Ortigas v FeatiBank; G.R. No. L-24670; 14 Dec 1979; 94 SCRA 533

in Legal Chyme by

A municipal resolution declared the area along the western part of EDSA a commercial and industrial zone. Such area covers the two parcels of land originally owned by plaintiff-appellant and later acquired by defendant-appellee from third persons. The Transfer Certificates of Title of both parcels of land contained building restrictions that such land be only used for residential purposes. Defendant-appellee commenced the construction of a building to be devoted to banking purposes.

Whether or not a municipal resolution can nullify contractual obligations.

YES. While 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. Even if the subject building restrictions were assumed by the defendant-appellee, the contractual obligations so assumed cannot prevail over the municipal zoning resolution which is a valid exercise of police power.

The decision appealed from is AFFIRMED.

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