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Magna Carta for Homeowners and PD 957

M a n i l a

PRESIDENTIAL DECREE No. 957 July 12, 1976


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


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

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

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

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.















Subdivision and Condominium Buyers Protective Decree

Various laws have been passed to protect homebuyers and small property owners. The Subdivision and Condominium Buyers Protective Decree or PD 957 regulates the real estate trade and business and imposes penalties on fraudulent practices. The law ensures that the subdivision lot/housing unit meets the minimum design standards, has valid titles, and that the subdivision/ condominium developer has the financial capacity to complete the project. For this purpose the Housing and Land Use Regulatory Board issues a License to Sell to a developer who is able to satisfy the requirements of PD 957. Written complaints against developers are handled by the HLURB as a quasi-judicial body. Arbiters in all HLURB Regional Offices have been assigned to hear complaints and to determine cause for action.

PD 957 likewise requires that the subdivision developer should initiate the organization of a Homeowners Association (HOA) among the buyers and residents of the housing project to promote and protect their mutual interest and assist in their community development. The HLURB registers Homeowners Associations and adjudicates conflicts within the HOA.

Requirements for Filing a Complaint at the HLURB

1.       The complaint must be filed in three copies, with supporting documents attached to all copies of the complaint;

2.       The complaint must be verified with a Certification of Non-Forum Shopping subscribed before a notary public or person  authorized by law to administer oath. The accomplished Form must be attached to all copies of the complaint;

3.       Payment of the filing fee-P1,000.00 minimum, pursuant to the 2004 Revised Schedule of Fees (HLURB Resolution No.R-760).

For more details, contact:
Executive Services Group
2nd Floor HLURB Bldg.,
Kalayaan Ave., Diliman, Quezon City
Tel. No.: 927-2723

Documentary Requirements for HOA Registration

  • Articles of Incorporation – signed by all 5 to 15 incorporators on the last page.
  • By-Laws- signed by all 5 to 15 incorporators on the last page.
  • Written Undertaking by the Incorporators – to change the corporate name in the event that another person, firm or entity has acquired a prior right to the use of said name or one similar to it; and to comply with all the rules and regulations of the HLURB.
  • Information Sheet – contains the name of the association, principal office address, list of the members of the board of directors or trustees and their addresses, list of officers and their positions, list of the members of the association. 
  • Notarized Certification as to the existence or absence of a HOA in the subdivision, territorial jurisdiction of the HOA, name and address of the nearest existing HOA. 
  • Notarized Authorization – written authority of the representative of the association.
  • HOA Tax Identification Number (TIN).



Magna Carta for Homeowners and Homeowners’ Associations

Posted by attyjojo on February 2, 2010

Almost a month ago,  Republic Act No. 9904 (An Act Providing for a Magna Carta for Homeowners and Homeowners’ Associations, and for Other Purposes) was signed by the President.

RA 9904 was designed to be the vehicle to bring peace and comfortable living conditions in many communities. This is according to Senate Majority Floor Leader Juan Miguel Zubiri. He said that this law will benefit all homeowners from the different socio-economic classes. It was made sure that the benefits will be encompassing.  Sen. Zubiri further said that the Magna Carta would “hopefully put an end to the confusion on where to register homeowners’ associations.”

Under RA 9904, every association of homeowners shall be required to register with the Housing and Land Use Regulatory Board (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.

In addition, 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 RA 9904 takes effect.

As Realtors, I think that we should be well-versed with new laws that affect our clients who want to purchase properties in gated communities – be they high-end or low-end subdivision projects – so that we could give them ample and educated advise should they ask our opinions about it.

For further information about RA 9904, I have prepared a primer that can be downloaded for future reference. Click here for your copy: Primer on RA 9904.

Magna Carta for homeowners groups a welcome development
(The Freeman) Updated January 17, 2010 12:00 AM

CEBU, Philippines - Local officials here welcome the enactment of the Magna Carta for Homeowners and Homeowners Associations, or Republic Act 9004, which protects the rights of the homeowners and the homeowners association and seen to cut conflicts in every community.

Senate Majority Floor Leader Juan Miguel Zubiri relayed recently to Cebu’s local officials the approval of the law which according to him will benefit both the homeowners and the homeowners association.

Zubiri, the main author of the law, said that in a very clear and specific language the law laid down the rights and responsibilities of homeowners and the guidelines on the operations of homeowners associations.

Cebu mayors who attended an informal meeting with Zubiri said that the law will benefit the homeowners especially on the delivery of basic services.

Zubiri who is the past chairman of the Committee on Housing, Urban Planning and Resettlement now chaired by Senator Rodolfo Biazon, also said that from now on, homeowners and homeowners association members will be supported by the law’s clear provisions and guidelines ensuring their right to avail of basic community services and facilities due them.

Zubiri clarified though that “contrary to earlier perceptions, this law was not made for rich residents of gated subdivisions only.”

“Lessees in government socialized housing projects or urban estates and those in communities of underprivileged and homeless citizens are also considered as homeowners for the purpose of qualifying as a member of a homeowners’ association without need of any written consent or authorization.”

Magna Carta also provides penalties for prohibited acts. Among them are depriving 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; and preventing any member in good standing from participating in association meetings, elections and referenda.

Violations to the Magna Carta shall be punished with a fine of not less than P5,000 but not more than P50,000 and permanent disqualification from being elected or appointed as members of the board, officer or employee of the association. — Jose P. Sollano/MEEV   (FREEMAN NEWS)

No need for ‘Magna Carta’ for homeowners

Philippine Daily Inquirer
First Posted 01:34:00 07/09/2009

According to the legislative staff of Sen. Miguel Zubiri, a bicameral session is scheduled this August to tackle the proposed Magna Carta for Homeowners and Homeowners Associations. This will be a waste of time. There is no need for this law.

As the administrator of a gated subdivision for the past 20 years, and as secretary of a federation of homeowners associations for 10 years, let me address a few words to the bicameral committee.

First, as framed, the proposed legislation is the most inutile I have come across during my lifetime (and it has been a long 88 years). Why? Can you imagine that a law has to be enacted to guarantee the right of homeowners to basic services, which is a right they, as taxpaying citizens, already have? Is this not ridiculous? Whether they live in a gated subdivision or outside, homeowners already have this right. Why still enact a law to protect this right?

Second, when a homeowner decides to build his house inside a gated subdivision, he is aware and knows fully well that there is an existing homeowners association that the developer of the subdivision is mandated by law (PD 957) to organize. He knows that the association is required by law to register with the Securities and Exchange Commission and the Housing and Land Use Regulatory Board (HLURB).

Third, can you imagine a magna carta (does this not mean a bill of rights?) that will emasculate homeowners associations, which are mandated by law to be organized? Because if membership were to be made optional, many homeowners will resign from the association and stop paying their dues. They will just pay “reasonable” (who will decide this?) contributions for services when and if they please. If they do not pay, will the administrator (like me) have to sue them in court? As it is now, I have problems collecting dues and so I have to advance my own money so that our security guards will have something to eat.

For the information of the members of the bicameral committee, so they will understand why I am personally so aggrieved by this proposed magna carta, I was always present as secretary of our homeowners federation during the hearings held in Congress and when the Rep. Ruffy Biazon was prevailed upon by the federations to propose legislation to protect us from some quarters like congressmen wishing to use our roads to solve traffic problems.

One of them will remember that I excoriated him, in a letter to the Speaker of the House, for meddling with subdivision roads in Metro Manila when he had not yet passed laws solving the poverty of his constituents in Samar. Do you know that he even had the temerity to threaten us with contempt, we who were invited to the hearings “in aid of legislation?”

In view of the above, forget this Magna Carta and leave us gated subdivisions in peace with the HLURB, whose guidelines we were asked to help frame.

—CONSUELO D. SISON, administrator, Alpha Village  Homeowners Associations Inc.,  Quezon City

Law for gated communities

By Raul J. Palabrica
Philippine Daily Inquirer
First Posted 20:14:00 02/25/2010

THIS IS THE TIME OF THE YEAR when most homeowners’ associations in residential areas (or gated communities, as sophisticates prefer to call it) in the country hold their annual election of directors or trustees.

With the May 10 polls just around the corner, these officers are expected to get special attention or treatment from local candidates.

Who will be invited to dialogue with the homeowners en masse or whose tarpaulins will be allowed to be put up in common areas within the village are matters usually decided by these officers.

This political “clout” is in addition to their access to the funds and resources of the village which, depending on the financial standing of its residents, often run into millions of pesos.

For this reason, homeowners’ elections have become hotly contested events that are conducted with the same intensity as corporate takeover moves that recently hit the headlines.

That problem, among others, is sought to be addressed by Republic Act No. 99041, also known as the “Magna Carta for Homeowners and Homeowners’ Associations,” which was enacted into law early this year.


A key element of the law is the designation of the Housing and Land Use Regulatory Board as the government agency that can grant juridical personality to these associations and regulate their activities.

The juridical status is acquired by the simple expedient of registering with HLURB.

A similar personality earlier acquired by similar organizations through their filings with the Securities and Exchange Commission or Home Insurance Guarantee Corp. shall be respected if they register with HLURB when the law takes effect.

To resolve the often contentious issue of membership, the law provides that only lot owners, legal occupants (lessees or authorized users) and informal settlers who are in the process of being awarded lot or housing ownership rights are eligible to join the associations.

A two-way arrangement is envisioned between the association and its members. A homeowner has the right to enjoy basic community services and use common areas and facilities on condition that he pays the association’s fees and charges.

And to safeguard the disbursement of these funds, the law states that a member has the right “to inspect association books and records during office hours and to be provided upon request with annual reports, including financial statements.”

What’s more, the association is required to prepare its audited financial statement yearly and, within 90 days from the end of its accounting period, post a copy in its office, bulletin board or other conspicuous places within the community, and submit a copy to HULRB.

With regard to the qualifications of directors or trustees and the manner of their election, the law leaves those matters to the association’s by-laws, as approved by HLURB.

Although associations are given leeway in the performance of their duties and responsibilities, the removal of directors or trustees is treated differently—it has to done along the lines of the “recall” procedures presently being used for elected local officials.

A director or trustee may be removed for any of the causes stated in the by-laws upon the signed petition, subject to HLURB’s validation, of majority of the members in good standing.

Within 60 days from such removal, the board is obliged to call an election to fill up the vacancy for the remaining term of the ousted board member.

For the same causes, the entire board may be dissolved if two-thirds of the association members sign a petition, subject to HLURB’s validation, for that purpose.

If this happens, HLURB is required, within 60 days, to call and conduct a new election to fill up the vacated positions for their unexpired term.0

Pending the election of new officers, an interim board can be named to run the affairs of the community.


The law spells out in detail the rights, duties and responsibilities of the association in relation to the homeowners and vice versa.

The most significant aspect of this enumeration is the treatment of the position of director or trustee as fiduciary in character and therefore requires the exercise of the degree of care and loyalty needed for the job.

There is, however, a kink in this scenario. The director or trustee has to live up to these standards at his own cost or expense because the law prohibits the payment of compensation for his services!

In the enforcement and implementation of the law, HULRB is authorized to hear and decide intra-association disputes or controversies.

If any person intentionally, or by gross negligence, fails to perform his duties under the law or violates the rights of the members, he may be ordered to pay a fine of not less than P5,000 but not more than P50,000, and be permanently disqualified from holding any position in the association.

All these actions are without prejudice to the right of an aggrieved party to file civil or criminal action with the regular courts for any incidental violation of the Revised Penal Code and other pertinent laws.

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