South Pachem Development vs CA (Case Digest)

South Pachem Development vs Honorable Court of Appeals and Makati Commercial Estate Association, Inc.

December 16, 2004

Facts:

Makati Commercial Estate Association, Inc. (formerly Ayala Commercial Estate Association), the respondent,  is an association of all real estate owners and long-term lessees of parcels of land located in the Makati Commercial Area.  Pursuant to its Articles of Incorporation, the members are assessed association dues annually, subject to penalty and interest in case of default.  Petitioner, South Pachem Development, Inc. purchased from Ayala Corp two adjoining lots.  The deed of restrictions which was duly annotated in the titles of the property and annexed to the two deeds provides that: “The owner of this lot or his successor-in-interest is required to be and is automatically a member of the Makati Commercial Estate Association, Inc. or any other Association which may be formed  or to which the area may be affiliated got the purpose, and must abide by the rules and regulations laid down by the association in the interest  of security, maintenance, beautification and the general welfare of the area.  The association will also provide for and collect assessments which will constitute a lien on the property xxxx”

The petitioner stopped paying its association dues including the interest and penalty to private respondent.  It questioned the legality of the deed of restrictions for being contrary to morals, public policy, good customs, and the Constitution, as it constituted  a perpetual burden on the property and the purchaser would be deprived of the use of the property without due process of law.

Issue: 

Whether or not the deed of restrictions annotated  in the titles of the property  unconstitutional

Ruling:

The provision in the deed of restrictions which requires a purchaser of a parcel of land located in the Makati area to pay association fees is a valid stipulation.  The court ruled that an annotation to the effect that the lot owner becomes an automatic member of the village association and must abide by such rules and regulations laid down by said association was a valid restraint on one’s ownership over the property as the same was for the interest of the sanitation, security and the general welfare of the community.