G.R. No. 78490 November 23, 1992
WACK WACK CONDOMINIUM CORPORATION, WELBILT CONSTRUCTION CORPORATION and EUGENIO JUAN GONZALES, petitioners, vs. THE COURT OF APPEALS, HON. JUANITO ALMOSA, JR., in his capacity as Securities and Exchange Commission Hearing Officer, and JOSEFINA M. BAYOT, respondents.

FACTS

Private respondent Josefina Bayot bought and fully paid for a condominium unit in the Wack Wack Building, becoming a stockholder of petitioner Wack Wack Condominium Corporation. Petitioner Welbilt Construction Corporation is the developer, and petitioner Eugenio Gonzales is the President of both corporations. In July 1984, Wack Wack issued a Statement of Account listing assessments against Bayot totaling P112,367.72, which she assailed as unreasonable, arbitrary, and/or unauthorized. On July 17, 1984, Wack Wack filed a petition for extrajudicial sale of Bayot’s unit to answer for the unpaid assessments. On August 23, 1984, the day before the scheduled sale, Bayot filed a petition before the SEC for Injunction and Damages with a prayer for a preliminary injunction, and the SEC Hearing Officer issued a temporary restraining order. On September 10, 1984, petitioners filed a petition for mandamus before the RTC of Pasig to compel the Sheriff to proceed with the sale. On October 5, 1984, the RTC issued an order stating the restraining order had lapsed and could be disregarded. Bayot was unaware of this mandamus proceeding as she was not made a party. Hearings on the preliminary injunction at the SEC continued, with several postponements at petitioners’ instance. On October 23, 1984, after Bayot finished presenting her evidence, petitioners’ counsel asked for another postponement. At this hearing, counsel said nothing about the granted mandamus. Subsequently, Bayot received a second notice of foreclosure and filed a motion with the SEC for another restraining order. On November 16, 1984, the date set for the next SEC hearing, petitioners’ counsel did not appear but sent a motion for postponement. That same day, despite the Sheriff’s receipt of the second restraining order, the extrajudicial sale took place with petitioners as the highest bidders. On December 3, 1984, petitioners filed a Motion to Dismiss SEC Case No. 2675 on the grounds of mootness and lack of SEC jurisdiction. The SEC denied the motion, and the Court of Appeals upheld the SEC’s denial.

ISSUE

1. Whether the extrajudicial sale of the condominium unit has rendered SEC Case No. 2675 moot and academic.
2. Whether the foreclosure proceedings is within the jurisdiction of the SEC.

RULING

1. No, the extrajudicial sale has not rendered the SEC case moot and academic. The validity of the foreclosure depends on the legality of the assessments. If there were no valid assessments, then there was no lien on the property to foreclose. The issue of the assessments’ validity must be determined by the SEC to ensure Bayot was not deprived of her property without being heard.
2. Yes, the dispute is within the exclusive original jurisdiction of the SEC. The dispute as to the validity of the assessments is an intra-corporate matter between Wack Wack and its stockholder, Bayot, falling under the SEC’s jurisdiction pursuant to P.D. 902-A. Since the extrajudicial sale was authorized by the corporation’s by-laws and resulted from the non-payment of the assessments, the legality of the foreclosure is necessarily an issue also within the SEC’s jurisdiction.
Additionally, the Supreme Court found that, under the unusual circumstances of the case, the second restraining order issued by the SEC Hearing Officer on November 15, 1984, was valid and effective. The circumstances strongly suggested a premeditated plan to effect the sale with the least possible opportunity for Bayot to stop it.
The SEC order denying the Motion to Dismiss was AFFIRMED, and the case was remanded to the SEC for further proceedings.