Understanding Jurisdiction in Homeowners Association Disputes: HLURB vs RTC

When a homeowner's request to inspect association records is refused, where should the dispute be heard—before the Housing and Land Use Regulatory Board (HLURB) or the Regional Trial Court (RTC)? In Francisco v. Del Castillo (G.R. No. 236726, September 14, 2021), the Supreme Court En Banc settled this question, ruling that intra-association disputes involving violations of the Magna Carta for Homeowners and Homeowners Associations (Republic Act No. 9904) fall under the exclusive jurisdiction of the HLURB, not the regular courts.

The Facts of the Case

Atty. Pablo Francisco and private respondents Melanio Del Castillo and Sandra Bernales were all members of the board of the Brookside Residents Association, Inc. (BRAI). When Francisco requested copies of the association's financial books and records for 2008 to 2013 and was refused, he filed a criminal case against the respondents for violation of Section 7(b) of R.A. No. 9904, which guarantees a member's right to inspect association books and records.

The Information charged the respondents with failing to provide the requested documents. The case was raffled to the RTC of Antipolo City, Branch 71, which issued a warrant of arrest. The respondents moved to quash the Information, arguing that jurisdiction belonged to the HLURB, not the RTC.

The Issue Before the Supreme Court

The Court resolved two issues: (1) whether the HLURB or the RTC has jurisdiction over the controversy, and (2) whether Section 23, in relation to Sections 7(b) and 22(c) of R.A. No. 9904, is a penal provision.

The Ruling: HLURB Has Exclusive Jurisdiction

The Supreme Court denied Francisco's petition and affirmed the Court of Appeals' dismissal of the criminal case. The Court held that the dispute was an intra-association controversy—a suit arising out of relations between and among members of an association—which falls squarely within the HLURB's jurisdiction under Section 20(d) of R.A. No. 9904.

Section 22(c) of the law declares it a prohibited act to prevent a homeowner from reasonably exercising the right to inspect association books. Section 23 authorizes the HLURB to impose administrative fines and permanent disqualification from board membership for violations.

Why the Violation Is Not a Crime

The Court emphasized that a violation of R.A. No. 9904 is an administrative violation, not a criminal offense. The phrase "without prejudice to being charged before a regular court" in Sections 20 and 23 applies only when the violation is accompanied by an act that constitutes an offense under the Revised Penal Code, Civil Code, or other penal laws. A sole violation of a homeowner's right to inspection, without more, does not give rise to a criminal case.

The Court relied on the deliberations of the Bicameral Conference Committee, which deliberately changed the term "offense" to "violation" to avoid any interpretation that violating the Act would carry criminal liability.

The Distinction From Corporate Inspection Rights

The Court also rejected the argument that the Corporation Code's penal provisions on inspection of corporate books should apply by suppletory application. While violations of a stockholder's right to inspect corporate books fall under the RTC's jurisdiction as a special commercial court (pursuant to R.A. No. 8799), homeowners' associations are under the HLURB's jurisdiction. The Corporation Code applies only to supplement gaps in R.A. No. 9904—and the law adequately addresses inspection rights.

The HLURB's Administrative Fine Is Not a Criminal Penalty

The Court clarified that the HLURB's power to impose fines is administrative in nature, not a criminal penalty. The fine serves to stress upon erring parties the need to desist from wanton disregard of the law, not to exact criminal punishment.

Practical Takeaways

• Intra-association disputes—including disputes over inspection of books and records—are within the exclusive jurisdiction of the HLURB (now reconstituted as the Human Settlements Adjudication Commission or HSAC under R.A. No. 11201).
• Filing a criminal case for a mere violation of R.A. No. 9904, without alleging a separate offense under the Revised Penal Code, Civil Code, or other penal laws, is improper and may be quashed.
• Homeowners should first seek relief from the HLURB for violations of their rights under R.A. No. 9904, not the regular courts.
• The Corporation Code's penal provisions on inspection of corporate books do not apply to homeowners' associations, which are governed by R.A. No. 9904.
• The HLURB's administrative fines are not criminal penalties; they are sanctions imposed to enforce compliance with the Magna Carta for Homeowners.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.