The Housing and Land Use Regulatory Board can compel subdivision and condominium project owners and developers to regularly submit information on their financial condition and reports for their projects in a bid to address issue of “shadow banking.”
In a four-page legal opinion, Justice Secretary Emmanuel Caparas upheld the position of the Bangko Sentral ng Pilipinas that HLURB can impose such a requirement.
“The authority of the HLURB to require from project owners and developers the regular submission of financial reports for a given project can be implied from the express grant of power to regulate the real estate trade and business,” the legal opinion stated.
BSP Deputy Governor Vicente Aquino sought DoJ’s legal opinion on whether the HLURB, under its existing powers and authority, can require project owners and developers to submit on a regular basis, certain information relating to their financial condition and reports for their projects.
The request was sought following the directive of the BSP, the government agency which has been monitoring the proliferation of shadow banking, to ensure a safe financial system by identifying and mitigating risks related to such illegal activity.
Earlier, Aquino informed the DoJ that the BSP had discussions with HLURB on the possibility of requiring subdivision or condominium project owners and developers to regularly submit their financial statements for a given project.
Based on the proposal, a data or report template will have to be accomplished by owners and developers in order to capture their shadow banking activities.
The report will require details of the subdivision and condominium project owners’ or developers’ financial condition, borrowings from non-bank sources, and installment sales.
The Justice department noted that Presidential Decree (PD) No. 957, otherwise known as the Subdivision and Condominium Buyers Protective Decree, granted the National Housing Authority the exclusive jurisdiction to regulate the real estate business.
On the other hand, under Executive Order No. 648, the NHA’s regulatory functions were transferred to the Human Settlements Regulatory Commission, now renamed as the HLURB.
The DoJ also explained that PD 957 grants to NHA the power to suspend or revoke licenses, when the registration statement has become misleading, incorrect, inadequate or incomplete, carries the power to require regular submission of financial statements.
In addition, PD 957 requires financial statements consisting of capitalization, balance sheet showing the amount and general character of its assets and liabilities and a copy of articles of incorporation, partnership or association.
The Implementing Rules and Regulations of PD 957 also requires the submission of semestral reports on operations showing the sales status.
“Thus, on the basis of these… provisions, HLURB may regularly require subdivisions/condominium project owners and developers to furnish it with financial information pertaining to the sale or offering for sale of subdivision or condominium project, the general character of their assets and liabilities, sales status, including the mode of acquisition, and the extent/development status of their projects,” the DoJ stressed.
However, the DoJ said the HLURB must be able to justify that the information being sought has a connection to the prevention of undesirable activities which include reneging of obligations, endangerment to health, swindling and fraudulent manipulation.
