In Alliance of Quezon City Homeowners’ Association, Inc. v. Quezon City Government, the Supreme Court addressed the crucial issue of whether an unregistered association has the legal capacity to sue on behalf of its members. The Court ruled that an unregistered association, lacking a separate juridical personality, cannot bring a suit in its own name. This means that only individuals or entities with a recognized legal existence can initiate legal actions, safeguarding the integrity of court proceedings by ensuring that the parties involved are properly defined and accountable. This case underscores the importance of proper registration and legal standing in pursuing legal remedies.

Whose Fight Is It? The Battle Over Quezon City’s Property Tax Hike

The case arose from Quezon City Ordinance No. SP-2556, Series of 2016, which revised the schedule of Fair Market Values (FMVs) for real properties in Quezon City, leading to increased real property taxes. The Alliance of Quezon City Homeowners’ Association, Inc. (Alliance), an organization claiming to represent homeowners, challenged the ordinance, arguing it was unconstitutional and violated the Local Government Code (LGC). Alliance contended that the increased FMVs were unjust, excessive, and confiscatory, and that the public consultations prior to the ordinance’s enactment were insufficient. The Quezon City government defended the ordinance, asserting that it complied with all legal requirements and that the increased FMVs were necessary to reflect the current market prices of real properties.

The Supreme Court initially addressed procedural hurdles raised by the respondents. These included the doctrines of exhaustion of administrative remedies and hierarchy of courts, as well as the Alliance’s legal capacity to sue. The doctrine of **exhaustion of administrative remedies** requires parties to exhaust all available remedies at the administrative level before seeking judicial intervention. In this case, the LGC provides remedies such as questioning the assessment before the city treasurer and appealing to the Local Board of Assessment Appeals, as well as appealing the validity of a tax ordinance to the Secretary of Justice. While Alliance did not comply with these administrative remedies, the Court recognized an exception when strong public interest is involved, as the increase in FMVs for property taxes significantly affects the public at large.

Similarly, the **hierarchy of courts doctrine** generally prohibits parties from directly resorting to the Supreme Court when relief can be obtained from lower courts. However, this doctrine also admits exceptions, such as when the case involves matters of transcendental importance. Given the widespread impact of the ordinance on Quezon City residents, the Court deemed it appropriate to relax this rule. As the court stated in Ferrer, Jr. v. Bautista:

…the challenged ordinances would “adversely affect the property interests of all paying constituents of (QC),” and that it would serve as a test case for the guidance of other local government units in crafting ordinances. It added that these circumstances allow the Court to set aside the technical defects and take primary jurisdiction over the petition, stressing that “[t]his is in accordance with the well-entrenched principle that rules of procedure are not inflexible tools designed to hinder or delay, but to facilitate and promote the administration of justice. Their strict and rigid application, which would result in technicalities that tend to frustrate, rather than promote substantial justice, must always be eschewed.”

Despite these exceptions, the Court ultimately dismissed the petition due to Alliance’s lack of **legal capacity to sue**. This legal principle dictates that only natural or juridical persons, or entities authorized by law, may be parties in a civil action. An unregistered association, lacking a separate juridical personality, cannot sue in its own name. The Court emphasized that Alliance admitted its lack of juridical personality due to the revocation of its SEC Certificate of Registration and its failure to register with the HLURB as a homeowner’s association. Alliance argued that its members of the Board of Trustees filed the petition in their own personal capacities, but the Court found that the petition was filed solely in the name of Alliance, not the individual members.

Furthermore, the Court noted that even if Alliance’s authorized representative, Liwanag, was a taxpayer and resident of Quezon City, this did not cure the procedural lapse. In Association of Flood Victims (AFV) v. Commission on Elections, the Court dismissed the petition because the unincorporated association lacked the capacity to sue in its own name, and its representative had no personality to bring an action in court. The Court, referencing the case of Dueñas v. Santos Subdivision Homeowners Association, reiterated that a complaint filed by an unregistered association cannot be treated as a suit by the persons who signed it.

The Court underscored the importance of a proper petitioner in a lawsuit. Without a legally recognized entity bringing the suit, the Court would face continuous uncertainty regarding to whom the reliefs should be granted. This contrasts with the case of Samahan ng mga Progresibong Kabataan (SPARK) v. Quezon City, where the Court gave due course to the petition despite SPARK’s lack of legal capacity because individuals or natural persons joined as co-petitioners.

The Supreme Court ultimately held that while the case raised important issues regarding the validity and constitutionality of Quezon City Ordinance No. SP-2556, Series of 2016, the lack of legal capacity to sue on the part of the Alliance of Quezon City Homeowners’ Association, Inc. necessitated the dismissal of the petition. The Court emphasized that the resolution of these critical issues must await the filing of a proper case by a proper party.

FAQs

What was the key issue in this case?	The key issue was whether an unregistered homeowners’ association has the legal capacity to sue in court on behalf of its members to challenge a local tax ordinance. The Court found that lacking a juridical personality, the association could not bring the suit.
What is legal capacity to sue?	Legal capacity to sue refers to a party’s general ability to bring a civil action in court. This includes having a recognized legal existence, such as being a natural person or a registered juridical entity.
Why did the Supreme Court dismiss the petition?	The Supreme Court dismissed the petition because the Alliance of Quezon City Homeowners’ Association, Inc. lacked legal capacity to sue. Its SEC registration was revoked and it was unregistered with HLURB, and no proper party filed the case.
What is the doctrine of exhaustion of administrative remedies?	This doctrine requires that parties must exhaust all available remedies at the administrative level before seeking intervention from the courts. This ensures that administrative agencies have the opportunity to resolve issues within their expertise.
What is the hierarchy of courts doctrine?	The hierarchy of courts doctrine directs that parties should generally seek relief from the lower courts before resorting to higher courts, including the Supreme Court. This promotes efficient judicial administration and prevents overburdening the higher courts with cases that could be resolved elsewhere.
What was the effect of the temporary restraining order (TRO) issued by the Court?	The TRO initially prevented the implementation of the Quezon City Ordinance No. SP-2556, Series of 2016, pending resolution of the case. However, with the dismissal of the petition, the TRO was lifted, allowing the ordinance to take effect.
What recourse do Quezon City homeowners have now?	Quezon City homeowners who wish to challenge the ordinance must do so through a properly registered entity or as individual taxpayers with legal standing. They may also pursue administrative remedies, such as protesting the assessment with the City Treasurer and appealing to the Local Board of Assessment Appeals.
Can individual members of an unregistered association sue?	Yes, individual members of an unregistered association can sue, but they must do so in their personal capacities, ensuring that their names are included in the case title. They must also demonstrate that they have suffered direct and personal injury as a result of the challenged action.
Why is it important for an association to be registered?	Registration confers a separate juridical personality on an association, allowing it to enter into contracts, own property, and sue or be sued in its own name. This legal recognition is essential for protecting the interests of its members and ensuring accountability.

This case underscores the critical importance of legal standing and proper registration for associations seeking to represent their members’ interests in court. While the Supreme Court recognized the public interest in the challenged tax ordinance and relaxed procedural rules, the lack of legal capacity to sue ultimately led to the dismissal of the case. This ruling serves as a reminder for associations to ensure their legal status is properly established before pursuing legal action.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Alliance of Quezon City Homeowners’ Association, Inc. v. Quezon City Government, G.R. No. 230651, September 18, 2018