Case Digest: Sunset View Condominium Corp. vs. Campos, Jr., No. L-52361 & No. L-52524, April 27, 1981.

CASE TITLE: Sunset View Condominium Corp. vs. Campos, Jr.

GR No/ Date: No. L-52361 & No. L-52524, April 27, 1981.

PONENTE: Fernandez, J.

CASE WITH THE SC: Petition 

PROCEDURAL ANTECEDENTS:

  1. CFI

FACTS:

  • G.R. No. 52361

    • Petitioner: Sunset View Condominium Corporation

    • Private Respondent: Aguilar-Bernares Realty, assignee of unit "Solana" in Sunset View Condominium Project from La Perla Commercial, Incorporated.

      • La Perla Commercial, Incorporated bought the "Solana" unit from Tower Builders, Inc. on installment.

      • Sunset View Condominium Corporation filed for collection of assessments against Aguilar-Bernares Realty in Civil Case No. 7303-P.

      • Aguilar-Bernares Realty moved to dismiss citing lack of cause of action, jurisdiction, and pending action, arguing disputes should be with Securities & Exchange Commission (SEC).

      • CFI: Granted the motion to dismiss, citing SEC jurisdiction over shareholder disputes.

      • Petitioner filed petition for certiorari alleging grave abuse of discretion by the court.

  • G.R. No. 52524

    • Petitioner: Sunset View Condominium Corporation.

    • Private Respondent: Lim Siu Leng, assignee of unit "Alegria" in Sunset View Condominium Project from Alfonso Uy.

      • Petitioner filed amended complaint in Civil Case No. 14127 for collection of overdue assessments and premiums against Lim Siu Leng.

      • Lim Siu Leng moved to dismiss for lack of jurisdiction, arguing the dispute is intra-corporate under SEC jurisdiction due to ownership of unit.

      • City Court: Denied motion to dismiss, asserting jurisdiction.

      • CFI: Reversed trial court decision, dismissing the case and directing parties to SEC.

      • Petitioner filed petition for certiorari against CFI decision alleging grave abuse of discretion.

ISSUE:

Whether  a purchaser of a condominium unit in the condominium project managed by the petitioner, who has not yet fully paid the purchase price thereof, automatically a stockholder of the petitioner Condominium Corporation. NO


Whether the Securities & Exchange Commission has jurisdiction over cases for collection of assessments assessed by the Condominium Corporation on condominium units the full purchase price of which has not been paid. NO

ARGUMENTS/LEGAL BASES  

PETITIONER

RESPONDENTS

  1. -

  1. The private respondents in both cases argue that every purchaser of a condominium unit, regardless of whether or not he has fully paid the purchase price, is a "holder of a separate interest" mentioned in Section 2 of Republic Act No. 4726, otherwise known as "The Condominium Act" and is automatically a shareholder of the condominium corporation.

PREVAILING PARTY:  Respondents

The contention has no merit. 


Section 5 of the Condominium Act expressly provides that the shareholding in the Condominium Corporation will be conveyed only in a proper case. Said Section 5 provides:


Any transfer or conveyance of a unit or an apartment, office or other space therein, shall include the transfer or conveyance of the undivided interests in the common areas or, in a proper case, the membership or shareholding in the condominium corporation ...


It is clear then that not every purchaser of a condominium unit is a shareholder of the condominium corporation. The Condominium Act leaves to the Master Deed the determination of when the shareholding will be transferred to the purchaser of a unit. Thus, Section 4 of said Act provides:


The provisions of this Act shall apply to property divided or to be divided into condominium only if there shall be recorded in the Register of Deeds of the province or city in which the property lies and duly annotated in the corresponding certificate of title of the land ... an enabling or master deed which shall contain, among others, the following:


xxx xxx xxx


(d) A Statement of the exact nature of the interest acquired or to be acquired by the purchaser in the separate units and in the common areas of the condominium project ...


The Amended Master Deeds in these cases, which were duly registered in the Register of Deeds, and which contain, by mandate of Section 4, a statement of the exact nature of the interest acquired by a purchaser of a unit, provide in Section 6 of Part 1:


(d) Each Unit owner shall, as an essential condition to such ownership, acquire stockholding in the Condominium Corporation herein below provided ...  


The Amended Master Deeds likewise provide in Section 7 (b), thus.


(b) All unit owners shall of necessity become stockholders of the Condominium Corporation. TOWER shall acquire all the shares of stock of SUNSET VIEW and shall allocate the said shares to the units in proportion to the appurtenant interest in the COMMON AREAS and LIMITED COMMON AREAS as provided in Section 6 (b) above. Said shares allocated are mere appurtenances of each unit, and therefore, the same cannot be transferred, conveyed, encumbered or otherwise disposed of separately from the Unit ...  


It is clear from the above-quoted provisions of the Master Deeds that the shareholding in the Condominium Corporation is inseparable from the unit to which it is only an appurtenant and that only the owner of a unit is a shareholder in the Condominium Corporation.


Subparagraph (a) of Part 1, Section 6, of the Master Deeds determines when and under what conditions ownership of a unit is acquired by a purchaser thus:


(a) The purchaser of a unit shall acquire title or ownership of such Unit, subject to the terms and conditions of the instrument conveying the unit to such purchaser and to the terms and conditions of any subsequent conveyance under which the purchaser takes title to the Unit, and subject further to this MASTER DEED ... 


The instrument conveying the unit "Solana" in G.R. NO. 52361 is the "Contract to Buy and Sell" dated September 13, 1977, Annex "D", while that conveying the unit "Alegria" in G.R. NO. 52524 is the "Contract to Buy and Sell" dated May 12, 1976, Annex "C". In both deeds of conveyance, it is provided:


4. Upon full payment by the BUYER of the total purchase price and full compliance by the BUYER of an its obligations herein, the SELLER will convey unto the BUYER, as soon as practicable after completion of the construction, full and absolute title in and to the subject unit, to the shares of stock pertaining thereto and to an rights and interests in connection therewith ... 


The share of stock appurtenant to the unit win be transferred accordingly to the purchaser of the unit only upon full payment of the purchase price at which time he will also become the owner of the unit. Consequently, even under the contract, it is only the owner of a unit who is a shareholder of the Condominium Corporation. Inasmuch as owners is conveyed only upon full payment of the purchase price, it necessarily follows that a purchaser of a unit who has not paid the full purchase price thereof is not the owner of the unit and consequently is not a shareholder of the Condominium Corporation.


That only the owner of a unit is a stockholder of the Condominium Corporation is inferred from Section 10 of the Condominium Act which reads:


SEC. 10. ... Membership in a condominium corporation, regardless of whether it is a stock or non-stock corporation, shall not be transferable separately from the condominium unit of which it is an appurtenance When a member or stockholder ceases is to own a unit in the project in which the condominium corporation owns or holds the common areas, he shall automatically cease to be a member or stockholder of the condominium corporation.


Pursuant to the above statutory provision, ownership of a unit is a condition sine qua non to being a shareholder in the condominium corporation. It follows that a purchaser of a unit who is not yet the owner thereof for not having fully paid the full purchase price, is not a shareholder By necessary implication, the "separate interest" in a condominium, which entitles the holder to become automatically a share holder in the condominium corporation, as provided in Section 2 of the Condominium Act, can be no other than ownership of a unit. This is so because nobody can be a shareholder unless he is the owner of a unit and when he ceases to be the owner, he also ceases automatically to be a shareholder.


The private respondents, therefore, who have not fully paid the purchase price of their units and are consequently not owners of their units are not members or shareholders of the petitioner condominium corporation,


Inasmuch as the private respondents are not shareholders of the petitioner condominium corporation, the instant case for collection cannot be a "controversy arising out of intracorporate or partnership relations between and among stockholders, members or associates; between any or all of them and the corporation, partnership or association of which they are stockholders, members or associates, respectively" which controversies are under the original and exclusive jurisdiction of the Securities & Exchange Commission, pursuant to Section 5 (b) of P.D. No. 902- A. The subject matters of the instant cases according to the allegations of the complaints are under the jurisdiction of the regular courts: that of G.R. NO. 52361, which is for the collection of P8,335.38 with interest plus attorney's fees equivalent to the principal or a total of more than P10,000.00 is under the jurisdiction of the Court of First Instance; and that of G.R. NO. 52524, which is for the collection of P6,168-06 is within the jurisdiction of the City Court.


In view of the foregoing, it is no longer necessary to resolve the issue raised in G.R. NO. 52524 of whether an order of the City Court denying a motion to dismiss on the ground of lack of jurisdiction can be appealed to the Court of First Instance.


WHEREFORE, the questioned orders of the respondent Judge dated December 11, 1979 and January 4, 1980 in Civil Case No. 7303-P, subject matter of the Petition in G.R. No. 52361, are set aside and said Judge is ordered to try the case on the merits. The orders dated December 14, 1979 and January 14, 1980 in Civil Case No. 7530-P, subject matter of the petition in G.R. No. 52524 are set aside and the case is ordered remanded to the court a quo, City Court of Pasay City, for trial on the merits, with costs against the private respondents.


SO ORDERED.

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