Alternative Approach to Building Management: An Exploratory Study 1

Alternative Approach to Building Management: An Exploratory Study

Nathaniel M. Dagsa, Jr., Andrew P. Tinao and Feylene B. Sison

Unibersidad de Manila
Alternative Approach to Building Management: An Exploratory Study 2

Chapter I

Background of the Study

The National Housing Authority (NHA) through its Regional and District Offices has

been organizing Home Owners Associations (HOAs) in its housing projects upon the occupancy

of its beneficiaries whom a set of HOA officers were elected by its member/unit owners. Tasked

with managing the water and electricity consumption of the buildings, HOAs are generating

income from this which could be utilized as a fund for the beautification of their respective

buildings as well as livelihood projects for their not so lucky members. While this seems to be an

opportunity to uplift the lives of the beneficiaries, some HOAs sees it as their own personal gain

in which problems arise in the association such as mismanagement of funds by some HOA

officers that may eventually evolve into a much bigger problem if not solved nor prevented.

In Paradise Heights Housing Project in Tondo, Manila wherein thirty (30) buildings are

already occupied by 3,490 beneficiaries, a set of HOA officers per building were organized by

the NHA pursuant to Republic Act No. 9904 otherwise known as the Magna Carta for

Homeowners and Homeowners’ Associations. Of the 30 sets of HOA Officers in Paradise

Heights Housing Project, 27 HOAs have issues with financial management. This was evidenced

by the reports of their respective members or by financial statements rarely submitted to NHA or

are unsubstantiated.
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Statement of the Problem

Fund mismanagement is more likely to become the status quo in housing projects if the

Housing and Land Use Regulatory Board (HLURB), mandated to regulate and oversee these

HOAs as provided in R.A. 9904, would not intervene as they are preoccupied with the takeover

of Department of Human Settlement and Urban Development (DHSUD). NHA, on the other

hand, is aimed to disengage in their housing projects eventually upon turnover of the housing

units to the beneficiaries, however, this would leave the HOAs on their own and unequipped

with the skills of effectively managing their respective buildings and/or funds. Perhaps a study

that would explore the possibility of an external management body to effectively manage the

housing projects of NHA instead of the customary HOA Officers could remedy this situation.

Hypothesis of the Study

The purpose of this study was to test the hypothesis that a third party building manager will be

more effective in managing the operations in the Low Rise Buildings of Paradise Heights

Housing Project in Tondo, Manila than the existing and customary HOA Officers.

Significance of the Study

This study will be undertaken to find out the efficiency of a third party building manager vis-à-

vis HOA Officers in managing the Low Rise Buildings of Paradise Heights Housing Project in

Tondo, Manila.

Benefiting the study are the various sectors as follows:

The Residents
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The direct recipients of the output of this research are the residents of NHA’s Low Rise

Buildings in Paradise Heights Housing Project in Tondo, Manila. Any improvement in the

housing project introduced by the third party building manager will benefit the residents.

The Government

This study will be very beneficial to the government, specifically to NHA, since this will address

the problems of the community that NHA is catering thus reducing their exposure and allocation

of resources to the project.

The Third Party Building Manager

If pursued, the third party building manager will benefit from the study by generating income

from its service rendered in the project.

Scope and Limitations of the Study

This study focused only on the viability and efficiency of a third party building manager vis-à-

vis HOA Officers in managing the operations of a housing project. This was conducted at the

NHA’s Low Rise Buildings in Paradise Heights Housing Project in Tondo, Manila. This was

done through a survey that was administered to at least 30 respondents and subjected to

Cronbach Alpha test for reliability and acceptability.

However, this study did not include the maintenance of the housing project.
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Chapter II

Theoretical/Conceptual Framework

This chapter presents the review of related literature and studies, synthesis of the review,

framework of the study and the definition of terms relative to the topic.

2.1 Related Literature

2.1.1 Homeowners Association

Homeowners association (HOA) is an organization in a sub-subdivision, planned community or

condominium that makes and enforces rules for the properties and their residents. As stated in

Republic Act no. 9904, also known as the Magna Carta for Homeowners and Homeowners

Associations, a homeowner’s association is a non-stock and non-profit corporation registered

with HLURB, organized and composed of lot/unit owners and legal occupants or lessees within

the jurisdiction of a residential real property that is government owned and operated or

exclusively owned by private developers. Those who purchase property within an HOA's

jurisdiction automatically become members and are required to pay dues, known as HOA fees.

The purposes of this Association is to provide and/or maintain community facilities and to

facilitate the delivery of adequate social services and economic advantages for the association to

improve the quality of life and well-being of its members, on a non-profit basis consonant with

the provisions set forth on its Articles of Association.

Here are some Pros and Cons of having a homeowner’s association.

PROs CONs
Set and enforce community rules Set fees, dues, and assessments
Protect property values Impose restrictive regulations
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Provide services, amenities, and Operate inefficiently

facilities
Offer self-governance Management amateurishly or
ineptly

2.1.2 Duties and Responsibilities of the Board of Trustees/Directors

An HOA has a set of Trustees/Directors elected by people reside within the jurisdiction of the

association. Based on Implementing Rules and Regulations of Republic Act No. 9904 otherwise

kwon as the Magna Carta for Homeowners and Homeowners Associations the officers term in

office shall not exceed two (2) years.

As stated in Section 3 of By-Laws the powers and rights of the Association include, but are not

limited to, the following:

(a) Subject to consultation and with the approval of a simple majority of the members, adopt and

amend the articles of incorporation and by-laws, rules and regulations, pursuant to existing laws

and regulations;

(b) In behalf of its members, institute, defend, or intervene in litigation and/or administrative

proceedings affecting the welfare of the association and the subdivision/village as a whole,

excluding, however, disputes that are not the responsibility of the association;

(c) Regulate the use, maintenance, repair, replacement and modification of common areas and

cause additional improvements to be made part of the common areas: Provided, that the

aforementioned do not contradict the provisions of the approved subdivision plan;

(d) Regulate access to, or passage through the subdivision/village roads for purposes of

preserving privacy, tranquillity, internal security, and safety and traffic order: Provided, that: (1)
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public consultations are held; (2) existing laws and regulations are met; (3) the authority of the

concerned government agencies or units are obtained; and, (4) the appropriate and necessary

memoranda of agreement are executed among the concerned parties;

(e) Hire, discharge or contract managing agents and other employees, agents and independent

contractors to ensure the full functioning and operation of the association; (f) Subject to

consultation with and the approval of a simple majority of the association members, acquire,

hold, encumber and convey in its own name any right, title to or interest in real or personal

property: Provided, that such approval of a simple majority of the association members shall not

be required for the acquisition, holding, encumbrance and conveyance of personal properties in

amounts not exceeding ten percent (10%) of the association’s cash holdings for its use in the

course of its normal operations;

(g) Ensure the availability of quality water services at a reasonable price and at its option,

administer and manage the waterworks system of the subdivision;

(h) Upon consultation, grant easements, leases, concessions and authority to use common areas

and petition for or consent to the vacation of streets and alleys: Provided, that the said grant of

easements, leases, concessions and authority shall not be applicable to access roads, main

interconnecting roads, alleys and sidewalks within the subdivision; (i) Impose or collect

reasonable fees for the use of open spaces, facilities, and services of the association to defray

necessary operational expenses, subject to the limitations and conditions imposed under the law,

the regulations of the board and the association’s bylaws;

(j) Cause compliance with regard to height regulations, easements, use of homes, buildings,

edifices, or structures that may be built within the subdivision, in accordance with the National
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Building Code, zoning laws, HLURB rules and regulations, existing local ordinances, and

existing deeds of restriction;

(k) Subject to consultation and with the approval of a simple majority of the association

members, allow the establishment of certain institutions such as, but not limited to, schools,

hospitals, markets, grocery stores and other similar establishments that will necessarily affect the

character of the subdivision/village in terms of traffic generation, and/or opening the area to

outsiders which may result in the loss of privacy, security, safety, and tranquillity to its residents,

in accordance with the National Building Code, zoning laws, existing local ordinances, HLURB

rules and regulations, and existing jurisprudence: Provided, that such prior approval shall not be

necessary for the establishment of sari-sari stores, home industries and similar small-scale

business enterprises within the subdivision/village classified as socialized housing;

(l) Suspend privileges of and services to and/or impose sanctions upon its members for violations

and/or noncompliance with the association's by-laws, and rules and regulations;

(m) Petition for the creation of a separate barangay, independently or together with neighboring

subdivisions: Provided, that all the requirements of the Local Government Code of 1991 are met;

and,

(n) Exercise any other powers conferred by the by-laws and the HLURB necessary for the

governance and operation of the association:

The Association has the following duties:

a. The Association shall maintain financial records in accordance with generally accepted

accounting standards and principles. The records shall be open to inspection by Association

members or their authorized representatives at reasonable times, and written summaries of such
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records shall be supplied at least annually to the members or their authorized representatives.

The failure of the Association to permit inspection of its accounting records by members or their

authorized representatives entitles any persons prevailing in an enforcement action to recover

reasonable attorney’s fees from the person in control of the books and records who, directly or

indirectly, knowingly denied access to the books and records for inspection. The records shall

include, but not be limited to:

i. A record of all receipts and expenditures of the Association; and,

ii. An account for each member, designating the name and current mailing address of the

member, the amount of each assessment, the dates on which and amounts in which the

assessments come due, the amount paid on the account, and the balance due.

b. The Association shall use its best efforts to obtain and maintain adequate security to protect

the Association and its properties.

2.1.3 Effectiveness of Homeowners Association

The rules and responsibilities of a homeowners association can often lead to disagreements or, in

some cases, major conflicts between board members and residents. When you move into a

community with a homeowners association, you hope it will guarantee high-quality living and

protect the value of your house. But the rules and responsibilities involved can often lead to

disagreements or, in some cases, major conflicts between board members and residents.

Reducing the conflict and building a strong, success homeowners association may be achieved

the following. (The Seattle Times, Erin Conroy)

a. Be transparent
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b. Enforce all rules

c. Set aside reserve funds

d. Conduct Studies

e. Hire Professional

f. Closely monitor finances

g. Make records accessible

h. Get residents involved

i. Newsletter
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2.4 Framework of the Study

CONCEPTUAL FRAMEWORK

ALTERNATIVE APPROACH TO BUILDING

MANAGEMENT: AN EXPLORATORY STUDY

Republic Act 9904

HOA
NHA Magna Carta for Home
Articles of
Occupancy Rules and Owners (HO) and Home
Incorporation and By-
Regulations Owners Association
Laws
(HOA)

1. Profile of Respondents 1. Evaluation of 1. Impact of the

1.1 Home Owners
Association
1.2 Residents
1.3 National Housing
Authority
2. Alternative Approach
to Building Management
2.1 Owner-designated
Building Manager
2.2 Third party firm
2.3 Other Government
Agencies
3. Problems encountered
in the building
management by HOAs
Respondents Profile alternative building
manager
2. Assessment of the
Alternative Approach to 2. Significance of the
Building Management alternative building
manager to the building
3. Analysis of the and organization
significance of the
alternative building 3. Solution recommended
manager to the building to the problem
and organization encountered
4. Program of activities
to improve the building
management of NHA
housing projects

4. Test of Hypothesis

FEEDBACK
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2.5 Definition of Terms

For the purpose of clarification, the important terms used in this study have been defined.

The following terms are:

Articles of Incorporation - is a set of formal documents filed with a government body to legally

document the creation of a corporation.

Community Facilities - are an essential and indispensable feature of any area. Services such as

education, health, social services, libraries, the Police, Fire and Ambulance services all help to

support the quality of life in a community.

Dues - a regular fee or charge payable at specific intervals, especially to a group or organization:

Homeowners Association (HOA) - is a subdivision, planned community or condominium that

makes and enforces rules for the properties and their resident.

Housing and Land Regulatory Board (HLURB) - s a national government agency tasked as

the planning, regulatory and quasi-judicial body for land use development and real estate and

housing regulation. These roles are done via a triad of strategies namely, policy development,

planning and regulation.

Legal Occupants - person who takes possession of real property or a thing which has no known

owner, intending to gain ownership.

Republic Act No. 9904 - otherwise known as the “Magna Carta for Homeowners and

Homeowners’ Associations”.
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Non-Stock/Non-profit - A non-profit organization is a group organized for purposes other than

generating profit and in which no part of the organization's income is distributed to its members,

directors, or officers. Non-profit corporations are often termed "non-stock corporations."

Private Developers - are property developers within the private sector. They acquire buildings

or land in order to construct or refurbish building projects on the site. Private developers aim to

generate a profit, as opposed to the government which aims to provide buildings for social and

welfare reason.

Social Services - government services provided for the benefit of the community, such as

education, medical care, and housing.

Socialized Housing - refers to housing programs and projects covering houses and lots or home

lots only undertaken by the government or the private sector for the underprivileged and

homeless citizens which shall include sites and services development, long-term financing,

liberalized terms on interest payments, and such other benefits in agreement with this Act. —

Urban Development and Housing Act (UDHA), RA 7279

Trustees/Director - is an appointed or elected group of individuals that has overall

responsibility for the management of an organization. The board of trustees is typically the

governing body of an organization and seeks to ensure the best interest of stakeholders in all

types of management decisions.

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