THIRD DIVISION

[G.R. No. 181416. November 11, 2013.]

MEDICAL PLAZA MAKATI CONDOMINIUM CORPORATION , petitioner,

vs . ROBERT H. CULLEN , respondent.

DECISION

PERALTA , J : p

This is a petition for review on certiorari under Rule 45 of the Rules of Court assailing
the Court of Appeals (CA) Decision 1 dated July 10, 2007 and Resolution 2 dated January
25, 2008 in CA-G.R. CV No. 86614. The assailed decision reversed and set aside the
September 9, 2005 Order 3 of the Regional Trial Court (RTC) of Makati, Branch 58 in Civil
Case No. 03-1018; while the assailed resolution denied the separate motions for
reconsideration led by petitioner Medical Plaza Makati Condominium Corporation
(MPMCC) and Meridien Land Holding, Inc. (MLHI).
The factual and procedural antecedents are as follows:
Respondent Robert H. Cullen purchased from MLHI condominium Unit No. 1201 of
the Medical Plaza Makati covered by Condominium Certi cate of Title No. 45808 of the
Register of Deeds of Makati. Said title was later cancelled and Condominium Certi cate of
Title No. 64218 was issued in the name of respondent.
On September 19, 2002, petitioner, through its corporate secretary, Dr. Jose
Giovanni E. Dimayuga, demanded from respondent payment for alleged unpaid association
dues and assessments amounting to P145,567.42. Respondent disputed this demand
claiming that he had been religiously paying his dues shown by the fact that he was
previously elected president and director of petitioner. 4 Petitioner, on the other hand,
claimed that respondent's obligation was a carry-over of that of MLHI. 5 Consequently,
respondent was prevented from exercising his right to vote and be voted for during the
2002 election of petitioner's Board of Directors. 6 Respondent thus clarified from MLHI the
veracity of petitioner's claim, but MLHI allegedly claimed that the same had already been
settled. 7 This prompted respondent to demand from petitioner an explanation why he was
considered a delinquent payer despite the settlement of the obligation. Petitioner failed to
make such explanation. Hence, the Complaint for Damages 8 led by respondent against
petitioner and MLHI, the pertinent portions of which read: CSIHDA

xxx xxx xxx

6. Thereafter, plaintiff occupied the said condominium unit no. 1201
and religiously paid all the corresponding monthly contributions/association dues
and other assessments imposed on the same. For the years 2000 and 2001,
plaintiff served as President and Director of the Medical Plaza Makati
Condominium Corporation;

7. Nonetheless, on September 19, 2002, plaintiff was

shocked/surprised to [receive] a letter from the incumbent Corporate Secretary of
the defendant Medical Plaza Makati, demanding payment of alleged unpaid
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 association dues and assessments arising from plaintiff's condominium unit no.
1201. The said letter further stressed that plaintiff is considered a delinquent
member of the defendant Medical Plaza Makati. . . .;

8. As a consequence, plaintiff was not allowed to le his certi cate of

candidacy as director. Being considered a delinquent, plaintiff was also barred
from exercising his right to vote in the election of new members of the Board of
Directors . . .;
9. . . . Again, prior to the said election date, . . . counsel for the
defendant [MPMCC] sent a demand letter to plaintiff, anent the said delinquency,
explaining that the said unpaid amount is a carry-over from the obligation of
defendant Meridien. . . .;
10. Veri cation with the defendant [MPMCC] resulted to the issuance
of a certi cation stating that Condominium Unit 1201 has an outstanding unpaid
obligation in the total amount of P145,567.42 as of November 30, 2002, which
again, was attributed by defendant [MPMCC] to defendant Meridien. . . .; DIETcC

11. Due to the seriousness of the matter, and the feeling that
defendant Meridien made false representations considering that it fully warranted
to plaintiff that condominium unit 1201 is free and clear from all liens and
encumbrances, the matter was referred to counsel, who accordingly sent a letter
to defendant Meridien, to demand for the payment of said unpaid association
dues and other assessments imposed on the condominium unit and being
claimed by defendant [MPMCC]. . . .;

12. . . . defendant Meridien claimed however, that the obligation does

not exist considering that the matter was already settled and paid by defendant
Meridien to defendant [MPMCC]. . . .;
13. Plaintiff thus caused to be sent a letter to defendant [MPMCC] . . . .
The said letter . . . sought an explanation on the fact that, as per the letter of
defendant Meridien, the delinquency of unit 1201 was already fully paid and
settled, contrary to the claim of defendant [MPMCC]. . . .;

14. Despite receipt of said letter on April 24, 2003, and to date however,
no explanation was given by defendant [MPMCC], to the damage and prejudice of
plaintiff who is again obviously being barred from voting/participating in the
election of members of the board of directors for the year 2003;
15. Clearly, defendant [MPMCC] acted maliciously by insisting that
plaintiff is a delinquent member when in fact, defendant Meridien had already
paid the said delinquency, if any. The branding of plaintiff as delinquent member
was willfully and deceitfully employed so as to prevent plaintiff from exercising
his right to vote or be voted as director of the condominium corporation;

16. Defendant [MPMCC]'s ominous silence when confronted with

claim of payment made by defendant Meridien is tantamount to admission that
indeed, plaintiff is not really a delinquent member;CScTED

17. Accordingly, as a direct and proximate result of the said acts of

defendant [MPMCC], plaintiff experienced/suffered from mental anguish, moral
shock, and serious anxiety. Plaintiff, being a doctor of medicine and respected in
the community further suffered from social humiliation and besmirched
reputation thereby warranting the grant of moral damages in the amount of
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 P500,000.00 and for which defendant [MPMCC] should be held liable;

18. By way of example or correction for the public good, and as a stern
warning to all similarly situated, defendant [MPMCC] should be ordered to pay
plaintiff exemplary damages in the amount of P200,000.00;

[19]. As a consequence, and so as to protect his rights and interests,

plaintiff was constrained to hire the services of counsel, for an acceptance fee of
P100,000.00 plus P2,500.00 per every court hearing attended by counsel;

[20]. In the event that the claim of defendant [MPMCC] turned out to be
true, however, the herein defendant Meridien should be held liable instead, by
ordering the same to pay the said delinquency of condominium unit 1201 in the
amount of P145,567.42 as of November 30, 2002 as well as the above damages,
considering that the non-payment thereof would be the proximate cause of the
damages suffered by plaintiff; 9

Petitioner and MLHI led their separate motions to dismiss the complaint on the
ground of lack of jurisdiction. 1 0 MLHI claims that it is the Housing and Land Use
Regulatory Board (HLURB) which is vested with the exclusive jurisdiction to hear and
decide the case. Petitioner, on the other hand, raises the following speci c grounds for the
dismissal of the complaint: (1) estoppel as respondent himself approved the assessment
when he was the president; (2) lack of jurisdiction as the case involves an intra-corporate
controversy; (3) prematurity for failure of respondent to exhaust all intra-corporate
remedies; and (4) the case is already moot and academic, the obligation having been
settled between petitioner and MLHI. 1 1 AIaSTE

On September 9, 2005, the RTC rendered a Decision granting petitioner's and MLHI's
motions to dismiss and, consequently, dismissing respondent's complaint.
The trial court agreed with MLHI that the action for speci c performance led by
respondent clearly falls within the exclusive jurisdiction of the HLURB. 1 2 As to petitioner,
the court held that the complaint states no cause of action, considering that respondent's
obligation had already been settled by MLHI. It, likewise, ruled that the issues raised are
intra-corporate between the corporation and member. 1 3
On appeal, the CA reversed and set aside the trial court's decision and remanded the
case to the RTC for further proceedings. Contrary to the RTC conclusion, the CA held that
the controversy is an ordinary civil action for damages which falls within the jurisdiction of
regular courts. 1 4 It explained that the case hinged on petitioner's refusal to con rm
MLHI's claim that the subject obligation had already been settled as early as 1998 causing
damage to respondent. 1 5 Petitioner's and MLHI's motions for reconsideration had also
been denied. 1 6
Aggrieved, petitioner comes before the Court based on the following grounds:
I.

THE COURT A QUO HAS DECIDED A QUESTION OF SUBSTANCE, NOT

THERETOFORE DETERMINED BY THE SUPREME COURT, OR HAS DECIDED IT IN
A WAY NOT IN ACCORD WITH LAW OR WITH THE APPLICABLE DECISIONS OF
THE SUPREME COURT WHEN IT DECLARED THE INSTANT CASE AN ORDINARY
ACTION FOR DAMAGES INSTEAD OF AN INTRA-CORPORATE CONTROVERSY
COGNIZABLE BY A SPECIAL COMMERCIAL COURT. cEHSIC

II.
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 THE COURT A QUO HAS DECIDED THE INSTANT CASE IN A WAY NOT IN
ACCORD WITH LAW OR WITH THE APPLICABLE DECISIONS OF THE SUPREME
COURT WHEN IT TOOK COGNIZANCE OF THE APPEAL WHILE RAISING ONLY
PURE QUESTIONS OF LAW. 1 7

The petition is meritorious.

It is a settled rule that jurisdiction over the subject matter is determined by the
allegations in the complaint. It is not affected by the pleas or the theories set up by the
defendant in an answer or a motion to dismiss. Otherwise, jurisdiction would become
dependent almost entirely upon the whims of the defendant. 1 8 Also illuminating is the
Court's pronouncement in Go v. Distinction Properties Development and Construction, Inc. :
19

Basic as a hornbook principle is that jurisdiction over the subject matter of

a case is conferred by law and determined by the allegations in the complaint
which comprise a concise statement of the ultimate facts constituting the
plaintiff's cause of action. The nature of an action, as well as which court or body
has jurisdiction over it, is determined based on the allegations contained in the
complaint of the plaintiff, irrespective of whether or not the plaintiff is entitled to
recover upon all or some of the claims asserted therein. The averments in the
complaint and the character of the relief sought are the ones to be
consulted. Once vested by the allegations in the complaint, jurisdiction also
remains vested irrespective of whether or not the plaintiff is entitled to recover
upon all or some of the claims asserted therein. . . . 2 0

Based on the allegations made by respondent in his complaint, does the controversy
involve intra-corporate issues as would fall within the jurisdiction of the RTC sitting as a
special commercial court or an ordinary action for damages within the jurisdiction of
regular courts? AIECSD

In determining whether a dispute constitutes an intra-corporate controversy, the

Court uses two tests, namely, the relationship test and the nature of the controversy test.
21

An intra-corporate controversy is one which pertains to any of the following

relationships: (1) between the corporation, partnership or association and the public; (2)
between the corporation, partnership or association and the State insofar as its franchise,
permit or license to operate is concerned; (3) between the corporation, partnership or
association and its stockholders, partners, members or o cers; and (4) among the
stockholders, partners or associates themselves. 2 2 Thus, under the relationship test, the
existence of any of the above intra-corporate relations makes the case intra-corporate. 2 3
Under the nature of the controversy test, "the controversy must not only be rooted in
the existence of an intra-corporate relationship, but must as well pertain to the
enforcement of the parties' correlative rights and obligations under the Corporation Code
and the internal and intra-corporate regulatory rules of the corporation." 2 4 In other words,
jurisdiction should be determined by considering both the relationship of the parties as
well as the nature of the question involved. 2 5
Applying the two tests, we nd and so hold that the case involves intra-corporate
controversy. It obviously arose from the intra-corporate relations between the parties, and
the questions involved pertain to their rights and obligations under the Corporation Code
and matters relating to the regulation of the corporation. 2 6

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 Admittedly, petitioner is a condominium corporation duly organized and existing
under Philippine laws, charged with the management of the Medical Plaza Makati.
Respondent, on the other hand, is the registered owner of Unit No. 1201 and is thus a
stockholder/member of the condominium corporation. Clearly, there is an intra-corporate
relationship between the corporation and a stockholder/member. HDIaST

The nature of the action is determined by the body rather than the title of the
complaint. Though denominated as an action for damages, an examination of the
allegations made by respondent in his complaint shows that the case principally dwells on
the propriety of the assessment made by petitioner against respondent as well as the
validity of petitioner's act in preventing respondent from participating in the election of the
corporation's Board of Directors. Respondent contested the alleged unpaid dues and
assessments demanded by petitioner.
The issue is not novel. The nature of an action involving any dispute as to the validity
of the assessment of association dues has been settled by the Court in Chateau de Baie
Condominium Corporation v. Moreno . 2 7 In that case, respondents therein led a
complaint for intra-corporate dispute against the petitioner therein to question how it
calculated the dues assessed against them, and to ask an accounting of association dues.
Petitioner, however, moved for the dismissal of the case on the ground of lack of
jurisdiction alleging that since the complaint was against the owner/developer of a
condominium whose condominium project was registered with and licensed by the
HLURB, the latter has the exclusive jurisdiction. In sustaining the denial of the motion to
dismiss, the Court held that the dispute as to the validity of the assessments is purely an
intra-corporate matter between petitioner and respondent and is thus within the exclusive
jurisdiction of the RTC sitting as a special commercial court. More so in this case as
respondent repeatedly questioned his characterization as a delinquent member and,
consequently, petitioner's decision to bar him from exercising his rights to vote and be
voted for. These issues are clearly corporate and the demand for damages is just
incidental. Being corporate in nature, the issues should be threshed out before the RTC
sitting as a special commercial court. The issues on damages can still be resolved in the
same special commercial court just like a regular RTC which is still competent to tackle
civil law issues incidental to intra-corporate disputes filed before it. 2 8
Moreover, Presidential Decree No. 902-A enumerates the cases over which the
Securities and Exchange Commission (SEC) exercises exclusive jurisdiction:
xxx xxx xxx
b) Controversies 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; and between such
corporation, partnership or association and the State insofar as it concerns their
individual franchise or right to exist as such entity; and

c) Controversies in the election or appointment of directors, trustees,

officers, or managers of such corporations, partnerships, or associations. 2 9 cITAaD

To be sure, this action partakes of the nature of an intra-corporate controversy, the

jurisdiction over which pertains to the SEC. Pursuant to Section 5.2 of Republic Act No.
8799, otherwise known as the Securities Regulation Code, the jurisdiction of the SEC over
all cases enumerated under Section 5 of Presidential Decree No. 902-A has been
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 transferred to RTCs designated by this Court as Special Commercial Courts. 3 0 While the
CA may be correct that the RTC has jurisdiction, the case should have been led not with
the regular court but with the branch of the RTC designated as a special commercial court.
Considering that the RTC of Makati City, Branch 58 was not designated as a special
commercial court, it was not vested with jurisdiction over cases previously cognizable by
the SEC. 3 1 The CA, therefore, gravely erred in remanding the case to the RTC for further
proceedings.
Indeed, Republic Act (RA) No. 9904, or the Magna Carta for Homeowners and
Homeowners' Associations, approved on January 7, 2010 and became effective on July
10, 2010, empowers the HLURB to hear and decide inter-association and/or intra-
association controversies or con icts concerning homeowners' associations. However,
we cannot apply the same in the present case as it involves a controversy between a
condominium unit owner and a condominium corporation. While the term association as
de ned in the law covers homeowners' associations of other residential real property
which is broad enough to cover a condominium corporation, it does not seem to be the
legislative intent. A thorough review of the deliberations of the bicameral conference
committee would show that the lawmakers did not intend to extend the coverage of the
law to such kind of association. We quote hereunder the pertinent portion of the Bicameral
Conference Committee's deliberation, to wit:
THE CHAIRMAN (SEN. ZUBIRI). Let's go back, Mr. Chair, very quickly on
homeowners.
THE ACTING CHAIRMAN (REP. ZIALCITA). Ang sa akin lang, I think
our views are similar, Your Honor, Senator Zubiri, the entry of the condominium
units might just complicate the whole matters. So we'd like to put it on record that
we're very much concerned about the plight of the Condominium Unit
Homeowners' Association. But this could very well be addressed on a separate bill
that I'm willing to co-sponsor with the distinguished Senator Zubiri, to address in
the Condominium Act of the Philippines, rather than address it here because it
might just create a red herring into the entire thing and it will just complicate
matters, hindi ba?
THE CHAIRMAN (SEN. ZUBIRI). I also agree with you although I
sympathize with them — although we sympathize with them and we feel that
many times their rights have been also violated by abusive condominium
corporations. However, there are certain things that we have to reconcile. There
are certain issues that we have to reconcile with this version.
In the Condominium Code, for example, they just raised a very peculiar
situation under the Condominium Code — Condominium Corporation Act. It's ve
years the proxy, whereas here, it's three years. So there would already be violation
or there will be already a problem with their version and our version. Sino ang
matutupad doon? Will it be our version or their version?
So I agree that has to be studied further. And because they have a law
pertaining to the condominium housing units, I personally feel that it would
complicate matters if we include them. Although I agree that they should be
looked after and their problems be looked into. cTEICD

Probably we can ask our staff, Your Honor, to come up already with the bill
although we have no more time. Hopefully we can tackle this again on the 15th
Congress. But I agree with the sentiments and the inputs of the Honorable Chair
of the House panel.
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 May we ask our resource persons to also probably give comments?

Atty. Dayrit.
MR. DAYRIT. Yes I agree with you. There are many, I think, practices in
their provisions in the Condominium Law that may be con icting with this version
of ours.
For instance, in the case of, let's say, the condominium, the so-called
common areas and/or maybe so called open spaces that they may have,
especially common areas, they are usually owned by the condominium
corporation. Unlike a subdivision where the open spaces and/or the common
areas are not necessarily owned by the association. Because sometimes —
generally these are donated to the municipality or to the city. And it is only when
the city or municipality gives the approval or the conformity that this is donated to
the homeowners' association. But generally, under PD [Presidential Decree] 957,
it's donated. In the Condominium Corporation, hindi. Lahat ng mga open spaces
and common areas like corridors, the function rooms and everything, are owned
by the corporation. So that's one main issue that can be conflicting.
THE CHAIRMAN (SEN. ZUBIRI). I'll just ask for a one-minute
suspension so we can talk.
THE ACTING CHAIRMAN (REP. ZIALCITA). Unless you want to put a
catchall phrase like what we did in the Senior Citizen's Act. Something like, to the
extent — paano ba iyon? To the extent that it is practicable and applicable, the
rights and bene ts of the homeowners, are hereby extended to the — mayroon
kaming ginamit na phrase eh. . . to the extent that it be practicable and applicable
to the unit homeowners, is hereby extended, something like that. It's a catchall
phrase. But then again, it might create a. . .
MR. JALANDONI. It will become complicated. There will be a lot of
conflict of laws between the two laws.
THE ACTING CHAIRMAN (REP. ZIALCITA). Kaya nga eh. At saka, I
don't know. I think the — mayroon naman silang protection sa ano eh, di ba?
Buyers decree doon sa Condominium Act. I'm sure there are provisions there eh.
Huwag na lang, huwag na lang.

MR. JALANDONI. Mr. Chairman, I think it would be best if your previous

comments that you'd be supporting an amendment. I think that would be — Well,
that would be the best course of action with all due respect.
THE ACTING CHAIRMAN (REP. ZIALCITA). Yeah. Okay. Thank you. So
iyon na lang nal proposal naming 'yung catchall phrase, "With respect to the. . ."
32

xxx xxx xxx

THE CHAIRMAN (SEN. ZUBIRI). . . . And so, what is their nal decision
on the definition of homeowners?
THE ACTING CHAIRMAN (REP. ZIALCITA). We stick to the original, Mr.
Chairman. We'll just open up a whole can of worms and a whole new ball game
will come into play. Besides, I am not authorized, neither are you, by our
counterparts to include the condominium owners. IEAHca

THE CHAIRMAN (SEN. ZUBIRI). Basically that is correct. We are not

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 authorized by the Senate nor — because we have discussed this lengthily on the
oor, actually, several months on the oor. And we don't have the authority as
well for other Bicam members to add a provision to include a separate entity that
has already their legal or their established Republic Act tackling on that particular
issue. But we just like to put on record, we sympathize with the plight of our
friends in the condominium associations and we will just guarantee them that we
will work on an amendment to the Condominium Corporation Code. So with that
— we skipped, that is correct, we have to go back to homeowners' association
de nition, Your Honor, because we had skipped it altogether. So just quickly
going back to Page 7 because there are amendments to the de nition of
homeowners. If it is alright with the House Panel, adopt the opening phrase of
Subsection 7 of the Senate version as opening phrase of Subsection 10 of the
reconciled version.
xxx xxx xxx 3 3

To be sure, RA 4726 or the Condominium Act was enacted to speci cally govern a
condominium. Said law sanctions the creation of the condominium corporation which is
especially formed for the purpose of holding title to the common area, in which the holders
of separate interests shall automatically be members or shareholders, to the exclusion of
others, in proportion to the appurtenant interest of their respective units. 3 4 The rights and
obligations of the condominium unit owners and the condominium corporation are set
forth in the above Act.
Clearly, condominium corporations are not covered by the amendment. Thus, the
intra-corporate dispute between petitioner and respondent is still within the jurisdiction of
the RTC sitting as a special commercial court and not the HLURB. The doctrine laid down
by the Court in Chateau de Baie Condominium Corporation v. Moreno 3 5 which in turn cited
Wack Wack Condominium Corporation, et al. v. CA 3 6 is still a good law.
WHEREFORE , we hereby GRANT the petition and REVERSE the Court of Appeals
Decision dated July 10, 2007 and Resolution dated January 25, 2008 in CA-G.R. CV No.
86614. The Complaint before the Regional Trial Court of Makati City, Branch 58, which is
not a special commercial court, docketed as Civil Case No. 03-1018 is ordered
DISMISSED for lack of jurisdiction. Let the case REMANDED to the Executive Judge of
the Regional Trial Court of Makati City for re-ra e purposes among the designated special
commercial courts.
SO ORDERED.
Velasco, Jr., Abad, Mendoza and Leonen, JJ., concur.

Footnotes
1.Penned by Associate Justice Juan Q. Enriquez, Jr., with Associate Justices Vicente S. E.
Veloso and Marlene Gonzales-Sison, concurring; rollo, pp. 79-85.
2.Id. at 76-78.
3.Penned by Presiding Judge Eugene C. Paras; id. at 86-88.
4.Rollo, p. 80.
5.Id.
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 6.Id.
7.Id. at 81.
8.Id. at 89-96.

9.Id. at 91-94.
10.Id. at 86.
11.Id. at 97.
12.Id. at 87.
13.Id.

14.Id. at 83.
15.Id. at 84.
16.Id. at 76-78.
17.Id. at 49-50.

18.Eristingcol v. Court of Appeals , G.R. No. 167702, March 20, 2009, 582 SCRA 139, 156, citing
Sta. Clara Homeowners' Association v. Sps. Gaston, 425 Phil. 221 (2002).
19.G.R. No. 194024, April 25, 2012, 671 SCRA 461.

20.Go v. Distinction Properties Development and Construction, Inc. , supra, at 471-472.

(Emphasis and underscoring in the original.)

21.Reyes v. Regional Trial Court of Makati , Br. 142 , G.R. No. 165744, August 11, 2008, 561
SCRA 593, 609-610.

22.Go v. Distinction Properties Development and Construction, Inc. , supra note 19, at 479-480;
Strategic Alliance Development Corporation v. Star Infrastructure Development
Corporation, G.R. No. 187872, November 17, 2010, 635 SCRA 380, 391.
23.Reyes v. Regional Trial Court of Makati, Br. 142, supra note 21, at 610.
24.Strategic Alliance Development Corporation v. Star Infrastructure Development Corporation ,
supra note 22, at 391; Reyes v. Regional Trial Court of Makati, Br. 142, supra note 21, at
611.
25.Reyes v. Regional Trial Court of Makati, Br. 142, supra note 21, at 611.
26.Aguirre II v. FQB+7, Inc., G.R. No. 170770, January 9, 2013, 688 SCRA 242, 261.

27.G.R. No. 186271, February 23, 2011, 644 SCRA 288, 297.
28.Strategic Alliance Development Corporation v. Star Infrastructure Development Corporation ,
supra note 22, at 398.
29.Reyes v. Regional Trial Court of Makati, Br. 142, supra note 21, at 604-605.
30.Strategic Alliance Development Corporation v. Star Infrastructure Development Corporation ,
supra note 22, at 396.
31.Calleja v. Panday , 518 Phil. 801, 813 (2006).
32.Bicameral Conference Committee on the Disagreeing Provisions of SBN 3106 and HBN 50,
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 September 30, 2009, pp. 90-94.
33.Id. at 101-102.
34.Yamane v. BA Lepanto Condominium Corporation, 510 Phil. 750, 772 (2005).
35.G.R. No. 186271, February 23, 2011, 644 SCRA 288.

36.G.R. No. 78490, November 23, 1992, 215 SCRA 850.

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