G.R. No. 126260. December 16, 2004.
SOUTH PACHEM DEVELOPMENT, INC., petitioner, vs. HONORABLE COURT OF APPEALS AND MAKATI COMMERCIAL ESTATE ASSOCIATION, INC., respondents.

FACTS

Petitioner South Pachem Development, Inc. purchased two parcels of land in Makati from Ayala Corporation in 1973. The Deeds of Absolute Sale contained annotated deed restrictions, one of which required the owner to automatically become a member of respondent Makati Commercial Estate Association, Inc. (MACEA) and to abide by its rules, including the payment of association dues. The dues were to constitute a lien on the property, junior only to tax liens and voluntary mortgages.
In 1984, petitioner ceased paying its association dues, contending that MACEA was no longer performing the services it promised, such as garbage collection and maintenance, as these were allegedly being undertaken by the Makati city government. Petitioner also argued that the obligation to pay dues for 47 years constituted a perpetual and illegal imposition on property ownership. MACEA filed a collection suit, which the trial court decided in its favor, a decision affirmed by the Court of Appeals.

ISSUE

Whether the stipulation in the deed restrictions requiring automatic membership in MACEA and perpetual payment of association dues is valid and binding upon the petitioner.

RULING

The Supreme Court denied the petition and affirmed the lower courts’ decisions. The stipulation is a valid contractual obligation and not an unlawful restriction on ownership. The deed restrictions, duly annotated on the titles, are covenants that run with the land and bind the petitioner as a successor-in-interest. The Court emphasized the principle of the obligatory force of contracts under Article 1159 of the Civil Code. Petitioner, as a buyer in a commercial transaction, is presumed to have entered into the agreement with full knowledge and consent to its terms, including the automatic membership and dues obligation.
The requirement is not contrary to law, morals, good customs, public order, or public policy. It is a reasonable condition imposed by the developer to ensure the collective maintenance, security, and welfare of the commercial estate, which ultimately benefits all property owners, including the petitioner. The fact that the obligation extends for a long period does not render it a “perpetual burden” in a legal sense that would invalidate it. The Court noted that petitioner’s remedy, if it believes MACEA is not performing its obligations, is to seek an accounting or file an action for specific performance or rescission for non-performance, not to unilaterally cease payment of validly incurred dues.