LEGAL OPINION

Re: draft memorandum of agreement entitled for Local Housing Fund of xxx HOA

Facts:

This pertains to an unsigned/draft of a memorandum of agreement (MOA) for the

land acquisition for an unspecified homeowners’ association (HOA). Parties to the draft MOA
are the National Housing Authority (NHA), the Sixth Congressional District of Quezon City
(DISTRICT), the HOA, and the barangay (where, it is assumed, the land to be acquired is
situated).

From the language of the draft MOA, the local housing fund (LHF) is now an
additional funding source from those enumerated in Republic Act No. 7835.

Opinion:

1. Language should be consistent.

Note that the document talks of a “local housing fund” and a “trust fund”. To avoid
confusion, language and use of terminology should be consistent. Moreover, the term
“project” was used in the draft MOA despite the lack of a particular definition of what it
pertains to.

2. The preambulatory clauses should be reviewed.

In the third preamble, a quick review of the Urban Development and Housing Act of 1992
(UDHA) shows that there is no mandate for local government units to take a principal role in
the provision of housing services. The Local Government Code of 1991 (LGC) does not make it a
principal role of local government units to provide housing services.

The mention of a letter sent by the DISTRICT to the NHA, in the fourth preamble,
should be reviewed as possible violation of the principles laid down by jurisprudence in the
use of congressional (pork barrel) and other funds. The tenor of the request to allocate a
portion of the LHF should be reviewed. This should also be reviewed vis-à-vis the fifth
preamble which mentions of the management of a fund endorsed by the district
representative.

As regards the obligation of the barangay to assist both NHA and the HOA, the
specific obligations could be ultra vires depending on the authority granted by the sangguniang
barangay to the punong barangay.

3. Power of NHA to allocate amounts from the local housing fund. If NHA is
responsible for the management of the trust fund, the same should be referenced to (a) the
power of the legislature to allocate funds, and (2) the relationship of the local housing fund
with the trust fund management by the NHA.

4. Deliberative budget process. In regard paragraph 2.2.1 of the draft MOA, the
DISTRICT could use the deliberative budget process not to comply with its obligation to
provide for land acquisition. Regardless, the annual procurement plan originates with the
implementing agency (in this case, NHA).

5. DISTRICT will not manage funds. The deletion of paragraph 2.2.3 in the draft MOA
is seriously suggested. The DISTRICT should not be involved in the utilization of funds, and
should have no obligation as regards unutilized fund.

6. Barangay powers are limited. As regards the obligation of the barangay to utilize the
funds and remit unutilized funds (2.3.1 and 2.3.8), provide any amount in excess of that
“allocated” by NHA (2.3.2), undertake by administration (2.3.3), enter into a contract of loan
(2.3.6), the same could be ultra vires without the resolution of the sangguniang panlunsod. Note
that the mandate of local housing boards come from the issuance of an administrative order
from the city chief executive pursuant to an ordinance. While the barangay sanggunian may
authorize the punong barangay to sign contracts through a resolution, it is questionable
whether it could grant authority to enter in contracts of loan and to implement projects
through administration.