Laws and Regulations

 

BUYERS’ PROTECTION

 

PRESIDENTIAL DECREE No. 957 July 12, 1976

REGULATING THE SALE OF SUBDIVISION LOTS AND CONDOMINIUMS, PROVIDING PENALTIES FOR VIOLATIONS THEREOF

WHEREAS, it is the policy of the State to afford its inhabitants the requirements of decent human settlement and to provide them with ample opportunities for improving their quality of life;

WHEREAS, numerous reports reveal that many real estate subdivision owners, developers, operators, and/or sellers have reneged on their representations and obligations to provide and maintain properly subdivision roads, drainage, sewerage, water systems, lighting systems, and other similar basic requirements, thus endangering the health and safety of home and lot buyers;

WHEREAS, reports of alarming magnitude also show cases of swindling and fraudulent manipulations perpetrated by unscrupulous subdivision and condominium sellers and operators, such as failure to deliver titles to the buyers or titles free from liens and encumbrances, and to pay real estate taxes, and fraudulent sales of the same subdivision lots to different innocent purchasers for value;

WHEREAS, these acts not only undermine the land and housing program of the government but also defeat the objectives of the New Society, particularly the promotion of peace and order and the enhancement of the economic, social and moral condition of the Filipino people;

WHEREAS, this state of affairs has rendered it imperative that the real estate subdivision and condominium businesses be closely supervised and regulated, and that penalties be imposed on fraudulent practices and manipulations committed in connection therewith.

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by the Constitution, do hereby decree and order:

Title I
TITLE AND DEFINITIONS

Section 1. Title. This Decree shall be known as THE SUBDIVISION AND CONDOMINIUM BUYERS’ PROTECTIVE DECREE.

Section 2. Definition of Terms When used in this Decree, the following terms shall, unless the context otherwise indicates, have the following respective meanings:

(a) Person. “Person” shall mean a natural or a juridical person. A juridical person refers to a business firm whether a corporation, partnership, cooperative or associations or a single proprietorship.

(b) Sale or sell. “Sale” or “sell” shall include every disposition, or attempt to dispose, for a valuable consideration, of a subdivision lot, including the building and other improvements thereof, if any, in a subdivision project or a condominium unit in a condominium project. “Sale” and “sell” shall also include a contract to sell, a contract of purchase and sale, an exchange, an attempt to sell, an option of sale or purchase, a solicitation of a sale, or an offer to sell, directly or by an agent, or by a circular, letter, advertisement or otherwise.

A privilege given to a member of a cooperative, corporation, partnership, or any association and/or the issuance of a certificate or receipt evidencing or giving the right of participation in, or right to, any land in consideration of payment of the membership fee or dues, shall be deemed a sale within the meaning of this definition.

(c) Buy and purchase. The “buy” and “purchase” shall include any contract to buy, purchase, or otherwise acquire for a valuable consideration a subdivision lot, including the building and other improvements, if any, in a subdivision project or a condominium unit in a condominium project.

(d) Subdivision project. “Subdivision project” shall mean a tract or a 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.

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

(f) Complex subdivision plan. “Complex subdivision plan” shall mean a subdivision plan of a registered land wherein a street, passageway or open space is delineated on the plan.

(g) Condominium project. “Condominium project” shall mean the entire parcel of real property divided or to be divided primarily for residential purposes into condominium units, including all structures thereon.

(h) Condominium unit. “Condominium unit” shall mean a part of the condominium project intended for any type of independent use or ownership, including one or more rooms or spaces located in one or more floors (or part of parts of floors) in a building or buildings and such accessories as may be appended thereto.

(i) Owner. “Owner” shall refer to the registered owner of the land subject of a subdivision or a condominium project.

(j) Developer. “Developer” shall mean the person who develops or improves the subdivision project or condominium project for and in behalf of the owner thereof.

(k) Dealer. “Dealer” shall mean any person directly engaged as principal in the business of buying, selling or exchanging real estate whether on a full-time or part-time basis.

(l) Broker. “Broker” shall mean any person who, for commission or other compensation, undertakes to sell or negotiate the sale of a real estate belonging to another.

(m) Salesman. “Salesman” shall refer to the person regularly employed by a broker to perform, for and in his behalf, any or all functions of a real estate broker.

(n) Authority. “Authority” shall mean the National Housing Authority.

Title II
REGISTRATION AND LICENSE TO SELL

Section 3. National Housing Authority The National Housing Authority shall have exclusive jurisdiction to regulate the real estate trade and business in accordance with the provisions of this Decree.

Section 4. Registration of Projects The registered owner of a parcel of land who wishes to convert the same into a subdivision project shall submit his subdivision plan to the Authority which shall act upon and approve the same, upon a finding that the plan complies with the Subdivision Standards’ and Regulations enforceable at the time the plan is submitted. The same procedure shall be followed in the case of a plan for a condominium project except that, in addition, said Authority shall act upon and approve the plan with respect to the building or buildings included in the condominium project in accordance with the National Building Code (R.A. No. 6541).

The subdivision plan, as so approved, shall then be submitted to the Director of Lands for approval in accordance with the procedure prescribed in Section 44 of the Land Registration Act (Act No. 496, as amended by R.A. No. 440): Provided, that it case of complex subdivision plans, court approval shall no longer be required. The condominium plan as likewise so approved, shall be submitted to the Register of Deeds of the province or city in which the property lies and the same shall be acted upon subject to the conditions and in accordance with the procedure prescribed in Section 4 of the Condominium Act (R.A. No. 4726).

The owner or the real estate dealer interested in the sale of lots or units, respectively, in such subdivision project or condominium project shall register the project with the Authority by filing therewith a sworn registration statement containing the following information:

(a) Name of the owner;

(b) The location of the owner’s principal business office, and if the owner is a non-resident Filipino, the name and address of his agent or representative in the Philippines is authorized to receive notice;

(c) The names and addresses of all the directors and officers of the business firm, if the owner be a corporation, association, trust, or other entity, and of all the partners, if it be a partnership;

(d) The general character of the business actually transacted or to be transacted by the owner; and

(e) A statement of the capitalization of the owner, including the authorized and outstanding amounts of its capital stock and the proportion thereof which is paid-up.

The following documents shall be attached to the registration statement:

(a) A copy of the subdivision plan or condominium plan as approved in accordance with the first and second paragraphs of this section.

(b) A copy of any circular, prospectus, brochure, advertisement, letter, or communication to be used for the public offering of the subdivision lots or condominium units;

(c) In case of a business firm, a balance sheet showing the amount and general character of its assets and liabilities and a copy of its articles of incorporation or articles of partnership or association, as the case may be, with all the amendments thereof and existing by-laws or instruments corresponding thereto.

(d) A title to the property which is free from all liens and encumbrances: Provided, however, that in case any subdivision lot or condominium unit is mortgaged, it is sufficient if the instrument of mortgage contains a stipulation that the mortgagee shall release the mortgage on any subdivision lot or condominium unit as soon as the full purchase price for the same is paid by the buyer.

The person filing the registration statement shall pay the registration fees prescribed therefor by the Authority.

Thereupon, the Authority shall immediately cause to be published a notice of the filing of the registration statement at the expense of the applicant-owner or dealer, in two newspapers general circulation, one published in English and another in Pilipino, once a week for two consecutive weeks, reciting that a registration statement for the sale of subdivision lots or condominium units has been filed in the National Housing Authority; that the aforesaid registration statement, as well as the papers attached thereto, are open to inspection during business hours by interested parties, under such regulations as the Authority may impose; and that copies thereof shall be furnished to any party upon payment of the proper fees.

The subdivision project of the condominium project shall be deemed registered upon completion of the above publication requirement. The fact of such registration shall be evidenced by a registration certificate to be issued to the applicant-owner or dealer.

Section 5. License to sell. Such owner or dealer to whom has been issued a registration certificate shall not, however, be authorized to sell any subdivision lot or condominium unit in the registered project unless he shall have first obtained a license to sell the project within two weeks from the registration of such project.

The Authority, upon proper application therefor, shall issue to such owner or dealer of a registered project a license to sell the project if, after an examination of the registration statement filed by said owner or dealer and all the pertinent documents attached thereto, he is convinced that the owner or dealer is of good repute, that his business is financially stable, and that the proposed sale of the subdivision lots or condominium units to the public would not be fraudulent.

Section 6. Performance Bond. No license to sell subdivision lots or condominium units shall be issued by the Authority under Section 5 of this Decree unless the owner or dealer shall have filed an adequate performance bond approved by said Authority to guarantee the construction and maintenance of the roads, gutters, drainage, sewerage, water system, lighting systems, and full development of the subdivision project or the condominium project and the compliance by the owner or dealer with the applicable laws and rules and regulations.

The performance bond shall be executed in favor of the Republic of the Philippines and shall authorize the Authority to use the proceeds thereof for the purposes of its undertaking in case of forfeiture as provided in this Decree.

Section 7. Exempt transactions. A license to sell and performance bond shall not be required in any of the following transactions:

(a) Sale of a subdivision lot resulting from the partition of land among co-owners and co-heirs.

(b) Sale or transfer of a subdivision lot by the original purchaser thereof and any subsequent sale of the same lot.

(c) Sale of a subdivision lot or a condominium unit by or for the account of a mortgagee in the ordinary course of business when necessary to liquidate a bona fide debt.

Section 8. Suspension of license to sell. Upon verified complaint by a buyer of a subdivision lot or a condominium unit in any interested party, the Authority may, in its discretion, immediately suspend the owner’s or dealer’s license to sell pending investigation and hearing of the case as provided in Section 13 hereof.

The Authority may motu proprio suspend the license to sell if, in its opinion, any information in the registration statement filed by the owner or dealer is or has become misleading, incorrect, inadequate or incomplete or the sale or offering for a sale of the subdivision or condominium project may work or tend to work a fraud upon prospective buyers.

The suspension order may be lifted if, after notice and hearing, the Authority is convinced that the registration statement is accurate or that any deficiency therein has been corrected or supplemented or that the sale to the public of the subdivision or condominium project will neither be fraudulent not result in fraud. It shall also be lifted upon dismissal of the complaint for lack of legal basis.

Until the final entry of an order of suspension, the suspension of the right to sell the project, though binding upon all persons notified thereof, shall be deemed confidential unless it shall appear that the order of suspension has in the meantime been violated.

Section 9. Revocation of registration certificate and license to sell. The Authority may, motu proprio or upon verified complaint filed by a buyer of a subdivision lot or condominium unit, revoke the registration of any subdivision project or condominium project and the license to sell any subdivision lot or condominium unit in said project by issuing an order to this effect, with his findings in respect thereto, if upon examination into the affairs of the owner or dealer during a hearing as provided for in Section 14 hereof, if shall appear there is satisfactory evidence that the said owner or dealer:

(a) Is insolvent; or

(b) has violated any of the provisions of this Decree or any applicable rule or regulation of the Authority, or any undertaking of his/its performance bond; or

(c) Has been or is engaged or is about to engage in fraudulent transactions; or

(d) Has made any misrepresentation in any prospectus, brochure, circular or other literature about the subdivision project or condominium project that has been distributed to prospective buyers; or

(e) Is of bad business repute; or

(f) Does not conduct his business in accordance with law or sound business principles.

Where the owner or dealer is a partnership or corporation or an unincorporated association, it shall be sufficient cause for cancellation of its registration certificate and its license to sell, if any member of such partnership or any officer or director of such corporation or association has been guilty of any act or omission which would be cause for refusing or revoking the registration of an individual dealer, broker or salesman as provided in Section 11 hereof.

Section 10. Registers of subdivision lots and condominium units. A record of subdivision lots and condominium units shall be kept in the Authority wherein shall be entered all orders of the Authority affecting the condition or status thereof. The registers of subdivision lots and condominium units shall be open to public inspection subject to such reasonable rules as the Authority may prescribe.

Title III
DEALERS, BROKERS AND SALESMEN

Section 11. Registration of dealers, brokers and salesmen. No real estate dealer, broker or salesman shall engage in the business of selling subdivision lots or condominium units unless he has registered himself with the Authority in accordance with the provisions of this section.

If the Authority shall find that the applicant is of good repute and has complied with the applicable rules of the Authority, including the payment of the prescribed fee, he shall register such applicant as a dealer, broker or salesman upon filing a bond, or other security in lieu thereof, in such sum as may be fixed by the Authority conditioned upon his faithful compliance with the provisions of this Decree: Provided, that the registration of a salesman shall cease upon the termination of his employment with a dealer or broker.

Every registration under this section shall expire on the thirty-first day of December of each year. Renewal of registration for the succeeding year shall be granted upon written application therefor made not less than thirty nor more than sixty days before the first day of the ensuing year and upon payment of the prescribed fee, without the necessity of filing further statements or information, unless specifically required by the Authority. All applications filed beyond said period shall be treated as original applications.

The names and addresses of all persons registered as dealers, brokers, or salesmen shall be recorded in a Register of Brokers, Dealers and Salesmen kept in the Authority which shall be open to public inspection.

Section 12. Revocation of registration as dealers, brokers or salesmen. Registration under the preceding section may be refused or any registration granted thereunder, revoked by the Authority if, after reasonable notice and hearing, it shall determine that such applicant or registrant:

1. Has violated any provision of this Decree or any rule or regulation made hereunder; or

2. Has made a material false statement in his application for registration; or

3. Has been guilty of a fraudulent act in connection with any sale of a subdivision lot or condominium unit; or

4. Has demonstrated his unworthiness to transact the business of dealer, broker, or salesman, as the case may be.

In case of charges against a salesman, notice thereof shall also be given the broker or dealer employing such salesman.

Pending hearing of the case, the Authority shall have the power to order the suspension of the dealer’s, broker’s, of salesman’s registration; provided, that such order shall state the cause for the suspension.

The suspension or revocation of the registration of a dealer or broker shall carry with it all the suspension or revocation of the registrations of all his salesmen.

Title IV
PROCEDURE FOR REVOCATION OF REGISTRATION CERTIFICATE

Section 13. Hearing. In the hearing for determining the existence of any ground or grounds for the suspension and/or revocation of registration certificate and license to sell as provided in Section 8 and 9 hereof, the following shall be complied with:

(a) Notice. No such hearing shall proceed unless the respondent is furnished with a copy of the complaint against him or is notified in writing of the purpose of such hearing.

(b) Venue. The hearing may be held before the officer or officers designated by the Authority on the date and place specified in the notice.

(c) Nature of proceeding. The proceedings shall be non-litigious and summary in nature without regard to legal technicalities obtaining in courts of law. The Rules of court shall not apply in said hearing except by analogy or in a suppletory character and whenever practicable and convenient.

(d) Power incidental to the hearing. For the purpose of the hearing or other proceeding under this Decree, the officer or officers designated to hear the complaint shall have the power to administer oaths, subpoena witnesses, conduct ocular inspections, take depositions, and require the production of any book, paper, correspondence, memorandum, or other record which are deemed relevant or material to the inquiry.

Section 14. Contempt.

(a) Direct contempt. The officer or officers designated by the Authority to hear the complaint may summarily adjudge in direct contempt any person guilty of misbehavior in the presence of or so near the said hearing officials as to obstruct or interrupt the proceedings before the same or of refusal to be sworn or to answer as a witness or to subscribe an affidavit or deposition when lawfully required to do so. The person found guilty of direct contempt under this section shall be punished by a fine not exceeding Fifty (P50.00) Pesos or imprisonment not exceeding five (5) days, or both.

(b) Indirect contempt. The officer or officers designated to hear the complaint may also adjudge any person in indirect contempt on grounds and in the manner prescribed in Rule 71 of the Revised Rules of Court.

Section 15. Decision. The case shall be decided within thirty (30) days from the time the same is submitted for decision. The Decision may order the revocation of the registration of the subdivision or condominium project, the suspension, cancellation, or revocation of the license to sell and/or forfeiture, in whole or in part, of the performance bond mentioned in Section 6 hereof. In case forfeiture of the bond is ordered, the Decision may direct the provincial or city engineer to undertake or cause the construction of roads and of other requirements for the subdivision or condominium as stipulated in the bond, chargeable to the amount forfeited. Such decision shall be immediately executory and shall become final after the lapse of 15 days from the date of receipt of the Decision.

Section 16. Cease and Desist Order. Whenever it shall appear to the Authority that any person is engaged or about to engage in any act or practice which constitutes or will constitute a violation of the provisions of this Decree, or of any rule or regulation thereunder, it may, upon due notice and hearing as provided in Section 13 hereof, issue a cease and desist order to enjoin such act or practices.

Section 17. Registration. All contracts to sell, deeds of sale and other similar instruments relative to the sale or conveyance of the subdivision lots and condominium units, whether or not the purchase price is paid in full, shall be registered by the seller in the Office of the Register of Deeds of the province or city where the property is situated.

Whenever a subdivision plan duly approved in accordance with Section 4 hereof, together with the corresponding owner’s duplicate certificate of title, is presented to the Register of Deeds for registration, the Register of Deeds shall register the same in accordance with the provisions of the Land Registration Act, as amended: Provided, however, that it there is a street, passageway or required open space delineated on a complex subdivision plan hereafter approved and as defined in this Decree, the Register of Deeds shall annotate on the new certificate of title covering the street, passageway or open space, a memorandum to the effect that except by way of donation in favor of a city or municipality, no portion of any street, passageway, or open space so delineated on the plan shall be closed or otherwise disposed of by the registered owner without the requisite approval as provided under Section 22 of this Decree.

Section 18. Mortgages. No mortgage on any unit or lot shall be made by the owner or developer without prior written approval of the Authority. Such approval shall not be granted unless it is shown that the proceeds of the mortgage loan shall be used for the development of the condominium or subdivision project and effective measures have been provided to ensure such utilization. The loan value of each lot or unit covered by the mortgage shall be determined and the buyer thereof, if any, shall be notified before the release of the loan. The buyer may, at his option, pay his installment for the lot or unit directly to the mortgagee who shall apply the payments to the corresponding mortgage indebtedness secured by the particular lot or unit being paid for, with a view to enabling said buyer to obtain title over the lot or unit promptly after full payment thereto;

Section 19. Advertisements. Advertisements that may be made by the owner or developer through newspaper, radio, television, leaflets, circulars or any other form about the subdivision or the condominium or its operations or activities must reflect the real facts and must be presented in such manner that will not tend to mislead or deceive the public.

The owner or developer shall answerable and liable for the facilities, improvements, infrastructures or other forms of development represented or promised in brochures, advertisements and other sales propaganda disseminated by the owner or developer or his agents and the same shall form part of the sales warranties enforceable against said owner or developer, jointly and severally. Failure to comply with these warranties shall also be punishable in accordance with the penalties provided for in this Decree.

Section 20. Time of Completion. Every owner or developer shall construct and provide the facilities, improvements, infrastructures and other forms of development, including water supply and lighting facilities, which are offered and indicated in the approved subdivision or condominium plans, brochures, prospectus, printed matters, letters or in any form of advertisement, within one year from the date of the issuance of the license for the subdivision or condominium project or such other period of time as may be fixed by the Authority.

Section 21. Sales Prior to Decree. In cases of subdivision lots or condominium units sold or disposed of prior to the effectivity of this Decree, it shall be incumbent upon the owner or developer of the subdivision or condominium project to complete compliance with his or its obligations as provided in the preceding section within two years from the date of this Decree unless otherwise extended by the Authority or unless an adequate performance bond is filed in accordance with Section 6 hereof.

Failure of the owner or developer to comply with the obligations under this and the preceding provisions shall constitute a violation punishable under Sections 38 and 39 of this Decree.

Section 22. Alteration of Plans. No owner or developer shall change or alter the roads, open spaces, infrastructures, facilities for public use and/or other form of subdivision development as contained in the approved subdivision plan and/or represented in its advertisements, without the permission of the Authority and the written conformity or consent of the duly organized homeowners association, or in the absence of the latter, by the majority of the lot buyers in the subdivision.

Section 23. Non-Forfeiture of Payments. No installment payment made by a buyer in a subdivision or condominium project for the lot or unit he contracted to buy shall be forfeited in favor of the owner or developer when the buyer, after due notice to the owner or developer, desists from further payment due to the failure of the owner or developer to develop the subdivision or condominium project according to the approved plans and within the time limit for complying with the same. Such buyer may, at his option, be reimbursed the total amount paid including amortization interests but excluding delinquency interests, with interest thereon at the legal rate.

Section 24. Failure to pay installments. The rights of the buyer in the event of this failure to pay the installments due for reasons other than the failure of the owner or developer to develop the project shall be governed by Republic Act No. 6552.

Where the transaction or contract was entered into prior to the effectivity of Republic Act No. 6552 on August 26, 1972, the defaulting buyer shall be entitled to the corresponding refund based on the installments paid after the effectivity of the law in the absence of any provision in the contract to the contrary.

Section 25. Issuance of Title. The owner or developer shall deliver the title of the lot or unit to the buyer upon full payment of the lot or unit. No fee, except those required for the registration of the deed of sale in the Registry of Deeds, shall be collected for the issuance of such title. In the event a mortgage over the lot or unit is outstanding at the time of the issuance of the title to the buyer, the owner or developer shall redeem the mortgage or the corresponding portion thereof within six months from such issuance in order that the title over any fully paid lot or unit may be secured and delivered to the buyer in accordance herewith.

Section 26. Realty Tax. Real estate tax and assessment on a lot or unit shall de paid by the owner or developer without recourse to the buyer for as long as the title has not passed the buyer; Provided, however, that if the buyer has actually taken possession of and occupied the lot or unit, he shall be liable to the owner or developer for such tax and assessment effective the year following such taking of possession and occupancy.

Section 27. Other Charges. No owner or developer shall levy upon any lot or buyer a fee for an alleged community benefit. Fees to finance services for common comfort, security and sanitation may be collected only by a properly organized homeowners association and only with the consent of a majority of the lot or unit buyers actually residing in the subdivision or condominium project.

Section 28. Access to Public Offices in the Subdivisions. No owner or developer shall deny any person free access to any government office or public establishment located within the subdivision or which may be reached only by passing through the subdivision.

Section 29. Right of Way to Public Road. The owner or developer of a subdivision without access to any existing public road or street must secure a right of way to a public road or street and such right of way must be developed and maintained according to the requirement of the government and authorities concerned.

Section 30. Organization of Homeowners Association. The owner or developer of a subdivision project or condominium project shall initiate the organization of a homeowners association among the buyers and residents of the projects for the purpose of promoting and protecting their mutual interest and assist in their community development.

Section 31. Donations of roads and open spaces to local government. The registered owner or developer of the subdivision or condominium project, upon completion of the development of said project may, at his option, convey by way of donation the roads and open spaces found within the project to the city or municipality wherein the project is located. Upon acceptance of the donation by the city or municipality concerned, no portion of the area donated shall thereafter be converted to any other purpose or purposes unless after hearing, the proposed conversion is approved by the Authority.

Section 32. Phases of Subdivision. For purposes of complying with the provisions of this Decree, the owner or developer may divide the development and sale of the subdivision into phases, each phase to cover not less than ten hectares. The requirement imposed by this Decree on the subdivision as a whole shall be deemed imposed on each phase.

Section 33. Nullity of waivers. Any condition, stipulation, or provision in contract of sale whereby any person waives compliance with any provision of this Decree or of any rule or regulation issued thereunder shall be void.

Section 34. Visitorial powers. This Authority, through its duly authorized representative may, at any time, make an examination into the business affairs, administration, and condition of any person, corporation, partnership, cooperative, or association engaged in the business of selling subdivision lots and condominium units. For this purpose, the official authorized so to do shall have the authority to examine under oath the directors, officers, stockholders or members of any corporation, partnership, association, cooperative or other persons associated or connected with the business and to issue subpoena or subpoena duces tecum in relation to any investigation that may arise therefrom.

The Authority may also authorize the Provincial, City or Municipal Engineer, as the case may be, to conduct an ocular inspection of the project to determine whether the development of said project conforms to the standards and specifications prescribed by the government.

The books, papers, letters, and other documents belonging to the person or entities herein mentioned shall be open to inspection by the Authority or its duly authorized representative.

Section 35. Take-over Development. The Authority, may take over or cause the development and completion of the subdivision or condominium project at the expenses of the owner or developer, jointly and severally, in cases where the owner or developer has refused or failed to develop or complete the development of the project as provided for in this Decree.

The Authority may, after such take-over, demand, collect and receive from the buyers the installment payments due on the lots, which shall be utilized for the development of the subdivision.

Section 36. Rules and Regulations. The Authority shall issue the necessary standards, rules and regulations for the effective implementation of the provisions of this Decree. Such standards, rules and regulations shall take effect immediately after their publication three times a week for two consecutive weeks in any newspaper of general circulation.

Section 37. Deputization of law enforcement agencies. The Authority may deputize the Philippine Constabulary or any law enforcement agency in the execution of its final orders, rulings or decisions.

Section 38. Administrative Fines. The Authority may prescribe and impose fines not exceeding ten thousand pesos for violations of the provisions of this Decree or of any rule or regulation thereunder. Fines shall be payable to the Authority and enforceable through writs of execution in accordance with the provisions of the Rules of Court.

Section 39. Penalties. Any person who shall violate any of the provisions of this Decree and/or any rule or regulation that may be issued pursuant to this Decree shall, upon conviction, be punished by a fine of not more than twenty thousand (P20,000.00) pesos and/or imprisonment of not more than ten years: Provided, That in the case of corporations, partnership, cooperatives, or associations, the President, Manager or Administrator or the person who has charge of the administration of the business shall be criminally responsible for any violation of this Decree and/or the rules and regulations promulgated pursuant thereto.

Section 40. Liability of controlling persons. Every person who directly or indirectly controls any person liable under any provision of this Decree or of any rule or regulation issued thereunder shall be liable jointly and severally with and to the same extent as such controlled person unless the controlling person acted in good faith and did not directly or indirectly induce the act or acts constituting the violation or cause of action.

Section 41. Other remedies. The rights and remedies provided in this Decree shall be in addition to any and all other rights and remedies that may be available under existing laws.

Section 42. Repealing clause. All laws, executive orders, rules and regulations or part thereof inconsistent with the provisions of this Decree are hereby repealed or modified accordingly.

Section 43. Effectivity. This Decree shall take effect upon its approval.

Done in the City of Manila, this 12th day of July, in the year of Our Lord, nineteen hundred and seventy-six.

 

 

OPEN SPACES FOR SUBDIVISIONS

 

MALACAÑANG
M a n i l a

PRESIDENTIAL DECREE No. 1216

DEFINING “OPEN SPACE” IN RESIDENTIAL SUBDIVISIONS AND AMENDING SECTION 31 OF PRESIDENTIAL DECREE NO. 957 REQUIRING SUBDIVISION OWNERS TO PROVIDE ROADS, ALLEYS, SIDEWALKS AND RESERVE OPEN SPACE FOR PARKS OR RECREATIONAL USE

WHEREAS, there is a compelling need to create and maintain a healthy environment in human settlements by providing open spaces, roads, alleys and sidewalks as may be deemed suitable to enhance the quality of life of the residents therein;

WHEREAS, such open spaces, roads, alleys and sidewalks in residential subdivision are for public use and are, therefore, beyond the commerce of men;

WHEREAS, pursuant to Presidential Decree No. 953 at least thirty percent (30%) of the total area of a subdivision must be reserved, developed and maintained as open space for parks and recreational areas, the cost of which will ultimately be borne by the lot buyers which thereby increase the acquisition price of subdivision lots beyond the reach of the common mass;

WHEREAS, thirty percent (30%) required open space can be reduced to a level that will make the subdivision industry viable and the price of residential lots within the means of the low income group and at the same time preserve the environmental and ecological balance through rational control of land use and proper design of space and facilities;

WHEREAS, pursuant to Presidential Decree No. 757, government efforts in housing, including resources, functions and activities to maximize results have been concentrated into one single agency, namely, the National Housing Authority;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by the Constitution, do hereby order and decree:

Section 1. For purposes of this Decree, the term “open space” shall mean an area reserved exclusively for parks, playgrounds, recreational uses, schools, roads, places of worship, hospitals, health centers, barangay centers and other similar facilities and amenities.

Section 2. Section 31 of Presidential Decree No. 957 is hereby amended to read as follows:

“Sec. 31. Roads, Alleys, Sidewalks and Open spaces. The owner as developer of a subdivision shall provide adequate roads, alleys and sidewalks. For subdivision projects one (1) hectare or more, the owner or developer shall reserve thirty percent (30%) of the gross area for open space. such open space shall have the following standards allocated exclusively for parks, playgrounds and recreational use:

(a) 9% of gross area for high density or social housing (66 to 100 family lot per gross hectare).

(b) 7% of gross area for medium-density or economic housing (21 to 65 family lot per gross hectare).

(c) 3.5 % of gross area low-density or open market housing (20 family lots and below per gross hectare).

These areas reserved for parks, playgrounds and recreational use shall be non-alienable public lands, and non-buildable. The plans of the subdivision project shall include tree planting on such parts of the subdivision as may be designated by the Authority.

Upon their completion as certified to by the Authority, the roads, alleys, sidewalks and playgrounds shall be donated by the owner or developer to the city or municipality and it shall be mandatory for the local governments to accept provided, however, that the parks and playgrounds may be donated to the Homeowners Association of the project with the consent of the city or municipality concerned. No portion of the parks and playgrounds donated thereafter shall be converted to any other purpose or purposes.

Section 3. Sections 2 and 5 of Presidential Decree No. 953 are hereby repealed and other laws, decrees, executive orders, institutions, rules and regulations or parts thereof inconsistent with these provisions are also repealed or amended accordingly.

Section 4. This Decree shall take effect immediately.

DONE in the City of Manila, this 14th day of October, in the year of Our Lord, nineteen hundred and seventy-seven.

 

 

CONDOMINIUM ACT

 

REPUBLIC ACT NO. 4726

AN ACT TO DEFINE CONDOMINIUM, ESTABLISH REQUIREMENTS FOR ITS CREATION, AND GOVERN ITS INCIDENTS.

Sec. 1. The short title of this Act shall be “The Condominium Act”.

Sec. 2. A condominium is an interest in real property consisting of separate interest in a unit in a residential, industrial or commercial building and an undivided interest in common, directly or indirectly, in the land on which it is located and in other common areas of the building. A condominium may include, in addition, a separate interest in other portions of such real property. Title to the common areas, including the land, or the appurtenant interests in such areas, may be held by a corporation specially formed for the purpose (hereinafter known as the “condominium corporation”) in which the holders of separate interest shall automatically be members or shareholders, to the exclusion of others, in proportion to the appurtenant interest of their respective units in the common areas.

The real right in condominium may be ownership or any other interest in real property recognized by law, on property in the Civil Code and other pertinent laws.

Sec. 3. As used in this Act, unless the context otherwise requires:

(a) “Condominium” means a condominium as defined in the next preceding section.

(b) “Unit” means a part of the condominium project intended for any type of independent use or ownership, including one or more rooms or spaces located in one or more floors (or part or parts of floors) in a building or buildings and such accessories as may be appended thereto.

(c) “Project” means the entire parcel of real property divided or to be divided in condominiums, including all structures thereon,

(d) “Common areas” means the entire project excepting all units separately granted or held or reserved.

(e) “To divide” real property means to divide the ownership thereof or other interest therein by conveying one or more condominiums therein but less than the whole thereof.

Sec. 4. The provisions of this Act shall apply to property divided or to be divided into condominiums only if there shall be recorded in the Register of Deeds of the province or city in which the property lies and duly annotated in the corresponding certificate of title of the land, if the latter had been patented or registered under either the Land Registration or Cadastral Acts, an enabling or master deed which shall contain, among others, the following:

(a) Description of the land on which the building or buildings and improvements are or are to be located;

(b) Description of the building or buildings, stating the number of stories and basements, the number of units and their accessories, if any;

(c) Description of the common areas and facilities;

(d) A statement of the exact nature of the interest acquired or to be acquired by the purchaser in the separate units and in the common areas of the condominium project. Where title to or the appurtenant interests in the common areas is or is to be held by a condominium corporation, a statement to this effect shall be included;

(e) Statement of the purposes for which the building or buildings and each of the units are intended or restricted as to use;

(f) A certificate of the registered owner of the property, if he is other than those executing the master deed, as well as of all registered holders of any lien or encumbrance on the property, that they consent to the registration of the deed;

(g) The following plans shall be appended to the deed as integral parts thereof:

(1) A survey plan of the land included in the project, unless a survey plan of the same property had previously bee filed in said office;

(2) A diagrammatic floor plan of the building or buildings in the project, in sufficient detail to identify each unit, its relative location and approximate dimensions;

(h) Any reasonable restriction not contrary to law, morals or public policy regarding the right of any condominium owner to alienate or dispose of his condominium.

The enabling or master deed may be amended or revoked upon registration of an instrument executed by the registered owner or owners of the property and consented to by all registered holders of any lien or encumbrance on the land or building or portion thereof. The term “registered owner” shall include the registered owners of condominiums in the project. Until registration of a revocation, the provisions of this Act shall continue to apply to such property.

Sec. 5. Any transfer or conveyance of a unit or an apartment, office or store or other space therein, shall include the transfer or conveyance of the undivided interests in the common areas or, in a proper case, the membership or shareholdings in the condominium corporation: Providedhowever, That where the common areas in the condominium project are owned by the owners of separate units as co-owners thereof, no condominium unit therein shall be conveyed or transferred to persons other than Filipino citizens, or corporations at least sixty percent of the capital stock of which belong to Filipino citizens, except in cases of hereditary succession. Where the common areas in a condominium project are held by a corporation, no transfer or conveyance of a unit shall be valid if the concomitant transfer of the appurtenant membership or stockholding in the corporation will cause the alien interest in such corporation to exceed the limits imposed by existing laws.

Sec. 6. Unless otherwise expressly provided in the enabling or master deed or the declaration of restrictions, the incidents of a condominium grant are as follows:

(a) The boundary of the unit granted are the interior surfaces of the perimeter walls, floors, ceilings, windows and doors thereof. The following are not part of the unit bearing walls, columns, floors, roofs, foundations and other common structural elements of the building; lobbies, stairways, hallways, and other areas of common use, elevator equipment and shafts, central heating, central refrigeration and central air-conditioning equipment, reservoirs, tanks, pumps and other central services and facilities, pipes, ducts, flues, chutes, conduits, wires and other utility installations, wherever located, except the outlets thereof when located within the unit.

(b) There shall pass with the unit, as an appurtenance thereof, an exclusive easement for the use of the air space encompassed by the boundaries of the unit as it exists at any particular time and as the unit may lawfully be altered or reconstructed from time to time. Such easement shall be automatically terminated in any air space upon destruction of the unit as to render it untenantable.

(c) Unless otherwise, provided, the common areas are held in common by the holders of units, in equal shares, one for each unit.

(d) A non-exclusive easement for ingress, egress and support through the common areas is appurtenant to each unit and the common areas are subject to such easements.

(e) Each condominium owner shall have the exclusive right to paint, repaint, tile, wax, paper or otherwise refinish and decorate the inner surfaces of the walls, ceilings, floors, windows and doors bounding his own unit.

(f) Each condominium owner shall have the exclusive right to mortgage, pledge or encumber his condominium and to have the same appraised independently of the other condominiums but any obligation incurred by such condominium owner is personal to him.

(g) Each condominium owner has also the absolute right to sell or dispose of his condominium unless the master deed contains a requirement that the property be first offered to the condominium owners within a reasonable period of time before the same is offered to outside parties;

Sec. 7. Except as provided in the following section, the common areas shall remain undivided, and there shall be no judicial partition thereof.

Sec. 8. Where several persons own condominiums in a condominium project, an action may be brought by one or more such persons for partition thereof by sale of the entire project, as if the owners of all of the condominiums in such project were co-owners of the entire project in the same proportion as their interests in the common areas: Providedhowever, That a partition shall be made only upon a showing:

(a) That three years after damage or destruction to the project which renders material part thereof unit for its use prior thereto, the project has not been rebuilt or repaired substantially to its state prior to its damage or destruction, or

(b) That damage or destruction to the project has rendered one-half or more of the units therein untenantable and that condominium owners holding in aggregate more than thirty percent interest in the common areas are opposed to repair or restoration of the project; or

(c) That the project has been in existence in excess of fifty years, that it is obsolete and uneconomic, and that condominium owners holding in aggregate more than fifty percent interest in the common areas are opposed to repair or restoration or remodeling or modernizing of the project; or

(d) That the project or a material part thereof has been condemned or expropriated and that the project is no longer viable, or that the condominium owners holding in aggregate more than seventy percent interest in the common areas are opposed to continuation of the condominium regime after expropriation or condemnation of a material portion thereof; or

(e) That the conditions for such partition by sale set forth in the declaration of restrictions, duly registered in accordance with the terms of this Act, have been met.

Sec. 9. The owner of a project shall, prior to the conveyance of any condominium therein, register a declaration of restrictions relating to such project, which restrictions shall constitute a lien upon each condominium in the project, and shall insure to and bind all condominium owners in the project. Such liens, unless otherwise provided, may be enforced by any condominium owner in the project or by the management body of such project. The Register of Deeds shall enter and annotate the declaration of restrictions upon the certificate of title covering the land included within the project, if the land is patented or registered under the Land Registration or Cadastral Acts.

The declaration of restrictions shall provide for the management of the project by anyone of the following management bodies: a condominium corporation, an association of the condominium owners, a board of governors elected by condominium owners, or a management agent elected by the owners or by the board named in the declaration. It shall also provide for voting majorities quorums, notices, meeting date, and other rules governing such body or bodies.

Such declaration of restrictions, among other things, may also provide:

(a) As to any such management body;

(1) For the powers thereof, including power to enforce the provisions of the declarations of restrictions;

(2) For maintenance of insurance policies, insuring condominium owners against loss by fire, casualty, liability, workmen’s compensation and other insurable risks, and for bonding of the members of any management body;

(3) Provisions for maintenance, utility, gardening and other services benefiting the common areas, for the employment of personnel necessary for the operation of the building, and legal, accounting and other professional and technical services;

(4) For purchase of materials, supplies and the like needed by the common areas;

(5) For payment of taxes and special assessments which would be a lien upon the entire project or common areas, and for discharge of any lien or encumbrance levied against the entire project or the common areas;

(6) For reconstruction of any portion or portions of any damage to or destruction of the project;

(7) The manner for delegation of its powers;

(8) For entry by its officers and agents into any unit when necessary in connection with the maintenance or construction for which such body is responsible;

(9) For a power of attorney to the management body to sell the entire project for the benefit of all of the owners thereof when partition of the project may be authorized under Section 8 of this Act, which said power shall be binding upon all of the condominium owners regardless of whether they assume the obligations of the restrictions or not.

(b) The manner and procedure for amending such restrictions: Provided, That the vote of not less than a majority in interest of the owners is obtained.

(c) For independent audit of the accounts of the management body;

(d) For reasonable assessments to meet authorized expenditures, each condominium unit to be assessed separately for its share of such expenses in proportion (unless otherwise provided) to its owners fractional interest in any common areas;

(e) For the subordination of the liens securing such assessments to other liens either generally or specifically described;

(f) For conditions, other than those provided for in Sections eight and thirteen of this Act, upon which partition of the project and dissolution of the condominium corporation may be made. Such right to partition or dissolution may be conditioned upon failure of the condominium owners to rebuild within a certain period or upon specified inadequacy of insurance proceeds, or upon specified percentage of damage to the building, or upon a decision of an arbitrator, or upon any other reasonable condition.

Sec. 10. Whenever the common areas in a condominium project are held by a condominium corporation, such corporation shall constitute the management body of the project. The corporate purposes of such a corporation shall be limited to the holding of the common areas, either in ownership or any other interest in real property recognized by law, to the management of the project, and to such other purposes as may be necessary, incidental or convenient to the accomplishment of said purposes. The articles of incorporation or by-laws of the corporation shall not contain any provision contrary to or inconsistent with the provisions of this Act, the enabling or master deed, or the declaration of restrictions of the project. Membership in a condominium corporation, regardless of whether it is a stock or non-stock corporation, shall not be transferable separately from the condominium unit of which it is an appurtenance. When a member or stockholder ceases to own a unit in the project in which the condominium corporation owns or holds the common areas, he shall automatically cease to be a member or stockholder of the condominium corporation.

Sec. 11. The term of a condominium corporation shall be co-terminus with the duration of the condominium project, the provisions of the Corporation Law to the contrary notwithstanding.

Sec. 12. In case of involuntary dissolution of a condominium corporation for any of the causes provided by law, the common areas owned or held by the corporation shall, by way of liquidation, be transferred pro-indiviso and in proportion to their interest in the corporation to the members or stockholders thereof, subject to the superior rights of the corporation creditors. Such transfer or conveyance shall be deemed to be a full liquidation of the interest of such members or stockholders in the corporation. After such transfer or conveyance, the provisions of this Act governing undivided co-ownership of, or undivided interest in, the common areas in condominium projects shall fully apply.

Sec. 13. Until the enabling or the master deed of the project in which the condominium corporation owns or holds the common area is revoked, the corporation shall not be voluntarily dissolved through an action for dissolution under Rule 104 of the Rules of Court except upon a showing:

(a) That three years after damage or destruction to the project in which the corporation owns or holds the common areas, which damage or destruction renders a material part thereof unfit for its use prior thereto, the project has not been rebuilt or repaired substantially to its state prior to its damage or destruction; or

(b) That damage or destruction to the project has rendered one-half or more of the units therein untenantable and that more than thirty percent of the members of the corporation, if non-stock, or the shareholders representing more than thirty percent of the capital stock entitled to vote, if a stock corporation, are opposed to the repair or reconstruction of the project, or

(c) That the project has been in existence in excess of fifty years, that it is obsolete and uneconomical, and that more than fifty percent of the members of the corporation, if non-stock, or the stockholders representing more than fifty percent of the capital stock entitled to vote, if a stock corporation, are opposed to the repair or restoration or remodeling or modernizing of the project; or

(d) That the project or a material part thereof has been condemned or expropriated and that the project is no longer viable, or that the members holding in aggregate more than seventy percent interest in the corporation, if non-stock, or the stockholders representing more than seventy percent of the capital stock entitled to vote, if a stock corporation, are opposed to the continuation of the condominium regime after expropriation or condemnation of a material portion thereof; or

(e) That the conditions for such a dissolution set forth in the declaration of restrictions of the project in which the corporation owns of holds the common areas, have been met.

Sec. 14. The condominium corporation may also be dissolved by the affirmative vote of all the stockholders or members thereof at a general or special meeting duly called for the purpose: Provided, That all the requirements of Section sixty-two of the Corporation Law are complied with.

Sec. 15. Unless otherwise provided for in the declaration of restrictions upon voluntary dissolution of a condominium corporation in accordance with the provisions of Sections thirteen and fourteen of this Act, the corporation shall be deemed to hold a power of attorney from all the members or stockholders to sell and dispose of their separate interests in the project and liquidation of the corporation shall be effected by a sale of the entire project as if the corporation owned the whole thereof, subject to the rights of the corporate and of individual condominium creditors.

Sec. 16. A condominium corporation shall not, during its existence, sell, exchange, lease or otherwise dispose of the common areas owned or held by it in the condominium project unless authorized by the affirmative vote of all the stockholders or members.

Sec. 17. Any provision of the Corporation Law to the contrary notwithstanding, the by-laws of a condominium corporation shall provide that a stockholder or member shall not be entitled to demand payment of his shares or interest in those cases where such right is granted under the Corporation Law unless he consents to sell his separate interest in the project to the corporation or to any purchaser of the corporation’s choice who shall also buy from the corporation the dissenting member or stockholder’s interest. In case of disagreement as to price, the procedure set forth in the appropriate provision of the Corporation Law for valuation of shares shall be followed. The corporation shall have two years within which to pay for the shares or furnish a purchaser of its choice from the time of award. All expenses incurred in the liquidation of the interest of the dissenting member or stockholder shall be borne by him.

Sec. 18. Upon registration of an instrument conveying a condominium, the Register of Deeds shall, upon payment of the proper fees, enter and annotate the conveyance on the certificate of title covering the land included within the project and the transferee shall be entitled to the issuance of a “condominium owner’s” copy of the pertinent portion of such certificate of title. Said “condominium owner’s” copy need not reproduce the ownership status or series of transactions in force or annotated with respect to other condominiums in the project. A copy of the description of the land, a brief description of the condominium conveyed, name and personal circumstances of the condominium owner would be sufficient for purposes of the “condominium owner’s” copy of the certificate of title. No conveyance of condominiums or part thereof, subsequent to the original conveyance thereof from the owner of the project, shall be registered unless accompanied by a certificate of the management body of the project that such conveyance is in accordance with the provisions of the declaration of restrictions of such project.

In cases of condominium projects registered under the provisions of the Spanish Mortgage Law or Act 3344, as amended, the registration of the deed of conveyance of a condominium shall be sufficient if the Register of Deeds shall keep the original or signed copy thereof, together with the certificate of the management body of the project, and return a copy of the deed of conveyance to the condominium owner duly acknowledge and stamped by the Register of Deeds in the same manner as in the case of registration of conveyances of real property under said laws.

Sec. 19. Where the enabling or master deed provides that the land included within a condominium project are to be owned in common by the condominium owners therein, the Register of Deeds may, at the request of all the condominium owners and upon surrender of all their “condominium owner’s” copies, cancel the certificates of title of the property and issue a new one in the name of said condominium owners as pro-indiviso co-owners thereof.

Sec. 20. An assessment upon any condominium made in accordance with a duly registered declaration of restrictions shall be an obligation of the owner thereof at the time the assessment is made. The amount of any such assessment plus any other charges thereon, such as interest, costs (including attorney’s fees) and penalties, as such may be provided for in the declaration of restrictions, shall be and become a lien upon the condominium assessed when the management body causes a notice of assessment to be registered with the Register of Deeds of the city or province where such condominium project is located. The notice shall state the amount of such assessment and such other charges thereon a may be authorized by the declaration of restrictions, a description of the condominium, unit against which same has been assessed, and the name of the registered owner thereof. Such notice shall be signed by an authorized representative of the management body or as otherwise provided in the declaration of restrictions. Upon payment of said assessment and charges or other satisfaction thereof, the management body shall cause to be registered a release of the lien.

Such lien shall be superior to all other liens registered subsequent to the registration of said notice of assessment except real property tax liens and except that the declaration of restrictions may provide for the subordination thereof to any other liens and encumbrances.

Such liens may be enforced in the same manner provided for by law for the judicial or extra-judicial foreclosure of mortgages of real property. Unless otherwise provided for in the declaration of restrictions, the management body shall have power to bid at foreclosure sale. The condominium owner shall have the same right of redemption as in cases of judicial or extra-judicial foreclosure of mortgages.

Sec. 21. No labor performed or services or materials furnished with the consent of or at the request of a condominium owner or his agent or his contractor or subcontractor, shall be the basis of a lien against the condominium of any other condominium owner, unless such other owners have expressly consented to or requested the performance of such labor or furnishing of such materials or services. Such express consent shall be deemed to have been given by the owner of any condominium in the case of emergency repairs of his condominium unit. Labor performed or services or materials furnished for the common areas, if duly authorized by the management body provided for in a declaration of restrictions governing the property, shall be deemed to be performed or furnished with the express consent of each condominium owner. The owner of any condominium may remove his condominium from a lien against two or more condominiums or any part thereof by payment to the holder of the lien of the fraction of the total sum secured by such lien which is attributable to his condominium unit.

Sec. 22. Unless otherwise provided for by the declaration of restrictions, the management body, provided for herein, may acquire and hold, for the benefit of the condominium owners, tangible and intangible personal property and may dispose of the same by sale or otherwise; and the beneficial interest in such personal property shall be owned by the condominium owners in the same proportion as their respective interests in the common areas. A transfer of a condominium shall transfer to the transferee ownership of the transferor’s beneficial interest in such personal property.

Sec. 23. Where, in an action for partition of a condominium project or for the dissolution of condominium corporation on the ground that the project or a material part thereof has been condemned or expropriated, the Court finds that the conditions provided for in this Act or in the declaration of restrictions have not been met, the Court may decree a reorganization of the project, declaring which portion or portions of the project shall continue as a condominium project, the owners thereof, and the respective rights of said remaining owners and the just compensation, if any, that a condominium owner may be entitled to due to deprivation of his property. Upon receipt of a copy of the decree, the Register of Deeds shall enter and annotate the same on the pertinent certificate of title.

Sec. 24. Any deed, declaration or plan for a condominium project shall be liberally construed to facilitate the operation of the project, and its provisions shall be presumed to be independent and severable.

Sec. 25. Whenever real property has been divided into condominiums, each condominium separately owned shall be separately assessed, for purposes of real property taxation and other tax purposes to the owners thereof and the tax on each such condominium shall constitute a lien solely thereon.

Sec. 26. All Acts or parts of Acts in conflict or inconsistent with this Act are hereby amended insofar as condominium and its incidents are concerned.

Sec. 27. This Act shall take effect upon its approval.

Approved: June 18, 1966

 

 

 

REALTY INSTALLMENT BUYER ACT/ MACEDA LAW

 

REPUBLIC ACT No. 6552

AN ACT TO PROVIDE PROTECTION TO BUYERS OF REAL ESTATE ON INSTALLMENT PAYMENTS. (Rep. Act No. 6552)

Section 1. This Act shall be known as the “Realty Installment Buyer Act.”

Section 2. It is hereby declared a public policy to protect buyers of real estate on installment payments against onerous and oppressive conditions.

Section 3. In all transactions or contracts involving the sale or financing of real estate on installment payments, including residential condominium apartments but excluding industrial lots, commercial buildings and sales to tenants under Republic Act Numbered Thirty-eight hundred forty-four, as amended by Republic Act Numbered Sixty-three hundred eighty-nine, where the buyer has paid at least two years of installments, the buyer is entitled to the following rights in case he defaults in the payment of succeeding installments:

(a) To pay, without additional interest, the unpaid installments due within the total grace period earned by him which is hereby fixed at the rate of one month grace period for every one year of installment payments made: Provided, That this right shall be exercised by the buyer only once in every five years of the life of the contract and its extensions, if any.

(b) If the contract is canceled, the seller shall refund to the buyer the cash surrender value of the payments on the property equivalent to fifty per cent of the total payments made, and, after five years of installments, an additional five per cent every year but not to exceed ninety per cent of the total payments made: Provided, That the actual cancellation of the contract shall take place after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act and upon full payment of the cash surrender value to the buyer.

Down payments, deposits or options on the contract shall be included in the computation of the total number of installment payments made.

Section 4. In case where less than two years of installments were paid, the seller shall give the buyer a grace period of not less than sixty days from the date the installment became due.

If the buyer fails to pay the installments due at the expiration of the grace period, the seller may cancel the contract after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act.

Section 5. Under Section 3 and 4, the buyer shall have the right to sell his rights or assign the same to another person or to reinstate the contract by updating the account during the grace period and before actual cancellation of the contract. The deed of sale or assignment shall be done by notarial act.

Section 6. The buyer shall have the right to pay in advance any installment or the full unpaid balance of the purchase price any time without interest and to have such full payment of the purchase price annotated in the certificate of title covering the property.

Section 7. Any stipulation in any contract hereafter entered into contrary to the provisions of Sections 3, 4, 5 and 6, shall be null and void.

Section 8. If any provision of this Act is held invalid or unconstitutional, no other provision shall be affected thereby.

Section 9. This Act shall take effect upon its approval.

Approved: August 26, 1972.

 

 

 

MAGNA CARTA FOR HOMEOWNERS & HOMEOWNERS’ ASSOCIATIONS

 

REPUBLIC ACT NO. 9904

AN ACT PROVIDING FOR A MAGNA CARTA FOR HOMEOWNERS AND HOMEOWNERS’ ASSOCIATIONS, AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

CHAPTER I
TITLE AND DECLARATION OF POLICY

Section 1. Title. – This Act shall be known as the “Magna Carta for Homeowners and Homeowners’ Associations”.

Section 2. Declaration of Policy. – In fulfillment of the constitutional principles directing the State to encourage, promote and respect nongovernmental, community – based and people’s organizations in serving their legitimate collective interests in our participatory democracy, it is hereby declared the policy of the State to uphold the rights of the people to form unions, associations, or societies, and to recognize and promote the rights and the roles of homeowners as individuals and as members of the society and of homeowners’ associations. To this end, the State shall endeavor to make available resources and assistance that will help them fulfill their roles In serving the needs and interests of their communities, in complementing the efforts of local government units (LGUs) in providing vital and basic services to our citizens, and in helping implement local and national government policies, programs, rules and ordinances for the development of the nation.

Section 3. Definition of Terms. – For purposes of this Act, the following terms shall mean:

(a) “Accounting period” refers to the fiscal or calendar year adopted by a homeowners’ association in the recording and reporting of its fiscal transactions.

(b) “Association” refers to the homeowners’ association which is a nonstick, nonprofit corporation registered with the Housing and Land Use Regulatory Board (HLURB), or one previously registered with the Home Insurance Guarantee Corporation (now Home Guaranty Corporation) or the Securities and Exchange Commission (SEC), organized by owners or purchasers of a lot in a subdivision/village or other residential real property located within the jurisdiction of the association; or awardees, usufructuaries, legal occupants and/or lessees of a housing unit and/or lot in a government socialized or economic housing or relocation project and other urban estates; or underprivileged and homeless citizens as defined under existing laws in the process of being accredited as usufructuaries or awardees of ownership rights under the Community Mortgage Program (CMP), Land Tenure Assistance Program (LTAP) and other similar programs in relation to a socialized housing project actually being Implemented by the national government or the LGU.

(c) “Association member” refers to a homeowner who is a member of the association where his/her housing unit or lot is situated and those defined in the articles of incorporation and bylaws of the association.

(d) “Basic community services and facilities” refer to services and facilities that redound to the benefit of all homeowners and from which, by reason of practicality, no homeowner may be excluded such as, but not limited to: security; street and vicinity lights; maintenance, repairs and cleaning of streets; garbage collection and disposal; and other similar services and facilities.

(e) “Board” refers to the board of directors or trustees of the association which has primary authority to manage the affairs of the association.

(f) “Common areas” refer to property owned or otherwise maintained, repaired or administered in whole or in part by the association including, but not limited to, roads, parks, playgrounds and open spaces as provided in Presidential Decree No. 1216.

(g) “Common expense” refers to costs incurred by the association to exercise any of the powers provided for in this Act.

(h) “Economic housing” refers to a type of housing project with lower interest rates and longer amortization periods provided to moderately low – income families, as defined under existing laws, rules and regulations.

(i) “Governing document” refers to the articles of incorporation, bylaws, conditions, rules and regulations of the association, or other written instrument by which the association has the authority to exercise any of the powers provided for in this Act.

(j) “Homeowner” refers to any of the following;

(1) An owner or purchaser of a lot in a subdivision/village;

(2) An awardee, usufructuary, or legal occupant of a unit, house and/or lot in a government socialized or economic housing or relocation project and other urban estates; or

(3) An informal settler in the process of being accredited as beneficiary or awardee of ownership rights under the CMP, LTAP, and other similar programs.

(k) “Residential real property” refers to any real property, the use of which is limited by law to primarily residential purposes.

(l) “Simple majority” refers to fifty percent (50%) plus one (1) of the total number of association members.

(m) “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 other benefits in accordance with the provisions of Republic Act No. 7279, otherwise known as the Urban Development and Housing Act of 1992 (UDHA).

(n) “Subdivision/Village” refers to a tract or parcel of land partitioned into individual lots, with or without improvements thereon, primarily for residential purposes.

Section 4. Registration with the HLURB. – Every association of homeowners shall be required to register with the HLURB. This registration shall serve to grant juridical personality to all such associations that have not previously acquired the same by operation of the General Corporation Law or by any other general law.

The procedure for registration shall be specifically provided for in the implementing rules and regulations to be promulgated by the HLURB pursuant to Section 28 of this Act.1avvphi1 Such procedure shall provide for an adjudicatory mechanism that will be observed in the event there is a dispute involving two (2) or more associations established within the same subdivision/village), community/area, or housing project seeking registration. In resolving this type of dispute, the HLURB shall take into account the date each association was legally established, the date of submission of its application for registration, the number of members, and other similar factors.

The existence of associations previously registered with the Home Insurance Guarantee Corporation or the SEC shall be respected, and the said associations shall not be charged a penalty when they register with the HLURB after this Act takes effect.

CHAPTER II
HOMEOWNERS

Section 5. Rights and Duties of Every Homeowner. – Every homeowner has the right to enjoy the basic community services and facilities: Provided, That he/she pays the necessary fees and other pertinent charges.

Section 6. Qualification of a Member. – A homeowner as defined under this Act shall be qualified to be a member of an association: Provided, however, That a lessee, usufructuary, or legal occupant shall have the right of a homeowner as set forth under this Act upon procurement of a written consent or authorization from the owner of the lot or housing unit.

Until such consent or authorization is revoked in writing, the owner of the lot or housing unit is deemed to have waived his/her rights enumerated under Section 7 of this Act, except subsection (b) of the same section which can be simultaneously enjoyed by both the owner and the lessee.

For purposes of this Act, the lessee authorized in accordance with this sect shall qualify as a member with all the rights enumerated in this Act, including the duties and obligations enumerated under Sections 7, 8 and 9 hereof: Provided, further, That lessees in government socialized housing projects or urban estates and those in communities of underprivileged and homeless citizens covered under the term under Section 3 of this Act will be considered as homeowners for the purpose of qualifying as a member of a homeowners’ association without need of such written consent or authorization.

Section 7. Rights of a Member. – An association member has full rights:

(a) to avail of and enjoy all basic community services and the use of common areas and facilities;

(b) to inspect association books and records during office hours and to be provided upon request with annual reports, including financial statements;

(c) to participate, vote and be eligible for any elective or appointive office of the association subject to the qualifications as provided for in the bylaws;

(d) to demand and promptly receive deposits required by the association as soon as the condition for the deposit has been complied with or the period has expired;

(e) to participate in association meetings, elections and referenda, as long as his/her bona fide membership subsists; and

(f) to enjoy all other rights as may be provided for in the association bylaws.

Section 8. Duties of a Member. – A member shall have the following duties:

(a) to pay membership fees, dues and special assessments;

(b) to attend meetings of the association; and

(c) to support and participate In projects and activities of the association.

Section 9. Delinquent Member. – The bylaws shall provide for guidelines and procedures in determining who is a delinquent member, or a member not in good standing, and to prescribe the administrative sanctions to be imposed on such member. The right to due process shall be observed in cases where administrative sanctions are imposed on a delinquent member.

CHAPTER III
HOMEOWNERS’ ASSOCIATION

Section 10. Rights and Powers of the Association. – An association shall have the following rights and shall exercise the following powers:

(a) Subject to consultation and with the approval of a simple majority of the members, adopt and amend the articles of incorporation and bylaws, 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, tranquility, internal security, and safety and traffic order: Provided, That: (1) 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;

(I) 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 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 tranquility 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 bylaws, 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 bylaws and the HLURB necessary for the governance and operation of the association.

Section 11. Board of Directors or Trustees. – The bylaws of the association shall provide for the qualifications and number of the directors or trustees that will comprise the board.

Section 12. Duties and Responsibilities of the Board. In addition to the duties and responsibilities stated in the bylaws of the association, the board shall have the following duties and responsibilities:

(a) Regularly maintain an accounting system using generally accepted accounting principles, and keep books of accounts, which shall be open for inspection to any homeowner and duly authorized representatives of government agencies upon request, during reasonable hours, on business days;

(b) Collect the fees, dues and assessments that may be provided for in the bylaws and approved by a majority of the members;

(c) Collect reasonable charges for assessments, and after due notice and hearing by the board in accordance with the procedures as provided in the bylaws, and rules and regulations adopted by the board, charge reasonable fines for late payments and for violation of the bylaws, rules, and regulations of the association, in accordance with a previously established schedule adopted by the board and furnished to the homeowners;

(d) Propose measures to raise funds and the utilization of such funds and submit the same for consideration of the members of the association;

(e) Undergo a free orientation by the HLURB or any other competent agency deputized by it on how to conduct meetings, preparation of minutes, handling of accounts, laws and pertinent rules and regulations within thirty (30) days after election or appointment;

(f) Discharge the duties and responsibilities provided for in the association’s bylaws; and

(g) Exercise such other powers as may be necessary and proper in accordance with this Act and for the accomplishment of the purposes for which the association was organized.

The board shall act in all instances on behalf of the association, except to amend the articles of incorporation, to dissolve the association, to elect members of the board or to determine the qualifications, powers and duties, or terms of office of the board, and other instances that require the vote or approval of the members themselves. In the performance of their duties, the officers and members of the board shall exercise the degree of care and loyalty required by such position.

Section 13. Removal of a Director or Trustee. – Through a signed petition of a simple majority of the association members in good standing, subject to a verification and validation by the HLURB, a director/trustee may be removed for causes provided in the bylaws of the association: Provided, That if a majority of the members of the board is removed, it shall be considered a dissolution of the entire board, in which case, Section 14 hereof shall govern.

Within sixty (60) days after the removal of a director or trustee, an election shall be called by the remainder of the board for the purpose of determining who shall hold office for the unexpired term of the removed director/trustee.

Section 14. Dissolution of the Board. – Through a signed petition of two – thirds (2/3) of the association members subject to a verification and validation by the HLURB, the board of the association may be dissolved for causes provided in the bylaws of the association.

Within sixty (60) days from the above dissolution, an election for a new board shall be called and conducted by the HLURB for the purpose of determining who shall hold office for the unexpired term of the dissolved board.

Until the new board members shall have been elected and qualified, the HLURB shall designate an interim board: Provided, That such board shall be composed of association members in good standing: Provided, further, That such interim board members shall not be eligible to run in the election called for the purpose of replacing the members of the dissolved board.

Section 15. Association Bylaws. – The bylaws of the association shall be adopted by a simple majority of the members of the association. Consistent with the provisions of this Act, it shall provide for:

(a) The rights, duties and obligations of members;

(b) The circumstances under which membership is acquired, maintained, and lost;

(c) The schedule, venue, and manner of conducting the regular, special, and emergency meetings of the general membership, the required quorum, and allowable proxies in such meetings;

(d) The number, qualifications, powers and duties, terms of office, manner of electing and removing the board and the filling of vacancies in the board: Provided, That the term of office of the members of the board shall not exceed two (2) years;

(e) The qualifications, positions, duties, election or appointment, and compensation of other officers and employees of the association: Provided, That the term of office of the other officers shall not exceed two (2) years: Provided, further, That no officer of the association holding a rank of director or trustee shall likewise be entitled to any compensation;

(f) The schedule, venue, and manner of conducting the regular, special, and emergency meetings of the board, the required quorum, and allowable proxies in such meetings;

(g) Such powers that the board may delegate to a managing agent, if any, or to other persons;

(h) Which of its officers may prepare, execute, certify and record amendments to the governing documents on behalf of the association;

(i) The grounds and procedure for removal of director or trustee, and the manner of filling up vacancies in the board, consistent with Section 13 of this Act;

(j) The grounds and procedure for dissolution of the board, and the manner of reconstituting the board, consistent with Sections 13 and 14 of this Act;

(k) The actions for limiting, broadening or denying the right to vote, and the extent thereof;

(I) The designation of the presiding officer at meetings of directors or trustees and members;

(m) The time for holding the regular election of directors or trustees and the mode or manner of giving notice thereof;

(n) The creation of election, grievance and audit committees, and such other committees which the association may deem necessary; as well as a conciliation or mediation mechanism for the amicable settlement of disputes among members, directors or trustees, officers and committee members of the association;

(o) The dues, fees, and special assessments to be imposed on a regular basis, and the manner in which the same may be imposed and/or increased;

(p) The method of adopting, amending, repealing and abrogating the bylaws;

(q) The list of acts constituting a violation by its officers and the corresponding penalties therefor;

(r) The penalties for violation of the bylaws; and

(s) Such other matters necessary for the proper or convenient transaction of its corporate business and affairs.

Section 16. Proxies. – Association members may vote in person or by proxy in all meetings of members. Proxies shall be in writing, signed by the member and filed before the scheduled meeting with the association secretary. Unless otherwise provided in the proxy, it shall be valid only for the meeting for which it is intended, No proxy shall be valid and effective for a period longer than three (3) years at anyone time unless earlier revoked by the member.

Section 17. Financial and Other Records. – The homeowners’ association is enjoined to observe the following, with regard to its funds, financial and other records:

(a) The association or its managing agent shall keep financial and other records sufficiently detailed to enable the association to fully declare to each member the true statement of its financial status. All financial and other records of the association including, but not limited to, checks, bank records and invoices, in whatever form these are kept, are the property of the association. Each association’s managing agent shall turn over all original books and records to the association immediately upon termination of the management relationship with the association, or upon such other demand as is made by the board. An association’s managing agent is entitled to keep association records. All records which the managing agent has turned over to the association shall be made reasonably available for the examination and copying by the managing agent;

(b) All records involving the affairs of the association shall be available for examination by all owners, holders of mortgages on the lots, and their respective authorized agents upon reasonable advanced notice, during normal working hours at the office of the association: Provided, That holders of mortgages on lots may have access to the information about the property held in mortgage with the written consent of the registered owner;

(c) A financial statement of the association shall be prepared annually by an auditor, the treasurer and/or an independent certified public accountant within ninety (90) days from the end of the accounting period to be posted in the association office, bulletin boards, or other conspicuous places within the subdivision/village, and to be submitted to the HLURB; and

(d) The funds of the association shall be kept in accounts in the name of the association and shall not be joined with the funds of any other association, or any person responsible for the custody of such funds.

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 and 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 III providing such basic services, association dues and income derived from rentals of their 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.

LGUs shall, upon due notice, hold public consultations with the members of the affected associations, especially their officers and directors, where proposed rules, zoning and other ordinances, projects and/or programs affecting their jurisdiction and surrounding vicinity are to be implemented prior to the effectivity or implementation of such rules, zoning, ordinances, projects or programs: Provided, That in cases of zonal reclassification, the approval of a simple majority of homeowners shall be required.

Such public consultations shall conform to the manner as specified in Rule XI, Article 54 of the implementing rules and regulations of Republic Act No. 7160, otherwise known as the Local Government Code of 1991.

Section 19. Relationship with National Government Agencies. – The associations shall complement, support and strengthen the efforts of the national government agencies in providing vital services to their members and help implement the national government policies and programs.

Associations are encouraged to actively cooperate with national government agencies in the furtherance of their common goals and activities for the benefit of the residents of the subdivisions and its environs. National government agencies shall consult the associations where proposed rules, projects and/or programs may affect their welfare.

CHAPTER IV
DUTIES AND RESPONSlBILlTIES OF THE HLURB

Section 20. Duties and Responsibilities of the HLURB. – In addition to the powers, authorities and responsibilities vested in it by Republic Act No. 8763, Presidential Decree No. 902 – A, Batas Pambansa Big. 68 and Executive Order No. 535, Series of 1981, as amended, the HLURB shall:

(a) Regularly conduct free orientation for officers of homeowners’ associations or deputize another competent agency to conduct the orientation;

(b) Formulate and publish a Code of Ethics and Ethical Standards for board members detailing prohibited conflicts of interest;

(c) Register all associations, federations, confederations or umbrella organizations of the associations;

(d) Hear and decide inter – association and/or inter – association controversies and/or conflicts, without prejudice to filing civil and criminal cases by the parties concerned before the regular courts: Provided, That all decisions of the HLURB are appealable directly to the Court of Appeals;

(e) Formulate the rules or manner of verification and validation of petitions for the removal of director(s) or trustee(s) of the association or dissolution of the board pursuant to Sections 13 and 14 of this Act;

(f) Exercise the same powers over federations, confederations or umbrella organizations of the associations;

(g) Formulate, in consultation with the representatives of associations, federations, confederations or umbrella organizations of the associations, standard nomenclatures to be used for the associations’ books of accounts, and a standard articles of incorporation and bylaws for homeowners’ association for reference purposes;

(h) Formulate, in consultation with the representatives of associations, federations, confederations or umbrella organizations of the associations, the guidelines in regulating the kinds of contributions and fees that may be charged and/or collected by associations; and

(i) Call upon the Philippine National Police, other law enforcement agencies, and other instrumentalities of the government, if necessary, for the enforcement of its functions.

Section 21. Additional Positions and Personnel for the HLURB. – For purposes of this Act, the HLURB shall, upon its discretion, create positions and enlist additional personnel to carry out its mandate.

CHAPTER V
FINAL PROVISIONS

Section 22. Prohibited Acts. – It shall be prohibited for any person:

(a) To compel a homeowner to join the association, without prejudice to the provisions of the deed of restrictions, its extensions or renewals as approved by the majority vote of the members or as annotated on the title of the property; the contract for the purchase of a lot in the subdivision project; or an award under a CMP project or a similar tenurial arrangement;

(b) To deprive any homeowner of his/her right to avail of or enjoy basic community services and facilities where he/she has paid the dues, charges, and other fees for such services;

(c) To prevent any homeowner who has paid the required fees and charges from reasonably exercising his/her right to inspect association books and records;

(d) To prevent any member in good standing from participating in association meetings, elections and referenda;

(e) To deny any member due process in the imposition of administrative sanctions;

(f) To exercise rights and powers as stated m Section 10 in violation of the required consultation and approval of the required number of homeowners or members;

(g) To unreasonably fail to provide basic community services and facilities and maintain, repair, replace, or modify such facilities;

(h) To unreasonably fail to comply with Section 17 of this Act; or

(i) To violate any other provision of this Act.

Section 23. Penalties and Sanctions. – Any person who, intentionally or by gross negligence, violates any provision of this Act, fails to perform his/her functions under this Act and/or violates the rights of the members, 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 to being charged before a regular court for violations of the provisions of the Revised Penal Code, Civil Code and other pertinent laws.

If the violation is committed by the association, the members, officers, directors or trustees of the association who have actually participated in, authorized, or ratified the prohibited act shall be held liable.

If the violation is committed by the employees and agents who acted in gross violation of the provisions of this Act, the officers, directors or trustees, or incorporators of the association shall be jointly and severally liable with the offending employees, agents, and the association.

Section 24. Review of Association’s Bylaws. – In order to comply with the provisions of this Act, the homeowners’ association shall, within six (6) months from the effectivity of this Act, conduct a review of its bylaws, draft its own rules of procedure to be incorporated in the bylaws and conduct a plebiscite for the approval of the members of the association. A simple majority shall be used to determine the approval of the bylaws.

Section 25. Appropriations. – The amounts necessary for the implementation of this Act and for carrying out the additional functions and responsibilities of the HLURB shall be included in the annual General Appropriations Act.

Section 26. Separability Clause. – If any provision of this Act is declared invalid or unconstitutional, the remainder of the Act shall remain valid and subsisting.

Section 27. Repealing Clause. – All other issuances, laws, decrees, orders, rules and regulations, or parts thereof inconsistent with this Act are hereby repealed or modified accordingly.

Section 28. Implementing Rules and Regulations. – The HLURB shall formulate and promulgate, in consultation with concerned sectors, rules and regulations necessary to implement the provisions of this Act within SIX (6) months of its effectivity.

No rule or regulation shall be issued which tends to undermine the organizational and territorial integrity of any association.

Section 29. Effectivity. – This Act shall take effect fifteen (15) days following Its publication ill the Official Gazette or III at least two (2) national newspapers of general circulation.