Ibabao Bagong Lipunan Community Association, Inc. vs. Ibabao Bagong Lipunan Community Association, Inc.

July 1, 2014 SEC CASE NO. 03-06-128 IBABAO BAGONG LIPUNAN COMMUNITY ASSOCIATION, INC. [A Homeowners' Association], petitioner , vs .IBABAO BAGONG LIPUNAN COMMUNITY ASSOCIATION, INC., respondent . ORDER This is a Petition for Revocation of Respondent's Certificate of Registration 1 filed on September 8, 2005 by Petitioner Ibabao Bagong Lipunan Community Association, Inc.,with Home Financing Corporation (HFC) Registration No. 07-009, against the Respondent Ibabao Bagong Lipunan Community Association, Inc.,with SEC Company Registration No. CN200525569. The Petitioner alleges in the Petition that: (1) it is a Homeowners' Association duly registered with the HFC pursuant to Section 20 of Act 1459, otherwise known as the Corporation Law, as shown by its Certificate of Filing of By-Laws issued by the HFC on January 12, 1981 under Registration No. 07-009; (2) the Respondent whose registration is sought to be revoked is composed of a runaway group of members of Petitioner who, through dubious efforts, managed to have their group registered with the Commission on January 6, 2005, despite the fact that the Petitioner is already registered with the HFC for more than twenty four (24) years; (3) the Respondent bears the same corporate name as the Petitioner, hence, caused confusion, chaos and duplication; (4) the Respondent is usurping the functions and privileges accorded to Petitioner as a duly constituted and registered Homeowners' Association; (5) the existence of Respondent creates division in the bona fide membership of Petitioner; and (6) it is entitled to a Writ of Preliminary Injunction because the Respondent has been usurping the functions and privileges of the former. In its Comment to the Petition , 2 dated May 31, 2006, the Respondent asserts that the Petition is formally defective and should be dismissed for failure to comply with the requirements set out in Section 7, Rule IV of the Revised Rules of Procedure of the Commission which mandates that the Petition should contain the names and residences of the parties and a brief statement of the right sought to be enforced, the law, rule or regulation under which the Petition is based, and the relief sought. Respondent also avers that the Petitioner has no legal capacity to sue, and the Petition does not state a cause of action. In support of its claim that the Petitioner has no legal capacity to sue, Respondent declares that when the Petitioner obtained a Certificate of Filing of By-Laws, the law in force at that time was already Batas Pambansa Blg. 68, 3 which took effect on May 1, 1980. Under Section 19 of the Corporation Code, a private corporation commences to have corporate existence and juridical personality and is deemed incorporated from the date the Commission issues a Certificate of Incorporation. In this case, the Respondent claims that the HFC merely issued the Petitioner a Certification of Filing of By-Laws and not a Certificate of Incorporation or Registration. The Petitioner, as an unregistered organization, cannot exercise the powers, rights and privileges expressly granted by the Corporation Code to registered corporations, such as the power to sue. As to Respondent's claim that the Petition does not state a cause of action, the former contends that nowhere in the Petition can be found any of the grounds provided for by Section 6 (1) 4 of Presidential Decree 902-A (PD 902-A) to warrant the revocation of Respondent's Certificate of Registration. Accordingly, the Petitioner is not entitled to a Writ of Preliminary Injunction. AEcTCD The Petition contends in its Rejoinder to Respondent's Comment to Petition 5 (Rejoinder) , dated June 19, 2006 that: (1) it is formerly registered with the HFC and is now supervised by the Home Guaranty Corporation through the Housing and Land Use Regulatory Board (HLURB); (2) the Respondent was not truthful in disclosing before the Commission that there exists a duly registered Homeowner's Association bearing the same name; (3) the Respondent was masquerading or representing itself as a Homeowners' Association; (4) the Respondent is composed of merely disgruntled members of the Petitioner; and (5) the Respondent did not disclose to the Commission that it is now transacting with the public and private persons as a Homeowners' Association. The Petitioner, thus, insists that Respondent usurped unto itself the name, identity of a validly registered and existing Homeowners' Association, hence, the Commission has jurisdiction to hear and resolve the issues involved under PD 902-A. On May 14, 2008, the Petitioner filed its Memorandum ,dated April 30, 2008, reiterating the arguments alleged in its pleadings. The Respondent, on the other hand, did not file its Memorandum, despite the Order directing to file the same. On July 10, 2010 or during the pendency of this case, Republic Act No. 9904 6 (RA 9904) took effect. RA 9904 covers homeowners' and neighborhood associations, 7 and bestows jurisdiction over these entities exclusively to the HLURB. Sections 4 and 20 of the law declares that every Homeowners' Association, including those previously registered by the Commission, shall register with the HLURB, which shall hear and decide intra-association and inter-association disputes, to wit: " Section 4 . Registration with the HLURB. Every association of homeowners shall be required to register with the HLURB. This registration shall serve to grant juridical personality to all such associations that have not previously acquired the same by operation of the General Corporation Law or by any other general law . The procedure for registration shall be specifically provided for in the implementing rules and regulations to be promulgated by the HLURB pursuant to Section 28 of this Act. Such procedure 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. 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 . 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 after this Act takes effect. xxx xxx xxx CHAPTER IV DUTIES AND RESPONSIBILITIES OF THE HLURB Section 20 . Duties and Responsibilities of the HLURB. In addition to the powers, authorities and responsibilities vested in it by Republic Act No. 8763, Presidential Decree No. 902-A, Batas Pambansa Blg. 68 and Executive Order No. 535, Series of 1981, as amended, the HLURB shall: xxx xxx xxx (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;" 8 On June 24, 2011, the HLURB approved the Implementing Rules & Regulations of RA 9904 (IRR of RA 9904), which provides: TASCDI " RULE 1 Section 4 . Definition of Terms. As used in these Implementing Rules and Regulations, the following terms shall mean: w. Intra-association dispute refers to a controversy which arises out of the relations between and among members of the association; between any or all of them and the association of which they are members; and between such association and the State insofar as it concerns their individual franchise or right to exist. It refers also to a controversy which is intrinsically connected with the regulation of associations or dealing with the internal affairs of such entity. x. Inter-association dispute refers to a controversy which arises out of the relations between and among two or more associations. xxx xxx xxx RULE 5 REGISTRATION OF HOMEOWNERS ASSOCIATION Section 20 . Number of Associations. As far as practicable, only one (1) homeowners association shall be established and registered with HLURB in each subdivision ,except in cases where the subdivision consists of two (2) or more phases. In case two (2) or more associations are registered or applying for registration within the same subdivision, the HLURB shall decide which association shall be registered after the procedures for adjudicatory mechanism as provided in this Rules are observed . Section 21. Mandatory Registration . It is mandatory for all associations to register solely with the HLURB . All associations whose purpose, among others, is to promote and protect their mutual interest and assist in their community development as homeowners are considered homeowners associations . Associations previously registered with the Home Insurance Guaranty Corporation (HIGC) or the Securities and Exchange Commission (SEC) shall be respected and recognized: Provided, that they register with HLURB ;and, provided, further, that no penalty shall be charged. xxx xxx xxx Section 26. Adjudicatory Mechanism in the Registration of Association . In case two or more associations are organized within the same subdivision/village and both applied for registration with HLURB in accordance with this Rules, the HLURB shall register only one association in accordance with the following procedures: xxx xxx xxx c. In case one (1) of the associations is registered with the SEC and the other with the HLURB, the one earlier registered shall prevail and the registration of the other shall be revoked ,provided the requirements under Section 24 are submitted within a period of one (1) year of the effectivity of this Rules. xxx xxx xxx RULE 11 DUTIES AND RESPONSIBILITIES OF THE HLURB Section 64. Duties and Responsibilities of the HLURB . In addition to the powers, authorities and responsibilities vested in it by Republic Act No. 8763, Presidential Decree No. 902-A, Batas Pambansa Blg. 68 and Executive Order No. 535, Series of 1981, as amended, the HLURB shall: xxx xxx xxx c. Register all associations, federations, confederations or umbrella organizations of the associations; CTEaDc 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; ...." 9 Respondent practically admits 10 that it is acting as a Homeowners' Association. 11 It is undisputed that the Respondent was incorporated by disgruntled members of the Petitioner, and is composed of members who are residing in the same housing project, Rural Bliss Project located at Ibabao, Cordova Cebu. 12 Further, Respondent stated in the purpose clause of its Articles of Incorporation that it is organized to provide support and direction in the operation, management and maintenance of the association's facilities and to strengthen relationship among members, 13 which is consistent with Section 21, Rule 5 of the IRR of RA 9904 that says "[a]ll associations whose purpose, among others, is to promote and protect their mutual interest and assist in their community development as homeowners are considered homeowners associations." Finally, the Commission's records show that the Respondent is classified as a Neighborhood Association. 14 From the foregoing, it is clear that the Commission has lost jurisdiction over intra/inter-association disputes involving Homeowners' Association. Stated otherwise, it is now the HLURB which has jurisdiction to hear and decide cases involving inter-association controversies of Homeowners' Associations despite the fact that this case was pending with this Commission, upon the effectivity of RA 9904. In fact, the law makes it mandatory for all Homeowners' Associations, like the herein parties, to register with the HLURB which has been vested the exclusive jurisdiction to decide which Homeowners' Association shall prevail, in case two (2) or more associations are registered or applying for registration within the same subdivision or housing project, or in case one (1) of the associations is registered with the Commission and the other with the HLURB. WHEREFORE, premises considered, the case is hereby DISMISSED for lack of jurisdiction and REFERRED to the Housing and Land Use Regulatory Board for appropriate action. SO ORDERED. Mandaluyong City, Philippines, July 1, 2014. (SGD.) TERESITA J. HERBOSA Chairperson (SGD.) MANUEL HUBERTO B. GAITE Commissioner (SGD.) ANTONIETA F. IBE Commissioner (SGD.) EPHYRO LUIS B. AMATONG Commissioner (SGD.) BLAS JAMES G. VITERBO Commissioner Footnotes 1. Dated September 7, 2005. 2. Filed on June 8, 2006. 3. Corporation Code of the Philippines. 4. Sec. 6. In order to effectively exercise such jurisdiction, the Commission shall possess the following powers: ... (i) To suspend, or revoke, after proper notice and hearing, the franchise or certificate of registration of corporations, partnerships or associations, upon any of the grounds provided by law, including the following: [1] Fraud in procuring its certificate of registration; [2] Serious misrepresentation as to what the corporation can do or is doing to the great prejudice of or damage to the general public; [3] Refusal to comply or defiance of any lawful order of the Commission restraining commission of acts which would amount to a grave violation of its franchise; [4] Continuous inoperation for a period of at least five (5) years; [5] Failure to file by-laws within the required period; [6] Failure to file required reports in appropriate forms as determined by the Commission within the prescribed period; 5. Filed on June 28, 2006. 6. Otherwise known as the Magna Carta for Homeowners' Associations. 7. Section 3 (b), RA 9904; DOJ Opinion No 020, Series of 2011 dated May 3, 2011. 8. Underlining ours. 9. Emphasis supplied. 10. Respondent does not specifically deny paragraphs 6, 7, 9 & 10 of the Petition, and pages 3 and 4 of Petitioner's Rejoinder. 11. Section 3 (b) of Republic Act No. 9904 refers an 'Association' to the homeowners' association which is a nonstock, nonprofit corporation registered with the Housing and Land Use Regulatory Board (HLURB),or one previously registered with the Home Insurance Guarantee Corporation (now Home Guaranty Corporation) or the Securities and Exchange Commission (SEC) ,organized by owners or purchasers of a lot in a subdivision/village or other residential real property located within the jurisdiction of the association; or awardees, usufructuaries, legal occupants and/or lessees of a housing unit and/or lot in a government socialized or economic housing or relocation project and other urban estates ;or underprivileged and homeless citizens as defined under existing laws in the process of being accredited as usufructuaries or awardees of ownership rights under the Community Mortgage Program (CMP),Land Tenure Assistance Program (LTAP) and other similar programs in relation to a socialized housing project actually being Implemented by the national government or the LGU. 12. Paragraphs 4 and 10, Petition and Respondent's Articles of Incorporation and 2005, 2007 General Information Sheet. 13. Annex "E",Petition. 14. Industry Classification stated in the Company Information, as published in the SEC's iView.