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EN BANC

G.R. No. L-20786            October 30, 1965

IN RE: PETITION FOR CANCELLATION OF CONDITION ANNOTATED ON TRANSFER CERTIFICATE OF TITLE No. 54417, QUEZON CITY, DRA. RAFAELA V. TRIAS, married to MANUEL SIA RAMOS, petitioner-appellee, vs. GREGORIO ARANETA, INC. oppositor-appellant.

Yatco & Yatco for petitioner-appellee.
Araneta & Araneta for oppositor-appellant.

BENGZON, C.J.:chanrobles virtual law library

In May 1963, Rafaela Trias, married, filed in the Rizal court of first instance, a petition to cancel from her Torrens certificate of title, the annotation appearing on its back which reads as follows:

5. That no factories will be permitted in this section.

She alleged she was the registered owner of this lot in Quezon City; that she wanted the cancellation, not for the purpose of erecting a factory thereon, but merely to facilitate approval of a loan she had applied for; that the restriction was illegal, because it impaired the owner's dominical rights; and that it was a mere surplusage anyhow, because there are zoning ordinances prohibiting establishment of factories in that district.chanroblesvirtualawlibrarychanrobles virtual law library

Acting on the petition, the court granted it, endorsing her views, particularly the one referring to surplusage due to a zoning ordinance.chanroblesvirtualawlibrarychanrobles virtual law library

Two weeks later, Gregorio Araneta, Inc. moved for reconsideration of the order, alleging: (a) that the condition had been inserted in the title pursuant to a contract of sale between it and Rafaela's predecessor-in-interest; (b) that it received no timely notice of petition; (c) that the order disregards contractual rights and obligations; (d) that the prohibition against factories was valid, and not a surplusage; and (e) that the Court had no jurisdiction to act on the petition.chanroblesvirtualawlibrarychanrobles virtual law library

Upon denial of its motion to reconsider, Gregorio Araneta, Inc. appealed to this Court.chanroblesvirtualawlibrarychanrobles virtual law library

There are no issues of fact. The parties agree: (1) that the lot was part of a subdivision and originally belonged to J.M. Tuason & Co. Inc. which corporation upon selling it (thru Araneta Inc.) to a purchaser (Garcia Mateo and Deogracias Lopez), imposed the prohibition; that such prohibition was accordingly printed on the back of the transfer certificate issued to the purchaser; (2) after several transfers, always subject to the prohibition, Rafaela acquired the lot, again subject to the limitation which was repeated on the back of her certificate; (3) that upon receiving her certificate, she noticed the prohibition; and so, arguing that it infringes the owner's right to use her land, she asked for its cancellation; (4) as already stated, she obtained relief.chanroblesvirtualawlibrarychanrobles virtual law library

The questions at issue here are: (a) the validity of the prohibition or limitation; (b) the effect of the zoning ordinance.chanroblesvirtualawlibrarychanrobles virtual law library

Such prohibition is similar to other conditions imposed by sellers of subdivision lots upon purchasers thereof, in and around Manila. It is in reality an easement,¹ which every owner of real estate may validly impose under Art. 594 of the Civil Code or under Art. 688 of the New Civil Code, which provides that "the owner of a piece of land nay establish thereon the easements which he may deem suitable, ... provided he does not contravene the law, public policy or public order".chanroblesvirtualawlibrarychanrobles virtual law library

No law has been cited outlawing this condition or limitation, which evidently was imposed by the owner of the subdivision to establish a residential section in that area, or the purpose of assuring purchasers of the lots therein that the peace and quiet of the place will not be disturbed by the noise or smoke of factories in the vicinity.chanroblesvirtualawlibrarychanrobles virtual law library

The limitation is essentially a contractual obligation which the seller, Tuason & Co., Inc. (thru Araneta Inc.) imposed, and the purchaser agreed to accept. Of course, it restricts the free use of the parcel of land by the purchaser. However, "while the courts have manifested some disfavor of covenants restricting the use of property, they have generally sustained them where reasonable, and not contrary to public policy ... ." (14 Am. Jur. 616.).chanroblesvirtualawlibrarychanrobles virtual law library

"The validity of building restrictions limiting buildings to residences, ... restrictions as to the character or location of buildings or structures to be erected on the land ... has been sustained. (14 Am. Jur. 617, citing cases.)chanrobles virtual law library

Now, it is proper for Tuason & Co., Inc. (thru Araneta, Inc.) to oppose the elimination of the condition from the certificate of title, because, if it is erased, a purchaser who gets a new certificate of title without the annotation, will hold the lot free from the encumbrance, and might build a factory there.² As declared by sec. 39 of Act 496 as amended, "every purchaser of registered land ... shall hold the same free from all encumbrances except those noted in said certificate."chanrobles virtual law library

The existence of a zoning ordinance prohibiting factories in the area is immaterial. The ordinance might be repealed at any time; and if so repealed, this prohibition would not be enforceable against new purchasers of the land, who may be ignorant thereof. The same remark applies to Rafaela's promise not to build a factory on the lot: new owners might not be bound.chanroblesvirtualawlibrarychanrobles virtual law library

A problem might arise if and when the ordinance is amended so as to convert the area into an industrial zone - impliedly permitting factories. Probably, the limitation might still bind the lot owner (with annotation) ; but it is not the present issue, and we do not now decide it.chanroblesvirtualawlibrarychanrobles virtual law library

IN THIS VIEW OF THE CASE, it becomes unnecessary to take up the other questions discussed by appellant, regarding notice and jurisdiction. Neither do we pass on the point raised by appellee concerning appellant's personality to object to the cancellation; because anyway, the proper party in interest (J.M. Tuason & Co., Inc.) could be impleaded as substitute party on appeal. (Alonzo v. Villamor, 16 Phil. 315).chanroblesvirtualawlibrarychanrobles virtual law library

The appealed order is reversed, and the petition to cancel is denied, with costs against petitioner. So ordered.chanroblesvirtualawlibrarychanrobles virtual law library

Bautista Angelo, Concepcion, Dizon, Regala, Makalintal, Bengzon, J.P., and Zaldivar, JJ., concur.
Reyes, J.B.L., J., took no part.

Endnotes:

¹ For that reason it was annotated, as it should, in all subsequent transfer certificates.chanroblesvirtualawlibrarychanrobles virtual law library

² And J. M. Tuason & Co., Inc. might be liable to those who bought lots in the subdivision relying on the prohibition against factories in that part of the city.