LEHOA By-Laws and PD957 and RA9904

As a follow-up article from our previous blog post about Homeowners Dues Being Illegally Collected by the Developer, we have explained point-by-point why HOA dues must not be collected by the developer. Now we will be tackling about some of the sections of LEHOA By-Laws that Pro-Friends use as the basis for its reason why there must be a developer involvement in the activities of a homeowners association.



By-Laws

What is a Homeowners Association Bylaw? Section 15 of the  Republic Act 9904 has an answer.

Sec. 15. Association Bylaws. - The bylaws of the association shall be adopted by a simple majority of the members of the association. Consistent with the provisions of this Act. - RA9904

Simply put, the Bylaws of a homeowners association must have been approved by a simple majority (50%+1) of its members and not just its directors nor officers. This means the homeowners must have been involved. However when I asked the residents of Lancaster Residences, that are already residing during the drafting and approval of the by-laws, no one among them knew that there was a by-law being drafted. They were just surprised that a bylaw immediately existed informing them on how much HOA dues they must pay and how the officers and directors must be put in power.

It is also noted that the by-law must be consistent and does not go against the provisions of RA9904.



LEHOA Management

According to Pro-Friends via its Estate and Asset Management Division CRD Head, the developer has a right to manage the Lancaster Estates Homeowners Association (LEHOA) due to the following section of the by-laws.

Sec.1. The Developer, while holding title to unsold lots or housing units in the subdivision and for purposes of representation in the Association, shall be deemed a member of the Association. As such, such the developer may designate its nominees for each of the unsold lots or housing units to be its official representatives in all meetings and on all matter concerning the Association, including the right to elect and to be elected as block representatives, phase representatives and members of the Board of Directors and its Officers.” - LEHOA By-Laws

However, the law put up under the Presidential Decree 957 Section 27 states that

Section 27. Other Charges. No owner or developer shall levy upon any lot or buyer a fee for an alleged community benefit. Fees to finance services for common comfort, security and sanitation may be collected only by a properly organized homeowners association and only with the consent of a majority of the lot or unit buyers actually residing in the subdivision or condominium project. - PD957

Section 27 of PD957 clearly reiterates that no developer or any connection to it thereof must handle nor collect fees nor manage fees of a homeowners association which is what is currently happening on the HOA dues of Lancaster Residences. Aside from that, it requires a consent of the majority of the lot or unit buyers residing in Lancaster Residences before it will be allowed. Upon doing my research and asking residents of Lancaster Residences who are already residing in the subdivision during the incorporation of LEHOA last 2009, there were no referendum or plebescite held to make such decision of having the developer handle the Homeowners Association.

The nearest clause of PD957 that may allow Pro-Friends to govern LEHOA is section 30 which says:

Section 30. Organization of Homeowners Association. The owner or developer of a subdivision project or condominium project shall initiate the organization of a homeowners association among the buyers and residents of the projects for the purpose of promoting and protecting their mutual interest and assist in their community development. - PD957

However, let us not forget that the law only requires the developer to assist the homeowners and residents to put up a homeowners association and not to govern it.

This is even proven further using Section 19 that in the absence of a homeowners association, the developer (Pro-Friends) is required to shoulder the cost for its infrastructure and facilities until a homeowners association has already been put up by homeowners.

Section 19. Advertisements. .. The owner or developer shall answerable and liable for the facilities, improvements, infrastructures or other forms of development represented or promised in brochures, advertisements and other sales propaganda disseminated by the owner or developer or his agents and the same shall form part of the sales warranties enforceable against said owner or developer, jointly and severally. Failure to comply with these warranties shall also be punishable in accordance with the penalties provided for in this Decree. - PD957

Thus, the developer collecting Homeowners Association Dues at the back of a Homeowners Association which they hold all the Board of Director Seats (LEHOA), is illegal and is punishable in accordance with PD957. And even their "15 minutes away" advertisement is also punishable through this decree if proven to erroneous. (See 15 Minutes Away. More fun in Lancaster.)


Also, Republic Act 9904 of the Magna Carta of Homeowners Association, aside from the developer being prohibited to handle the homeowners association and hold board seats (from PD957), this republic act also specifies what the board directors must be:

Section 52  Qualifications of Officers. - A director and officer of an association:

c. Must be an actual resident of the subdivision, housing or relocation project for at least six (6) months as certified by the association secretary or in default thereof, by a member having personal knowledge thereof;  - IRR, RA9904

The 5 seats of the board of directors in LEHOA currently are not residents of Lancaster Residences and worse, they are employees of the developer.

To further make the handling of LEHOA by the developer look very legit with homeowner participation, they even went to the point of using gullible homeowners by self-appointing them without elections. And they were appointed by Pro-Friends as "Block Representatives". Do take note though that because of the structure of LEHOA as demanded by their own by-laws, these block representatives do not have decision-making power as the one that decides are those that are seating as Board of Directors which is obviously occupied by Pro-Friends employees. Even the Estates and Asset Magement Division CRD head of Pro-Friends have verbally mentioned that the existing block representatives were appointed by their group and not elected by the homeowners.

 Article V Section 1 that “Block Representatives are members of the association who shall either be elected by their fellow members belonging to or residing in the same block within the subdivision or appointed by the Board of Trustees in the absence of any such election.” - LEHOA By-laws

Do take note that the section of the LEHOA by-laws contradict with the following law:

Section 50. Composition of the Board. Unless otherwise provided in the by-laws, the board shall be composed of at least five (5) but not more than fifteen (15) elected members of the association. - IRR, RA9904

Take note that Section 50 the IRR for RA9904 commands that the board of directors must be elected. It only specifies the number of board seats must be coming from the by-laws.


Further logic of Pro-Friends to handle LEHOA.

Using the LEHOA by-laws, Pro-Friends have added the following section in the by-laws to give specific methods on how they will occupy the Board of Directors seats depending on the occupancy.

Article VII Section 2, it states that;
"The Board of Directors shall be composed of five (5) elected members. The nominees of the developer shall in the interim serve as the members of the Board of Directors. The Developer, at its option, may give up the following number of board seats depending on the occupancy rate of the total project which shall include existing phases at the time of the incorporation of the Homeowners Association and other phase/s that may be acquired by the developer in the future:
                a. When the occupancy rate has reached 40%, the developer shall give up 1 board seat;
                b. When the occupancy rate has reached 60%, the developer shall give up 2 board seats;
                c.  When the occupancy rate has reached 90%, the developer shall give up 2 board seats;
                d. When the occupancy rate has reached 100%, the developer shall give up all board seats.The nominees of the developer and members of the Village council shall be eligible for the office of a Director. - LEHOA By-laws

With the above section of the LEHOA by-laws, the developer instantly secured its sticky grip to the homeowners association for a whole lifetime or probably for several generations of Lancaster Residences' residents.  It is not impossible however highly probable that the units would not be sold for a 100% especially when Pro-Friends is known to have quality issues with their projects which is documented at how they handled the issue at their Montefaro project (Youtube video here.) and their actual performance on how they construct their units at their Lancaster Estates project (now renamed to Lancaster New City Cavite) which includes Lancaster Residences; which is precisely documented at this blog - Construction Lapses of Pro-Friends.



Conclusion

Using the following clauses from Presidential Decree 957 and its implementing rules and regulations; as well as Republic Act 9904 and its implementing rules and regulations, the following must be concluded:

The current management, board of directors, officers, of the Lancaster Estates Homeowners Association (LEHOA) and its corresponding bylaws is one-sided, insufficient, and illegal.

When the legality of LEHOA and its by-laws has been contested to the Pro-Friends Estate and Asset Management CRD Head, his answer was simple, "The bylaws were approved with HLURB arbitration"

If the response was factual, the HLURB arbiters and Pro-Friends must be held liable for the approval of the LEHOA by-laws as it contradicts with the law. Or else, HLURB must prove that the statement of Pro-Friends is incorrect.

But again, the Pro-Friends representative/LEHOA Director has missed the point... the by-laws must not only be approved through HLURB arbitration but through simple majority of the residents of Lancaster Residences.

 

Present set-up of LEHOA

Current Status

The developer, Pro-Friends, probably being mindful of the circumstances and irregularity of its self-proclaimed and self-ruled Lancaster Estates Homeowners Association, is now calling for an election of officers from the homeowners. However, be informed that they are still pushing for what its own bylaws is pertaining to. Board of Director seats must still depend on the occupancy of not only Lancaster Residences but also of LV1, LV2-East and LV2-West which as of this time has minimal occupancy thus giving relentless power to the developer.

The homeowners must know that this only gives the opportunity for the developer to prove that the homeowners "agree" with current LEHOA bylaws, and the homeowners only elect a set of officers that still do not have the decision-making power of the homeowners association. This is only a replacement to the block representatives that the homeowners distrust.


Solution

In the name of community empowerment, uphold your rights as homeowners of Lancaster Residences. Do not allow the developer to handle the homeowners association because the mandate of a homeowners association is to protect and nurture the community via a non-profit organization to which is only handled by homeowners. The resistance of the developer holding LEHOA to provide financial statements even if asked by paying members is a good reason enough that there is a probability that the dues you pay may be going somewhere else.

RA9904 provides specific instructions on how to unseat the board of directors and modify the bylaws with a simple majority of its members excluding the directors. Use this power given by law to protect your rights and of your family in years to come. After all, this is OUR COMMUNITY.

The HOA that must be upheld by the Lancaster Residences community.