G.R. No. L-20786 October 30, 1965
IN RE: PETITION FOR CANCELLATION OF CONDITION ANNOTATED ON TRANSFER CERTIFICATE OF TITLE NO. 54417, QUEZON CITY, DRA. RAFAELA V. TRIAS, married to MANUEL SIA RAMOS, petitioner-appellee, vs. GREGORIO ARANETA, INC., oppositor-appellant.

FACTS

Petitioner Rafaela Trias filed in the Rizal Court of First Instance a petition to cancel an annotation on the back of her Torrens Certificate of Title, which stated: “That no factories will be permitted in this section.” She alleged she was the registered owner of the lot in Quezon City and sought cancellation not to erect a factory but to facilitate a loan approval. She argued the restriction was illegal as it impaired dominical rights and was a surplusage due to existing zoning ordinances prohibiting factories in the district. The court granted the petition, endorsing her view on surplusage. Gregorio Araneta, Inc. moved for reconsideration, alleging the condition was inserted pursuant to a contract of sale with Trias’s predecessor-in-interest, it received no timely notice, the order disregarded contractual rights, the prohibition was valid and not a surplusage, and the court lacked jurisdiction. Upon denial of its motion, Gregorio Araneta, Inc. appealed. The parties agreed on the facts: the lot was part of a subdivision originally owned by J.M. Tuason & Co., Inc., which imposed the prohibition upon sale through Araneta Inc.; the prohibition was annotated on all subsequent transfer certificates, including Trias’s; and Trias acquired the lot subject to this limitation.

ISSUE

The primary issues are: (a) the validity of the prohibition or limitation annotated on the title, and (b) the effect of a zoning ordinance prohibiting factories in the area on said restriction.

RULING

The Supreme Court reversed the appealed order and denied the petition for cancellation. The prohibition is a valid easement that the owner of the subdivision may establish under Article 688 of the New Civil Code, provided it does not contravene law, public policy, or public order. It is essentially a contractual obligation imposed by the seller and agreed to by the purchaser, restricting the use of the land to maintain a residential area free from factory noise and smoke. Such covenants restricting use are generally sustained where reasonable and not contrary to public policy. The existence of a zoning ordinance is immaterial, as it may be repealed, and new purchasers might be ignorant of it. If the annotation is erased, a purchaser holding a new certificate without it would hold the lot free from the encumbrance, potentially building a factory and exposing J.M. Tuason & Co., Inc. to liability to other lot buyers who relied on the prohibition. The Court deemed it unnecessary to address other questions raised by appellant regarding notice, jurisdiction, or appellee’s point on appellant’s personality to object.