G.R. No. 210286 - Welbit Construction Corp. vs. Heirs of De Castro

Welbit Construction Corporation, the developer of the Wack Wack Apartments Building (condominium).
Wack Wack Condominium Corporation, the management body of the condominium project.
Spouses Eugenio Juan and Matilde Gonzalez, the registered owners of the condominium unit.

The late Cresenciano C. De Castro, who was the registered owner of Unit 802 of the condominium via Condominium Certificate of Title (CCT) No. 2826.
After De Castro’s death in February 1992, his heirs substituted as respondents.

As of July 31, 1986, De Castro had failed to pay assessment dues amounting to P79,905.41 despite demands.
Petitioners, pursuant to Section 4 of the Master Deed with Declaration of Restrictions of the Wack Wack Condominium, caused the annotation of a lien for unpaid assessments and other dues on De Castro’s title on August 14, 1986.

Following continued non-payment, petitioners filed a petition for the extra-judicial foreclosure of the subject property with the Office of the Ex-A-Officio Sheriff of Pasig City on October 27, 1986.
The required publication and posting of the foreclosure notice were complied with; the public auction was set on February 10, 1987.
De Castro received a copy of the notice on January 29, 1987.
Petitioners emerged as the highest bidders with an amount of P88,809.94, leading to the issuance of a certificate of sale on the same day.
The sale was registered with the Register of Deeds of Pasig City on April 2, 1987, with the certificate of sale annotated on De Castro’s CCT.
De Castro failed to redeem the property following the sale.

Upon being requested to surrender his owner’s duplicate copy of the CCT, De Castro filed a petition before the Securities and Exchange Commission (SEC) seeking to annul the foreclosure proceedings.
In his petition, De Castro argued:

Petitioners lacked the legal personality to invoke the Condominium Act, and they should have resorted to alternative remedies.
The annotation of assessment dues, the issuance of a certificate of sale, and the extra-judicial foreclosure proceedings were irregular and devoid of factual and legal basis.
The assessments imposed were excessive, oppressive, unconscionable, and arbitrary.
Petitioners did not possess a special power of attorney or any express authority, nor was there any agreement evidencing such power.

The foreclosure was lawful under the Master Deed to which De Castro was bound as a unit owner.
The assessments were fair and uniformly applied to all condominium unit owners.
De Castro was duly notified of the foreclosure proceedings, and his lack of opposition or participation confirmed his acquiescence.

The Regional Trial Court (RTC) of Mandaluyong City, Branch 211, rendered a decision on March 31, 2009:

The RTC upheld the validity of the extra-judicial foreclosure, finding that De Castro was aware of his debts and bound by the Master Deed and the condominium by-laws.
The RTC emphasized that the by-laws conferred upon the Board of Directors the authority to enforce collection, including foreclosure.

The CA ruled that petitioners lacked sufficient authority to effectuate the extra-judicial foreclosure.
This conclusion was largely based on the precedent set in First Marbella Condominium Association, Inc. v. Gatmaytan, which emphasized the need for proof of a special power or authority to foreclose.

Whether the extra-judicial foreclosure proceeding conducted by the petitioners is null and void due to the alleged lack of sufficient special authority to foreclose on the condominium unit.
Whether the CA properly applied the precedent in First Marbella in concluding that petitioners did not possess the requisite power to enforce the foreclosure based solely on the notice of assessment, as opposed to other contractual evidences such as the Master Deed and the by-laws.