Case Summary (G.R. No. 186271)
Relevant Properties and Mortgage Details
Ma. Rosario Moreno owns specific properties covered by Condominium Certificates of Title (CCT) Nos. 4153, 4154, and 4155. She also mortgaged these properties as security for a P16,600,000 loan obtained from Oscar Salvacion. The mortgage annotations appeared on the CCTs. The condominium corporation had, in turn, assessed unpaid association dues on these properties.
Legal Basis for Condominium Lien and Foreclosure
Under Section 20 of Republic Act No. 4726, the Condominium Act, condominium associations have the power to enforce a lien against a unit owner who fails to pay association dues. Such lien may be enforced through judicial or extrajudicial foreclosure. The condominium corporation may bid at the foreclosure sale, and the unit owner enjoys the right of redemption comparable to mortgage foreclosure proceedings.
Initial Proceedings and the Salvacion Case
After the petitioner annotated a Notice of Assessment for unpaid dues totaling P323,870.85, and subsequent refusal of the Spouses Moreno’s settlement offer, the petitioner moved to execute an extrajudicial public auction sale of the Moreno properties set on February 10, 2005.
Oscar Salvacion, the mortgagee, filed a petition for certiorari and prohibition on February 3, 2005, seeking to halt the foreclosure sale on grounds that the condominium corporation lacked the special power to sell under Act No. 3135 and challenged the lien as excessive. The RTC dismissed the petition, allowing the sale to proceed; the Moreno properties were sold to the petitioner as the lone bidder.
Court of Appeals and Supreme Court Ruling on Salvacion Petition
The Court of Appeals (CA) affirmed that Act No. 3135, a law regulating sales under real estate mortgages, did not apply to condominium liens and that R.A. No. 4726 was the exclusive governing law. The CA upheld the extrajudicial sale as valid and rejected the requirement for a special authority from the owner as a condition to foreclose. The condominium corporation’s by-laws granted it authority to pursue collection remedies, including extrajudicial foreclosure.
The Supreme Court later denied Salvacion’s petition for review, affirming the CA’s ruling. The sale of the Moreno properties was established as valid and final.
Filing and Nature of the Moreno Spouses’ Complaint
While Salvacion’s case was pending, the Morenos filed their own complaint for intra-corporate dispute against the condominium corporation before RTC Branch 258. They sought to contest the calculation of assessed dues, requested an accounting, prayed for damages, challenged the foreclosure, and petitioned for preliminary injunction.
Petitioner's Motion to Dismiss and RTC’s Ruling
The petitioner moved to dismiss the complaint, invoking the exclusive jurisdiction of the Housing and Land Use Regulatory Board (HLURB) on the basis that the condominium project was registered with it. However, the RTC denied the motion to dismiss, ruled it as a prohibited pleading under the Interim Rules Governing Intra-Corporate Controversies, expunged it from the record, and declared the petitioner in default for failure to answer timely.
Petition for Certiorari to the Court of Appeals and Its Ruling
The petitioner brought the matter before the CA, allegating grave abuse of discretion by the RTC, citing forum shopping, litis pendencia, and the pending Salvacion appeal. The CA denied the petition, explaining that the case involved an intra-corporate dispute concerning the Moreno spouses and the condominium corporation, which jurisdictionally belongs to the RTC under Republic Act No. 8799 (Securities Regulation Code) and the Interim Rules. The CA further clarified that motions to dismiss are prohibited pleadings under these rules and that jurisdictional defenses should have been raised in the answer, making the motion invalid and preserving the RTC’s jurisdiction.
Issue on Appeal
The petitioner contended that the CA should have dismissed the Moreno spouses’ complaint given the prior final and executory CA decision in the Salvacion case upholding the foreclosure sale of the Moreno properties.
Supreme Court Ruling and Legal Analysis
The Supreme Court denied the petition, affirming the CA’s dismissal of the petitioner’s petition. The Court distinguished the two cases: Salvacion’s case concerned the validity and legality of the extrajudicial foreclosure sale itself—a third party’s attempt to halt the sale—while the Moreno spouses' complaint raised intra-corporate issues related to the computation and collection of association dues, which are independent of, and not barred by, the completed sale.
The Court emphasized that the co
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Case Syllabus (G.R. No. 186271)
Background and Parties Involved
- The petitioner is Chateau de Baie Condominium Corporation, the management body of a condominium project located in Roxas Boulevard, Manila.
- The respondents, spouses Raymond and Ma. Rosario Moreno, are the registered owners of a penthouse unit and two parking slots within the condominium, evidenced by Condominium Certificates of Title (CCT) Nos. 4153, 4154, and 4155.
- Mrs. Moreno, as a registered condominium unit owner, is a member/stockholder of the condominium corporation.
- Mrs. Moreno obtained a loan from Oscar Salvacion amounting to P16,600,000.00 and mortgaged the Moreno properties as security, with annotations on the CCTs.
Legal Framework Governing Condominium Assessments and Foreclosure
- Under Section 20, Republic Act No. 4726 (The Condominium Act), condominium owners are obligated to pay assessments duly registered with the Register of Deeds.
- The Condominium Corporation may enforce a lien on the condominium unit for unpaid dues via judicial or extrajudicial foreclosure sale.
- Such a lien is superior to all liens registered after the assessment notice except real property tax liens.
- The management body may bid at foreclosure sales; owners have rights of redemption akin to mortgage foreclosures.
Facts Leading to Litigation
- On November 23, 2001, Chateau de Baie Condominium Corporation annotated a Notice of Assessment on the Moreno properties’ CCTs for unpaid association dues amounting to P323,870.85.
- The petitioner sent a demand letter; the Morenos offered payment settlement, which the petitioner declined.
- The petitioner sought to enforce its lien by requesting the parañaque RTC Clerk of Court/Ex-Officio Sheriff to conduct an extrajudicial auction.
- The extrajudicial foreclosure sale of the Moreno properties was scheduled for February 10, 2005.
The Salvacion Case (Civil Case No. 05-0061)
- Oscar Salvacion, mortgagee of the Moreno properties, filed a petition for certiorari and prohibition with a prayer for temporary restraining order to stop the auction sale due to alleged lack of special power of sale from the owner and an assertion that the lien was excessive.
- The RTC dismissed Salvacion’s petition and denied injunctive relief; the auction proceeded, with the properties sold to the petitioner, the sole bidder, for P1,328,967.12.
- The Court of Appeals (CA), in affirming the foreclosure, held that:
- Act No. 3135 regulates extrajudicial sales of mortgaged properties but does not apply to condominium liens.
- Republic Act No. 4726, a special law governing condominiums, exclusively regulates condominium liens and foreclosures.
- No special authority from the condominium owner is required to initiate foreclosure proceedings.
- The condominium corporation’s by-laws provided sufficient authority to enforce the lien extrajudicially.
- The Supreme Court’s Third Division denied Salvacion’s petition for review on certiorari due to procedural deficiencies and lack of reversible error, rendering the CA’s decision final.
The Moreno Case (Civil Case No. 05-0183): Intra-Corporate Dispute
- While the Salvacion case was pending, the Morenos filed a complaint against the pe