The Condominium Law
By: Erwin
February 7th, 2016
Condo,Law



REPUBLIC ACT NO. 4726 AN ACT TO DEFINE CONDOMINIUM, ESTABLISH REQUIREMENTS FOR ITS CREATION, AND GOVERN ITS INCIDENTS

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

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

SECTION 2. A condominium is an interest in real property consisting of a 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 area, may be held by a corporation especially formed for the purpose (hereinafter known as the “condominium corporation”) in which the holders of separate interests 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 interests in condominium may be ownership or any other real right in real property recognized by the law or property in the Civil Code and other pertinent laws.

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

  1. “Condominium” means a condominium as defined in the next preceding section.
  2. “Unit” means a part of the condominium project intended for any type of independent use of 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.
  3. “Project” means the entire parcel of real property divided or to be divided in condominiums, including all structures thereon.
  4. “Common areas”  means the entire project excepting all units separately granted or held or reserved.
  5. “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.

SECTION 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:

  1. Description of the land on which the building or buildings and improvements are or to be located;
  2. Description of the building or buildings, stating the number of stories and basements, the number of units and their accessories, if any;
  3. Description of the common areas and facilities;
  4. 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 are or is to be held by a condominium corporation, a statement to this effect shall be included;
  5. Statement of the purposes for which the building or buildings and each of the units are intended or restricted as to use;
  6. 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;
  7. The following plans shall be appended to the deed as integral parts thereof:
    • A survey plan of the land included in the project, unless a survey plan of the same property had previously been filed in the said office;
    • 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.
  8. 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 a simple majority of the registered owners of the property: Provided, That in a condominium project exclusively for either residential or commercial use, simple majority shall be on a per unit of ownership basis and that in case of mixed use, simple majority shall be on a floor area of ownership basis: Provided, further, That prior notification to all registered owners are done: Provided, finally, That any amendment or revocation already decided by a simple majority of all registered owners shall be submitted to the Housing and Land Use Regulatory Board and the city/municipality engineer for approval before it can be registered. Until registration of a revocation, the provision of this Act shall continue to apply to such property. (As Amended by RA 7899)

SECTION 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 interest in the common areas or, in a proper case, the membership or shareholders in the condominium corporation; PROVIDED, However, That where the common areas in the condominium project are held 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, 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.

SECTION 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:

  • The boundary of the unit granted are the interior surfaces of the perimeter walls, floors, ceilings, windows and door 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 other utility installations, wherever located, except the outlets thereof when located within the unit.
  • 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 which 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.
  • Unless otherwise provided, the common areas are held in common by the holders of units, in equal shares one for each unit.
  • 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.
  • Each condominium owner shall have the exclusive right to paint, repaint, tile, wax, paper or otherwise refinish and decorate the inner surface of the walls, ceilings, windows and doors bounding his own unit.
  • 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 condominium but any obligation incurred by such condominium owner is personal to him.
  • 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.

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

SECTION 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: PROVIDED, However, That a partition shall be made only upon a showing:

  • That three years after damage or destruction to the projects which render 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
  • 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 30 per cent interest in the common areas are opposed to repair or restoration of the projects; or
  • That the project has been in existence in existence in excess of 50 years, that it is obsolete and uneconomic, and that condominium owners holding in aggregate more than 50 per cent interest in the common areas are opposed to repair or restoration or modeling or modernizing of the project; or
  • 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 70 per cent interest in the common areas are opposed to continuation of the condominium regime after expropriation or condemnation of a material portion thereof; or
  • 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.

SECTION 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 inure to and bind all condominium owners in the projects. 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: condominium corporation, an association of the condominium owners, a board of governors elected by the condominium owners, or a management agent elected  by the owners or by the board named in the declaration. It shall 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:

  1. As to management body
    • For the powers thereof, including the power to enforce the provisions of the declaration of restrictions;
    • For the 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;
    • 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;
    • For purchase of materials, supplies and the like needed by the common areas;
    • For payment of taxes and special assessments which would be a lien upon the entire project or common areas, and for discharge of any encumbrance levied against the entire project or the common areas;
    • For reconstruction of any portion or portions of any damage to or destruction of the project;
    • The manner for delegation of its powers;
    • 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;
    • 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 obligation of the restrictions or not.
  2. 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;
  3. For the independent audit of the accounts of the management body;
  4. 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 owner’s fractional interest in any common areas;
  5. For the subordination of liens securing such assessments to other liens either generally or specifically described;
  6. For conditions, other than those provided for in Sections 8 and 13 of this Act, upon which partition of the project and dissolution of the condominium corporations 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 percentage of damage to the building, or upon a decision of an arbitrator, or upon any other reasonable condition.

SECTION 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 purpose of such 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 declarations 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 a appurtenance. When a member or a stockholder ceases to own a unit in the project in which the condominium corporation owns or holds the common areas, he shall cease to be a member or stockholder of the condominium corporation.

SECTION 11. The term of the condominium corporation shall be coterminous with the duration of the condominium project, the provisions of the corporation law to the contrary notwithstanding.

SECTION 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’s 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.

SECTION 13. Until the enabling or master deed of the project in which the condominium corporation owns or holds the common areas 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:

  1. 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 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
  2. That damage or destruction to the project has rendered one-half or more of the units therein untenantable and that more than 30 per cent of the members of the corporation, if non-stock, or the shareholders representing more than 30% of the capital stock entitled to vote, if a stock corporation, are opposed to the repair or reconstruction of the project; or
  3. That the project has been in existence in excess of 50 years, that it is obsolete and uneconomical, and that more than 50 per cent of the members of the corporation, if non-stock, or the stockholders representing more than 50% 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
  4. 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 70% interest in the corporation, if non-stock, or the stockholders representing more than 70% 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
  5. That the conditions for such a dissolution set forth in the declaration of restrictions of the project in which the corporation owns or holds the common areas, have been met.

SECTION 14. The condominium corporation may also be dissolved by the affirmative 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 62 of the Corporation Law are complied with.

SECTION 15. Unless otherwise provided for in the declaration of restrictions, upon voluntary dissolution of a condominium corporation in accordance with the provisions of Section 13 and 14 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 interest in the project and liquidation of the corporation shall be affected by a sale of the entire project as if the corporation owned the whole thereof, subject to the rights of the corporation and of individual condominium creditors.

SECTION 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 a simple majority of the registered owners; Provided, That prior notification to all registered owners are done; and provided, further, That the condominium corporation may expand or integrate the project with another upon the affirmative vote of a simple majority of the registered owners, subject only to the final approval of the Housing and Land Use Regulatory Board. (As Amended by RA 7899)

SECTION 17. Any provision of the Corporation Law to the contrary notwithstanding, the by-laws of the 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 allowed. 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.

SECTION 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 other condominiums in the project. A copy of the description of the land, a brief description of 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 project 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 acknowledged and stamped by the Register of Deeds in the same manner as in the case of registration of conveyance of real property under said laws.

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

SECTION 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) are 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 as 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 encumbrance.

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.

SECTION 21. No labor performed or services or materials furnished without 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 condominium owner, unless such other owner 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.

SECTION 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.

SECTION 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 in this Act or in the declarations 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 the remaining owners and the just compensation, if any, that a condominium owner may be entitled to due 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.

SECTION 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.

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

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

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

Approved, 19 June 1966.