G.R. No. 146807.

 May 9, 2002. *

PADCOM CONDOMINIUM CORPORATION, petitioner,  vs.  ORTIGAS

CENTER ASSOCIATION, INC., respondent.
Civil Law;  Land Registration;  Liens;  Under the Torrens system of registration,
claims and liens of whatever character except those mentioned by law existing against the
land binds the holder of the title and the whole world.—Under the Torrens system of
registration, claims and liens of whatever character, except those mentioned by law,
existing against the land binds the holder of the title and the whole world.
Same;  Same;  Same;  Any lien annotated on previous certificates of title should be
incorporated in or carried over to the new transfer certificates of title; Such lien is
inseparable from the property as it is a right in rem, a burden on the property whoever its
owner may be.—This is so because any lien annotated on previous certificates of title
should be incorporated in or carried over to the new transfer certificates of title. Such lien
is insepara-
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* FIRST DIVISION.

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VOL. 382, MAY 9, 2002 223

Padcom Condominium Corp. vs. Ortigas Center Association, Inc.
ble from the property as it is a right  in rem,  a burden on the property whoever its
owner may be. It subsists notwithstanding a change in ownership; in short, the personality
of the owner is disregarded.
PETITION for review on certiorari of a decision of the Court of Appeals.

The facts are stated in the opinion of the Court.

     Pelaez, Gregorio, Sipin, Bala & Robles for petitioner.
     Julio C. Elamparo for respondent.
DAVIDE, JR., C.J.:

Challenged in this case is the 30 June 2000 decision  of the

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Petitioner Padcom Condominium Corporation (hereafter PADCOM) owns
and manages the Padilla Office Condominium Building (PADCOM Building)
located at Emerald Avenue, Ortigas Center, Pasig City. The land on which the
building stands was originally acquired from the Ortigas & Company, Limited
Partnership (OCLP), by Tierra Development Corporation (TDC) under a Deed of
Sale dated 4 September 1974. Among the terms and conditions in the deed of sale
was the requirement that the transferee and its successor-in-interest must become
members of an association for realty owners and long-term lessees in the area
later known as the Ortigas Center. Subsequently, the said lot, together with
improvements thereon, was conveyed by TDC in favor of PADCOM in a Deed of
Transfer dated 25 February 1975. 4

In 1982, respondent Ortigas Center Association, Inc. (hereafter the

Association) was organized to advance the interests and pro-
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1 Rollo, 29. Per Martin, Jr., F., J., with Valdez, Jr., S. and Fernando, S., JJ., concurring.
2 Id., 95-106, Per Judge Leoncio M. Janolo, Jr.
3 Entitled Ortigas Center Association, Inc. v. Padcom Condominium Corporation.
4 Rollo, 115-118.
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224 SUPREME COURT REPORTS ANNOTATED
Padcom Condominium Corp. vs. Ortigas Center Association, Inc.
mote the general welfare of the real estate owners and long-term lessees of lots in
the Ortigas Center. It sought the collection of membership dues in the amount of
two thousand seven hundred twenty-four pesos and forty centavos (P2,724.40)
per month from PADCOM. The corporate books showed that PADCOM owed
the Association P639,961.47, representing membership dues, interests and
penalty charges from April 1983 to June 1993.   The letters exchanged between 5

the parties through the years showed repeated demands for payment, requests for
extensions of payment, and even a settlement scheme proposed by PADCOM in
September 1990.
In view of PADCOM’s failure and refusal to pay its arrears in monthly dues,
including interests and penalties thereon, the Association filed a complaint for
collection of sum of money before the trial court below, which was docketed as
Civil Case No. 63801. The Association averred that purchasers of lands within
the Ortigas Center complex from OCLP are obligated under their contracts of
sale to become members of the Association. This obligation was allegedly passed
on to PADCOM when it bought the lot from TDC, its predecessor-in-interest. 6

In its answer, PADCOM contended that it is a non-stock, nonprofit

association, and for it to become a special member of the Association, it should
first apply for and be accepted for membership by the latter’s Board of Directors.
No automatic membership was apparently contemplated in the Association’s By-
laws. PADCOM added that it could not be compelled to become a member
without violating its right to freedom of association. And since it was not a
member of the Association, it was not liable for membership dues, interests and
penalties. 7
 During the trial, the Association presented its accountant as lone witness to
prove that PADCOM was, indeed, one of its members and, as such, did not pay
its membership dues.
PADCOM, on the other hand, did not present its evidence; instead it filed a
motion to dismiss by way of demurrer to evidence. It
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5 Annex “G”; Rollo, 74.

6 Rollo, 50-54.
7 Rollo, 55-59.
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VOL. 382, MAY 9, 2002 225
Padcom Condominium Corp. vs. Ortigas Center Association, Inc.
alleged that the facts established by the Association showed no right to the relief
prayed for. It claimed that the provisions of the Association’s By-laws and the
Deed of Transfer did not contemplate automatic membership. Rather, the owner
or long-term lessee becomes a member of the Association only after applying
with and being accepted by its Board of Directors. Assuming further that
PADCOM was a member of the Association, the latter failed to show that the
collection of monthly dues was a valid corporate act duly authorized by a proper
resolution of the Association’s Board of Directors. 8

After due consideration of the issues raised in the motion to dismiss, the trial
court rendered a decision dismissing the complaint. 9

The Association appealed the case to the Court of Appeals, which docketed
the appeal as CA-G.R. CV No. 60099. In its decision  of 30 June 2000, the Court 10

of Appeals reversed and set aside the trial court’s dismissal of Civil Case No.
63801, and decreed as follows:
“WHEREFORE, the appealed decision dated September 1, 1997 is REVERSED and SET ASIDE and, in lieu thereof, a
new one is entered ordering the appellee (PADCOM) to pay the appellant (the Association) the following:
1. 1)
P639,961.47 as and for membership dues in arrears inclusive of earned interests and penalties; and
2. 2)
P25,000.00 as and for attorney’s fees.
Costs against the appellees.
SO ORDERED.”
The Court of Appeals justified its ruling by declaring that PADCOM
automatically became a member of the Association when the land was sold to
TDC. The intent to pass the obligation to prospective transferees was evident
from the annotation of the same clause at the back of the Transfer Certificate of
Title covering the
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8 Id., 80-93.
9 Id., 106.
10 Supra note 1.
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226 SUPREME COURT REPORTS ANNOTATED
Padcom Condominium Corp. vs. Ortigas Center Association, Inc.
lot. Despite disavowal of membership, PADCOM’s membership in the
Association was evident from these facts: (1) PADCOM was included in the
Association’s list of bona fide members as of 30 March 1995; (2) Narciso Padilla,
PADCOM’s President, was one of the Association’s incorporators; and (3) having
received the demands for payment, PADCOM not only acknowledged them, but
asked for and was granted repeated extensions, and even proposed a scheme for
the settlement of its obligation. The Court of Appeals also ruled that PADCOM
cannot evade payment of its obligation to the Association without violating
equitable principles underlying quasi-contracts. Being covered by the
Association’s avowed purpose to promote the interests and welfare of its
members, PADCOM cannot be allowed to expediently deny and avoid the
obligation arising from such membership.
Dissatisfied with the adverse judgment of the Court of Appeals, PADCOM
filed the petition for review in this case. It raises the sole issue of whether it can
be compelled to join the association pursuant to the provision on  automatic
membership appearing as a condition in the Deed of Sale of 04 September 1974
and the annotation thereof on Transfer Certificate of Title No. 457308.
PADCOM contends that it cannot be compelled to be a member of the
Association solely by virtue of the “automatic membership” clause that appears
on the title of the property and the Deed of Transfer. In 1975, when it bought the
land, the Association was still inexistent. Therefore, the provision on automatic
membership was anticipatory in nature, subject to the actual formation of the
Association and the subsequent formulation of its implementing rules.
PADCOM likewise maintains that the Association’s By-laws requires an
application for membership. Since it never sought membership, the Court of
Appeals erred in concluding that it was a member of the Association by
implication. Aside from the lack of evidence proving such membership, the
Association has no basis to collect monthly dues since there is no board
resolution defining and prescribing how much should be paid. For its part, the
Association claims that the Deed of Sale between OCLP and TDC clearly
stipulates automatic membership for the owners of lots in the Ortigas Center,
including their successors-
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VOL. 382, MAY 9, 2002 227
Padcom Condominium Corp. vs. Ortigas Center Association, Inc.
in-interest. The filing of applications and acceptance thereof by the Board of
Directors of the Association are, therefore, mere formalities that can be dispensed
with or waived. The provisions of the Association’s By-laws cannot in any
manner alter or modify the automatic membership clause imposed on a property
owner by virtue of an annotation of encumbrance on his title.
The Association likewise asserts that membership therein requires the
payment of certain amounts for its operations and activities, as may be authorized
by its Board of Directors. The membership dues are for the common expenses of
the homeowners for necessary services.
After a careful examination of the records of this case, the Court sees no
reason to disturb the assailed decision. The petition should be denied.
Section 44 of Presidential Decree No. 1529  mandates that: 11

SEC. 44. Statutory liens affecting title.—Every registered owner receiving a certificate of title in pursuance of a decree
of registration, and every subsequent purchaser of registered land taking a certificate of title for value and in good faith,
shall hold the same free from all encumbrances except those noted on said certificate and any of the following
encumbrances which may be subsisting, namely: x x x
Under the Torrens system of registration, claims and liens of whatever character,
except those mentioned by law, existing against the land binds the holder of the
title and the whole world. 12

It is undisputed that when the land in question was bought by PADCOM’s

predecessor-in-interest, TDC, from OCLP, the sale bound TDC to comply with
paragraph (G) of the covenants, conditions and restrictions of the Deed of Sale,
which reads as follows: 13

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11 Amending and Codifying the Laws Relative to Registration of Property and for Other Purposes.
12 See Narciso Peña, Narciso Peña, Jr., and Nestor N. Peña, REGISTRATION OF LAND TITLES AND DEEDS, 1988 ED., 162.
13 Rollo, 111.
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228 SUPREME COURT REPORTS ANNOTATED
Padcom Condominium Corp. vs. Ortigas Center Association, Inc.

G. AUTOMATIC MEMBERSHIP WITH THE ASSOCIATION:

The owner of this lot, its successor-in-interest hereby binds himself to become a member of the ASSOCIATION which
will be formed by and among purchasers, fully paid up Lot BUYERS, Building Owners and the COMPANY in respect
to COMPANY OWNED LOTS.
The OWNER of this lot shall abide by such rules and regulations that shall be
laid down by the ASSOCIATION in the interest of security, maintenance,
beautification and general welfare of the OFFICE BUILDING zone. The
ASSOCIATION when organized shall also, among others, provide for and collect
assessments which shall constitute a lien on the property, junior only to liens of
the Government for taxes. Evidently, it was agreed by the parties that dues shall
be collected from an automatic member and such fees or assessments shall be a
lien on the property.
This stipulation was likewise annotated at the back of Transfer Certificate of
Title No. 457308 issued to TDC.  And when the latter sold the lot to PADCOM
14

on 25 February 1975, the Deed of Transfer expressly stated: 15

NOW, THEREFORE, for and in consideration of the foregoing premises, the DEVELOPER, by these presents, cedes,
transfers and conveys unto the CORPORATION the above-described parcel of land evidenced by Transfer Certificate of
Title No. 457308, as well as the Common and Limited Common Areas of the Condominium project mentioned and
described in the Master Deed with Declaration of Restrictions (Annex “A” hereof), free from all liens and
encumbrances, except those already annotated at the back of said Transfer Certificate of Title No. 457308, x x x
This is so because any lien annotated on previous certificates of title should be
incorporated in or carried over to the new transfer certificates of title. Such lien is
inseparable from the property as it is a right  in rem,  a burden on the property
whoever its owner may be. It subsists notwithstanding a change in ownership; in
short, the personality of the owner is disregarded.   As emphasized earlier, the
16

provision on automatic membership was annotated in the

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14 CA Decision, 4; Rollo, 32.

15 Rollo, 117.
16 See Ligon v. Court of Appeals, 244 SCRA 693 (1995).
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VOL. 382, MAY 9, 2002 229
Padcom Condominium Corp. vs. Ortigas Center Association, Inc.
Certificate of Title and made a condition in the Deed of Transfer in favor of
PADCOM. Consequently, it is bound by and must comply with the covenant.
Moreover, Article 1311 of the Civil Code provides that contracts take effect
between the parties, their assigns and heirs. Since PADCOM is the successor-in-
interest of TDC, it follows that the stipulation on automatic membership with the
Association is also binding on the former.
We are not persuaded by PADCOM’s contention that the Bylaws of the
Association requires application for membership and acceptance thereof by the
Board of Directors. Section 2 of the By-laws  reads: 17

Section 2. Regular Members.—Upon acceptance by the Board of Directors of Ortigas Center Association, Inc., all real
estate owners, or long-term lessees of lots within the boundaries of the Association as defined in the Articles of
Incorporation become regular members, provided, however that the long-term lessees of a lot or lots in said area shall be
considered as the regular members in lieu of the owners of the same. Likewise, regular membership in the Association
automatically ceases upon the cessation of a member to be an owner or long-term lessee of real estate in the area.
A lessee shall be considered a long-term lessee if his lease is in writing and for a period of two (2) years or more.
Membership of a long-term lessee in the Association shall be co-terminus with his legal possession (or his lease) of the
lot/s in the area. Upon the lessee’s cessation of membership in the Association, the owner shall automatically succeed
the lessee as member thereat.
As lot owner, PADCOM is a regular member of the Association. No application
for membership is necessary. If at all, acceptance by the Board of Directors is a
ministerial function considering that PADCOM is deemed to be a regular
member upon the acquisition of the lot pursuant to the automatic membership
clause annotated in the Certificate of Title of the property and the Deed of
Transfer.
Neither are we convinced by PADCOM’s contention that the automatic
membership clause is a violation of its freedom of association. PADCOM was
never forced to join the association. It could
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17 Rollo, 62-63.
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230 SUPREME COURT REPORTS ANNOTATED
Padcom Condominium Corp. vs. Ortigas Center Association, Inc.
have avoided such membership by not buying the land from TDC. Nobody
forced it to buy the land when it bought the building with the annotation of the
condition or lien on the Certificate of Title thereof and accepted the Deed.
PADCOM voluntarily agreed to be bound by and respect the condition, and thus
to join the Association.
In addition, under the principle of estoppel, PADCOM is barred from
disclaiming membership in the Association. In estoppel, a person, who by his act
or conduct has induced another to act in a particular manner, is barred from
adopting an inconsistent position, attitude or course of conduct that thereby
causes loss or injury to another. 18

We agree with the Court of Appeals’ conclusion from the facts or

circumstances it enumerated in its decision and enumerated above that PADCOM
is, indeed, a regular member of the Association. These facts and circumstances
are sufficient grounds to apply the doctrine of estoppel against PADCOM.
Having ruled that PADCOM is a member of the Association, it is obligated to
pay its dues incidental thereto. Article 1159 of the Civil Code mandates:
Art. 1159. Obligations arising from contracts have the force of law between the contracting parties and should be
complied with in good faith.
Assuming in gratis argument that PADCOM is not a member of the Association,
it cannot evade payment without violating the equitable principles underlying
quasi-contracts. Article 2142 of the Civil Code provides:
Art. 2142. Certain lawful, voluntary and unilateral acts give rise to the juridical relation of quasi-contract to the end that
no one shall be unjustly enriched or benefited at the expense of another.
Generally, it may be said that a quasi-contract is based on the presumed will or
intent of the obligor dictated by equity and by the principles of absolute justice.
Examples of these principles are: (1) it is presumed that a person agrees to that
which will benefit him;
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18 Cruz v. Court of Appeals, 293 SCRA 239, 255-256 (1998).

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VOL. 382, MAY 9, 2002 231
Padcom Condominium Corp. vs. Ortigas Center Association, Inc.
(2) nobody wants to enrich himself unjustly at the expense of another; or (3) one
must do unto others what he would want others to do unto him under the same
circumstances. 19

As resident and lot owner in the Ortigas area, PADCOM was definitely
benefited by the Association’s acts and activities to promote the interests and
welfare of those who acquire property therein or benefit from the acts or
activities of the Association.
Finally, PADCOM’s argument that the collection of monthly dues has no basis
since there was no board resolution defining how much fees are to be imposed
deserves scant consideration. Suffice it is to say that PADCOM never protested
upon receipt of the earlier demands for payment of membership dues. In fact, by
proposing a scheme to pay its obligation, PADCOM cannot belatedly question
the Association’s authority to assess and collect the fees in accordance with the
total land area owned or occupied by the members, which finds support in a
resolution dated 6 November 1982 of the Association’s incorporating
directors  and Section 2 of its By-laws.
20 21

WHEREFORE, the petition is hereby DENIED for lack of merit. Costs

against petitioner.
SO ORDERED.
     Puno, Kapunan, Ynares-Santiago and Austria Martinez, JJ., concur.
Petition denied.
Note.—Every person dealing with registered land may solely rely on the
correctness of the certificate of title issued therefore and the law will in no way
oblige him to go behind the certificate to determine the condition of the property.
(Republic vs. Court of Appeals, 306 SCRA 81 [1999])
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