LPL Greenhills Condominium Corporation v. Brouwer
REITERATIONFacts
The Antecedents: Respondent Catharina Brouwer was the registered owner of two condominium units (Unit Nos. 16-I and 16-J) at LPL Greenhills Condominium. She failed to pay her monthly association dues and other assessments. LPL Greenhills Condominium Corporation (LPL) issued notices of assessment, which were annotated on the Condominium Certificates of Title (CCTs). Despite notices, respondent failed to settle her obligations. Consequently, LPL filed petitions for extrajudicial foreclosure of the subject units pursuant to Section 20 of the Condominium Act (RA 4726) and its Master Deed of Restrictions. Notices of sale were posted and published. Sheriffs conducted the extrajudicial foreclosure sales, with Unit 16-I being sold to Mario Antoni Salazar and Lauro S. Leviste II, and Unit 16-J to Spouses Clemartin Arboleda and Maria Angelita Arboleda. Certificates of sale were issued and registered. Procedural History: Respondent, through her attorney-in-fact, filed a Complaint for declaration of nullity of foreclosure proceedings, quieting of title, and damages. She argued the foreclosure sales were void due to lack of authorization in LPL's Master Deed and By-Laws, absence of a board resolution authorizing foreclosure, and improper notice. Petitioners countered that a special authority from the unit owner is not required. The Regional Trial Court (RTC) limited the issue to the validity of the foreclosure proceedings. The RTC declared the extrajudicial foreclosure sales and certificates of sale null and void, ordered the cancellation of annotations, and declared respondent the owner. The RTC also awarded attorney's fees. The RTC denied petitioners' motion for reconsideration. The Court of Appeals (CA) affirmed the RTC's decision with modification, deleting the award of attorney's fees. The CA agreed that LPL needed to provide evidence of special authority to foreclose, which was lacking. Petitioners' motion for reconsideration was denied. The Petition: Petitioners seek the annulment of the CA Decision and Resolution, arguing that the CA erred in ruling the foreclosure sales void and in not finding that respondent's counsel lost legal personality due to the death of the attorney-in-fact. They contend that Section 20 of the Condominium Act does not require special authority under Act No. 3135, citing Chateau de Baie and Welbilt. They also claim LPL's Master Deed and By-Laws provide the necessary authority.
Issue(s)
Whether the Court of Appeals erred in ruling that the extrajudicial foreclosure sales are null and void. Whether the Court of Appeals erred in not finding that respondent's counsel has lost the legal personality to represent respondent.
Ruling
The petition is denied. The Decision dated March 29, 2019 and the Resolution dated August 1, 2019 of the Court of Appeals in CA-G.R. CV No. 107139 are affirmed.
Ratio Decidendi
On the first issue (validity of extrajudicial foreclosure sales): The Court affirmed the CA's ruling that the extrajudicial foreclosure sales were null and void for want of special authority or power to sell. Petitioners' reliance on Chateau de Baie Condominium Corp. v. Spouses Moreno was found to be erroneous, as that case did not abandon the doctrine requiring special authority. The Court reiterated the ruling in First Marbella Condominium Association, Inc. v. Gatmaytan and Welbilt Construction Corp. v. Heirs of Cresenciano C. De Castro, emphasizing that Section 20 of the Condominium Act does not grant condominium corporations special authority to foreclose. Such authority must be explicitly provided, typically through a special power of attorney, as required by Section 1 of Act No. 3135 and related circulars. The principle of "nemo dat quod non habet" (one cannot give what one does not have) applies, meaning only the owner can exercise the right to dispose of the property, and any agent must have a special power of attorney for acts of strict dominion, such as selling an immovable. The Court found that neither LPL's Master Deed of Restrictions nor its By-Laws contained a provision granting LPL the special authority to extra-judicially foreclose the respondent's units. The Court also noted that petitioners were barred by laches from raising the factual issue of whether the Master Deed and By-Laws contained such authority, as they had agreed to limit the issue to the necessity of such authority and did not assail the RTC's factual finding on its absence. On the second issue (legal personality of respondent's counsel): The Court ruled in the negative, holding that the death of Manfred De Koning, the attorney-in-fact, did not extinguish the legal personality of Gutierrez, Cortez & Partners to represent respondent. The Court clarified that an attorney-in-fact is not the real party in interest; the beneficiary (respondent Brouwer) is. The attorney-client relationship is between the respondent and her counsel, Gutierrez, Cortez & Partners. Therefore, Manfred's death did not sever this relationship, and the law firm continued to be the respondent's counsel of record.
Main Doctrine
A condominium corporation must possess a special authority or power to sell, either inserted in or attached to the deed of mortgage or deed of restrictions, to conduct an extrajudicial foreclosure sale of a condominium unit for unpaid dues and assessments. Such authority is not granted by Section 20 of the Condominium Act itself, nor can it be presumed from the Master Deed of Restrictions or By-Laws unless explicitly stated.