The Learning Child, Inc. (TLC) v.

Ayala Alabang Village Association (AAVA),

G.R. No. 134269
Date: July 7, 2010 | Ponente: Leonardo-De Castro, J.

Doctrine: Contracts Clause; Limitations on the use of land imposed by contract

yield to reasonable exercise of police power and, hence, zoning ordinances are
superior to contractual restrictions on the use of property.

Summary: The case is 3 consolidated petitions for review on certiorari concerning

the operation of The Learning Child, a preparatory AND grade school located in
Ayala Alabang Village. AAVA filed an injunction case against TLC and the spouses
Alfonso for violating the Deed of Restrictions which limits the use of the lot to a
preparatory (nursery and kindergarten) school. The Supreme Court held that AAVAs
and ALIs insistence on (1) the enforcement of the Deed of Restriction or (2) the
obtainment of the approval of the affected residents for any modification of the
Deed of Restrictions is reasonable absent any interest or zoning purpose asserted
by the Municipality contrary to that of the subdivision developer in declaring the
subject property as institutional.

Deed of Metropolitan Muntinlupa Muntinlupa

Restrictions Manila Zoning Resolution No.
Commission Ordinance No. 94-179
Ordinance No. 91-39
81-01
USE AND Classified Ayala Reclassified the Corrected a
OCCUPANCY The Alabang Village for subject property typographical error
property shall be zoning purposes as institutional in the description
used exclusively as a low-density of a parcel of land
for the residential area, under the heading
establishment thereby limiting Institutional
and the use of the Zone in Appendix
maintenance subject property to B of Ordinance No.
thereon of a the establishment 91-39 , adjusting
preparatory or operation of a the description
(nursery and nursery and Lot 25, Block 1,
kindergarten) kindergarten Phase V, Ayala
school, which school, which Alabang to Lot
may include such should not exceed 25, Block 3, Phase
installations as an two classrooms. V, Ayala Alabang
office for school
administration,
playground and
garage for school
vehicles.

Facts:
Sale of Lot 25, Block 3, Phase V, Ayala Alabang Ayala Land Inc. (ALI) sold
this parcel of land to spouses Yuson. They then sold it to spouses Alfonso. A Deed
of Restrictions was annotated on the TCT which expressly provides that, the
property shall be used exclusively for the establishment and maintenance
 thereon of a preparatory (nursery and kindergarten) school. ALI turned over the
right and power to enforce the restrictions on the properties in the Ayala Alabang
Village to the association of homeowners, the AAVA.
Establishment of TLC and Expansion In 1989, the spouses opened on the
same lot The Learning Child Pre-school which initially consisted of nursery and
kindergarten classes. In 1991, it was expanded to include a grade school
program, the School of the Holy Cross.
AAVA Protest The AAVA filed with the RTC of Makati an action for injunction
against TLC and the spouses Alfonso, alleging breach of contract by the
defendant spouses of the Deed of Restrictions.
RTC of Makati Rendered a Decision in favour of AAVA, emphasizing that the
restrictions were in reality an easement which an owner of a real estate may
validly impose under Article 688 of the Civil Code.
Motion for Reconsideration TLC alleged that with the passage of Muntinlupa
Zoning Ordinance No. 91-39 which reclassified the subject property as
institutional, there ceased to be legal basis for the RTC to uphold the Deed of
Restrictions. RTC agreed and set aside its earlier Decision. Citing Ortigas & Co.
Limited Partnership v. Feati Bank & Trust Co., it decreed that while the non-
impairment of contracts is constitutionally guaranteed, the rule is not absolute
since it has to be reconciled with the legitimate exercise of police power by the
municipality.
CA Upon appeal by the AAVA, it set aside the Resolution of the RTC and
reinstated the previous decision in favour of AAVA. TLC and spouses Alfonso filed
a Motion for Reconsideration from this Decision but was denied.
Motion to Intervene Aquino, et al., students of TLC, alleging that they are
minor children who suffer from various learning disabilities and behavioural
disorders benefiting from TLCs full-inclusion program, filed a Motion for Leave to
Intervene and their own Motion for Reconsideration with the CA. The CA denied
their Motions for being proscribed by Section 2, Rule 19 of the 1997 Rules on
Civil Procedure.
Zoning Ordinance Case In the meantime, the Municipality of Muntinlupa
passed Resolution No. 94-179 correcting an alleged typo on abovementioned
Ordinance No. 91-39, effectively placing Lot 25, Block 3, Phase V (herein subject
lot) under the Institutional Zone.
o HLURB According to the Housing and Land Use Regulatory Board
(HLURB), the Resolution was not a mere correction of a typo but an actual
rezoning of the property into an institutional area and would require the
conduct of public hearings.
o Office of the President The Office of the President set aside this
conclusion of the HLURB and declared Resolution No. 94-179 as a valid
corrective issuance. It further held that the Deed of Restrictions had lost
its force and effect in view of the passage of Ordinance No. 91-39.
o CA The CA upheld the validity of Resolution No. 94-179 but held that the
Office of the President erred; that Ordinance No. 91-39 did not have the
effect of nullifying the Deed of Restrictions inasmuch as there is no conflict
between the two.

Issues/Ratio:
 WON the CA is correct in upholding the validity of Muntinlupa
Resolution No. 94-179 YES, being a mere corrective issuance, it is not
invalidated by the lack of notice and hearing as AAVA contends.
o Both the Official Zoning Map of Muntinlupa and that of the Ayala Alabang
Village show that the subject lot is classified as institutional. The official
zoning map is an indispensable and integral part of a zoning ordinance,
without which said ordinance would be considered void.
o It is clear that there was a typo and the Court is merely affirming the
correction made by the same entity which committed the error.
o The authority of the HLURB is subordinate to that of the Office of the
President and the acts of the former may be set aside by the latter.

WON the CA was correct in denying Aquino, et al.s Motion to Intervene

MOOT, since their motion was filed in 1998, Aquino, et al., would no longer be
in grade school at this time.
o For the sake of argument, the Court finds no reversible error in CAs denial
of their Motion. The motion was filed three months after the CA had
already rendered its Decision.
o Section 2, Rule 19 of the 1997 Rules on Civil Procedure clearly imports
that intervention cannot be allowed when the trial court has already
rendered its Decision, and much less, as in the instant case, when even
the CA had rendered its own Decision on appeal.

WON TLC and the spouses Alfonso should be enjoined from continuing
the operation of a grade school in the subject property YES, sub-issues
below:

WON Muntinlupa Municipal Ordinance No. 91-39, as corrected by

Muntinlupa Resolution No. 91-179, has the effect of nullifying the
provisions of the Deed of Restrictions on the subject property NO,
there is a way to harmonize the seemingly opposing provisions.
o TLC and spouses Alfonso: Reclassification of properties is a valid
exercise of the states police power, with which contractual obligations
should be reconciled.
o AAVA: Even where the exercise of police power is valid, the same does
not operate to automatically negate all other legal relationships in
existence since the better policy is to reconcile the conflicting rights.
o Review of jurisprudence:
Ortigas & Co. Limited Partnership v. Feati Bank & Trust Co: The
Court, in upholding the exercise of police power attendant in the
reclassification of the subject property therein over the Deed of
Restrictions over the same property, took into consideration the
prevailing conditions in the area. Resolution was passed in the
exercise of police power to safeguard or promote the health, safety,
peace, good order and general welfare of the people in the locality.
Co v. Intermediate Appellate Court: The Court denied the
applicability of reclassification. This is not to suggest that a zoning
ordinance cannot affect existing legal relationships for it is settled
that it can legally do so, being an exercise of police power. As such,
 it is superior to the impairment clauses. xxx The zoning ordinance
in question, while valid as a police measure, was not intended to
affect existing rights protected by the impairment clause. It is
always a wise policy to reconcile apparently conflicting rights under
the Constitution and to preserve both instead of nullifying one
against the other.
Presley v. Bel-Air Village Association: The Court allowed the
operation of the Hot Pan de Sal Store despite the Deed of
Restrictions, but not without examining the surrounding area like in
Ortigas.
o SC: The subject property, though declared as an institutional lot,
nevertheless lies within a residential subdivision and is surrounded by
residential lots. TLCs student population had swelled to 350 students. The
greater traffic will affect adjacent property owners enjoyment and use of
their own properties. AAVAs insistence on the enforcement of the Deed of
Restrictions is thus reasonable. Also, the Municipality of Muntinlupa did
not appear to have any special justification for declaring the subject lot as
an institutional property.

WON AAVA is estopped from enforcing the Deed of Restrictions NO

o TLC and spouses Alfonso: The AAVA had allegedly abrogated said
restrictions by its own acts.
o However, TLC and the spouses Alfonso failed to prove by clear and
convincing evidence the gravity of AAVAs acts so as to bar the latter from
insisting compliance.
o The circumstances around the enumerated acts of AAVA also show that
there was no intention on the part of AAVA to abrogate the Deed of
Restrictions nor to waive its right to have said restrictions enforced.
o Finally, a thorough examination of the records of the case shows that
AAVA consistently insisted upon compliance with the Deed of Restrictions.

Ruling: TLC and the spouses Alfonso are ordered to CEASE AND DESIST from the
operation of the Learning Child School beyond nursery and kindergarten. The
current students will be allowed to finish their elementary studies up to their
graduation in Grade 7. Enrollment of new grade school students will no longer be
permitted.