REPUBLIC OF THE PHILIPPINES

OFFICE OF THE PRESIDENT

HOUSING AND LAND USE REGULATORY BOARD

EXPANDED NATIONAL CAPITAL REGION FIELD OFFICE
HLURB BUILDING, KALAYAAN AVENUE CORNER MAYAMAN STREET
DILIMAN, QUEZON CITY

JOCELYN A. SOLANO, ET. AL.,

Complainants,

Versus

CASE NO. NCRHOA-090612-1732

MARK MILAN JAGUNAP, ET. AL.,

Respondents.
x-----------------------------------------x

DRAFT DECISION
For resolution of this Board is a dispute between homeowners of
Golden Gate Subdivision Homeowners Association, Inc. (GGSHAI). This
complaint is initiated by the complainants as derivative suit against the
incumbent officers of GGSHAI for allegedly violating the provisions of
Republic Act No. 9904, otherwise known as the Magna Carta for Homeowners
and Homeowners Associations, and its Implementing Rules and Regulations
as embodied in HLURB Board Resolution No. 877, series of 2011.
Nothing is more disappointing than neighbors quarreling against each
other. The simple dynamics of a peaceful community is disturbed much like
calm waters agitated with ripples by the throwing of a stone. In this case the
throwing of multiple stones of different sizes and at different locations leaves
the community in turmoil.
It is detrimental to the progress of a community that leaves it ruined if
left unchecked and unresolved. This dispute has been brought to this Board
to be settled. Thus, we now discuss the merits of this case.
This controversy arose allegedly from the continued violation of the
rights of herein complainants by respondents who are the incumbent officers
of the Golden Gate Subdivision Homeowners Association, Inc. Complainants
claim they represent majority of the homeowners thus invoking the right to
file a derivative suit for and in behalf of the homeowners of GGSHAI. In order
to vindicate their rights they come to this Board with this complaint raising
the following acts and omissions purportedly committed by respondents: 1 a.)
Depriving the complainants of their rights as homeowners to avail of or enjoy
basic community services and facilities; b.) Preventing the complainants
from reasonably exercising their right to inspect association books and
1

Page 2 of complaint.

records; c.) Preventing the complainants from participating in association

elections and referenda; d.) Preventing the complainants from exercising
their rights and powers in violation of the required consultation and approval
of the required number of homeowners or members by: d.1.) Collecting
illegal fees, charges, and assessments without prior consultation and
approval by a majority of the homeowners; d.2.) Allowing the establishment
and construction of an institution and opening an area inside the subdivision
to outsiders without prior consultation and approval by a majority of the
homeowners; e.) Failing to adopt and maintain an accounting system using
Generally Accepted Accounting Principles (GAAP); f.) Non-submission of and
filing erroneous, inaccurate, and incomplete financial statements; g.)
Destroying projects and improvements done by previous administrations; h.)
Unreasonably failing to provide basic community services and facilities and
maintain, repair, replace or modify such facilities; i.) Making and
implementing election rules and regulations that are not in accordance with
the By-Laws of the association; j.) Failing to conduct a review of the By-Laws
of the association, draft rules and procedures and conduct plebiscite; and k.)
Depriving homeowners of the basic right to avail of and enjoy quality water
services and facilities at a reasonable price. The complaint has been
submitted together with an application for a cease and desist order to
restrain respondents and all persons, acting for and in behalf and under the
authority of the respondents, from (1) collecting fees; (2) preventing the
passage of delivery trucks; (3) preventing lessees from leaving the
subdivision; and (3) destroying and removing the improvements erected by
the previous administration of GGSHAI.
Complainants prayed for this Board to declare respondents to have
failed their functions under R.A. 9904 as directors and officers of GGSHAI, to
have violated the rights of complainants, order respondents to pay the
maximum fine, order the permanent disqualification of respondents, their
agents and representatives, and to issue a cease and desist order enjoining
the respondents and all persons acting in their behalf.
Respondents deny the allegations in the complaint and answered by
raising procedural infirmities in the validity of the derivative suit and the
legal standing of complainants. They likewise disputed the allegations
contained therein by raising counter allegations against complainants. They
pray for the dismissal of the instant complaint for lack of merit and the denial
of the application for cease and desist order.
On the issue of procedural infirmities, respondents claim that
complainants did not exert all efforts to settle their grievance as a condition
precedent before coming to this Board. According to them, the complaint
itself does not contain any allegations of such fact. In support of their claim,
respondents invoke Sec. 10, par. (b) of the 2011 Revised Rules of Procedure
of the HLURB that the complaint must alleges with particularity that
reasonable efforts were exhausted to exhaust all remedies available under
GGSHAIs articles of incorporation, by laws, laws or rules, to wit:
Sec. 10. Derivative Suit A member of a homeowners
association in good standing may bring an action on behalf of
the association provided that:
xxx xxx xxx

b.) The complainant alleges with particularity that

reasonable efforts were exerted to exhaust all remedies
available under the associations articles of incorporation, by
laws, laws or rules for the purpose of obtaining the relief prayed
for; and xxxx xxx
On this, we resolve the issue in favor of the complainants. It is clear
that the complaint is against the incumbent officers of GGSHAI for their
continued denial and refusal to recognize the rights of complainants as
homeowners. Since they are the incumbent officers, members of the board
of GGSHAI and employees any effort exerted against them would be to no
avail. Hence, the only recourse for complainants was to submit their
grievance to the only available forum having jurisdiction over the dispute
which is the Housing and Land Use Regulatory Board.
Nonetheless, this Board provided a mandatory conference for the
parties to settle their dispute amicably and give them a chance to raise their
grievances face to face. This however failed miserably as the parties could
not agree on a common ground.
Anent the issue on legal standing, the complainants are filing the
instant complaint as a derivative suit. Respondents, however, claim that not
all of the complainant homeowners in the complaint and impleaded as such
did not consent to its filing with this Board. On this and for this issue we find
for complainant. A complaint does not derive its validity based on the
number of complainants that are impleaded in it. There is no such
requirement under the rules. Thus, even if there is only a single complainant
in the complaint as long as the requirements are met then such complaint is
valid and should be given due course. Although the numbers of complainant
do not have any effect on the procedural validity of the complaint, the
number of complainants definitely affects the substance of the complaint.
Another issue raised by respondents is the legal personality of
complainants as homeowners to file the derivative suit. They allege that
complainants are not members in good standing because according to their
claim, complainants have been delinquent in the payment of their
association dues. Thus, they are without personality to file a derivative suit.
Respondents invoke Sec. 13, Rule 3 of the Implementing Rules and
Regulations of the Rep. Act. No. 9004, where it provides, to wit:
Section 13 - Delinquent Member Unless otherwise
provided in the by-laws, a member who has failed to pay three
(3) cumulative monthly dues or membership fees or other
charges/assessment despite demands by the association, or has
repeatedly violated the associations by laws and/or declared
policies, may be declared delinquent by the Board of Directors in
accordance with the procedure in the succeeding section.
On the other hand, complainants claim that they have paid their
association dues and are therefore members in good standing. They claim
that in order for them to be considered delinquent they must first be
declared delinquent in accordance with the procedures under the by-laws of
the association2. For this issue and for the purpose of allowing this complaint
to proceed we find for complainants. The issue as to whether or not a
member is in good standing may be invoked only in two instances: (1)
2

Rule 1, Section 4 (p), Implementing Rules and Regulations of R.A. 9904.

election of directors; and removal of directors. A delinquent member or a

member not in good standing refers to a member of the association who
has been declared as such for the grounds and in accordance with the
procedures under the by laws of the association. Hence, complainants have
legal standing on this note.
We now go to the meat core of the dispute, the causes of actions
raised by complainants:
On the first cause of action regarding the deprivation of the rights of
complainants to inspect association books and records, complainants
contend that they were refused inspection of the association books and
records by the incumbent officers of GGSHAI. In support of their claim, they
presented demand letters dated December 1, 2010, December 10, 2010,
January 7, 2011 and November 18, 2011. Of these letters only the January 7,
2011 and November 18, 2011 bears a mark of receipt by respondents which
respondents do not deny. Respondents deny having received the December
1, 2010 and December 10, 2010 letters.
Respondents also do not deny refusing complainant Edward P.
Colobong and company, the sender of the January 7, 2011 and November 18,
2011 demand letter, in inspecting the association books and records.
Respondents refused inspection because according to the records of GGSHAI
Mr. Colobong and the other complainant sender of the demand letters are
members not in good standing as they have not paid their association dues.
Furthermore, the demands of complainants for inspection was held in
abeyance considering that some of the complainants were still facing
criminal action before the Regional Trial Court of Las Pias City Branch 202,
concerning the same association dues covering the same period.
We find the claim of respondents persuasive on this issue. Mr.
Colobong and the other senders of the demand letters are considered
members not in good standing. Although complainants insist that
complainant Colobong and the other senders of the demand letter are all
members in good standing. They even argued that assuming they are not
members in good standing, respondents however, did not follow the
procedure under the IRR of R.A. 9904 3 before a homeowner becomes a
delinquent member that he must first be declared delinquent by the board.
Complainants argue that there must be strict compliance of this procedure
before a delinquent member is considered a member not in good standing.
On this issue and for this purpose, we resolve that there is no need for
the Board of Directors to declare a member delinquent. This is merely
discretionary. The IRR of R.A. 9904 under Section 13, to reiterate provides
that:
Section 13 - Delinquent Member Unless otherwise
provided in the by-laws, a member who has failed to pay three
(3) cumulative monthly dues or membership fees or other
charges/assessment despite demands by the association, or has
repeatedly violated the associations by laws and/or declared
policies, may be declared delinquent by the Board of
Directors in accordance with the procedure in the
succeeding section. (emphasis supplied)
3

Rule 3, Section 14, Implementing Rules and Regulations of Rep. Act No. 9904.

The word may is merely discretionary. Hence, the construction of

the above provision would be that the procedure as indicated in the
succeeding section4 may or may not be followed. Mere failure to pay three
(3) cumulative monthly dues is already sufficient to make a member
delinquent.
Morever, the law itself provides for the procedure to determine who is
a delinquent member. An examination of the law, R.A. 9904 which provides,
to wit:
Section 9. Delinquent Member. - The by-laws shall provide
for guidelines and procedures in determining who is a delinquent
member, or a member not in good standing, and to prescribe the
administrative sanctions to be imposed on such member. The
right to due process shall be observed in cases where
administrative sanctions are imposed on a delinquent member
Clearly the procedure that should be followed to determine a
delinquent are those procedures as indicated in the by-laws of the
association. Absent any procedures indicated in the by-laws those with
authority may adopt those outlined in the IRR of R.A. 9904.
Also, respondents are correct that it would be more prudent to answer
the allegations before the criminal court on the basis of sub judice.
On the second cause of action, respondents posit that Rep. Act No.
9904 cited by the complainants and the Implementing Rules and Regulations
has no legal application on the construction of the Annex school building of
St. Marks Institute and the opening of the perimeter fence. They allege that
law is not applicable because it did not provide for retroactivity. Simply
stated, the law did not expressly provide for retroactive application.
Respondents claim that R.A. 9904 took effect on March 30, 2010 while
the construction of the school building began in 2009 with zoning clearances
and permits issued before the effectivity of the law. Hence, the application of
the law could not be retroactively applied to a right already vested prior to
its enactment.
Respondents are correct in their argument. The law clearly has no
express provisions regarding retroactive application. Interestingly,
complainants never denied the operation of the school prior to the
enactment of R.A. 9004 or issuance of the zonal clearance of Las Pias City
they merely questioned the beginning of the construction of the school
Annex building. On this issue we must find for respondents.
On the third cause of action, complainants allege that respondents
have been collecting fees, charges and assessments without prior
consultation and approval of the board. However, respondents vehemently
denied that they were collecting illegal fees and charges. They admit
collecting fees and charges but the same according to them are enforced not
to homeowners but to ambulant vendors, and deliveries and the same are
within their powers and duties. They invoke Sec. 49, Rule 9 of the
Implementing Rules and Regulations of R.A. 9904, which provides:

Ibid.

Sec. 49.
Rights and Powers of the Association. An
Association shall have the following rights and powers:
Xxx xxx
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] xxxx [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 xxx
xxx among the concerned parties;
Complainants to support their claim that respondents are illegally
charging fees against homeowners, presented the affidavit of complainant
Joycelyn A. Solano who according to her was charged with the disputed toll
fee for entering the subdivision. In disputing complainants claim, respondent
raised the fact that Ms. Solano was not a homeowner within the purview of
the law but merely a possessor of a residential house and that the she was
actually delivering construction materials. Complainants did not refute this
allegation thus, bolstering the claim of respondents. We therefore cannot
side for complainants in this issue.
On the fourth cause of action, complainants submit that respondents
failed to adopt and maintain an accounting system using General Accepted
Accounting Principles (GAAP). Respondents on the other hand submit that
the reports, balance sheet and statement of receipts and disbursements are
in accord with GAAP. In fact, according to respondents the illegal practice of
not submitting reports where in fact conducted by complainant Colobong
during their term which the records at the HLURB will show. Given this
uncontroverted fact, the complaint on this issue must necessarily fail.
On the fifth cause of action regarding the destruction and removal of
the structure and improvements introduced by complainants during their
term of office, respondents never contradicted the same and merely raised
that the structures no longer serve its use or give any benefit to the
community. On this trivial issue we find for complainants. The removal or
destruction of the structures and improvement introduced by complainants
should have been properly consulted to the board. Even nuisance must be
properly abated lest liability be incurred. Certainly, the removal of these
structures even if already without use or benefit should have been properly
consulted to the board.
On the sixth cause of action, this Board cannot help but think that this
issue is in the guise of an electoral protest. The thirty eight complainants in
this case prays that unto this Board to permanently disqualify respondents,
their agents and their representatives from being elected or appointed as
members of the board, officer, or employee of GGSHAI. Their numbers give
credence to their protest. However, we are not persuaded. For one,
respondents raise a claim that not all of the complainants consented to the
filing of the complaint. According to them, some of these complainants were
duped to sign a document that they were told was a petition with the
Maynilad. Respondents support their claim by submitting affidavits of some
of these complainants.
Second, the Board can no longer hear the issue as the action has
already prescribed. Under the HLURB Board of Commissioners Resolution
No. 851 Series of 2009 Adopting the 2009 Revised Rules of Procedures of

the Housing and Land Use Regulatory Board it provides for the specific
cases being raised here and the remedy provided thereto. 5 It provides, to
wit:
Election Contest
Section 1. Cases covered. The provision of this Rule
shall apply to election contests involving homeowners
associations;
Section 2. Definition An election contest refers to any
controversy or dispute involving title or claim to any elective
office in a homeowners association, the validation of proxies, the
manner and validity of elections, and the qualification of
candidates, including the proclamation of winners and
assumption to the office of directors, trustees or other officers
directly elected by the members of a homeowners association
where the articles of incorporation or by-laws so provides;
Section 3. Filing of election contest. In addition to the
requirements in Sections 1 and 2, Rule IV, of this Rules, the
complaint in an election contest must state that the case was
filed within ten (10) days from the date of election, if the by-laws
of the association do not provide for a procedure for resolution of
the controversy, or within ten (10) days from receipt of the
resolution of the controversy by the association as provided in its
by-laws:
Applying the above rule, we therefore must dismiss this issue raised by
complainants.
With regard to the prayer of complainants to permanently disqualify
respondents and their representatives, the Board has no power to issue this
as the same involves a determination of guilt based on proof beyond
reasonable doubt and not merely substantial evidence before the supreme
penalty of permanent disqualification can be handed to respondents. For the
Board to issue such an order would be an exercise of grave abuse of
discretion.
On the seventh cause of action, complainants claim that respondents
have not yet conducted a review of the by-laws of the GGSHAI. This is a
trivial issue that does need this Boards utmost attention. As pointed out by
respondents, the by-laws are already consistent with the law.
Respondents have shown that it has formed a committee to review the
entire provisions of the by-laws of GGSHAI. The result of the review by the
committee found that the provisions of the by-laws of GGSHAI are consistent
with the requirements of R.A. 9904. Against this issue, the positive
declaration of respondents that the present by-laws of GGSHAI are consistent
with R.A. 9904 must outweigh the negative assertion of complainants.
What is clearly revealing is an examination of the by-laws of GGSHAI
which proves respondents point that it is consistent with the law.

Rule VII of HLURB Commissioners Resolution No. 851, Series of 2009.

Lastly, we now resolve the eight cause of action of complainants and

probably the most crucial issue deciding whether respondents violated the
provisions R.A. 9904 and its implementing rules and regulations. According
to complainants the homeowners of Golden Gate Subdivision were assessed
by Maynilad Water Services, Inc. (Maynilad) the amount of Php 24,000.00 as
installation fee for water meter payable in monthly installments. In 2011,
complainants discovered the neighboring subdivisions in Las Pias City were
charged a one-time installation fee of only 2,800.00 due to their subdivision
status as an Open Community. Complainants, in order to make available
this discounted installation to the homeowners demanded to the officers of
the present GGSHAI, respondents herein, to pass a board resolution
declaring Golden Gate Subdivision as an Open Community.
Before a declaration that a private subdivision is an Open
Community certain qualifications must first be met. Complainants allege
that these qualifications have been met by Golden Gate Subdivision. These
qualifications are subject to determination, hence, a call for a special general
membership meeting on July 1, 2012.
Complainants claim that they were denied this call and immediately
demanded the board of GGSHAI to issue a resolution declaring Golden Gate
Subdivision as an Open Community.
We resolve that the determination of whether Golden Gate Subdivision
should be declared as an Open Community cannot be left to a few
homeowners alone. Hence, the demand of complainants against the board of
GGSHAI is premature. Complainants should have immediately called the
attention of the HLURB regarding this matter to determine first whether
Golden Gate Subdivision has met the qualifications to be considered an
Open Community.
Respondents dispute the allegations of complainants. They interpose
that the assessment of Php 24,000.00 covers the Capital Expenditures such
as underground water pipes to be installed along the numerous streets of
Golden Gate Subdivision. There are no existing water pipelines inside the
subdivision before Maynilad came inside the subdivision. The situation
therefore of neighboring subdivisions as complainants claim is inapplicable in
this case.
In order to bolster their demand to declare the subdivision an Open
Community, complainants submitted a list purportedly a petition by
majority of the homeowners expressing their consent to the demand of
complainants. However, respondent quickly refuted this, as the list is merely
a list of homeowners who signed because they wanted to avail of the water
services of Maynilad. In support of their claim they submitted affidavits of
some of these complainants.
Regrettably, complainants have not been candid with this Board. This
list has been repeatedly used and abused by complainants by attaching the
same to the complaint, position paper and other pleading submitted before
us. It is apparent that not all of the supposed complainants in the list
consented to the filing of the instant complaint.
All in all the complaint filed by the aggrieved homeowners of Golden
Gate Subdivision failed to establish the quantum of evidence required of this
case to justify the penalties they prayed to this Board against respondents.

Substantial evidence does not necessarily mean preponderant proof as

required in ordinary civil cases, but such kind of relevant evidence as a
reasonable mind might accept as adequate to support a conclusion or
evidence commonly accepted by reasonably prudent men in the conduct of
their affairs.6
Basic is the rule that, in administrative cases, the quantum of evidence
necessary to find an individual administratively liable is substantial evidence.
Section 5, Rule 133 of the Rules of Court is explicit, to wit:
Sec. 5. Substantial evidence. In cases filed before
administrative or quasi-judicial bodies, a fact may be deemed
established if it is supported by substantial evidence, or that
amount of relevant evidence which a reasonable mind might
accept as adequate to justify a conclusion.
The statute provides that the rules of evidence prevailing in courts of
law and equity shall not be controlling. The obvious purpose of this and
similar provisions is to free administrative boards from the compulsion of
technical rules so that the mere admission of matter which would be deemed
incompetent in judicial proceedings would not invalidate the administrative
order.7 But this assurance of a desirable flexibility in administrative
procedure does not go so far as to justify orders without a basis in evidence
having rational probative force. Mere uncorroborated hearsay or rumor does
not constitute substantial evidence.
With merely allegations bereft of any substantial evidence to support
the claims of complainant, this complaint must necessarily fail.
WHEREFORE PREMISES CONSIDERED, judgment is hereby rendered
dismissing the instant complaint for lack of merit and consequently the
application for a cease and desist order is DENIED.
SO ORDERED.

Ombudsman v. Jurado, G.R. 154155, August 6, 2008, 561 SCRA 135, 154.
Interstate Commerce Commission v. Baird, 194 U. S. 25, 44, 24 S. Ct. 563, 568, 48 Law. ed.
860; Interstate Commerce Commission v. Louisville & Nashville R. Co., 227 U. S. 88, 93, 33
S. Ct. 185, 187, 57 Law. ed. 431; United States v. Abilene & Southern Ry. Co., 265 U. S. 274,
288, 44 S. Ct. 565, 569, 68 Law. ed. 1016; Tagg Bros. & Moorhead v. United States, 280 U. S.
420, 442, 50 S. Ct. 220, 225, 74 Law. ed. 624.
7