Sta. Clara Homeowners' Association vs. Spouses Gaston

Membership in a homeowners’ association is voluntary and cannot be unilaterally forced by a provision in the association’s articles of incorporation or by-laws which the alleged member did not agree to be bound. Jurisdiction over the subject matter and the sufficiency of a cause of action are determined exclusively by the allegations in the complaint, unaffected by the pleas or theories set up in a motion to dismiss.

Spouses Victor Ma. Gaston and Lydia Gaston purchased Lots 11 and 12 of Block 37 along San Jose Avenue in Sta. Clara Subdivision, Bacolod City in 1974. At the time of purchase, there was no mention or requirement of membership in any homeowners’ association, and their Transfer Certificates of Title contained no annotation regarding automatic membership. They remained non-members of the Sta. Clara Homeowners’ Association (SCHA) and were issued "non-member" gatepass stickers for their vehicles. This arrangement remained undisturbed until mid-March 1998, when SCHA disseminated a board resolution decreeing that only members in good standing would be issued vehicle stickers. Following this resolution, the spouses' son was repeatedly required to show his driver's license to enter the subdivision, and on March 29, 1998, Victor Ma. Gaston was physically prevented from entering the subdivision by security guards who lowered the steel bar at the gate and demanded his driver's license.

• Purchase of Property: Spouses Victor Ma. Gaston and Lydia Gaston purchased their lots in Sta. Clara Subdivision, Mandalagan, Bacolod City in 1974. At the time of purchase, there was no requirement of membership in any homeowners' association.
• Non-Member Status: The spouses never joined the Sta. Clara Homeowners’ Association (SCHA). An arrangement was made wherein non-member homeowners were issued "non-member" gatepass stickers for their vehicles for identification by subdivision security guards.
• SCHA Board Resolution: In mid-March 1998, SCHA disseminated a board resolution decreeing that only members in good standing would be issued vehicle stickers.
• Incidents of Restriction: Following the resolution, the spouses' son, who lived with them, was required by guards to show his driver's license as a prerequisite to entering the subdivision on three separate occasions, despite being personally known to the guards. On March 29, 1998, Victor Ma. Gaston was prevented from entering the subdivision when security guards lowered the steel bar at the KAMETAL gate and demanded his driver's license.
• Filing of Complaint: On April 1, 1998, the spouses filed a complaint for damages with preliminary injunction/preliminary mandatory injunction and temporary restraining order, alleging that the petitioners' acts caused them moral damages.
• Petitioners' Defenses: Petitioners moved to dismiss, claiming the dispute was intra-corporate and under HIGC jurisdiction because the SCHA Articles of Incorporation and By-laws provided that all real estate owners automatically become members. They also argued that the spouses enjoyed the privileges of membership and that no cause of action existed because the spouses were not actually prevented from entering.

• Intra-Corporate Jurisdiction: Petitioners argued that the RTC lacked jurisdiction because the controversy was intra-corporate between SCHA and its members, falling under the HIGC's purview pursuant to Republic Act No. 580, as amended by Executive Order Nos. 535 and 90. They contended that the spouses automatically became members in 1974 by virtue of the SCHA's SEC-approved Articles of Incorporation and By-laws, which decreed automatic membership for all lot owners.
• Alternative HIGC Jurisdiction: Petitioners alternatively argued that even if the spouses were not members, the HIGC still had jurisdiction under Section 1(a), Rule II of the HIGC Rules of Procedure, claiming the dispute fell under controversies between the association and the "general public."
• Lack of Cause of Action: Petitioners maintained that the complaint stated no cause of action, invoking the principle of damnum absque injuria because there was no allegation that the spouses were actually prevented from entering the subdivision and accessing their residence.

• Lack of Membership: Respondents countered that they had never joined the association, thereby negating the existence of an intra-corporate controversy and placing the dispute within the RTC's jurisdiction.
• No Privity of Contract: Respondents argued that no privity of contract existed binding them to the SCHA, as their titles contained no annotation regarding automatic membership and they never expressly or impliedly consented to join.

• Jurisdiction: Whether the RTC had jurisdiction over the complaint, or whether the dispute constituted an intra-corporate controversy under the HIGC's exclusive jurisdiction.
• Membership: Whether the respondents are members of the SCHA.
• Cause of Action: Whether the complaint stated a sufficient cause of action.

• Jurisdiction: The RTC correctly exercised jurisdiction. Jurisdiction is determined by the allegations in the complaint, not by the defenses or theories in a motion to dismiss. Because the complaint denied membership in the SCHA, no intra-corporate relation was alleged. Furthermore, the HIGC's jurisdiction is limited; Section 1(b), Rule II of the HIGC Revised Rules expanding jurisdiction to the "general public" was previously declared void in United BF Homeowners’ Association v. BF Homes, Inc. for unduly expanding the provisions of Presidential Decree 902-A, as only the State can question an association's franchise or corporate existence.
• Membership: Respondents are not members of SCHA. The constitutionally guaranteed freedom of association includes the freedom not to associate. A person cannot be compelled to become a member of an association by the mere expedient of including a provision in the articles of incorporation or by-laws without their express or implied consent. Unlike in Bel Air Village Association, Inc. v. Dionisio, where automatic membership was expressly annotated on the certificate of title, the spouses' titles contained no such annotation. The SCHA's prior issuance of "non-member" stickers effectively acknowledged that subdivision landowners were not automatically members.
• Cause of Action: The complaint sufficiently states a cause of action. A motion to dismiss based on lack of cause of action hypothetically admits the truth of the factual averments in the complaint. The essential elements—legal right of the plaintiff, correlative obligation of the defendant, and violation of that right—are present: the spouses have a right of free access to their residence, the petitioners have an obligation to respect that right, and that right was impaired when the spouses were refused access unless they showed their driver's licenses.

• Freedom Not to Associate — The constitutionally guaranteed freedom of association includes the freedom not to associate. The right to choose with whom one will associate oneself is the very foundation and essence of that partnership. The right to form an association does not include the right to compel others to form or join one. Applied to the case, lot owners cannot be forced into membership in a homeowners' association without their express or implied consent, notwithstanding automatic membership provisions in the association's articles and by-laws.
• Hypothetical Admission in Motions to Dismiss — A motion to dismiss based on lack of cause of action hypothetically admits the truth of the allegations in the complaint. The test of sufficiency is whether, admitting the facts alleged, the court can render a valid judgment on the prayers. The court does not inquire into the truth of such allegations or declare them false at this stage.
• Jurisdiction Determined by the Complaint — Jurisdiction over the subject matter is determined by the allegations in the complaint. It is not affected by the pleas or the theories set up by the defendant in an answer or a motion to dismiss, lest jurisdiction become dependent entirely upon the whims of the defendant.

• "The constitutionally guaranteed freedom of association includes the freedom not to associate. The right to choose with whom one will associate oneself is the very foundation and essence of that partnership."
• "Private respondents cannot be compelled to become members of the SCHA by the simple expedient of including them in its Articles of Incorporation and By-laws without their express or implied consent."
• "It is a settled rule that jurisdiction over the subject matter is determined by the allegations in the complaint. Jurisdiction is not affected by the pleas or the theories set up by the defendant in an answer or a motion to dismiss."

• Bel Air Village Association, Inc. v. Dionisio, 174 SCRA 589 (1989) — Distinguished. In Bel Air, the purchaser was bound by the automatic membership annotation on the Transfer Certificate of Title, which served as notice under the Land Registration Act. In the present case, no such annotation existed on the spouses' titles, precluding privity of contract.
• United BF Homeowners’ Association v. BF Homes, Inc., 310 SCRA 304 (1999) — Followed. The provision in the HIGC Revised Rules of Procedure extending jurisdiction to controversies between the association and the "general public or other entity" was declared void for being a clear attempt to unduly expand the provisions of Presidential Decree 902-A, as only the State can question an association's franchise or corporate existence.

• Article III, Section 8, 1987 Constitution — Guarantees the right of the people to form unions, associations, or societies for purposes not contrary to law. Applied to establish that this right inherently includes the freedom not to associate.
• Article 1305, Civil Code — Defines a contract as a meeting of minds between two persons. Applied to emphasize that no privity of contract existed between the association and the spouses, as there was no meeting of minds or consent to membership.
• Section 39, Act 496 (The Land Registration Act) — States that every subsequent purchaser of registered land who takes a certificate of title for value in good faith holds the same free of all encumbrances except those noted on said certificate. Applied to distinguish Bel Air, where the encumbrance of automatic membership was noted on the title, unlike the present case.
• Section 1(b), Rule II, HIGC Revised Rules of Procedure — Purported to grant HIGC jurisdiction over controversies between the association and the state/general public or other entity concerning its right to exist as a corporate entity. Declared void in United BF Homeowners for expanding PD 902-A, and inapplicable here since the complaint did not assail SCHA's corporate existence.

Melo, Sandoval-Gutierrez, and Carpio, JJ., concurred. Vitug, J., concurred, calling attention to Article 2174 of the Civil Code as and when pertinent.