Legal basis and transition
- The transfer of authority to the Board is made pursuant to Section 26 of Republic Act No. 8763.
- The interim adoption is justified by the need for a smooth transition in the Board’s assumption of power.
- The procedural rules are adopted to carry out and implement Republic Act No. 580, as amended by Executive Order Nos. 535 and 90.
- E.O. 535 is implemented through a rules-based framework for expeditious, inexpensive, and speedy settlement of disputes.
- E.O. 90 renames the relevant government corporation as Home Insurance and Guaranty Corporation (HIGC).
Policy and rule-construction mandate
- The rules must be liberally construed to carry out the objectives of E.O. 535.
- The rules are intended to assist homeowners associations and their members in achieving expeditious, inexpensive and speedy settlement of disputes.
- The proceedings are summary in nature, while ensuring a fair and just hearing and observance of the basic requirements of due process.
Key definitions and interpretations
- Home Insurance and Guaranty Corporation (HIGC) refers to a government corporation created under R.A. 580, as amended by E.O. 535, and renamed under E.O. 90; it was formerly the Home Financing Commission and later the Home Financing Corporation.
- Homeowners Association means a duly registered housing/community association composed of homeowners in a private or government housing project, subdivision, or urban estates, organized to facilitate delivery of adequate housing and related services to improve the quality of life of its members and/or the community/subdivision concerned.
- A Hearing Officer is any person or officer/body/board/committee designated or created by proper order issued by HIGC to hear and decide a particular case.
- An Order is any written directive of HIGC or any duly designated entity under HIGC.
- A Decision/Resolution is the written judgment in a homeowners’ case before HIGC.
- A Complainant is any person, natural or juridical, seeking relief for violation of a law/rule/regulation or for enforcement of a right in law.
- A Respondent is any person claiming interest adverse to the complainant necessary for complete settlement of the issues.
- The rules interpretive directive requires liberal construction to meet the objectives of E.O. 535 and to enable speedy dispute resolution.
Coverage: disputes and governing tribunal
- HIGC and any duly designated Hearing Officer/body/board/committee have jurisdiction to hear and decide specified categories of disputes.
- HIGC jurisdiction includes acts or schemes by the Board of Directors or officers of the association amounting to fraud and misrepresentation detrimental to the public and/or association members, and/or the association registered with HIGC.
- HIGC jurisdiction includes intra-corporate controversies among association members, between members and the association, and between the association and the state/general public or other entities, insofar as it concerns the association’s right to exist as a corporate entity.
- HIGC jurisdiction includes controversies involving membership, election, or appointment of directors or officers, including regularity and eligibilities.
- HIGC jurisdiction includes suspension or revocation of the certificate of registration of any homeowners association duly registered with HIGC upon lawful grounds, including:
- Fraud or misrepresentation in procuring the certificate of registration.
- Serious misrepresentation as to what the association can do or is doing.
- Refusal to comply with or defiance of any lawful order of HIGC or its hearing officer.
- Misuse of a right, privilege, or franchise conferred by law, or exercise in contravention of law.
- Commission or omission amounting to surrender of corporate rights, privileges, or franchise.
- Violation of HIGC rules and regulations and, where applicable, the Corporation Code.
- Continuous inoperation or inactivity for at least five (5) years.
- Failure to file required reports in appropriate forms as determined by HIGC within the prescribed period.
- For revocation/suspension of registration, HIGC grounds include failure to file By-Laws within thirty (30) days from receipt of the notice of issuance of certificate of incorporation.
- Hearings of these disputes are summary and not bound by technical rules of evidence, provided fair and just hearing and due process are observed.
Commencement, pleadings, summons, and default
- An action is commenced by filing a verified complaint in triplicate with payment of the appropriate filing fee before HIGC.
- An action for suspension or revocation of a certificate of registration under Rule II, Section 1(d) is commenced by the Legal Department of HIGC when directed by HIGC.
- The Legal Department may also bring such an action upon good reasons to believe a case can be established, upon instance of an interested person, but it must first require the interested person to pay the expenses incident to the action sought to be instituted.
- The action for revocation of certificate of registration may be commenced only within five (5) years from the time the ground relied upon arose.
- Pleadings are the written allegations of the parties’ claims and defenses submitted to HIGC for adjudication.
- Allowed pleadings are only: complaint and answer.
- The following pleadings, motions, or petitions are not allowed:
- Motion to dismiss or to quash.
- Motion for a bill of particulars.
- Motion for a new trial or for reconsideration; or for reopening of trial.
- Petition for relief from judgment.
- Motion for extension of time to file pleadings/affidavits/other documents.
- Memoranda, except on appeal.
- Motion to declare defendant in default.
- Dilatory motions for postponements.
- Reply, except on appeal.
- Third party complaints and similar complaints.
- Interventions.
- The complaint must state the names and residences of the parties and a concise statement of the ultimate facts constituting the cause of action, specify the relief/right sought, and may include a general prayer for further or other relief.
- The answer must set forth negative and affirmative defenses, and any compulsory counter-claims or cross-claims.
- Failure to allege compulsory counter-claims or cross-claims in the answer bars them.
- Upon filing of the complaint and payment of the correct filing fee, summons issue directing the respondent to answer within fifteen (15) days from receipt; otherwise the complainant may take judgment by default and demand the relief prayed for.
- If the respondent fails to answer within fifteen (15) days from receipt, the respondent is declared in default and the complainant may present evidence ex-parte.
Summary dismissal before raffle
- HIGC may dismiss a complaint prior to the raffle of the complaint to the Hearing Officer.
- The dismissal grounds are:
- Lack of jurisdiction.
- Lack of cause of action.
- Non-compliance with Administrative Circular No. 04-94 of the Supreme Court, requiring a certification under oath that no other action or proceeding between the same parties involving the same issues is commenced or pending in the Supreme Court, Court of Appeals, or any other tribunal or agency.
Hearings, evidence timelines, and conference
- A Hearing Officer conducts hearings and investigations of cases filed with HIGC.
- The Hearing Officer is empowered to:
- Issue preliminary or permanent injunctions, whether prohibitory or mandatory, applying the Revised Rules of Court provisions as far as practicable.
- Punish for contempt under the pertinent Revised Rules of Court provisions.
- Compel association officers to call a members’ meeting or directly order calling of the meeting in the Hearing Officer’s discretion.
- Pass upon the validity of proxies of absent members.
- Issue subpoena duces tecum and summon witnesses.
- Impose fines and/or other penalties for violation of these rules, related regulations, or any HIGC Order/Decision.
- Suspend or revoke the association’s certificate of registration, after proper notice and hearing, for lawful grounds including those enumerated under registration suspension/revocation.
- Place or keep a homeowners association under receivership or administration upon proper petition/application after due notice and hearing.
- Order production, inspection, examination, investigation, and submission of records, books of accounts, and financial reports of registered homeowners associations.
- HIGC is also authorized, in adjudication, to:
- Enlist the aid and support of enforcement agencies of the government, civil or military.
- Exercise other implied, necessary, or incidental powers to carry out its express powers and charter objectives.
- Reception of evidence proceedings must terminate within three (3) months from the first day of hearing, counted from the date of preliminary conference if held.
- Evidence timeline may be extended only for the most exigent reasons and only upon written permission of the head of agency.
- The Hearing Officer must decide within thirty (30) working days from termination of presentation of evidence of all parties.
Preliminary conference and affidavits
- Immediately upon receipt of the last answer, the Hearing Officer sets the case for preliminary conference not later than fifteen (15) days thereafter.
- Parties and their attorneys must appear to consider:
- Possibility of an amicable settlement.
- Necessity/desirability of amendments to pleadings.
- Possibility of stipulations/admissions to avoid unnecessary proof.
- Limitations on number of witnesses, simplification of issues, and just speedy disposition.
- Other matters aiding just and speedy disposition.
- Failure of a party to appear may result in being non-suited or considered in default.
- At preliminary conference, if facts exist for judgment on pleadings or summary judgment, the Hearing Officer renders judgment on the pleadings or appropriate summary judgment.
- The Hearing Officer must endeavor to effect an amicable settlement at any stage, as long as it is not prejudicial to public interest/third parties and not contrary to law, rules/regulations of HIGC, good morals, or public policy.
- Amicable settlement must be reduced in writing, signed by parties and their counsels if any, and serves as the basis of the Hearing Officer’s order or decision.
- If no amicable settlement occurs, the Hearing Officer must clarify and define the issues and issue an order immediately after the preliminary conference.
- The order must direct parties to submit, within a non-extendible period of fifteen (15) days, affidavits of witnesses and other evidence on factual issues plus a brief statement of law and facts relied upon.
- Affidavits must contain only facts of direct personal knowledge, must be admissible, and must show competence to testify.
- Submitting affidavits in violation of these requirements subjects the party or counsel to disciplinary action, and the inadmissible affidavit or portion may be expunged from the record.
Judgment and decision process
- If a judgment can be rendered without formal hearing, the Hearing Officer may render judgment not later than thirty (30) working days from submission of the parties’ position statements.
- If clarifying specific factual matters is necessary, the Hearing Officer sets the case for hearing for that purpose.
- At a clarificatory hearing, clarificatory questions are asked solely by the Hearing Officer.
- The order setting a hearing must specify the witnesses to testify and the matters for their examination.
- If a hearing is ordered, it must be finished on the scheduled date as far as practicable.
- The judgment must be rendered within thirty (30) working days from filing of the last pleading and draft decision required of the parties.
- The parties file simultaneously with the last pleading required of them a draft of the decision they seek, clearly stating the facts and laws relied upon.
Appeals: timelines, fees, and appellate body
- Any party may appeal a final decision/judgment, order, or ruling of the Hearing Officer to the Appeals Board within a non-extendible period of fifteen (15) days from receipt.
- The HIGC Appeals Board is composed of:
- The HIGC President.
- The Executive Vice-President and General Manager.
- Any two (2) Vice-Presidents.
- The head of the Legal Division.
- The Appeals Board resolves the appeal by concurrence of the majority of its members.
- An appeal fee of PHP 550.00 is payable to HIGC by the appellant.
- The appeal is taken by filing with the Appeals Board a notice of appeal and a memorandum on appeal within a non-extendible period of fifteen (15) days from receipt of the challenged decision/judgment/order/ruling, together with the appeal fee.
- The memorandum on appeal must specifically state:
- The assignment of errors.
- The grounds relied upon.
- The arguments supporting them.
- The appellee may file a reply memorandum within a non-extendible period of ten (10) days from receipt of the appellant’s memorandum on appeal; failure to file within the period results in waiver to file a reply memorandum.
- The memorandum on appeal must state material dates to show the appeal was filed within the prescribed period.
- Failure to pay the filing fee within the prescribed period is a ground for dismissal of the appeal.
- The appeal is considered perfected upon filing of the notice of appeal, memorandum on appeal, and payment of the required appeal fee.
- The Appeals Board dismisses an appeal on these grounds:
- Joint motion to dismiss.
- Withdrawal of the appeal.
- Failure to pay the appeal fee.
- Failure to file the memorandum on appeal within the prescribed period.
- Failure to comply with the Appeals Board’s orders.
- After perfection, the entire records are transmitted to the Appeals Board immediately upon filing of the reply memorandum if filed, or upon expiration of the time to file it.
- The Appeals Board may impose reasonable penalties, including fines and censure, on appellants and their counsel to discourage frivolous or dilatory appeals.
- The decision of the Appeals Board constitutes the decision of the Corporation.
- Appeals from the Appeals Board’s decision proceed to the Court of Appeals under the Revised Rules of Court.
Supplementary rules and effectivity of application
- The Revised Rules of Court apply in a suppletory character when not inconsistent with these rules, while preserving the summary nature of proceedings.