LEGAL NOTE 0046: FORECLOSURE DUE TO NON-PAYMENT OF CONDO DUES IS AN INTRA CORPORATE DISPUTE.

SOURCE: CHATEAU DE BAIE CONDOMINIUM CORPORATION VS. SPS. RAYMOND AND MA. ROSARIO MORENO (G.R. NO. 186271, 23 FEBRUARY 2011, BRION, J.) SUBJECTS: QUESTIONS ON ASSESSMENT OF CONDO DUES ARE INTRA-CORPORATE; FORECLOSURE ALSO INTRA-CORPORATE. (BRIEF TITLE CHATEU DE BAIE VS. SPS. MORENO)

 

SPOUSES MORENO FAILED TO PAY CONDO DUES TO CHATEAU DE BAIE. THE LATTER FORECLOSED THEIR CONDOS. SPOUSES MORENO FILED A CASE AT RTC FOR ACCOUNTING OF CONDO DUES,  ANNULMENT OF FORECLOSURE AND DAMAGES. CHATEAU DE BAIE FILED MOTION TO DISMISS ON GROUND THAT HLURB HAS JURISDICTION. WHICH HAS JURISDICTION?

THE RTC HAS JURISDICTION BECAUSE THE ISSUES RAISED ARE INTRA-CORPORATE. SINCE THE EXTRAJUDICIAL SALE WAS AUTHORIZED BY THE CONDOMINIUM CORPORATION’S BY-LAWS AND WAS THE RESULT OF THE NONPAYMENT OF THE ASSESSMENTS, THE LEGALITY OF THE FORECLOSURE WAS NECESSARILY AN ISSUE WITHIN THE EXCLUSIVE ORIGINAL JURISDICTION OF THE SEC (NOW RTC). 

The facts of this case are similar to the facts in Wack Wack Condominium Corporation, et al. v. Court of Appeals, et al.,[20] where we held  that the dispute as to the validity of the assessments is purely an intra-corporate matter between Wack Wack Condominium Corporation and its stockholder, Bayot, and is, thus, within the exclusive original jurisdiction of the Securities and Exchange Commission (SEC).[21]   We ruled in that case that since the extrajudicial sale was authorized by Wack Wack Condominium Corporation’s by-laws and was the result of the nonpayment of the assessments, the legality of the foreclosure was necessarily an issue within the exclusive original jurisdiction of the SEC.  We added that:

Just because the property has already been sold extrajudicially does not mean that the questioned assessments have now become legal and valid or that they have become immaterial. In fact, the validity of the foreclosure depends on the legality of the assessments and the issue must be determined by the SEC if only to insure that the private respondent was not deprived of her property without having been heard. If there were no valid assessments, then there was no lien on the property, and if there was no lien, what was there to foreclose? Thus, SEC Case No. 2675 has not become moot and academic and the SEC retains its jurisdiction to hear and decide the case despite the extrajudicial sale.[22]

* No Part.

** Designated Acting Chairperson of the Third Division effective February 16, 2011, per Special Order No. 295 dated January 24, 2011.

*** Designated additional Member of the Third Division per Special Order No. 944 dated February 9, 2011.

[1]  Penned by Associate Justice Rosmari D. Carandang, and concurred in by Presiding Justice Conrado M. Vasquez, Jr. and Associate Justice Mariflor P. Punzalan Castillo; rollo, pp. 24-33.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

[2]  Annex “C,” Petition; id. at 37-38.

[3]  January 24, 2008.

[4]               Section 20.  An assessment upon any condominium made in accordance with a duly registered declaration of restrictions shall be an obligation of the owner thereof at the time the assessment is made. The amount of any such assessment plus any other charges thereon, such as interest, costs (including attorney’s fees) and penalties, as such may be provided for in the declaration of restrictions, shall be and become a lien upon the condominium assessed when the management body causes a notice of assessment to be registered with the Register of Deeds of the city or province where such condominium project is located. The notice shall state the amount of such assessment and such other charges thereon as may be authorized by the declaration of restrictions, a description of the condominium unit against which same has been assessed, and the name of the registered owner thereof. Such notice shall be signed by an authorized representative of the management body or as otherwise provided in the declaration of restrictions. Upon payment of said assessment and charges or other satisfaction thereof, the management body shall cause to be registered a release of the lien.  

Such lien shall be superior to all other liens registered subsequent to the registration of said notice of assessment except real property tax liens and except that the declaration of restrictions may provide for the subordination thereof to any other liens and encumbrances.

Such liens may be enforced in the same manner provided for by law for the judicial or extra-judicial foreclosure of mortgages of real property. Unless otherwise provided for in the declaration of restrictions, the management body shall have power to bid at the foreclosure sale. The condominium owner shall have the same right of redemption as in cases of judicial or extra-judicial foreclosure of mortgages.

[5]  Rollo, p. 43.

[6]  Entitled Oscar S. Salvacion v. Atty. Clemente E. Boloy, in his capacity as Ex-Officio Sheriff, Office of the Clerk of Court, Regional Trial Court, Parañaque City, Branch 196, and Chateau de Baie Condominium Corporation.

[7] An Act to Regulate the Sale of Property Under Special Powers Inserted In or Annexed to Real Estate Mortgages (approved on March 6, 1924).

[8] Rollo, pp. 42-49; penned by Associate Justice Japar B. Dimaampao, and concurred in by Associate Justice Portia Aliño-Hormachuelos and Associate Justice Mario L. Guariña III.

[9]  Id. at 51-52.

[10] G.R. No. 178549, entitled Oscar S. Salvacion v. Chateau de Baie Condominium Corporation.

[11] Rollo, p. 53.

[12] On May 11, 2005.

[13] Rollo, pp. 37-38.

[14] Rule 1, Section 8. Prohibited pleadings. — The following pleadings are prohibited:

(1) Motion to dismiss;

(2) Motion for a bill of particulars;

(3) Motion for new trial, or for reconsideration of judgment or order, or for re-opening of trial;

(4) Motion for extension of time to file pleadings, affidavits or any other paper, except those filed due to clearly compelling reasons. Such motion must be verified and under oath; and

(5) Motion for postponement and other motions of similar intent, except those filed due to clearly compelling reasons. Such motion must be verified and under oath.

[15] Rollo, pp. 39-40.

[16] Id. at 24-33.

[17] Id. at 31-32.

[18] In its February 5, 2009 Resolution; id. at 35-36.

[19] Id. at 14.

[20] G.R. No. 78490, November 23, 1992, 215 SCRA 850.

[21] Section 5.2 of the Securities Regulation Code (R.A. No. 8799) transferred exclusive and original jurisdiction of the SEC over actions involving intra-corporate controversies to the courts of general jurisdiction or the appropriate RTC.   

[22]  Supra note 20, at 856.