Makati Commercial Estate Association, Inc. vs. Makati Bel-Air Condominium Developers, Inc., et al.

[SEC-SICD * CASE NO. 3861. February 19, 1992.] MAKATI COMMERCIAL ESTATE ASSOCIATION, INC. , complainant , vs .MAKATI BEL-AIR CONDOMINIUM DEVELOPERS, INC.,ET AL. , respondents . D E C I S I O N This is a simple case of collection of association dues, accumulated interests, penalties and damages filed by Makati Commercial Estate Association, Inc. (MACEA for brevity) against Makati Bel-Air Condominium Developers, Inc. and/or CGB Condominium Owners Association, Inc. (hereinafter called for brevity as MBCD and CGB, respectively). In its complaint filed on August 27, 1990, complainant MACEA alleged that it is an association of all real estate owners and long-term lessees of lots in the Makati Commercial Area with the purpose, among others, to promote the best interests, well-being and to safeguard the welfare of its members; that respondent MBCD purchased from Ayala Corporation two (2) parcels of land described as Lots 8 and 9, Block 14, located in Legaspi Village, Makati, Metro Manila, wherein as part of the Deed of Sale, a Deed of Restrictions was provided which states that: "the owner of this lot or his successor-in-interest is required to be and is automatically a member of LEGASPI/SALCEDO Association, or any other association which may be formed or to 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 association will also provide for and collect assessment which will constitute a lien on the property, junior only to liens of the Government for taxes and to voluntary mortgages for sufficient consideration entered into in good faith . . . ."; that the Deed of Sale of the subject parcels of land were registered in the Registry of Deeds of the Province of Rizal, together with the annotation of the Deed Restrictions thereon, and Transfer Certificates of Title No. (397400) S-34398 and (394901) S-34399 were issued in respondent MBCD's name; that by reason of these sales, respondent MBCD, therefore, is a member of complainant subject to the payment of association dues assessed by the complainant and which dues the respondent MBCD refused to pay up to the present time; that respondent CGB was organized for the purpose, among others. "To own or hold title to the common areas in the condominium project known and identified as the CACHO-GONZALES BUILDING (CONDOMINIUM PROJECT) which has been constituted pursuant to the provisions of Republic Act 4726, on the properties described and brought under the operation of said Act by that Master Deed with Declaration of Restrictions executed by Makati Bel-Air Condominium Developers, Inc. on July 8, 1976 registered in the Notarial Register of Ronald E. Asis as Doc. No. 21, Page No. 5; Book No. IV; Series of 1976, and registered with the Register of Deeds of Rizal on September 22, 1976 as Primary Entry No. 34398."; that in spite of the fact that respondent MBCD is the registered owner of the parcels of land up to the present time, it has pointed to the respondent CGB as the entity liable for association dues to the complainant; that despite several demands, respondents have failed to pay the outstanding association dues to complainant which, as of May 31, 1990, has accumulated to P826,877.40. inclusive of interest and penalties from January 1980 to May 1990; that effective in 1985, the complainant has increased the penalty and interest rate on unpaid accounts to three per cent (3%) compounded on a monthly basis; that the current rates of association dues on the subject parcels of land including the improvements thereon are as follows: (a) On the Lots 1,741 sq.m. at P3.50 per sq.m. or P6,903.50 per annum; (b) on the Building 9,000 sq.m. at P1.50 per sq.m.; (c) plus 3% penalty and interest rate, compounded monthly for failure to pay the dues on time; that in December, 1984, complainant filed Civil Case No. 9028, with the Regional Trial Court of Makati, Branch CXXXIX, a complaint against both respondents seeking to recover from them the association dues then already due. The trial court dismissed the complaint on the ground that jurisdiction over the same should be with the Honorable Commission. The dismissal was appealed to the Court of Appeals in CA-G.R. No. 12645 - CV, which, on 25 May 1988 rendered a Decision upholding the dismissal of the complaint by the lower court on the ground that jurisdiction over the subject matter was with the Honorable Commission; and that as a consequence of respondents unjustified and unreasonable failure to pay for its overdue accounts, complainant has been compelled to institute this suit, incur expenses for litigation and secure the services of counsel under the agreement to pay 25% of the total amount due from respondents as attorney's fees. Upon summons served to the respondents on August 30, 1990, respondent MBCD filed a Motion to drop as party respondent on September 19, 1990 while respondent CGB filed on September 27, 1990 its Motion to Dismiss which were all opposed and/or objected to by complainant. Besides the issue of jurisdiction which was already resolved by the Court of Appeals involving the same subject matter and the same parties in C.A.-G.R. No. 12645 - CV which states that it is quite clear that it is a collection case for unpaid dues filed by a corporation against one of its members a purely intra-corporate affair",the resolution of the issue of membership of the respondents to the complainant, which was raised by the respondents in their aforesaid motions, was deferred until trial on the merits, as contained in the Order of this Hearing Officer dated April 22, 1991. On May 9, 1991, respondent filed its answer with counterclaim and cross-claim reiterating, as its special and affirmative defense, its motion to drop as party respondent dated September 18, 1990 claiming that it is respondent CGB, as its successor-in-interest, which is liable for the association dues assessed by the complainant. Accordingly, respondent MBCD prayed for the dismissal of the case against it, payment of attorney's fees "and/or in the alternative, that whatever award on plaintiff's claim be adjudged only against CGB Condominium Owners Association." On May 20, 1991, respondent CGB filed its answer with counterclaim and cross-claim denying any liability for the payment of association dues and damages which complainant seeks to recover from respondents; respondent CGB claimed that it is not a party to the Deeds of Sale entered into by and between complainant and respondent MBCD, including the Deeds Restriction covering the parcels of land subject of the aforementioned Deed. Neither is it privy to any agreement between complainant and respondent MBCD regarding compulsory membership with complainant; that respondent MBCD was the purchaser and remains the owner of the land subject of the Deeds of Sale as shown by the fact that Transfer Certificates of Title Nos. (397400) S-34398 and (394901) S-34399 are still registered in the name of respondent MBCD; respondent MBCD constructed and developed on the aforestated parcels of land the "CACHO-GONZALES BUILDING" and placed the building and the other improvements thereon under the condominium form of ownership pursuant to the Master Deed with Declaration of Restrictions prepared and registered by respondent MBCD; that pursuant to the Master Deed, respondent MBCD organized the condominium corporation known as "CGB Condominium Owners Association, Inc." for the purpose of holding title to the common areas and limited common areas in the Cacho-Gonzales Building, including the parcels of land on which the building has been built; that this Commission approved respondent CGB's Articles of Incorporation on July 6, 1977; that more than twenty three (23) years have elapsed from the incorporation of CGB but respondent MBCD still has to transfer to CGB the title to the parcels of land covered by TCT Nos. (394700) S-34398 and (394901) S-34399 and other common areas defined and enumerated in the Master Deed; that since it is a condition sine qua non that a deed of conveyance covering the aforementioned parcels of land be executed by respondent MBCD in favor of respondent CGS before the latter could acquire ownership over these parcels of land which were duly registered under the provisions of Presidential Decree No. 1529 , otherwise known as the Property Registration Decree, respondent CGB requested their conveyance per its letter dated September 21, 1990 but respondent MBCD failed and refused to do so even with the filing by the former of a complaint against the latter with the Housing and Land Use Regulatory Board (HLURB) to compel it to transfer the title of the common areas; that the parcels of land having been registered pursuant to the Property Registration Decree, respondent CGB cannot acquire said land and does not become owner thereof by operation of law. The operative act which would vest ownership to these parcels, of land is the execution of the deeds of conveyance which respondent MBCD has adamantly refused to execute; that having refused to perform an act which it is required and mandated to do, respondent MBCD is clearly in estoppel to deny its liability, as owner of the land, to pay the association dues. Unless and until respondent MBCD executes the necessary deeds of conveyance, it is factually and legally speaking, the owner of the land and consequently, a member of the petitioner, which has, therefore, the sole obligation to pay the association dues; that respondent MBCD, as registered owner of the land, remains a member of the petitioner; that respondent MBCD's unjust refusal to convey the common areas and limited common areas of the Cacho-Gonzales Building places it in estoppel to claim that respondent CGB is its "successor-in-interest"; that respondent CGB having been unnecessarily dragged to this suit, it is entitled to attorney's fees and other damages; and that in the event that judgment be rendered against it, it is entitled to recover the full amount of such judgment from respondent MBCD which continues to be the owner of the land on which the CACHO-GONZALES building was built and the bonafide member of complainant. The issues having been joined with the filing of the respondents' answers, the preliminary conference was eventually held on September 19, 1991. Upon motion of the petitioner in the presence of respondent MBCD's counsel, MBCD was declared as in default for its failure to file preliminary conference brief as required in the Order dated June 21, 1991. MBCD has not filed any motion or action to set aside the Order of default nor did it attempt to be allowed to adduce evidence in support of its position. As agreed upon, the issues to be resolved in this case are: a) Which of the respondents is a member of the petitioner and consequently liable for the payment of association dues, accumulated interests and penalties including other damages? b) Which cross-claim will be given due course? Evidence adduced by the complainant and respondent CGB all pointed to MBCD as member of the complainant. It was not disputed that respondent MBCD purchased two (2) parcels of land described as Lot 8 and 9, Block 14, in Legaspi Village, Makati, Metro Manila from Ayala Corporation which Deeds of Sale uniformly contained a Deed Restrictions which provide, among others, that "the owner of this lot or his successor-in-interest is required to be and is automatically a member of LEGASPI/SALCEDO 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 association will also provide and collect assessments which will constitute a lien on the property, junior only to liens of the Government for taxes and to voluntary mortgages for sufficient consideration entered into in good faith, PROVIDED that SCHOOLS, CHURCHES, other RELIGIOUS institutions and buildings for public use are exempt from the payment of association dues." These Deeds of Sale of the aforestated parcels of land were registered in the Registry of Deeds of the Province of Rizal, together with the annotation of the Deed Restrictions thereon, and Transfer Certificates of Title Nos. (397400) S-34398 and (394901) S-34399 were issued in the name of respondent MBCD which holds the same up to the present. The Deeds of Sale including the Deed Restrictions thereon having been validly entered into by and between the complainant and respondent MBCD, the latter should not be allowed to renege on its obligations to the former by virtue of the said Deeds. Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith. (Article 1159, Civil Code of the Philippines). Respondent MBCD, therefore, having been a member of the complainant from the time it acquired the lots from Ayala Corporation on August 6, 1971 continuously remains a bonafide member of the complainant up to the present and consequently be held liable to pay complainant the association dues, accumulated interest, and penalties which amounted to ONE MILLION THREE HUNDRED FIFTY TWO THOUSAND FOUR HUNDRED SIXTY FIVE AND 77/100 PESOS (P1,352,465.77) as of September, 1991 (Exhibit E-1). The claim of respondent MBCD that it is respondent CGB, as its successor-in-interest, which should be held liable for the claims of the complainant deserves scant consideration. This Hearing Officer observed that respondent MBCD has adamantly failed and refused to transfer the title of the subject parcels of land to respondent CGB for the past twenty three (23) years when the latter was incorporated up to the present, despite demands and case filed by it with the Housing and Land Use Regulatory Board. Clearly, respondent MBCD is estopped from claiming that respondent CGB is its successor-in-interest. WHEREFORE, premises considered, Decision is hereby rendered: (a) Granting the motion to dismiss filed by respondent CGB Condominium Owners Association, Inc.; (b) Denying respondent MBCD's motion to drop as party respondent: (c) Ordering respondent Makati Bel-Air Condominium Developers, Inc.,as a member of the complainant, Makati Commercial Estate Association Inc. to pay the latter the association dues, accumulated interest and penalties in the sum of ONE MILLION THREE HUNDRED FIFTY TWO THOUSAND FOUR HUNDRED SIXTY FIVE AND 77/100 PESOS (P1,352,465.77) as of September 1991 and thereafter until such time that title to the lots is fully transferred to respondent CGB or any person or entity as its successor-in-interest. (d) Ordering respondent MBCD to pay complainant attorney's fees in the sum of Ten Thousand Pesos (P10,000.00). Counter-claims and cross-claims are hereby dismissed for lack of merit. SO ORDERED. (SGD.) ELPIDIO S. SALGADO Hearing Officer