Case Digest (G.R. No. 230426)
Facts:
Ferndale Homes Homeowners Association Inc. v. Spouses Harlin Cast. Abayon and Daryl Grace Abayon, G.R. Nos. 230426 and 230476, April 28, 2021, Supreme Court Second Division, Lazaro-Javier, J., writing for the Court.The parties are the Ferndale Homes Homeowners Association Inc. (FHHAI) (petitioner in G.R. No. 230426; respondent in G.R. No. 230476) and Spouses Harlin Cast Abayon and Daryl Grace Abayon (petitioners in G.R. No. 230476; respondents in G.R. No. 230426). The dispute arose from FHHAI’s assessment and collection of association dues, interest (24% per annum), and penalty (8% per annum) charged against Lots 1–8 in Block 2, Phase 4B of Ferndale Homes, some of which the Spouses acquired from earlier owners by deed of exchange and sale.
Chronology: various deeds of sale show original purchases by Salud C. Abayon and Ladislawa A. Castro in 2003–2004; Spouses Abayon acquired several lots directly (Lot 6 on October 8, 2004; Lot 4 on October 15, 2004) and by Deed of Exchange on March 18, 2005 (acquiring Lots 1, 3, 5, and 7). Upon acquiring Ferndale lots, Spouses Abayon became FHHAI members and paid assessments, some under protest, including amounts characterized as interest and penalties for earlier delinquencies. They sought reimbursement of association dues that accrued before their acquisitions for Lots 1, 3, 4 and 5 (totaling roughly P68,777.11 per their complaint) and challenged the legality and excessiveness of the 24% interest and 8% penalty.
Procedural history: In December 2013 the Spouses filed a complaint with the Housing and Land Use Regulatory Board (HLURB). By Decision dated June 27, 2014 the HLURB Regional Office Arbiter granted their complaint: it ruled that successors-in-interest were not obliged to pay predecessors’ unpaid dues, reduced interest to 6% per annum (reckoned from January 2007), deleted the 8% penalty, ordered refunds (including for dues paid before March 18, 2005) with 6% legal interest, and awarded exemplary damages (P50,000) and attorney’s fees (P25,000). The HLURB Board of Commissioners denied FHHAI’s appeal on September 22, 2014 due to defects in the surety bond.
FHHAI elevated the case to the Court of Appeals (CA). In CA-G.R. SP No. 137780 the Court of Appeals, in a Decision dated August 9, 2016, reversed the HLURB: it found FHHAI remedied the bond defect, held that unpaid association dues are liens on the property under Ferndale’s Deed of Restrictions and bind successors-in-interest, dismissed the Spouses’ reimbursement claims and awards for damages/attorney’s fees, but reduced the 24% interest to 12% and the 8% penalty to 6%, ordering reimbursement of amounts paid in excess of those reduced rates. The CA denied reconsideration on March 8, 2017.
Both parties sought relief before the Supreme Court: Spouses Abayon filed a petition to reinstate HLURB’s decision (G.R. No. 230476), contending the bond defect was uncured, that they should not be liable for prior dues or the imposed interest/penalties and that the HLURB’s damages and attorney’s fees should stand. FHH...(Pro-only)
Issues:
- Did FHHAI comply with the surety-bond requirements of Section 52, Rule 14 of the 2011 Revised Rules of Procedure of the HLURB?
- Are Spouses Abayon liable for association dues that accrued prior to their acquisition of Lots 1, 3, 4, and 5?
- Are Spouses Abayon liable for interest and penalties on late payment of association dues, and if so, at what rates are such charges proper?
- Are Spouses Abayon entitled to exemplary damages a...(Pro-only)
Ruling:
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Ratio:
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Doctrine:
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