According to Republic Act No. 9904, also known as the "Magna Carta
for Homeowners and Homeowners' Associations", it is the a policy of the State
“to uphold the rights of the people to form unions, associations, or societies”,
and “to recognize and promote the rights and the roles of homeowners as
individuals and as members of the society and of homeowners' associations”.
Section 2 of the law defines the term "homeowner"
as referring to any of the following·
“(1) An
owner or purchaser of a lot in a subdivision village;
(2) An awardee,
usufructuary, or legal occupant of a unit, house and/or lot in a
government socialized or economic housing or relocation project and other urban
estates; or
(3) An informal settler
in the process of being accredited as beneficiary or awardee of ownership
rights under the CMP, LTAP and other similar programs.”
The law requires every association of homeowners
“to register with
the Housing and Land Use Regulatory Board
(HLURB)”. The registration serves as a grant “juridical personality” to the association.
(Sec. 4).
The procedure for registration shall be
specifically provided for in the implementing rules and regulations to be promulgated
by the HLURB.
The implementing rules and regulations (IRR) to
be formulated by the HLURB shall provide for an “adjudicatory mechanism” that
will be observed in the event there is “a dispute involving two (2) or
more associations established within the same subdivision/village,
community/area, or housing project seeking registration”. (Id.). (Note: The IRR should also cover
applications by different phases within a mother subdivision to form their own
separate phase associations).
In resolving this type of dispute, the HLURB
shall take into account “the date each association was legally established, the
date of submission of its application for registration, the number of members,
and other similar factors”. (Id.).
The existence of associations “previously
registered with the Home Insurance Guarantee Corporation or the SEC” shall be
respected, and the said associations shall “not be charged a penalty when they
register with the HLURB” under this Act.
Section 5 of the law provides that every homeowner
has the “right to enjoy the basic community services and facilities”. But he
must “pay the necessary fees and other pertinent charges”.
A “lessee, usufructuary, or legal occupant shall
have the rights of a homeowner” upon procurement of a “written consent or
authorization from the owner of the lot or housing unit”. (Sec. 6).
Until such consent or authorization is “revoked
in writing”, the “owner of the lot or housing unit” is deemed to have “waived his/her
rights” enumerated under Section 7, infra,
except subsection (b) of the same
section which can be “simultaneously enjoyed by both the owner and the
lessee” (re: inspection of books and records). (Id.).
However, the “lessees” in “government socialized
housing projects” or “urban estates” and those in “communities of
underprivileged and homeless citizens” are “considered as homeowners for the
purpose of qualifying as a member” of a homeowners' association “without need
of such written consent or authorization”. (Id.).
Section 7 of the law provides for the “rights of
a member”, to wit:
“(a) to avail of and
enjoy all basic community services and the use of common areas and facilities;
(b) to inspect
association books and records during office hours and to be provided upon
request with annual reports, including financial statements;
(c) to participate, vote
and be eligible for any elective or appointive officer of the association
subject to the qualifications as provided for in the bylaws;
(d) to demand and
promptly receive deposits required by the association as soon as the
condition for the deposit has been complied with or the period has expired;
(e) to participate in
association meetings, elections and referenda, as long as his/her bona fide
membership subsists; and
(f) to
enjoy all other rights as may be provided for in the association bylaws.”
Section 8 of the law provides for the “duties
of a member”, to wit:
“(a) to pay
membership fees, dues and special assessments;
(b) to attend meetings
of the association; and
(c) to support and participate
In projects and activities of the association.
Section 10 of the law provides for the “rights
and powers of the association”, to
wit:
(a) Subject to
consultation and with the approval of a simple majority of the members, adopt
and amend the articles of incorporation and bylaws, rules and regulations,
pursuant to existing laws and regulations;
(b) In behalf of its
members, institute, defend, or intervene in litigation and/or administrative
proceedings affecting the welfare of the association and the subdivision/village
as a whole, excluding, however, disputes that are not the responsibility of the
association;
(c) Regulate the use,
maintenance, repair, replacement and modification of common areas and cause
additional improvements to be made part of the common areas: Provided, That
the aforementioned do not contradict the provisions of the approved subdivision
plan;
(d) Regulate access to,
or passage through the subdivision/village roads for purposes of preserving
privacy, tranquility, internal security, safety and traffic order: Provided,
That: (1) public consultations are held; (2) existing laws and regulations
are met; (3) the authority of the concerned government agencies or units are
obtained; and (4) the appropriate and necessary memoranda of agreement are executed
among the concerned parties;
(Note: This applies, for instance, to car stickers or village
stickers imposed by an association not only to its own members but to members
of the separate phase associations located within the other subdivision, or to
the members of the associations of the smaller subdivisions located inside the
territory of the bigger subdivision).
(e) Hire, discharge or
contract managing agents and other employees, agents and independent
contractors to ensure the full functioning and operation of the
association;
(f) Subject
to consultation with and the approval of a simple majority of the association
members, acquire, hold, encumber and convey in its own name any right, title to
or interest in real or personal property: Provided, That such approval
of a simple majority of the association members shall not be required for the
acquisition, holding, encumbrance and conveyance of personal properties in
amounts not exceeding ten percent (10%) of the association's cash holdings for
its use in the course of its normal operations;
(Note: When an association plans to acquire, hold, encumber
and convey/sell/dispose of a right, title to or interest in any of its real or
personal property, and the value thereof exceeds 10% of its cash holdings, it
shall need the prior approval of a simple majority of its members).
(g) Ensure the availability
of quality water services at a reasonable price and, at its option, administer
and manage the waterworks system of the subdivision;
(h) Upon consultation,
grant easements, leases, concessions and authority to use common areas and
petition for or consent to the vacation of streets and alleys: Provided, That
the said grant of easements, leases, concessions and authority shall not be
applicable to access roads, main interconnecting roads, alleys and sidewalks
within the subdivision;
(i) Impose or collect
reasonable fees for the use of open spaces, facilities, and services of the
association to defray necessary operational expenses, subject to the limitations
and conditions imposed under the law, the regulations of the board and the association’s
bylaws;
j) Cause compliance with
regard to height regulations, easements, use of homes, buildings, edifices, or
structures that may be built within the subdivision, in accordance with the National
Building Code, zoning laws, HLURB rules and
regulations, existing local ordinances, and existing deeds of restriction;
(k) Subject to
consultation and with the approval of a simple majority of the association members,
allow the establishment of certain institutions such as, but not limited to,
schools, hospitals, markets, grocery stores and other similar establishments
that will necessarily affect the character of the subdivision/village in terms
of traffic generation, and/or opening the area to outsiders which may result in
the loss of privacy, security, safety, and tranquility to its residents, in
accordance with the National Building Code, zoning laws, existing local ordinances,
HLURB rules and regulations, and existing jurisprudence: Provided, That
such prior approval shall not be necessary for the establishment of sari-sari
stores, home industries and similar small-scale business enterprises within the subdivision/village
classified as socialized housing;
(l) Suspend privileges
of and services to and/or impose sanctions upon its members for violations
and/or noncompliance with the association's bylaws, and rules and regulations;
(m) Petition for the
creation of a separate barangay, independently or together with neighboring
subdivisions: Provided, That all the requirements of the Local
Government Code of 1991 are met; and
(m) Exercise any other
powers conferred by the bylaws and the HLURB necessary for the governance and
operation of the association.”
Section 12 of the law provides for the “duties
and responsibilities of the board” of
the association, to wit:
“(a) Regularly maintain
an accounting system using generally accepted accounting principles, and keep
books of accounts, which shall be open for inspection to any homeowner and duly
authorized representatives of government agencies upon request, during
reasonable hours, on business days;
(b) Collect the fees,
dues and assessments that may be provided for in the bylaws and approved by a majority of
the members;
(c) Collect reasonable
charges for assessments, and after due notice and hearing by the board in
accordance with the procedures as provided in the bylaws, and rules
and regulations adopted by the board, charge reasonable fines for late payments
and for violation of the bylaws, rules, and regulations of the association, in
accordance with a previously established schedule adopted by the board and
furnished to the homeowners;
(d) Propose measures to
raise funds and the utilization of such funds and submit the same for
consideration of the members of the association;
(e) Undergo a free
orientation by the HLURB or any other competent agency deputized by it on how
to conduct meetings, preparation of minutes, handling of accounts, laws and pertinent
rules and regulations within thirty (30) days after election or appointment;
(I) Discharge
the duties and responsibilities provided for in the association's bylaws; and
(g) Exercise such other
powers as may be necessary and proper in accordance with this Act
and for the accomplishment of the purposes for which the association was
organized.”
The board represents and acts in behalf of the association.
However, it cannot, on its own, do the following acts:
1. “to amend the articles
of incorporation”,
2. “to dissolve the
association”,
3. “to elect members of the
board” or
4. “to determine the
qualifications, powers and duties, or terms of office of the board”, and
5. “other instances that
require the vote or approval of the members themselves”. (Id.).
In the foregoing actions, the board shall comply
with the provisions of the bylaws, especially with respect to the ratification
by or concurrence of the members in special meetings duly called for the
purpose.
The officers and members of the board
shall exercise “the degree of care and loyalty required by such position”.
(Id.).
Section 13 (removal of a director) of the law
provides that “a signed petition of a simple majority of the association members
in good standing, subject to a verification and validation by the HLURB, a director/trustee”
may cause the removal of a director for causes provided in the bylaws of the association”.
Within sixty (60) days after the removal of a
director or trustee, “an election shall be called by the remainder of the board”
to determine who shall hold office for the “unexpired term of the removed
director/trustee”. (Id.).
Section 14 (dissolution of the board) of the law
provides that “through a signed petition of two-thirds (2/3) of the association
members, subject to a verification and validation by the HLURB, the board of the
association may be dissolved for causes provided in the bylaws of
the association”. (Id.).
Within sixty (60) days from the above dissolution,
“an election for a new board shall be called and conducted by the HLURB” to determine
who shall hold office for the “unexpired term of the dissolved board”. (Id.).
Until the new board members shall have been
elected and qualified, the “HLURB shall designate an interim board”. (Id.).
Such interim board shall be composed of association
members in good standing. Such interim board members shall “not be eligible to
run in the election called for the purpose of replacing the members of the dissolved
board”. (Id.).
Section 15 (bylaws) of the law provides that “the
bylaws of the association” shall be adopted by a “simple majority of the members
of the association”.
According to the same section, the bylaws shall provide
for the following:
“(a) The rights, duties
and obligations of members;
(b) The circumstances
under which membership is acquired, maintained, and lost;
(c) The schedule, venue,
and manner of conducting the regular, special, and emergency meetings of the
general membership, the required quorum, and allowable proxies in such
meetings;
(d) The number,
qualifications, powers and duties, terms of office, manner of electing and
removing the board and the filling of vacancies in the board: Provided, That
the term of office of the members of the board shall not exceed two (2) years;
(e) The qualifications,
positions, duties, election or appointment, and compensation of other officers
and employees of the association: Provided, That the term of office of
the other officers shall not exceed two (2) years: Provided, further, That
no officer of the association holding a rank of director or trustee shall
likewise be entitled to any compensation;
(Note: A director/trustee shall not receive compensation as such. If
he is appointed by the board as an “officer”, he is not entitled to
compensation as such “officer cum director” or as a so-called “working director”).
(f) The schedule, venue,
and manner of conducting the regular, special, and emergency meetings of the
board, the required quorum, and allowable proxies in such meetings;
(g) Such powers that the
board may delegate to a managing agent, if any, or to other persons;
(h) Which
of its officers may prepare, execute, certify and record amendments to the
governing documents on behalf of the association;
(i) The grounds and
procedure for removal of director or trustee, and the manner of filling up
vacancies in the board, consistent with Section 13 of this Act;
(j) The
grounds and procedure for dissolution of the board, and the manner of
reconstituting the board, consistent with Sections 13 and 14 of this Act;
(k) The actions for limiting,
broadening or denying the right to vote, and the extent thereof;
(l) The
designation of the presiding officer at meetings of directors or trustees and
members;
(m) The time for holding
the regular election of directors or trustees and the mode or manner of giving
notice thereof;
(n) The creation of
election, grievance and audit committees, and such other committees which the association
may deem necessary, as well as a conciliation or mediation mechanism for the
amicable settlement of disputes among members, directors or trustees, officers
and committee members of the association;
(0) The dues, fees, and
special assessments to be imposed on a regular basis, and the manner in which
the same may be imposed and/or increased;
(P) The method of
adopting, amending, repealing and abrogating the bylaws;
(q) The list of acts
constituting a violation by its officers and the corresponding penalties
therefor;
(r) The penalties for
violation of the bylaws; and
(s) Such other matters
necessary for' the proper or convenient transaction of its corporate business
and affairs.”
Section 16 of the law provides that association
members “may vote in
person or by proxy in all meetings of members”.
Proxies shall be “in writing, signed by the member, and filed before the scheduled
meeting with the association secretary”. Unless otherwise provided in the
proxy, it shall be “valid only for the meeting for which it is intended”. No
proxy shall be valid and effective for a period “longer than three (3) years at
anyone time”. It may be revoked earlier by the member.
Section 17 of the law provides that the homeowners'
association must observe the following rules with regard to its “funds,
financial and other records”, to wit:
“(a) The association or
its managing agent shall keep financial and other records sufficiently detailed
to enable the
association to fully
declare to each member the true statement of its financial status. All
financial and other records of the association including, but not limited to,
checks, bank records and invoices, in whatever form these are kept, are the
property of the association. Each association's managing agent shall turn over
all original books and records to the association immediately upon termination
of the management relationship with the association, or upon such other demand
as is made by the board. An association's managing agent is entitled to keep
association records. All records which the managing agent has turned over to
the association shall be made reasonably available for the examination and
copying by the managing agent;
(b) All records
involving the affairs of the association shall be available for examination by
all owners, holders of mortgages on the lots, and their respective authorized
agents upon reasonable advanced notice, during normal working hours at the
office of the association: Provided, That holders of mortgages on lots
may have access to the information about the property held in mortgage with the
written consent of the registered owner;
(c) A financial statement
of the association shall be prepared annually by an auditor, the treasurer
and/or an independent certified public accountant within ninety (90) days from
the end of the accounting period to be posted in the association office,
bulletin boards, or other conspicuous places within the subdivision/village,
and to be submitted to the HLURB; and
(d) The funds of the
association shall be kept in accounts in the name of the association
and shall not be joined with the funds of any other association or any person
responsible for the custody of such funds.”
Section 18 of the law provides that homeowners' associations
shall complement, support and strengthen Local Government Units (LGUs) “in
providing vital services to their members and help implement local government
policies, programs, ordinances, and rules”.
The same section provides that where the LGUs
lack resources to provide for basic services, the associations shall endeavor “to
tap the means to provide for the same”. (Id.).
The “association dues and income derived from
rentals of their facilities shall be tax-exempt”. (Id.).
However, such income and dues shall be used for
the “cleanliness, safety, security and other basic services needed by the
members, including the maintenance of the facilities of their respective
subdivisions or villages”. (Id.).
(Note: Refer to recent circulars of the Bureau of
Internal Revenue which deemed as taxable the dues, fees, and earnings of the associations.
Some legal experts believe these circulars violate the Magna Carta. Please note
that as stated in the foregoing section 18, “association dues and income derived from rentals of their facilities
shall be tax-exempt”, provided, they are used for the “cleanliness, safety, security and other basic services needed by the members, including the maintenance of the facilities of
their respective subdivisions or villages”).
The LGUs shall, upon “due notice”, hold “public
consultations” with the members of the “affected associations, especially their
officers and directors”, where proposed “rules, zoning and other ordinances,
projects and/or programs” of the LGUs shall affect the associations and their
surrounding vicinities. (Id.).
In case of “zonal reclassification”, the
approval of a “simple majority of
homeowners” shall be required. (Id.).
The “public consultations” shall conform to the
manner as specified in “Rule XI, Article 54 of the implementing rules and
regulations of Republic Act No. 7160” (Local Government Code of 1991). (Id.).
Similarly, Section 19
provides that the
associations shall “complement, support and strengthen the efforts of the
national government agencies in providing vital services to their members and
help implement the national government policies and programs”.
National government agencies “shall consult the
associations” where its proposed rules, projects and/or programs “may
affect their welfare”. (Id.).
Section 20 provides for the powers of the
HLURB.
Under the said section, in addition to the
powers, authorities and responsibilities vested in it by “Republic Act No. 8763, Presidential Decree No. 902-A, Batas Pambansa
Big. 68 and Executive Order No. 535, Series of 1981, as amended”, the HLURB
shall:
“(a) Regularly conduct
free orientation for officers of homeowners' associations or deputize another
competent agency to conduct the orientation;
(b) Formulate and
publish a Code of Ethics and Ethical Standards for board members detailing
prohibited conflicts of interest;
(c) Register all
associations, federations, confederations or umbrella organizations of the
associations;
(d) Hear and decide
intra-association and/or inter-association
controversies and/or conflicts, without prejudice to filing civil and criminal
cases by the parties concerned before the regular courts: Provided, That
all decisions of the HLURB are appealable directly to the Court of Appeals;
(Note: Under the old rules
of appeals in administrative cases, HLURB decisions were appealable to the
Office of the President. Under the new law, HLURB decisions are now appealable
to the Court of Appeals by way of “petition for review” under Rule 43 of the 1997 Rules of Civil Procedure).
(e) Formulate the rules
or manner of verification and validation of petitions for the removal of
director(s) or trustee(s) of the association or dissolution of the board
pursuant to Sections 13 and 14 of this Act;
(f) Exercise
the same powers over federations, confederations or umbrella organizations of
the associations;
(g) Formulate, in
consultation with the representatives of associations, federations,
confederations or umbrella organizations of the associations, standard
nomenclatures to
be used for the
associations' books of accounts, and a standard articles of incorporation and
bylaws for homeowners' association for reference purposes;
(h) Formulate,
in consultation with the representatives of associations, federations,
confederations or umbrella organizations of the associations, the guidelines in
regulating the kinds of contributions and fees that may be charged and/or
collected by associations; and
(i) Call upon the
Philippine National Police, other law enforcement agencies, and other
instrumentalities of the government, if necessary, for the enforcement of its
functions.”
The Magna Carta for Homeowners, in Sec. 22
thereof, enumerates the following prohibited acts, to wit:
“(a) To compel a
homeowner to join the association, without prejudice to the provisions of the
deed of restrictions, its extensions or renewals as approved by the majority
vote of the members or as annotated on the title of the property; the
contract for the
purchase of a lot in the subdivision project; or an award under a CMP project (i.e., comprehensive
mortgage program of the National Home Mortgage
Finance Corp., or NHMFC) or a similar tenurial arrangement;
(Note: A homeowner may be
compelled to be a member of the association if so provided in the “deed of
restrictions” affecting his property or as “annotated on his land title”, or if
stipulated in his “contract to sell/contract of sale/deed of conditional/absolute
sale”, or if stipulated in his “award under a CMP or similar tenurial agreement”).
(b) To deprive any
homeowner of his/her right to avail of or enjoy basic community services and
facilities where he/she
has paid the dues,
charges, and other fees for such services;
(c) To prevent any
homeowner who has paid the required fees and charges from reasonably exercising
his/her right to
inspect association
books and records;
(d) To prevent any
member in good standing from participating in association meetings, elections
and referenda;
(e) To deny any member
due process in the imposition of administrative sanctions;
(I) To
exercise rights and powers as stated in Section 10 in violation of the required
consultation and approval of the required number of homeowners or members;
(g) To unreasonably fail
to provide basic community services and facilities and maintain, repair,
replace, or modify such facilities;
(h) To
unreasonably fail to comply with Section 17 of this Act; or
(i) To violate any other
provision of this Act.”
Under Sec. 23 of the law, any person who, “intentionally
or by gross negligence”, violates any provision of the Magna Carta, or “fails
to perform his/her functions” under the Magna Carta, and/or “violates the
rights of the members”, shall be punished by the HLURB with:
1.
A
“fine of not less than Five thousand pesos (Php5,OOO.OO) but not more than
Fifty thousand pesos (Php50,OOO.OO) and
2.
“Permanent
disqualification from being elected or appointed as member of the board,
officer or employee of the association”.
The foregoing administrative penalty is “without
prejudice” to cases that may be filed before the regular courts for
violations of the “Revised Penal Code, Civil Code and other pertinent laws”.
(Id.).
If the violation is
committed “by the association”, the “members, officers, directors or trustees”
of the association who “actually participated in, authorized, or ratified” the prohibited
act shall be held liable. (Id.).
If the violation is
committed “by the employees and agents who acted in gross violation” of the
provisions of the Magna Carta, the “officers, directors or trustees, or
incorporators” of the association shall be “jointly and severally liable” with
the offending employees, agents, and the association. (Id.).
Section 24 of the law provides that within six
(6) months from the effectivity thereof, existing associations previously
registered with the Securities and Exchange Commission (SEC) or the Housing
Insurance Guaranty Corp. (HIGC) shall conduct a “review of its bylaws”, draft
its own “rules of procedure” to be incorporated in the bylaws, and conduct a “plebiscite”
for the approval thereof by the members of the association. A “simple majority”
is enough to approve the new bylaws.
Finally, Section 28 of the law provides that in
formulating the implementing rules and regulations of the Magna Carta, the
HLURB shall not “undermine the organizational and territorial integrity of any association”.
(Note:
“Organizational integrity” refers to the constitutional right of the members to
freedom of association. “Territorial integrity” refers to the boundaries covered
by the jurisdiction of the association as provided in the official/original subdivision
plan registered by the subdivision developer with the HLURB and duly verified and
approved by the HLURB, pursuant to existing housing laws).
Atty.
Manuel J. Laserna Jr.
Laserna Cueva-Mercader Law Offices
Las Pinas City
