SUNSET VIEW CONDOMINIUM CORPORATION, PETITIONER, VS. THE HON. JOSE C. CAMPOS, JR. OF THE COURT OF FIRST INSTANCE, BRANCH XXX, PASAY CITY AND AGUILAR-BERNARES REALTY, RESPONDENTS.

These two cases which involve similar facts and raise identical
questions of law were ordered consolidated by resolution of this Court dated March 17, 1980.^[1]

The petitioner, Sunset View Condominium Corporation, in both
cases, is a condominium corporation within the meaning of Republic Act No. 4726
in relation to a duly registered Amended Master Deed with Declaration of
Restrictions of the Sunset View Condominium Project located at 2230 Roxas Boulevard, Pasay City of
which said petitioner is the Management Body holding title to all the common
and limited common areas.^[2]

G.R.
NO. 52361

The private respondent, Aguilar-Bernares
Realty, a sole proprietorship with business name registered with the Bureau of
Commerce, owned and operated by the spouses Emmanuel G. Aguilar and Zenaida B. Aguilar, is the assignee of a unit,
“Solana”, in the Sunset View Condominium Project with La Perla Commercial, Incorporated, as assignor.^[3]
The La Perla Commercial, Incorporated bought the
“Solana” unit on installment from the Tower Builders, Inc.^[4]
The petitioner, Sunset View Condominium Corporation, filed for the collection
of assessments levied on the unit against Aguilar-Bernares
Realty, private respondent herein, a complaint dated June 22, 1979 docketed as
Civil Case No. 7303-P of the Court of First Instance of Pasay
City, Branch XXX.  The private respondent
filed a Motion to Dismiss the complaint on the grounds
(1) that the complaint does not state a cause of action; (2) that the court has
no jurisdiction over the subject or nature of the action; and (3) that there is
another action pending between the same parties for the same cause.  The petitioner filed its opposition
thereto.  The motion to dismiss was
granted on December 11, 1979 by the respondent Judge who opined that the
private respondent is, pursuant to Section 2 of Republic Act No. 4726, a
“holder of a separate interest” and consequently, a shareholder of
the plaintiff condominium corporation; and that “the case should be
properly filed with the Securities & Exchange Commission which has
exclusive original jurisdiction on controversies arising between shareholders
of the corporation.” The motion for reconsideration thereof having been
denied, the petitioner, alleging grave abuse of discretion on the part of
respondent Judge, filed the instant petition for certiorari praying that
the said orders be set aside.

G.R.
NO. 52524

The petitioner filed its amended complaint dated July 16, 1979
docketed as Civil Case No. 14127 of Branch I of the City Court of Pasay City for the collection of overdue accounts on
assessments and insurance premiums and the interest thereon amounting to
P6,168.06 as of March 31, 1979 against the private respondent Lim Siu Leng^[5]
to whom was assigned on July 11, 1977 a unit called “Alegria”
of the Sunset View Condominium Project by Alfonso Uy^[6]
who had entered into a “Contract to Buy and Sell” with Tower
Builders, Inc. over the said unit on installment basis.^[7]

The private respondent filed a motion to dismiss on the ground of
lack of jurisdiction, alleging that the amount sought to be collected is an
assessment, the correctness and validity of which is certain to involve a
dispute between her and the petitioner corporation; that she has automatically
become, as a purchaser of the condominium unit, a stockholder of the petitioner
pursuant to Section 2 of the Condominium Act, Republic Act No. 4726; that the
dispute is intra-corporate and is consequently under the exclusive jurisdiction
of the Securities & Exchange Commission as provided in Section 5 of P.D.
No. 902-A.^[8]

The petitioner filed its opposition thereto, alleging that the
private respondent who had not fully paid for the unit was not the owner
thereof, consequently was not the holder of a separate interest which would
make her a stockholder, and that hence the case was not an intra-corporate
dispute.^[9]

After the private respondent had filed her answer to the
opposition to the motion to dismiss^[10]
of the petitioner, the trial court issued an order dated August 13, 1979 denying the motion to dismiss.^[11]
The private respondent’s motion for reconsideration thereof was denied by the
trial court in its Order dated September
19, 1979.^[12]

The private respondent then appealed pursuant to Section 10 of
Rule 40 of the Rules of Court to the Court of First Instance, where the appeal
was docketed as Civil Case No. 7530-P. 
The petitioner filed its “Motion to Dismiss Appeal” on the
ground that the order of the trial court appealed from is interlocutory.^[13]

The motion to dismiss the appeal was denied and the parties were
ordered to submit their respective memorandum on the issue raised before the
trial court and on the disputed order of the trial judge.^[14]
After the parties had submitted their respective memoranda on the matter, the
respondent Judge issued an order dated December
14, 1979 in which he directed that “the appeal is hereby
dismissed and the judgment of the lower court is reversed.  The case is dismissed and the parties are
directed to ventilate their controversy with the Securities & Exchange
Commission.”^[15]
The petitioner’s motion for reconsideration thereof was denied in an order
dated January 14, 1980.^[16] Hence this petition for certiorari, alleging grave abuse of
discretion on the part of the respondent Judge.

Issues Common to Both
Cases

It is admitted that the private respondents in both cases have
not yet fully paid the purchase price of their units.

The identical issues raised in both petitions are the following:

1.     
Is 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?

2.     
Is it the regular court or the Securities &
Exchange Commission that 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?

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.

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 x x x.”

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 x x
x an enabling or master deed which shall contain,
among others, the following:

x        x         x

“(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 x x x.”

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 I:

“(d) Each Unit owner shall, as an essential condition to such
ownership, acquire stockholding in the Condominium Corporation hereinbelow provided x x x.”^[17]

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 x x x.”^[18]

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 I, 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 x x x.”^[19]

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
all 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 all
rights and interests in connection therewith x x x.”^[20]

The share of stock appurtenant to the unit will 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 ownership 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.  x x x 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 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 shareholder 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, be 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 cases for collection cannot be
a “controversy arising out of intra-corporate 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.

Teehankee, (Chairman), Makasiar, Guerrero, and Melencio-Hererra, JJ., concur.

^[1] Rollo of
G.R. NO. 52524, p. 170.

^[2] Petition, G.R. NO. 52361, Rollo,
p. 2.

^[3] Deed of Assignment, Rollo of
G.R. NO. 52361, pp. 28-29.

^[4]
Contract to Buy and Sell, Idem., Rollo, pp. 30-33.

^[5]
Annex “F”, Rollo, pp. 60-62.

^[6]
Annex “D”, Rollo, pp. 52-54.

^[7]
Annex “C”, Rollo, pp. 45-50.

^[8]
Annex “G”, Rollo, pp. 63-66.

^[9]
Annex “H”, Rollo, pp. 67-70.

^[10]
Annex “I”, Rollo, pp. 71-76.

^[11]
Annex “J”, Rollo, p. 77.

^[12]
Annex “M”, Rollo, p. 84.

^[13] Annex
“O”, Rollo, pp. 87-89.

^[14]
Annex “R”, Rollo, p. 102.

^[15]
Annex “A”, Rollo, pp. 42-43.

^[16]
Annex “B”, Rollo, p. 44.

^[17] Petition, G.R. NO. 52361, Rollo,
p. 11.

^[18] Idem., Rollo, pp.
11-12.

^[19] Idem., Rollo, p. 11.

^[20]
Annex “C”, G.R. NO. 52524, Rollo, p.
47.