G.R. No. 228135 , June 16, 2021
Sto. Niño Village Homeowners’ Association, Inc., et al., Petitioners, vs. Amado Y. Lintag, Respondent.

FACTS

The Sto. Niño Village Homeowners’ Association, Inc. (SNVHAI), through its Board of Directors (petitioner-directors), passed three resolutions: Resolution No. 3 (August 23, 2010) imposing no-parking regulations and fines; Resolution No. 5 (September 4, 2010) increasing water rates; and Resolution No. 6 (September 20, 2010) imposing a special assessment for a drainage fund. Respondent Amado Lintag, a member, challenged these resolutions. He refused to pay the parking fines, arguing the subdivision roads where his son’s taxicabs were parked were owned by private families, not the association. He also assailed Resolutions No. 5 and 6 for lack of consultation and member approval as required by law. After Lintag refused to pay the fines and assessment, SNVHAI refused his payments for dues and utilities and eventually disconnected his water supply in April 2011. Lintag filed a complaint with the HLURB for annulment of the resolutions and illegal assessments.
The HLURB Arbiter declared all three resolutions null and void for lack of proper ratification by the general membership and awarded Lintag actual damages and litigation expenses. On appeal by the petitioner-directors, the HLURB Board of Commissioners (BOC) modified the decision. It declared Resolution No. 3 valid, finding the association had the power to regulate common areas like roads. It dismissed the challenges to Resolutions No. 5 and 6 as moot due to their subsequent ratification by members in a 2012 referendum. It also set aside the awards for damages and litigation expenses but imposed an administrative fine on SNVHAI and the directors for the water disconnection and ordered the reconnection of Lintag’s water supply.
Lintag appealed to the Court of Appeals. The CA vacated the HLURB-BOC decision. It ruled that since SNVHAI itself did not appeal the Arbiter’s decision, the nullity of all three disputed resolutions had become final and binding against the association. The CA held the HLURB-BOC could only review the liability of the petitioner-directors who filed the appeal. It reinstated the Arbiter’s declaration that the resolutions were void. It modified the awards, holding SNVHAI solely liable for the actual damages and litigation expenses (though it noted evidentiary issues), and held the petitioner-directors jointly and severally liable with SNVHAI for the administrative fine, also ordering their permanent disqualification from association office under RA 9904. The petitioners elevated the case to the Supreme Court.

ISSUE

The primary issue was whether the Court of Appeals erred in ruling that the HLURB Board of Commissioners could no longer review the merits of the case—specifically the validity of the disputed board resolutions—because the homeowner’s association (SNVHAI) itself did not file an appeal from the Arbiter’s decision, and only its individual directors did.

RULING

The Supreme Court DENIED the petition and AFFIRMED the Court of Appeals’ decision with MODIFICATION. The Court held that the petitioner-directors, in filing the appeal before the HLURB-BOC, did so in their personal capacities and not as representatives of SNVHAI. Since SNVHAI, as a juridical entity, did not appeal through a proper board resolution authorizing the directors to act on its behalf, the Arbiter’s decision declaring the resolutions null and void became final and executory as against the association. Consequently, the HLURB-BOC exceeded its jurisdiction when it modified the Arbiter’s ruling on the validity of the resolutions. The only matter properly before the HLURB-BOC was the personal liability of the individual directors.
The Court further ruled:
1. The awards for actual damages (P27,000.00) and litigation expenses (P40,000.00) in the Arbiter’s decision were reinstated as final liabilities of SNVHAI, but were DELETED as against the petitioner-directors personally, as they were not parties to the contract (water supply) and there was no finding of their individual bad faith or gross negligence justifying personal liability for corporate acts.
2. The administrative fine of P5,000.00 for violating Section 22(b) of RA 9904 (the Magna Carta for Homeowners) by disconnecting the water supply was upheld. The petitioner-directors were held jointly and severally liable with SNVHAI for this fine, as they authorized or ratified the prohibited act.
3. The order for the permanent disqualification of the petitioner-directors from being elected or appointed to the SNVHAI board was SET ASIDE. The Supreme Court found that Section 23 of RA 9904, which mandates disqualification for violations of the Act, only applies to final judgments from regular courts, not from quasi-judicial bodies like the HLURB.
4. All other orders of the CA, including the directive for SNVHAI to reconnect Lintag’s water supply and for Lintag to withdraw his consigned payments, were AFFIRMED.