JRB Realty, Inc. vs. Makati Commercial Estate Association, Inc.

[SEC-AC NO. 468. December 5, 1994.] (SEC CASE NO. 3795) JRB REALTY, INC. , petitioner-appellant , vs .MAKATI COMMERCIAL ESTATE ASSOCIATION, INC. (MACEA) , respondent-appellee, AYALA LAND, INC. , intervenor-appellee . D E C I S I O N Makati Commercial Estate Association, Inc. (hereafter referred as "MACEA") is an association of the lot owners within the Association's territorial jurisdiction consisting of the subdivisions: Ayala-Roxas District, Legaspi Village and Salcedo Village in Makati, Metro Manila. Ayala Land, Inc. ("ALI") is the successor of Ayala Corporation which was the developer of said subdivision. cdlex By the developers' form Deed of Sale, each purchaser of a lot became automatically bound by developers' Deed Restrictions attached to each Deed of Sale as an essential part of the consideration of the sale annotated on the Certificate of Title as voluntary liens and encumbrances "A.1. The owner of this lot or his successor-in-interest is required to be and is automatically a member of Makati Commercial Estate Association, or any other Association which may be formed or to which the area may be affiliated for the purpose, and must abide by the rules and regulations laid down by the Association in the interest of security, maintenance, beautification and the general welfare of the area. ..." As of the end of 1988, the owners of 80.57% of all of the lots, including herein petitioner-appellant, within the territorial jurisdiction of MACEA had already built buildings on their lots in compliance with the height and floor area ratio (FAR) restrictions. Sometime in 1989, within the term of effectivity of the original Deed of Restrictions, ALI submitted to MACEA through its Board of Governors a proposal for the revision of the original restrictions governing the constructions and use of structures to be built on the so-called Makati Central Business Districts ("MCBD") lots. The proposal is a relaxed height and FAR restriction where the proposed revisions sought the abolition of direct height restrictions to be replaced with "floor area ratios" with the effect of allowing lot owners to increase the total floor areas of their buildings or to construct building with floor areas greater than those allowed by the original Deed Restrictions. On May 15, 1989 MACEA sent out to its members Memorandum Circular No. 89-05, requesting written comments, suggestions and other actions to the proposed revisions of the Deed Restrictions as proposed by ALI, including herein petitioner-appellant. Reacting on the same, petitioner-appellant submitted its written opposition dated May 26, 1989 and on June 17, 1989 its Position Paper, alleging as grounds thereof that the proposal had an unfair effect on the members who already built structures on their lots in substantial compliance with the Original Deed Restrictions, and that no less than the consent of all the parties to the Deed of Sale of the lot (which did not include MACEA) was needed in order to effect the revisions, not the mere "say-so" of the members of MACEA, as such members. MACEA Board of Governors decided to favorably endorse the matter for direct approval of its members; and that on March 22, 1990 it sent out to its members Notices of Annual Meeting set for April 5, 1990, to take up, among others, the "8. Approval of the Revised Deed Restrictions on Properties within MACEA jurisdiction proposed by Ayala Land, Inc ." Said meeting did not push through, but was reset to June 14, 1990. Petitioner-appellant of June 7, 1990 filed a petition to enjoin MACEA " from submitting for the consideration and or approval of its members the Revised Deed Restrictions proposed by Ayala Land, Inc . ,more particularly item 8 of the Agenda of its 14th June 1990 membership meeting ." On June 8, 1990, the Hearing Officer issued a Temporary Restraining Order "enjoining the respondent not from proceeding with the membership meeting scheduled on June 14, 1990, but only from submitting the Revised Deed Restrictions proposed by Ayala Land, Inc.,for consideration and or approval of the members at the scheduled meeting on June 14, 1990." Subsequently, MACEA cancelled said June 14, 1990 meeting Ayala Land, Inc. as the proponent of the Revised Deed Restrictions intervened in the case. On June 23, 1990, the Hearing Officer denied petitioner's application for preliminary injunction. MACEA then held its annual membership meeting on July 11-12, 1990, where it was recorded that 403 members voted for the Revised Deed Restrictions while 73 voted against. On August 14, 1990, petitioner-appellant filed a supplemental petition, praying additionally that judgment be rendered "(a) Declaring null and void and without any legal effect the approval by 403 of respondents members of the Revised Deed Restrictions as proposed by Ayala Land, Inc.;and (b) Declaring respondent to be liable to petitioner for damages it shall suffer in consequence of the implementation of the Revised Deed Restrictions ;..." Petitioner-appellant cited, among others, the alleged rampant irregularities which supposedly attended the July 11-12, 1990 MACEA annual membership meeting. Then, on August 17, 1990, MACEA issued to its members Memorandum Circular No. 90-04 on its " Initial Guidelines (Series of 90-01) " for the annotation of the Revised Deed Restrictions on the titles of the lots of members who voted for the adoption of the Revised Deed Restrictions and of those who subsequently accepted the same. The Preliminary Conference Order dated 28 February 1991 defined the issue in the proceedings a quo as " A perusal of the preliminary conference briefs submitted by the parties reveal that the only germane issue to be resolved in this case is whether the respondent Makati Commercial Estate Association, Inc . is empowered or can legally and validly change amend and or revise the Deed Restrictions ." After hearing/tackling said issue, the Hearing Officer a quo rendered his Decision dated February 28, 1994, dismissing the Petition and Supplemental Petition. Hence, the present appeal to the Commission en banc where the petitioner-appellant raised the following assignment of errors: I THE HEARING OFFICER A QUO ERRED IN RULING THAT THE REVISION OF THE DEED RESTRICTIONS IS AN IMPLIED POWER OF MACEA TO CARRY OUT ITS EXPRESS PURPOSE OF PROMOTING THE "GENERAL WELFARE." II THE HEARING OFFICER A QUO ERRED IN RULING THAT MACEA IS NOT PROHIBITED BY PD 957 FROM CHANGING/ALTERING THE DEED RESTRICTIONS. III THE HEARING OFFICER ERRED IN RULING THAT THE IRREGULARITIES OF THE 11-12 JULY 1990 MEETING DID NOT NULLIFY THE VOTATION THEREAT. As first assigned error, petitioner-appellant argued that the Hearing Officer a quo erred when he upheld the Association's position that it is empowered to do all acts as long as it is for the "general welfare" of the areas and of the property owners, especially when the determination of whether a particular act is for the "general welfare" or not is left entirely to the discretion of its governing board. We are not convinced by such arguments posited by herein petitioner-appellant. prcd "A corporation is, as a rule, presumed to act within its powers and when a contract is not on its face necessarily beyond its authority, it will, in the absence of proof to the contrary, be presumed valid." (Coleman v. Hotel de France Co.,29) In pointing out the correct view, the Hearing Officer laid his several basis and the laws applicable to such facts and not in any manner bound by such interpretations given by the party to the case. Records of the case will show the sources of MACEA's power to amend the Deed Restrictions as (1) the original Deed Restrictions annotated in the title of each lot buyer; (2) the articles on incorporation of the Association; (3) the by-laws of MACEA; and (4) the provisions of Sections 29, 25 and 52 of the Corporation Code. All buyers/owners of lots acquired from the Ayala Corporation bound themselves to automatic membership in, and obedience to enactments by respondent-appellee, MACEA. As provided in the Deed Restrictions annexed to the Deed of Sale between the lot buyer and Ayala Corporation as seller. "1. The owner of this lot or his successor-in-interest is required to be and is automatically a member of Ayala Commercial Estate Association, or any other Association which may be formed or to which the area may be affiliated for the purpose, and must abide by the rules and regulations laid down by the Association in the interest of security, maintenance, beautification and the general welfare of the area, ..." The Deed Restrictions also laid regulations for the use of lots, buildings and architecture, service entrance, canteens, signs, sewage disposal, including the height and floor areas of buildings, and MACEAs' authority to police compliance with the same. Should the revision of the Deed Restrictions promote the general welfare, property, service and reputation of the areas under its jurisdiction, then MACEA necessarily has the implied powers to agree to such revisions. Section 36 of the Corporation Code provides that corporations may exercise not only such powers as are expressly vested on it either by law or their articles of incorporation, and also " such other powers as may be essential or necessary to carry out its purposes as stated in the articles of incorporation ." The Supreme Court, in recognition of the corporate power to perform acts for the general welfare of the members of the association, pronounced in Bel-Air Village Association, Inc. v. Dionisio (G.R. No. 38354 June 30, 1989) that: "Living in this modern complex society has raised complex problems of security, sanitation, communitarian comfort and convenience and it is now a recognized necessity that members of the community must organize themselves for the promotion of their safety and security, peace and comfort, and general welfare cannot be categorized as unreasonable. Indeed, the essence of community life is association and cooperation for without these broader welfare, goals cannot be attained. It is for these reasons that modern subdivisions are imposing encumbrances upon titles of prospective lot buyers a limitation upon ownership of said buyers that they automatically become members of the homeowners' association living within the community of the subdivision." Likewise petitioner-appellants' posture that the relaxation of the Original Deed Restrictions would benefit only a minority of the membership of MACEA, since the majority of lot owners have already built structures on their lots, was already negated by the vote of the majority which approved the relaxation of the Deed Restriction. Thus, with the amendment of the height requirement, even those who had built according to the original Deed Restrictions may now embark on projects to build higher structures on their properties. Under Memorandum Circular No. 90-04, promulgated by MACEA on August 17, 1990, the Revised Deed Restrictions are being annotated on the titles only of those who voted to approve them and of those who subsequently accept the same. In its second assigned error, petitioner contends the MACEA is prohibited by Presidential Decree No. 957 from changing or altering the Deed Restrictions. Examining carefully the provisions of said Decree, especially Section 22 thereof, it is clear that said Decree requires the consent of the association or of the majority of the lot owners for the "alteration of plans" contemplated therein. There is nothing in the said section which prohibits the association from agreeing to the revision of the Deed Restrictions or of any matter not mentioned in the said Decree. Thus, Section 22 of P.D. 957 states: "No owner or developer shall change or alter the roads, open spaces, infrastructures, facilities for public use and or other form of subdivision development as contained in the approved subdivision plan ...without the permission or the authority and the written conformity or consent of the duly organized homeowners' association, or in the absence of the latter, by majority of the lot buyers in the subdivisions." MACEA then may not be prevented from enforcing the CRDRS against the vast majority of its members who voted in favor of the revision. Hence, what is actually being challenged here is not the respondent-appellees' supposed act of imposing the CRDRS on all its members, but on MACEA's act of determining which members are willing to accept the CRDRS in lieu of the original ones and of enforcing the CRDRS only as against those who accept. We need not disturb the Hearing Officers' finding as to petitioner-appellants' claim that there were irregularities in the 11-12 July 1990 meeting, specifically in the ascertainment of the quorum at such meeting, as it is beyond the issues agreed upon by the parties to be resolved in the case. Further, the Hearing Officer declared that petitioner-appellants' attempt to substantiate this claim during the hearings over the objections of the intervenor have not succeeded in showing how the alleged irregularities affected the ascertainment of the quorum and the outcome of the voting at the meeting. WHEREFORE, the appealed Decision is hereby AFFIRMED and the instant appeal DISMISSED for lack of merit. SO ORDERED. (SGD.) ROSARIO N. LOPEZ Chairman (SGD.) RODOLFO L. SAMARISTA (SGD.) MERLE O. MANUEL Associate Commissioner Associate Commissioner (did not participate) (SGD.) FE ELOISA C. GLORIA (SGD.) PERFECTO R. YASAY, JR. Associate Commissioner Associate Commissioner