In a dispute within a homeowners’ association, the Supreme Court affirmed the Housing and Land Use Regulatory Board’s (HLURB) authority to award damages, including moral and exemplary damages, and attorney’s fees. This ruling clarifies that HLURB’s jurisdiction extends beyond cases involving developers and buyers to include disputes among homeowners and their associations. The decision underscores the HLURB’s role in resolving intra-association conflicts and ensuring that homeowners’ rights are protected, providing a clearer path for seeking remedies within the administrative framework.

Vermont Royale Brouhaha: Can the HLURB Award Damages in a Homeowners’ Feud?

The case of Eric Sto. Tomas, et al. v. Adoracion I. Del Valle, et al., G.R. No. 223637, decided on August 28, 2019, revolves around a conflict within the Vermont Royale Homeowners Association, Inc. (VRHAI). The core issue arose when some homeowners sought to construct a duplex on their property, only to be blocked by VRHAI’s construction rules, which restricted single lots to single-family dwellings. This restriction was based on the Deed of Restrictions annotated on the property titles. The homeowners challenged the association’s rules, arguing they were inconsistent with the local zoning ordinance that permitted multi-family dwellings in the area.

The dispute escalated to the Housing and Land Use Regulatory Board (HLURB), which initially issued a Temporary Restraining Order (TRO) and later ruled in favor of the homeowners, declaring the association’s resolution void and awarding damages. The VRHAI appealed, questioning HLURB’s jurisdiction to award damages in intra-association disputes. This raised a critical legal question: Does the HLURB have the authority to award damages in cases involving conflicts within a homeowners’ association, or is that power reserved exclusively for regular courts?

The Supreme Court addressed the issue by interpreting Section 20(d) of Republic Act No. 9904 (R.A. No. 9904), the “Magna Carta for Homeowners and Homeowners’ Associations.” This section outlines the duties and responsibilities of the HLURB, including the power to:

SECTION 20. Duties and Responsibilities of the HLURB. — x x x (d) Hear and decide intra-association and/or inter-association controversies and/or conflicts, without prejudice to filing civil and criminal cases by the parties concerned before the regular courts: Provided, That all decisions of the HLURB are appealable directly to the Court of Appeals[.]

The petitioners argued that the phrase “without prejudice to filing civil and criminal cases” meant that claims for damages must be pursued in separate actions before the regular courts. The Supreme Court, however, rejected this interpretation, clarifying that the civil and criminal cases contemplated by the law are those that proceed independently of the intra-association dispute. These are actions that arise from the same acts but are not incidental to the core issue brought before the HLURB.

The Court emphasized that the claim for damages in this case was directly related to the principal relief sought by the homeowners: the injunction and annulment of VRHAI’s construction rules. Therefore, it was an incident to the main case before the HLURB. The Supreme Court underscored that statutes conferring powers on administrative agencies should be construed liberally to enable them to effectively perform their duties. The Court then stated that:

Statutes conferring powers on administrative agencies must be liberally construed to enable them to discharge their assigned duties in accordance with the legislative purpose. In addition, it is settled in jurisprudence that when an administrative agency or body is conferred quasi-judicial functions, all controversies relating to the subject matter pertaining to its specialization are deemed to be included within the jurisdiction of said administrative agency or body. Split jurisdiction is not favored.

The Supreme Court also cited previous rulings, such as Spouses Osea v. Ambrosio and C.T. Torres Enterprises, Inc. v. Hon. Hibionada, to support the HLURB’s authority to adjudicate claims recoverable under the Civil Code. These cases affirm the power of administrative bodies to perform quasi-judicial functions as an incident to their regulatory powers. The Court saw no reason to limit the HLURB’s competence to award damages only to cases filed by subdivision lot or condominium unit buyers against developers under Presidential Decree (P.D.) No. 1344 or P.D. No. 957.

The Court reasoned that requiring homeowners to file separate civil actions for damages would be inefficient and could lead to conflicting findings from different tribunals. It also pointed out that such a requirement would violate the rule against multiplicity of suits. Instead, the Court held that the HLURB’s jurisdiction extends to all cases within its purview, including intra-association and inter-association controversies under R.A. No. 9904. Given this context, the High Tribunal then declared:

The Court thus finds absurd petitioners’ insistence that the HLURB has no jurisdiction to rule on respondents’ claim for damages in the instant intra-association case. The competence of the HLURB to award damages should not be limited to cases filed by subdivision lot or condominium unit buyers against the project owners, developers, brokers or salesmen pursuant to P.D. No. 1344 or P.D. No. 957, as petitioners would want to impress upon this Court; rather, such power should likewise apply to other cases within the agency’s jurisdiction, including inter-association and intra-association controversies pursuant to R.A. No. 9904, like the one at bar.

Regarding the specific award of damages in this case, the Supreme Court upheld the HLURB’s decision, as affirmed by the Court of Appeals. Moral damages were justified because the homeowners’ association had willfully infringed on the property rights of the respondents by restricting the construction of duplexes after a building permit had already been secured. The Court also emphasized that the association’s actions were discriminatory since some duplexes already existed in the subdivision. This discrimination, coupled with the bad faith displayed by the association, warranted the award of exemplary damages to serve as a deterrent for similar conduct in the future.

The award of attorney’s fees and litigation expenses was also deemed appropriate because the respondents were compelled to litigate to protect their interests due to the association’s prolonged refusal to allow the duplex construction. Thus, the High Tribunal concluded that:

Here, due to petitioners’ prolonged refusal to allow respondents to construct the proposed duplex on their own lot, respondents were compelled to litigate their claim before the HLURB and to incur expenses to protect their rights and interests. Consequently, respondents’ entitlement to the recovery of attorney’s fees and litigation expenses cannot be denied.

FAQs

What was the key issue in this case?	The key issue was whether the HLURB has the authority to award damages, including moral and exemplary damages and attorney’s fees, in intra-association disputes within a homeowners’ association.
What did the Supreme Court decide?	The Supreme Court affirmed that the HLURB does have the authority to award damages in such disputes, clarifying that its jurisdiction is not limited to cases involving developers and buyers.
What is the significance of R.A. No. 9904 in this case?	R.A. No. 9904, or the “Magna Carta for Homeowners and Homeowners’ Associations,” outlines the duties and responsibilities of the HLURB, including hearing and deciding intra-association disputes, which the Court interpreted to include the power to award damages.
Why did the homeowners seek damages?	The homeowners sought damages because the homeowners’ association had restricted their right to construct a duplex on their property, even after they had obtained a building permit and despite the fact that the zoning ordinance allowed multi-family dwellings.
What is the difference between intra-association and inter-association disputes?	An intra-association dispute is a conflict within a single homeowners’ association, while an inter-association dispute is a conflict between two or more homeowners’ associations.
What are moral damages, and why were they awarded in this case?	Moral damages are compensation for mental anguish, emotional distress, and similar injuries. They were awarded in this case because the homeowners’ association had willfully infringed on the homeowners’ property rights.
What are exemplary damages, and why were they awarded?	Exemplary damages are awarded as a way to punish the defendant for egregious behavior and to deter others from engaging in similar conduct. They were awarded in this case due to the discriminatory and bad-faith actions of the homeowners’ association.
Why were attorney’s fees and litigation expenses awarded?	Attorney’s fees and litigation expenses were awarded because the homeowners were compelled to litigate to protect their interests due to the association’s refusal to allow the construction of the duplex.
Does this ruling mean homeowners can always get damages in disputes with their association?	Not necessarily. The award of damages depends on the specific facts of the case, including whether the association acted in bad faith or violated the homeowner’s rights.

In conclusion, the Supreme Court’s decision in Eric Sto. Tomas, et al. v. Adoracion I. Del Valle, et al. clarifies the HLURB’s authority to award damages in intra-association disputes, solidifying its role in protecting homeowners’ rights and resolving conflicts within homeowners’ associations. This ruling ensures a more efficient and comprehensive process for addressing grievances within homeowners’ 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: Eric Sto. Tomas, et al. v. Adoracion I. Del Valle, et al., G.R. No. 223637, August 28, 2019