FIRST DIVISION

[G.R. No. 210286. July 23, 2018.]

WELBIT CONSTRUCTION CORP., WACK WACK CONDOMINIUM

CORP., AND SPOUSES EUGENIO JUAN GONZALEZ AND MATILDE
GONZALEZ , petitioners, vs. HEIRS OF CRESENCIANO C. DE CASTRO ,
respondents.
MASTER OF DEED AND BYLAWS AUTHORIZED EJF

DECISION

TIJAM , J : p

This is a Petition for Review on Certiorari 1 under Rule 45 of the Rules of Court,
assailing the Decision 2 dated September 30, 2013 and Resolution 3 dated December 4,
2013 of the Court of Appeals (CA) in CA-G.R. CV No. 93366. CAIHTE

Factual Antecedents

Petitioners Welbit Construction Corporation and Wack Wack Condominium

Corporation are the developer and management body of Wack Wack Apartments
Building (condominium), respectively, 4 while Spouses Eugenio Juan and Matilde
Gonzalez are the owners thereof. 5
The late Cresenciano C. De Castro (De Castro) is the registered owner of Unit
802 of the condominium, covered by Condominium Certificate of Title (CCT) No. 2826 6
(subject property). For failure to pay assessment dues amounting to P79,905.41 as of
July 31, 1986 despite demand, Welbit Construction Corp., Wack Wack Condominium
Corp., and Spouses Eugenio Juan Gonzalez and Matilde Gonzalez (petitioners) caused
the annotation of a lien for unpaid assessments and other dues at the back of De
Castro's title on August 14, 1986 pursuant to Section 4 of the Master Deed with
Declaration of Restrictions of Wack Wack Condominium (Master Deed). 7
As the said dues remained unsettled, petitioners led a petition for the extra-
judicial foreclosure of the subject property with the O ce of the Ex-Officio Sheriff of
Pasig City on October 27, 1986. The requirements of publication and posting of the
notice were then complied with and the public auction was set on February 10, 1987. A
copy of such notice was received by De Castro on January 29, 1987. 8
Petitioners emerged as the highest bidder for P88,809.94. Accordingly, a
certi cate of sale was issued in their favor on February 10, 1987. On April 2, 1987, the
sale was registered with the Register of Deeds of Pasig City and annotated at the back
of De Castro's title. De Castro failed to redeem the property. 9
When requested to surrender his owner's duplicate copy of CCT No. 2826, De
Castro led a petition for annulment of foreclosure proceedings before the Securities
and Exchange Commission (SEC) which then had the jurisdiction over intra-corporate
disputes. In the said petition, De Castro argued that petitioners have no legal
personality to invoke the Condominium Act and should have availed of other remedies
in law; the annotation of assessment dues and certi cate of sale, and the extra judicial
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 proceedings were highly irregular and devoid of factual and legal basis; that the
assessments imposed were excessive, oppressive, unconscionable, and arbitrary; and
that the petitioners have no special power of attorney or authority was granted to them
nor was there any agreement between the parties to that effect. 1 0
For their part, petitioners countered that the foreclosure was lawful pursuant to
the Master Deed to which De Castro was bound as a unit owner. Petitioners further
averred that the assessment was fair and reasonable as the rate in computing the
same was the same applied to all condominium unit owners. As for the foreclosure
proceedings, De Castro was noti ed thereof but never made any opposition nor did he
attend the foreclosure sale. 1 1
Sometime in February 1992, during the pendency of the case, De Castro passed
away 1 2 and substituted by Heirs of Cresenciano C. De Castro (respondents).

Ruling of the Regional Trial Court

In its March 31, 2009 Decision, 1 3 the Regional Trial Court (RTC) of Mandaluyong
City, Branch 211, ruled for the validity of the extra-judicial foreclosure proceedings
instituted by the petitioners. The RTC thoroughly discussed that the evidence on record
clearly show that De Castro was aware of his unsettled dues and penalties. The RTC
also held that De Castro cannot deny that he is bound by the Master Deed, which gave
authority to the petitioners to issue assessments against him for his unpaid dues and
penalties. The RTC also cited the By-Laws of the condominium corporation that gives
authority to the Board of Directors to enforce collection of unpaid assessments duly
levied in by any of the remedies provided by the Republic Act No. 4726 1 4 or the
Condominium Act and other pertinent laws, such as foreclosure. The RTC, disposed,
thus:
WHEREFORE , judgement is hereby rendered as follows:
(a) Dismissing as it is hereby DISMISSED the instant
petition for lack of merit; and,
(b) Dismissing as it is hereby DISMISSED the counter-
claims of the [petitioners].
SO ORDERED . 1 5 CA said no authority - needs SPA to foreclose

Ruling of the CA

In its September 30, 2013 Decision, 1 6 the CA reversed and set aside the RTC
Decision, on the sole ground that the petitioners have no su cient authority to extra-
judicially foreclose the subject property. The CA cited the case of First Marbella
Condominium Association, Inc. v. Gatmaytan , 1 7 wherein the Court ruled that it is
mandatory that a petition for extra-judicial foreclosure be supported by evidence that
petitioner holds a special power or authority to foreclose pursuant to Circular No. 7-
2002, 1 8 implementing Supreme Court (SC) Administrative Matter (A.M.) No. 99-10-05-
0 . 1 9 According to the CA, herein condominium corporation's By-Laws or the Master
Deed does not vest the petitioners with su cient authority to extra-judicially foreclose
the property. Neither does Section 20 of the Condominium Act gives authority to the
petitioners to enforce the liens on the condominium unit through extra-judicial
foreclosure as the said provision merely prescribes the procedure therefor, i.e., it
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 should be done in the same manner provided for by law for the judicial or extra-judicial
foreclosure of mortgage of real property. 2 0 The CA disposes, thus: DETACa

WHEREFORE , the appeal is GRANTED . The assailed RTC Decision

dated March 31, 2009 is REVERSED and SET ASIDE . Accordingly, the petition
in SEC Case No. MC-01-002 is GRANTED . The extra-judicial foreclosure of
Condominium Unit No. 802 is SET ASIDE for being null and void. With costs.
SO ORDERED . 2 1
Hence, this petition.

Issue

Whether or not the CA erred in declaring the extra-judicial foreclosure proceeding

null and void.

Ruling of the Court

We find merit in the instant petition.

As can be gleaned from the CA's assailed Decision, its conclusion that the extra-
judicial foreclosure proceeding instituted by the petitioners is null and void for the
latter's lack of proof of authority is heavily anchored upon the case of First Marbella 2 2
above-cited. A careful perusal of the said case, however, would show that the same is
not applicable in the case at bar.
Section 20 of the Condominium Act merely provides that the assessments, upon
any condominium made in accordance with a duly registered declaration of restrictions,
shall be a lien upon the said condominium, and also prescribes the procedure by which
such liens may be enforced, viz.:
Sec. 20. The assessment upon any condominium made in
accordance with a duly registered declaration of restrictions shall be an
obligation of the owner thereof at the time the assessment is made. The
amount of any such assessment plus any other charges thereon, such as
interest, costs (including attorney's fees) and penalties, as such may be
provided for in the declaration of restrictions, shall be and become a lien
upon the condominium to be registered with the Register of Deeds of
the city or province where such condominium project is located . The
notice shall state the amount of such assessment and such other charges
thereon as may be authorized by the declaration of restrictions, a description of
condominium unit against which same has been assessed, and the name of the
registered owner thereof. Such notice shall be signed by an authorized
representative of the management body or as otherwise provided in the
declaration of restrictions. Upon payment of said assessment and charges or
other satisfaction thereof, the management body shall cause to be registered a
release of the lien.
Such lien shall be superior to all other liens registered subsequent to the
registration of said notice of assessment except real property tax liens and
except that the declaration of restrictions may provide for the subordination
thereof to any other liens and encumbrances, such liens may be enforced in
the same manner provided for by law for the judicial or extra-judicial
foreclosure of mortgage or real property . Unless otherwise provided for in
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 the declaration of the restrictions, the management body shall have power to
bid at foreclosure sale. The condominium owner shall have the right of
redemption as in cases of judicial or extra-judicial foreclosure of mortgages. 2 3
(Emphasis in the original)
Indeed, it does not grant the petitioners the authority to foreclose. The aforecited
provision clearly provides that the rules on extra-judicial foreclosure of mortgage or
real property should be followed. Accordingly, Section 1 2 4 of Act No. 3135, 2 5 which
prescribes for the procedure for the extra-judicial foreclosure of real properties subject
to real estate mortgage, in relation to Circular No. 7-2002 and SC A.M. No. 99-10-05-0
requires that the petition for extra-judicial foreclosure be supported by evidence that
petitioners hold a special power or authority to foreclose, thus:
Sec. 1. All applications for extra-judicial foreclosure of mortgage,
whether under the direction of the Sheriff or a notary public pursuant to Act No.
3135, as amended, and Act 1508, as amended, shall be led with the Executive
Judge, through the Clerk of Court, who is also the Ex-Officio Sheriff (A.M. No.
99-10-05-0, as amended, March 1, 2001).
Sec. 2. Upon receipt of the application, the Clerk of Court shall:
a. Examine the same to ensure that the special power of attorney
authorizing the extra-judicial foreclosure of the real property is either inserted
into or attached to the deed of real estate mortgage (Act No. 3135, Sec. 1, as
amended) x x x. 2 6
I n First Marbella, the Court held that "[w]ithout proof of petitioner's special
authority to foreclose, the Clerk of Court as Ex-Officio Sheriff is precluded from acting
on the application for extra-judicial foreclosure." 2 7
Unlike in First Marbella, however, the CA erred in ruling that herein petitioners
have no such special authority to foreclose. In the said case, the Court found that the
only basis of therein petitioners for causing the extra-judicial foreclosure of therein
respondent's condominium unit was a mere notice of assessment annotated on the
latter's CCT. Thus, the Court ruled that neither annotation nor law vests therein
petitioner with sufficient authority to foreclose on the property. 2 8 aDSIHc

In the case at bar, the foreclosure was not merely based on the notice of
assessment annotated on CCT No. 2826 nor solely upon the Condominium Act but also
on the Master Deed 2 9 and the condominium corporation's By-Laws. 3 0 As correctly
found by the RTC:
Thus, Section 1 of the Article V of the By-laws of the Condominium
Corporation authorizes the board to assess the unit owner penalties and
expenses for maintenance and repairs necessary to protect the common areas
or any portion of the building or safeguard the value and attractiveness of the
condominium. Under Section 5 of Article [V] of the By-Laws, in the event
a member defaults in the payment of any assessment duly levied in
accordance with the Master Deed and the By-Laws, the Board of
Directors may enforce collection thereof by any of the remedies
provided by the Cond ominium A ct and other pertinent laws, such as
foreclosure . x x x.
xxx xxx xxx
The Master Deed with Declaration of Restrictions of the
Condominium Project is annotated on the Condominium Certi cate of
title 2826. The Master Deed and By-Laws constitute as the contract
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 between the unit owner and the condominium corporation. As a unit
owner, [De Castro] is bound by the rules and restrictions embodied in
the said Master Deed and by-Laws pursuant to the provisions of the
Cond ominium Act. Under the Condomin ium Act (Section 20 of RA
4 72 6) and the by-laws (Section 5 of Article [V]) of the Wack Wack, the
assessments upon a condominium constitute a lien on such
condominium and may be enforced by judicial or extra-judicial
foreclosure . 3 1 (Emphasis ours)
Clearly, petitioners were authorized to institute the foreclosure proceeding to
enforce the lien upon the condominium unit. Moreover, this conclusion nds support in
the 1984 condominium corporation's Board Resolution No. 84-007, 3 2 also signed by
De Castro as a member of the Board of Directors at that time, stating that:
RESOLVED to, as we do hereby authorize our President, Arch. Eugenio
Juan Gonzalez and/or the law o ces of Siguion Reyna, Montecillo and
Ongsiako and/or whomsoever Arch. Gonzalez may appoint or designate, to
effect foreclosure of Condominium Apartment Units at Wack Wack Apartment
Building Condominium Project, Mandaluyong, Metro Manila with unpaid or
delinquent accounts to satisfy the unit's obligation to Wack Wack Condominium
Corporation;
RESOLVED FURTHER TO, as we do hereby designate and appoint Arch.
Eugenio Juan Gonzalez as the Wack Wack Condominium Corporation's
attorney-in-fact for the purpose of foreclosure;
RESOLVED FINALLY TO, as we do hereby authorize the above-named
Architect Eugenio Juan Gonzalez to execute, sign, and deliver documents and
whatever papers necessary, and in general, to do and perform all such acts and
things that are or may be necessary to give effect to the foregoing authority.
Furthermore, in the similar case of Wack Wack Condominium Corp. v. Court of
Appeals, 3 3 involving petitioners and another unit owner, wherein the petitioners
likewise extra-judicially foreclosed a condominium unit to enforce assessments albeit
the issue therein was the jurisdiction of the SEC, this Court had already ruled that the
Condominium Act and the By-Laws of the condominium corporation recognize and
authorize assessments upon a condominium unit to constitute a lien on such unit which
may be enforced by judicial or extra-judicial foreclosure. Clearly, petitioners' authority to
foreclose a condominium unit to enforce assessments, pursuant to the Condominium
Act and the condominium corporation's Master Deed and By-Laws, had long been
established.
WHEREFORE , premises considered, the Petition is GRANTED . Accordingly, the
Decision dated September 30, 2013 and Resolution dated December 4, 2013 of the
Court of Appeals in CA-G.R. CV No. 93366 are hereby REVERSED and SET ASIDE . The
Decision dated March 31, 2009 of the Regional Trial Court of Mandaluyong City, Branch
211 in SEC Case No. MC-02-002 is REINSTATED . ETHIDa

SO ORDERED .
Leonardo-de Castro, * Del Castillo, Jardeleza and Gesmundo, ** JJ., concur.

Footnotes
* Designated as Acting Chairperson per Special Order No. 2559 dated May 11, 2018.

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 ** Designated as Acting Member per Special Order No. 2560 dated May 11, 2018.

1. Rollo, pp. 11-55.

2. Penned by Associate Justice Normandie B. Pizarro, concurred in by Associate Justices
Remedios A. Salazar-Fernando and Manuel M. Barrios; id. at 64-78.

3. Id. at 61-62.
4. Id. at 14.

5. Id. at 65.

6. Id. at 80-82.
7. Id. at 65-66.
8. Id. at 66.
9. Id.
10. Id. at 67.

11. Id. at 67-68.

12. Id. at 68.
13. Rendered by Acting Presiding Judge Edwin D. Sorongon; id. at 183-190.
14. AN ACT TO DEFINE CONDOMINIUM, ESTABLISH REQUIREMENTS FOR ITS CREATION, AND
GOVERN ITS INCIDENTS. Approved on June 18, 1966.
15. Id. at 190.
16. Id. at 64-78.

17. 579 Phil. 432 (2008).

18. Guidelines for the Enforcement of the Supreme Court Resolution of December 14, 1999 in
Administrative Matter No. 99-10-05-0, as Amended by the Resolutions dated January 30,
2001 and August 7, 2001; effective April 22, 2002.

19. Re: Procedure in Extra-Judicial or Judicial Foreclosure of Real Estate Mortgage; effective
January 15, 2000.
20. Rollo, pp. 76-77.

21. Id. at 77.

22. Supra note 17.
23. Id. at 441.
24. Section 1. When a sale is made under a special power inserted in or attached to any real-
estate mortgage hereafter made as security for the payment of money or the fulfillment
of any other obligation, the provisions of the following election shall govern as to the
manner in which the sale and redemption shall be effected, whether or not provision for
the same is made in the power.
25. AN ACT TO REGULATE THE SALE OF PROPERTY UNDER SPECIAL POWERS INSERTED IN
OR ANNEXED TO REAL ESTATE MORTGAGES. Approved on March 6, 1924.
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 26. Rollo, p. 75.

27. First Marbella Condominium Ass'n., Inc. v. Gatmaytan, supra note 17, at 440.
28. Id.
29. Rollo, 103-123.
30. Id. at 84-102.
31. Id. at 189-190.

32. Id. at 148.

33. 290 Phil. 357 (1992).

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