The Supreme Court ruled that condominium owners must pay their association dues, even if they are denied access to common facilities due to unpaid fees. This decision clarifies the rights and responsibilities of condo owners and the condominium corporations that manage their properties. Practically, this means unit owners cannot withhold dues as leverage while still bound by the fees. By extension, condo corporations must prove that such denials of facility access were in line with the by-laws of that particular community.

Locked Out, Still Paying Up: When Condo Rules Bind Unit Owners

This case revolves around Twin Towers Condominium Corporation (Twin Towers) and ALS Management & Development Corporation (ALS). ALS, owned a unit in Twin Towers. A dispute arose when ALS failed to pay condominium assessments and dues. Twin Towers denied ALS, and by extension Antonio Litonjua, its president, use of the condominium facilities, a move based on their House Rules and Regulations. ALS argued they should not have to pay because they were being denied the benefits of those payments. The Securities and Exchange Commission (SEC) and later the Court of Appeals weighed in. Now, the Supreme Court steps in to determine whether a condo owner can be forced to pay when barred from facility use.

At the heart of this case is the condominium corporation’s authority to impose sanctions for non-payment of dues. Twin Towers, like many condo corporations, had a House Rule (26.3) that allowed them to deny access to facilities for unit owners with delinquent accounts. ALS contended that this rule was invalid, or ultra vires, because it was not expressly authorized by the corporation’s Master Deed or By-Laws. However, the Supreme Court disagreed. They referred to the Condominium Act, which permits Master Deeds to empower management bodies to enforce restrictions and maintain common areas.

“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 xxx shall inure to and bind all condominium owners in the project. xxx 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.”

The Court underscored that petitioner’s Master Deed authorizes it to exercise the granted powers. Twin Towers By-Laws expressly empowers its Board of Directors to promulgate rules and regulations on use of common areas. House Rule 26.3 promotes the overall welfare of the condominium community. Without such a rule, delinquent members could freeload, undermining the financial stability needed for maintaining common areas and facilities.

Building on this foundation, the Court addressed the issue of whether ALS could offset the value of denied services against their unpaid dues. The Court made it clear that ALS cannot offset damages against its assessments because it is not entitled to damages for alleged injury from their own violation of its obligations. To support their argument for reduction of assessments and dues from their failure to repair damages from a defect with ALS’s unit, ALS failed to demonstrate it advanced the expenses from said claim or if there was actual damages to the unit because of such water leakage. Further, the issue was never presented before SEC hearing officer, thus barred to interpose a claim for failure to be raised and thus be deemed waived.

The Supreme Court then addressed the procedural lapse regarding the petition being made after a circular was issued. Though there was merit in dismissing because the petition failed to contain certification of non-forum shopping, the Court states special circumstances can justify the procedural requirement of not requiring the certificate on non-forum shopping. Substantive issues outweighed and justify tempering the hard consequences from the procedural requirement on non-forum shopping. Essentially, the merit should be considered.

Concerning the correct amount of assessments and dues by petitioner, the Court of Appeals did not err as it falls into purely a factual issue which is in turn supported by evidence. This court is not a trier of facts, therefore there is no duty for the Court to weigh on evidence submitted by parties. Lastly, it can no longer be remanded to SEC Hearing Officer per Republic Act No. 8799, since SEC jurisdiction of cases involving intra-corporate disputes to courts of general jurisdiction and regional trial courts.

Ultimately, the Supreme Court granted the petition and set aside the Court of Appeals’ decision. ALS Management & Development Corporation was ordered to pay Twin Towers Condominium Corporation all overdue assessments and dues, including interest and penalties from the date of default. It also held there was no showing on bad faith of ALS in refusing the claims, and thus no basis for attorney fees. This underscores the power of a contract made with good faith with an attached penalty running annually on total due to a failure to pay and the responsibility of unit owners to pay their dues, regardless of temporary restrictions on facility access due to delinquency.

FAQs

What was the key issue in this case?	Whether a condominium owner is obligated to pay assessments and dues even when denied access to condominium facilities due to delinquency.
What is House Rule 26.3 about?	This rule, enacted by Twin Towers Condominium Corporation, restricts delinquent members from using common areas such as the swimming pool, gym, and social hall. It aims to enforce the collection of condominium assessments and dues effectively.
Why did ALS Management & Development Corporation refuse to pay?	ALS refused to pay because Twin Towers denied them (and Antonio Litonjua) use of the condominium facilities. ALS argued they should not be charged for services they couldn’t use.
What does “ultra vires” mean in this context?	“Ultra vires” refers to an act by a corporation that is beyond the scope of its legal powers. ALS argued that House Rule 26.3 was ultra vires because it wasn’t explicitly authorized in Twin Towers’ Master Deed or By-Laws.
What did the Supreme Court decide about House Rule 26.3?	The Supreme Court ruled that House Rule 26.3 was valid. They reasoned that the Condominium Act, Master Deed, and By-Laws collectively gave Twin Towers the power to regulate common area use and enforce payment of dues.
Can ALS offset damages against their unpaid assessments?	No, ALS cannot offset damages against their unpaid assessments and dues. The Supreme Court determined that ALS had no right to such a reduction or offset because the non-payment of dues, which led to the denial of facilities, was the company’s own breach of contract.
What happens now that the case is with the Regional Trial Court?	The Regional Trial Court will receive the records of the case and conduct further proceedings to determine the precise amount of unpaid assessments and dues ALS owes to Twin Towers. This includes calculating applicable interest and penalties.
Does this ruling affect all condominium owners in the Philippines?	Yes, this ruling has implications for all condominium owners in the Philippines. It reinforces the principle that unit owners are obligated to pay assessments and dues, even if temporarily denied access to facilities due to delinquency, solidifying the financial integrity of the condo as a whole.

In conclusion, this case provides valuable guidance on the rights and responsibilities of both condominium corporations and unit owners. By upholding the validity of reasonable restrictions on facility use for delinquent members, the Supreme Court reinforces the importance of fulfilling financial obligations within condominium communities.

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: Twin Towers Condominium Corporation v. Court of Appeals, G.R. No. 123552, February 27, 2003