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ORTIGAS & CO., LIMITED VS. CA, 346 SCRA 748

FACTS: 

Petitioner sold a parcel of land, located in Greenhills Subdivision IV, San Juan to EMILIO HERMOSO. WIth the said sale, it was stated in the contract that the said lot shall only be used exclusively for residential purposes, until December 31, 2025.

In 1981, the Metropolitan Manila Commission (MMC) enacted an ordinance known as the Comprehensive Zoning Area for the NCR. The ordinance reclassified portions of Ortigas Avenue from Madison to Roosevelt Streets to a commercial area where, apparently, the lot was located. 

In 1984, private respondent Ismael Mathay III leased the said lot from Emilio Hermoso and built a single storey building for a car sales company. After which, the petitioner filed a complaint against Emilio Hermoso and sought for the demolition of the said building, invoking the provisions of the sale during the time before the zoning ordinance was put in force. 

ISSUE:

Whether or not the zoning ordinance enacted by the MMC may impair contracts that were entered into prior to its effectivity. 

RULING:

Yes, the zoning ordinance is considered a valid exercise of police power and is actually enshrined in the constitution. Thus, it may be applied retroactively since this is an exception to the general rule. The contract between Emilio Hermoso and the petitioner was hence overridden by the said ordinance providing for the reclassification of the area as commercial, making the existence of the car sales company built on the said lot at valid and legitimate.                      

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