Homeowners Dues Illegally being collected by the Developer

The Homeowners Association in Lancaster Residences is handled by the developer, Property Company of Friends, Incorporated (Pro-Friends) and its HOA dues are being collected through its water utility Southlink Waterworks.  Is it legal for the developer to collect HOA dues from its own customers, the homeowners of Lancaster Residences? Let us check out point-by-point if this act is legal.




Paying for the homeowners association dues is legal and necessary. It is because the payment collected from the dues are to be used for the daily expenses used by the community for the street lights, garbage collection, security personnel and other regular maintenance of the said subdivision. And this is the reason why the homeowners have signed the the clause under the Contract to Sell of their units to religiously pay the homeowners association dues.

However, in Lancaster Residences, the Homeowners Association  is handled and put up by the employees of its developer, Property Company of Friends, Inc. (Pro-Friends). In fact, the five seats for the board of directors and trustees of Lancaster Estates Homeowners Association (LEHOA) are all occupied by employees of Profriends under its Estate and Asset Management Division.

Lancaster Residences homeowners are required to pay P300/month for those residing in Manor units while P220/month for those residing in Villas units.

The dues are collected monthly and is embedded together with the water bill. The water utility company in Lancaster Residences is provided by South Link Waterworks Incorporated which is a company owned by Ahnex Builders whose owner is one of the large stakeholder of Pro-Friends in the Lancaster Estates project to where Lancaster Residences is part of.

As the water service is one of the life-blood service of the community, all homeowners are required to pay for the water bill plus the homeowners association dues. A homeowner could not pay the water service if the homeowner does not choose to pay the homeowners association dues.

The video below was taken last December 2011 when homeowners were not allowed to pay for their water service at South Link Waterworks satellite office at Petron Gas station of Advincula Avenue near the Lancaster Residences entrance and caused a commotion.

One of the homeowners said, "Why would you not accept our water payment while this is South Link. You are a water service company and we are paying for the water bill and not the homeowners association dues."

The homeowner did make sense, however, South Link still insisted and did not accept the payment of the homeowners who decided to pay for the water bill only. Until today, this satellite office including the main office at Buhay na Tubig, does not accept water service payment if the HOA dues are not paid.

The majority, if not, all of the homeowners are against paying the homeowners association dues because the dues are too expensive in comparison with other larger subdivisions that have bigger lots and lesser units.

And so most homeowners who believe that the dues collected by LEHOA are illegal decided to find ways in paying the water bill only without the HOA dues. And this is possible by paying the water bill via a bank deposit at Metrobank Lotus Imus branch where South Link has an account.

The homeowners via a representation from the Lancaster ADHOC committee, now known as LRUOA have sent a letter to South Link via their attorney to stop collecting payment of the HOA dues via the water bill last mid-2012. However there was no response made and the collection of HOA dues via the water bill continued.

The picture below is the South Link Waterworks Water Bill that includes the homeowners association dues and the bank account where most homeowners deposit their payment.

Water bill which includes HOA dues before March 2013

Because many homeowners are already paying their bills via this route, LEHOA may no longer be reaching their quota for a homeowners association dues collection and so South Link have decided to cut-off the bills payment via their bank account starting March 2013. According to South Link, this was done for the "convenience" of the homeowners as they can pay their dues via specified bills payment centers at SM Anabu, FRC Mall SM Molino, and SM Bacoor. However through this payment route, the Bills Payment center does not accept payment if not the total amount is to be paid. Unfortunately, the total amount of the water bill from South Link Water Works includes the water service payment and the HOA dues. This actually made the payment less convenient to the homeowners as they need to go further to these bills payment centers. The nearest and most convenient way of paying for the water bill is via a bank deposit in Metrobank branches yet they decided to cut it off.

It may be a coincidence, but if it is not, then it may be a connivance between ProFriends and South Link to ensure that homeowners pay for the HOA dues.

Below is the latest water bill of South Link that removed the bank deposit option when paying for the water service.

Water bill which includes HOA dues after March 2013

It is also noted that HOA dues are tax-exempt while water bill payments are not. Combining them in to one bill would eventually tax South Link even more. I just couldn't comprehend why South Link is doing this. If they are indeed paying taxes, they are too generous to the government and even allowed themselves to be taxed for the HOA dues collected. :D

Additionally, South Link Waterworks is only giving a "Provisional Receipt" with an LEHOA header whenever they accept payments of monthly dues which is insufficient and illegal if not followed up with an "Official Receipt". In any sense, none of the Lancaster Residences homeowners have ever received an Official Receipt for this purpose.

As of June 2013, South Link has expectedly closed their Metrobank Account 039-3039-570310 so homeowners could no longer pay their water bill without paying their HOA dues.

When one of the homeowners asked if there are other bank accounts of South Link Waterworks Incorporated to which the homeowners can choose to pay the water service only, South Link Water Works responded again that they are just collecting agents for LEHOA thus they directed us to the Village Administrator which is a non-homeowner, and and employee of the real-estate developer, Property Company of Friends, Inc. (Pro-Friends). Hence, they would still not accept the water service payment if the Association Fee will not be paid.

One of the homeowners emailed South Link but was never responded.

Legal Implications

It is noted via Presidential Decree 957 that a Homeowners Association must not be handled by the developer. In this case, Pro-Friends. However, 100% of the Board of Directors of LEHOA are Pro-Friends employees. This makes LEHOA illegal under this decree.

It has also been said the the HOA dues must be collected separately and not by the developer. However, in Lancaster Residences and other Lancaster Estates project, the HOA dues is collected via the water bill from South Link Waterworks wherein the owner is a big stakeholder of the developer, Pro-Friends.

According to HLURB on the implementation of PD957 (reference link)

Can officers of a developer collect association dues or fees from homeowners for the maintenance and security of a subdivision? 
No, because association dues or fees for the maintenance and security of a subdivision can only be collected by a property organized Homeowners Association with the consent of a majority of the lot or unit buyers actually residing in the subdivision project (Sec. 27 of PD 957) 

When asked regarding the official response of Pro-Friends regarding this matter via its Estates and Asset Management Division CRD Head which happens to be one of the board of directors of LEHOA (By the way, this person is an employee of the developer and a non-homeowner of Lancaster Residences), his response was that the LEHOA by-laws allows it so.

When the homeowners were asked, the reason behind the reluctance of Lancaster Residences homeowners in paying the HOA dues is due to the fact that the dues were implemented without consultation and approval of the homeowners and was only the decision of the 5-member board of directors of LEHOA which are all employees of Pro-Friends. Add to this the absence of monthly financial reports from LEHOA which they do not provide even if it was asked by paying members.

It must be noted that any by-laws of a homeowners association must never go against the law that allowed its existence. And it seems, the by-laws created by LEHOA is in contradiction of the available laws for homeowners associations.

We have also discussed deeper the LEHOA by-laws that the developer is using to justify its handling of the homeowners association and compared it with the laws protecting a homeowners association. The article is LEHOA By-Laws and PD957 and RA9904.