Case Summary (G.R. No. 134692)
Factual Background
Freedom To Build, Incorporated sold to the petitioners a house and lot designated Lot No. 33, Block 14, De la Costa Homes, Barangka, Marikina. The Contract to Sell contained a written Restrictive Covenant prescribing a front easement, limitations on front and second-storey expansions, and specified setback distances for the standard sixty square meter units. The restrictive provisions also appeared on the Transfer Certificate of Title covering the lot. By mutual agreement between the Homeowners Association and the developer, the setback restriction had been relaxed from four meters to two meters. Despite warnings, the petitioners extended the roof to the property line and expanded the second floor directly above the original front wall, thereby exceeding the covenant’s prescribed limits.
Trial Court Proceedings
Freedom To Build, Incorporated filed an action in the Regional Trial Court to demolish the unauthorized extensions. After trial, the court directed the petitioners to immediately demolish and remove the portions of their expansion that exceeded the limitations imposed by the Restrictive Covenant, authorizing the Branch Sheriff to execute the order at the defendants’ expense if they failed to comply. The trial court declined to award damages or attorney’s fees because neither party introduced evidence to sustain such claims.
Court of Appeals Disposition
The Court of Appeals affirmed the judgment of the trial court in all material respects, sustaining the order that the petitioners remove the portions of the structure that exceeded the limitations of the Restrictive Covenant. The petitioners then sought review by the Supreme Court.
Petitioners’ Contentions on Review
The petitioners argued that adjacent owners did not object to the construction and that neighboring owners would undertake similar expansions. They justified the expansion as necessary to provide housing for their children and prospective families. The petitioners challenged the respondent’s authority to enforce the Restrictive Covenant, asserting that respondent had relinquished ownership of the subdivision upon execution of a Deed of Absolute Sale and that, under the contract between the developer and the De la Costa Low Income Project Homeowners’ Association, enforcement of the covenant resided with the homeowners’ association rather than with respondent. Finally, the petitioners contended that, because the covenant contained no specific penalty of demolition, respondent could not seek demolition as a remedy.
Respondent’s Position and Policy Justification
In its memorandum, Freedom To Build, Incorporated urged upholding the Restrictive Covenant as a reasonable measure necessary in low-cost, socialized housing projects to prevent overcrowding and to preserve safety, aesthetics, privacy, and decent living conditions. The respondent emphasized that the covenant formed part of the consideration for conveyance and that the restrictions were promulgated for the protection and benefit of the entire project and current and future lot owners.
Legal Issues Presented
The principal issues were whether the Restrictive Covenant was valid and enforceable against the petitioners, whether respondent retained the personality or authority to enforce the covenant after divesting ownership, and whether the remedy of demolition was permissible notwithstanding the absence of an express demolition penalty in the covenant.
Legal Analysis on Restrictive Covenants
The Court explained that restrictive covenants are not strictly synonymous with easements but operate as limitations on the owner’s use of land and often take the form of negative easements or servitudes that preclude acts otherwise lawful for the owner. The Court reiterated the established rule that courts enforce restrictive covenants when they are reasonable, not contrary to public policy or law, and not in restraint of trade. Frontline restrictions and stipulations prescribing the character and siting of buildings have been sustained where they further the developer’s legitimate design and purposes for a community, including aesthetics, health, privacy, and the prevention of overcrowding.
Application of Law to the Facts
Applying those principles, the Court found the Restrictive Covenant valid and aimed at legitimate ends: to uphold the design intents of the De la Costa Low Income Housing Project and to secure benefits for present and future owners. The fact that immediate neighbors did not object did not negate the covenant’s purpose, because its object was not merely the benefit of adjacent owners but the preservation of overall community design and prevention of overcrowding. The petitioners’ reliance on the needs of their extended family did not justify breach of the covenant. The Court noted that the restrictive provisions were conspicuously written in the Contract to Sell and annotated on the Transfer Certificate of Title; therefore the petitioners could not claim ignorance or good faith.
Authority to Enforce the Covenant
On the question whether respondent retained the authority to enforce the covenant notwithstanding alleged transfer of ownership, the Court accepted evidence that the homeowners’ association, through its board of directors, expressly allowed respondent to enforce the Restrictive Covenant. Under the doctrine that equitable enforcement may be sought by one for whose benefit the restriction was intended, respondent’s enforcement was thereby sustained.
Remedy and Civil Code Provision
The Court addressed the petitioners’ argument against demolition in the absence of a specific contractual demolition penalty by invoking Article 1168 of the New Civil Code: when an obligation consists in not doing and the obligor performs the forbidden act, it shall be undone at his expense. The Court distinguished Ayala Corporation vs. Ray Burton D
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Case Syllabus (G.R. No. 134692)
Parties and Posture
- Eliseo Fajardo, Jr., and Marissa F. Fajardo purchased a house and lot designated Lot No. 33, Block 14, De la Costa Homes in Barangka, Marikina, from Freedom To Build, Inc..
- The parties executed a Contract to Sell that contained a Restrictive Covenant governing setbacks and second-floor expansions.
- The Restrictive Covenant was also annotated on Transfer Certificate of Title No. N-115384 issued in the names of the petitioners.
- Freedom To Build, Inc. filed an action in the Regional Trial Court, Branch 261, Pasig City, for demolition of unauthorized structures constructed by the petitioners.
- The trial court ordered the petitioners to demolish the portions of their house exceeding the covenant limits and declined to award damages or attorney’s fees.
- The Court of Appeals affirmed the trial court decision and the petitioners appealed to the Supreme Court by petition for review.
Key Factual Allegations
- The petitioners extended the roof to the property line and expanded the second floor to a point directly above the original front wall in contravention of the covenant.
- The Restrictive Covenant required a two-meter front easement and prohibited any structure on the front easement.
- The covenant permitted a second storey only if placed above the back portion of the house and not extending forward beyond the apex of the original building.
- The covenant specified that a second-floor front expansion must be six meters back from the front property line and four meters back from the front wall in the 60 sq. m. units.
- Adjacent owners reportedly did not object and expressed interest in similar expansions, and the setback restriction had been relaxed by mutual agreement from four meters to two meters between the developer and the homeowners association.
Restrictive Covenant Terms
- The Restrictive Covenant declared that the restrictions were "For the protection and benefit of the De La Costa Low Income Housing Project" and listed purposes including ensuring subsequent sales to low-income families, preserving privacy, fostering community spirit, and maintaining undisturbed possession.
- The covenant expressly mandated a two-meter front easement and prohibited building on that easement.
- The covenant placed limits on upward expansion by requiring the second storey to be above the back portion and not to project forward beyond the original apex.
- The covenant fixed the front second-floor expansion lines by reference to the design of the 60 sq. m. units, specifying numerical setbacks from the property line and front wall.
Contentions
- The petitioners argued that adjacent owners did not object and that expansion was necessary to accommodate their expanding families.
- The petitioners contended that Freedom To Build, Inc. relinquished any ownership or interest in the subdivision and