G.R. No. 78490 - Wack Wack Condominium Corp. vs. Court of Appeals

Case Digest (G.R. No. 78490)
Expanded Legal Reasoning Model

Facts:

Parties Involved

Petitioners:

Wack Wack Condominium Corporation – owner of the common areas and manager of the condominium project.
Welbilt Construction Corporation – the developer of the condominium building.
Eugenio Juan Gonzalez – President of both Welbilt and Wack Wack and with Welbilt holds the controlling interest in Wack Wack.

Private Respondent:

Josefina Bayot – purchaser who fully paid for her condominium unit and, by virtue of acquisition, became a stockholder of Wack Wack.

Background of the Condominium Purchase and Assessments

Josefina Bayot purchased and fully paid for a condominium unit in the Wack Wack Condominium building.
Upon full payment and issuance of Condominium Certificate of Title No. 727, Bayot also became a stockholder of Wack Wack.
Sometime in July 1984, Wack Wack issued an undated Statement of Account to Bayot listing assessments amounting to ₱112,367.72, many of which Bayot assailed as unreasonable, arbitrary, or unauthorized under the contract of sale.

Initiation of Foreclosure Proceedings

On July 17, 1984, Wack Wack filed with the Pasig Sheriff a petition for the extrajudicial sale of Bayot’s unit to answer for the unpaid assessments.
All required notices and publications were made; the foreclosure sale was set for August 24, 1984.

Bayot’s Legal Countermeasures

On August 23, 1984, Bayot, represented by counsel, filed a petition before the Securities and Exchange Commission (SEC) seeking an injunction and damages, along with a prayer for a preliminary injunction to restrain the sheriff from proceeding with the sale.
On the same day, the SEC Hearing Officer issued a temporary restraining order addressed to the Pasig Sheriff.

Subsequent Judicial and SEC Proceedings

On September 10, 1984, petitioners filed a petition for mandamus before the Regional Trial Court (RTC) of Pasig, compelling the sheriff to proceed with the extrajudicial sale.
On October 5, 1984, the RTC issued an order that allowed the sale to go on, as the 20-day period of the temporary restraining order had lapsed.
Bayot was not made a party to the RTC petition for mandamus so she received no notice of the order.

Continuation of SEC Proceedings with Multiple Postponements

Hearings on the preliminary injunction continued with several postponements, particularly at the instance of petitioners.
On October 23, 1984, despite the RTC mandamus order, petitioners did not mention the existence of the mandamus while requesting another postponement (their main witness, Eugenio Gonzalez, was cited as being abroad).
The SEC Hearing Officer reset the hearing for November 16, 1984, at 9:30 a.m., with both the SEC and Bayot unaware of the earlier mandamus order.

Emergence of the Second Restraining Order and Extrajudicial Sale

After the October 23 hearing, Bayot’s counsel received a second notice of extrajudicial foreclosure.
Bayot immediately filed a motion with the SEC for another order to restrain the sheriff, with notice sent to petitioners stating that a restraining order would take effect immediately upon receipt (notice dated November 15, 1984).
On November 16, 1984, at the scheduled SEC hearing time, petitioners sent another motion for postponement (again citing the absence of their main witness) rather than appearing personally.
Despite the receipt of the second restraining order by the sheriff, the extrajudicial sale was conducted on the same day, with petitioners emerging as the highest bidders.

Subsequent Motions and Appeals

On December 3, 1984, petitioners filed a Motion to Dismiss SEC Case No. 2675, arguing that the case had become moot and academic due to the foreclosure sale and that the SEC lacked jurisdiction.
The SEC denied the Motion to Dismiss on March 22, 1985; following further motion for reconsideration (also denied), petitioners raised the issue in a Petition for Certiorari before the Intermediate Appellate Court (now the Court of Appeals).
The Court of Appeals issued two resolutions (dated November 25, 1986, and May 13, 1987) upholding the SEC’s denial of the Motion to Dismiss.

Additional Developments

In the meantime, Bayot died; her original counsel withdrew and new counsel took her place to represent her heirs.
The central dispute involved both the extrajudicial sale and the validity of the assessments imposed under the Condominium Act and the Wack Wack by-laws.

Issues:

Jurisdiction and Mootness

Whether the extrajudicial sale of Bayot’s condominium unit rendered SEC Case No. 2675 moot and academic.
Whether the foreclosure proceeding—based on the non-payment and disputed validity of assessments—remains within the exclusive original jurisdiction of the SEC.

Validity of the Assessments and Foreclosure

Whether the assessments levied against Bayot, which became a lien on the property as provided under the Condominium Act and the Wack Wack by-laws, are valid and enforceable.
Whether the extrajudicial sale, which was based on these assessments, legally effectuated the foreclosure despite the ongoing dispute over the validity of said assessments.

Validity and Effectiveness of the Second Restraining Order

Whether the issuance of the second restraining order by the SEC Hearing Officer—given alleged non-compliance with the required 3-day notice—is legally valid and effective.
Whether the petitioners’ repeated postponements and absence in the SEC hearings contributed to forfeiting procedural rights.

Interplay Between Multiple Courts and Jurisdictions

The relationship and potential conflict between the SEC’s actions and the RTC’s mandamus order.
Whether the interventions by various courts and delays initiated by petitioners interfered with Bayot’s right to due process and her opportunity to be heard.

Ruling:

(Subscriber-Only)

Ratio:

(Subscriber-Only)

Doctrine:

(Subscriber-Only)

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Case Digest (G.R. No. 78490) Core Legal Reasoning Model Expanded

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Case Digest (G.R. No. 78490) Expanded Legal Reasoning Model

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Case Digest (G.R. No. 78490)
Core Legal Reasoning Model

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Case Digest (G.R. No. 78490)
Expanded Legal Reasoning Model