G.R. No. 223637 - Sto. Tomas vs. Del Valle

Petitioners: Eric Sto. Tomas, Roland Cabigas, Arch. Jojo Centeno, Ret. Col. Larry Zubia, George Badulis, Jose De Belen, Larry Galang, Carmen Dimagiba, Elvis Basas, Brandon Whisenhunt, Tony Turingan, Armando Yanga, Alex Dandan, and Vermont Royale Homeowners Association, Inc. (VRHAI). Petitioners were officers and board members of VRHAI, the homeowners' association of Vermont Royale Village, registered with HLURB.
Respondents: Adoracion I. Del Valle, Jo-Anne I. Del Valle, Arch. Roberto R. Camacho, Nelson Z. Ochoa, who were homeowners and members of VRHAI.
The dispute arose from respondents' attempt to construct a duplex (multiple dwelling units) on a single residential lot in Vermont Royale Village.

Respondents requested a clearance from VRHAI in February 2009 to build a duplex, which was a requirement for the city’s building permit issuance.
VRHAI denied the clearance based on its Construction Rules and Regulations (passed in February 2008), which, in turn, were issued pursuant to the Deed of Restrictions attached to the titles of Vermont lots limiting construction to single-family dwellings only.
Despite not having obtained VRHAI’s clearance, respondents secured a building permit from the City Building Official. VRHAI still refused to issue clearance and reaffirmed its prohibition against duplex construction through a Board Resolution dated June 21, 2009.

Injunction against enforcement of the restrictive rules and Board Resolution;
Annulment or revocation of the restrictive construction rules, fees, fines, penalties, and June 21, 2009 Board Resolution;
Damages; and
Issuance of TRO or preliminary injunction.

Petitioners countered, justifying their disapproval on the basis of existing Deed of Restrictions and Construction Rules, admitting some existing duplexes were due to past officers’ misfeasance.
On January 14, 2010, HLURB Special Division issued a TRO/Cease and Desist Order enjoining petitioners from preventing respondents from constructing the duplex, subject to compliance with VRHAI rules and City requirements.
On June 29, 2011, HLURB Arbiter Joselito F. Melchor ruled in favor of respondents:

Declared permanent the TRO/CDO;
Declared void the June 21, 2009 Board Resolution and conflicting deed restrictions to the extent inconsistent with the Antipolo City zoning ordinance;
Ordered issuance of necessary permits and clearances allowing respondents to construct the duplex;
Ordered petitioners to pay P50,000.00 each as moral and exemplary damages and attorney’s fees.

Petitioners appealed to HLURB which, on June 28, 2012, denied the appeal for lack of merit, affirming the Arbiter’s Decision.
Petitioners filed a Petition for Review at the Court of Appeals (CA).
On March 21, 2016, CA dismissed the petition, affirming the HLURB Decision, finding petitioners acted with bad faith and violated respondents' property rights and concluding the award of damages and attorney’s fees was proper.

Petitioners only questioned the validity of the award of moral and exemplary damages and attorney’s fees, alleging lack of jurisdiction of HLURB to grant such awards in intra-association disputes and no legal basis for said damages.
Two main issues were presented:

Whether HLURB has jurisdiction to award damages and attorney’s fees in intra-association disputes;
Whether HLURB had proper basis to award moral and exemplary damages and attorney’s fees in this case.

Does the HLURB have jurisdiction to award damages and attorney’s fees in intra-association disputes such as the present case?
Assuming HLURB has such jurisdiction, was the award of moral and exemplary damages and attorney’s fees in favor of respondents legally proper and supported by the facts?