Corporate Securities Info

Neighborhood associations

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The availability of credit in recent times, boosted by remittances from overseas Filipino workers, has spurred the construction of housing projects in different parts of the country.

True to Filipino gregariousness, as soon as a gated community or residential condominium building is fairly populated or its developer decides to wind up its activities, the residents organize themselves into a homeowners’ association for mutual protection and cooperation.

Before the enactment last year of the Magna Carta for Homeowners and Homeowners’ Association (Republic Act 9904), homeowners’ associations acquired their juridical personality by registering either with the Securities and Exchange Commission or Housing and Land Use Regulatory Board (HLURB).

With the new law giving the HLURB exclusive regulatory and supervisory authority over housing projects, the power to grant juridical personality to homeowners’ associations that have not previously acquired that status by way of the SEC or through any other law was likewise transferred to the HLURB.

To be entitled to that privilege, however, it is essential that the association members are owners or purchasers of lots in a subdivision or village, or awardees or legal occupants of government socialized housing or relocation projects.

Organizations

Due to inadvertence, the law failed to include in its coverage “neighborhood associations” or non-stock, non-profit organizations that consist of members who are members of existing homeowners’ associations, or who reside in the same community but are not or do not want to be members of existing homeowners’ associations.

Just like our electoral process where losing candidates claim cheating as reason for their defeat, it is common practice by members of homeowners’ associations who fail to win the election to secede and form separate organizations.

The same approach is also taken by residents who, for one reason or another (but often personal), do not see eye to eye with or are disgruntled with the incumbent leadership.

Invoking the constitutional right to form associations for purposes not contrary to law, breakaway groups—which describe themselves as neighborhood associations, bukluran, or words of similar effect—are able to register with the SEC despite the existence of homeowners’ associations within their communities.

Depending on the degree of animosity among the residents, a residential subdivision or condominium building may have two (sometimes three) organizations with the similar objective of promoting the well-being of their members.

Responsibility

Thus, there are cases of gated communities with a homeowners’ association registered with the HLURB and, at the same time, a neighborhood association registered with the SEC, both of which have separate and distinct juridical personalities.

It’s no holds barred when these two organizations clash over the collection and disposition of membership dues and fees! The conflict becomes nastier if politicians get into the picture, especially during local elections.

The administrative aspect of the dispute is litigated either in the SEC or HLURB. If tempers go out of hand, civil and criminal cases are filed against each other, with the lawyers only too happy to oblige the protagonists.

With this scenario in mind and in the light of the objective of the law to centralize the supervision of housing-related projects under the HLURB, the SEC sought clarification from the Department of Justice on whether neighborhood associations are included in the HLURB’s area of responsibility.

Justice Secretary Leila de Lima ruled that the term “association,” as defined in Rep. Act 0004, necessarily includes neighborhood associations because “although they are differently named they have the same objectives, membership pool and territorial coverage.”

She said the word “association” should be given a liberal construction in order to accomplish the intended purpose and carry out the intent of the law.

Consolidation

Citing the provision of the law granting the HLURB the power to hear and decide intra-association and inter-association controversies, De Lima pointed out that “the consolidation of jurisdiction over all homeowners’ associations including neighborhood associations under a single government agency was envisioned to facilitate conflict resolution and coordination between and among these associations.”

She also made reference to the provision of the law, which requires the registration of every association of homeowners with the HLURB after the law becomes effective, including those previously registered with the SEC and the defunct Home Insurance Guarantee Corp.

According to De Lima, this re-registration is necessary so the HLURB can acquire and exercise jurisdiction over them. Thus, to interpret the term “association” strictly that would exclude neighborhood associations from its meaning would defeat the intent of the legislature to invest the HLURB with adjudicatory powers over the said organizations.

Bottom line, like a rose called by any name, members of a community who want to acquire a juridical personality of their own to promote their common housing interests, regardless of the name or title used to describe themselves, have to go to the HLURB for that purpose.

(For feedback, write to rpalabrica@inquirer.com.ph.)

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