775 Phil. 262; 112 OG No. 45, 7863 (November 7, 2016)
BERSAMIN, J.:
As a result, the Register of Deeds of Rizal cancelled TCT No. 65118 and issued TCT No. PT-94175 in the name of Amethyst.[7] The conditions contained in the Deed of Sale were also annotated on TCT No. PT-94175 as encumbrances.[8]COVENANTS, CONDITIONS AND RESTRICTIONS
This lot has been segregated by ORTIGAS from its subdivisions to form part of a zonified BUILDING AREA pursuant to its controlled real estate development project and subdivision scheme, and is subject to the following covenants which form part of the consideration of ORTIGAS' sale to VENDEE and its assigns, namely:
x x x x
B. BUILDING WORKS AND ARCHITECTURE:
1. The building to be constructed on the lot shall be of reinforced concrete, cement hollow blocks and other high-quality materials and shall be of the following height of not more than: fourteen (14) storeys plus one penthouse.
x x x x
L. SUBMISSION OF PLANS:
The final plans and specifications of the said building shall be submitted to ORTIGAS for approval not later than six (6) months from date hereof. Should ORTIGAS object to the same, it shall notify and specify to the VENDEE in writing the amendments required to conform with its building restrictions and VENDEE shall submit the amended plans within sixty (60) days from receipt of said notice.
M. CONSTRUCTION AND COMPLETION OF BUILDING:
The VENDEE shall finish construction of its building within four (4) years from December 31, 1991.[6]
5. Defendant has violated the terms of the Deed of Absolute Sale (Annex "A") in the following manner:For reliefs, Ortigas prayed for the reconveyance of the subject property, or, alternatively, for the demolition of the structures and improvements thereon, plus the payment of penalties, attorney's fees and costs of suit.[16]a. While the lot may be used only "for office and residential purposes", defendant introduced constructions on the property which are commercial in nature, like restaurants, retail stores and the like (see par. A, Deed of Absolute Sale, Annex "A").6. Any of the afore-described violations committed by the defendant empower the plaintiff to sue under paragraph "N. Unilateral Cancellation", plaintiff may have the Deed of Absolute Sale (Annex "A") cancelled and the property reverted to it by paying the defendant the amount it has paid less the items indicated therein.[15]
b. The commercial structures constructed by defendant on the property extend up to the boundary lines of the lot in question violating the setbacks established in the contract (see par. B.A., ibid).
c. Defendant likewise failed to submit the final plans and specifications of its proposed building not later than six (6) months from June 29, 1994 and to complete construction of the same within four (4) years from December 31, 1991. (see pars. L and M, ibid).
d. Being situated in a first-class office building area, it was agreed that no advertisements or any kind of commercial signs shall be allowed on the lot or the improvements therein but this was violated by defendant when it put up commercial signs and advertisements all over the area, (see par. F, ibid).
Ortigas sold the property [to] Amethyst on 29 June 1994. Amethyst was supposed to finish construction on 31 December 1995. Yet, up to the time the property was transferred to ASB on 28 December 1996, Ortigas never initiated any action against Amethyst to enforce said provision. Ortigas is therefore guilty of laches or negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled to assert it either has abandoned it or declined to assert it. (Tijam v. Sibonghanoy, L-21450, 15 April 1968, 23 SCRA 29).Ortigas appealed to the CA, which initially affirmed the RTC under the decision promulgated on September 6, 2011,[20] ruling thusly:
It is worth mentioning that the restrictions annotated in TCT No. 94175 (in the name of Amethyst Pearl Corporation) and TCT No. PT-105797 (in the name of ASB) repeatedly and consistently refer to the VENDEE. The term VENDEE in the said restrictions obviously refer to Amethyst Pearls Corporation considering the fact that the date referred to in Paragraph N thereof (Construction and Completion of Building), which is four (4) years from December 31, 1991, obviously refer to the plaintiff's VENDEE Amethyst Pearl Corporation. Definitely, it cannot refer to the defendant ASB which is not a vendee of the plaintiff. Therefore, all references to VENDEE in the restrictions evidently refer to Amethyst Pearl Corporation, the VENDEE in the sale from the plaintiff. Such explanation is more consistent with logic than the plaintiffs convoluted assertions that the said restrictions apply to the defendant ASB.
Reconveyance of the property to Ortigas necessarily implies rescission of the sale or transfer from Amethyst to ASB and from Ortigas to Amethyst. But Amethyst was not made a party to the case. Reconveyance of the property to the original seller (Ortigas) applies only on the sale to the original vendee (Amethyst) and not to subsequent vendees to whom the property was sold (Ayala Corp. v. Rosa Diana Realty and Dev. Corp., G.R. No. 134284, Dec. 1, 2000, 346 SCRA 663).
The non-compliance by the plaintiff with the requisites of its own restrictions further proves that it had no intention whatsoever to enforce or implement the same. If at all, this evinces an afterthought of the plaintiff to belatedly and unjustifiably single out the defendant for alleged non compliance of the said restrictions which are not applicable to it anyway.
WHEREFORE, foregoing premises considered, the present complaint is hereby dismissed for lack of basis.
SO ORDERED.[19]
x x x x ORTIGAS can no longer enforce the said restrictions as against ASB.Acting on Ortigas' Motion for Reconsideration, however, the CA promulgated its assailed amended decision on January 9, 2012,[22] whereby it reversed the decision promulgated on September 6, 2011. It observed and ruled as follows:
The "Covenants, Conditions and Restrictions" of ORTIGAS with respect to the property clearly states the following purpose:"This lot has been segregated by ORTIGAS from its subdivisions to form part of a zonified BUILDING AREA pursuant to its controlled real estate development project and subdivision scheme. x x x"However, it appears from the circumstances obtaining in this case that ORTIGAS failed to pursue the aforequoted purpose. It never filed a complaint against its vendee, AMETHYST, notwithstanding that it required the latter to complete construction of the building within four (4) years from the execution of the Deed of Sale. Neither did it make a demand to enforce the subject restriction. Moreover, while it imposed a restriction on the registration and issuance of title in the name of the vendee under Paragraph "P" on "Registration of Sale", to wit:
"P. REGISTRATION OF SALE:
The VENDEE hereby agrees that, for the time being, this Deed will not be registered and that its title shall not be issued until the satisfactory construction of the contemplated Office Building and VENDEE's compliance with all conditions therein. x x x"
AMETHYST was nonetheless able to procure the title to the property in its name, and subsequently, assigned the same to ASB.
Besides, records show that there are registered owner-corporations of several properties within the Ortigas area, where the subject property is located, that have likewise failed to comply with the restriction on building construction notwithstanding the fact of its annotation on the titles covering their properties. In fact, the tax declarations covering these properties in the respective names of UNIMART INC., CHAILEASE DEVELOPMENT CO. INC., CANOGA PARK DEVELOPMENT CORPORATION, and MAKATI SUPERMARKET CORPORATION reveal that no improvements or buildings have been erected thereon.
Notwithstanding such blatant non-compliance, however, records are bereft of evidence to prove that ORTIGAS took steps to demand observance of the said restriction from these corporations, or that it opted to institute any case against them in order to enforce its rights as seller. Thus, while ORTIGAS effectively tolerated the non-compliance of these other corporations, it nonetheless proceeded with the filing of the Complaint a quo against ASB, seeking the rescission of the original Deed of Sale on the ground of non-compliance of the very same restriction being violated by other property owners similarly situated.
On the basis of the foregoing acts or omissions of ORTIGAS, and the factual milieu of the present case, it cannot be pretended that it failed to actively pursue the attainment of its objective of having a "controlled real estate development project and subdivision scheme". The Court thus concurs with the ratiocinations of the RTC when it posited that the restrictions imposed by ORTIGAS on ASB have been "rendered obsolete and inexistent" for failure of ORTIGAS to enforce the same uniformly and indiscriminately against all non-complying property owners. If the purpose of ORTIGAS for imposing the restrictions was for its "controlled real estate development project and subdivision scheme", then it should have sought compliance from all property owners that have violated the restriction on building completion. As things stand, ASB would appear to have been singled out by ORTIGAS, rendering the present action highly suspect and a mere afterthought.
Consequently, while it may be true that ASB was bound by the restrictions annotated on its title, specifically the restriction on building completion, ORTIGAS is now effectively estopped from enforcing the same by virtue of its inaction and silence.
x x x x
In this case, ORTIGAS acquiesced to the conveyance of the property from AMETHYST to ASB with nary a demand, reservation or complaint for the enforcement of the restriction on building construction. It allowed the four-year period within which to construct a building to lapse before it decided that it wanted, after all, to enforce the restriction, which cannot be allowed lest the property rights of the registered owner, ASB, be transgressed. Such a silence or inaction, which in effect led ASB to believe that ORTIGAS no longer sought the enforcement of the restrictions on the contract, therefore bars ORTIGAS from enforcing the restriction it imposed on the subject property.
x x x x
WHEREFORE, premises considered, the instant appeal is DENIED. The assailed Decision is hereby AFFIRMED.
SO ORDERED.[21]
It is not disputed that AMETHYST failed to finish construction within the period stated in the 1994 Deed of Sale. As correctly pointed out by ORTIGAS, in accordance with Article 1144 of the Civil Code, the prescriptive period within which to enforce remedies under the 1994 Deed of sale is ten (10) years from the time the right of action accrues.By its resolution promulgated on July 26, 2012, the CA denied the petitioner's Motion for Reconsideration[24] for being filed out of time.[25]
ORTIGAS, therefore, had ten (10) years from 31 December 1995 or until 31 December 2005 within which to file suit to enforce the restriction. ORTIGAS filed the present complaint on 07 July 2000 well within the prescriptive period for filing the same.
ASB contends that it could not have complied with the particular restriction to finish construction of the building as the period to finish the same had already lapsed by the time ASB acquired the property by way of a Deed of Assignment in Liquidation between AMETHYST and ASB on 28 December 1996. We hold, however, that the mere assignment or transfer of the subject property from AMETHYST to ASB does not serve to defeat the vested right of ORTIGAS to avail of remedies to enforce the subject restriction within the applicable prescriptive period.
x x x x
As to the argument that the inaction of ORTIGAS with respect to other non-compliant properties in the Ortigas area is tantamount to consenting to such non-compliance, it must be mentioned that it is the sole prerogative and discretion of Ortigas to initiate any action against the violators of the deed restrictions. This Court cannot interfere with the exercise of such prerogative/discretion. Furthermore, We cannot sustain estoppel in doubtful inference. Absent the conclusive proof that its essential elements are present, estoppel must fail. Estoppel, when misapplied, becomes an effective weapon to accomplish an injustice, inasmuch as it shuts a man's mouth from speaking the truth.[23]
Per allegation of material dates, the Motion for Reconsideration filed by Balgos Gumara & Jalandoni, co-counsel with Jose, Mendoza & Associates, on January 30, 2012 appears to have been filed on time. However, per registry return attached at the back of p. 212 of the Rollo, the Motion for Reconsideration was filed three (3) days late considering that the Amended Decision was received by defendant appellee's counsel of record, Jose, Mendoza & Associates, on January 12, 2012.[27]The conclusion of the CA was unwarranted because the petitioner established that its filing of the Motion for Reconsideration was timely.
x x x x [T]he ASSIGNOR hereby assigns, transfers and conveys unto the ASSIGNEE, its successors and assigns, free from any lien or encumbrance except those that are duly annotated on the Transfer Certificate of Title (TCT), one parcel of real property (with improvements). x x x.The express terms of the Deed of Assignment in Liquidation, supra, indicate that Amethyst transferred to the petitioner only the tangible asset consisting of the parcel of land covered by TCT No. PT-94175 registered in the name of Amethyst. By no means did Amethyst assign the rights or duties it had assumed under the Deed of Sale. The petitioner thus became vested with the ownership of the parcel of land "free from any lien or encumbrance except those that are duly annotated on the [title]" from the time Amethyst executed the Deed of Assignment in Liquidation.
x x x x
The ASSIGNEE in turn in consideration of the foregoing assignment of assets to it, hereby surrenders to ASSIGNOR, Amethyst Pearl Corporation, Stock Certificate Nos. (006, 007, 008, 009, 010, 011), covering a total of TEN THOUSAND SHARES (10,000) registered in the name of the ASSIGNEE and its nominees in the books of ASSIGNOR, receipt of which is hereby acknowledged, and in addition hereby releases ASSIGNOR from any and all claims.[40]
3. The lot, together with any improvements thereon, or any rights thereto, shall not be transferred, sold or encumbered before the final completion of the building as herein provided unless it is with the prior express written approval of ORTIGAS.[41]Ortigas apparently recognized without any reservation the issuance of the new certificate of title in the name of Amethyst and the subsequent transfer by assignment from Amethyst to the petitioner that resulted in the issuance of the new certificate of title under the name of the petitioner. As such, Ortigas was estopped from assailing the petitioner's acquisition and ownership of the property.
x x x x
The VENDEE hereby agrees that, for the time being, this Deed will not be registered and that its title shall not be issued until the satisfactory construction of the contemplated Office Building and VENDEE's compliance with all conditions herein. x x x[42]
The sale or transfer of the mortgaged property cannot affect or release the mortgage; thus the purchaser or transferee is necessarily bound to acknowledge and respect the encumbrance.To be clear, contractual obligations, unlike contractual rights or benefits, are generally not assignable. But there are recognized means by which obligations may be transferred, such as by sub-contract and novation. In this case, the substitution of the petitioner in the place of Amethyst did not result in the novation of the Deed of Sale. To start with, it does not appear from the records that the consent of Ortigas to the substitution had been obtained despite its essentiality to the novation. Secondly, the petitioner did not expressly assume Amethyst's obligations under the Deed of Sale, whether through the Deed of Assignment in Liquidation or another document. And, thirdly, the consent of the new obligor (i.e., the petitioner), which was as essential to the novation as that of the obligee (i.e., Ortigas), was not obtained.[50]
x x x x
x x x However, Villar, in buying the subject property with notice that it was mortgaged, only undertook to pay such mortgage or allow the subject property to be sold upon failure of the mortgage creditor to obtain payment from the principal debtor once the debt matures. Villar did not obligate herself to replace the debtor in the principal obligation, and could not do so in law without the creditors consent. Article 1293 of the Civil Code provides:Art. 1293. Novation which consists in substituting a new debtor in the place of the original one, may be made even without the knowledge or against the will of the latter, but not without the consent of the creditor. Payment by the new debtor gives him the rights mentioned in articles 1236 and 1237.Therefore, the obligation to pay the mortgage indebtedness remains with the original debtors Galas and Pingol. x x x
The mere assignment of a bilateral executory contract may not be interpreted as a promise by the assignee to the assignor to assume the performance of the assignor's duties, so as to have the effect of creating a new liability on the part of the assignee to the other party to the contract assigned. The assignee of the vendee is under no personal engagement to the vendor where there is no privity between them. (Champion v. Brown, 6 Johns. Ch. 398; Anderson v. N. Y. & H. R. R. Co., 132 App. Div. 183, 187, 188; Hugel v. Habel, 132 App. Div. 327, 328.) The assignee may, however, expressly or impliedly, bind himself to perform the assignor's duties. This he may do by contract with the assignor or with the other party to the contract. It has been held (Epstein v. Gluckin, 233 N. Y. 490) that where the assignee of the vendee invokes the aid of a court of equity in an action for specific performance, he impliedly binds himself to perform on his part and subjects himself to the conditions of the judgment appropriate thereto. "He who seeks equity must do equity." The converse of the proposition, that the assignee of the vendee would be bound when the vendor began the action, did not follow from the decision in that case. On the contrary, the question was wholly one of remedy rather than right and it was held that mutuality of remedy is important only so far as its presence is essential to the attainment of the ends of justice. This holding was necessary to sustain the decision. No change was made in the law of contracts nor in the rule for the interpretation of an assignment of a contract.Is rescission the proper remedy for Ortigas to recover the subject property from the petitioner?
A judgment requiring the assignee of the vendee to perform at the suit of the vendor would operate as the imposition of a new liability on the assignee which would be an act of oppression and injustice, unless the assignee had, expressly or by implication, entered into a personal and binding contract with the assignor or with the vendor to assume the obligations of the assignor.[51]
x x x The rescission on account of breach of stipulations is not predicated on injury to economic interests of the party plaintiff but on the breach of faith by the defendant, that violates the reciprocity between the parties. It is not a subsidiary action, and Article 1191 may be scanned without disclosing anywhere that the action for rescission thereunder is subordinated to anything; other than the culpable breach of his obligations by the defendant. This rescission is in principal action retaliatory in character, it being unjust that a party be held bound to fulfill his promises when the other violates his, as expressed in the old Latin aphorism: "Non servanti fidem, non est fides servanda." Hence, the reparation of damages for the breach is purely secondary.Based on the foregoing, Ortigas' complaint was predicated on Article 1191 of the Civil Code, which provides:
On the contrary, in the rescission by reason of lesion or economic prejudice, the cause of action is subordinated to the existence of that prejudice, because it is the raison d'etre as well as the measure of the right to rescind. Hence, where the defendant makes good the damages caused, the action cannot be maintained or continued, as expressly provided in Articles 1383 and 1384. But the operation of these two articles is limited to the cases of rescission for lesion enumerated in Article 1381 of the Civil Code of the Philippines, and does not apply to cases under Article 1191.
Article 1191. The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is incumbent upon him.Rescission under Article 1191 of the Civil Code is proper if one of the parties to the contract commits a substantial breach of its provisions. It abrogates the contract from its inception and requires the mutual restitution of the benefits received;[53] hence, it can be carried out only when the party who demands rescission can return whatever he may be obliged to restore.
The injured party may choose between the fulfillment and the rescission of the obligation, with the payment of damages in either case. He may also seek rescission, even after he has chosen fulfillment, if the latter should become impossible.
The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a period.
This is understood to be without prejudice to the rights of third persons who have acquired the thing, in accordance with articles 1385 and 1388 and the Mortgage Law.