G.R. No. 134692 ; August 1, 2000
ELISEO FAJARDO, JR., and MARISSA FAJARDO, petitioners, vs. FREEDOM TO BUILD, INC., respondent.

FACTS

Petitioner-spouses purchased a house and lot from respondent Freedom to Build, Inc., a developer of low-cost housing. The Contract to Sell and the subsequent Transfer Certificate of Title contained a Restrictive Covenant imposing specific construction limitations. These included prohibitions against building structures on a front easement and a rule that any second-storey expansion must not extend forward beyond the apex of the original building or a designated setback line. Despite repeated warnings, petitioners constructed an extension that violated these covenants by extending their roof to the property line and expanding the second floor beyond the permitted front limit.
Respondent filed an action for demolition. The Regional Trial Court ruled in favor of respondent, ordering the removal of the unauthorized structures, a decision affirmed by the Court of Appeals. Petitioners argue that respondent lacks personality to sue, having transferred all interests to the homeowners’ association upon sale. They also contend the restrictions are unreasonable, noting neighboring homeowners have no objections and that their expansion is due to family needs.

ISSUE

Whether the Restrictive Covenant is valid and enforceable, and whether respondent has the legal standing to seek its enforcement through demolition.

RULING

The Supreme Court affirmed the decisions of the lower courts, upholding the validity and enforceability of the Restrictive Covenant. The legal logic is clear: restrictive covenants, while limitations on property use, are enforceable contractual obligations if they are reasonable, not contrary to law or public policy, and not in restraint of trade. The covenant here was designed to prevent overcrowding, promote safety, aesthetics, and decent living conditions within a low-cost housing project—objectives deemed reasonable and beneficial to the entire community.
On the issue of standing, the Court ruled that the original developer, as a party to the Contract to Sell containing the covenant, retains a legitimate interest in ensuring compliance to protect the project’s overall design and integrity, even after the sale. The obligation is a real covenant that runs with the land, binding subsequent owners. The fact that adjacent owners do not object is immaterial, as the covenant is a binding contractual stipulation, not merely dependent on neighborly consent. Since petitioners’ construction clearly violated the specific area limits, the remedy of demolition is appropriate under Article 1168 of the Civil Code, which allows for the undone of a forbidden act at the obligor’s expense. The peculiar circumstances in cited cases justifying damages in lieu of demolition are not present here.