SEC-OGC Case No. 12-11-140 Petition for Revocation of Certificate of Registration of COMMUNITY ASSOCIATES HABITAT FOUNDATION INC. (CAHAFI), dated 5 December 2011, filed by the then Enforcement Protection Department, now Enforcement and Investor PRotection Department.

SEC Building, EDSA, Greenhills, Mandaluyong City Securities and Exchange Commission Republic of the Philippines Department of Finance

In the matter of

COMMUNITY (CAHAFI), INC., HABITAT FOUNDATION ASSOCIATES For: Revocation of Certificate of SEC-OGC Case No. 12-11-140 Incorporation

ENFORCEMENT AND PROSECUTION DEPARTMENT, Petitioner.

DECISION

under Section 6, par. (l), sub-paragraph (2) of Presidential Decree 902-A', as amended. now Enforcement and Investor Protection Department, of the Commission on December 7, 2011 based on serious misrepresentation as to what the corporation can do as provided (Petition) of Community Associates Habitat Foundation, Inc. (CAHAFI), dated December 5, 2011, filed by the then Enforcement and Prosecution Department (EPD) This resolves the Petition for Revocation of the Certificate of Registration

The relevant facts, as alleged by the EPD in its Petition, are as follows:

1 "SECTION 6. In order to effectively exercise such jurisdiction, the Commission shall possess the following powers:

I) To suspend, or revoke, after proper notice and hearing, the franchise or certificate of registration of corporations, partnerships or associations, upon any of the grounds provided by law, including the following:

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2) Serious misrepresentation as to what the corporation can do or is doing to the great prejudice of or damage to the general public;"

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among others, as follows: Commission on June 4, 2003 with Company Registration No. CN200312692.2 indicated in its Articles of Incorporation, the primary purposes of the corporation are, CAHAFI is a non-stock non-profit foundation duly registered with the As

affordable monthly amortization. Unions/Associations to include low income earner Government employees such as Teacher, member of the AFP and PNP and employees of Municipal Government units, to acquire their own house and lot at a very "To organize or tap already landless Urban Poor and Labor

of years but still their security of land tenure is uncertain due to lack of development, or maybe a simple example of "Bahala na"" attitude. knowledge to deal with their problem concerning the land acquisition and To assist families who are already living on an area for a number

for an unutilized parcel of lands and negotiate with its owners to reach an scheme. agreement for a possible land acquisition, it may through the Community Mortgage Program (CMP) of the National Home Mortgage and Finance Corp (NHMFC) or through an affordable short term direct financing To create a research and documentation committee/group to scout

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convenient and appropriate for the accomplishment of the foregoing purposes." To do and perform all other acts and deed as may be necessary

"Salaysay", dated July 15, 2010. In his Salaysay, Mr. Canlas avers that he was employed by the Respondent as a Liason and Documentation Officer from April 1, 2005 until July representative of CAHAFI, approaches landowners and convinces them to sell to 2, 2010. He asserts that CAHAFI is not a foundation but a family corporation which sells has no permit from local and national government agencies. Finally, Mr. Canlas describes the business transactions of CAHAFI as follows: CAHAFI their property. As soon as landowners agree to the terms of the purchase, the real estate properties to its supposed members. Moreover, he alleges that the foundation property will be offered by CAHAFI for "pre-selling" to interested buyers. CAHAFI will then look for an organizer who will in turn convince buyers to be members of the "Foundation". CAHAFI collects certain membership fees in addition to the contract price On July 15, 2010, Mr. Ricardo H. Canlas filed before the EPD a Sworn Rosario Teatro,a

2 Records, p. 272

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area, and no title was issued to the buyers/members for the purchase of subdivided lots. No development, however, was made on the project

members or buyers, to corroborate and prove his claims. Summons directing him to appear before it on September 2, 2010. At the hearing, Mr. several pieces of documentary evidence3, together with Affidavits4 of CAHAFI's Canlas affirmed what he has declared in his sworn statement. Thereafter, he submitted To confirm the facts stated in the affidavit of Mr. Canlas, the EPD issued

to Petitioner's inquiry, the SHFC issued a Certification declaring that CAHAFI has no pending application for accreditation as an Originator or Community Coordinator under business transactions of the CAHAFI. It went to the Office of the Social Housing Finance Corporation3 (SHFC) on October 4, 2010 to investigate and verify whether the CAHAFI is accredited to engage in Community Mortgage Program (CMP). In response the CMP. Acting on Mr. Canlas' complaint, the EPD conducted an investigation on the

that, although CAHAFI has applied for Certificate of Registration (CR) and License to Field Investigation Report, Mr. Leonid Gaiterall declared that it appears from Sell (LS) for its projects, HLURB has not issued a CR and/or LS.According to EPD's required it to submit several documents, otherwise, CAHAFI's application for CR/LS CAHAFI's applications that it was acting as a Developer and not as an Originator or a Community Coordinator in a CMP. Likewise, HLURB, in its letterl2 to CAHAFI, will be included in an inactive file. The EPD also secured from the HLURB Region V Office" a Certification stating

two of the existing projects of CAHAFI in Tanza Cavite. The EPD's investigators interviewed Ms. Tolentino1 and Mr. Numeriano Veleraina14. have fully paid the purchase price of the lots they bought from CAHAFI as evidenced by a Certification of Full Payment. They further stated that although CAHAFI allowed them On October 29, 2010, the EPD conducted an ocular inspection of Santol 1 and 2. . They declared that they

5 A subsidiary of the National Home Mortgage Finance Corporation. 1 Petition, Annex "" Summary Report of Field Investigation, Records, p. 179. 12 Dated June 16, 2006, Annex "NNN", Records, p. 98. 14 House owner in Santol 1 Project, Note 12, supra. 3 Petition, Annexes "G" to "N", "R" to "V", and "II" to "NNN", Records, 198-205, 181-192, 157-98, 4 Ibid, Annexes "OOO" to "CCCC", Records, p. 3-97. Dated October 5, 2010, Annex "Q" of the Petition, Records, p. 193. 2 CAHAFI HOMES located in Indang and Santol, Tanza Cavite, and Balayan Batangas. respectively. 7 Southern Tagalog Region. Dated October 28, 2013, Annex "W" of the Petition, Records, p. 181, Note 2, supra. Petition. 11 Records Officer of HLURB, Region IV Office, Records, p. 180. 13 President of the Homeowners' Association of CAHAFI, Records p. 266.

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to construct their houses by virtue of such certificate, CAHAFI failed to undertake developments of the necessary roads, electrical and water facility at Santol 1 and 2.

explain its side by serving Subpoenas Duces Tecum and Ad Testificandum to its officers them. Again, despite proper receipt of thereof, none of the CAHAFI's officers and namely, (a) Marlon Miran; (b) Janett D. Miran; (c) Lilibeth Dardo; (d) Rochelle H. Morales; and (e) Facundo G. Dardo, Jr. However, its officers failed to appear before the Petitioner despite the Subpoenas. Thus, another set of Subpoenas were served upon trustees appeared. On November 5, 2010, the EPD gave CAHAFI an opportunity to be heard and to

resolved that CAHAFI, as a foundation, cannot engage in activities or operate business for profit, hence, its operation is beyond the purpose for which it was incorporated. The EPD likewise found that CAHAFI misrepresented to the public that its program and activities are being undertaken as a CMP pursuant to Republic Act No. 7279 (RA 7279), otherwise known as the Urban Development Housing Act of 1992. The EPD, on the basis of the evidence on record and its own investigation,

Certificate of Incorporation of CAHAFI. In the meantime, the EPD prays that a Cease agents, representatives and any and all persons claiming and acting for and in its behalf, and directing them to immediately cease and desist from offering and selling lots to its and Desist Order be issued against CAHAFI, its trustees, officers, members, salesmen, members and the public. Thus, the EPD filed the instant Petition praying that the Commission revoke the

directing CAHAFI and its Officers to enter their appearances and file their Answer to the through Myra M. Tapia. Petition within fifteen (15) days from receipt thereof. On July 19, 2013, the Commission's designated process server tried to serve summons on CAHAFI. However, according to the sister-in-law of its President, Ms. Joan Dardo, CAHAFI no longer holds office at its principal office, while all its officers cannot be located. Thus, on April 6. 2015, a copy of the Alias Summons was served on the Respondent's Corporate Secretary. Acting on the Petition, the Commission issued Summons, dated July 16, 2013.

ISSUE

the basis of Section 6, paragraph (l), sub-paragraph (2) of PD 902-A15 and the evidence on record. Whether or not the Certificate of Registration of CAHAFI should be revoked, on

1s Note 1, supra.

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RULING

to the Petition, it has yet to file the same. Thus, pursuant to Section 3-121 of the 2006 the Commission shall render judgment on the basis of the Petition and the evidence on record. Rules of Procedure of the Commission, it is considered as in default. As a consequence, Despite the substituted service of Summons directing CAHAFI to file its Answer

We now resolve the case on the merits

Originator or a Community Coordinator under the CMP. CAHAFI is not acting as an

buyers in their Kasunduan7, that it has an obligation to undertake housing projects for them through the CMP under RA 7279. CAHAFI represents to the public, particularly to its alleged members and/or

they occupy or where they choose to relocate to and eventually improve their legally organized associations of underprivileged and homeless citizens to purchase and develop a tract of land under the concept of community ownership. The primary objective of the CMP is to assist residents of blighted or depressed areas to own the lots neighborhood and homes to the extent of their affordability.19 Under Article VIII of RA 727918, the CMP is one of the programs which assist

vs. Sta. Monica Riverside Homeowners' Association29, the Supreme Court held that: Act may collectively acquire and own lands covered by this Program." In Edna Eugenio Section 33 of RA No. 7279 provides that "associations organized pursuant to this

No. 7279, An Act to Provide for a Comprehensive and Continuing Urban "CMP, as a mode of land acquisition was introduced by Republic Act

16 SEc. 3-12. Effect of Failure to Answer. - If the respondent fils to answer the complaint within the above stated period, he shall be considered as in default. The hearing Panel or Officer shall, motu proprio, 2o G.R. No. 187751, November 22, 2010. 18 Otherwise known as the "Urban Development and Housing Act of 1992". proceed to render judgment granting the complainant such relief as the complaint may warrant, unless the Hearing Panel or Officer determines that the complainant should be required to submit ex parte 17 As an attachment to Annexes "D", "NN", "PPP", "QQQ", "ZZZ", "BBBB", and "CCCC". additional evidence. 19 Section 31, Note 17, supra.

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Development and Housing Program, Establish the Mechanism and for its Implementation and other purposes.' Section 33 of the Act specifies that beneficiaries of the Program shall be responsible for their organization into associations to manage their subdivisions or places of residence, to secure housing loans under existing Community Mortgage Program and such other projects beneficial to them.

underprivileged and homeless citizens to purchase and develop a tract of land under the concept of community ownership. Finance Corporation (NHMFC) assists legally organized associations of The mortgage financing program of the National Home Mortgage

favor of the community association. In turn, the community association executes an agreement with the SHFC for the collection and remittance of shares in monthly amortization from its member-borrowers, and is under obligation to keep tab of paid and unpaid amortization of its member-borrowers. In the event a borrower in default." 2! member-borrower defaults, the community association has the responsibility to find a qualified substitute who shall assume the obligations of the member- Under the CMP, the landowner executes a contract to sell the property in

beneficiaries. Later on, the property is subdivided with individual mortgages per assists and enables informal settlers, slum dwellers or residents of blighted areas, in purchasing, through their duly registered Community Associations (CA), the land they occupy or the land where they will be relocated. The loan is secured by a first mortgage on the undivided tract of land initially under the community ownership of the beneficiaries. The CMP is a financing scheme granted by the government through SHFC that

themselves into a CA. The CC may either be a Local Government Unit, a National Government Agency, Bureau or Corporation, or a Non-Government Organization (NGO) or a Cooperative duly registered with the SEC/CDA. 22 A Community Coordinator (CC) is tasked to assist informal settlers in organizing

such organization to be able to participate in the CMP. To be accredited, CC and CA23 The SHFC requires that the CC and CA, be duly accredited with it in order for

22 SHFC's Fast Fact on Community Mortgage Program, Annex "EEE". 23 MHI. COMMUNITY COORDINATORS' (CC) ACCREDITATION, ReCOrds, p. 1. 21 Underlines ours.

D Application letter for CC Accreditation (CMP-001)

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public. Then, CAHAFI subdivided the Santol properties into smaller lots for resale to the general different provinces for the purpose of developing them into residential subdivisions.

October 5, 2010, declaring that CAHAFI has no pending application for accreditation accreditation under the CMP. This fact is clear from SHFC's Certification25, dated under the CMP. During said operation, CAHAFI did not file an application for either CC or CA

participate in the CMP. Rather, CAHAFI is acting as a developer of residential lots for resale to the general public pursuant to Section 2 (d) and (e) of Presidential Decree 95726 The foregoing considered, CAHAFI is not a CA or CC accredited by the SHFC to

parcel of land registered under Act No. 496 which is partitioned primarily for residential purposes into individual lots with or without improvements thereon, and offered to the public for sale, in cash or in installment terms. It shall include all residential, commercial, industrial and recreational areas as well as open spaces and other community and public areas in the project. "d) Subdivision project. - "Subdivision project" shall mean a tract or a

whether residential, commercial, industrial, or recreational, in a subdivision project." e) Subdivision lot. - "Subdivision lot" shall mean any of the lots,

foundation but is engaged in a real estate business for profit. CAHAFI is not acting as a

the purpose of extending grants or endowments to support its goals or raising funds to accomplish charitable, religious, educational, athletic, cultural, literary, scientific, social welfare or other similar objectives. A foundation27 is defined as "a non-stock, non-profit corporation established for

It was purportedly organized for noble and philanthropic purposes such as, among others: In the instant case, CAHAFI was registered with the Commission as a foundation.

26 "Regulating the Sale of Subdivision Lots and Condominiums, providing Penalties for violation thereof" 25 Records, p. 193, Annex "Q", Petition. as amended by PD No. 1216. Foundations. Section 1 of SEC Memorandum Circular No. 8, Series of 2006 (SEC MC No. 8), Revised Guidelines of

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house and lot at a very affordable monthly amortization, (2) to assist families who are already living in a property that they do not own and help them deal with their problem (1) to organize or tap already landless Urban Poor and assist them in acquiring their own concerning the land acquisition, and (3) to create a research and documentation committee/group to scout for an unutilized parcel of lands and negotiate with its owners to reach an agreement for a possible land acquisition, which may be through the CMP

through the Sworn Statement of Funds28 of its President and Treasurer, dated August 12. 200729, that its sources of funds are limited to membership dues and donations and it has an on-ongoing lot distribution project in Santol, Tanza Cavite, to wit: Pursuant to its primary purpose, CAHAFI represented to the Commission,

2006 are from the following: "2. That the source of Funds of the Foundation during the Fiscal Year

b: Donation & Contribution from donors c: Training & Consulting from donors d:Vehicle Sale Proceeds a:Membership dues from members PhP 407,000.00 406,147.00 36,650.00 95,000.00

preceding year: 3. That the following are the activities of the Foundation in the

a: Planned Sponsorship of medical mission and livelihood seminars.

b:Accomplished xxx

c: On-Going Project

Lot distribution Project to Members-beneficiaries of the foundation located at Barangay Santol Tanza Cavite."

business transactions, i.e., real estate development, contradict the nature of a foundation and/or non-stock non-profit corporation and the purposes for which it is organized.3c However, the evidence presented by EPD clearly show that CAHAFI's actual

Tanza Cavite. To the contrary, the following pieces of evidence show that CAHAFI sells residential house and lots, as a real estate developer, to the public for profit, to wit: CAHAFI does not distribute lots to its members-beneficiaries in Barangay Santol.

28 Dated August 12, 2007, 30 Note 15, supra. 29 Filed with the Commission on September 11, 2007.

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Sale (DCS),32 demonstrate that CAHAFI bought a property33, from Numeriana Herrera Iruguin Hines34. Thereafter, CAHAFI subdivided the said property and sold35 the subdivided lots to its alleged members. 1. The Memorandum of Agreement3' (MOA) and Deed of Conditional

survey fees37 in addition to the contract price of around PhP 900 to PhP 1,668 per The alleged members are required to pay land commitment, membership and square meters. These fees and revenues reveal that CAHAFI earns a gross profit of PhP 600 to Php 1418 per square meters. the subdivided property to its alleged members under the "Direct-Buy Scheme." 2. Paragraph 2 of the Kasunduans3 stipulate that CAHAFI distributes

although the above-mentioned MOA provides CAHAFI will distribute the lots in accordance with the CMP, they did not acquire their parcels of land through the CMP of the NHMFC considering that they directly and exclusively transacted with and remitted all their payments and other fees to CAHAFI. 4.The Affidavits38 of CAHAFI's members consistently aver that

HLURB to sell lots as a developer. CAHAFI is not licensed by the

residential development projects. However, the HLURB certified that it has not issued a CR and/or LS.Thus, CAHAFI has been selling subdivided lots and even houses to the general public without the required CR/LS Records show that CAHAFI applied for CR/LS with the HLURB for its

to what the corporation can do or Serious misrepresentation as

is doing to the great prejudice of or damage to the general public.

31 Dated October 7, 2003, Annex "II", Records, p. 157. 32 Dated 1 March 2004, Annex "MM", Records, p. 148 33 35,000 square meter property located in Baragay Santol, Municipality of Tanza, Cavite bought at Php 35 Annexes "NN" to "KKK", Records pp. 101-144 36 As an attachment to Annexes "NN", "PPP", "QQQ", "ZZ", "BBBB", and "CCCC". 37 Paragraph 4, thereof. 38 Annexes "000" to "CCCC", Records pp. 3 to 97. 8,750,000.00 or Php 250/sq. m., Records, p. 147 34 Represented by Silvina H. Bautista

C

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to the public, particularly to its alleged members and/or buyers, that is validly engaged in CMP and that it has an authority to undertake housing projects for them within the ambit of RA 7279. Further, it misrepresented itself as a foundation when its actual business operations clearly show that it is engaged in the real estate development business. Worse, as to what the corporation can do or doing to the great prejudice to the general public. As Such, CAHAFI's operations are contrary to its primary purpose as stated in its Articles of Incorporation. SHFC and the HLURB have certified that CAHAFI is neither licensed as a Community Coordinator or Originator nor as a developer. These constitute serious misrepresentation From the foregoing evidence, it is indubitable that CAHAFI misrepresented itself

neighborhood at its Tanza Cavite project, despite its representation that it will provide electric and water distribution infrastructure and will develop the property pursuant to the provisions set forth in the aforementioned DOA and Kasunduan. It is also worth mentioning that CAHAFI failed to improve its buyers'

The Certificate of Incorporation of COMMUNITY ASSOCIATES HABITAT paragraph 2 of Presidential Decree No. 902-A. FOUNDATION (CAHAFI), INC. is hereby REVOKED, for violating Section 6(l) sub- WHEREFORE, premises considered, the instant Petition is hereby GRANTED.

this Decision for its appropriate action. Let the Company Registration and Monitoring Department be furnished a copy of

SO ORDERED

Mandaluyong City, 11 June 2015.

M TERESITA J. HERBOSA Chairperson

MANUEL Commissioner RTO B. GAITE Ommu hat o ANTONIETA F. IBE Commissioner

EPHYRO LUIS B. AMATONG Commissioner BLASJAMES G.VITERBO T10s1omt Commissioner