G.R. No. 140092 , September 8, 2006
UNITED BF HOMEOWNERS’ ASSOCIATIONS, INC., petitioner, vs. THE BARANGAY CHAIRMAN and THE SANGGUNIANG BARANGAY OF BF HOMES PARAÑAQUE, respondents.

FACTS

Petitioner United BF Homeowners’ Association, as representative of the subdivision developer BF Homes Inc. (BFHI), claimed the right to administer a multi-purpose hall constructed in 1991 by then Congressman Freddie Webb using his Countrywide Development Fund. The hall was built on an old basketball court, an original subdivision facility deemed an “open space.” Petitioner asserted that, as the open space had not been donated to the local government, it remained private property of the developer, whose administrative authority it exercised. It further cited Municipal Resolution No. 88-12 and Municipal Ordinance No. 97-08, which required its prior endorsement for the issuance of barangay clearances to businesses within the subdivision.
Respondent barangay officials, invoking the Local Government Code (RA 7160), claimed authority to administer the hall and to issue barangay clearances without petitioner’s endorsement. After failed negotiations, petitioner filed a petition for mandamus with injunction. The Regional Trial Court initially denied the petition, upholding the barangay’s authority under RA 7160. Upon petitioner’s motion, the court later declared respondents in default and allowed ex parte presentation of evidence but ultimately dismissed the amended petition, ruling that RA 7160 governed.

ISSUE

1. Whether the barangay or the homeowners’ association has the right to administer the multi-purpose hall constructed on the subdivision’s open space.
2. Whether the prior endorsement of the homeowners’ association is necessary for the barangay to issue business clearances within the subdivision.

RULING

The Supreme Court ruled in favor of the petitioner homeowners’ association on both issues. On the first issue, the Court held that the multi-purpose hall, though built with public funds, was erected on a subdivision open space. Under PD 957, as amended by PD 1216, open spaces are non-alienable and non-buildable, reserved for the use of subdivision residents and remain the private property of the developer until formally donated to the local government. The Court, in White Plains Homeowners Association, Inc. v. Court of Appeals, affirmed that ownership and the concomitant right of administration over such reserved areas, including improvements, remain with the developer or its representative until donation. Since no donation occurred, the barangay could not claim administrative authority under RA 7160, which applies to facilities constructed with government funds within the jurisdiction of the barangay on public, not private, property.
On the second issue, the Court upheld the validity of the municipal ordinances requiring the association’s endorsement. The Local Government Code mandates a barangay clearance as a prerequisite for a municipal business permit but does not prohibit the municipality from imposing additional reasonable conditions through its police power. The municipal resolution and ordinance, which require homeowner association clearance, are valid exercises of such power to ensure harmony within the subdivision. Therefore, respondents cannot issue barangay clearances for businesses inside the subdivision without petitioner’s prior endorsement.