+ 13 &" 1==, o< t'e Co"rt o< A))e(! in

CA-G.R. CV No. 5445, !"!t(inin/ t'(t o< t'e 8o"rt ( "o, i! A00IR%ED. No 8o!t!.

SO ORDERED.

%eo, ?C'(ir(n@, P(n/(ni(n, P"ri!i(, (n+ Gon(/(-Ree!, &&., 8on8"r.

91: Re!tri8tie Coen(nt!# A)en+i, Re8or+!, ). 11.

92: Re8or+!, )). =-11.



93: B "t"( (/reeent et7een t'e oeo7ner! A!!o8i(tion (n+ t'e +eeo)er,

t'e re!tri8tion 7(! re(e+ <ro ;-eter! to ( 2-eter !et(8.

9;: Re8or+!, ). 1=1.

95: %eor(n+" <or re!)on+ent, Roo, )). 62-63.

96: "t8'in!i !. T'o)!on, 141 N& E. 6;=, 13 A56=.

9: %o!e! !. (en, 63 A)) DC 14;, 6= 0 2+ ;2, = A*R 36.

9: i!on !. O7en ?%o@ 261 S2+ 1=.

9=: 0irt' !. %(roi8', 164 C( 25, 116 P2=.

914: To7n!en+ !. Aen, 11; C( A)) 2+ 2=1, 254 P2+ 2=2, 3= A*R 2+ 114.

911: 0"!'( !. D(8ono To7n Site Co. 64 Coo 315, 153 P226.

912: S")r(, To7n!en+.

913: 'itne !. Union R. Co. 11 Gr( ?%(!!@ 35=.

91;: (rt(n !. e!, 25 III 16, 144 NE 544. In ( not(e n"er o< 8(!e!,

re!tri8tion! i)o!e+ on )ro)ert 8onee+ 7ere +e8(re+ in(i+ <or '(in/

8ontr(ene+ !oe 8on!tit"tion( or !t(t"tor )roi!ion, or 7'ere <o"n+ to e o< no

enet to (none (n+ ( !erio"! inter<eren8e in t'e )ro)er +eeo)ent o< t'e

8o"nit ?(rri! !. Pe(!e, 135 Conn 535, 66 A2+ 5=4, 14 A*R 2+ 1=@ (n+ 7'ere

it (o"nte+ to ( )ro'iition o< t'e "!e o< )ro)ert. ?B(er !. en+er!on, 13 Te

266, 153 S2+ ;65.@

915: B(/i(no !. (rro7, 2; %i8' ;1 226 N 262.

916: "t8'in!on !. Uri8', 1;5 III 336, 3; NE 556.

91: I+, See (!o S8'7(r8'i+ !. eorne 16 V( 1452, ;5 SE 2+ 152.

91: %eor(n+" <or Re!)on+ent, Roo, ). 62.

91=: A" !. r(<t ?Te Ci A))@ 26 S2+ ;64.

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-24670 December 14, 1979



ORTIGS ! CO., LIMITED PRTNERS"IP, plaintiff-appellant,vs.#ETI $N% ND TRUST CO., defendant-appellee.

Ramirez & Ortigas for appellant.

Tañada, Teehankee & Carreon for appellee.

SNTOS, J.:

An appeal interposed on June 2, !"#$ b% plaintiff-appellant, &rti'as ( Co., )i*ited Partnership,fro* the decision of the Court of +irst nstance of Rial, Branch , at Pasi', /on. Andres Re%espresidin', 0hich dis*issed its co*plaint in Civil Case No. 11#, entitled, 3&rti'as ( Co*pan%,)i*ited Partnership, plaintiff, v. +eati Ban4 and 5rust Co*pan%, defendant,3 for lac4 of *erit.

5he follo0in' facts 6 a reproduction of the lo0er court7s findin's, 0hich, in turn, are based on a

stipulation of facts entered into b% the parties are not disputed. Plaintiff 8for*erl% 4no0n as 3&rti'as,Madri'al % Cia39 is a li*ited partnership and defendant +eati Ban4 and 5rust Co., is a corporationdul% or'anied and e:istin' in accordance 0ith the la0s of the Philippines. Plaintiff is en'a'ed in realestate business, developin' and sellin' lots to the public, particularl% the /i'h0a% /ills ;ubdivisionalon' Epifanio de los ;antos Avenue, Mandalu%on', Rial.1

&n March <, !"$2, plaintiff, as vendor, and Au'usto Padilla % An'eles and Natividad An'eles, asvendees, entered into separate a'ree*ents of sale on install*ents over t0o parcels of land, 4no0nas )ots Nos. $ and #, Bloc4 !, of the /i'h0a% /ills ;ubdivision, situated at Mandalu%on', Rial. &nJul% !", !"#2, the said vendees transferred their ri'hts and interests over the aforesaid lots in favorof one E**a Chave. =pon co*pletion of pa%*ent of the purchase price, the plaintiff e:ecuted thecorrespondin' deeds of sale in favor of E**a Chave. Both the a'ree*ents 8of sale on install*ent9

and the deeds of sale contained the stipulations or restrictions that>

!. 5he parcel of land sub?ect of this deed of sale shall be used the Bu%er e:clusivel%for residential purposes, and she shall not be entitled to ta4e or re*ove soil, stonesor 'ravel fro* it or an% other lots belon'in' to the ;eller.

2. All buildin's and other i*prove*ents 8e:cept the fence9 0hich *a% be constructedat an% ti*e in said lot *ust be, 8a9 of stron' *aterials and properl% painted, 8b9provided 0ith *odern sanitar% installations connected either to the public se0er or toan approved septic tan4, and 8c9 shall not be at a distance of less than t0o 829 *etersfro* its boundar% lines. 2

5he above restrictions 0ere later annotated in 5C5 Nos. !!$" and !!$!! of the Re'ister of@eeds of Rial, coverin' the said lots and issued in the na*e of E**a Chave. &

Eventuall%, defendant-appellee acuired )ots Nos. $ and #, 0ith 5C5 Nos. !!#! and !#"2issued in its na*e, respectivel% and the buildin' restrictions 0ere also annotatedtherein. 4 @efendant-appellee bou'ht )ot No. $ directl% fro* E**a Chave, 3free fro* all liens andencu*brances as stated in Anne: 7@7, ' 0hile )ot No. # 0as acuired fro* Republic +lour Mills throu'h a3@eed of E:chan'e,3 Anne: 3E3. 6 5C5 No. !!1!" in the na*e of Republic +lour Mills li4e0ise containedthe sa*e restrictions, althou'h defendant-appellee clai*s that Republic +lour Mills purchased the said



)ot No. # 3in 'ood faith. free fro* all liens and encu*brances,3 as stated in the @eed of ;ale, Anne:3+3 7 bet0een it and E**a Chave.

Plaintiff-appellant clai*s that the restrictions annotated on 5C5 Nos. !!$", !!$!!, !!1!",!!#!, and !#"2 0ere i*posed as part of its 'eneral buildin' sche*e desi'ned for thebeautification and develop*ent of the /i'h0a% /ills ;ubdivision 0hich for*s part of the bi' landed

estate of plaintiff-appellant 0here co**ercial and industrial sites are also desi'nated orestablished. (

@efendant-appellee, upon the other hand, *aintains that the area alon' the 0estern part of Epifaniode los ;antos Avenue 8E@;A9 fro* ;ha0 Boulevard to Pasi' River, has been declared aco**ercial and industrial one, per Resolution No. 21, dated +ebruar% <, !"# of the MunicipalCouncil of Mandalu%on', Rial. 9 t alle'es that plaintiff-appellant 7co*pletel% sold and transferred tothird persons all lots in said subdivision facin' Epifanio de los ;antos Avenue3 10 and the sub?ect lotsthereunder 0ere acuired b% it 3onl% on Jul% 2, !"#2 or *ore than t0o 829 %ears after the area ... hadbeen declared a co**ercial and industrial one ... 11

&n or about Ma% $, !"#, defendant-appellee be'an la%in' the foundation and co**enced theconstruction of a buildin' on )ots Nos. $ and #, to be devoted to ban4in' purposes, but 0hichdefendant-appellee clai*s could also be devoted to, and used e:clusivel% for, residential purposes.5he follo0in' da%, plaintiff-appellant de*anded in 0ritin' that defendant-appellee stop theconstruction of the co**erical buildin' on the said lots. 5he latter refused to co*pl% 0ith thede*and, contendin' that the buildin' 0as bein' constructed in accordance 0ith the onin're'ulations, defendant-appellee havin' filed buildin' and plannin' per*it applications 0ith theMunicipalit% of Mandalu%on', and it had accordin'l% obtained buildin' and plannin' per*its toproceed 0ith the construction.12

&n the basis of the fore'oin' facts, Civil Case No. 11#, supra, 0as sub*itted in the lo0er court fordecision. 5he co*plaint sou'ht, a*on' other thin's, the issuance of 3a 0rit of preli*inar%in?unction ... restrainin' and en?oinin' defendant, its a'ents, assi'ns, and those actin' on its or theirbehalf fro* continuin' or co*pletin' the construction of a co**ercial ban4 buildin' in the

pre*ises ... involved, 0ith the vie0 to co**andin' the defendant to observe and co*pl% 0ith thebuildin' restrictions annotated in the defendant7s transfer certificate of title.3

n decidin' the said case, the trial court considered, as the funda*ental issue, 0hether or not theresolution of the Municipal Council of Mandalu%on' declarin' )ots Nos. $ and #, a*on' others, aspart of the co**ercial and industrial one of the *unicipalit%, prevailed over the buildin' restrictionsi*posed b% plaintiff-appellant on the lots in uestion. 1& 5he records do not sho0 that a 0rit ofpreli*inar% in?unction 0as issued.

5he trial court upheld the defendant-appellee and dis*issed the co*plaint, holdin' that the sub?ectrestrictions 0ere subordinate to Municipal Resolution No. 21, supra. t predicated its conclusion onthe e:ercise of police po0er of the said *unicipalit%, and stressed that private interest should 3bo0

do0n to 'eneral interest and 0elfare. 3 n short, it upheld the classification b% the Municipal Councilof the area alon' Epifanio de los ;antos Avenue as a co**ercial and industrial one, and held thatthe sa*e rendered 3ineffective and unenforceable3 the restrictions in uestion as a'ainst defendant-appellee. 14 5he trial court decision further e*phasied that it 3assu*es said resolution to be valid,considerin' that there is no issue raised b% either of the parties as to 0hether the sa*e is null and void. 1'

&n March 2, !"#$, plaintiff-appellant filed a *otion for reconsideration of the above decision, 16 0hich*otion 0as opposed b% defendant-appellee on March !1, !"#$. 17 t averred, a*on' others, in the *otionfor reconsideration that defendant- appellee 30as dut% bound to co*pl% 0ith the conditions of the contract



of sale in its favor, 0hich conditions 0ere dul% annotated in the 5ransfer Certificates of 5itle issued in her8E**a Chave9 favor.3 t also invited the trial court7s attention to its clai* that the Municipal Council had8no9 po0er to nullif% the contractual obli'ations assu*ed b% the defendant corporation.3 1(

5he trial court denied the *otion for reconsideration in its order of March 2#, !"#$. 19

&n April 2, !"#$ plaintiff-appellant filed its notice of appeal fro* the decision dis*issin' theco*plaint and fro* the order of March 2#, !"#$ den%in' the *otion for reconsideration, its record onappeal, and a cash appeal bond.3 20 &n April !<, the appeal 0as 'iven due course 21 and the records ofthe case 0ere elevated directl% to this Court, since onl% uestions of la0 are raised. 22

Plaintiff-appellant alle'es in its brief that the trial court erred 6

. hen it sustained the vie0 that Resolution No. 21, series of !"# of the MunicipalCouncil of Mandalu%on', Rial declarin' )ots Nos. $ and #, a*on' others, as part ofthe co**ercial and industrial one, is valid because it did so in the e:ercise of itspolice po0er and

. hen it failed to consider 0hether or not the Municipal Council had the po0er tonullif% the contractual obli'ations assu*ed b% defendant-appellee and 0hen it did not*a4e a findin' that the buildin' 0as erected alon' the propert% line, 0hen it shouldhave been erected t0o *eters a0a% fro* said propert% line. 2&

5he defendant-appellee sub*itted its counter-assi'n*ent of errors. n this connection, e alread%had occasion to hold in Relativo v. Castro 24 that 389t is not incu*bent on the appellee, 0ho occupies apurel% defensive position, and is see4in' no affir*ative relief, to *a4e assi'n*ents of error, 3

5he onl% issues to be resolved, therefore, are> 8!9 0hether Resolution No. 21 s-!"# is a valide:ercise of police po0er and 829 0hether the said Resolution can nullif% or supersede thecontractual obli'ations assu*ed b% defendant-appellee.

!. 5he contention that the trial court erred in sustainin' the validit% of Resolution No. 21 as ane:ercise of police po0er is 0ithout *erit. n the first place, the validit% of the said resolution 0asnever uestioned before it. 5he rule is that the uestion of la0 or of fact 0hich *a% be included inthe appellant7s assi'n*ent of errors *ust be those 0hich have been raised in the court belo0, andare 0ithin the issues fra*ed b% the parties. 2' 5he ob?ect of reuirin' the parties to present all uestionsand issues to the lo0er court before the% can be presented to the appellate court is to enable the lo0ercourt to pass thereon, so that the appellate court upon appeal *a% deter*ine 0hether or not such rulin'0as erroneous. 5he reuire*ent is in furtherance of ?ustice in that the other part% *a% not be ta4en b%surprise.26 5he rule a'ainst the practice of blo0in' 3hot and cold3 b% assu*in' one position in the trialcourt and another on appeal 0ill, in the 0ords of Elliot, prevent deception. 27 +or it is 0ell-settled thatissues or defenses not raised 2( or properl% liti'ated 29 or pleaded &0 in the Court belo0 cannot be raised or entertained on appeal.

n this particular case, the validit% of the resolution 0as ad*itted at least i*pliedl%, in the stipulationof facts belo0. 0hen plaintiff-appellant did not dispute the sa*e. 5he onl% controvers% then as statedb% the trial court 0as 0hether or not the resolution of the Municipal Council of Mandalu%on' ... 0hichdeclared lots Nos. < and $ a*on' others, as a part of the co**ercial and industrial one of the*unicipalit%, prevails over the restrictions constitutin' as encu*brances on the lots inuestion. &1 /avin' ad*itted the validit% of the sub?ect resolution belo0, even if i*pliedl%, plaintiff-appellant cannot no0 chan'e its position on appeal.



But, assu*in' arguendo that it is not %et too late in the da% for plaintiff-appellant to raise the issue ofthe invalidit% of the *unicipal resolution in uestion, e are of the opinion that its posture isunsustainable. ;ection of R.A. No. 22#<, other0ise 4no0n as the )ocal Autono*%

Act,3 &2 e*po0ers a Municipal Council 3to adopt onin' and subdivision ordinances or regulations3 && forthe *unicipalit%. Clearl%, the la0 does not restrict the e:ercise of the po0er throu'h an ordinance.5herefore, 'rantin' that Resolution No. 21 is not an ordinance, it certainl% is a re'ulator% *easure 0ithin

the intend*ent or a*bit of the 0ord 3re'ulation3 under the provision. As a *atter of fact the sa*e sectiondeclares that the po0er e:ists 38A9n% provision of la0 to the contrar% not0ithstandin' ... 3

An e:a*ination of ;ection !2 of the sa*e la0 &4 0hich prescribes the rules for its interpretation li4e0isereveals that the i*plied po0er of a *unicipalit% should be 3liberall% construed in its favor3 and that 38A9n%fair and reasonable doubt as to the e:istence of the po0er should be interpreted in favor of the local'overn*ent and it shall be presu*ed to e:ist.3 5he sa*e section further *andates that the 'eneral0elfare clause be liberall% interpreted in case of doubt, so as to 'ive *ore po0er to local 'overn*ents inpro*otin' the econo*ic conditions, social 0elfare and *aterial pro'ress of the people in the co**unit%.5he onl% e:ceptions under ;ection !2 are e:istin' vested ri'hts arisin' out of a contract bet0een 3aprovince, cit% or *unicipalit% on one hand and a third part% on the other,3 in 0hich case the ori'inal ter*sand provisions of the contract should 'overn. 5he e:ceptions, clearl%, do not appl% in the case at bar.

2. ith re'ard to the contention that said resolution cannot nullif% the contractual obli'ationsassu*ed b% the defendant-appellee D referrin' to the restrictions incorporated in the deeds of saleand later in the correspondin' 5ransfer Certificates of 5itle issued to defendant-appellee D it shouldbe stressed, that 0hile non-i*pair*ent of contracts is constitutionall% 'uaranteed, the rule is notabsolute, since it has to be reconciled 0ith the le'iti*ate e:ercise of police po0er, i.e., 3the po0er toprescribe re'ulations to pro*ote the health, *orals, peace, education, 'ood order or safet% and'eneral 0elfare of the people. &' nvariabl% described as 3the *ost essential, insistent, and illi*itable ofpo0ers3 &6 and 3in a sense, the 'reatest and *ost po0erful attribute of 'overn*ent, &7 the e:ercise of thepo0er *a% be ?udiciall% inuired into and corrected onl% if it is capricious, 70hi*sical, un?ust orunreasonable, there havin' been a denial of due process or a violation of an% other applicableconstitutional 'uarantee. &( As this Court held throu'h Justice Jose P. Ben'on in Philippine LongDistane Compan! vs. Cit! of Davao, et al . &9 police po0er 3is elastic and *ust be responsive to varioussocial conditions it is not, confined 0ithin narro0 circu*scriptions of precedents restin' on past

conditions it *ust follo0 the le'al pro'ress of a de*ocratic 0a% of life.3 e 0ere even *ore e*phaticin"da. de #enuino vs. The Court of $grarian Relations, et al ., 40 0hen e declared> 3e do not see 0h%public 0elfare 0hen clashin' 0ith the individual ri'ht to propert% should not be *ade to prevail throu'hthe state7s e:ercise of its police po0er.

Resolution No. 21, s-!"# declarin' the 0estern part of hi'h0a% $<, no0 E. de los ;antos Avenue8E@;A, for short9 fro* ;ha0 Boulevard to the Pasi' River as an industrial and co**ercial one,0as obviousl% passed b% the Municipal Council of Mandalu%on', Rial in the e:ercise of policepo0er to safe'uard or pro*ote the health, safet%, peace, 'ood order and 'eneral 0elfare of thepeople in the localit%, Judicial notice *a% be ta4en of the conditions prevailin' in the area, especiall%0here lots Nos. $ and # are located. 5he lots the*selves not onl% front the hi'h0a% industrial andco**ercial co*ple:es have flourished about the place. E@;A, a *ain traffic arter% 0hich runsthrou'h several cities and *unicipalities in the Metro Manila area, supports an endless strea* oftraffic and the resultin' activit%, noise and pollution are hardl% conducive to the health, safet% or0elfare of the residents in its route. /avin' been e:pressl% 'ranted the po0er to adopt onin' andsubdivision ordinances or re'ulations, the *unicipalit% of Mandalu%on', throu'h its Municipal7council, 0as reasonabl%, if not perfectl%, ?ustified under the circu*stances, in passin' the sub?ectresolution.

5he scope of police po0er 4eeps e:pandin' as civiliation advances, stressed this Court, spea4in'thru Justice )aurel in the leadin' case of Calalang v. %illiams et al., 41 5hus-



As 0as said in the case of Doins v. Los $ngeles 8!"$ =; 22, 2 <" ). ed.!#"9, 'the right to e(erise the polie po)er is a ontinuing one, and a usinessla)ful toda! ma! in the future, eause of hanged situation, the gro)th of

population or other auses, eome a menae to the puli health and )elfare, ande re*uired to !ield to the puli good.7 And in People v. Po*ar 8<# Phil. <<9, it 0asobserved that 'advaning ivilization is ringing )ithin the sope of polie po)er of

the state toda! things )hih )ere not thought of as eing )ith in suh po)er!esterda!. 5he develop*ent of civiliation9, the rapidl% increasin' population, the'ro0th of public opinion, 0ith an increasin' desire on the part of the *asses and ofthe 'overn*ent to loo4 after and care for the interests of the individuals of the state,have brou'ht 0ithin the police po0er *an% uestions for re'ulation 0hich for*erl%0ere not so considered. 42 8E*phasis, supplied.9

5hus, the state, in order to pro*ote the 'eneral 0elfare, *a% interfere 0ith personal libert%, 0ithpropert%, and 0ith business and occupations. Persons *a% be sub?ected to all 4inds of restraints andburdens, in order to secure the 'eneral co*fort health and prosperit% of the state 4& and to thisfunda*ental ai* of our Fovern*ent, the ri'hts of the individual are subordinated. 44

5he need for reconcilin' the non-i*pair*ent clause of the Constitution and the valid e:ercise ofpolice po0er *a% also be 'leaned fro* +elvering v. Davis 4' 0herein Mr. Justice Cardoo, spea4in' for the Court, resolved the conflict 3bet0een one 0elfare and another, bet0een particular and 'eneral, thus6

Nor is the concept of the 'eneral 0elfare static. eeds that )ere narro) or parohiala entur! ago ma! e inter)oven in our da! )ith the )ell-eing of the nation hat iscritical or ur'ent chan'es 0ith the ti*es. 46

5he *otives behind the passa'e of the uestioned resolution bein' reasonable, and it bein' a 3le'iti*ate response to a felt public need,3 47 not 0hi*sical or oppressive, the non-i*pair*ent ofcontracts clause of the Constitution 0ill not bar the *unicipalit%7s proper e:ercise of the po0er. No0 Chief Justice +ernando puts it aptl% 0hen he declared> 3Police po0er le'islation then is not li4el% to succu*b to

the challen'e that thereb% contractual ri'hts are rendered nu'ator%.3 4(

+urther*ore, e restated in Philippine $merian Life ns. Co. v. $uditor #eneral 49 that la0s andreservation of essential attributes of soverei'n po0er are read into contracts a'reed upon b% the parties.5hus 6

Not onl% are e:istin' la0s read into contracts in order to fi: obli'ations as bet0eenthe parties, butthe reservation of essential attriutes of sovereign po)er is also readinto ontrats as a postulate of the legal order . 5he polic% of protectin' contractsa'ainst i*pair*ents presupposes the *aintenance of a 'overn*ent b% virtue of0hich contractual relations are 0orth0hile D a 'overn*ent 0hich retains adeuateauthorit% to secure the peace and 'ood order of societ%.

A'ain, e held in Lieration /teamship Co., n. v. Court of ndustrial Relations, '0 throu'h JusticeJ.B.). Re%es, that ... the la0 for*s part of, and is read into, ever% contract, unless clearl% e:cludedtherefro* in those cases 0here such e:clusion is allo0ed.3 5he decision in 0aritime Compan! of thePhilippines v. Reparations Commission, '1 0ritten for the Court b% Justice +ernando, no0 Chief Justice,restates the rule.

&ne last observation. Appellant has placed unualified reliance on A*erican ?urisprudence andauthorities '2 to bolster its theor% that the *unicipal resolution in uestion cannot nullif% or supersede the



a'ree*ent of the parties e*bodied in the sales contract, as that, it clai*s, 0ould i*pair the obli'ation ofcontracts in violation of the Constitution. ;uch reliance is *isplaced.

n the first place, the vie0s set forth in A*erican decisions and authorities are not per se controllin'in the Philippines, the la0s of 0hich *ust necessaril% be construed in accordance 0ith the intentionof its o0n la0*a4ers and such intent *a% be deduced fro* the lan'ua'e of each la0 and the

conte:t of other local le'islation related thereto.'&

and 1urgess, et al v. 0agarian, et al.,''

t0o &f thecases cited b% plaintiff-appellant, lend support to the conclusion reached b% the trial court, i.e. that the*unicipal resolution supersedesGsupervenes over the contractual underta4in' bet0een the parties. Dolanv. 1ro)n, states that 3Euit% 0ill not, as a rule, enforce a restriction upon the use of propert% b%in?unction )here the propert! has so hanged in harater and environment as to make it unfit orunprofitale for use should the restrition e enfored, but 0ill, in such a case, leave the co*plainant to0hatever re*ed% he *a% have at la0. '6 8E*phasis supplied.9 /ence, the re*ed% of in?unction in Dolanvs. 1ro)n 0as denied on the specific holdin' that 3A 'rantor *a% la0full% insert in his deed conditions orrestrictions 0hich are not a'ainst public polic% and do not *ateriall% i*pair the beneficial en?o%*ent of theestate. '7 Appl%in' the principle ?ust stated to the present controvers%, e can sa% that since it is no0unprofitable, na% a haard to the health and co*fort, to use )ots Nos. $ and # for strictl% residentialpurposes, defendants- appellees should be per*itted, on the stren'th of the resolution pro*ul'atedunder the police po0er of the *unicipalit%, to use the sa*e for co**ercial purposes. n 1urgess v.

0agarian et al. it 0as, held that 3restrictive covenants runnin' 0ith the land are bindin' on all subseuentpurchasers ... 3 /o0ever, ;ection 2 of the onin' ordinance involved therein containeda proviso e:pressl% declarin' that the ordinance 0as not intended 3to interfere 0ith or abro'ate or annulan% ease*ents, covenants or other a'ree*ent bet0een parties.3 '( n the case at bar, no such proviso isfound in the sub?ect resolution.

t is, therefore, clear that even if the sub?ect buildin' restrictions 0ere assu*ed b% the defendant-appellee as vendee of )ots Nos. $ and #, in the correspondin' deeds of sale, and later, in 5ransferCertificates of 5itle Nos. !!#! and !#"2, the contractual obli'ations so assu*ed cannot prevailover Resolution No. 21, of the Municipalit% of Mandalu%on', 0hich has validl% e:ercised its policepo0er throu'h the said resolution. Accordin'l%, the buildin' restrictions, 0hich declare )ots Nos. $and # as residential, cannot be enforced.

N E &+ 5/E +&REF&NF, the decision appealed fro*, dis*issin' the co*plaint, is hereb% A++RME@. 30ithout pronounce*ent as to costs.

;& &R@ERE@.

0akasiar, $ntonio, Conepion, 2r., 3ernandez, #uerrero, De Castro and 0elenio-+errera, 22.,onur.

Teehankee 4 and $*uino,22., took no part.

Se)*r*+e O)o

$RREDO, J., concurrin'>

hold it is a *atter of public 4no0led'e that the place in uestion is co**ercial. t 0ould be 0orse ifthe sa*e 0ere to be left as residential and all around are alread% co**ercial.



#ERNNDO, C.J., concurrin'>

5he e:haustive and lucid opinion of the Court penned b% Justice Fuiller*o ;. ;antos co**endsitself for approval. feel no hesitanc%, therefore, in %ieldin' concurrence, 5he observation, ho0ever,in the dissent of Justice icente Abad ;antos relative to restrictive covenants calls, to *% *ind, forfurther reflection as to the respect to 0hich the% are entitled 0henever police po0er le'islation,

0hether on the national or local level, is assailed. Before doin' so, ho0ever, it *a% not be a*iss toconsider further the effect of such all-e*bracin' attribute on e:istin' contracts.

!. Reference 0as *ade in the opinion of the Court to Philippine $merian Life nsurane Compan!v. $uditor #eneral . 1 5he ponente in that case 0as Justice ;anche. A concurrence ca*e fro* *e. tcontained this ualification> 3t cannot be said, 0ithout renderin' nu'ator% the constitutional 'uarantee ofnon-i*pair*ent, and for that *atter both the eual protection and due process clauses 0hich euall%serve to protect propert% ri'hts, that at the *ere invocation of the police po0er, the ob?ection on non-i*pair*ent 'rounds auto*aticall% loses force. /ere, as in other cases 0here 'overn*ental authorit% *a%trench upon propert% ri'hts, the process of balancin', ad?ust*ent or har*oniation is called for. 2 Afterreferrin' to three leadin' 5nited /tates /upreme Court deisions, +ome 1uilding and Loan $ssoiation v.1laisdell, 3eia v. e) 6ork, 4 and orman v. 1altimore and Ohio Railroad Co ., ' stated> 3All of theabove decisions reflect the vie0 that an enact*ent of a police po0er *easure does not per se call for the

overrulin' of ob?ections based on either due process or non-i*pair*ent based on either due process ornon-i*pair*ent 'rounds. 5here *ust be that balancin', or ad?ust*ent, or har*oniation of the conflictin'clai*s posed b% an e:ercise of state re'ulator% po0er on the one hand and assertion of ri'hts to propert%,0hether of natural or of ?uridical persons, on the other. 75hat is the onl% 0a% b% 0hich the constitutional'uarantees *a% serve the hi'h ends that call for their inclusion in the Constitution and thus effectivel%preclude all% abusive e:ercise of 'overn*ental authorit%.3 6 Nor did *% concurrence stop there> 3n theopinion of the Blaisdell case, penned b% the then Chief Justice /u'hes, there 0as this understandablestress on balancin' or har*oniin', 0hich is called for in liti'ations of this character> 75he polic% ofprotectin' contracts a'ainst i*pair*ent presupposes the *aintenance of a 'overn*ent b% virtue of 0hichcontractual relations are 0orth0hile a 'overn*ent 0hich retains adeuate authorit% to secure the peaceand 'ood order of societ%. 5his principle of har*oniin' the constitutional prohibition 0ith the necessar%residuu* of state po0er has had pro'ressive reco'nition in the decisions of this Court.7 Also to the sa*eeffect> 7=ndoubtedl%, 0hatever is reserved of state po0er *ust be consistent 0ith the fair intent of the

constitutional li*itation of that po0er. 5he reserve po0er cannot be construed so as to destro% theli*itation, nor is the li*itation to be construed to destro% the reserved po0er in its essential aspects. 75he%*ust be construed in har*on% 0ith each other. 5his principle precludes a construction 0hich 0ould per*itthe ;tate to adopt as its polic% the repudiation of debts or the destruction of contracts or the denial of*eans to enforce the*. But it does not follo0 that conditions *a% not arise in 0hich a te*porar% restraintof enforce*ent *a% be consistent 0ith the spirit and purpose of the constitutional provision and thus befound to be 0ithin the ran'e of the reserved po0er of the ;tate to protect the vital interests of theco**unit%.7 +urther on, Chief Justice /u'hes li4e0ise stated> 7t is *anifest fro* this revie0 of ourdecisions that there has been a 'ro0in' appreciation of public needs and of the necessit% of findin''round for a rational co*pro*ise bet0een individual ri'hts and public 0elfare. 3 7 5his is the concludin'para'raph of *% concurrence in the Philippine A*erican )ife nsurance Co. case> 3f e*phasis betherefore laid, as this concurrin' opinion does, on the pressin' and inescapable need for such anapproach 0henever a possible collision bet0een state authorit% and an assertion of constitutional ri'ht to

propert% *a% e:ist, it is not to depart fro* 0hat sound constitutional orthodo:% dictates. t is rather toabide b% 0hat is co*pels. n liti'ations of this character then, perhaps *uch *ore so than in otherdisputes, 0here there is a reliance on a constitutional provision, the ?udiciar% cannot escape 0hat /ol*esfitl% referred to as the soverei'n prero'ative of choice, the e:ercise of 0hich *i'ht possibl% be i*pu'nedif there be no atte*pt, ho0ever sli'ht, at such an effort of ad?ustin' or reconcilin' the respective clai*s ofstate re'ulator% po0er and constitutionall% protected ri'hts.3 (

adhere to such a vie0. 5his is not to sa% that there is a departure therefro* in the able andscholarl% opinion of Justice ;antos. t is *erel% to stress 0hat to *% *ind is a funda*ental postulateof our Constitution. 5he onl% point 0ould 0ish to add is that in the process of such balancin' and



ad?ust*ent, the present Constitution, the Philippine A*erican )ife nsurance Co. decision havin'been pro*ul'ated under the !"$ Charter, leaves no doubt that the clai* to propert% ri'hts basedon the non-i*pair*ent clause has a lesser 0ei'ht. +or as e:plicitl% provided b% our presentfunda*ental la0> 35he ;tate shall pro*ote social Justice to ensure the di'nit%, 0elfare, and securit%of all the people. 5o0ards this end, the

;tate shall re'ulate the acuisition, o0nership, use, en?o%*ent, and disposition of private propert%,and euitabl% diffuse propert% o0nership and profits. 9

2. No0 as to restrictive convenants, accuratel% included b% /art and ;ac4s under the cate'or% of3private directive arran'e*ents. 3 10 5hrou'h the* people are enable to a'ree on ho0 to order theiraffairs. 5he% could be utilied to 'overn their affairs. 5he% could be utilied to 'overn their future conduct.t is a 0ell-4no0n fact that the co**on la0 relies to a 'reat e:tent on such private directive arran'e*entsto attain a desirable social condition. More specificall%, such covenants are an i*portant *eans oforderin' one aspect of propert% relationships. 5hrou'h the*, there could be deli*itation of land useri'hts. t is uite understandable 0h% the la0 should ordinaril% accord the* deference, t does so, it hasbeen said, both on 'rounds of *oralit% and utilit%. Nonetheless, there are li*its to the literal enforce*entof their ter*s. 5o the e:tent that the% i'nore technolo'ical or econo*ic pro'ress, the% are notauto*aticall% entitled to ?udicial protection. Clearl%, the% *ust 3spea4 fro* one point of ti*e to

another.3 11 5he parties, li4e all *ortal, do not have the po0er of predictin' the future 0ith unfailin'certaint%. n cases therefore 0here societal 0elfare calls for police po0er le'islation, the parties adversel%affected should realie that arran'e*ents dealin' 0ith propert% ri'hts are not i*pressed 0ith sanctit%.5hat approach, in *% vie0, 0as the 'uidin' principle of the opinion of the Court. f fence *% full and entireconcurrence.

$D SNTOS, J:, dissentin'>

Althou'h Resolution No. 21, series of !"#, of the Municipal Council of Mandalu%on', Rial, is validuntil other0ise declared, do not believe that its enact*ent 0as b% virtue of the police po0er of that*unicipalit%. do not here dispute the concept of police po0er as stated in Primiias vs. 3ugoso, Phil. 11 8!"<9 for as a *atter of fact accept it. And a'ree also that it is elastic and *ust be

responsive to various social conditions, etc. as ruled in PLDT vs. Cit! of Davao, )-2, &ct. 2#,!"#$, !$ ;CRA 2<<. But Resolution No. 21, cannot be described as pro*otive of the health, *orals,peace, education, 'ood order or safet% and 'eneral 0elfare of the people of Mandalu%on'. &n thecontrar%, its effect is the opposite. +or the serenit%, peace and uite of a residential section 0ould b%the resolution be replaced b% the chaos, tur*oil and fren% of co**erce and industr%. here there0ould be no industrial and noise pollution these bane of so-called pro'ress 0ould no0 pervade andsuffocate the environ*ent to the detri*ent of the ecolo'%. 5o characterie the ordinance as ane:ercise of police po0er 0ould be retro'ressive. t 0ill set bac4 all the efforts of the Ministr% of/u*an ;ettle*ents to i*prove the ualit% of life especiall% in Metro Manila. t 0ill *a4e MetroManila, not the cit% of *an as envisioned b% its Fovernor but a cit% of co**erce and industr%.

Considerin', therefore, that Resolution No, 2-! 0as not enacted in the le'iti*ate e:ercise of policepo0er, it cannot i*pair the restrictive covenants 0hich 'o 0ith the lands that 0ere sold b% the

plaintiff-appellant. vote for the reversal of the appealed decision.



/ Se)*r*+e O)o

$RREDO, J., concurrin'>

hold it is a *atter of public 4no0led'e that the place in uestion is co**ercial. t 0ould be 0orse ifthe sa*e 0ere to be left as residential and all around are alread% co**ercial.

#ERNNDO, C.J., concurrin'>

5he e:haustive and lucid opinion of the Court penned b% Justice Fuiller*o ;. ;antos co**endsitself for approval. feel no hesitanc%, therefore, in %ieldin' concurrence, 5he observation, ho0ever,in the dissent of Justice icente Abad ;antos relative to restrictive covenants calls, to *% *ind, forfurther reflection as to the respect to 0hich the% are entitled 0henever police po0er le'islation,0hether on the national or local level, is assailed. Before doin' so, ho0ever, it *a% not be a*iss toconsider further the effect of such all-e*bracin' attribute on e:istin' contracts.

!. Reference 0as *ade in the opinion of the Court to Philippine $merian Life nsurane Compan!v. $uditor #eneral . 1 5he ponente in that case 0as Justice ;anche. A concurrence ca*e fro* *e. tcontained this ualification> 3t cannot be said, 0ithout renderin' nu'ator% the constitutional 'uarantee ofnon-i*pair*ent, and for that *atter both the eual protection and due process clauses 0hich euall%serve to protect propert% ri'hts, that at the *ere invocation of the police po0er, the ob?ection on non-i*pair*ent 'rounds auto*aticall% loses force. /ere, as in other cases 0here 'overn*ental authorit% *a%trench upon propert% ri'hts, the process of balancin', ad?ust*ent or har*oniation is called for. 2 Afterreferrin' to three leadin' 5nited /tates /upreme Court deisions, +ome 1uilding and Loan $ssoiation v.1laisdell, 3eia v. e) 6ork, 4 and orman v. 1altimore and Ohio Railroad Co ., ' stated> 3All of theabove decisions reflect the vie0 that an enact*ent of a police po0er *easure does not per se call for theoverrulin' of ob?ections based on either due process or non-i*pair*ent based on either due process ornon-i*pair*ent 'rounds. 5here *ust be that balancin', or ad?ust*ent, or har*oniation of the conflictin'clai*s posed b% an e:ercise of state re'ulator% po0er on the one hand and assertion of ri'hts to propert%,

0hether of natural or of ?uridical persons, on the other. 75hat is the onl% 0a% b% 0hich the constitutional'uarantees *a% serve the hi'h ends that call for their inclusion in the Constitution and thus effectivel%preclude all% abusive e:ercise of 'overn*ental authorit%.3 6 Nor did *% concurrence stop there> 3n theopinion of the Blaisdell case, penned b% the then Chief Justice /u'hes, there 0as this understandablestress on balancin' or har*oniin', 0hich is called for in liti'ations of this character> 75he polic% ofprotectin' contracts a'ainst i*pair*ent presupposes the *aintenance of a 'overn*ent b% virtue of 0hichcontractual relations are 0orth0hile a 'overn*ent 0hich retains adeuate authorit% to secure the peaceand 'ood order of societ%. 5his principle of har*oniin' the constitutional prohibition 0ith the necessar%residuu* of state po0er has had pro'ressive reco'nition in the decisions of this Court.7 Also to the sa*eeffect> 7=ndoubtedl%, 0hatever is reserved of state po0er *ust be consistent 0ith the fair intent of theconstitutional li*itation of that po0er. 5he reserve po0er cannot be construed so as to destro% theli*itation, nor is the li*itation to be construed to destro% the reserved po0er in its essential aspects. 75he%*ust be construed in har*on% 0ith each other. 5his principle precludes a construction 0hich 0ould per*it

the ;tate to adopt as its polic% the repudiation of debts or the destruction of contracts or the denial of*eans to enforce the*. But it does not follo0 that conditions *a% not arise in 0hich a te*porar% restraintof enforce*ent *a% be consistent 0ith the spirit and purpose of the constitutional provision and thus befound to be 0ithin the ran'e of the reserved po0er of the ;tate to protect the vital interests of theco**unit%.7 +urther on, Chief Justice /u'hes li4e0ise stated> 7t is *anifest fro* this revie0 of ourdecisions that there has been a 'ro0in' appreciation of public needs and of the necessit% of findin''round for a rational co*pro*ise bet0een individual ri'hts and public 0elfare. 3 7 5his is the concludin'para'raph of *% concurrence in the Philippine A*erican )ife nsurance Co. case> 3f e*phasis betherefore laid, as this concurrin' opinion does, on the pressin' and inescapable need for such anapproach 0henever a possible collision bet0een state authorit% and an assertion of constitutional ri'ht to



propert% *a% e:ist, it is not to depart fro* 0hat sound constitutional orthodo:% dictates. t is rather toabide b% 0hat is co*pels. n liti'ations of this character then, perhaps *uch *ore so than in otherdisputes, 0here there is a reliance on a constitutional provision, the ?udiciar% cannot escape 0hat /ol*esfitl% referred to as the soverei'n prero'ative of choice, the e:ercise of 0hich *i'ht possibl% be i*pu'nedif there be no atte*pt, ho0ever sli'ht, at such an effort of ad?ustin' or reconcilin' the respective clai*s ofstate re'ulator% po0er and constitutionall% protected ri'hts.3 (

adhere to such a vie0. 5his is not to sa% that there is a departure therefro* in the able andscholarl% opinion of Justice ;antos. t is *erel% to stress 0hat to *% *ind is a funda*ental postulateof our Constitution. 5he onl% point 0ould 0ish to add is that in the process of such balancin' andad?ust*ent, the present Constitution, the Philippine A*erican )ife nsurance Co. decision havin'been pro*ul'ated under the !"$ Charter, leaves no doubt that the clai* to propert% ri'hts basedon the non-i*pair*ent clause has a lesser 0ei'ht. +or as e:plicitl% provided b% our presentfunda*ental la0> 35he ;tate shall pro*ote social Justice to ensure the di'nit%, 0elfare, and securit%of all the people. 5o0ards this end, the

;tate shall re'ulate the acuisition, o0nership, use, en?o%*ent, and disposition of private propert%,and euitabl% diffuse propert% o0nership and profits. 9

2. No0 as to restrictive convenants, accuratel% included b% /art and ;ac4s under the cate'or% of3private directive arran'e*ents. 3 10 5hrou'h the* people are enable to a'ree on ho0 to order theiraffairs. 5he% could be utilied to 'overn their affairs. 5he% could be utilied to 'overn their future conduct.t is a 0ell-4no0n fact that the co**on la0 relies to a 'reat e:tent on such private directive arran'e*entsto attain a desirable social condition. More specificall%, such covenants are an i*portant *eans oforderin' one aspect of propert% relationships. 5hrou'h the*, there could be deli*itation of land useri'hts. t is uite understandable 0h% the la0 should ordinaril% accord the* deference, t does so, it hasbeen said, both on 'rounds of *oralit% and utilit%. Nonetheless, there are li*its to the literal enforce*entof their ter*s. 5o the e:tent that the% i'nore technolo'ical or econo*ic pro'ress, the% are notauto*aticall% entitled to ?udicial protection. Clearl%, the% *ust 3spea4 fro* one point of ti*e toanother.3 11 5he parties, li4e all *ortal, do not have the po0er of predictin' the future 0ith unfailin'certaint%. n cases therefore 0here societal 0elfare calls for police po0er le'islation, the parties adversel%affected should realie that arran'e*ents dealin' 0ith propert% ri'hts are not i*pressed 0ith sanctit%.

5hat approach, in *% vie0, 0as the 'uidin' principle of the opinion of the Court. f fence *% full and entireconcurrence.

$D SNTOS, J:, dissentin'>

Althou'h Resolution No. 21, series of !"#, of the Municipal Council of Mandalu%on', Rial, is validuntil other0ise declared, do not believe that its enact*ent 0as b% virtue of the police po0er of that*unicipalit%. do not here dispute the concept of police po0er as stated in Primiias vs. 3ugoso, Phil. 11 8!"<9 for as a *atter of fact accept it. And a'ree also that it is elastic and *ust beresponsive to various social conditions, etc. as ruled in PLDT vs. Cit! of Davao, )-2, &ct. 2#,!"#$, !$ ;CRA 2<<. But Resolution No. 21, cannot be described as pro*otive of the health, *orals,peace, education, 'ood order or safet% and 'eneral 0elfare of the people of Mandalu%on'. &n the

contrar%, its effect is the opposite. +or the serenit%, peace and uite of a residential section 0ould b%the resolution be replaced b% the chaos, tur*oil and fren% of co**erce and industr%. here there0ould be no industrial and noise pollution these bane of so-called pro'ress 0ould no0 pervade andsuffocate the environ*ent to the detri*ent of the ecolo'%. 5o characterie the ordinance as ane:ercise of police po0er 0ould be retro'ressive. t 0ill set bac4 all the efforts of the Ministr% of/u*an ;ettle*ents to i*prove the ualit% of life especiall% in Metro Manila. t 0ill *a4e MetroManila, not the cit% of *an as envisioned b% its Fovernor but a cit% of co**erce and industr%.





2 ;ee Brief for @efendant-Appellee, pp. -!.

2< 1# Phil. $#, $#1 8!"<#9.

2$ ;ec. !, Rule <#, Revised Rules of Court 5an Machan v. @e la 5rinidad Phil.#<, 8!"<#9.

2# +rancisco, 5he Revised Rules of Court, ol. !!!, !"# Ed., p. #<, citin' Jones v.;e%*our, "$ Art. $", $"1, ! ;.. $#.

21 d ., pp.#-#<", cit Elliot on Appellate Procedure, <!#-<!1.

2 ;u*erari, et al . vs. @evelop*ent Ban4 of the Philippines, et al ., )-21#<, @ec.2#, !"#1, 2! ;CRA !1<> ;an Mi'uel Bre0er%, et al . vs. da. de Joves. et al ., )-2<2$, June 2#, !"#, 2 ;CRA !", !"1. ;ee also 5uason vs. /on. Arca, et al .,)- 2<<#, June 2", !"#, 2 ;CRA !, !!2.

2" Plaridel ;uret% and ns. Co. vs. Co**issioner of nternal Revenue, )-2!$2, @ec.

!!, !"#1, 2! ;CRA !!1.

Manila Port ;ervice, et al vs, Court of Appeals, et al., )2!", March 2". !"#, 22;CRA !#<.

! Record on Appeal, p. !!<.

2 ;ec. reads>

;ec. . Additional po0ers of provincial boards, *unicipal boards or cit% councils and*unicipal and re'ularl% or'anied *unicipal district councils.

::: ::: :::

Po0er to adopt onin' and plannin' ordinances. An% provision of la0 to the contrar%not0ithstandin' Municipal Boards or Cit% Councils in cities, and Municipal Councils in*unicipalities are hereb% authoried to adopt onin' and subdivision ordinances orre'ulations for their respective cities and *unicipalities sub?ect to the approval of theCit% Ma%or or Municipal Ma%or, as the case *a% be. Cities and *unicipalities *a%,ho0ever, consult the National Plannin' Co**ission on *atters pertainin' toplannin' and onin'. 8E*phasis supplied9.

E*phasis supplied.

< 5he full te:t of ;ection !2 follo0s>

;EC. !2. Rules for the nterpretation of the )ocal Autono*% Act. 6

!. *plied po0er of a province, a cit% or *unicipalit% shall be liberall%construed in its favor. An% fair and reasonable doubt as to thee:istence of the po0er should be interpreted infavor of the local'overn*ent and it shall be presu*ed to e:ist.



2. 5he 'eneral 0elfare clause be liberall% interpreted in case of local'overn*ents in pro*otin' the econo*ic condition, social 0elfare and*aterial pro'ress of the people in the co**unit%.

. ested ri'hts e:istin' at the ti*e of the pro*ul'ation of this arisin'out of a contract bet0een a province, cit% or *unicipalit% on one hand

and third part% on the other, should be 'overned b% the ori'inal ter*sand provisions of the sa*e, and in no case 0ould this act infrin'ee:istin' ri'ht.

$ Pri*icias vs. +u'oso Phil, 11 8!"<9.

# ;*ith Bell ( Co. v. Natividad, < Phil. !# 8!"!"9, citin' earlier authorities, JusticeMalcol* ponente.

1 Edu v. Ericta, )-2#, &ct. 2<, !"1, $ ;CRA <1, Justice +ernando, no0 ChiefJustice, spea4in' for the court.

;ee Er*ita-Malate /otel and Motel &perators Association, nc. v. Cit% Ma%or ofManila, )-2<#", Jul% !, !"#1, 2 ;CRA <", Justice +ernando, no0 Chief Justice,also 0rote the decision for the Court.

" )-2, &ct. 2, !"#$, !$ ;CRA 2<<, 2<1-2<.

< )-2$$, +eb. 2#, !"#, 22 ;CRA 1"2, 1"1.

<! 1 Phil. 12# 8!"<9.

<2 d., P. 1< E*phasis supplied.

< d., p. 1, citin' =.;. v. Fo*e Jesus, ! Phil. 2! 8!"!$9.

<< d., p. 1.

<$ ! =.;. #!" 8!"19.

<# E*phasis supplied.

<1 Edu v. Ericta, supra, p. <".

< +ernando on the Philippine Constitution, !"1< ed., p. $$.

<" )-!"2$$, Januar% !, !"#, 22 ;CRA !$, citin' /o*e Buildin' and )oan Association v. Blaisedell, 1 ). ed., <!, <2.

$ )-2$"-", June 21, !"#, 2 ;CRA !!!$, citin' Manresa, Co**. ol. , part 28$th Ed.9 p. $$.

$! )-2"2, Jul% 2#, !"1!, < ;CRA 1$.



$2 Brief for Plaintiff-Appellant, pp. "-!1.

$ Proctor ( Fa*ble Philippine Manufacturin' Corporation vs. Co**issioner ofCusto*s, )-2<!1, Ma% 2, !"#, 2 ;CRA #"!.

$< !1 NE <2$, <2 llinois 8!"9.

$$ 2< N $#, $-$" o0a 8!"29.

$# &p. Cit at p. <21.

$1 d., d.

$ &p. Cit. at p. $.

! )-!"2<<, Januar% !, !"#, 22 ;CRA !$.

2 id , !<.

2" =; " 8!"<9.

H Justice 5eehan4ee 0as co-counsel for defendant-appellee.

< 2"! =; $2 8!"<9.

$ 2"< =; 2< 8!"$9.

# id , !$!-!$2.

1 id ., !$2-!$.

id ., !$$.

" Article , ;ection # of the Constitution.

! /. /art and A. ;ac4s, 5he )e'al Process, !2<.

!! id , !2$.

SECOND DIVISION

9G.R. No. 126142. De8eer ;, 2444:



ORTIGAS CO. *TD., )etitioner, !. TE COURT O0 APPEA*S (n+ IS%AE* G. %ATAY

III, re!)on+ent!.

D E C I S I O N

$UISU%BING, &.#

T'i! )etition !ee! to reer!e t'e +e8i!ion o< t'e Co"rt o< A))e(!, +(te+ %(r8' 25,

1==6, in CA-G.R. SP No. 3=1=3, 7'i8' n"ie+ t'e 7rit o< )reiin(r inK"n8tion

i!!"e+ t'e Re/ion( Tri( Co"rt o< P(!i/ Cit, Br(n8' 261, in Cii C(!e No. 6;=31.

It (!o (!!(i! t'e re!o"tion o< t'e ())e(te 8o"rt, +(te+ A"/"!t 13, 1==6, +enin/

)etitioner! otion <or re8on!i+er(tion.

T'e <(8t! o< t'i! 8(!e, (! 8"e+ <ro t'e re8or+!, (re (! <oo7!#

On A"/"!t 25, 1=6, )etitioner Orti/(! Co)(n !o+ to Eii( ero!o, ( )(r8e

o< (n+ no7n (! *ot 1, Bo8 21, P!+-665=, 7it' (n (re( o< 1,54 !"(re eter!,

o8(te+ in Green'i! S"+ii!ion IV, S(n &"(n, %etro %(ni(, (n+ 8oere+ Tr(n!<er

Certi8(te o< Tite No. 43. T'e 8ontr(8t o< !(e )roi+e+ t'(t t'e ot#

1. L?1@ e "!e+ e8"!ieL<or re!i+enti( )"r)o!e! on, (n+ not ore t'(n one

!in/e-<(i re!i+enti( "i+in/ 7i e 8on!tr"8te+ t'ereon,L

6. T'e BUYER !'( not ere8tL(n !i/n or io(r+ on t'e roo<L<or (+erti!in/

)"r)o!e!L

11. No !in/e-<(i re!i+enti( "i+in/ !'( e ere8te+L"nti t'e "i+in/

)(n!, !)e8i8(tionL'(e een ())roe+ t'e SE**ERL



1;....re!tri8tion! !'( r"n 7it' t'e (n+ (n+ !'( e 8on!tr"e+ (! re( 8oen(nt!

"nti De8eer 31, 2425 7'en t'e !'( 8e(!e (n+ terin(teL91:

T'e!e (n+ t'e ot'er 8on+ition! 7ere +" (nnot(te+ on t'e 8erti8(te o< tite i!!"e+

to Eii(.

In 1=1, t'e %etro)oit(n %(ni( Coi!!ion ?no7 %etro)oit(n %(ni(

Deeo)ent A"t'orit@ en(8te+ %%C Or+in(n8e No. 1-41, (!o no7n (! t'e

Co)re'en!ie onin/ Are( <or t'e N(tion( C()it( Re/ion. T'e or+in(n8e

re8(!!ie+ (! ( 8oer8i( (re( ( )ortion o< Orti/(! Aen"e <ro %(+i!on toRoo!eet Street! o< Green'i! S"+ii!ion 7'ere t'e ot i! o8(te+.

On &"ne , 1=;, )ri(te re!)on+ent I!(e %(t'( III e(!e+ t'e ot <ro Eii(

ero!o (n+ &.P. ero!o Re(t Cor).. T'e e(!e 8ontr(8t +i+ not !)e8i< t'e

)"r)o!e! o< t'e e(!e. T'ere")on, )ri(te re!)on+ent 8on!tr"8te+ ( !in/e !tor

8oer8i( "i+in/ <or Green'i! A"to'("!, In8., ( 8(r !(e! 8o)(n.

On &(n"(r 1, 1==5, )etitioner e+ ( 8o)(int (/(in!t Eii( ero!o 7it' t'eRe/ion( Tri( Co"rt o< P(!i/, Br(n8' 261. Do8ete+ (! Cii C(!e No. 6;=31, t'e

8o)(int !o"/'t t'e +eoition o< t'e !(i+ 8oer8i( !tr"8t"re <or '(in/

io(te+ t'e ter! (n+ 8on+ition! o< t'e Dee+ o< S(e. Co)(in(nt )r(e+ <or t'e

i!!"(n8e o< ( te)or(r re!tr(inin/ or+er (n+ ( 7rit o< )reiin(r inK"n8tion to

)ro'iit )etitioner <ro 8on!tr"8tin/ t'e 8oer8i( "i+in/ (n+For en/(/in/ in

8oer8i( (8tiit on t'e ot. T'e 8o)(int 7(! (ter (en+e+ to i)e(+ I!(e

G. %(t'( III (n+ &.P. ero!o Re(t Cor)., 7'i8' '(! ( ten )er8ent ?14@ intere!t

in t'e ot.

In 'i! (n!7er, %(t'( III +enie+ (n no7e+/e o< t'e re!tri8tion! on t'e "!e o< t'e

ot (n+ e+ ( 8ro!!-8(i (/(in!t t'e ero!o!.



On &"ne 16, 1==5, t'e tri( 8o"rt i!!"e+ t'e 7rit o< )reiin(r inK"n8tion. On &"ne

2=, 1==5, %(t'( III oe+ to !et (!i+e t'e inK"n8tie or+er, "t t'e tri( 8o"rt

+enie+ t'e otion.

%(t'( III t'en e+ 7it' t'e Co"rt o< A))e(! ( !)e8i( 8ii (8tion <or 8ertior(ri,

+o8ete+ (! CA-G.R. SP No. 3=1=3, (!8riin/ to t'e tri( 8o"rt /r(e ("!e o<

+i!8retion in i!!"in/ t'e 7rit o< )reiin(r inK"n8tion. e 8(ie+ t'(t %%C

Or+in(n8e No. 1-41 8(!!ie+ t'e (re( 7'ere t'e ot 7(! o8(te+ (! 8oer8i(

(re( (n+ !(i+ or+in(n8e "!t e re(+ into t'e A"/"!t 25, 1=6 Dee+ o< S(e (! (

8on8rete eer8i!e o< )oi8e )o7er.

Orti/(! (n+ Co)(n (erre+ t'(t in(!"8' (! t'e re!tri8tion! on t'e "!e o< t'e ot

7ere +" (nnot(te+ on t'e tite it i!!"e+ to Eii( ero!o, !(i+ re!tri8tion! "!t

)re(i oer t'e or+in(n8e, !)e8i( !in8e t'e!e re!tri8tion! 7ere (/ree+ ")one<ore t'e )(!!(/e o< %%C Or+in(n8e No. 1-41.

On %(r8' 25, 1==6, t'e ())e(te 8o"rt +i!)o!e+ o< t'e 8(!e (! <oo7!#

ERE0ORE, in i/'t o< t'e <ore/oin/, t'e )etition i! 'ere GRANTED. T'e (!!(ie+

or+er! (re 'ere n"ie+ (n+ !et (!i+e.

SO ORDERED.92:

In n+in/ <or %(t'( III, t'e Co"rt o< A))e(! 'e+ t'(t t'e %%C Or+in(n8e No. 1-

41 eJe8tie n"ie+ t'e re!tri8tion! (o7in/ on re!i+enti( "!e o< t'e )ro)ert

in "e!tion.

Orti/(! !e(!on( oe+ <or re8on!i+er(tion, "t t'e ())e(te 8o"rt +enie+ it onA"/"!t 13, 1==6.

en8e, t'e in!t(nt )etition.



In it! %eor(n+", )etitioner no7 !"it! t'(t t'e )rin8i)( i!!"e in t'i! 8(!e i!

7'et'er re!)on+ent Co"rt o< A))e(! 8orre8t !et (!i+e t'e Or+er +(te+ &"ne 16,

1==5 o< t'e tri( 8o"rt 7'i8' i!!"e+ t'e 7rit o< )reiin(r inK"n8tion on t'e !oe

/ro"n+ t'(t %%C Or+in(n8e No. 1-41 n"ie+ t'e "i+in/ re!tri8tion i)o!in/

e8"!ie re!i+enti( "!e on t'e )ro)ert in "e!tion.93: It (!o (!!ert! t'(t

%(t'( III (8! e/( 8()(8it to "e!tion t'e (i+it o< 8on+ition! o< t'e +ee+ o<!(eH (n+ 'e i! (rre+ e!to))e or 7(ier to r(i!e t'e !(e "e!tion ie 'i!

)rin8i)(!, t'e o7ner!.9;: *(!t, it (er! t'(t t'e ())e(te 8o"rt "n(88o"nt(

<(ie+ to (++re!! !eer( "e!tion! o< <(8t.

Prin8i)(, 7e "!t re!oe t'e i!!"e o< 7'et'er t'e Co"rt o< A))e(! erre+ in

'o+in/ t'(t t'e tri( 8o"rt 8oitte+ /r(e ("!e o< +i!8retion 7'en it re<"!e+ to

()) %%C Or+in(n8e No.1-41 to Cii C(!e No. 6;=31.

B"t r!t, 7e "!t (++re!! )etitioner! (e/(tion t'(t t'e Co"rt o< A))e(!

"n(88o"nt( <(ie+ to (++re!! "e!tion! o< <(8t. 0or (!i8 i! t'e r"e t'(t

<(8t"( i!!"e! ( not e r(i!e+ e<ore t'i! Co"rt in ( )etition <or reie7 (n+ t'i!

Co"rt i! not +"t-o"n+ to 8on!i+er !(i+ "e!tion!.95: CA-G.R. SP No. 3=1=3 7(! (

!)e8i( 8ii (8tion <or 8ertior(ri, (n+ t'e ())e(te 8o"rt on '(+ to +eterine i< t'e

tri( 8o"rt 8oitte+ /r(e ("!e o< +i!8retion (o"ntin/ to 7(nt or e8e!! o<

K"ri!+i8tion in i!!"in/ t'e 7rit o< )reiin(r inK"n8tion. T'"!, "ne!! it( to o"r

+eterin(tion o< t'e i!!"e (t '(n+, 7e !'( re<r(in <ro <"rt'er 8on!i+er(tion o<

<(8t"( "e!tion!.

Petitioner 8onten+! t'(t t'e ())e(te 8o"rt erre+ in iitin/ it! +e8i!ion to t'e 8ite+

onin/ or+in(n8e. It (er! t'(t ( 8ontr(8t"( ri/'t i! not ("to(ti8( +i!8(r+e+

on8e ( 8(i i! (+e t'(t it 8onQi8t! 7it' )oi8e )o7er. Petitioner !"it! t'(t t'e

re!tri8tie 8("!e! in t'e "e!tione+ 8ontr(8t i! not in 8onQi8t 7it' t'e onin/

or+in(n8e. 0or one, (88or+in/ to )etitioner, t'e %%C Or+in(n8e No. 1-41 +i+ not

)ro'iit t'e 8on!tr"8tion o< re!i+enti( "i+in/!. Petitioner (r/"e! t'(t een 7it'

t'e onin/ or+in(n8e, t'e !eer (n+ "er o< t'e re-8(!!ie+ ot 8(n o"nt(ri

(/ree to (n e8"!ie re!i+enti( "!e t'ereo<. en8e, )etitioner 8on8"+e! t'(t t'e

Co"rt o< A))e(! erre+ in 'o+in/ t'(t t'e 8on+ition i)o!in/ e8"!ie re!i+enti("!e 7(! eJe8tie n"ie+ t'e onin/ or+in(n8e.

In it! t"rn, )ri(te re!)on+ent (r/"e! t'(t t'e ())e(te 8o"rt 8orre8t r"e+ t'(t

t'e tri( 8o"rt '(+ (8te+ 7it' /r(e ("!e o< +i!8retion in re<"!in/ to !"Ke8t t'e

8ontr(8t to t'e %%C Or+in(n8e No. 1-41. e (er! t'(t t'e ())e(te 8o"rt



)ro)er 'e+ t'e )oi8e )o7er !")erior to t'e non-i)(irent o< 8ontr(8t 8("!e in

t'e Con!tit"tion. e 8on8"+e! t'(t t'e ())e(te 8o"rt +i+ not err in +i!!oin/ t'e

7rit o< )reiin(r inK"n8tion i!!"e+ t'e tri( 8o"rt in e8e!! o< it! K"ri!+i8tion.

e note t'(t in i!!"in/ t'e +i!)"te+ 7rit o< )reiin(r inK"n8tion, t'e tri( 8o"rt

o!ere+ t'(t t'e 8ontr(8t o< !(e 7(! entere+ into in A"/"!t 1=6, 7'ie t'e onin/

or+in(n8e 7(! en(8te+ on in %(r8' 1=1. T'e tri( 8o"rt re(!one+ t'(t !in8e

)ri(te re!)on+ent '(+ <(ie+ to !'o7 t'(t %%C Or+in(n8e No. 1-41 '(+

retro(8tie eJe8t, !(i+ or+in(n8e !'o"+ e /ien )ro!)e8tie ())i8(tion on,96:

8itin/ Co !. Intere+i(te A))e(te Co"rt, 162 SCRA 3=4 ?1=@.

In /ener(, 7e (/ree t'(t (7! (re to e 8on!tr"e+ (! '(in/ on )ro!)e8tie

o)er(tion. *e )ro!)i8it, non re!)i8it. E"( !ette+, on (7! ei!tin/ (t t'e tie

o< t'e ee8"tion o< ( 8ontr(8t (re ())i8(e t'ereto (n+ not (ter !t(t"te!, "ne!!t'e (tter (re !)e8i8( inten+e+ to '(e retro(8tie eJe8t.9: A (ter (7 7'i8'

en(r/e!, (ri+/e!, or in (n (nner 8'(n/e! t'e intent o< t'e )(rtie! to t'e

8ontr(8t ne8e!!(ri i)(ir! t'e 8ontr(8t it!e<9: (n+ 8(nnot e /ien retro(8tie

eJe8t 7it'o"t io(tin/ t'e 8on!tit"tion( )ro'iition (/(in!t i)(irent o<

8ontr(8t!.9=:

B"t, t'e <ore/oin/ )rin8i)e! +o (+it o< 8ert(in e8e)tion!. One inoe! )oi8e

)o7er. A (7 en(8te+ in t'e eer8i!e o< )oi8e )o7er to re/"(te or /oern 8ert(in

(8tiitie! or tr(n!(8tion! 8o"+ e /ien retro(8tie eJe8t (n+ ( re(!on(i)(ir e!te+ ri/'t! or 8ontr(8t!. Poi8e )o7er e/i!(tion i! ())i8(e not on to

<"t"re 8ontr(8t!, "t e"( to t'o!e (re(+ in ei!ten8e.914: Noni)(irent o<

8ontr(8t! or e!te+ ri/'t! 8("!e! 7i '(e to ie+ to t'e !")erior (n+ e/iti(te

eer8i!e t'e St(te o< )oi8e )o7er to )roote t'e 'e(t', or(!, )e(8e,

e+"8(tion, /oo+ or+er, !(<et, (n+ /ener( 7e<(re o< t'e )eo)e.911: %oreoer,

!t(t"te! in eer8i!e o< (i+ )oi8e )o7er "!t e re(+ into eer 8ontr(8t.912:

Note7ort', in S(n/((n/ !. Intere+i(te A))e(te Co"rt,913: 7e (re(+ ")'e+

%%C Or+in(n8e No. 1-41 (! ( e/iti(te )oi8e )o7er e(!"re.

T'e tri( 8o"rt! rei(n8e on t'e Co !. IAC,91;: i! i!)(8e+. In Co, t'e +i!)"te+

(re( 7(! (/ri8"t"r( (n+ Or+in(n8e No. 1-41 +i+ not !)e8i8( )roi+e t'(t it

!'( '(e retro(8tie eJe8t !o (! to +i!8ontin"e ( ri/'t! )reio"! (8"ire+ oer

(n+! o8(te+ 7it'in t'e one 7'i8' (re neit'er re!i+enti( nor i/'t in+"!tri( in

n(t"re,915: (n+ !t(te+ 7it' re!)e8t to (/ri8"t"r( (re(! 8oere+ t'(t t'e onin/

or+in(n8e !'o"+ e /ien )ro!)e8tie o)er(tion on.916: T'e (re( in t'i! 8(!e



inoe! not (/ri8"t"r( "t "r(n re!i+enti( (n+. Or+in(n8e No. 1-41

retro(8tie (Je8te+ t'e o)er(tion o< t'e onin/ or+in(n8e in Green'i!

re8(!!i<in/ 8ert(in o8(tion! t'erein (! 8oer8i(.

0oo7in/ o"r r"in/ in Orti/(! Co., *t+. !. 0e(ti B(n Tr"!t Co., =; SCRA 533

?1==@, t'e 8ontr(8t"( !ti)"(tion! (nnot(te+ on t'e Torren! Tite, on 7'i8' Orti/(!

reie!, "!t ie+ to t'e or+in(n8e. 'en t'(t !tret8' o< Orti/(! Aen"e <ro

Roo!eet Street to %(+i!on Street 7(! re8(!!ie+ (! ( 8oer8i( one t'e

%etro)oit(n %(ni( Coi!!ion in %(r8' 1=1, t'e re!tri8tion! in t'e 8ontr(8t o<

!(e et7een Orti/(! (n+ ero!o, iitin/ ( 8on!tr"8tion on t'e +i!)"te+ ot to

!in/e-<(i re!i+enti( "i+in/!, 7ere +eee+ etin/"i!'e+ t'e retro(8tie

o)er(tion o< t'e onin/ or+in(n8e (n+ 8o"+ no on/er e en<or8e+. 'ie o"r e/(

!!te ")'o+! t'e !(n8tit o< 8ontr(8t !o t'(t ( 8ontr(8t i! +eee+ (7 et7een

t'e 8ontr(8tin/ )(rtie!,91: nonet'ee!!, !ti)"(tion! in ( 8ontr(8t 8(nnot

8ontr(ene (7, or(!, /oo+ 8"!to!, )"i8 or+er, or )"i8 )oi8.91:Ot'er7i!e !"8' !ti)"(tion! 7o"+ e +eee+ n" (n+ oi+. Re!)on+ent 8o"rt

8orre8t <o"n+ t'(t t'e tri( 8o"rt 8oitte+ in t'i! 8(!e ( /r(e ("!e o<

+i!8retion (o"ntin/ to 7(nt o< or e8e!! o< K"ri!+i8tion in re<"!in/ to tre(t

Or+in(n8e No. 1-41 (! ())i8(e to Cii C(!e No. 6;=31. In re!oin/ (tter! in

iti/(tion, K"+/e! (re not on +"t-o"n+ to (!8ert(in t'e <(8t! (n+ t'e ())i8(e

(7!,91=: t'e (re (!o o"n+ t'eir o(t' o< o>8e to ()) t'e ())i8(e (7.924:

A! ( !e8on+(r i!!"e, )etitioner 8onten+! t'(t re!)on+ent %(t'( III, (! ( ere

e!!ee o< t'e ot in "e!tion, i! ( tot( !tr(n/er to t'e +ee+ o< !(e (n+ i! t'"!(rre+ <ro "e!tionin/ t'e 8on+ition! o< !(i+ +ee+. Petitioner )oint! o"t t'(t t'e

o7ner! o< t'e ot o"nt(ri (/ree+ to t'e re!tri8tion! on t'e "!e o< t'e ot (n+ +o

not "e!tion t'e (i+it o< t'e!e re!tri8tion!. Petitioner (r/"e! t'(t %(t'( III (! (

e!!ee i! ere (n (/ent o< t'e o7ner!, (n+ 8o"+ not oerri+e (n+ ri!e (oe t'e

!t(t"! o< 'i! )rin8i)(!. Petitioner !"it! t'(t 'e 8o"+ not '(e ( 'i/'er intere!t

t'(n t'o!e o< t'e o7ner!, t'e ero!o!, (n+ t'"! '(+ no o8"! !t(n+i to e CA-G.R.

SP No. 3=1=3 to +i!!oe t'e inK"n8tie 7rit i!!"e+ t'e RTC o< P(!i/ Cit.

0or 'i! )(rt, )ri(te re!)on+ent (r/"e! t'(t (! t'e e!!ee 7'o "it t'e 8oer8i(!tr"8t"re, it i! 'e (n+ 'e (one 7'o !t(n+! to e eit'er enete+ or inK"re+ t'e

re!"t! o< t'e K"+/ent in Cii C(!e No. 6;=31. e (er! 'e i! t'e )(rt 7it' re(

intere!t in t'e !"Ke8t (tter o< t'e (8tion, (! it 7o"+ e 'i! "!ine!!, not t'e

ero!o!, 7'i8' 7o"+ !"Jer '(+ not t'e re!)on+ent 8o"rt +i!!oe+ t'e 7rit o<

)reiin(r inK"n8tion.



A re( )(rt in intere!t i! +ene+ (! t'e )(rt 7'o !t(n+! to e enete+ or inK"re+

t'e K"+/ent or t'e )(rt entite+ to t'e ((i! o< t'e !"it. Intere!t 7it'in t'e

e(nin/ o< t'e r"e e(n! (teri( intere!t, (n intere!t in i!!"e (n+ to e (Je8te+

t'e +e8ree, (! +i!tin/"i!'e+ <ro ere intere!t in t'e "e!tion inoe+, or (

ere in8i+ent( intere!t.921: B re( intere!t i! e(nt ( )re!ent !"!t(nti( intere!t,

(! +i!tin/"i!'e+ <ro ( ere e)e8t(n8 or ( <"t"re, 8ontin/ent, !"or+in(te, or8on!e"enti( intere!t.922:

Te!te+ t'e <ore/oin/ +enition, )ri(te re!)on+ent in t'i! 8(!e i! 8e(r ( re(

)(rt in intere!t. It i! not +i!)"te+ t'(t 'e i! in )o!!e!!ion o< t'e ot )"r!"(nt to (

(i+ e(!e. e i! ( )o!!e!!or in t'e 8on8e)t o< ( 'o+er o< t'e t'in/ "n+er Arti8e

525 o< t'e Cii Co+e.923: e 7(! i)e(+e+ (! ( +e<en+(nt in t'e (en+e+

8o)(int in Cii C(!e No. 6;=31. 0"rt'er, 7'(t )etitioner !ee! to enKoin i! t'e

"i+in/ re!)on+ent o< ( 8oer8i( !tr"8t"re on t'e ot. Ce(r, it i! )ri(te

re!)on+ent! (8t! 7'i8' (re in i!!"e, (n+ 'i! intere!t in !(i+ i!!"e 8(nnot e ( erein8i+ent( intere!t. In it! (en+e+ 8o)(int, )etitioner )r(e+ <or, (on/ ot'er!,

K"+/ent or+erin/ t'e +eoition o< ( i)roeent! ie/( "it on t'e ot in

"e!tion.92;: T'e!e !'o7 t'(t it i! )etitioner %(t'( III, +oin/ "!ine!! (!

Green'i! A"to'("!, In8., (n+ not on t'e ero!o!, 7'o 7i e (+er!e

(Je8te+ t'e 8o"rt! +e8ree.

Petitioner (!o 8ite! t'e r"e t'(t ( !tr(n/er to ( 8ontr(8t '(! no ri/'t! or

oi/(tion! "n+er it,925: (n+ t'"! '(! no !t(n+in/ to 8'(en/e it! (i+it.926: B"t

in !eein/ to en<or8e t'e !ti)"(tion! in t'e +ee+ o< !(e, )etitioner i)e(+e+)ri(te re!)on+ent (! ( +e<en+(nt. T'"! )etitioner "!t re8o/nie t'(t 7'ere (

)(intiJ '(! i)e(+e+ ( )(rt (! ( +e<en+(nt, 'e 8(nnot !"!e"ent "e!tion t'e

(tter! !t(n+in/ in 8o"rt.92:

ERE0ORE, t'e in!t(nt )etition i! DENIED. T'e 8'(en/e+ +e8i!ion o< t'e Co"rt o<

A))e(! +(te+ %(r8' 25, 1==6, (! 7e (! t'e (!!(ie+ re!o"tion o< A"/"!t 13,

1==6, in CA-G.R. SP No. 3=1=3 i! A00IR%ED. Co!t! (/(in!t )etitioner.

SO ORDERED.

Beo!io, ?C'(ir(n@, %en+o(, B"en(, (n+ De *eon, &r., &&., 8on8"r.



91: Roo, ). =2.

92: Roo, ). 52.

93: I+. (t 22.

9;: Ii+.

95: 0ir!t N(tion7i+e A!!"r(n8e Cor). !. Co"rt o< A))e(!, et (., G.R. No. 12=,

Noeer 1, 1===, ). 1.

96: CA Roo, ). 26.

9: P'i. Vir/ini( To(88o A+ini!tr(tion !. Gon(e!, =2 SCRA 12, 15 ?1==@.

9: US !. Di( Con+e, ;2 P'i. 66, 6= ?1=22@.

9=: Con!t., Art. III, Se8. 14.

914: %e8'or, &r. !. %o(, 121 SCRA 1, 6 ?1=3@H Co C'ion/ !. C"(+erno, 3 P'i.

2;2 ?1=;=@H S(nto! !. A(re, P'i. 543 ?1=;@.

911: Pre!e !. Be-Air Vi(/e A!!o8i(tion, In8., 241 SCRA 13, 1-1= ?1==1@.

912: P'i. Aeri8(n *i<e In!"r(n8e Co. !. A"+itor Gener(, 22 SCRA 135, 136-13

?1=6@.



913: 16 SCRA 63;, 66= ?1=@.

91;: 162 SCRA 3=4 ?1=@.

915: I+. (t 3=6.

916: Ii+.

91: CIVI* CODE, Art. 115=.

91: S")r(, Art. 1346.

91=: P(r(+( !. Vener(8ion, 26= SCRA 31, 3 ?1==@.

924: C(r( Re!o"r8e! Cor). !. Contrer(!, 23 SCRA 2;, 3; ?1==;@.

921: 1== RU*ES O0 CIVI* PROCEDURE, R"e 3, Se8. 2H Re)"i8 !. S(n+i/(n((n,

243 SCRA 314, 32; ?1==1@ 8itin/ S(('(n n/ /( N(n/"n/")('(n !( A8(rr(/(

Tetie %(ret, In8., et (. !. Co"rt o< A))e(!, 165 SCRA 5= ?1=@.

922: De *eon !. Co"rt o< A))e(!, 2 SCRA ;, ;6-; ?1==@H B(r<e

Deeo)ent Cor). !. Co"rt o< A))e(!, 223 SCRA 26 ?1==3@.

923: CIVI* CODE, Art. 525. T'e )o!!e!!ion o< t'in/! or ri/'t! ( e '(+ in one o<

t7o 8on8e)t!H eit'er in t'e 8on8e)t o< o7ner, or in t'(t o< t'e 'o+er o< t'e t'in/ or

ri/'t to ee) or enKo it, t'e o7ner!'i) )ert(inin/ to (not'er )er!on.

92;: Roo, ). 61.



925: CIVI* CODE, Art. 1311. Contr(8t! t(e eJe8t on et7een t'e )(rtie!, t'eir

(!!i/n! (n+ 'eir!, e8e)t in 8(!e 7'ere t'e ri/'t! (n+ oi/(tion! (ri!in/ <ro t'e

8ontr(8t (re not tr(n!i!!ie t'eir n(t"re, or !ti)"(tion, or )roi!ion o<

(7L

926: I(We !. on/on/ (n+ S'(n/'(i B(nin/ Cor)., 22 P'i. 52, 5; ?1=12@H

o<!on !. E!t(te o< %(rtine, 24 P'i. 3;4, 3;; ?1=11@.

92: *(o !. Co"rt o< A))e(!, 25 SCRA 23, 256 ?1==@.

Re)"i8 o< t'e P'ii))ine!

SUPRE%E COURT

%(ni(

SECOND DIVISION

G.R. No. 1=653= O8toer 14, 2412

%ARIETTA N. PORTI**O, Petitioner,

!.

RUDO*0 *IET, INC., RUDO*0 *IET (n+ COURT O0 APPEA*S Re!)on+ent!.

D E C I S I O N

PERE, &.#



Be<ore "! i! ( )etition <or 8ertior(ri (!!(iin/ t'e Re!o"tion 1 +(te+ 1; O8toer

2414 o< t'e Co"rt o< A))e(! in CA-G.R. SP No. I 465/ I 7'i8' o+ie+ it! De8i!ion2

+(te+ 31 %(r8' 244=, t'"! (o7in/ t'e e/( 8o)en!(tion or )etitioner %(riett( N.

Portio! ?Portio@ onet(r 8(i! (/(in!t re!)on+ent 8or)or(tion R"+o< *iet,In8.! ?*iet In8.@3 8(i <or i"i+(te+ +((/e! (ri!in/ <ro Portio! (e/e+

io(tion o< t'e Goo+7i C("!e in t'e e)oent 8ontr(8t ee8"te+ t'e

)(rtie!.

T'e <(8t! (re not in +i!)"te.

In ( etter (/reeent +(te+ 3 %( 1==1, !i/ne+ in+ii+"( re!)on+ent R"+o<

*iet ?R"+o<@ (n+ 8on<ore+ to Portio, t'e (tter 7(! 'ire+ t'e <orer "n+ert'e <oo7in/ ter! (n+ 8on+ition!#

A 8o) o< 9*iet In8.!: 7or r"e! (n+ )oi8ie! on )er!onne i! en8o!e+ (n+ (n

in'erent )(rt o< t'e ter! (n+ 8on+ition! o< e)oent.

e (8no7e+/e o"r )ro)o!( in o"r ())i8(tion !)e8i8( to t'e eJe8t t'(t o"

7i not en/(/e in (n ot'er /(in<" e)oent o"r!e< or 7it' (n ot'er

8o)(n eit'er +ire8t or in+ire8t 7it'o"t 7ritten 8on!ent o< 9*iet In8.:, (n+ 7e'ere (88e)t (n+ 'en8e<ort' 8on!i+er o"r )ro)o!( (n "n+ert(in/ on o"r )(rt,

( re(8' o< 7'i8' 7i ren+er o" i(e to 9*iet In8.: <or i"i+(te+ +((/e!.

I< o" (re in (/reeent 7it' t'e!e ter! (n+ 8on+ition! o< e)oent, )e(!e

!i/ni< o"r 8on<orit eo7.;

On 'er tent' ?14t'@ e(r 7it' *iet In8., !)e8i8( on 1 0er"(r 2442, Portio 7(!)roote+ to S(e! Re)re!ent(tie (n+ re8eie+ ( 8orre!)on+in/ in8re(!e in (!i8

ont' !((r (n+ !(e! "ot(. In t'i! re/(r+, Portio !i/ne+ (not'er etter

(/reeent 8ont(inin/ ( Goo+7i C("!e#

It re(in! "n+er!too+ (n+ o" (/ree+ t'(t, on t'e terin(tion o< o"r e)oent

(8t o< eit'er o" or 9*iet In8.:, (n+ <or ( )erio+ o< t'ree ?3@ e(r! t'ere(<ter, o"



!'( not en/(/e +ire8t or in+ire8t (! e)oee, (n(/er, )ro)rietor, or !oi8itor

<or o"r!e< or ot'er! in ( !ii(r or 8o)etitie "!ine!! or t'e !(e 8'(r(8ter o<

7or 7'i8' o" 7ere e)oe+ 9*iet In8.: to +o (n+ )er<or. S'o"+ o" re(8'

t'i! /oo+ 7i 8("!e o< t'i! Contr(8t, o" !'( )( 9*iet In8.: (! i"i+(te+

+((/e! t'e (o"nt o< 144 o< o"r /ro!! 8o)en!(tion oer t'e (!t 12 ont'!,

it ein/ (/ree+ t'(t t'i! !" i! re(!on(e (n+ K"!t.5

T'ree ?3@ e(r! t'ere(<ter, on 6 &"ne 2445, Portio re!i/ne+ <ro *iet In8. D"rin/

'er eit interie7, Portio +e8(re+ t'(t !'e inten+e+ to en/(/e in "!ine!!X( ri8e

+e(er!'i), !ein/ ri8e in 7'oe!(e.

On 15 &"ne 2445, *iet In8. (88e)te+ Portio! re!i/n(tion (n+ rein+e+ 'er o< t'e

Goo+7i C("!e in t'e (!t etter (/reeent !'e '(+ !i/ne+. U)on re8ei)t t'ereo<,

Portio Kotte+ ( note t'ereon t'(t t'e (te!t 8ontr(8t !'e '(+ !i/ne+ in 0er"(r244; +i+ not 8ont(in (n Goo+7i C("!e re<erre+ to *iet In8. In re!)on!e

t'ereto, *iet In8. 8(te/ori8( 7rote#

Pe(!e e in<ore+ t'(t t'e !t(n+(r+ )re!8ri)tion o< )ro'iitin/ e)oee! <ro

en/(/in/ in "!ine!! or !eein/ e)oent 7it' or/(ni(tion! t'(t +ire8t or

in+ire8t 8o)ete (/(in!t 9*iet In8.: <or t'ree ?3@ e(r! (<ter re!i/n(tion re(in!

in eJe8t.

T'e +o8"ent(tion o" )ert(in to i! (n intern( eor(n+" o< o"r !((r

in8re(!e, not (n e)oent 8ontr(8t. T'e (!en8e o< t'e t'ree-e(r )ro'iition

8("!e in t'i! +o8"ent ?or (n +o8"ent <or t'(t (tter@ +oe! not 8(n8e t'e

)ro'iition it!e<. e +i+ not, '(e not, (n+ 7i not i!!"e (n 8(n8e(tion o< !"8' in

t'e <ore!ee(e <"t"re9.: 9T:'"!9,: re/ret<", it i! erroneo"! o< o" to eiee

ot'er7i!e.6

In ( !"!e"ent etter +(te+ 21 &"ne 2445, *iet In8. 7rote Portio (n+ !"))o!e+

t'(t t'e e8'(n/e o< 8orre!)on+en8e et7een t'e re/(r+in/ t'e Goo+7i

C("!e in t'e e)oent 8ontr(8t 7(! ( oot eer8i!e !in8e Portio! (rti8"(te+

intention to /o into "!ine!!, !ein/ ri8e, 7i not 8o)ete 7it' *iet In8.! )ro+"8t!.



S"!e"ent, *iet In8. e(rne+ t'(t Portio '(+ een 'ire+ E+ eer P'ii))ine!,

*iite+ to 'e(+ it! P'(r( R(7 %(teri( De)(rtent. E+ eer *iite+ i!

)"r)orte+ ( +ire8t 8o)etitor o< *iet In8.

%e(n7'ie, Portio! +e(n+! <ro *iet In8. <or t'e )(ent o< 'er re(inin/

!((rie! (n+ 8oi!!ion! 7ent "n'ee+e+. *iet In8. /(e Portio t'e r"n (ro"n+, on

t'e )retet t'(t 'er !((rie! (n+ 8oi!!ion! 7ere !ti ein/ 8o)"te+.

On 1; Se)teer 2445, Portio e+ ( 8o)(int 7it' t'e N(tion( *(or Re(tion!

Coi!!ion ?N*RC@ <or non-)(ent o< 1 ont'! !((r, t7o ?2@ ont'!

8oi!!ion, 13t' ont' )(, )"! or(, ee)(r (n+ (8t"( +((/e! (n+

(ttorne! <ee!.

In it! )o!ition )()er, *iet In8. (+itte+ i(iit <or Portio! one 8(i! in t'e

tot( (o"nt o< P114,662.16. o7eer, *iet In8. r(i!e+ t'e +e<en!e o< e/(

8o)en!(tion# Portio! one 8(i! !'o"+ e oJ!et (/(in!t 'er i(iit to *iet

In8. <or i"i+(te+ +((/e! in t'e (o"nt o< Z6=,633.4= <or Portio! (e/e+

re(8' o< t'e Goo+7i C("!e in t'e e)oent 8ontr(8t 7'en !'e e8(e

e)oe+ 7it' E+ eer P'ii))ine!, *iite+.

On 25 %( 244, *(or Ariter D(nie &. C(Kii/ /r(nte+ Portio! 8o)(int#

ERE0ORE, K"+/ent i! 'ere ren+ere+ or+erin/ re!)on+ent! R"+o< *iet, In8.

to )( 8o)(in(nt %(riett( N. Portio t'e (o"nt o< P')114,662.16, re)re!entin/

'er !((r (n+ 8oi!!ion!, in8"+in/ 13t' ont' )(.

On ())e( re!)on+ent!, t'e N*RC, t'ro"/' it! Se8on+ Dii!ion, (>re+ t'e

r"in/ o< *(or Ariter D(nie &. C(Kii/. On otion <or re8on!i+er(tion, t'e N*RC

!too+ )(t on it! r"in/.

E)e8te+, re!)on+ent! e+ ( )etition <or 8ertior(ri e<ore t'e Co"rt o< A))e(!,

(e/in/ /r(e ("!e o< +i!8retion in t'e (or tri"n(! r"in/!.



A! e(rier (+erte+ to, t'e ())e(te 8o"rt initi( (>re+ t'e (or tri"n(!#

ERE0ORE, 8on!i+erin/ t'e <ore/oin/ )rei!e!, K"+/ent i! 'ere ren+ere+

"! DENYING t'e )etition e+ in t'i! 8(!e. T'e Re!o"tion o< t'e N(tion( *(or

Re(tion! Coi!!ion ?N*RC@, Se8on+ Dii!ion, in t'e (or 8(!e +o8ete+ (! N*RC

NCR C(!e No. 44-4=- 4113-2445 9N*RC *AC No. 4-441=65-4?5@: i! 'ere

A00IR%ED.=

T'e +i!)o!ition 7(! +i!t"re+. T'e Co"rt o< A))e(!, on otion <or re8on!i+er(tion,

o+ie+ it! )reio"! +e8i!ion, t'"!#

ERE0ORE, in ie7 o< t'e <ore/oin/ )rei!e!, 7e 'ere %ODI0Y t'e +e8i!ion)ro"/(te+ on %(r8' 31, 244= in t'(t, 7'ie 7e ")'o+ t'e onet(r (7(r+ in

<(or o< t'e 9)etitioner: in t'e (//re/(te !" o< Z114,662.16 re)re!entin/ t'e

"n)(i+ !((r, 8oi!!ion (n+ 13t' ont' )( +"e to 'er, 7e 'ere (o7 e/(

8o)en!(tion or !et-oJ o< !"8' (7(r+ o< onet(r 8(i! 'er i(iit to

9re!)on+ent!: <or i"i+(te+ +((/e! (ri!in/ <ro 'er io(tion o< t'e Goo+7i

C("!e in 'er e)oent 8ontr(8t 7it' t'e.14

Portio! otion <or re8on!i+er(tion 7(! +enie+.

en8e, t'i! )etition <or 8ertior(ri i!tin/ t'e <oo7in/ (8t! (! /r(e ("!e o<

+i!8retion o< t'e Co"rt o< A))e(!#

TE COURT O0 APPEA*S ACTED IT GRAVE ABUSE O0 DISCRETION BY EVADING TO

RECOGNIE ?!i8@ TAT TE RESPONDENTS EAR*IER PETITION IS 0ATA**Y

DE0ECTIVEH

TE COURT O0 APPEA*S ACTED IT GRAVE ABUSE O0 DISCRETION BY

OVERSTEPPING TE BOUNDS O0 APPE**ATE &URISDICTION9H:

TE COURT O0 APPEA*S ACTED IT GRAVE ABUSE O0 DISCRETION BY %ODI0YING

ITS PREVIOUS DECISION BASED ON AN ISSUE TAT AS RAISED ON*Y ON TE 0IRST





T'e Co"rt o< A))e(! (n8'or! it! o+ie+ r"in/ on t'e o!ten!ie 8("!( 8onne8tion

et7een Portio! one 8(i! (n+ *iet In8.! 8(i <or i"i+(te+ +((/e!, ot'

8(i! ())(rent (ri!in/ <ro t'e !(e e)oent re(tion!. T'"!, +i+ it !(#

T'i! Co"rt 7i '(e to t(e 8o/ni(n8e o< (n+ 8on!i+er t'e Goo+7i C("!e

8ont(ine+ 9in: t'e e)oent 8ontr(8t !i/ne+ (n+ et7een 9re!)on+ent! (n+

Portio:. T'ere i! no /(in!(in/ t'e <(8t t'(t !"8' Goo+7i C("!e i! )(rt (n+

)(r8e o< t'e e)oent 8ontr(8t eten+e+ to 9Portio:, (n+ !"8' 8("!e i! not

8ontr(r to (7, or(! (n+ )"i8 )oi8. T'ere i! t'"! ( 8("!( 8onne8tion et7een

9Portio!: onet(r 8(i! (/(in!t 9re!)on+ent!: (n+ t'e (tter! 8(i <or

i"i+(te+ +((/e! (/(in!t t'e <orer. Con!e"ent, 7e !'o"+ (o7 e/(

8o)en!(tion or !et-oJ to t(e )(8e. 9Re!)on+ent! (n+ Portio: (re ot' o"n+

)rin8i)( (n+, (t t'e !(e tie, (re 8re+itor! o< e(8' ot'er. 9Portio: i! ( 8re+itor

o< 9re!)on+ent!: in t'e !" o< Z114,662.16 in 8onne8tion 7it' 'er onet(r 8(i!

(/(in!t t'e (tter. At t'e !(e tie, 9re!)on+ent!: (re 8re+itor! o< 9Portio: in!o<(r

(! t'eir 8(i! <or i"i+(te+ +((/e! in t'e !" o< Z=4,2=5.2516 (/(in!t t'e

(tter i! 8on8erne+.1

e (re not 8onin8e+.

P(r(/r()' ; o< Arti8e 21 o< t'e *(or Co+e ())e(r! to '(e 8("!e+ t'e rei(n8e t'e Co"rt o< A))e(! on t'e 8("!( 8onne8tion et7een 9Portio!: onet(r 8(i!

(/(in!t 9re!)on+ent!: (n+ t'e (tter! 8(i <ro i"i+(te+ +((/e! (/(in!t t'e

<orer.

Art. 21. &"ri!+i8tion o< *(or Ariter! (n+ t'e Coi!!ion. ?(@ E8e)t (!

ot'er7i!e )roi+e+ "n+er t'i! 8o+e, t'e Ariter! !'( '(e ori/in( (n+ e8"!ie

K"ri!+i8tion to 'e(r (n+ +e8i+e, 7it'in t'irt ?34@ 8(en+(r +(! (<ter t'e !"i!!ion

o< t'e 8(!e t'e )(rtie! <or +e8i!ion 7it'o"t eten!ion, een in t'e (!en8e o<

!teno/r()'i8 note!, t'e <oo7in/ 8(!e inoin/ ( 7orer!, 7'et'er (/ri8"t"r( ornon(/ri8"t"r(#



;. C(i! <or (8t"(, or(, ee)(r (n+ ot'er <or! o< +((/e! (ri!in/ <ro t'e

e)oer-e)oee re(tion!H ?Un+er!8orin/ !"))ie+@

Ei+ent, t'e Co"rt o< A))e(! i! 8onin8e+ t'(t t'e 8(i <or i"i+(te+ +((/e!

e(n(te! <ro t'e Goo+7i C("!e o< t'e e)oent 8ontr(8t (n+, t'ere<ore, i! (

8(i <or +((/e! (ri!in/ <ro t'e e)oere)oee re(tion!.

A! e(r (! Sin/()ore Airine! *iite+ . P(Wo,1 7e e!t(i!'e+ t'(t not ( +i!)"te!

et7een (n e)oer (n+ 'i! e)oee?!@ <( 7it'in t'e K"ri!+i8tion o< t'e (or

tri"n(!. e +iJerenti(te+ et7een ((n+onent )er !e (n+ t'e (nner (n+

8on!e"ent eJe8t! o< !"8' ((n+onent (n+ r"e+ t'(t t'e r!t, i! ( (or 8(!e,

7'ie t'e !e8on+, i! ( 8ii (7 8(!e.

U)on t'e <(8t! (n+ i!!"e! inoe+, K"ri!+i8tion oer t'e )re!ent 8ontroer! "!t

e 'e+ to eon/ to t'e 8ii Co"rt!. 'ie !eein/ )etitioner! 8(i <or +((/e!

(ri!e! <ro e)oer-e)oee re(tion!, (n+ t'e (te!t (en+ent to Arti8e 21

o< t'e *(or Co+e "n+er PD No. 16=1 (n+ BP B/. 134 )roi+e! t'(t ( ot'er 8(i!

(ri!in/ <ro e)oer-e)oee re(tion!'i) (re 8o/ni(e *(or Ariter!

98it(tion oitte+:, in e!!en8e, )etitioner! 8(i <or +((/e! i! /ro"n+e+ on t'e

7(nton <(i"re (n+ re<"!( 7it'o"t K"!t 8("!e o< )ri(te re!)on+ent Cr" to re)ort

<or +"t +e!)ite re)e(te+ noti8e! !ere+ ")on 'i o< t'e +i!())ro( o< 'i!

())i8(tion <or e(e o< (!en8e 7it'o"t )(. T'i!, 8o")e+ 7it' t'e <"rt'er

(erent t'(t Cr" (i8io"! (n+ 7it' (+ <(it' io(te+ t'e ter! (n+8on+ition! o< t'e 8oner!ion tr(inin/ 8o"r!e (/reeent to t'e +((/e o< )etitioner

reoe! t'e )re!ent 8ontroer! <ro t'e 8oer(/e o< t'e *(or Co+e (n+ rin/! it

7it'in t'e )"rie7 o< Cii *(7.

Ce(r, t'e 8o)(int 7(! (n8'ore+ not on t'e ((n+onent )er !e )ri(te

re!)on+ent Cr" o< 'i! KoX(! t'e (tter 7(! not re"ire+ in t'e Co)(int to re)ort

(8 to 7orX"t on t'e (nner (n+ 8on!e"ent eJe8t! o< !"8' ((n+onent o<

7or tr(n!(te+ in ter! o< t'e +((/e! 7'i8' )etitioner '(+ to !"Jer.

S"(re in )oint i! t'e r"in/ en"n8i(te+ in t'e 8(!e o< $"i!(( !. St(. Ine! %e(e

Veneer P7oo+, In8. 98it(tion oitte+:, t'e )ertinent )ortion o< 7'i8' re(+!#



At'o"/' t'e (8t! 8o)(ine+ o< !eein/ ())e(r to 8on!tit"te (tter inoin/

e)oee-e)oer re(tion! (! $"i!((! +i!i!!( 7(! t'e !eer(n8e o< ( )re-

ei!tin/ e)oee-e)oer re(tion!, 'i! 8o)(int i! /ro"n+e+ not on 'i!

+i!i!!( )er !e, (! in <(8t 'e +oe! not (! <or rein!t(teent or (87(/e!, "t on

t'e (nner o< 'i! +i!i!!( (n+ t'e 8on!e"ent eJe8t! o< !"8' +i!i!!(.

Cii (7 8on!i!t! o< t'(t (!! o< )re8e)t! t'(t +eterine or re/"(te t'e

re(tion! . . . t'(t ei!t et7een eer! o< ( !o8iet <or t'e )rote8tion o< )ri(te

intere!t ?1 S(n8'e Ro(n 3@.

T'e ri/'t o< t'e re!)on+ent! to +i!i!! $"i!(( !'o"+ not e 8on<"!e+ 7it' t'e

(nner in 7'i8' t'e ri/'t 7(! eer8i!e+ (n+ t'e eJe8t! Qo7in/ t'ere<ro. I< t'e

+i!i!!( 7(! +one (nti-!o8i( or o))re!!ie (! t'e 8o)(int (e/e!, t'en t'e

re!)on+ent! io(te+ Arti8e 141 o< t'e Cii Co+e 7'i8' )ro'iit! (8t! o<o))re!!ion eit'er 8()it( or (or (/(in!t t'e ot'er, (n+ Arti8e 21, 7'i8' (e!

( )er!on i(e <or +((/e! i< 'e 7i<" 8("!e! o!! or inK"r to (not'er in (

(nner t'(t i! 8ontr(r to or(!, /oo+ 8"!to! or )"i8 )oi8, t'e !(n8tion <or

7'i8', 7( o< or( +((/e!, i! )roi+e+ in (rti8e 221=, No. 14. 98it(tion

oitte+:

St(te+ +iJerent, )etitioner !ee! )rote8tion "n+er t'e 8ii (7! (n+ 8(i! no

enet! "n+er t'e *(or Co+e. T'e )ri(r reie< !o"/'t i! <or i"i+(te+ +((/e!

<or re(8' o< ( 8ontr(8t"( oi/(tion. T'e ot'er ite! +e(n+e+ (re not (orenet! +e(n+e+ 7orer! /ener( t(en 8o/ni(n8e o< in (or +i!)"te!, !"8'

(! )(ent o< 7(/e!, oertie 8o)en!(tion or !e)(r(tion )(. T'e ite! 8(ie+

(re t'e n(t"r( 8on!e"en8e! Qo7in/ <ro re(8' o< (n oi/(tion, intrin!i8( (

8ii +i!)"te.1= ?E)'(!i! !"))ie+@

S"!e"ent r"in/! ()ie+ t'e te(8'in/ in Sin/()ore Airine!. T'e re(!on(e

8("!( 8onne8tion r"e 7(! +i!8"!!e+. T'"!, in S(n %i/"e Cor)or(tion . N(tion(

*(or Re(tion! Coi!!ion,24 7e 'e+#

'ie )(r(/r()' 3 (oe re<er! to ( one 8(i! o< 7orer!, it i! not ne8e!!(r

to !"))o!e t'(t t'e entire "nier!e o< one 8(i! t'(t i/'t e (!!erte+

7orer! (/(in!t t'eir e)oer! '(! een (!ore+ into t'e ori/in( (n+ e8"!ie

K"ri!+i8tion o< *(or Ariter!. In t'e r!t )(8e, )(r(/r()' 3 !'o"+ e re(+ not in

i!o(tion <ro "t r(t'er 7it'in t'e 8ontet <ore+ )(r(/r()' 1 ?re(tin/ to



"n<(ir (or )r(8ti8e!@, )(r(/r()' 2 ?re(tin/ to 8(i! 8on8ernin/ ter! (n+

8on+ition! o< e)oent@, )(r(/r()' ; ?8(i! re(tin/ to 'o"!e'o+ !eri8e!, (

)(rti8"(r !)e8ie! o< e)oer-e)oee re(tion!@, (n+ )(r(/r()' 5 ?re(tin/ to

8ert(in (8tiitie! )ro'iite+ to e)oee! or to e)oer!@. It i! ei+ent t'(t t'ere i!

( "ni<in/ eeent 7'i8' r"n! t'ro"/' )(r(/r()' 1 to 5 (n+ t'(t i!, t'(t t'e (

re<er to 8(!e! or +i!)"te! (ri!in/ o"t o< or in 8onne8tion 7it' (n e)oer-e)oeere(tion!'i). T'i! i!, in ot'er 7or+!, ( !it"(tion 7'ere t'e r"e o< no!8it"r ( !o8ii!

( e "!e<" inoe+ in 8(ri<in/ t'e !8o)e o< )(r(/r()' 3, (n+ (n ot'er

)(r(/r()' o< Arti8e 21 o< t'e *(or Co+e, (! (en+e+. e re(8' t'e (oe

8on8"!ion <ro (n e(in(tion o< t'e ter! t'e!ee! o< Arti8e 21, (! (!t

(en+e+ B.P. B/. 22, (n+ een t'o"/' e(rier er!ion! o< Arti8e 21 o< t'e

*(or Co+e e)re!! ro"/'t 7it'in t'e K"ri!+i8tion o< t'e *(or Ariter! (n+ t'e

N*RC 8(!e! (ri!in/ <ro e)oer-e)oee re(tion!, 98it(tion oitte+: 7'i8'

8("!e 7(! not e)re!! 8(rrie+ oer, in )rinter! in, in Arti8e 21 (! it ei!t!

to+(. 0or it 8(nnot e )re!"e+ t'(t one 8(i! o< 7orer! 7'i8' +o not (ri!e

o"t o< or in 8onne8tion 7it' t'eir e)oer-e)oee re(tion!'i), (n+ 7'i8' 7o"+

t'ere<ore <( 7it'in t'e /ener( K"ri!+i8tion o< re/"(r 8o"rt! o< K"!ti8e, 7ere

inten+e+ t'e e/i!(tie ("t'orit to e t(en (7( <ro t'e K"ri!+i8tion o< t'e

8o"rt! (n+ o+/e+ 7it' *(or Ariter! on (n e8"!ie (!i!. T'e Co"rt, t'ere<ore,

eiee! (n+ !o 'o+! t'(t t'e one 8(i! o< 7orer! re<erre+ to in )(r(/r()' 3

o< Arti8e 21 er(8e! one 8(i! 7'i8' (ri!e o"t o< or in 8onne8tion 7it' t'e

e)oer-e)oee re(tion!'i), or !oe (!)e8t or in8i+ent o< !"8' re(tion!'i).

P"t ( itte +iJerent, t'(t one 8(i! o< 7orer! 7'i8' no7 <( 7it'in t'e

ori/in( (n+ e8"!ie K"ri!+i8tion o< *(or Ariter! (re t'o!e one 8(i! 7'i8'

'(e !oe re(!on(e 8("!( 8onne8tion 7it' t'e e)oer-e)oee

re(tion!'i).21 ?E)'(!i! !"))ie+@

e t'ere(<ter r"e+ t'(t t'e re(!on(e 8("!( 8onne8tion 7it' t'e e)oer-

e)oee re(tion!'i) i! ( re"ireent not on in e)oee! one 8(i!

(/(in!t t'e e)oer "t i!, ie7i!e, ( 8on+ition 7'en t'e 8(i(nt i! t'e

e)oer.

In D(i-C'i Ee8troni8! %(n"<(8t"rin/ Cor)or(tion . Vi(r((, &r.,22 7'i8' reiter(te+

t'e S(n %i/"e r"in/ (n+ (ie+ K"ri!)r"+en8e, 7e )rono"n8e+ t'(t ( non-8o)ete

8("!e, (! in t'e Goo+7i C("!e re<erre+ to in t'e )re!ent 8(!e, 7it' ( !ti)"(tion

t'(t ( io(tion t'ereo< (e! t'e e)oee i(e to 'i! <orer e)oer <or

i"i+(te+ +((/e!, re<er! to )o!t-e)oent re(tion! o< t'e )(rtie!.

In D(i-C'i, t'e tri( 8o"rt +i!i!!e+ t'e 8ii 8o)(int e+ t'e e)oer to

re8oer +((/e! <ro it! e)oee <or t'e (tter! re(8' o< 'i! 8ontr(8t"(



oi/(tion. e reer!e+ t'e r"in/ o< t'e tri( 8o"rt (! 7e <o"n+ t'(t t'e e)oer

+i+ not (! <or (n reie< "n+er t'e *(or Co+e "t !o"/'t to re8oer +((/e!

(/ree+ ")on in t'e 8ontr(8t (! re+re!! <or it! e)oee! re(8' o< 8ontr(8t"(

oi/(tion to it! +((/e (n+ )reK"+i8e. e iter(te+ t'(t Arti8e 21, )(r(/r()' ;

+oe! not ("to(ti8( 8oer ( +i!)"te! et7een (n e)oer (n+ it! e)oee?!@.

e note+ t'(t t'e 8("!e o< (8tion 7(! 7it'in t'e re( o< Cii *(7, t'"!, K"ri!+i8tion oer t'e 8ontroer! eon/! to t'e re/"(r 8o"rt!. At otto, 7e

8on!i+ere+ t'(t t'e !ti)"(tion re<erre+ to )o!t-e)oent re(tion! o< t'e )(rtie!.

T'(t t'e Goo+7i C("!e in t'i! 8(!e i! ie7i!e ( )o!te)oent i!!"e !'o"+

roo no (r/"ent. T'ere i! no +i!)"te (! to t'e 8e!!(tion o< Portio! e)oent

7it' *iet In8.23 S'e !i) 8(i! 'er "n)(i+ !((rie! (n+ 8oi!!ion!, 7'i8'

*iet In8. +oe! not 8onte!t. At t'(t K"n8t"re, Portio 7(! no on/er (n e)oee o<

*iet In8.2; T'e Goo+7i C("!e or t'e Non-Co)ete C("!e i! ( 8ontr(8t"(

"n+ert(in/ eJe8tie (<ter t'e 8e!!(tion o< t'e e)oent re(tion!'i) et7eent'e )(rtie!. In (88or+(n8e 7it' K"ri!)r"+en8e, re(8' o< t'e "n+ert(in/ i! ( 8ii

(7 +i!)"te, not ( (or (7 8(!e.

It i! 8e(r, t'ere<ore, t'(t 7'ie Portio! 8(i <or "n)(i+ !((rie! i! ( one 8(i

t'(t (ri!e! o"t o< or in 8onne8tion 7it' (n e)oer-e)oee re(tion!'i), *iet

In8.! 8(i (/(in!t Portio <or io(tion o< t'e /oo+7i 8("!e i! ( one 8(i

(!e+ on (n (8t +one (<ter t'e 8e!!(tion o< t'e e)oent re(tion!'i). An+, 7'ie

t'e K"ri!+i8tion oer Portio! 8(i i! e!te+ in t'e (or (riter, t'e K"ri!+i8tion

oer *iet In8.! 8(i re!t! on t'e re/"(r 8o"rt!. T'"!#

A! it i!, )etitioner +oe! not (! <or (n reie< "n+er t'e *(or Co+e. It ere !ee!

to re8oer +((/e! (!e+ on t'e )(rtie! 8ontr(8t o< e)oent (! re+re!! <or

re!)on+ent! re(8' t'ereo<. S"8' 8("!e o< (8tion i! 7it'in t'e re( o< Cii *(7,

(n+ K"ri!+i8tion oer t'e 8ontroer! eon/! to t'e re/"(r 8o"rt!. %ore !o "!t

t'i! e in t'e )re!ent 8(!e, 7'(t 7it' t'e re(it t'(t t'e !ti)"(tion re<er! to t'e

)o!te)oent re(tion! o< t'e )(rtie!.

0or !"re, ( )(in (n+ 8"r!or re(+in/ o< t'e 8o)(int 7i re(+i ree( t'(t t'e

!"Ke8t (tter i! one o< 8(i <or +((/e! (ri!in/ <ro ( re(8' o< 8ontr(8t, 7'i8'

i! 7it'in t'e (it o< t'e re/"(r 8o"rt! K"ri!+i8tion. 98it(tion oitte+:



It i! (!i8 t'(t K"ri!+i8tion oer t'e !"Ke8t (tter i! +eterine+ ")on t'e

(e/(tion! (+e in t'e 8o)(int, irre!)e8tie o< 7'et'er or not t'e )(intiJ i!

entite+ to re8oer ")on t'e 8(i (!!erte+ t'erein, 7'i8' i! ( (tter re!oe+ on

(<ter (n+ (! ( re!"t o< ( tri(. Neit'er 8(n K"ri!+i8tion o< ( 8o"rt e (+e to +e)en+

")on t'e +e<en!e! (+e ( +e<en+(nt in 'i! (n!7er or otion to +i!i!!. I< !"8'

7ere t'e r"e, t'e "e!tion o< K"ri!+i8tion 7o"+ +e)en+ (o!t entire ")on t'e+e<en+(nt.25 98it(tion oitte+:

'ere(! t'i! Co"rt in ( n"er o< o88(!ion! '(+ ())ie+ t'e K"ri!+i8tion(

)roi!ion! o< Arti8e 21 to 8(i! <or +((/e! e+ e)oee! 98it(tion

oitte+:, 7e 'o+ t'(t t'e +e!i/n(tin/ 8("!e (ri!in/ <ro t'e e)oer-

e)oee re(tion! Arti8e 21 !'o"+ ()) 7it' e"( <or8e to t'e 8(i o< (ne)oer <or (8t"( +((/e! (/(in!t it! +i!i!!e+ e)oee, 7'ere t'e (!i! <or

t'e 8(i (ri!e! <ro or i! ne8e!!(ri 8onne8te+ 7it' t'e <(8t o< terin(tion, (n+

!'o"+ e entere+ (! ( 8o"nter8(i in t'e ie/( +i!i!!( 8(!e.26

T'i! i!, o< 8o"r!e, to +i!tin/"i!' <ro 8(!e! o< (8tion! <or +((/e! 7'ere t'ee)oer-e)oee re(tion!'i) i! ere in8i+ent( (n+ t'e 8("!e o< (8tion

)ro8ee+! <ro ( +iJerent !o"r8e o< oi/(tion. T'"!, t'e K"ri!+i8tion o< re/"(r

8o"rt! 7(! ")'e+ 7'ere t'e +((/e!, 8(ie+ <or 7ere (!e+ on tort 98it(tion

oitte+:, (i8io"! )ro!e8"tion 98it(tion oitte+:, or re(8' o< 8ontr(8t, (! 7'en

t'e 8(i(nt !ee! to re8oer ( +et <ro ( <orer e)oee 98it(tion oitte+: or

!ee! i"i+(te+ +((/e! in en<or8eent o< ( )rior e)oent 8ontr(8t. 98it(tion

oitte+:

Neit'er 8(n 7e ")'o+ t'e re(!onin/ o< re!)on+ent 8o"rt t'(t e8("!e t'e

re!o"tion o< t'e i!!"e! )re!ente+ t'e 8o)(int +oe! not ent(i ())i8(tion o<

t'e *(or Co+e or ot'er (or (7!, t'e +i!)"te i! intrin!i8( 8ii. Arti8e 21?(@ o<

t'e *(or Co+e, (! (en+e+, 8e(r e!to7! ")on t'e *(or Ariter ori/in( (n+

e8"!ie K"ri!+i8tion oer 8(i! <or +((/e! (ri!in/ <ro e)oer-e)oee

re(tion![in ot'er 7or+!, t'e *(or Ariter '(! K"ri!+i8tion to (7(r+ not on t'e

reie<! )roi+e+ (or (7!, "t (!o +((/e! /oerne+ t'e Cii Co+e.2

?E)'(!i! !"))ie+@



In t'e 8(!e (t (r, t'e +iJeren8e in t'e n(t"re o< t'e 8re+it! t'(t one '(! (/(in!t

t'e ot'er, 8oner!e, t'e n(t"re o< t'e +et one o7e! (not'er, 7'i8' +iJeren8e in

t"rn re!"t! in t'e +iJeren8e o< t'e <or" 7'ere t'e +iJerent 8re+it! 8(n e

en<or8e+, )reent! t'e ())i8(tion o< 8o)en!(tion. Si), t'e (or tri"n( in (ne)oee! 8(i <or "n)(i+ 7(/e! i! 7it'o"t ("t'orit to (o7 t'e 8o)en!(tion

o< !"8' 8(i! (/(in!t t'e )o!t e)oent 8(i o< t'e <orer e)oer <or

re(8' o< ( )o!t e)oent 8on+ition. T'e (or tri"n( +oe! not '(e K"ri!+i8tion

oer t'e 8ii 8(!e o< re(8' o< 8ontr(8t.

e (re (7(re t'(t in B(We . on. V(+ei(, 7e entione+ t'(t#

'ere(! t'i! Co"rt in ( n"er o< o88(!ion! '(+ ())ie+ t'e K"ri!+i8tion()roi!ion! o< Arti8e 21 to 8(i! <or +((/e! e+ e)oee! 98it(tion

oitte+:, 7e 'o+ t'(t t'e +e!i/n(tin/ 8("!e (ri!in/ <ro t'e e)oer-

e)oee re(tion! Arti8e 21 !'o"+ ()) 7it' e"( <or8e to t'e 8(i o< (n

e)oer <or (8t"( +((/e! (/(in!t it! +i!i!!e+ e)oee, 7'ere t'e (!i! <or

t'e 8(i (ri!e! <ro or i! ne8e!!(ri 8onne8te+ 7it' t'e <(8t o< terin(tion, (n+

!'o"+ e entere+ (! ( 8o"nter8(i in t'e ie/( +i!i!!( 8(!e.2

'ie on t'e !"r<(8e, B(We !"))ort! t'e +e8i!ion o< t'e Co"rt o< A))e(!, t'e <(8t!

ene(t' )rei!e (n o))o!ite 8on8"!ion. T'ere, t'e !(e!(n-e)oee ot(ine+<ro t'e N*RC ( n( <(or(e K"+/ent o< ie/( +i!i!!(. A<ter7(r+!, t'e

e)oer e+ 7it' t'e tri( 8o"rt ( 8o)(int <or +((/e! <or (e/e+ ne<(rio"!

(8tiitie! 8("!in/ +((/e to t'e e)oer. E)(inin/ <"rt'er 7' t'e 8(i! <or

+((/e! !'o"+ e entere+ (! ( 8o"nter8(i in t'e ie/( +i!i!!( 8(!e, 7e !(i+#

Een "n+er Re)"i8 A8t No. 5 ?t'e \In+"!tri( Pe(8e A8t, no7 8o)ete

!")er!e+e+ t'e *(or Co+e@, K"ri!)r"+en8e 7(! !ette+ t'(t 7'ere t'e )(intiJ!

8("!e o< (8tion <or +((/e! (ro!e o"t o<, or 7(! ne8e!!(ri intert7ine+ 7it', (n

(e/e+ "n<(ir (or )r(8ti8e 8oitte+ t'e "nion, t'e K"ri!+i8tion i! e8"!ie7it' t'e ?no7 +e<"n8t@ Co"rt o< In+"!tri( Re(tion!, (n+ t'e (!!")tion o<

K"ri!+i8tion o< re/"(r 8o"rt! oer t'e !(e i! ( n"it. To (o7 ot'er7i!e 7o"+ e

to !(n8tion !)it K"ri!+i8tion, 7'i8' i! )reK"+i8i( to t'e or+er (+ini!tr(tion o<

K"!ti8e. T'"!, een (<ter t'e en(8tent o< t'e *(or Co+e, 7'ere t'e +((/e!

!e)(r(te 8(ie+ t'e e)oer 7ere (e/e+ in8"rre+ (! ( 8on!e"en8e o<

!trie or )i8etin/ o< t'e "nion, !"8' 8o)(int <or +((/e! i! +ee) roote+ <ro

t'e (or +i!)"te et7een t'e )(rtie!, (n+ !'o"+ e +i!i!!e+ or+in(r 8o"rt!



<or (8 o< K"ri!+i8tion. A! 'e+ t'i! Co"rt in N(tion( 0e+er(tion o< *(or !.

Ei!(, 12 SCRA ;1=#

Cert(in, t'e )re!ent *(or Co+e i! een ore 8oitte+ to t'e ie7 t'(t on

)oi8 /ro"n+!, (n+ e"( !o in t'e intere!t o< /re(ter )ro)tne!! in t'e

+i!)o!ition o< (or (tter!, ( 8o"rt i! !)(re+ t'e o<ten onero"! t(! o< +eterinin/

7'(t e!!enti( i! ( <(8t"( (tter, n(e, t'e +((/e! t'(t ( e in8"rre+

eit'er (or or (n(/eent (! ( re!"t o< +i!)"te! or 8ontroer!ie! (ri!in/ <ro

e)oer-e)oee re(tion!.2=

Ei+ent, t'e r"in/ o< t'e ())e(te 8o"rt i! o+ee+ (<ter t'e (!i! "!e+ in B(We

7'i8' i! t'e intert7ine+ <(8t! o< t'e 8(i! o< t'e e)oer (n+ t'e e)oee or

t'(t t'e 8o)(int <or +((/e! i! +ee) roote+ <ro t'e (or +i!)"te et7een

t'e )(rtie!. T'"!, +i+ t'e ())e(te 8o"rt !( t'(t#

T'ere i! no /(in!(in/ t'e <(8t t'(t !"8' Goo+7i C("!e i! )(rt (n+ )(r8e o< t'e

e)oent 8ontr(8t eten+e+ to 9Portio:, (n+ !"8' 8("!e i! not 8ontr(r to (7,

or(! (n+ )"i8 )oi8. T'ere i! t'"! ( 8("!( 8onne8tion et7een 9Portio!:

onet(r 8(i! (/(in!t 9re!)on+ent!: (n+ t'e (tter! 8(i <or i"i+(te+

+((/e! (/(in!t t'e <orer. Con!e"ent, 7e !'o"+ (o7 e/( 8o)en!(tion or

!et-oJ to t(e )(8e.34

T'e Co"rt o< A))e(! 7(! i!/"i+e+. It! 8on8"!ion 7(! in8orre8t.

T'ere i! no 8("!( 8onne8tion et7een t'e )etitioner e)oee! 8(i <or "n)(i+

7(/e! (n+ t'e re!)on+ent e)oer! 8(i <or +((/e! <or t'e (e/e+ Goo+7i

C("!e io(tion. Portio! 8(i <or "n)(i+ !((rie! +i+ not '(e (nt'in/ to +o

7it' 'er (e/e+ io(tion o< t'e e)oent 8ontr(8t (!, in <(8t, 'er !e)(r(tion

<ro e)oent i! not roote+ in t'e (e/e+ 8ontr(8t"( io(tion. S'e re!i/ne+

<ro 'er e)oent. S'e 7(! not +i!i!!e+. Portio! entiteent to t'e "n)(i+

!((rie! i! not een 8onte!te+. In+ee+, *iet In8.! (r/"ent (o"t e/(

8o)en!(tion ne8e!!(ri (+it! t'(t it o7e! t'e one 8(ie+ Portio.

T'e (e/e+ 8ontr(8t"( io(tion +i+ not (ri!e +"rin/ t'e ei!ten8e o< t'e e)oer-

e)oee re(tion!'i). It 7(! ( )o!t-e)oent (tter, ( )o!t-e)oent

io(tion. Rein+er! (re ()t. T'(t i! )roi+e+ t'e <(ir re8ent 8(!e o< Y"!en Air



(n+ Se( Seri8e! P'i!., In8. . Vi(or,31 7'i8' '(re+ (8 to t'e )reio"! r"in/!

on t'e ne8e!!it o< re(!on(e 8("!( 8onne8tion et7een t'e tortio"! +((/e

(n+ t'e +((/e (ri!in/ <ro t'e e)oer-e)oee re(tion!'i). Y"!en )ro8ee+e+

to )rono"n8e t'(t t'e (!en8e o< t'e 8onne8tion re!"t! in t'e (!en8e o<

K"ri!+i8tion o< t'e (or (riter. I)ort(nt, !"8' (!en8e o< K"ri!+i8tion 8(nnot e

ree+ie+ r(i!in/ e<ore t'e (or tri"n( t'e tortio"! +((/e (! ( +e<en!e. T'"!#

'en, (! 'ere, t'e 8("!e o< (8tion i! (!e+ on ( "(!i-+ei8t or tort, 7'i8' '(! no

re(!on(e 8("!( 8onne8tion 7it' (n o< t'e 8(i! )roi+e+ <or in Arti8e 21,

K"ri!+i8tion oer t'e (8tion i! 7it' t'e re/"(r 8o"rt!. 98it(tion oitte+:

A! it i!, )etitioner +oe! not (! <or (n reie< "n+er t'e *(or Co+e. It ere !ee!

to re8oer +((/e! (!e+ on t'e )(rtie! 8ontr(8t o< e)oent (! re+re!! <orre!)on+ent! re(8' t'ereo<. S"8' 8("!e o< (8tion i! 7it'in t'e re( o< Cii *(7,

(n+ K"ri!+i8tion oer t'e 8ontroer! eon/! to t'e re/"(r 8o"rt!. %ore !o "!t

t'i! e in t'e )re!ent 8(!e, 7'(t 7it' t'e re(it t'(t t'e !ti)"(tion re<er! to t'e

)o!te)oent re(tion! o< t'e )(rtie!.

0or !"re, ( )(in (n+ 8"r!or re(+in/ o< t'e 8o)(int 7i re(+i ree( t'(t t'e

!"Ke8t (tter i! one o< 8(i <or +((/e! (ri!in/ <ro ( re(8' o< 8ontr(8t, 7'i8'

i! 7it'in t'e (it o< t'e re/"(r 8o"rt! K"ri!+i8tion. 98it(tion oitte+:

It i! (!i8 t'(t K"ri!+i8tion oer t'e !"Ke8t (tter i! +eterine+ ")on t'e

(e/(tion! (+e in t'e 8o)(int, irre!)e8tie o< 7'et'er or not t'e )(intiJ i!

entite+ to re8oer ")on t'e 8(i (!!erte+ t'erein, 7'i8' i! ( (tter re!oe+ on

(<ter (n+ (! ( re!"t o< ( tri(. Neit'er 8(n K"ri!+i8tion o< ( 8o"rt e (+e to +e)en+

")on t'e +e<en!e! (+e ( +e<en+(nt in 'i! (n!7er or otion to +i!i!!. I< !"8'

7ere t'e r"e, t'e "e!tion o< K"ri!+i8tion 7o"+ +e)en+ (o!t entire ")on t'e

+e<en+(nt.32 ?Un+er!8orin/ !"))ie+@.

T'e error o< t'e ())e(te 8o"rt in it! Re!o"tion o< 1; O8toer 2414 i! (!i8. T'e

ori/in( +e8i!ion, t'e ri/'t r"in/, !'o"+ not '(e een re8on!i+ere+.1]7)'i1





A!!o8i(te &"!ti8e

C'(ir)er!on

ARTURO D. BRION

A!!o8i(te &"!ti8e %ARIANO C. DE* CASTI**O

A!!o8i(te &"!ti8e

ESTE*A %. PER*AS-BERNABE

A!!o8i(te &"!ti8e

A T T E S T A T I O N

I (tte!t t'(t t'e 8on8"!ion! in t'e (oe De8i!ion '(+ een re(8'e+ in 8on!"t(tion

e<ore t'e 8(!e 7(! (!!i/ne+ to t'e 7riter o< t'e o)inion o< t'e Co"rt! Dii!ion.

ANTONIO T. CARPIO

A!!o8i(te &"!ti8e

C'(ir)er!on, Se8on+ Dii!ion

C E R T I 0 I C A T I O N

P"r!"(nt to Se8tion 13, Arti8e VIII o< t'e Con!tit"tion (n+ t'e Dii!ion C'(ir)er!on!

Atte!t(tion, I 8erti< t'(t t'e 8on8"!ion! in t'e (oe De8i!ion '(+ een re(8'e+ in

8on!"t(tion e<ore t'e 8(!e 7(! (!!i/ne+ to t'e 7riter o< t'e o)inion o< t'e Co"rt!

Dii!ion.

%ARIA *OURDES P.A. SERENO

C'ie< &"!ti8e



0ootnote!

1 Penne+ A!!o8i(te &"!ti8e I!(i(! Dio+i8(n 7it' A!!o8i(te &"!ti8e! Bieneni+o *.Ree! ?no7 ( eer o< t'i! Co"rt@ (n+ %(rene Gon(e!-Si!on, 8on8"rrin/. Roo.

)). ;4-;2

2 I+. (t 21-34

3 De!i/n(te+ (! !"8' to +i!tin/"i!' <ro re!)on+ent R"+o< *iet, t'e in+ii+"(,

!i) +e!i/n(te+ 'erein (! R"+o<.

; Roo, ). 22.

5 I+. (t 23.

6 I+. (t 23-2;.

V(rie+ (o"nt o< Z=4,2=5.25 in t'e 1; O8toer 2414 Re!o"tion o< t'e Co"rt o<

A))e(!. I+. (t ;2.

I+. (t 25.

= I+. (t 34.

14 I+. (t ;2.

11 I+. (t 6.



12 Se8tion 1, R"e 65 o< t'e R"e! o< Co"rt.

13 E!tinoo . Co"rt o< A))e(!, G.R. No. 15426, 12 0er"(r 244, 5;; SCRA ;22,;31.

1; I+.

15 Cirte E)oee! *(or Union-0e+er(tion o< 0ree orer! . Cirte Ee8troni8!,

In8., G.R. No. 1=4515, 6 &"ne 2411, 654 SCRA 656, 65=.

16 Roo, ). ;2.

1 I+. (t ;1-;2.

1 24 P'i. 55 ?1=3@.

1= I+. (t 5=-5=1.

24 2;; P'i. ;1 ?1=@.

21 I+. (t ;-;.

22 G.R. No. 112=;4, 21 Noeer 1==;, 23 SCRA 26.

23 See Arti8e 212, )(r(/r()' ?@ o< t'e *(or Co+e.



2; See Arti8e 212, )(r(/r()' ?<@ o< t'e *(or Co+e.

25 Y"!en Air Se( Seri8e P'i!., In8. . Vi(or, 54; P'i. ;3, ;; ?2445@.

26 B(We . on. V(+ei(, 3 P'i. 641, 64 ?2444@.

2 I+. (t 614-611.

2 S")r( note 26 (t 64.

2= I+. (t 64-64=.

34 Roo, )). ;1-;2.

31 S")r( note 25.

32 I+. (t ;;6-;;.



T'e D"r(tion o< Con+enti(it A/reeent!Posted on May 21, 2008 by Ken Adams

Reader David recently posed the followin !"estion#

$ have a !"estion for yo" that has b"ed me for several years% &rom time to time, my

company shares company'related information with a third party and, before doin so,

enters into a confidentiality areement ()A* [also known as a nondisclosure agreement

—KAA] with the third party% +"r )A has a term of five years, and it often ets

neotiated down to a shorter time frame% everal lawyers have s"ested that we

remove the term in o"r areement and force the third party to re!"est a term% -hese

attorneys ar"e that, if a term is not re!"ested, and th"s no term is specified in the )A,

the term is perpet"al (i%e%, the confidentiality obliations will o on forever*, which

wo"ld benefit my company% +ther attorneys $ have spo.en with have said that a )A

witho"t a term r"ns the ris. of bein voided by a co"rt (either the co"rt wo"ld impose

its own reasonable term, or void the entire contract for va"eness reasons*% Do yo"

.now of any case law on this partic"lar iss"e or have any tho"hts on whether yo"

sho"ld or sho"ld not incl"de a term in a )A (or any other contract*/

$t wo"ld ta.e me several paes to answer this !"estion thoro"hly% &or the time bein,

heres my !"ic. answer#

Information that Constitutes a Trade Secret

-he .ey iss"e is the nat"re of the information bein protected%

$nformation that constit"tes a trade secret is protected "nder common law "ntil s"ch

time as its no loner a trade secret%

-he owner of a trade secret co"ld elect to reinforce by contract the common'law

protection afforded trade secrets, and there are advantaes to doin so% ee Milgrim on

Trade Secrets %02314%

)o"ld d"ration of a contract obliation not to disclose trade secrets be s"b5ect to a

6reasonableness7 standard/ eres what Milrim has to say#

9hile there is some (and, in yo"r a"thors view, f"ndamentally misconceived* a"thority

for the proposition that covenants not to disclose m"st also be reasonable as to

d"ration, s"ch view is patently "nso"nd beca"se the covenant simply ceases to be

enforceable "pon the "nderlyin matters becomin enerally .nown or otherwise

ceasin to be a trade secret, and hence s"ch restriction can never be "nreasonably

enforced%

http://www.adamsdrafting.com/duration-confidentiality-agreements/


http://www.adamsdrafting.com/author/kadams/


http://www.adamsdrafting.com/author/kadams/




:iven the inherently indeterminate life of trade secrets and the practical inability to

en"merate specific trade secrets which may be .nown to the employee as a

conse!"ence of the ens"in employment, the notion that restrictions on "se and

disclos"re m"st be limited as to time is both "nreasonable and harsh%

$n other words, accordin to Milrim it wo"ldnt ma.e sense for a co"rt to say that an

open'ended contract obliation to .eep trade secrets confidential isnt enforceable, thatinstead it sho"ld have been of limited d"ration%

;"t $d add that it miht ma.e matters clearer for the parties, and for any co"rt, if it

were made e<plicit that any contract obliation not to disclose trade secrets wo"ld lapse

once the trade secrets in !"estion stopped constit"tin trade secrets% "re, yo"re

statin the obvio"s, b"t sometimes statin the obvio"s is the ca"tio"s thin to do%

9hat say yo"/

Information the Doesn’t Constitute a Trade Secret

;"t its a different matter when a contract see.s to cover information, s"ch as

confidential information revealed to an employee d"rin the co"rse of employment,

thats broader than trade secrets% "ch broad confidentiality obliations constit"te,alon with restrictions on competition, 6restrictive covenants,7 and in many 5"risdictions

restrictive covenants have been held "nforceable "nless they are limited in d"ration%

ee Milgrim on Trade Secrets%023243a4%

$ve only dipped into the case law% &or instance, one relevant case is AMP, Inc. v.

Fleiscacker , 82= &%2d 11>> (?th )ir% 1>8?* (applyin $llinois law*%

o David, whether it wo"ld ma.e sense to remove the term from yo"r confidentiality

areement depends on the nat"re of the protected information% ;"t even if the

areement protects only trade secrets, the protection wo"ldnt last forever% $ s"spect

that yo"r areement covers more than trade secrets% $f thats the case, $m not s"re

yo"ve been iven ood advice% +f co"rse, this isnt the place to et into a disc"ssion of

what constit"tes a trade secret%

And of co"rse, $m not ivin yo" leal advice@ -hese are simply my first impressions,

based on a co"ple of ho"rs of tho"ht% $ e<pect some readers will weih in with

tho"hts of their own%

How to State Duration in a Confidentiality Agreement

eres a !"estion David didnt as.# whats the best way to state the d"ration of a

confidentiality areement/

-o state the d"ration of any obliation, yo" have two choices% o" co"ld b"ild it into the

obliation# Acme sall kee! te In"ormation con"idential "or tree #ears% Alternatively,

yo" co"ld omit any mention of d"ration from the obliation and instead specify the

d"ration (or 6term7* of the entire areement%

Bconomy favors the former approach, b"t $ can thin. of two reasons in favor of

specifyin d"ration of the areement%

&irst, if yo" state the d"ration in the obliation, that s"ests that the areement itself

is of indefinite d"ration% $ prefer to specify that a confidentiality areement terminates



at some point, so there isnt any !"estion of a company havin to forever incl"de a

iven confidentiality areement in any list of contracts to which its party, even tho"h

its no loner bo"nd by the only obliation in the areement%

And second, confidentiality obliations often form part of a broader areement that

contains a 6term7 provisionC d"ration of the confidentiality obliation sho"ld .ey off that

6term7 provision% ometimes that re!"ires a hybrid arranement, with theconfidentiality obliation also addressin d"ration# $uring te term o" tis agreement

and tree #ears terea"ter, Acme sall kee! te In"ormation con"idential.

Question:Non-Compete, Non-Disclosure, and Non-Solicitation Agreements

Employment contracts often contain restrictive agreements, and there is much

confusion about the differences between these agreements. They are sometimes called"restrictive covoenants" because they involve a covenant(promise) not to do something

or restricting someone from doing something. Sometimes, but not always, the

agreement includes compensation for the party who agrees to refrain from the act.

There are three general types of restrictive agreements or covenants.

Ads

Answer:

Non-compete AgreementsThese agreements are used in two circumstances:

1. For employment situations in which an employer wants to restrict an

employee from leaving the company and setting up a competitor business next

door. Most often non-competes restrict the employee from working in a similar

business, within a defined time (one year, two years, or more), and within a

defined radius from the original business. Non-compete agreements are

difficult to enforce, and several states have said they are not enforceable

because they restrain trade. Other states will enforce a non-compete if there isadequate consideration (money or other benefits) to balance the loss of

income.

2. In business sales agreements, in which the original owner agrees not to

compete with the new owner over a specific time and area and in a similar

http://biztaxlaw.about.com/od/contractsandagreements/f/restrictivecovenants.htm

http://biztaxlaw.about.com/od/resolvingbusinessdisputes/f/noncompete.htm

http://biztaxlaw.about.com/od/contractsandagreements/f/restrictivecovenants.htm

http://biztaxlaw.about.com/od/resolvingbusinessdisputes/f/noncompete.htm



business. In this situation, the seller receives specific compensation for the

agreement not to compete.

Non-Solicitation Agreements

A non-solicitation agreement restricts someone from soliciting employees or customers

of a business. In a common case, an employee who leaves a company agrees not to

solicit other employees to work for him or her. For example, Joe leave XYZ

Manufacturing and he wants to take Sally, his fantastic administrative assistant with him.

If he had signed a non-solicitation agreement, he would not be allowed to take her

along. Non-solicitation agreements are common in professional practices, and in many

cases the professional who is leaving is also restrained from soliciting clients,

customers, or patients of the practice.

Today's Best Rates

Nondisclosure (Confidentiality) AgreementsA nondisclosure or confidentiality agreement is designed to keep someone from talking

about or stealing proprietary information, trade secrets, inventions, or other information

that has competitive advantage to the owner.

All three types of agreements have the purpose of trying to prevent someone from

taking something from a business - customers, employees, business in general,

proprietary products or trade secrets. The problem with all three is enforcement; once

the employee or trade secret has been stolen, it takes a lengthy and costly legal process

to recover damages and put the genie back in the bottle, so to speak. In these cases, no

one benefits but the lawyers.

Documents

Labor Restrictive Covenants