Case Summary (G.R. No. 181416)
Key Dates and Procedural Timeline
September 19, 2002 — MPMCC, through its corporate secretary, demanded payment from respondent. November 30, 2002 — certification reflected outstanding obligation of P145,567.42. April 24, 2003 — respondent’s letter to MPMCC seeking explanation. Civil Case filed in RTC (docketed Civil Case No. 03‑1018). September 9, 2005 — RTC, Makati Branch 58, granted motions to dismiss and dismissed the complaint. July 10, 2007 & January 25, 2008 — Court of Appeals (CA) decision and resolution reversing the RTC and remanding the case. November 11, 2013 — Supreme Court decision reviewed here.
Applicable Law and Authorities
Primary statutes and instruments discussed: 1987 Constitution (applicable framework), Republic Act No. 4726 (Condominium Act), Presidential Decree No. 902‑A (enumerating SEC jurisdiction), Republic Act No. 8799 (Securities Regulation Code, transferring certain SEC jurisdiction to RTCs designated as Special Commercial Courts), and Republic Act No. 9904 (Magna Carta for Homeowners). Controlling jurisprudence cited includes Chateau de Baie Condominium Corporation v. Moreno, Wack Wack Condominium Corporation v. Court of Appeals, Go v. Distinction Properties Development and Construction, Inc., and related decisions addressing the relationship/nature tests for intra‑corporate controversies.
Factual Background
Respondent purchased Unit No. 1201 from MLHI; title was issued in respondent’s name. MPMCC demanded payment of alleged unpaid association dues and assessments, totaling P145,567.42. Respondent disputed the demand, asserting he had been regularly paying dues and that, when he served as MPMCC president and director (2000–2001), he had accepted or approved assessments. MLHI purportedly advised respondent that the obligation had been settled; nonetheless MPMCC maintained the delinquency and prevented respondent from voting and filing candidacy in the corporation’s elections. Respondent sought explanation from MPMCC; none was provided, prompting the filing of a complaint for damages against MPMCC and MLHI.
Complaint and Reliefs Sought
Respondent’s complaint alleged continuous payment of dues, wrongful labeling as delinquent, prevention from voting and running as director, and emotional and reputational injury. He sought moral damages (P500,000), exemplary damages (P200,000), attorney’s acceptance fee and hearing fees (P100,000 plus P2,500 per hearing), and, if MLHI’s representation that the obligation had been settled proved false, an order against MLHI to pay the P145,567.42 plus the damages claimed.
Motions to Dismiss and Grounds Asserted by Defendants
MLHI moved to dismiss on the ground that the Housing and Land Use Regulatory Board (HLURB) possessed exclusive jurisdiction over the dispute. MPMCC moved to dismiss asserting (1) estoppel because respondent approved assessments while serving as president; (2) lack of jurisdiction because the matter involved an intra‑corporate controversy; (3) prematurity for failure to exhaust intra‑corporate remedies; and (4) mootness because the alleged obligation had allegedly been settled between MPMCC and MLHI.
RTC Decision
The RTC, Makati Branch 58, granted the motions to dismiss and dismissed the complaint. The trial court agreed with MLHI that the action fell within HLURB’s exclusive jurisdiction (per MLHI’s position). As to MPMCC, the RTC held that the complaint stated no cause of action because any obligation had been settled by MLHI and that the issues raised were intra‑corporate between a corporation and a member.
Court of Appeals Decision
The Court of Appeals reversed the RTC, holding that the dispute was an ordinary civil action for damages within the jurisdiction of regular courts. The CA reasoned that the case hinged on MPMCC’s refusal to confirm MLHI’s claim that the obligation had been settled in 1998, and that respondent was damaged by MPMCC’s conduct. The CA remanded the case to the RTC for further proceedings. Motions for reconsideration were denied.
Issues Presented to the Supreme Court
The principal issue before the Supreme Court was whether the CA erred in characterizing the controversy as an ordinary action for damages cognizable by regular courts or whether the dispute was an intra‑corporate controversy within the exclusive jurisdiction of the Securities and Exchange Commission (now vested in designated RTC Special Commercial Courts) and thus not properly before the regular RTC branch that heard the complaint.
Legal Standards on Jurisdiction and Tests Employed
The Court reiterated the settled rule that subject‑matter jurisdiction is determined by the allegations in the complaint. It applied the twofold test to determine whether a case is an intra‑corporate controversy: (1) the relationship test — whether the dispute arises from intra‑corporate relations (e.g., corporation and its members); and (2) the nature of the controversy test — whether the controversy pertains to enforcement of correlative rights and obligations under the Corporation Code and the corporation’s internal regulatory rules. Both relationship and nature aspects must be considered to determine proper jurisdiction.
Application of Tests to the Case Facts
Applying the tests, the Court found the dispute to be intra‑corporate. There was an intra‑corporate relationship between a condominium corporation (MPMCC) and its member/unit owner (respondent). The core of respondent’s complaint challenged the propriety and validity of association assessments and MPMCC’s action in branding him delinquent and barring him from voting and candidacy — matters inherently related to internal corporate governance and the enforcement of rights and obligations under the Condominium Act and corporate rules. The Court observed that, although the pleading was styled as an action for damages, the relief sought was incidental to a dispute that is corporate in nature. The Court relied on prior decisions (notably Chateau de Baie) holding that disputes over the validity of ass
...continue readingCase Syllabus (G.R. No. 181416)
Court, Citation, and Nature of Proceeding
- Supreme Court, Third Division; G.R. No. 181416; Decision dated November 11, 2013; reported at 720 Phil. 732.
- Petition for review on certiorari under Rule 45 assailing: (a) Court of Appeals Decision dated July 10, 2007, and (b) Court of Appeals Resolution dated January 25, 2008, in CA-G.R. CV No. 86614.
- Subject matter: whether the controversy is an intra-corporate dispute falling within the exclusive jurisdiction of the Regional Trial Court sitting as a Special Commercial Court (formerly SEC jurisdiction), or an ordinary civil action for damages properly cognizable by regular courts.
Parties and Case Identifiers
- Petitioner: Medical Plaza Makati Condominium Corporation (MPMCC).
- Co-respondent/Third party in trial court: Meridien Land Holding, Inc. (MLHI).
- Respondent/Plaintiff below and real party in interest: Robert H. Cullen.
- Trial Court docket: Regional Trial Court of Makati, Branch 58, Civil Case No. 03-1018.
- Court of Appeals docket: CA-G.R. CV No. 86614.
Factual Background
- Respondent Robert H. Cullen purchased condominium Unit No. 1201 from MLHI, initially covered by Condominium Certificate of Title No. 45808; that title was later cancelled and Condominium Certificate of Title No. 64218 was issued in respondent’s name.
- On September 19, 2002, petitioner, through its corporate secretary Dr. Jose Giovanni E. Dimayuga, demanded payment from respondent of alleged unpaid association dues and assessments totaling P145,567.42.
- Respondent disputed the demand, asserting he had been religiously paying dues; he had served as president and director of petitioner in 2000 and 2001.
- Petitioner asserted that respondent’s obligation was a carry-over of MLHI’s obligation.
- As a result of the demand/characterization as delinquent, respondent was prevented from voting and being voted for in the 2002 election of petitioner’s Board of Directors.
- Respondent sought clarification from MLHI regarding the alleged delinquency; MLHI allegedly claimed the obligation had already been settled.
- Petitioner did not provide an explanation to respondent for the alleged delinquency despite respondent’s demand for one.
Complaint for Damages — Key Allegations and Relief Sought
- Respondent filed a Complaint for Damages against MPMCC and MLHI alleging, among others:
- He occupied Unit 1201 and religiously paid monthly contributions/association dues and assessments.
- He served as President and Director of MPMCC for 2000 and 2001.
- He received a letter on September 19, 2002, declaring him delinquent and demanding payment of P145,567.42.
- He was not allowed to file his certificate of candidacy and was barred from voting in the election due to the delinquency designation.
- Petitioner issued a certification as of November 30, 2002 reflecting an outstanding unpaid obligation of P145,567.42, attributed to MLHI.
- Respondent’s counsel demanded payment from MLHI; MLHI claimed the obligation was already settled.
- Petitioner failed to explain its position despite receipt of respondent’s April 24, 2003 letter, resulting in continued bar from participating in the 2003 election.
- Allegations that petitioner acted maliciously, willfully, and deceitfully in branding respondent a delinquent to prevent him from exercising corporate voting and candidacy rights.
- Alleged damages suffered by respondent included mental anguish, moral shock, anxiety, social humiliation, and besmirched reputation.
- Monetary relief and remedies prayed for in the complaint included:
- Moral damages: P500,000.00.
- Exemplary damages: P200,000.00.
- Attorney’s acceptance fee claimed: P100,000.00 plus P2,500.00 per court hearing attended by counsel.
- In the event petitioner’s claim proved true, MLHI should be held liable to pay P145,567.42 (the delinquency) and the damages.
Motions to Dismiss and Grounds Raised
- Petitioner (MPMCC) and MLHI filed separate motions to dismiss for lack of jurisdiction.
- MLHI’s contention:
- The Housing and Land Use Regulatory Board (HLURB) had exclusive jurisdiction to hear and decide the case.
- Petitioner’s specific grounds for dismissal:
- Estoppel — respondent allegedly approved the assessment when he was president.
- Lack of jurisdiction — the case involves an intra-corporate controversy.
- Prematurity — respondent failed to exhaust intra-corporate remedies.
- Mootness/academic — the obligation had been settled between petitioner and MLHI.
Regional Trial Court (Makati, Branch 58) Ruling — September 9, 2005
- The RTC granted petitioner’s and MLHI’s motions to dismiss and dismissed respondent’s complaint.
- The trial court’s reasoning:
- Agreed with MLHI that the action falls within the exclusive jurisdiction of the HLURB (as argued by MLHI).
- Held that the complaint stated no cause of action against petitioner because the obligation had already been settled by MLHI.
- Ruled that the issues raised were intra-corporate between the corporation and a member.
Court of Appeals Decision and Resolution — July 10, 2007; January 25, 2008
- The Court of Appeals reversed and set aside the RTC’s September 9, 2005 Order and remanded the case to the RTC for further proceedings.
- The CA’s reasoning:
- Held the controversy to be an ordinary civil action for damages, within the jurisdiction of regular courts, not an intra-corporate dispute.
- Emphasized that the case hinged on petitioner’s refusal to confirm MLHI’s claim that the obligation had been settled as early as 1998, causing damage to respondent.
- The CA denied the motions for reconsideration filed by petitioner and MLHI (Resolution dated January 25, 2008).
Issues Presented to the Supreme Court
- Whether the CA erred in declaring the action an ordinary action for damages instead of an intra-corporate controversy cognizable by a Special Commercial