G.R. No. 248743 - LPL Greenhills Condominium Corp. vs. Brouwer

Case Summary (G.R. No. 248743)

Factual Background

Catharina Brouwer was the registered owner of two condominium units described as Unit Nos. 16‑I and 16‑J in the LPL Greenhills Condominium. She defaulted on monthly association dues and related assessments. On October 23, 2007, LPL Greenhills Condominium Corporation issued notices of assessment of P181,241.10 per unit. By August 31, 2008, respondent’s indebtedness exceeded P227,000 per unit. Thereafter, LPL petitioned on August 20, 2008 for extrajudicial foreclosure under Section 20, R.A. No. 4726, and the required notices were posted and published. Sheriffs conducted the foreclosure sales at San Juan City Hall, resulting in successful bids of P500,000.00 for each unit and issuance of certificates of sale dated November 12, 2008 and registered November 28, 2008.

Complaint and Grounds for Nullity

Respondent, through her attorney‑in‑fact, filed a complaint seeking declaration of nullity of the foreclosure proceedings and certificates of sale, quieting of title, and damages. She alleged that the extrajudicial foreclosures were void because the Master Deed of Restrictions and By‑Laws did not authorize LPL to institute extrajudicial foreclosure in the absence of a separate special authority or power of attorney as required by Act No. 3135, as amended by Act No. 4118; because there was no board resolution authorizing the foreclosures; and because of inadequate notice.

Petitioners’ Defenses and Reliance on Authority

Petitioners contended that, under Section 20, R.A. No. 4726, a condominium corporation need not obtain a separate special authority under Act No. 3135 to enforce its lien by extrajudicial foreclosure. They relied principally on Chateau de Baie Condominium Corp. v. Spouses Moreno to support a rule that a special power was not required. Alternatively, petitioners argued that, if a special authority were required, such authority existed in LPL’s Master Deed of Restrictions and By‑Laws and that those instruments were substantively similar to the by‑laws the Court found sufficient in Welbilt Construction Corp. v. Heirs of Cresenciano C. De Castro. Petitioners also maintained that the death of Manfred purportedly extinguished the legal personality of respondent’s counsel.

Trial Court Proceedings and Limited Issue

In an Order dated May 2, 2012, Branch 264, RTC of Pasig City limited the case to the single factual issue whether the extrajudicial foreclosure proceedings and auction sales were valid given the absence of any document designating LPL as respondent’s attorney‑in‑fact in the Master Deed of Restrictions. The parties agreed to submission of the case on position papers, and on December 8, 2015 the RTC declared the foreclosure sales and corresponding certificates of sale null and void, ordered cancellation of the annotations of certificates of sale in the Condominium Certificates of Title, and declared respondent still the registered owner; the RTC also awarded respondent P150,000.00 as attorney’s fees. The RTC denied petitioners’ omnibus motion for reconsideration and permitted appeal.

Court of Appeals’ Ruling

The Court of Appeals affirmed the RTC’s decision in a March 29, 2019 Decision, but deleted the award of attorney’s fees. The CA agreed that Section 20, R.A. No. 4726 contemplates enforcement of condominium liens by judicial or extrajudicial foreclosure, yet it concurred with the RTC that a condominium corporation must still present evidence of special authority to cause extrajudicial foreclosure and that such evidence was lacking in the record. The CA denied petitioners’ motion for reconsideration in an August 1, 2019 Resolution.

Issues Presented to the Supreme Court

The petition raised two questions of law: whether the CA erred in ruling that the extrajudicial foreclosure sales were null and void for lack of special authority; and whether the CA erred in concluding that respondent’s counsel had lost legal personality to represent respondent following the death of the attorney‑in‑fact.

Supreme Court’s Disposition

The Supreme Court denied the petition and affirmed the Court of Appeals Decision dated March 29, 2019 and the Resolution dated August 1, 2019. The Court held that the extrajudicial foreclosure sales were void for want of a special authority or power to sell.

Legal Reasoning on the Special Authority Requirement

The Court reaffirmed the longstanding rule that a petition for extrajudicial foreclosure must be supported by proof that the petitioner holds a special power or authority to sell, as required by Section 1, Act No. 3135, implemented by A.M. No. 99‑10‑05‑0 and Circular No. 7‑2002. The Court rejected petitioners’ reading of Chateau de Baie as having abrogated that rule. The Court explained that the holding in Chateau de Baie addressed intra‑corporate jurisdictional issues and did not dispense with the special authority requirement enunciated in First Marbella Condominium Association, Inc. v. Gatmaytan. The Court invoked the civil‑law principle nemo dat quod non habet and noted that the registered owner alone possesses jus disponendi over an immovable, which may be exercised by an agent only when a special power of attorney exists under Article 1878, Civil Code. The Court cited authority holding that a special power to sell must be inserted into or attached to the deed or otherwise manifested in writing, and it explained that without such authority the sheriff cannot validly effect extrajudicial sale under Act No. 3135.

Effect of Section 20, R.A. No. 4726 and Procedural Options

The Court clarified that Section 20, R.A. No. 4726 provides for the treatment of condominium assessments as liens and permits enforcement by judicial or extrajudicial foreclosure but does not by itself confer the special power or authority to sell the unit on the condominium corporation. Thus, a condominium corporation may enforce its lien by judicial foreclosure or by extrajudicial foreclosure only upon compliance with the documentary and procedural requisites established by applicable statutes and court administrative issuances. Absent proof of special authority, the condominium corporation’s remedy is to pursue ordinary collection or judicial foreclosure, such as under Rule 68, Rules of Court.

Factual Finding, Laches, and Limits of Review

The Supreme Court noted that petitioners had agreed before the RTC to limit the sole issue to the absence of any document designating LPL as attorney‑

Case Syllabus (G.R. No. 248743)

Parties and Procedural Posture

LPL Greenhills Condominium Corporation, Spouses Clemartin Arboleda and Maria Angelita Arboleda, Mario Antoni Salazar, and Lauro S. Leviste II filed a petition under Rule 45 seeking annulment of the Court of Appeals Decision dated March 29, 2019 and Resolution dated August 1, 2019.
Catharina Brouwer, represented by attorney-in-fact Manfred De Koning, was the respondent in the underlying civil action for declaration of nullity of foreclosure proceedings, quieting of title, and damages.
The Court of Appeals affirmed the Regional Trial Court, Branch 264, Pasig City, which had declared the extrajudicial foreclosure sales null and void, ordered cancellation of the annotations of Certificates of Sale on the Condominium Certificates of Title, and declared Catharina Brouwer still the registered owner of the subject units.

Key Facts

Catharina Brouwer was the registered owner of condominium Unit Nos. 16-I and 16-J in LPL Greenhills Condominium located in San Juan City.
LPL Greenhills Condominium Corporation issued notices of assessment dated October 23, 2007 in the amount of P181,241.10 per unit, and annotated said notices on the respective Condominium Certificates of Title on November 21, 2007.
As of August 31, 2008, the unpaid obligations totaled P252,983.19 for Unit 16-I and P227,168.58 for Unit 16-J.
LPL filed separate petitions to sell in extrajudicial foreclosure on August 20, 2008 invoking Section 20 of Republic Act No. 4726 and provisions of its Master Deed of Restrictions.
Notices of sale were posted and published in September 2008, and sheriffs conducted extrajudicial foreclosure sales at San Juan City Hall with successful bids of P500,000.00 for each unit by Salazar and Leviste and by Spouses Arboleda, respectively.
Certificates of sale were issued dated November 12, 2008 and registered with the Registry of Deeds on November 28, 2008.
Catharina Brouwer, through her attorney-in-fact Manfred De Koning, filed suit alleging that the extrajudicial sales were void for lack of special authority under Act No. 3135 as amended by Act No. 4118, absence of a board resolution, and defective notice.

Procedural History

The RTC, by Order dated May 2, 2012, limited the issue to the validity of the extrajudicial foreclosure proceedings and auction sales given the absence of a document designating LPL as attorney-in-fact.
The parties agreed to submit the case for decision and the RTC rendered judgment on December 8, 2015 declaring the sales null and void, ordering cancellation of the annotations, declaring Brouwer the registered owner, and awarding attorney's fees of P150,000.00.
The RTC denied petitioners' omnibus motion on May 10, 2016 and approved their notice of appeal on June 1, 2016.
The Court of Appeals, in its Decision dated March 29, 2019, affirmed the RTC with the modification deleting the award of attorney's fees.
The Court of Appeals denied petitioners' motion for reconsideration in a Resolution dated August 1, 2019, prompting the present Rule 45 petition to the Supreme Court.

Issues Presented

The principal issue presented was whether the Court of Appeals erred in ruling that the extrajudicial foreclosure sales of the subject condominium units were null and void.
A secondary issue presented was whether the Court of Appeals erred in not finding that respondent's counsel had lost the legal personality to represent respondent upon the death of Manfred De Koning.

Contentions of the Parties

Petitioners contended that Section 20 of R.A. No. 4726 permits enforcement of condominium liens by extrajudicial foreclosure without a separate special authority under Act No. 3135 and relied on Chateau de Baie Condominium Corp. v. Spouses Moreno for that proposition.
Petitioners alternatively argued that a special authority existed in LPL's Master Deed of Restrictions and By-Laws and relied on Welbi