G.R. No. 136897 . November 22, 2005.
Private Development Corporation of the Philippines, Pelagio Tolosa (as Register of Deeds, General Santos City), and Atanacio M. Villegas, Petitioners, vs. The Court of Appeals and General Santos Doctors’ Hospital, Inc., Respondents.

FACTS

The spouses Narciso owned two adjacent lots: an interior lot and an exterior lot abutting the national highway. On September 25, 1968, they sold the interior lot to respondent General Santos Doctors’ Hospital, Inc. (GSDHI). On the same date, they executed a Memorandum of Agreement, which stipulated that the vendors (the Narcisos) would construct a 10-meter wide road from the national highway, traversing their property (the exterior lot) to provide access to the interior lot purchased by GSDHI. This condition was a primary consideration for the sale, as the hospital needed access to the highway.
Years later, in 1977, the Narcisos mortgaged the exterior lot to petitioner Private Development Corporation of the Philippines (PDCP). Due to the Narcisos’ default, PDCP foreclosed on the mortgage, acquired the exterior lot at auction in 1982, and obtained a new title. PDCP later sold the lot to petitioner Atanacio Villegas in 1989. The Memorandum of Agreement creating the right-of-way was never annotated on the title to the exterior lot. GSDHI filed a complaint for specific performance to compel the annotation of this easement on the title now held by Villegas.

ISSUE

Whether the unregistered easement of right-of-way created by the Memorandum of Agreement is binding upon the subsequent purchasers (PDCP and Villegas) of the servient estate (the exterior lot).

RULING

Yes, the easement is binding. The Supreme Court affirmed the rulings of the lower courts, ordering the annotation of the Memorandum of Agreement on Villegas’s title. The legal logic proceeds from the nature of easements under the Civil Code and the exceptions to the principle of conclusiveness of a Torrens title.
First, the Court found that the Memorandum of Agreement created a voluntary easement of right-of-way under Article 619 of the Civil Code. It was a stipulation pour autrui (for the benefit of another) made by the then-owners, the Narcisos, in favor of GSDHI as the owner of the dominant estate. This easement was appurtenant to the interior lot and was established as a primary condition for its sale, making it inseparable from the ownership of that dominant estate.
Second, while PDCP and Villegas are registered owners, they are not innocent purchasers for value who can invoke the indefeasibility of the Torrens title to defeat the unregistered easement. Under the Land Registration Act (and later, the Property Registration Decree), an unregistered easement that is appurtenant to a parcel of land subsists and passes with the dominant estate until it is extinguished. The easement here, being an inseparable and established accessory to GSDHI’s property, is a burden that runs with the servient estate. Subsequent purchasers are charged with notice of such visible and continuous easements. PDCP, as a mortgagee and later purchaser, was bound to investigate the nature of the property and its physical condition, which would have revealed the existing use and necessity of the right-of-way for the hospital. Its failure to do so precludes it from claiming good faith. Consequently, Villegas, as PDCP’s successor-in-interest, acquired the property subject to the same burden. The Court thus upheld the order for the annotation of the Memorandum of Agreement to formally reflect the easement on the certificate of title.