HLURB allowed to compel developers to report financial condition
To address the issue of shadow banking, the Department of Justice (DOJ) on Thursday allowed the Housing and Land Use Regulatory Board (HLURB) to compel subdivision and condominium project owners and developers to regularly submit information on their financial condition and reports for their projects.
In a four-page legal opinion, acting Justice Secretary Emmanuel Caparas said the HLURB has the authority to make such an order as part of its general power to regulate real estate development and sales.
The Bangko Sentral ng Pilipinas (BSP), through Deputy Governor Vicente Aquino, wants the DOJ’s stand on the issue because they want to monitor the proliferation of shadow banking activities.
Shadow banking are financial activities, mainly lending, undertaken by non-banks and entities not regulated by the BSP especially those in the real estate industry.
The BSP wants to monitor the activities to ensure a safe financial system by identifying and mitigating the risks.
Aquino said they already 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.
Article continues after this advertisementBased 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.
Article continues after this advertisementThe report will require details of the subdivision and condominium project owners’ or developers’ financial condition, borrowings from non-bank sources and installment sales.
Under Presidential Decree (PD) No. 957 , otherwise known as the Subdivision and Condominium Buyers Protective Decree, the DOJ said the National Housing Authority (NHA) has 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 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 DOJ legal opinion stated.
The DOJ added that furthermore, the DOJ 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 either incorporation, partnership or association.
Likewise, the Implementing Rules and Regulations of PD 957 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 said.
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. RAM/rga
RELATED STORIES
BSP suspects ‘shadow banking’ in PH
