Republic Act No. 9904
AN ACT PROVIDING FOR A MAGNA CARTA FOR HOMEOWNERS
AND HOMEOWNERS’ ASSOCIATIONS, AND FOR OTHER PURPOSES
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.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
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, tranquillity,
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;
(f) 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;
(l) 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 therefore;
(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 any
one 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 Blg.
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.
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