PADCOM Condominium Corporation v. Ortigas Center Association Inc., GR 146807

PADCOM Condominium Corporation v. Ortigas Center Association Inc., GR 146807

FACTS:
​ Padcom Condominium Corporation (PADCOM) owns and manages the Padilla Office Condominium Building (PADCOM Building) located at Emerald Avenue, Ortigas Center, Pasig City. The land on which the building stands was originally acquired from the Ortigas &Company, Limited Partnership (OCLP), by Tierra Development Corporation (TDC) under a Deed of Sale dated 4 September 1974. Among the terms and conditions in the deed of sale was the requirement that the transferee and its successor-in-interest must become members of an association for realty owners and long-term lessees in the area later known as the Ortigas Center. Subsequently, the said lot, together with improvements thereon, was conveyed by TDC in favor of PADCOM in a Deed of Transfer dated 25 February 1975. In 1982, Ortigas Center Association, Inc. was organized to advance the interests and promote the general welfare of the real estate owners and long-term lessees of lots in the Ortigas Center. It sought the collection of membership dues in the amount of P2,724.40 per month from PADCOM. The corporate books showed that PADCOM owed the Association P639,961.47, representing membership dues, interests and penalty charges from April 1983 to June 1993.
The letters exchanged between the parties through the years showed repeated demands for payment, requests for extensions of payment, and even a settlement scheme proposed by PADCOM in September 1990. In view of PADCOM’s failure and refusal to pay its arrears in monthly dues, including interests and penalties thereon, the Association filed a complaint for collection of sum of money before the Regional Trial Court of Pasig City, Branch 264 (Civil Case No. 63801), but the same was dismissed. On appeal, the Court of Appeals reversed and set aside the trial court’s dismissal. Hence, this petition.

ISSUE:
 Whether PADCOM can be compelled to join the association pursuant to the provisions on automatic membership appearing as a condition in a Deed of Sale 
 
RULING:
Yes, PADCOM may be compelled. 
 
Evidently, it was agreed by the parties that dues shall be collected from an automatic member and such fees or assessments shall be a lien on the property. This stipulation was likewise annotated at the back of Transfer Certificate of Title No. 457308 issued to TDC. And when the latter sold the lot to PADCOM on 25 February 1975, the Deed of Transfer expressly stated:
 
...the transfer of lands is free from any liens and encumbrances, except those already annotated at the back of said Transfer Certificate of Title…
This is so because any lien annotated on previous certificates of title should be incorporated in or carried over to the new transfer certificates of title. Such lien is inseparable from the property as it is a right in rem, a burden on the property whoever its owner may be. It subsists notwithstanding a change in ownership; in short, the personality of the owner is disregarded. As emphasized earlier, the provision on automatic membership was annotated in the Certificate of Title and made a condition in the Deed of Transfer in favor of PADCOM. Consequently, it is bound by and must comply with the covenant.
Moreover, Article 1311 of the Civil Code provides that contracts take effect between the parties, their assigns and heirs. Since PADCOM is the successor-in-interest of TDC, it follows that the stipulation on automatic membership with the Association is also binding on the former.
Neither are we convinced by PADCOM’s contention that the automatic membership clause is a violation of its freedom of association. PADCOM was never forced to join the association. It could have avoided such membership by not buying the land from TDC. Nobody forced it to buy the land when it bought the building with the annotation of the condition or lien on the Certificate of Title thereof and accepted the Deed. PADCOM voluntarily agreed to be bound by and respect the condition, and thus to join the Association.