VOL.

398, FEBRUARY 27, 2003 203

Twin Towers Condominium Corporation vs. Court of
Appeals

G.R. No. 123552. February 27, 2003.*

TWIN TOWERS CONDOMINIUM CORPORATION,

petitioner, vs. THE COURT OF APPEALS, ALS
MANAGEMENT & DEVELOPMENT CORPORATION,
ANTONIO LITONJUA and SECURITIES AND
EXCHANGE COMMISSION, respondents.

Remedial Law; Forum-shopping; Circular No. 28-91

specifically provides for summary dismissal of petitions which do
not contain a sworn certification of non-forum-shopping.—
Circular No. 28-91, which took effect on January 1, 1992, required
a sworn certification of non-forum shopping in cases filed with the
Court of Appeals and the Supreme Court. Circular No. 28-91
specifically provides for summary dismissal of petitions which do
not contain a sworn certification of non-forum shopping.
Same; Same; Same; Petitioner cannot claim that at the time of
the filing of its petitions with the Court of Appeals, it was not
required under any

______________

* FIRST DIVISION.

204

204 SUPREME COURT REPORTS ANNOTATED

Twin Towers Condominium Corporation vs. Court of Appeals

existing Supreme Court Circular to include in its petitions a sworn

certification of non-forum shopping; The rule against forum-
shopping has long been established and Circular No. 28-91 merely
formalized the prohibition and provided the appropriate penalties
against violators.—Clearly, petitioner cannot claim that at the
time of the filing of its petitions with the Court of Appeals, it was
not required under any existing Supreme Court Circular to
include in its petitions a sworn certification of non-forum
shopping. Circular No. 28-91 applies in the instant case, being the
Circular in force at the time. Petitioner cannot even feign
ignorance of Circular No. 28-91 as its petitions were filed more
than one year after the Circular’s effectivity. The rule against
forum shopping has long been established and Circular No. 28-91
merely formalized the prohibition and provided the appropriate
penalties against violators.
Same; Same; Same; Special circumstances or compelling
reasons may justify relaxing the rule requiring certification of non-
forum shopping.—The Court of Appeals did not err in dismissing
the petition for this procedural lapse. However, special
circumstances or compelling reasons may justify relaxing the rule
requiring certification on non-forum shopping. Technical rules of
procedure should be used to promote, not frustrate justice. While
the swift unclogging of court dockets is a laudable objective,
granting substantial justice is an even more urgent ideal. The
certificate of non-forum shopping is a mandatory requirement.
Nonetheless, this requirement must not be interpreted too
literally to defeat the ends of justice.
Same; Appeals; Court is not a trier of facts, and it is not the
function of the Court to re-examine the evidence submitted by the
parties; Rule admits several exceptions.—The question of whether
petitioner’s claim of P994,529.75 for unpaid assessments and dues
against ALS is supported by sufficient evidence is a purely factual
issue and inevitably requires the weighing of evidence. This Court
is not a trier of facts, and it is not the function of this Court to re-
examine the evidence submitted by the parties. In cases brought
before this Court from the Court of Appeals under Rule 45 of the
Rules of Court, this Court’s jurisdiction is limited to reviewing
errors of law which must be distinctly set forth. In this mode of
appeal, the findings of fact of the Court of Appeals and other
courts of origin are conclusive. x x x This rule admits of several
exceptions. This Court may review the findings of fact of the
Court of Appeals: “(a) where there is grave abuse of discretion; (b)
when the finding is grounded entirely on speculations, surmises
or conjectures; (c) when the inference made is manifestly
mistaken, absurd or impossible; (d) when the judgment of the
Court of Appeals was based on a misapprehension of facts; (e)
when the factual findings are conflicting; (f) when the Court of
Appeals, in making its findings, went beyond the issues of the
case and the same are contrary to the admissions of both
appellant and appellee; (g) when the Court of Appeals

205
 VOL. 398, FEBRUARY 27, 2003 205

Twin Towers Condominium Corporation vs. Court of Appeals

manifestly overlooked certain relevant facts not disputed by the

parties and which, if properly considered, would justify a different
conclusion; and, (h) where the findings of fact of the Court of
Appeals are contrary to those of the trial court, or are mere
conclusions without citation of specific evidence, or where the
facts set forth by the petitioner are not disputed by the
respondent, or where the findings of fact of the Court of Appeals
are premised on the absence of evidence and are contradicted by
the evidence on record.”

PETITION for review on certiorari of the decision and

resolution of the Court of Appeals.

The facts are stated in the opinion of the Court.

       Benitez, Parlade, Africa, Herrera, Parlade & Panga
Law Offices for petitioner.
     Castillo, Poblador for private respondents.

CARPIO, J.:

The Case
1
Before us2 is a petition for review on certiorari to nullify the
Decision dated August 3
31, 1995 of the Court of Appeals
and its Resolution dated January 16, 1996 denying
petitioner’s motion for reconsideration. The Court of
Appeals
4
dismissed petitioner’s appeal from the Decision en
banc of the Securities and Exchange Commission, 5
which
reversed the order of the SEC Hearing Officer. The Court
of Appeals dismissed the appeal for lack of merit and for
non-compliance with6 the requirement on certification of
non-forum shopping.

______________

1 Under Rule 45 of the Rules of Court.

2 Penned by Justice Cancio C. Garcia and concurred in by Justices
Arturo B. Buena and Eugenio S. Labitoria, Rollo, pp. 36-46.
3 Rollo, p. 48.
4 By Chairman Rosario N. Lopez and concurred in by Associate
Commissioners Rodolfo L. Samarista, Merle O. Manuel, and Perfecto R.
Yasay, Jr. Commissioner Fe Eloisa C. Gloria did not participate, CA
Records, pp. 44-47.
 5 Rolando C. Malabonga, CA Records, pp. 29-43.
6 Section 6 of Supreme Court Administrative Circular No. 1-95, and
Section 1 of Supreme Court Revised Circular No. 28-91.

206

206 SUPREME COURT REPORTS ANNOTATED

Twin Towers Condominium Corporation vs. Court of
Appeals

The Antecedent Facts

On June 30, 1988, petitioner Twin Towers Condominium 7

Corporation (“petitioner” for brevity) filed a complaint with
the Securities and Exchange Commission (“SEC” for
brevity) against respondents ALS Management &
Development Corporation (“ALS” for brevity) and Antonio
Litonjua (“Litonjua” for brevity). The complaint prayed that
ALS and Litonjua be ordered to pay solidarity the unpaid
condominium assessments and dues with interests and
penalties covering the four quarters of 1986 and 1987 and
the first quarter of 1988.
The complaint alleged, among others, that petitioner, a
non-stock corporation, is organized for the sole purpose of
holding title to and managing the common areas of Twin
Towers Condominium (“Condominium” for brevity).
Membership in petitioner corporation is compulsory and
limited to all registered owners of units in the
Condominium. ALS, as registered owner of Unit No. 4-A
(“Unit” for brevity) of the Condominium, is a member of
petitioner. Litonjua, who is the corporate president of ALS,
occupies the Unit.
Petitioner collects from all its members quarterly
assessments and dues as authorized by its Master Deed
and Declaration of Restrictions (“Master Deed” for brevity)
and its By-Laws. As of the filing of the complaint with the
SEC, petitioner’s records of account show that ALS failed to
pay assessments and dues starting 1986 up to the first
quarter of 1988. Petitioner claimed against both ALS and
Litonjua P118,923.20 as unpaid assessments and dues.
This amount includes accrued interests of P30,808.33 and
penalty charges of P7,793.34, plus P1,500.00
8
as unpaid
contingency fund assessment for 1987.
In their joint Answer with Counterclaim, ALS and
Litonjua asserted that petitioner failed to state a cause of
action against Litonjua. ALS and Litonjua argued that
petitioner’s admission that ALS and not Litonjua is the
registered owner of the Unit and member of petitioner
exonerates Litonjua from any liability to petitioner. While
ALS is a juridical person that cannot by itself

______________

7 Docketed as SEC CASE No. 3385.

8 As of January 31, 1993, petitioner’s claim against ALS amounted to
P994,529.75 inclusive of the amount of P1,500.00 for the contingency fund
for 1987 plus accrued interest in the amount of P378,950.67 and penalty
charges in the amount of P115,183.88; Rollo, p. 18.

207

VOL. 398, FEBRUARY 27, 2003 207

Twin Towers Condominium Corporation vs. Court of
Appeals

physically occupy the Unit, the natural person who

physically occupies the Unit does not assume the liability of
ALS to petitioner. Neither does the agent who acts for the
corporation become personally liable for the corporation’s
obligation.
As counterclaim, ALS claimed damages against
petitioner arising from petitioner’s act of repeatedly
preventing ALS, its agents and guests from using the
parking space, swimming pool, gym, and other facilities of
the Condominium. In addition, Litonjua claimed damages
against petitioner for the latter’s act of including Litonjua’s
name in the list of delinquent unit 9 owners which was
posted on petitioner’s bulletin board. On December 11,
1991, the SEC Hearing Officer ordered petitioner to pay
Litonjua moral and exemplary damages for maliciously
including Litonjua’s name in the list of delinquent unit
owners and for impleading him as a respondent. On the
other hand, the SEC Hearing Officer ordered 10
ALS to pay
the assessments and dues to petitioner. However, the
Hearing Officer did not determine the exact amount to be
paid by ALS because petitioner failed to lay down the11 basis
for computing the unpaid assessments and dues. The
dispositive portion of the decision reads thus:

“WHEREFORE, premises considered, judgment is hereby

rendered as follows:

1. Ordering respondent ALS to pay the legal

assessments/dues due the complainant within thirty (30)
 days from finality of this Decision; and
2. Ordering the complainant to pay respondent Antonio
Litonjua the sum of THREE HUNDRED THOUSAND
PESOS (P300,000.00) as moral damages, FIFTY
THOUSAND PESOS (P50,000.00) as exemplary damages,
and TWO HUNDRED THOUSAND PESOS (P200,000.00)
as and by way of attorney’s fees.
12
SO ORDERED.”

Not satisfied with the SEC Hearing Officer’s decision, both

13
parties filed their respective appeals to the SEC en banc.
Petitioner assailed the award of moral and exemplary
damages as well as

______________

9 CA Records, pp. 22-23.

10 Ibid., p. 37.
11 Ibid.
12 See note 5.
13 The parties’ respective recourses were docketed as SEC-AC Nos. 377
and 378.

208

208 SUPREME COURT REPORTS ANNOTATED

Twin Towers Condominium Corporation vs. Court of
Appeals

attorney’s fees in favor of Litonjua. On the other hand, ALS

appealed that portion of the decision ordering it to pay to
petitioner the assessments and dues.
In a decision dated July 30, 1993, the SEC en banc
nullified the award of damages and attorney’s fees to
Litonjua on the ground that the SEC had no jurisdiction
over Litonjua. The SEC en banc held that there is no intra-
corporate relationship between petitioner and Litonjua who
is not the registered owner of the Unit and thus, not a
member of petitioner. The SEC en banc stated that
petitioner could not invoke the doctrine of piercing the veil
of ALS’ corporate fiction since disregarding the corporate
entity is a function of the regular courts.
Furthermore, the SEC en banc remanded the case to the
Hearing Officer to determine the value of the services
petitioner failed to render to ALS because of the latter’s
non-use of the Condominium facilities. The SEC en banc
ruled that the value of these services could be deducted
from the unpaid assessments and dues that ALS owes
petitioner.
Thus, the SEC en banc declared:

“WHEREFORE, in view of the foregoing, the order appealed from

is hereby reversed insofar as it awards moral and exemplary
damages and attorney’s fees to respondent Litonjua as the same is
null and void
14
for lack of jurisdiction of this Commission over the
said party.
As regards that portion of the appealed Order directing
respondent ALS to pay the legal assessment/dues to the
complainant TTC within thirty (30) [days] from finality of the said
decision, the same is hereby modified by remanding the case to
the hearing officer for determination of the value of the services
withheld by the complainant TTC from respondent ALS in order
that the same may be deducted from the amount of legal
assessments and dues which the respondent corporation shall pay
to the complainant.15
SO ORDERED.” (Emphasis supplied)

______________

14 Antonio Litonjua subsequently filed an action for damages against

petitioner for the latter’s act of including his name in the list of delinquent
members posted on petitioner’s bulletin board. On September 8, 1998, the
Regional Trial Court of Pasig, Branch 166, in Civil Case No. 64115
entitled “Antonio K. Litonjua v. Twin Towers Condominium, et al.”
ordered Twin Towers Condominium to pay Litonjua the amount of
P1,800,000.00 as damages; Rollo, pp. 159-160.
15 See note 4.

209

VOL. 398, FEBRUARY 27, 2003 209

Twin Towers Condominium Corporation vs. Court of
Appeals

Petitioner appealed the SEC en banc Decision to the Court

of Appeals contending grave error or grave abuse of
discretion by the SEC en banc.

The Ruling of the Court of Appeals

The Court of Appeals dismissed petitioner’s appeal on both

procedural and substantive grounds. Procedurally, the
Court of Appeals found the petition defective for failure to
contain a sworn certification of non-forum shopping as
required by Section 6 of Administrative Circular No. 1-95
and Section 2 of Revised Circular No. 28-91.
On the merits, the Court of Appeals substantially
affirmed the decision of the SEC en banc that there is no
ground to pierce the veil of ALS’ corporate fiction. The
Court of Appeals held that there is nothing in the records
to show that ALS is engaged in unlawful, business or that
Litonjua is using ALS to defraud third parties. The fact
alone that ALS is in arrears in paying its assessments and
dues does not make ALS or Litonjua guilty of fraud which
would warrant piercing the corporate veil of ALS. Thus, it
was improper for petitioner to post Litonjua’s name instead
of ALS’ in the list of delinquent unit owners since Litonjua
is not a member of petitioner.
The Court of Appeals also sustained the claim of
petitioner against ALS for unpaid assessments and dues
but found that petitioner failed to substantiate by
preponderance of evidence the basis for computing the
unpaid assessments and dues. Thus, the Court of Appeals
remanded the case to the SEC Hearing Officer for further
reception of evidence and for determination of the exact
amount of ALS’ liability to petitioner. The Court of
Appeals, however, directed the SEC Hearing Officer to
deduct from ALS’ unpaid assessments and dues the value
of the services denied to ALS because of the latter’s non-use
of the Condominium facilities. In allowing the deduction,
the Court of Appeals declared the Condominium’s House
Rule 26.3 as ultra vires. House Rule 26.3, which petitioner
claims as its basis for denying the use of the Condominium
facilities to ALS, authorizes withholding of the use of the
Condominium facilities from delinquent unit owners. The
Court of Appeals, however, ruled that petitioner is not
expressly authorized by its Master Deed and By-Laws to
prohibit delinquent members from using the facilities of
the Condominium.
210

210 SUPREME COURT REPORTS ANNOTATED

Twin Towers Condominium Corporation vs. Court of
Appeals

The Court of Appeals went further and declared the

interest
16
and penalty charges prescribed by House Rule
26.5 on delinquent accounts as exorbitant or grossly
excessive, although this was not raised as an issue. While
in its complaint, petitioner sought to recover P118,923.20
as unpaid assessments and dues, in its amended petition
for review, petitioner sought P994,529.75, more than
17
eight
times the amount it originally claimed from ALS.
In the dispositive portion on its assailed decision, the
Court of Appeals declared:

“WHEREFORE, the instant18

petition is hereby DENIED and is
accordingly DISMISSED.”

Hence, this petition.

The Issues

In its Memorandum, petitioner assigns the following errors

in the decision of the Court of Appeals:

1. “IN DISMISSING THE PETITION ALLEGEDLY

BECAUSE OF PETITIONER’S FAILURE TO COMPLY
WITH THE PERTINENT PROVISIONS OF SUPREME
COURT CIRCULAR NOS. 1-95 AND 28-91 ON THE
CERTIFICATION AGAINST FORUM SHOPPING”;
2. “IN ORDERING A REMAND OF THE CASE BACK TO
THE HEARING OFFICER FOR THE RECEPTION OF
EVIDENCE FOR SERVICES SUPPOSEDLY NOT
RENDERED BY PETITIONER”;
3. “IN DECLARING HOUSE RULE NO. 26.3 AS ULTRA
VIRES”;
4. “IN FINDING THE PENALTIES 19AND INTERESTS
PRESCRIBED IN HOUSE RULE 26.5 AS EXORBITANT
AND GROSSLY EXCESSIVE”;
5. “IN REFUSING TO RECOGNIZE THE FACT THAT
RESPONDENT LITONJUA AND NOT ALS IS THE
REAL OWNER OF APARTMENT UNIT 4-A”; and
6. “IN FAILING TO FIND THAT THERE IS ON RECORD
OVERWHELMING EVIDENCE TO SHOW THE BASIS
OF THE DUES

______________

16 This should read as 26.2, Rollo, p. 177.

17 Rollo, p. 45.
18 Rollo, p. 46.
19 Supra, see note 16.

211

VOL. 398, FEBRUARY 27, 2003 211

Twin Towers Condominium Corporation vs. Court of Appeals
 AND ASSESSMENTS BEING20
COLLECTED FROM THE
PRIVATE RESPONDENTS.”

The Ruling of the Court

The petition is partly meritorious.

A perusal of the foregoing issues readily reveals that
petitioner raises two aspects of the case for consideration—
the procedural aspect and the substantive aspect.
We will discuss the procedural aspect first.

Non-compliance with Supreme Court Circular No. 1-

95 and Revised Circular No. 28-91.

Petitioner submits that the Court of Appeals erred in

dismissing its appeal for non-compliance with Supreme
Court Circular No. 1-95 and Revised Circular No. 28-91.
Petitioner asserts that when it filed its petition, both
circulars were not yet in full force.
Petitioner filed its petition for review with the Court of
Appeals on August 18, 1993 and its amended petition on
September 3, 1993. Both the original and amended
petitions were filed before the effectivity of Revised
Administrative Circular No 1-95 on June 1, 1995. However,
contrary to petitioner’s claim, before the issuance of
Revised Administrative Circular No. 1-95, there was
already an existing circular requiring a sworn certification
of non-forum shopping from a party filing a petition for
review with the Court of Appeals.
Circular No. 28-91, which took effect on January 1,
1992, required a sworn certification of non-forum shopping
in cases filed with the Court of Appeals and the Supreme
Court. Circular No. 28-91 specifically provides for summary
dismissal of petitions which do not contain a sworn
certification of non-forum shopping. Sections 2 and 3 of
Circular No. 28-91 state:

“2. Certification—The party must certify under oath that he

has not commenced any other action or proceeding
involving the same issues in the Supreme Court, the Court
of Appeals, or different Divisions thereof, or any other
tribunal or agency, and that to the best of his knowledge,
no such action or proceeding is pending in the Supreme
Court, the Court of

______________
 20 Rollo, p. 174.

212

212 SUPREME COURT REPORTS ANNOTATED

Twin Towers Condominium Corporation vs. Court of Appeals

Appeals, or different Divisions thereof, or any other

tribunal or agency. If there is any action pending, he must
state the status of the same. If he should learn that a
similar action or proceeding has been filed or is pending
before the Supreme Court, the Court of Appeals, or
different Divisions thereof, or any other tribunal or
agency, he should notify the court, tribunal or agency
within five (5) days from such notice.
3. Penalties—

a. Any violation of this Circular shall be a cause for the

summary dismissal of the multiple petition or complaint.
x x x.”

Clearly, petitioner cannot claim that at the time of the

filing of its petitions with the Court of Appeals, it was not
required under any existing Supreme Court Circular to
include in its petitions a sworn certification of non-forum
shopping. Circular No. 28-91 applies in the instant case,
being the Circular in force at the time. Petitioner cannot
even feign ignorance of Circular No. 28-91 as its petitions
were filed more than one year after the Circular’s
effectivity. The rule against forum shopping has long been
established and Circular No. 28-91 merely formalized the
prohibition21
and provided the appropriate penalties against
violators.
The Court of Appeals did not err in dismissing the
petition for this procedural lapse. However, special
circumstances or compelling reasons may justify relaxing 22
the rule requiring certification on non-forum shopping.
Technical rules of procedure should be used to promote, not
frustrate justice. While the swift unclogging of court
dockets is a laudable objective,23
granting substantial justice
is an even more urgent ideal. The certificate of non-forum
shopping is a mandatory requirement. Nonetheless, this
requirement must 24not be interpreted too literally to defeat
the ends of justice.
In the instant case, the merits of petitioner’s case should
be considered special circumstances or compelling reasons
that justify tempering the hard consequence of the
procedural requirement on non-forum shopping. In the
interest of justice, we reinstate the petition.

______________

21 Chemphil Export and Import Corp. v. CA, 251 SCRA 257 (1995).
22 Shipside Inc. v. CA, 352 SCRA 334 (2001).
23 Ibid.
24 Ibid.; Bernardo v. NLRC, 255 SCRA 108 (1996).

213

VOL. 398, FEBRUARY 27, 2003 213

Twin Towers Condominium Corporation vs. Court of
Appeals

Essentially, the substantive issues for resolution in the

instant petition can be summarized into four, as follows:

1. Whether petitioner can collect assessments and

dues despite its denial to ALS of the use of the
Condominium facilities pursuant to House Rule
26.3;
2. Whether ALS can validly offset against its unpaid
assessments and dues the value of the services
withheld by petitioner;
3. Whether a remand of the case to the proper trial
court is necessary to determine the amounts
involved; and
4. Whether the penalties prescribed in House Rule
26.2 are grossly excessive and exorbitant.

First Issue: Payment of assessments and dues.

Petitioner’s authority to assess dues.

Petitioner was organized to hold title to the common areas
of the Condominium and to act as its management body.
The Condominium Act, the law governing condominiums,
states that:

“Title to the common areas, including the land, or the

appurtenant interests in such areas, may be held by a corporation
specially formed for the purpose (hereinafter known as the
“condominium corporation”) in which the holders of separate
interests shall automatically be members or shareholders, to the
exclusion of others, in proportion to the appurtenant
25
interest of
their respective units in the common areas. x x x”

The Condominium Act provides that the Master Deed may

authorize the condominium corporation to collect
“reasonable 26 assessments to meet authorized
expenditures.” For this purpose, each unit owner “may be
assessed separately for its share of such expenditures in
proportion (unless otherwise provided)27 to its owner’s
fractional interest in the common areas.” Also, Section 20
of the Condominium Act declares:

“Section 20. An assessment upon any condominium made in

accordance with a duly registered declaration of restrictions shall
be an

______________

25 Section 2, Republic Act No. 4726.

26 Ibid., Section 9 (d).
27 Ibid.

214

214 SUPREME COURT REPORTS ANNOTATED

Twin Towers Condominium Corporation vs. Court of Appeals

obligation of the owner thereof at the time the assessment is

made. x x x” (Emphasis supplied)

Petitioner is expressly authorized by its Master Deed to

impose reasonable assessments on its members to maintain
the common areas and facilities of the Condominium.
Section 4, Part II of petitioner’s Master Deed provides:

“Section 4. ASSESSMENTS.—From and after date Ayala

Investment & Development Corporation formally conveys the
condominium project to the Condominium Corporation, the owner
of each unit shall be proportionately liable for the common
expenses of the condominium project, which shall be assessed
against each unit owner in the project and paid to the
Condominium Corporation as provided in Part I Section 8 (b)
hereof at such times and in such manner as shall be provided in
the By-Laws of the Condominium Corporation,

a.) Regular assessments for such amounts as shall be

necessary to meet the operating expenses of the
Condominium Corporation as well as such amounts,
determined in accordance with the provisions of the By-
Laws, to be made for the purpose of creating and
 maintaining a special fund for capital expenditures on the
common areas of the project; including the cost of
extraordinary repairs, reconstruction or restoration
necessitated by damage, depreciation, obsolescence,
expropriation or condemnation of the common areas or
part thereof, as well as the cost of improvements or
additions thereto authorized in accordance with the
provisions of the By-Laws;
b.) x x x
c.) There may be assessed against the unit owners, in the
manner prescribed herein or in the By-Laws of the
Condominium Corporation, such other assessments as are
not specifically provided for herein;
d.) The amount of any such assessment, plus interest
penalties, attorney’s fees and other charges incurred for
the collection of such assessment, shall constitute a lien
upon the unit and on the appurtenant interest of the unit
owner in the Condominium Corporation. Such lien shall
be constituted in the manner provided in the By-Laws of
the Condominium Corporation. The foreclosure, transfer
of conveyance, as well as redemption of the unit shall
include the unit owner’s appurtenant interest in the
Condominium Corporation. The Condominium
Corporation
28
shall have the power to bid at the foreclosure
sale.”

______________

28 Rollo, pp. 104-105.

215

VOL. 398, FEBRUARY 27, 2003 215

Twin Towers Condominium Corporation vs. Court of
Appeals

Thus, petitioner’s right to collect assessments and

dues from its members and the corollary obligation of its
members to pay are beyond dispute.

There is also no question that ALS is a member of

petitioner considering that ALS is the registered owner of
the Unit. Under the automatic
29
exclusive membership
clause in the Master Deed, ALS became a regular member
of petitioner upon its acquisition of a unit in the
Condominium.
 As a member of petitioner, ALS assumed the compulsory
obligation to share in the common expenses of the
Condominium. This compulsory obligation is further
emphasized in Section 8, paragraph c, Part I of the Master
Deed, to wit:

“Each member of the Condominium Corporation shall share in the

common expenses of the condominium
30
project in the same sharing
or percentage stated x x x” (Emphasis supplied)

Undoubtedly, as a member of petitioner, ALS is legally

bound to pay petitioner assessments and dues to maintain
the common areas and facilities of the Condominium. ALS’
obligation arises from both the law and its contract with
the Condominium developer and other unit owners.
Petitioner’s Master Deed provides that a member of the
Condominium corporation shall share 31
in the common
expenses of the condominium project. This obligation does
not depend on the use or non-use by the member of the
common areas and facilities of the Condominium. Whether
or not a member uses the common areas or facilities, these
areas and facilities will have to be maintained.
Expenditures must be made to maintain the common areas
and facilities whether a member uses them frequently,
infrequently or never at all.
ALS asserts that the denial by petitioner to ALS and
Litonjua of the use of the Condominium facilities deprived
petitioner of any right to demand from ALS payment of any
condominium assessments and dues. ALS contends that
the right to demand payment of assessments and dues
carries with it the correlative obligation to

______________

29 Ibid., p. 103.
30 Ibid., p. 104.
31 Sections 7 and 8 (c) of Master Deed, Ibid., pp. 103-104.

216

216 SUPREME COURT REPORTS ANNOTATED

Twin Towers Condominium Corporation vs. Court of
Appeals

allow the use of the Condominium facilities. ALS is correct

if it had not defaulted on its assessment and dues before
the denial of the use of the facilities. However, the records
clearly show that petitioner denied ALS and Litonjua the
use of the facilities only after ALS had defaulted on its
obligation to pay the assessments and dues. The denial of
the use of the facilities was the sanction for the prior
default incurred by ALS.
In essence, what ALS wants is to use its own prior non-
payment as a justification for its future non-payment of its
assessments and dues. Stated another way, ALS advances
the argument that a contracting party who is guilty of first
breaching his obligation is excused from such breach if the
other party retaliates by refusing to comply with his own
obligation.
This obviously is not the law. In reciprocal obligations,
when one party fulfills his obligation, and the other does
not, delay by the other begins. Moreover, when one party
does not comply with his obligation, the other party does
not incur delay if he does not perform his own reciprocal
obligation because of the first party’s noncompliance. This
is embodied in Article 1169 of the Civil Code, the relevant
provision of which reads:

“In reciprocal obligations, neither party incurs in delay if the

other does not comply or is not ready to comply in a proper
manner with what is incumbent upon him. From the moment one
of the parties fulfills his obligation, delay by the other begins.”

Thus, before ALS incurred its arrearages, petitioner

allowed ALS to use the facilities. However, ALS
subsequently defaulted and thus incurred delay. It was
only then that petitioner disallowed ALS and Litonjua from
using the facilities. Clearly, petitioner’s denial to ALS of
the Condominium facilities, after ALS had defaulted, does
not constitute a valid ground on the part of ALS to refuse
paying its assessments and dues.

Validity of House Rule 26.3.

Petitioner’s House Rules and Regulations (“House Rules”
for brevity) expressly authorize denial of the use of
condominium facilities to delinquent members. Specifically,
House Rule 26.3 provides that:

217

VOL. 398, FEBRUARY 27, 2003 217

Twin Towers Condominium Corporation vs. Court of
Appeals

“26. ASSESSMENTS:

xxx
 26.3 Names of unit owners with delinquent accounts who fail to
pay two consecutive quarters shall be posted in the bulletin board.
Unit owners with delinquent accounts, their tenants,
guests/visitors and relatives shall not be allowed the use of all
facilities of the condominium such as the swimming pool, gym,
social hall, etc.” (Emphasis supplied)

The issue on the validity of House Rule 26.3 was raised for
the first time on appeal. It is settled that an issue not
raised during trial could not be raised for the first time on
appeal as to do so would be offensive
32
to the basic rules of
fair play, justice, and due process. Nonetheless, the Court
of Appeals opted to address this issue.
Petitioner justifies House Rule 26.3 by invoking Section
36, paragraph 11 of the Corporation Code which grants
every corporation the power “to exercise such powers as
may be essential or necessary to carry out its purpose or
purposes as stated in its Articles of Incorporation.”
Petitioner was organized for the main purpose of holding
title to and managing the common areas of the
Condominium. Petitioner claims that there is here implied
the power to enact such measures as may be necessary to
carry out the provisions of the Articles of Incorporation, By-
Laws and Master Deed to deal with delinquent members.
This, asserts petitioner, includes the power to enact House
Rule 26.3 to protect and safeguard the interests not only of
petitioner but also of its members.
For their part, ALS and Litonjua assail the validity of
House Rule 26.3 alleging that it is ultra vires. ALS and
Litonjua maintain that neither the Master Deed nor the
By-Laws of petitioner expressly authorizes petitioner to
prohibit delinquent members from using the Condominium
facilities. Being ultra vires, House Rule 26.3 binds no one.
Even assuming that House Rule 26.3 is intra vires, the
same is iniquitous, unconscionable, and contrary to morals,
good customs and public policy. Thus, ALS claims it can
validly deduct the value of the services withheld from the
assessments and dues since it was barred from using the
Condominium facilities for which the assessments and dues
were being collected.

______________

32 Victorias Milling Co., Inc. v. Court of Appeals, 333 SCRA 663 (2000).

218

218 SUPREME COURT REPORTS ANNOTATED

 Twin Towers Condominium Corporation vs. Court of
Appeals

The Court of Appeals sustained respondents’ argument and

declared House Rule 26.3 ultra vires on the ground that
petitioner is not expressly authorized by its Master Deed or
its By-Laws to promulgate House Rule 26.3.
House Rule 26.3 clearly restricts delinquent members
from the use and enjoyment of the Condominium facilities.
The question is whether petitioner can validly adopt such a
sanction to enforce the collection of Condominium
assessments and dues.
We rule that House Rule 26.3 is valid.
Section 45 of the Corporation Code provides:

“Sec. 45. Ultra vires acts of corporations.—No corporation under

this code shall possess or exercise any corporate powers except
those conferred by this Code or by its articles of incorporation and
except such as are necessary or incidental to the exercise of the
powers so conferred.”

The term ultra vires refers to an act outside or beyond

corporate powers, including those that may ostensibly be
within such powers but are, by33 general or special laws,
prohibited or declared illegal. The Corporation Code
defines an ultra vires act as one outside the powers
conferred by the Code or by the Articles of Incorporation, or
beyond what is necessary or incidental to the exercise of
the powers so conferred. Moreover, special laws governing
certain classes of corporations, like the Condominium Act,
also grant specific corporate powers to corporations falling
under such special laws.
The Condominium Act, petitioner’s By-Laws and the
Master Deed expressly empower petitioner to promulgate
House Rule 26.3. Section 9 of the Condominium Act
provides:

“Section 9. The owner of a project shall, prior to the conveyance of

any condominium therein, register a declaration of restrictions
relating to such project, which restrictions x x x shall inure to and
bind all condominium owners in the project, x x x The Register of
Deeds shall enter and annotate the declaration of restrictions
upon the certificate of title covering the land included within the
project, if the land is patented or registered under the Land
Registration or Cadastral acts.
xxx

______________
 33 Jose C. Vitug, Pandect of Commercial Law and Jurisprudence, 3rd
Edition, 1997, p. 466.

219

VOL. 398, FEBRUARY 27, 2003 219

Twin Towers Condominium Corporation vs. Court of
Appeals

Such declaration of restrictions, among other things, may also

provide:
(a) As to any management body—

1. For the powers thereof, including power to enforce the

provisions of the declaration of restrictions;x x x
3. Provisions for maintenance x x x and other services
benefiting the common areas, x x x” (Emphasis supplied)

The Condominium Act clearly provides that the Master

Deed may expressly empower the management body,
petitioner in the instant case, to enforce all provisions in
the Master Deed and Declaration of Restrictions.
Pursuant to Section 9 (a) (1) and (3) of the Condominium
Act, the Master Deed expressly authorizes petitioner to
exercise all the powers granted to the management body by
the Condominium Act, petitioner’s Articles of Incorporation
and By-Laws, the Master Deed, and the Corporation Code.
Section 3, Part II of the Master Deed reads:

“Section 3. MANAGEMENT BODY.—The Condominium

Corporation to be formed and organized pursuant to Section 7 of
Part I, above, shall constitute the management body of the
project. As such management body, the powers of the
Condominium Corporation shall be such as are provided by the
Condominium Act, by the Articles of Incorporation and the By-
Laws of the Corporation, by this instrument and by the applicable
provisions of the Corporation Code as are not inconsistent with the
Condominium Act. Among such powers but not by way of
limitation, it shall have the power to enforce the provisions thereof
in accordance with the By-Laws of the corporation.” (Emphasis
supplied)

Thus, the Master Deed clearly empowers petitioner to

enforce the provisions of the Master Deed in accordance
with petitioner’s ByLaws.
Petitioner’s By-Laws expressly authorize petitioner’s
Board of Directors to promulgate rules and regulations on
the use and enjoyment of the common areas. Thus,
paragraph 2, Section 2 of petitioner’s By-Laws states:
“Without limiting the general nature of the foregoing powers, the
Board of Directors shall have the power to enforce the limitations,
restrictions, and conditions contained in the Master Deed and
Declaration of

220

220 SUPREME COURT REPORTS ANNOTATED

Twin Towers Condominium Corporation vs. Court of Appeals

Restrictions of the project; promulgate rules and regulations

concerning the use, enjoyment and occupancy of the units, common
areas and other properties in the condominium project, to make
and collect assessments against members as unit owners to defray
the costs and expenses of the condominium project and the
corporation and to secure by legal means the observance of the
provisions of the Condominium Act, the Master Deed, the Articles
of Incorporation, these By-Laws, and the rules and regulations
promulgated by it in accordance herewith. The members of the
corporation 34bind themselves to comply faithfully with all these
provisions.” (Emphasis supplied)

Evidently, the Condominium Act, the Master Deed and

petitioner’s By-Laws grant petitioner the express power to
promulgate rules and regulations concerning the use,
enjoyment and occupancy of the common areas.
Moreover, House Rule 26.3, which prohibits delinquent
members from using the common areas, is necessary to
ensure maintenance of the common areas. Petitioner’s
purpose in enacting House Rule 26.3 is to enforce
effectively the provisions of the Master Deed. House Rule
26.3 is well within the powers of petitioner to adopt as the
same is reasonably necessary to attain the purpose for
which both petitioner and the Condominium project were
created. Thus, Section 7 of the Master Deed declares:

“Section 7. CONDOMINIUM CORPORATION.—A corporation to

be known as THE TWIN TOWERS CONDOMINIUM (hereinafter
referred to as the “Condominium Corporation”), shall be formed
and organized pursuant to the Condominium Act and the
Corporation Code to hold title to all the aforestated common areas
of the condominium project including the land, to manage THE
TWIN TOWERS CONDOMINIUM and to do such other things as
may be necessary, incidental and 35
convenient to the
accomplishment of said purposes x x x” (Emphasis supplied)

Petitioner would be unable to carry out its main purpose of

maintaining the Condominium common areas and facilities
if members refuse to pay their dues and yet continue to use
these areas and facilities. To impose a temporary ban on
the use of the common areas and facilities until the
assessments and dues in arrears are paid is a reasonable
measure that petitioner may undertake to compel the
prompt payment of assessments and dues.

______________

34 Rollo, p. 25.
35 Ibid., p. 130.

221

VOL. 398, FEBRUARY 27, 2003 221

Twin Towers Condominium Corporation vs. Court of
Appeals

Second Issue: Offsetting the value of services

withheld against ALS’ unpaid assessments and dues.

ALS’ claim for reduction of its assessments and dues

because of its non-use of the Condominium facilities.
We rule that ALS has no right to a reduction of its
assessments and dues to the extent of its non-use of the
Condominium facilities. ALS also cannot offset damages
against its assessments and dues because ALS is not
entitled to damages for alleged injury arising from its own
violation of its contract. Such a breach of contract cannot
36
be
the source of rights or the basis of a cause of action. To
recognize the validity of such claim would be to legalize
ALS’ breach of its contract.

ALS’ claim for unrendered repair services barred by

estoppel.
ALS also justifies its non-payment of dues on the ground of
the alleged failure of petitioner to repair the defects in ALS’
Unit. However, this claim for unrendered repairs was
never raised before the SEC Hearing Officer or the SEC en
banc. The issue on these alleged unrendered repairs, which
supposedly caused ALS’ Unit to deteriorate, was raised for
the first time on appeal. The Court of Appeals did not pass
upon the same.
Neither in the proceedings in the SEC nor in the
appellate court did ALS present evidence to substantiate
its allegation that petitioner failed to render the repair
services. Also, ALS failed to establish whether it claimed
for the costs of the repair because ALS advanced these
expenses, or for the value of damages caused to the Unit by
the water leakage.
ALS is therefore barred at this37late stage to interpose
this claim. In Del Rosario v. Bonga, the Court held:

“As a rule, no question will be entertained on appeal unless it has

been raised in the court below. Points of law, theories, issues and
arguments not brought to the attention of the lower court need
not be, and

______________

36 Asturias Sugar Central v. Pure Cane Molasses Co., 60 Phil. 255 (1934).
37 350 SCRA 101 (2001).

222

222 SUPREME COURT REPORTS ANNOTATED

Twin Towers Condominium Corporation vs. Court of Appeals

ordinarily will not be, considered by a reviewing court, as they

cannot be raised for the first time at that late stage. Basic
considerations of due process impel this rule.”

As this claim was a separate cause of action which should

have been raised in ALS’ Answer with Counterclaim, ALS’
failure to raise this claim is deemed a waiver of the claim.

Third Issue: Remand of the case to the proper trial

court.

Question of fact.
The Court of Appeals ruled that there is a need to remand
the case considering that there is no sufficient evidence on
record to establish the amount of petitioner’s claim against
ALS for unpaid assessments and dues.
The question of whether petitioner’s claim of
P994,529.75 for unpaid assessments and dues against ALS
is supported by sufficient evidence is a purely factual issue
and inevitably requires the weighing of evidence. This
Court is not a trier of facts, and it is not the function of this
Court 38to re-examine the evidence submitted by the
parties. In cases brought before this Court from the Court
of Appeals under Rule 45 of the Rules of Court, this Court’s
jurisdiction is limited to reviewing errors of law which
39
 39
must be distinctly set forth. In this mode of appeal, the
findings of fact of the40 Court of Appeals and other courts of
origin are conclusive.
Jurisprudence is settled that:

“(a)s a rule, the jurisdiction of this Court in cases brought to it

from the Court of Appeals x x x is limited to the review and
revision of errors of law allegedly committed by the appellate
court, as its finding of fact are deemed conclusive. As such this
Court is not duty-bound to analyze and weigh all over 41
again the
evidence already considered in the proceedings below.”

______________

38 Langkaan Realty Development, Inc. v. United Coconut Planters Bank,

347 SCRA 542 (2000).
39 Tan Chun Suy v. Court of Appeals, 229 SCRA 151 (1994).
40 Coca-Cola Bottlers Phils., Inc. v. Court of Appeals, 229 SCRA 533
(1994).
41 Fuentes v. Court of Appeals, 268 SCRA 703 (1997).

223

VOL. 398, FEBRUARY 27, 2003 223

Twin Towers Condominium Corporation vs. Court of
Appeals

This rule admits of several exceptions. This Court may

review the findings of fact of the Court of Appeals:

“(a) where there is grave abuse of discretion; (b) when the finding
is grounded entirely on speculations, surmises or conjectures; (c)
when the inference made is manifestly mistaken, absurd or
impossible; (d) when the judgment of the Court of Appeals was
based on a misapprehension of facts; (e) when the factual findings
are conflicting; (f) when the Court of Appeals, in making its
findings, went beyond the issues of the case and the same are
contrary to the admissions of both appellant and appellee; (g)
when the Court of Appeals manifestly overlooked certain relevant
facts not disputed by the parties and which, if properly
considered, would justify a different conclusion; and, (h) where
the findings of fact of the Court of Appeals are contrary to those of
the trial court, or are mere conclusions without citation of specific
evidence, or where the facts set forth by the petitioner are not
disputed by the respondent, or where the findings of fact of the
Court of Appeals are premised on the absence
42
of evidence and are
contradicted by the evidence on record.”
However, none of these exceptions exists in the instant
case.
The SEC Hearing Officer found that, while petitioner is
entitled to collect the unpaid assessments and dues from
ALS, petitioner has failed to establish clearly the basis for
computing the correct amount of the unpaid assessments
and dues. Indeed, there is no evidence laying down the
basis of petitioner’s claim other than allegations of previous
demands and statements of accounts. Whether petitioner
has sufficiently established its claim by preponderance of
evidence requires an examination of the probative weight
of the evidence presented by the parties. Evidently, this is
a question of fact the resolution of which is beyond the
purview of the petition for review where only errors of law
may be raised. On the other hand, the decision of the Court
of Appeals, finding insufficient evidence on record, was
made under its power to review both questions of fact and
law.

Remand to the proper trial court.

While we sustain the ruling of the Court of Appeals, the
case can no longer be remanded to the SEC Hearing
Officer. Republic Act No. 8799, which took effect on August
8, 2000, transferred SEC’s jurisdiction over cases involving
intra-corporate disputes to courts

______________

42 Ibid.

224

224 SUPREME COURT REPORTS ANNOTATED

Twin Towers Condominium Corporation vs. Court of
Appeals

of general jurisdiction or the appropriate regional trial

courts. Section 5.2 of R.A. No. 8799 reads:

“5.2. The Commission’s jurisdiction over all cases enumerated

under Section 5 of Presidential Decree No. 902-A is hereby
transferred to the Courts of general jurisdiction or the
appropriate Regional Trial Court; Provided, That the Supreme
Court in the exercise of its authority may designate the Regional
Trial Court branches that shall exercise jurisdiction over these
cases. The Commission shall retain jurisdiction over pending
cases involving intra-corporate disputes submitted for final
resolution which should be resolved within one (1) year from the
enactment of this Code. The Commission shall retain jurisdiction
over pending suspension of payments/rehabilitation cases filed as
of 30 June 2000 until finally disposed.”

Based on43the Resolution issued by this Court in AM No. 00-

8-10-SC, the Court Administrator and the Securities and
Exchange Commission should cause the transfer of the
records of SEC-AC Nos. 377 and 378 to the proper regional
trial court for further reception of evidence and
computation of the correct amount of assessments and dues
that ALS shall pay to petitioner.

Fourth Issue: Penalties prescribed in House Rule 26.2.

ALS and Litonjua did not question before either the SEC or
the Court of Appeals the validity of the penalties prescribed
in the Condominium’s House Rule 26.2. Nevertheless, the
Court of Ap-peals ruled that House Rule 26.2 prescribes
grossly excessive penalties and interests. The resolution of
this issue is not necessary in arriving at a complete and
just resolution of this case. At any rate, we find the interest
and penalties prescribed under House Rule 26.2 reasonable
considering the premier location of the Condominium at
the heart of Makati City. It is inevitable that ALS’ unpaid
assessments and dues would escalate because ALS’
delinquency started since 1986.
House Rule 26.2 clearly provides for a 24% interest and
an 8% penalty, both running annually, on the total amount
due in case of failure to pay, to wit:

______________

43 “In Re: Transfer of Cases from the Securities and Exchange

Commission to the Regular Courts Pursuant to RA 8799.”

225

VOL. 398, FEBRUARY 27, 2003 225

Twin Towers Condominium Corporation vs. Court of
Appeals

“26.2. Late payment of accounts of members shall be charged an

interest rate of 24% per annum. In addition, a penalty at the rate
of 8% per annum shall be charged on delinquent accounts. The
24% interest shall be imposed on unpaid accounts starting with
the 21st day of the quarter until fully paid.”
To reiterate, the Condominium Act expressly provides that
the Master Deed may empower the management body of
the Condominium “to enforce 44
the provisions of the
declaration of restrictions.” The Master Deed authorizes
petitioner, as the management body, to enforce the
provisions of the Master Deed in accordance with
petitioner’s By-Laws. Thus, petitioner’s Board of Directors
is authorized to determine the reasonableness of the
penalties and interests to be imposed against those who
violate the Master Deed. Petitioner has validly done this by
adopting the House Rules.
The Master Deed binds ALS since the Master Deed is
annotated on the condominium certificate of title of ALS’
Unit. The Master Deed is ALS’ contract with all
Condominium members who are all co-owners of the
common areas and facilities of the Condominium.
Contracts have the force of law between
45
the parties and are
to be complied with in good faith. From the moment the
contract is perfected, the parties are bound to comply with
what is expressly stipulated as well as with what is
required by the nature of the46 obligation in keeping with
good faith, usage and the law. Thus, when ALS purchased
its Unit from petitioner, ALS was bound by the terms and
conditions set forth in the contract, including the
stipulations in the House Rules of petitioner, such as
House Rule 26.2.
In sum, as a member of petitioner, ALS is indisputably
bound by the Condominium’s House Rules which are
authorized by the ByLaws, the Master Deed and the
Condominium Act.

Award of attorney’s fees.

The award of attorney’s fees as damages is the exception
rather than the rule. The general rule is that attorney’s
fees cannot be

______________

44 Section 9 (b) (1), Condominium Act.

45 Pilipinas Hino, Inc. v. Court of Appeals, 338 SCRA 355 (2000).
46 Article 1315 of the Civil Code.

226

226 SUPREME COURT REPORTS ANNOTATED

Twin Towers Condominium Corporation vs. Court of
Appeals
recovered as part of damages because of the policy that no 47
premium should be placed on the right to litigate.
Counsel’s 48fees are not awarded every time a party prevails
in a suit. An award of attorney’s fees and expenses of
litigation is proper under the instances provided for in
Article 2208 of the Civil Code, one of which is where the
defendant acted in gross and evident bad faith. In this case,
however, we find no cogent reason to award attorney’s fees
in the absence of showing of gross and evident bad faith on
the part of ALS in refusing to satisfy petitioner’s claim.
WHEREFORE, the petition is GRANTED and the
assailed Decision of the Court of Appeals is SET ASIDE.
ALS Management & Development Corporation is ordered
to pay Twin Towers Condominium Corporation all overdue
assessments and dues, including interest and penalties
from date of default, as shall be determined by the proper
Regional Trial Court in accordance with this Decision. The
proper Regional Trial Court shall complete the
computation within sixty (60) days from its receipt of this
Decision and the records of SEC-AC Nos. 377 and 378.
Costs of suit against ALS Management & Development
Corporation.
SO ORDERED.

          Davide, Jr. (C.J., Chairman), Vitug and Azcuna,

JJ., concur.
     Ynares-Santiago, J., On leave.

Petition granted, judgment set aside.

Note.—Where forum-shopping is deemed to exist the

summary dismissal of both actions is warranted.
(Prubankers Association vs. Prudential Bank and Trust
Company, 302 SCRA 74 [1999])

——o0o——

______________

47 Philtranco Service Enterprises, Inc. v. Court of Appeals, 273 SCRA

562 (1997).
48 Ibid.

227
© Copyright 2021 Central Book Supply, Inc. All rights reserved.