Case Summary (G.R. No. 146807)
Formation of the Association and Dues Claim
In 1982 the Association was organized and began collecting monthly membership dues of ₱2,724.40. Demand letters and corporate records showed PADCOM’s arrears from April 1983 to June 1993 amounting to ₱639,961.47, inclusive of interest and penalties.
Trial Court Proceedings and Dismissal
The Association sued PADCOM in Civil Case No. 63801 for collection of dues. PADCOM answered, arguing that automatic membership was not intended by the Association’s By-laws, that membership required formal application and board acceptance, and that compulsory membership violated its freedom of association. PADCOM demurred to evidence, and the Regional Trial Court granted its motion, dismissing the complaint.
Court of Appeals Reversal
On appeal, the Court of Appeals held that:
- The automatic-membership clause annotated on the title bound TDC’s successor, PADCOM.
- PADCOM was indisputably included in the Association’s membership lists; its president was an incorporator; and it repeatedly acknowledged and negotiated its dues.
- Equity and quasi-contract principles precluded PADCOM’s denial of membership where it had enjoyed Association benefits.
The CA ordered PADCOM to pay ₱639,961.47 and ₱25,000 in attorney’s fees.
Supreme Court’s Torrens-System Analysis
The Supreme Court invoked PD 1529 Sec. 44: under Torrens registration, all encumbrances annotated on the title bind subsequent purchasers. The automatic-membership lien was inseparable from the property and enforceable against PADCOM as TDC’s successor.
Contractual Effect of Automatic-Membership Covenant
Article 1311 of the Civil Code confirmed that contractual obligations bind successors and assigns. The automatic-membership clause in both the title and Deed of Transfer was thus binding and required PADCOM’s compliance.
Membership By-laws and Ministerial Acceptance
The Association’s By-laws Section 2 provides that lot owners “become regular members” upon board acceptance, and membership terminates upon transfer of ownership. The Court ruled that acceptance was merely ministerial, as PADCOM’s acquisition automatically conferred membership under the title covenant.
Freedom of Association and Estoppel
PADCOM’s argument that compulsory membership violated freedom of association failed because it voluntarily purchased the lot subject to the covenant. Under the doctrine of estoppel, PADCOM’s conduct—acknowledging dues demands, negotiating payment schemes, and enjoying Association services—precluded it from disavowing membership.
Equitable and Quasi-Contractual Obligations
Even assuming PADCOM were not a formal member, equitable principles underlying quasi-contracts (Civil Code Art. 2142) would obligate it to pay for benefits received. PADCOM enjoyed security, maint
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Facts of the Case
- Padcom Condominium Corporation (PADCOM) owns and manages the Padilla Office Condominium Building in Ortigas Center, Pasig City.
- The underlying lot was acquired by Tierra Development Corporation (TDC) from Ortigas & Company, Limited Partnership (OCLP) under a Deed of Sale dated 4 September 1974.
- The Deed of Sale contained a covenant requiring the transferee and its successors‐in‐interest to join an association of realty owners and long-term lessees to be formed in Ortigas Center.
- TDC conveyed the lot and improvements to PADCOM by Deed of Transfer dated 25 February 1975; the same automatic-membership covenant was incorporated and annotated on Transfer Certificate of Title No. 457308.
- In 1982, Ortigas Center Association, Inc. (the Association) was organized to promote the welfare of real estate owners and long-term lessees in Ortigas Center.
- The Association demanded monthly membership dues of ₱2,724.40 from PADCOM; corporate records showed arrears of ₱639,961.47 (dues, interest and penalties) covering April 1983 to June 1993.
- Repeated demands, extension requests and a proposed settlement scheme by PADCOM went unheeded, prompting the Association to file Civil Case No. 63801 for collection of money.
Procedural History
- Trial Court (RTC, Pasig City, Branch 264) granted PADCOM’s demurrer to evidence and dismissed the Association’s complaint.
- Association appealed to the Court of Appeals (CA-G.R. CV No. 60099).
- On 30 June 2000, the Court of Appeals reversed and set aside the dismissal, ordering PADCOM to pay ₱639,961.47 (arrears) plus ₱25,000.00 attorney’s fees.
- PADCOM filed a petition for review on certiorari before the Supreme Court.
Issues Presented
- Whether PADCOM can be compelled to join the Association by virtue of the “automatic membership” clause in the Deed of Sale of 4 September 1974 and its annotation on the Transfer Certificate of Title.
- Whether PADCOM’s freedom of association was violated.
- Whether absence of a board resolution prescribing the amount of dues invalidates the Association’s collectio