Title
Sta. Clara Homeowners' Association vs. Spouses Gaston
Case
G.R. No. 141961
Decision Date
Jan 23, 2002
Non-members of homeowners' association challenge access restrictions; Supreme Court affirms RTC jurisdiction, upholds voluntary membership and valid cause of action for damages.
jurisdiction
dispute
identification

Case Summary (G.R. No. 141961)

Factual Background

On April 1, 1998, SPOUSES VICTOR MA. GASTON AND LYDIA GASTON filed a complaint for damages with preliminary injunctive relief and application for temporary restraining order against STA. CLARA HOMEOWNERS ASSOCIATION and others, alleging that they purchased lots in Sta. Clara Subdivision in 1974 and had at no time agreed to membership in the association. They alleged a longstanding arrangement by which non-member homeowners were issued non-member gatepass stickers, and that in mid-March 1998 SCHA implemented a board resolution providing that only members in good standing would receive stickers. The complaint recited three incidents in which respondents’ son and respondent Victor Gaston were required to show his driver’s license or were denied entry by security guards, culminating in an alleged refusal of entry on March 29, 1998, and resulting moral damages.

Trial Court Proceedings

Pending the hearing of the respondents’ application for injunctive relief, counsel for petitioners signaled that a motion to dismiss would be filed and assured the court that respondents would have unrestricted access in the interim. Petitioners filed a motion to dismiss on April 8, 1998, asserting lack of jurisdiction on the ground that the controversy was intra-corporate and therefore within the exclusive jurisdiction of the Home Insurance and Guaranty Corporation (HIGC) pursuant to Republic Act 580 and Executive Order No. 535, and asserting that respondents were automatic members of SCHA by virtue of its Articles of Incorporation and By-laws. The RTC denied the motion to dismiss on July 6, 1998, denied reconsideration on August 17, 1998 without ruling on the additional ground of lack of cause of action, and later denied petitioners’ specific motion to resolve the lack of cause of action on September 8, 1998.

Court of Appeals’ Ruling

The Court of Appeals dismissed petitioners’ certiorari petition and affirmed the trial court Orders. The CA held that the controversy was not an intra-corporate dispute within HIGC’s exclusive jurisdiction; that respondents had adequately alleged non-membership; and that the complaint stated a cause of action. The CA emphasized that jurisdiction and the existence of a cause of action are determined by the allegations in the complaint and not by defenses or theories raised in an answer or a motion to dismiss.

Issues Presented

Petitioners framed three questions: whether the CA erred in upholding the RTC’s jurisdiction to entertain a claim to nullify the SCHA board resolution, whether respondents were members of SCHA, and whether the CA erred in not dismissing the complaint for lack of cause of action. The Court treated the matters as collapsing into two: (1) whether the RTC had jurisdiction over the complaint; and (2) whether the complaint stated a cause of action.

The Supreme Court’s Ruling

The Supreme Court denied the petition for review and affirmed the Court of Appeals’ Decision and Resolution. The Court held that, on the basis of the allegations in the complaint, the RTC had jurisdiction and the complaint stated a cause of action; therefore, the motion to dismiss for lack of jurisdiction and lack of cause of action was properly denied. Costs were imposed on petitioners.

Jurisdictional Analysis

The Court reviewed the statutory framework establishing HIGC’s jurisdiction. It noted that Republic Act 580 created the Home Financing Commission which, by Executive Order No. 535, assumed the regulatory and adjudicative powers over homeowners associations that had been vested in the Securities and Exchange Commission, and that Presidential Decree 902-A likewise contemplated jurisdiction over intra-corporate controversies. The HIGC’s Revised Rules of Procedure, Rule II, Section 1, enumerated the types of disputes triable by the HIGC, including controversies arising out of intra-corporate relations. The Court observed that the HIGC’s powers were later transferred to the Housing and Land Use Regulatory Board by Republic Act No. 8763, but held that the threshold question remained whether, on the face of the complaint, the controversy was intra-corporate and therefore within the special forum’s competence.

Membership and Freedom of Association

The Court examined whether respondents were members of SCHA as alleged by petitioners. It reiterated that the freedom of association includes the freedom not to associate and cited Art. III, Sec. 8, 1987 Constitution. The Court held that membership could not be unilaterally imposed by entries in the Articles of Incorporation or By-laws without express or implied consent of the homeowner. The Court found no privity of contract between petitioners and respondents because respondents’ Transfer Certificates of Title, obtained in 1974, bore no annotation of automatic membership in SCHA. The Court distinguished Bel Air Village Association, Inc. v. Dionisio on the ground that, in that case, the annotation appeared on the title whereas here no annotation existed. The Court also relied on the fact that SCHA itself had issued non-member gatepass stickers to certain homeowners prior to the disputed resolution, which demonstrated recognition that some landowners were not members.

Scope of HIGC Jurisdiction and the Complaint’s Allegations

The Court reaffirmed the principle that subject matter jurisdiction is determined by the allegations in the complaint and not by defenses interposed by the defendant, citing precedent. Because the complaint expressly denied membership in SCHA, the Court concluded that the HIGC did not have jurisdiction over the dispute. The Court rejected petitioners’ alternative contention that respondents fell within the meaning of the general public under the third category of Rule II, Section 1(b) of the HIGC rules, citing United BF Homeowners Association v. BF Homes and holding that the HIGC had improperly expanded its authority beyond what the law permitted; moreover, the complaint did not question SCHA’s corporate existence or franchise.

Sufficiency of Cause of Action

On the contention that the complaint lacked a cause of action because it did not allege actual prevention from entering the subdivision, the Court applied the settled rule that a motion to dismiss for lack of cause of action admits the truth of the complaint’s factual averments. The test is whether, admitting the facts alleged, the court can render a valid judgment on the relief prayed for. The Court identified the

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