Asb Realty Corporation v. Ortigas & Company Limited Partnership
REITERATIONFacts
The Antecedents: Ortigas & Company Limited Partnership (Ortigas) sold a parcel of land to Amethyst Pearl Corporation (Amethyst) through a Deed of Sale dated June 29, 1994. The Deed of Sale contained covenants and restrictions, including those on building height, submission of plans, construction completion, and prohibition of advertisements. These restrictions were annotated on Amethyst's Transfer Certificate of Title (TCT). Amethyst later assigned the property to ASB Realty Corporation (ASB) on December 28, 1996, through a Deed of Assignment in Liquidation. ASB obtained a new TCT, which also bore the same annotations. Procedural History: Ortigas filed a complaint for specific performance against ASB on July 7, 2000, alleging violations of the Deed of Sale by ASB, including using the lot for commercial purposes, violating setbacks, failing to submit plans and complete construction on time, and displaying commercial signs. Ortigas sought reconveyance of the property or demolition of structures. The Regional Trial Court (RTC) dismissed the complaint, finding Ortigas guilty of laches for not enforcing the provisions against Amethyst and noting that the restrictions referred to Amethyst as the "VENDEE" and could not apply to ASB, a subsequent transferee. The Court of Appeals (CA) initially affirmed the RTC decision, ruling that Ortigas was estopped from enforcing the restrictions due to inaction and tolerance towards other non-compliant property owners. However, upon Ortigas' motion for reconsideration, the CA reversed its earlier decision, holding that Ortigas filed its complaint within the prescriptive period and that the transfer of the property to ASB did not defeat Ortigas' vested right to enforce the restriction. The CA denied ASB's motion for reconsideration. The Petition: ASB appealed to the Supreme Court, assailing the CA's amended decision and its resolution denying the motion for reconsideration. The core issues were whether ASB's motion for reconsideration was timely filed and whether Ortigas validly rescinded the Deed of Sale.
Issue(s)
Whether ASB's Motion for Reconsideration before the Court of Appeals was filed on time. Whether Ortigas validly rescinded the Deed of Sale due to the failure of Amethyst and its assignee, ASB, to fulfill the covenants under the Deed of Sale.
Ruling
The Supreme Court granted the petition for review on certiorari, annulled and reversed the amended decision and resolution of the Court of Appeals, dismissed the civil case for lack of cause of action, and ordered Ortigas & Company Limited Partnership to pay the costs of suit.
Ratio Decidendi
On the timeliness of the Motion for Reconsideration: The Supreme Court found that ASB's Motion for Reconsideration was timely filed. The CA concluded that the motion was filed three days late based on a registry return card. However, ASB presented an affidavit from its counsel and a certification from the post office indicating that the amended decision was received on January 18, 2012, not January 12, 2012, as claimed by the CA. This receipt date allowed ASB until February 2, 2012, to file its motion, which it did on January 30, 2012. Therefore, the CA's denial of the motion for being out of time was unwarranted. On the validity of Ortigas' action for rescission: The Supreme Court held that Ortigas could not validly demand reconveyance of the property through rescission against ASB. The Court clarified that the Deed of Assignment in Liquidation between Amethyst and ASB assigned only the tangible asset (the land) and not the rights or duties under the Deed of Sale. ASB acquired the property "free from any lien or encumbrance except those that are duly annotated on the [title]." While the annotations on ASB's TCT bound it to acknowledge and respect the encumbrance, it did not automatically make ASB liable for Amethyst's non-performance of the covenants. The Court emphasized that contractual obligations are generally not assignable without the obligee's consent, and there was no novation in this case as Ortigas' consent was not obtained, nor did ASB expressly assume Amethyst's obligations. Therefore, the liability for non-performance remained with Amethyst, and Ortigas had no cause of action for rescission against ASB, a third party to the Deed of Sale. The Court also noted that Ortigas had previously tolerated non-compliance by other property owners, which could support an argument of estoppel, although it ultimately found the lack of privity to be the decisive factor.
Main Doctrine
A successor-in-interest, by virtue of acquiring a property with annotated covenants, is bound to acknowledge and respect the encumbrance, but this does not automatically make the successor liable for the non-performance of the original vendee's obligations under the deed of sale without express assumption, as the liability for non-performance remains with the original vendee unless novation occurs.