EDNA EUGENIO, MARY JEAN GREGORIO, RENATO PAJARILLO, ROGELIO VILLAMOR, PETITIONERS, VS. STA. MONICA RIVERSIDE HOMEOWNERS ASSOCIATION, RESPONDENT.

Eugenio versus Sta. Monica Riverside Homeowners Association

The Case

This is a petition for review brought by Edna Eugenio, Mary Jean Gregorio, Renato Pajarillo, and Rogelio Villamor against the Sta. Monica Riverside Homeowners Association. The association sued the petitioners for ejectment before the Housing and Land Use Regulatory Board after the petitioners refused to join the association and ignored its demand to vacate the land the association was acquiring under the Community Mortgage Program. The petitioners' central claim is that the Board had no jurisdiction, because the dispute is really one of forcible entry and unlawful detainer, which belongs to the first level courts. The case matters because it draws the boundary between the special jurisdiction of the Housing and Land Use Regulatory Board over homeowners associations and the ordinary jurisdiction of the first level courts over possession, and it tells us when the two overlap.

Procedural History

The association filed a complaint for ejectment and eviction against the petitioners before the Housing and Land Use Regulatory Board. The Housing and Land Use Arbiter ruled in favor of the association, ordering the petitioners excluded from the benefits of the Community Mortgage Program and directed to surrender and vacate the premises. On the jurisdictional objection, the Arbiter held that the Board exercises principal jurisdiction over issues affecting homeowners associations, and that the power to exclude non-members from the benefits of the program is incidental to that jurisdiction. On appeal, the Board of Commissioners affirmed the Arbiter. The petitioners then elevated the case to the Office of the President, which affirmed the Board of Commissioners. The petitioners went up to the Court of Appeals on a petition for review, and the Court of Appeals denied the petition for lack of merit, as it later denied their motion for reconsideration. The case then reached the Supreme Court by petition for review.

Facts

The residents of a parcel of land owned by Hi-Marketing Corporation in Barangay Sta. Monica, Novaliches, Quezon City organized themselves into the Sta. Monica Riverside Homeowners Association, the respondent, and registered it with the Housing and Land Use Regulatory Board for the purpose of acquiring the land under the Community Mortgage Program of the Social Housing Finance Corporation. Under that program, the landowner executes a contract to sell in favor of the community association, the association in turn agrees with the financing corporation to collect and remit the monthly amortizations of its member-borrowers, and if a member-borrower defaults, the association must find a qualified substitute to assume the obligations.

When the association began negotiating with Hi-Marketing Corporation for the purchase of the land, it invited the petitioners, who were occupying a portion of the land, to become members. The petitioners refused, having formed another organization which the Board did not accredit for lack of a memorandum of agreement with the landowner. Hi-Marketing Corporation agreed to sell the land, the association complied with all the requirements under the program's implementing rules and regulations, and the Quezon City Council passed an ordinance approving the association's subdivision plan.

Because only members of an association may avail of the benefits of the program, the association invited the petitioners anew to join, but they again declined. The association then issued a formal demand for the petitioners to leave their respective premises. The petitioners ignored the demand, and so the association filed the complaint for ejectment and eviction before the Board. The petitioners denied refusing to join, questioned the membership of the association as composed of non-residents, questioned the leadership and the alleged illegal activities of its president, and challenged the Board's jurisdiction over the complaint.

Issues

• Whether or not the Housing and Land Use Regulatory Board has jurisdiction over the complaint for ejectment filed by the homeowners association against the petitioners, who are not members of the association.
• Whether or not the first level courts have exclusive jurisdiction over the case as one of forcible entry and unlawful detainer.
• Whether or not the petitioners may be evicted from the premises as a consequence of their exclusion from the benefits of the Community Mortgage Program.

Applicable Provisions

Section 26 of Republic Act No. 8763 provides:

Section 26. Powers over Homeowners Associations. - The powers authorities and responsibilities vested in the Corporation (formerly Home Insurance Guaranty Corporation) with respect to homeowners association under Republic Act No. 580, as amended by executive Order No. 535 is hereby transferred to the Housing and Land use Regulatory Board (HLURB).

This provision is the source of the Board's regulatory authority over homeowners associations, and the Court uses it to anchor the Board's jurisdiction over the association's complaint.

Section 33 of Republic Act No. 7279 provides:

beneficiaries of the Program shall be responsible for their organization into associations to manage their subdivisions or places of residence, to secure housing loans under existing Community Mortgage Program and such other projects beneficial to them.

This provision explains why membership in the association is essential, since only members may avail of the benefits of the program, and it underlies the Court's holding that exclusion from those benefits carries eviction as a consequence.

Rule II, Section 1 of the rules on disputes triable by the Home Insurance Guaranty Corporation, the predecessor of the Board, provides in part:

Section 1. Types of Disputes. - The HIGC or any person, officer, body, board or committee duly designated or created by it shall have jurisdiction to hear and decide cases involving the following: x x x x (9) Controversies arising out of intra-corporate relations between and among members of the association of which they are members; and between such association and the state/general public or other entity insofar as it concerns its right to exist as a corporate entity.

The petitioners invoke this provision to argue that their dispute is not an intra-corporate controversy, and the Court addresses that argument in its ruling.

Ruling

On the first issue, the Court held that the Board has jurisdiction. When quasi-judicial functions are conferred on an administrative agency, all controversies relating to the subject matter which pertain to its specialization are deemed included within its jurisdiction. Since the Board is vested by law with jurisdiction to regulate and supervise homeowners associations, the association correctly lodged its complaint with the Board. The Court also observed that the petitioners themselves, in their reply to the complaint, acknowledged the Board's jurisdiction when they challenged the association's right to exist as a corporate entity, questioning its registration and the legitimacy of its president. If the petitioners refuse to recognize the association's legitimacy, the association cannot fulfill its obligation to collect and account for the monthly amortizations, individual titling cannot be completed, and the objectives of the program cannot be fully attained.

On the second issue, the Court acknowledged that a complaint for ejectment, which raises the issue of who has a better right of possession, falls within the exclusive and original jurisdiction of the first level courts. But the Court held that the right of possession in this case is necessarily intertwined with a determination of rights and privileges under a distinctive social housing concept such as the Community Mortgage Program, which falls within the expertise of the Board. The Court distinguished the authority of the Social Housing Finance Corporation, which pertains only to the administrative and financing aspects of the program, from the adjudicatory authority of the Board over the association and its members.

On the third issue, the Court held that it was unnecessary to delve into the petitioners' assigned error respecting their extrajudicial and summary eviction, because eviction is a necessary consequence of the petitioners' exclusion from the benefits of the program.

Doctrine

First, the Housing and Land Use Regulatory Board has jurisdiction to regulate and supervise homeowners associations, and when quasi-judicial functions are conferred on an administrative agency, all controversies relating to the subject matter which pertain to its specialization are deemed included within its jurisdiction. Second, that jurisdiction carries with it the incidental power to exclude non-members from the benefits of the Community Mortgage Program, because only members of an association may avail of those benefits. Third, although ejectment falls within the exclusive and original jurisdiction of the first level courts, where the right of possession is necessarily intertwined with a determination of rights and privileges under the Community Mortgage Program, the dispute falls within the expertise of the Board. Fourth, eviction is a necessary consequence of exclusion from the benefits of the program.

Disposition

The Supreme Court denied the petition and affirmed the rulings below, so the association prevailed and the petitioners were excluded from the benefits of the Community Mortgage Program and ordered to vacate the premises.

Remember This

Memorize this line: the Board's power to regulate homeowners associations carries with it the incidental power to exclude non-members from the benefits of the Community Mortgage Program, and eviction is the necessary consequence of that exclusion. Examiners use this case to test jurisdiction over ejectment suits involving homeowners associations, and to see whether you can distinguish the first level courts' jurisdiction over possession from the Board's special jurisdiction over social housing.