REHOA and its legal environment

REHOA and its legal environment

This blog is intended as a medium to enhance communications between the REHOA Board of Trustees and Association members. The focus of this blog is on the financial management of Association Funds.

The legal environment under which REHOA is administered is defined by two laws.

REHOA is a corporation, so we are governed under REPUBLIC ACT NO. 11232, referred to as the Revised Corporation Code of the Philippines (2018). We constitute a Homeowners Association, and thusly are governed by the REPUBLIC ACT No. 9904 (An Act providing for a Magna Carta for homeowners and homeowners’ associations, and for other purposes). This law is usually referred to as the Magna Carta.

Essentially both these laws prescribe duties of the Board of Trustees and the rights of corporate stockholders and Association members.

In 2009, the SEC promulgated in 2009 REVISED CODE OF CORPORATE GOVERNANCE which advocated for a strong corporate governance that is founded on the principles of fairness, accountability and transparency. 

Other salient provisions follow:

Section J

The corporation’s annual reports and information and proxy statements shall include a clear, concise and understandable disclosure of all fixed and variable compensation that may be paid, directly or indirectly, to its directors and top four (4) management officers during the preceding fiscal year.

Article 8: Disclosure and Transparency The essence of corporate governance is transparency. The more transparent the internal workings of the corporation are, the more difficult it will be for Management and dominant stockholders to mismanage the corporation or misappropriate its assets. 

It is therefore essential that all material information about the corporation which could adversely affect its viability or the interests of the stockholders should be publicly and timely disclosed. Such information should include, among others, earnings results, acquisition or disposition of assets, off balance sheet transactions, related party transactions, and direct and indirect remuneration of members of the Board and Management. 

All such information should be disclosed through the appropriate Exchange mechanisms and submissions to the Commission. (Underscoring is mine)

And in 2013, the HLURB promulgated THE CODE OF ETHICS AND ETHICAL STANDARDS FOR OFFICERS/BOARD MEMBERS OF HOMEOWNERS ASSOCIATIONS. HLURB requires that this Code be appended to REHOA By-Laws.

This Code  of Ethics is meant to guide trustees in their performance of duties “to achieve the avowed goal of serving the majority interests of the members, through proactive, responsive, nonpartisan and immediate basic services delivery under the atmosphere of self-help, volunteerism, rule of law, and transparency in the governance of (our) local affairs.”  (underscoring mine)

Both emphasize the need for transparency and accountability, particularly in the performance of fiduciary obligations.

As fiduciaries, our trustees have a legal and ethical duty to act in the best interests of our Association and to uphold the legal principles behind fiduciary obligations, including duties of loyalty, care, and good faith.  (underscoring mine)

An evaluation of the performance of our trustees is based on their compliance/noncompliance with the laws and the provisions in the Codes.

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