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MEDICAL PLAZA MAKATI CONDOMINIUM CORPORATION v. ROBERT H. CULLEN

FACTS:

Robert H. Cullen purchased a condominium unit from Meridien Land Holding, Inc. (MLHI) and a new title was issued in his name. The respondent claimed that he had been diligently paying his association dues and even held positions in the condominium corporation. He requested an explanation from MLHI regarding the settlement of his obligations but was informed that it had already been settled. Respondent then filed a complaint against Medical Plaza Makati Condominium Corporation (MPMCC) and MLHI, alleging that MPMCC maliciously labeled him as a delinquent member to prevent him from participating in the board of directors' election. The respondent sought damages and held petitioner liable for these alleged acts.

The plaintiff filed a complaint against Metropolitan Parkview Condominium Corporation (MPMCC) and Meridien Linen Hotel, Inc. (MLHI), claiming that MPMCC unjustly refused to accept his payment for the delinquency of his condo unit and that MLHI failed to provide accurate and updated information regarding his account. The plaintiff sought the payment of the delinquency, damages, and exemplary damages. MLHI argued that the Housing and Land Use Regulatory Board (HLURB) had jurisdiction over the case, while MPMCC argued that the complaint lacked a cause of action. The Regional Trial Court (RTC) dismissed the complaint, but the Court of Appeals (CA) reversed this decision and remanded the case to the RTC for further proceedings. MLHI now appeals to the Supreme Court, claiming that the case should be considered an intra-corporate controversy falling under the jurisdiction of a special commercial court.

ISSUES:

  1. Does the controversy involve intra-corporate issues falling within the jurisdiction of the RTC sitting as a special commercial court or an ordinary action for damages within the jurisdiction of regular courts?

  2. Should the dispute be resolved by the SEC, as it falls under the cases over which the SEC exercises exclusive jurisdiction?

  3. Whether the Regional Trial Court (RTC) has jurisdiction over cases previously cognizable by the Securities and Exchange Commission (SEC), even if the RTC is not designated as a special commercial court.

  4. Whether the Housing and Land Use Regulatory Board (HLURB) has jurisdiction over controversies between a condominium unit owner and a condominium corporation.

  5. Whether or not the jurisdiction over the intra-corporate dispute between petitioner and respondent lies with the Regional Trial Court (RTC) as a special commercial court or with the Housing and Land Use Regulatory Board (HLURB).

RULING:

  1. The case involves an intra-corporate controversy. The relationship test and the nature of the controversy test are used in determining whether a dispute constitutes an intra-corporate controversy. Under the relationship test, the existence of intra-corporate relations makes the case intra-corporate. Under the nature of the controversy test, the controversy must pertain to the enforcement of the parties' rights and obligations under the Corporation Code and the internal rules of the corporation. In this case, the controversy involves intra-corporate relations between the condominium corporation and a stockholder/member, and the questions involved pertain to their rights and obligations under the Corporation Code. Therefore, the case should be heard by the RTC sitting as a special commercial court.

  2. The RTC has jurisdiction over the case. While the case involves an intra-corporate controversy, it does not fall under the exclusive jurisdiction of the SEC. The dispute does not arise from the intra-corporate or partnership relations enumerated in Presidential Decree No. 902-A, which are under the exclusive jurisdiction of the SEC. The RTC sitting as a special commercial court is competent to tackle civil law issues incidental to intra-corporate disputes. Therefore, the RTC has jurisdiction to resolve the issues in the case.

  3. The RTC does not have jurisdiction over cases previously cognizable by the SEC if the RTC is not designated as a special commercial court.

  4. The HLURB does not have jurisdiction over controversies between a condominium unit owner and a condominium corporation.

  5. The Supreme Court ruled that the jurisdiction over the intra-corporate dispute between petitioner and respondent lies with the RTC as a special commercial court and not with the HLURB. The Court based its ruling on the fact that RA 4726, or the Condominium Act, specifically governs condominiums and sanctions the creation of a condominium corporation. It further emphasized that the rights and obligations of condominium unit owners and the condominium corporation are set forth in the said Act. Therefore, condominium corporations are not covered by the amendment in question, and the dispute should be resolved by the RTC sitting as a special commercial court. The Court reversed the Court of Appeals' decision and ordered the dismissal of the complaint before the RTC for lack of jurisdiction.

PRINCIPLES:

  • The jurisdiction of the court is determined based on the allegations in the complaint, irrespective of whether the plaintiff is entitled to recover upon all or some of the claims asserted therein.

  • In determining whether a dispute constitutes an intra-corporate controversy, two tests are used: the relationship test and the nature of the controversy test.

  • An intra-corporate controversy pertains to relationships between the corporation and the public, the State, stockholders, partners, or associates, or among the stockholders, partners, or associates themselves.

  • The nature of the controversy test requires that the controversy must not only be rooted in the existence of an intra-corporate relationship but must also pertain to the enforcement of the parties' rights and obligations under the Corporation Code and the internal rules of the corporation.

  • The RTC sitting as a special commercial court has jurisdiction over intra-corporate disputes, including issues on damages incidental to such disputes.

  • The SEC has exclusive jurisdiction over cases arising out of intra-corporate or partnership relations, controversies between stockholders, members, or associates, and controversies in the election or appointment of directors, trustees, officers, or managers of corporations, partnerships, or associations.

  • The Securities Regulation Code (RA No. 8799) transferred the jurisdiction over cases enumerated in Presidential Decree No. 902-A from the SEC to RTCs designated as special commercial courts.

  • The Magna Carta for Homeowners and Homeowners' Associations (RA No. 9904) empowers the HLURB to decide inter-association and/or intra-association controversies or conflicts concerning homeowners' associations, but it does not extend to controversies between a condominium unit owner and a condominium corporation. The legislative intent was not to include condominium corporations under the coverage of the law.

  • The jurisdiction over condominium-related disputes involving condominium corporations lies with the Regional Trial Court sitting as a special commercial court (citing Chateau de Baie Condominium Corporation v. Moreno and Wack Wack Condominium Corporation, et al v. CA).

  • RA 4726, or the Condominium Act, governs condominiums and provides for the rights and obligations of condominium unit owners and condominium corporations.