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Housing board can require condo firms to disclose finances -- DoJ

Posted on May 12, 2016 10:40:00 PM
By Vince Alvic A. F. Nonato, Reporter

THE Housing and Land Use Regulatory Board has the power to compel real estate developers to disclose their financial condition on a regular basis, the Department of Justice (DoJ) said.

 
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The DoJ stated this position in a four-page legal opinion at the request of Bangko Sentral ng Pilipinas (BSP) Deputy Governor Vicente S. Aquino.

The DoJ cited Executive Order No. 648, which transfers to the HLURB (then the Human Settlements Regulatory Commission) the National Housing Authority’s (NHA) function of “regulation of the real estate trade and business.”

The opinion stated that the power to require project owners and developers to submit financial reports “(is) implied from the express grant of power to regulate the real estate trade and business.”

Meanwhile, Presidential Decree No. 957, or the Subdivision and Condominium Buyers Protective Decree, originally granted the NHA the power to suspend or revoke licenses when the registration statement is found to be misleading.

With the regulatory functions being transferred to what is now the HLURB, the DoJ said it may thus require the regular submission of financial reports on the basis of that law.

But the opinion noted that the presidential decree’s clause stated a purpose of deterring undesirable activities. Because of this, it urged the BSP and the HLURB to explain the connection of disclosure reports to this purpose.

“We note only that HLURB must be able to demonstrate that the information sought has a reasonable connection to the prevention of undesirable activities... In this case, it is not readily apparent (at first appreciation) how the information sought... to be required to be disclosed are related to the purpose of PD 957...,” the opinion read.

The BSP has held discussions with the HLURB to look into the issue of requiring financial reports from project developers. The Financial Stability Coordination Council steering committee had proposed a report template to capture shadow banking activities, as it required details on financial condition, borrowing from non-bank sources, and installment sales.
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