Code of Ethics for BOD

CODE OF ETHICS AND ETHICAL STANDARDS FOR OFFICERS AND MEMBERS OF THE BOARD OF DIRECTORS

PREAMBLE

We, the officers/board members of duly registered and/or accredited homeowners association with the HLURB, cognizant of our roles and responsibilities to our constituents and fellow officers/board members on the one hand, and the community on the other, hereby adopt this Code of Ethics and Ethical Standards For Officers and Members of the Board of Directors that will guide us in the performance of our duties to achieve the avowed goal of serving the majority interests of the members, through proactive, responsive, non-partisan and immediate basic services delivery under the atmosphere of self-help, volunteerism, rule of law, and transparency in the governance of our local affairs.

And we hereby declare to be bound by these ethical standards and norms during our incumbency in office freely, voluntarily and without reservation.

ARTICLE II

DEFINITION OF TERMS

Section 1. Officers refer to those members duly elected to/for the executive positions such as but not limited to, Chairman/President, Vice Chairman/Vice President. Business Manager, Secretary and Treasurer, pursuant to the association's by­laws/internal rules.

Sec. 2. Board Members refer to those executive officers duly elected to the Board of Directors/Trustees in accordance with the by-laws/intemal rules of the association;

Sec. 3. Conflict of Interests occur whenever the integrity, trustworthiness, or impartiality of an officer/board member is potentially undermined, compromised or impaired by reason of his/her inconsistent or competing personal or professional interests and welfare, or that of his/her family and/or relatives to the fourth civil degree of consanguinity or affinity;

Sec. 4. Perceived Conflict of Interests occur whenever an officer/board member has committed or is committing an act tending or likely to cast doubt on his/her integrity.

trustworthiness, or impartiality to put the general interest and welfare of the association over and above his/her personal or professional interests and welfare;

Sec. 5. Disputes Mechanism refers to the Grievance Committee charged with the obligation to conduct mediation for the peaceful settlement of disputes within the association as provided in the by-laws or internal rules.

Sec. 6. Board refers to the board of directors/trustees of the association.

Sec. 7. HLURB refers to the Housing and Land Use Regulatory Board.

Sec. 8. Internal rules refer to circulars, orders, regulations and resolutions other than the by-laws, duly promulgated by the board of directors/trustees of the association

ARTICLE II

ETHICAL STANDARDS AND RULES OF CONDUCT

Sec. 9. Primacy of the Interests of the Association

9.1.            All officers/board members shall strive for the common good of the association, foregoing personal or professional interests. All decisions and representations by the officers/board members must be made with the best interests of the Association. In the performance and discharge of the officers/board members' sworn duties and responsibilities, conflicts of interest must always be avoided.

9.2.            No officer/board member shall use or take advantage of his/her position, or knowingly allow another to use or take advantage of his/her position, to advance and promote his/her personal or professional interests and gain. In all activities and processes undertaken by the board such as the procurement of goods and services, the annual and regular board meetings, the accounting of association funds, and any interaction with vendors, contractors, subcontractors, and homeowners, the conduct of each officer/board member shall at all times be above reproach and free of any appearance of impropriety.

 9.3.            To promote and safeguard the interests of the Association, officers/board members must always act collectively and as a body in discharging and performing their sworn duties and responsibilities. Unless demanded by the exigency of a situation, a board member shall avoid acting and deciding individually in order to avoid a real or perceived conflict of interest.

Sec. 10. Disclosure, Inhibition, and Abstention

10.1.       Upon knowledge and at the earliest opportunity, an officer/board member encountering or anticipating a conflict of interest arising from any business transaction, engagement, employment and/or hiring by the Association with an entity, company, or individual with whom the officer/board member is related personally or professionally, or with whom an officer/board member stands to benefit in any way, he/she should fully disclose in writing to the Board said conflict-of-interest.

10.2.       In the negotiation of any business transaction, engagement, employment and/or hiring, by the Association, the officer/board member encountering or anticipating a conflict of interest must inhibit and withdraw himself/herself from participating therewith, except to provide inputs relative to the transaction when so requested by the other members of the Board of Directors, and shall refrain from persuading, endorsing, or influencing in any manner the other officers/board members to favorably act on the said transaction. In the approval of said transaction, the concerned officer/board member shall abstain from voting thereon.

Such abstention and the reason/s thereof must be entered in the minutes of the

voting.

10.3.    Any dealings by the Board in which an officer/board member has abstained
in the negotiation and voting therefore must be made known and disclosed to the
homeowners and members of the Association in accordance with the procedure provided
in the Articles of Incorporation and/or bylaws of the Association.

Section 11. Partisan Politics

11.1.       Partisan Politics can be a cause of conflict of interest and must therefore be avoided. The officer/board member shall not use or take advantage of his/her position, power, and resources of the association to engage in any partisan political activity.

11.2.       No contributions will be made by the Board or Association to any political parties or political candidates.

11.3.       The officers/Board members shall not allow any of the properties and facilities of the association such as multi-purpose rooms, halls, pavilions, clubhouses, parks and open spaces, to be used, leased, or rented for the purpose of campaigning or giving advantage to a particular political candidate or party.

Sec. 12. Officer/Board member's Own Business and Practice of Profession

12.1.       An officer/board member, upon assuming office, shall disclose in writing and submit to the board any business enterprise or entity, undertaking, or activity, in which directly or indirectly he/she has financial or pecuniary interest.

12.2.       An officer/ board member who is also engaged in the practice of a profession shall not provide or render his/her professional service for the Association if the performance of such service is likely to result in a real or perceived conflict of interests.

Sec. 13. Dealings with Families and Related Parties. - No officer/board member, his/her spouse, agent, employee, immediate family member and relative/s by affinity or consanguinity up to 4^rd civil degree, shall enter into a personal service contract with the Association without previous disclosure of such relation/interest to the Board.

Sec. 14. Vendors, Suppliers, Contractors

14.1.       In all of the Association's business dealings, transactions, and negotiations, all officers/board members must observe transparency.

14.2.       No officer/board member may use, or allow another to use or take advantage of his/her position to promote, enhance, or serve his personal and professional interests and welfare through the direct or indirect recommendation or endorsement of vendors, suppliers, or contractors.

Sec. 15. Solicitation and Acceptance of Gifts - No officer/board member shall accept, request, or solicit, directly or indirectly, for himself/herself or for any other person, any gift, favor, percentage or commission, loan, or any other thing of monetary value tending to influence, or made with the intent to influence the decision or action of any member of the board on any official matter.

ARTICLE III

RULES OF RESPONSIBILITIES AND DISCIPLINE

Sec. 16. Respect and Uphold the Association's Constitution and By-Laws. -He/she should at all times respect and uphold the constitution and by-laws and other internal rules of the association.

Sec. 17. Regular Attendance and Decorum in Association's Meetings

17.1. He/she should regularly attend to and actively participate in any scheduled meeting of the association.

17.2.       He/she should conduct himself/herself civilly and with proper decorum in any discussion in the meeting and he/she should not criticize a fellow officer/colleague/member because of divergent in opinion or view; rather he/she should render his/her opinion with professional integrity and utmost courtesy.

17.3.       He/she should respect the decision of the majority of the members in policy making process and resolution of a given issue or controversy. In case of dissent, he/she should express his/her dissenting opinion in a professional and polite manner.

Sec. 18. Information/Education Campaigns and Public Advocacy Programs.

18.1.       He/she shall attend information/educational campaigns when invited by any national or local government agency or other non-government organization on matters pertaining to the Association, its members and officers on their rights, duties and obligations, and shall trickle down to its members any information obtained therein.

18.2.       He/she shall likewise inform himself/herself of any public advocacy programs pertaining to or affecting the nation, community and the Association, its officers and members, and shall encourage the participation of members to such public advocacies and programs.

Sec. 19. Conduct During Investigation of Dispute/Offense

19.1.       He/she should cooperate in the conduct of investigation, censure, discipline or dismissal of a fellow member/officer.

19.2.       He/she should, if being charged with an offense by the board, voluntarily take an official leave of absence during the investigation and until such time that he/she has been cleared of the charge.

Since it is the members who are filing the complaint I am not sure if this would apply but HE should actually step down or file a leave of absence together with Creighton, and Michelle since all of them are in our complaint.

19.3.       In case of dispute between the association and its member/s or between two (2) or more members, he/she should see to it that the controversy should exhaust at the first instance the association's disputes mechanism provided under its by-laws and/or internal rules before the filing of appropriate action with the proper forum.

Sec. 20. Respect and Obedience to the Authority of the Law - In any legal controversy or dispute involving the homeowners association, he/she should respect, obey and submit to the lawful order or final judgment of the authority of the law and the government agency or instrumentality mandated to enforce it.

Sec. 21. Public Complaints Mechanism. Complaints from members, homeowners and the public in general may be made through formal written complaint or anonymously through unsigned written complaints. The complaint, whether instituted formally or informally, shall undergo the following investigative process:

21.1.        Upon receipt of the complaint, the Board of Directors shall form an investigation committee which shall make a preliminary determination on the whether there is sufficient evidence to warrant a finding that the offense charged was probably committed by the officer or member of the Board of Directors. The proceedings of the investigation committee shall be strictly confidential and any violation thereof shall be subject to sanctions and shall be considered as a violation of the conflicts of interest rule.

21.2.        If there is a finding on the absence of probable cause, the investigation committee shall dismiss the complaint. However, if there is a finding of probable cause, then the matter shall be referred to the Board of Directors which shall duly inform the officer or member, who shall inhibit from the entire proceedings, to answer the complaint and, thereafter proceed to accept evidence on the charge.

31.1.        If there is no sufficient evidence to warrant a finding of guilt for the offense charged, the Board of Directors shall proceed to dismiss the complaint. However, if it is determined that substantial evidence exists, the Board of Directors shall impose the appropriate sanction/s against the officer or member of the Board of Directors found culpable for the offense charged.

31.2.    At all stages of the proceedings, the rights of the witnesses for or against the charged officer or Board member shall be protected, including the adoption of appropriate measures to secure their safety and well-being.

This is out in the open and this should be practiced to prevent the special treatment that I have now. Anyways since they presented the complaint directly to him which I will be asking when we meet them this is a violation of the ruling.

Sec. 22. Sanctions

22.1.        Violation of any provision of this Code constitutes misconduct by the board member/officer. If proven guilty, the responsible board member/officer shall be sanctioned by the association where he/she belongs pursuant to its by-laws or internal rules.

22.2.        If the association's by laws or internal rules are silent as to the imposable sanctions/penalties, the guilty board member/officer shall be punished with a fine of not less than Five Thousand Pesos (Php5,000.00) but not more than Fifty Thousand Pesos (Php50,000.00) and permanent disqualification from being elected or appointed as member of the board, officer or employee of the association, without prejudice, however, to such disciplinary action that the HLURB may deem appropriate thereon when proper complaint against said board member/officer is filed with HLURB.

ARTICLE IV

GENERAL PROVISIONS

Sec. 23. Scope. - This Code shall apply to and cover all homeowners associations pursuant to and within the scope of RA 9904, otherwise known as the "Magna Carta for Homeowners and Homeowners' Associations."

Sec. 24. Separability Clause. - If the effectivity of any provision of this Code is suspended or disapproved, or otherwise declared as contrary to law, the unaffected provisions shall remain in force.

Sec. 25. Effectivity. - This Code shall be signed by all present and future officers and members of the Board of Directors and shall be effective immediately upon its adoption and bind all Officers/Board Members whether or not they have signed this document and shall continue to bind all subsequent Officers/Board Members.

IN WITNESS WHEREOF, we have hereunto affixed our signature, this                      day

of______________ ,______ in______________________ , Philippines.

              

                             


                    








                    
 

Homeowners Association are now vatable RMc 9-2013

REPUBLIC OF THE PHILIPPINES

DEPARTMENT OF FINANCE

BUREAU OF INTERNAL REVENUE

Quezon City

Date: January 29, 2013

REVENUE MEMORANDUM CIRCULAR NO. 9-2013

SUBJECT :

Clarifying the Taxability of Association Dues, Membership Fees, and Other Assessments/Charges Collected by Homeowners’ Associations

TO : All Internal Revenue Officials, Employees and Others Concerned

This Circular is issued to clarify the taxability of association dues, membership

fees, and other assessments/charges collected by homeowners’ associations from its homeowner-members and other entities.

BACKGROUND

Republic Act No. 9904, otherwise known as the "Magna Carta for Homeowners and Homeowners' Associations", grants tax incentives to homeowners’

associations subject to certain conditions.

Section18 of RA No. 9904 reads:

SECTION 18. Relationship with LGUs.

 Homeowners' associations shall complement, support and strengthen LGUs in

providing vital services to their members and help implement local government policies, programs, ordinances, and rules. Associations are encouraged to actively cooperate with LGUs in furtherance of their common goals an

activities for the benefit of the residents of the subdivisions/villages and their environs. Where the LGUs lack resources to provide for basic services, the associations shall endeavor to tap the means to provide for the same. In recognition of the associations' efforts to assist the LGUs in providing such basic services, association dues and income derived from rentals oftheir

facilities shall be tax-exempt: Provided, That such income and dues shall be used for the cleanliness, safety, security and other basic services needed by the members, including the maintenance of the facilities of their respective subdivisions or villages.

xxx”

The Bureau has issued several rulings exempting from income tax the

assessments/charges collected by homeowners’ associations from its homeowner- Revenue Memorandum Circular No. ______

members, on the ground that the collection of assocation dues and other

assessments/charges are merely held in trust to be used solely for administrative expenses

in implementing its purposes i.e., to manage and maintain the homeowners’ associations,

establish, manage, maintain and operate adequate community facilities and services for

its members, and from which a homeowners’ associations could not realize any gain or

profit as a result of its receipt thereof. Other homeowners’ associations were given

exemption under Section 30(C) of the National Internal Revenue Code (NIRC) as mutual

aid associations. In addition, the same rulings exempted association dues from value-added tax for the reason that a homeowners’ associations does not sell, barter, exchange, nor lease any goods or property and neither does it render any service for a fee, but merely implements the administration of the required services to collect the association dues from the homeowners pursuant to its corporate purpose(s) as trustee of the fund thereof.

CLARIFICATION

The taxability of association dues, membership fees, and other assessments/charges collected by a homeowners’ association from its homeowner-members and other entities are discussed hereunder.

I. Income Tax

– Section 18 of R.A. No. 9904 which exempts from taxation the association dues and income derived from rental subject to certain conditions is an implied recognition by Congress that such receipts are subject to tax under existing laws. Thus, the amounts paid in as dues or fees by homeowner-members of a homeowners’ association form part of the gross income of the latter subject to income tax. This is because a homeowners’ association furnishes its members with benefits, advantages, and privileges in return for such payments. For tax purposes, the association dues, membership fees, and other

assessments/charges collected by a homeowners’ association constitute income payments or compensation for beneficial services it provides to its members and tenants. The previous interpretation that the assessment dues are funds which are merely held in trust by a homeowners’ association lacks legal basis and is hereby abandoned. Moreover, since a homeowners’ association is subject to income tax, income payments made to it are subject to applicable withholding taxes under existing regulations.

II. Value-Added Tax (VAT)and Percentage Tax

– Association dues, membership fees, and other assessments/charges collected by a homeowners’ association are subject to VAT since they constitute income payment or compensation for the beneficial services it provides to its homeowner-members.

Section 105 of the NIRC, as amended, provides: Revenue Memorandum Circular No.

SECTION 105. Persons Liable.

— Any person who, in the course of trade or business, sells, barters, exchanges, leases

goods or properties, renders services, and any person who imports goods shall be subject to the value-added tax (VAT) imposed in Sections 106 to 108 of this Code.

x x x

The phrase 'in the course of trade or business'means the regular conduct or pursuit of a commercial or an economic activity, including transactions incidental thereto by any person regardless of whether or not the person engaged therein is a nonstock, nonprofit private organization (irrespective of the disposition of its net income and whether or not it

sells exclusively to members or their guests), or government entity.”

(Emphasis supplied)

The above provision is clear -- even a non-stock, non-profit organization or government entity is liable to pay VAT on the sale of goods or services. This conclusion was affirmed by the Supreme Court in Commissioner of Internal Revenue v. Court of Appeals and Commonwealth Management and Services Corporation, (G.R. No. 125355,

March 30, 2000). In this case, the Supreme Court held: “(E)ven a non-stock, non-profit organization or government entity, is liable to pay VAT on the sale of goods or services.

VAT is a tax on transactions, imposed at every stage of the distribution process on the sale, barter, exchange of goods or property, and on the performance of services, even in the

absence of profit attributable thereto. The term "in the course of trade or business" requires the regular conduct or pursuit of a commercial or an economic activity, regardless of whether or not the entity is profit-oriented. The definition of the term "in the course of trade

or business" incorporated in the present law applies to all transactions even to those made prior to its enactment. Executive Order No. 273 stated that any person who, in the co

urse of trade or business, sells, barters or exchanges goods and services, was

already liable to pay VAT. The present law merely stresses that even a nonstock, nonprofit organization or government entity is liable to pay VAT for the sale of goods and services.

Section 108 of the National Internal Revenue Code of 1997 defines the phrase "sale of services" as the "performance of all kinds of services for others for a fee, remuneration or

consideration." It includes "the supply of technical advice, assistance or services rendered in connection with technical management or administration of any scientific, industrial or

commercial undertaking or project." Revenue Memorandum Circular No. _______

On February 5, 1998, the Commissioner of Internal Revenue issued BIR Ruling No. 010-98 emphasizing that a domestic corporation that provided technical, research, management and technical assistance to its affiliated companies and received payments on a reimbursement-of-cost basis, without any intention of realizing profit, was subject to VAT on services rendered. In fact, even if such corporation was organized without

any intention of realizing profit, any income or profit generated by the entity in the conduct of its activities was subject to income tax. Hence, it is immaterial whether the primary purpose of a corporation indicates that it receives payments forservices renderedto its affiliates on a reimbursement-on-cost basis only, without realizing profit, for purposes of determining liability for VAT on services rendered. As long as the entity provides service for a fee, remuneration or consideration, then the service rendered is subject to VAT.”

Accordingly, the gross receipts of homeowners’ associations including association dues, membership fees, and other assessments/charges are subject to VAT, income tax and

income payments made to it are subject to applicable withholding taxes under existing

regulations.

Those exempt from the payment of VAT under Section 109(V) are liable to pay percentage tax. Section 116 provides:

SEC. 116. Tax on Persons Exempt from Value-Added Tax (VAT).

— Any person whose sales or receipts are exempt under Section 109 (V) of this Code from the paymentof value-added tax and who is not a VAT-registered person shall pay a tax equivalent to three percent (3%) of his gross quarterly sales of receipts: Provided, That cooperatives shall be exempt from the three percent (3%) gross receipts tax herein imposed." As clearly stated in the law, non-VAT registered entities exempt under Section

109 (1) (V) of the NIRC, as amended, are covered by percentage taxes.

EXEMPTION UNDER REPUBLIC ACT NO. 9904

Pursuant to Section 18 of RA No. 9904, the association dues and income derived from rentals of the homeowners’ association’s properties may be exempted from income tax, VAT and percentage tax subject to the following conditions:

a.The homeowners’ association must be a duly constituted “Association” as defined under Section 3(b) of RA No. 9904;

b.The local government unit having jurisdiction over the homeowners’ association must issue a certification identifying the basic services being

Section 109 "(V) Sale or lease of goods or properties or the performance of services other than the transactions mentioned in the preceding paragraphs, the gross annual sales and/or receipts do not exceed the amount of One million five hundred thousand pesos (P1,500,000): Provided, That not later than January 31, 2009 and every three (3) years thereafter, the amount herein stated shall be adjusted to its present value using the Consumer Price Index as published by the National Statistics Office (NSO);