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Philippine Real Estate Laws

 

 

National Economy and Patrimony

NATIONAL ECONOMY AND PATRIMONY

Article XII – 1987 Philippine Constitution

Section 1. The goals of the national economy are a more equitable distribution of opportunities, income, and wealth; a sustained increase in the amount of goods and services produced by the nation for the benefit of the people; and an expanding productivity as the key to raising the quality of life for all, especially the underprivileged.The State shall promote industrialization and full employment based on sound agricultural development and agrarian reform, through industries that make full and efficient use of human and natural resources, and which are competitive in both domestic and foreign markets. However, the State shall protect Filipino enterprises against unfair foreign competition and trade practices.

In the pursuit of these goals, all sectors of the economy and all regions of the country shall be given optimum opportunity to develop. Private enterprises, including corporations, cooperatives, and similar collective organizations, shall be encouraged to broaden the base of their ownership.

Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all other natural resources shall not be alienated. The exploration, development, and utilization of natural resources shall be under the full control and supervision of the State. The State may directly undertake such activities, or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned by such citizens. Such agreements may be for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and under such terms and conditions as may be provided by law. In cases of water rights for irrigation, water supply, fisheries, or industrial uses other than the development of water, power, beneficial use may be the measure and limit of the grant.

The State shall protect the nation’s marine wealth in its archipelagic waters, territorial sea, and exclusive economic zone, and reserve its use and enjoyment exclusively to Filipino citizens.

The Congress may, by law, allow small scale utilization of natural resources by Filipino citizens, as well as cooperative fish farming, with priority to subsistence fishermen and fish workers in rivers, lakes, bays, and lagoons.

The President may enter into agreements with foreign-owned corporations involving either technical or financial assistance for large-scale exploration, development, and utilization of minerals, petroleum, and other mineral oils according to the general terms and conditions provided by law, based on real contributions to the economic growth and general welfare of the country. In such agreements, the State shall promote the development and use of local scientific and technical resources.

The President shall notify the Congress of every contract entered into in accordance with this provision, within thirty days from its execution.

Section 3. Lands of the public domain are classified into agricultural, forest or timber, mineral lands, and national parks. Agricultural lands of the public domain may be further classified by law according to the uses to which they may be devoted. Alienable lands of the public domain shall be limited to agricultural lands. Private corporations or associations may not hold such alienable lands of the public domain except by lease, for a period not exceeding twenty-five years, renewable for not more than twenty five years, and not to exceed one thousand hectares in area. Citizens of the Philippines may lease not more than five hundred hectares, or acquire not more than twelve hectares thereof by purchase, homestead, or grant.

Taking into account the requirements of conservation, ecology, and development, and subject to the requirements of agrarian reform, the Congress shall determine, by law, the size of lands of the public domain which may be acquired, developed, held, or leased and the conditions therefor.

Section 4. The Congress shall, as soon as possible, determine by law the specific limits of forest lands and national parks, marking clearly their boundaries on the ground. Thereafter, such forest lands and national parks shall be conserved and may not be increased nor diminished, except by law. The Congress shall provide, for such period as it may determine, measures to prohibit logging in endangered forests and watershed areas.

Section 5. The State, subject to the provisions of this Constitution and national development policies and programs, shall protect the rights of indigenous cultural communities to their ancestral lands to ensure their economic, social, and cultural well-being.

The Congress may provide for the applicability of customary laws governing property rights or relations in determining the ownership and extent of ancestral domain.

Section 6. The use of property bears a social function, and all economic agents shall contribute to the common good. Individuals and private groups, including corporations, cooperatives, and similar collective organizations, shall have the right to own, establish, and operate economic enterprises, subject to the duty of the State to promote distributive justice and to intervene when the common good so demands.

Section 7. Save in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals, corporations or associations qualified to acquire or hold lands of the public domain.

Section 8. Notwithstanding the provisions of Section 7 of this Article, a natural-born citizen of the Philippines who has lost his Philippine citizenship may be a transferee of private lands, subject to limitations provided by law.

Section 9. The Congress may establish an independent economic and planning agency headed by the President, which shall, after consultations with appropriate public agencies, various private sectors, and local government units, recommend to Congress, and implement continuing integrated and coordinated programs and policies for national development.

Until the Congress provides otherwise, the National Economic and Development Authority shall function as the independent planning agency of the government.

Section 10. The Congress shall, upon recommendation of the economic and planning agency, when the national interest dictates, reserve to citizens of the Philippines or to corporations or associations at least sixty per centum of whose capital is owned by such citizens, or such higher percentage as Congress may prescribe, certain areas of investments. The Congress shall enact measures that will encourage the formation and operation of enterprises whose capital is wholly owned by Filipinos. In the grant of rights, privileges, and concessions covering the national economy and patrimony, the State shall give preference to qualified Filipinos.

The State shall regulate and exercise authority over foreign investments within its territorial jurisdiction and in accordance with its national goals and priorities.

Section 11. No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines at least sixty per centum of whose capital is owned by such citizens, nor shall such franchise, certificate, or authorization be exclusive in character or for a longer period than fifty years. Neither shall any such franchise or right be granted except under the condition that it shall be subject to amendment, alteration, or repeal by the Congress when the common good so requires. The State shall encourage equity participation in public utilities by the general public. The participation of foreign investors in the governing body of any public utility enterprise shall be limited to their proportionate share in its capital, and all the executive and managing officers of such corporation or association must be citizens of the Philippines.

Section 12. The State shall promote the preferential use of Filipino labor, domestic materials and locally produced goods, and adopt measures that help make them competitive.

Section 13. The State shall pursue a trade policy that serves the general welfare and utilizes all forms and arrangements of exchange on the basis of equality and reciprocity.

Section 14. The sustained development of a reservoir of national talents consisting of Filipino scientists, entrepreneurs, professionals, managers, high-level technical manpower and skilled workers and craftsmen in all fields shall be promoted by the State. The State shall encourage appropriate technology and regulate its transfer for the national benefit.

The practice of all professionals in the Philippines shall be limited to Filipino citizens, save in cases prescribed by law.

Section 15. The Congress shall create an agency to promote the viability and growth of cooperatives as instrument for social justice and economic development.

Section 16. The Congress shall not, except by general law, provide for the formation, organization, or regulation of private corporations. Government-owned or controlled corporations may be created or established by special charters in the interest of the common good and subject to the test of economic viability.

Section 17. In times of national emergency, when the public interest so requires, the State may, during the emergency and under reasonable terms prescribed by it, temporarily take  over or direct the operation of any privately owned public utility or business affected with public interest.

Section 18. The State may, in the interest of national welfare or defense, establish and operate vital industries and, upon payment of just compensation, transfer to public ownership utilities and other private enterprises to be operated by the Government.

Section 19. The State shall regulate or prohibit monopolies when the public interest so requires. No combination in restraint of trade or unfair competition shall be allowed.

Section 20. The Congress shall establish an independent central monetary authority, the members of whose governing board must be natural-born Filipino citizens, of known probity, integrity, and patriotism, the majority of whom shall come from the private sector. They shall also be subject to such other qualifications and disabilities as may be prescribed by law. The authority shall provide policy direction in the areas of money, banking, and credit. It shall have supervision over the operation of banks and exercise such regulatory powers as may be provided by law over the operations of finance companies and other institutions performing similar functions.

Until the Congress otherwise provides, the Central Bank of the Philippines, operating under existing laws, shall function as the central monetary authority.

Section 21. Foreign loans may only be incurred in accordance with law and the regulation of the monetary authority. Information on foreign loans obtained or guaranteed by the Government shall be made available to the public.

Section 22. Acts which circumvent or negate any of the provisions of this Article shall be considered inimical to the national interest and subject to criminal and civil sanctions, as may be provided by law.

Rights of Former Filipino Citizens to Acquire Private Lands

BATAS PAMBANSA BLG. 185 AN ACT TO IMPLEMENT SECTION FIFTEEN OF ARTICLE XIV OF THE CONSTITUTION AND FOR OTHER PURPOSES

Section 1.
  In Implementation of Section fifteen of Article XIV of the Constitution, a natural-born citizen of the Philippines who has lost his Philippine citizenship may be a transferee of a private land, for use by him as his residence, subject to the provisions of this Act.

Section 2.  Any natural-born citizen of the Philippines who has lost his Philippine citizenship and who has the legal capacity to enter into a contract under Philippine laws may be a transferee of a private land up to a maximum area of one thousand square meters, in the case of urban land, or one hectare in the case of rural land, to be used by him as his residence.  In the case of married couples, one of them may avail of the privilege herein granted; Provided, That if both shall avail of the same, the total area acquired shall not exceed the maximum herein fixed. In case the transferee already owns urban or rural lands for residential purposes, he shall still be entitled to be a transferee of additional urban or rural lands for residential purposes which, when added to those already owned by him, shall not exceed the maximum areas herein authorized.

Section 3.  A transferee under this Act may acquire not more than two lots which should be situated in different municipalities or cities anywhere in the Philippines; Provided, That the total area thereof shall not exceed one thousand square meters in the case of urban lands or one hectare in the case of rural lands for use by him as urban land shall be disqualified from acquiring rural land, and vice versa.

Section 4.  As used in this Act -

  1. A natural-born citizen is one who is a citizen of the Philippines from birth without having to perform any act to acquire or perfect his Philippine citizenship.
  2. Urban areas shall include:
    • In their entirety, all municipal jurisdictions which whether designated as chartered cities, provincial capitals or not, have a population density of at least 1,000 persons per square kilometer;
    • Poblaciones or central districts of municipalities and cities which have a population density of at least 500 persons per square kilometer;
    • Poblaciones or central districts (not included in 1 and 2) regardless of population size which have the following:
      • Street pattern, i.e., network of streets in either at parallel or right angle orientation;
      • At least six establishments (commercial, manufacturing, recreational and/or personal services); and
      • At least three of the following:
        • A town hall, church or chapel with religious services at least once a month;
        • A public plaza, park or cemetery;
        • A market place or building where trading activities are carried on at least once a week; and
      • A public building like a school, hospital, puericulture and health center or  library.
        • Barangays having at least 1,000 inhabitants which meet the conditions set forth in sub-paragraph (3) of paragraph
        • above, and in which the occupation of the inhabitants is predominantly other than farming or fishing.
        • All other areas of the Philippines which do not meet the conditions in the preceding definition of urban areas shall be considered as rural areas.

Section 5.  Transfer as a mode of acquisition of private land under this Act refers to either voluntary or involuntary sale, devise or donation.  Involuntary sales shall include sales on tax delinquency, foreclosures and executions of judgment.

Section 6.  In addition to the requirements provided for in other laws for the registration of titles to lands, no private land shall be transferred under this Act, unless the transferee shall submit to the register of deeds of the province or city where the property is located a sworn statement showing the date and place of his birth; the names and addresses of his parents, of his spouse and children, if any; the area, location and the mode of acquisition of his land-holdings in the Philippines, if any; his intention to reside permanently in the Philippines; the date he lost his Philippine citizenship and the country of which he is presently a citizen; and such other information as may be required Section 8 of this Act.

Section 7.  The transferee shall not use the lands acquired under this Act for any purpose other than for his residence.  Violations of this Section, any misinterpretation in the sworn statement required under Section 6 hereof, any acquired within two years from the acquisition thereof, except when such failure is Code and deportation in appropriate cases, be penalized by forfeiture of such lands and their improvements to the National Government.  For this purpose the Solicitor General or his representative shall institute escheat proceedings. Any transferee liable under this Section shall moreover be forever barred from further availing of the privilege granted under this Act.

Section 8.  The Minister of Justice shall issue such rules and regulations as may be necessary to carry out the provisions of this Act.  Such rules and regulations shall take effect fifteen days following its publication in a newspaper of general circulation in the Philippines.

Section 9.  If any part of this Act shall be declared unconstitutional, the remaining provisions not thereby affected shall remain in full force and effect.

Section 10.  This Act shall take effect upon its approval.

Approved, March 16, 1982


REPUBLIC ACT NO. 7042 (AS AMENDED BY RA 8179)

FOREIGN INVESTMENTS ACT OF 1991

SECTION 1. Any natural born citizen who has lost his Philippine citizenship and who has the legal capacity to enter into a contract under Philippine laws may be a transferee of a private land up to a maximum area of five thousand (5,000) square meters in the case of urban land or three (3) hectares in the case of rural land to be used by him for business or other purposes.

SECTION 2. In the case where both spouses are qualified under the law, one of them may avail of the said privilege: However, if both shall avail of the privilege, the total area acquired shall not exceed the maximum allowed.

SECTION 3. In the case the transferee already owns urban or rural land for business or other purposes, he shall still be entitled to be a transferee of additional urban or rural land for business or other purposes which when added to those already owned by him shall not exceed the maximum areas allowed.

SECTION 4. A transferee under this Act may acquire not more than two (2) lots which should be situated in different municipalities or cities anywhere in the Philippines:  Provided, That the total land area thereof shall not exceed five thousand (5,000) square meters in the case of urban land or three (3) hectares in the case of rural land for use by him for business or other purposes.  A transferee who has already acquired urban land shall be disqualified from acquiring rural land and vice versa. However, if the trasnferee has disposed of his urban land, he may still acquire rural land and vice versa, provided that the same shall be used for business or other purposes.

SECTION 5. Land acquired under this Act shall be primarily, directly and actually used by the transferee in the performance or conduct of his business or commercial activities in the broad areas of agriculture, industry and services, including the lease of land, but excluding the buying and selling thereof. A transferee shall use his land to engage in activities that are not included in the Negative List or in those areas wherein investment rights have been granted to him under this Act.

SECTION 6. Registration of Land. The Register of Deeds in the province or city where the land is located shall register the land in the name of the transferee that it will be used for any purposes mentioned in Section 5 above, i.e. certification of business registration issued by the BTRCP/Department of Trade and Industry and affidavit that the land shall be used for business purposes.The provision of BP 185 (An Act to Implement Section 15 of Article XIV of the Constitution and for Other Purposes Pertaining to the Ownership of Private Lands for Residential Purposes by Former Natural Born Filipinos) and its implementing Rules and Regulations shall be adopted, where applicable, in the implementation of this Act through a Circular to be issued by the Land Registration Authority.The Register of Deeds shall ensure that the limits prescribed by law are observed.

(Section 10. RA 7042 as amended by RA 8179.  Approved, March 28, 1996)

The Dual Citizenship Law

REPUBLIC ACT NO. 9225

AN ACT MAKING THE CITIZENSHIP OF PHILIPPINE CITIZENS WHO ACQUIRE FOREIGN CITIZENSHIP PERMANENT, AMENDING FOR THE PURPOSE COMMONWEALTH ACT NO. 63, AS AMENDED, AND FOR OTHER PURPOSES

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

Section 1. Short Title – This Act shall be known as the “Citizenship Retention and Re-acquisition Act of 2003.

Section 2. Declaration of Policy – It is hereby declared the policy of the State that all Philippine citizens who become citizens of another country shall be deemed not to have lost their Philippine citizenship under the conditions of this Act.

Section 3. Retention of Philippine Citizenship – Any provision of law to the contrary notwithstanding, natural-born citizens of the Philippines who have lost their Philippine citizenship by reason of their naturalization as citizens of a foreign country are hereby deemed to have re-acquired Philippine citizenship upon taking the following oath of allegiance to the Republic:

“I __________________________, solemnly swear (or affirm) that I will support and defend the Constitution of the Republic of the Philippines and obey the laws and legal orders promulgated by the duly constituted authorities of the Philippines; and I hereby declare that I recognize and accept the supreme authority of the Philippines and will maintain true faith and allegiance thereto; and that I impose this obligation upon myself voluntarily without mental reservation or purpose of evasion.”

Natural-born citizens of the Philippines who, after the effectivity of this Act, become citizens of a foreign country shall retain their Philippine citizenship upon taking the aforesaid oath.

Section 4. Derivative Citizenship – The unmarried child, whether legitimate, illegitimate or adopted, below eighteen (18) years of age, of those who re-acquire Philippine citizenship upon effectivity of this Act shall be deemed citizens of the Philippines.

Section 5. Civil and Political Rights and Liabilities – Those who retain or re-acquire Philippine citizenship under this Act shall enjoy full civil and political rights and be subject to all attendant liabilities and responsibilities under existing laws of the Philippines and the following conditions:

  1. Those intending to exercise their right of suffrage must meet the requirements under Section 1, Article V of the Constitution, Republic Act. No. 9189, otherwise known as “The Overseas Absentee Voting Act of 2003″ and other existing laws;
  2. Those seeking elective public office in the Philippines shall meet the qualifications for holding such public office as required by the Constitution and existing laws, and, at the time of the filing of the certificate of candidacy, make a personal and sworn renunciation of any and all foreign citizenship before any public officer authorized to administer an oath;
  3. Those appointed to any public office shall subscribe and swear to an oath of allegiance to the Republic of the Philippines and its duly constituted authorities prior to their assumption of office:  Provided, That they renounce their oath of allegiance to the country where they took that oath;
  4. Those intending to practice their profession in the Philippines shall apply with the proper authority for a license or permit to engage in such practice; and
  5. That right to vote or be elected or appointed to any public office in the Philippines cannot be exercised by, or extended to, those who:
    • Are candidates for or are occupying any public office in the country of which they are naturalized citizens; and/or
    • Are in active service as commissioned or non-commissioned officers in the armed forces of the country which they are naturalized citizens.

Section 6. Separability Clause – If any section or provision of this Act is held unconstitutional or invalid, any other section or provision not affected thereby shall remain valid and effective. Section 7. Repealing Clause – All laws, decrees, orders, rules and regulations inconsistent with the provisions of this Act are hereby repealed or modified accordingly. Section 8. Effecitivity Clause – This Act shall take effect after fifteen (15) days following its publication in the Official Gazette or two (2) newspapers of general circulation.

Approved,

(Sgd) Jose De Venecia
Speaker of the House Of Representatives

(Sgd) Franklin Drilon
President of the Senate

This Act, which is a consolidation of Senate Bill No. 2130 and House Bill No. 4720, was finally passed by the Senate and the House of Representatives on August 25, 2003 and August 26, 2003, respectively.

(Sgd) Roberto P. Nazerno
Secretary of the SenateHouse of Representatives

(Sgd) Oscar G. Yabes
Secretary General

(Sgd) Gloria Macapagal Arroyo
President of the Republic of the Philippines

Approved: August 29, 2003                  

Realty Installment Buyer Protection Act (The Maceda Law)

Republic Act No. 6552

AN ACT TO PROVIDE PROTECTION TO BUYERS OF REAL ESTATE ON INSTALLMENT PAYMENTS

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

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

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

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

  1. To pay, without additional interest, the unpaid installments due within the total grace period earned by him, which is hereby fixed at the rate of one month grace period for every one year of installment payments made; provided, That this right shall be exercised by the buyer only once in every five years of the life of the contract and its extension, if any.
  2. If the contract is cancelled, the seller shall refund to the buyer the cash surrender value of the payments on the property equivalent to fifty percent of the total payments made and, after five years of installments, an additional five percent every year but not to exceed ninety percent of the total payments made; provided, That the actual cancellation of the contract shall take place after thirty days from receipt by the buyer of the notice of cancellation or the demand for recession of the contract by a notarial act and upon full payment of the cash surrender value to the buyer.Down payments, deposits or options on the contract shall be included in the computation of the total number of installment payments made.

SECTION 4. In case where less than two years of installments were paid, the seller shall give the buyer a grace period of not less than sixty days from the date the installment became due. If the buyer fails to pay the installments due at the expiration of the grace period, the seller may cancel the contract after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act.

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

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

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

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

SECTION 9. This Act shall take effect upon its approval

Approved, August 6, 1972.

The Subdivision and Condominium Buyer’s Protective Decree

PRESIDENTIAL DECREE 957

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

WHEREAS, it is the policy of the State to afford its inhabitants the requirements of decent human settlement and to provide them with ample opportunities for improving their quality of life; WHEREAS, numerous reports reveal that many real estate subdivision owners, developers, operators and/or sellers have reneged on their representations and obligations to provide and maintain properly subdivision roads, drainage, sewerage, water system, 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 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 business 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 of the Philippines, do hereby decree and order:

TITLE I – TITLE AND DEFINITIONS

SECTION 1. Title – This Decree shall be known as THE SUBDIVISION AND CONDOMINIUM BUYER’S PROTECTIVE DECREE

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

  1. Person – “Person” shall mean a natural or a juridical person. A juridical person refers to a business firm whether a corporation, partnership, cooperative, association or a single proprietorship.
  2. 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 thereon, if any, in a subdivision project or a condominium unit in a condominium project. “Sale or 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.
  3. Buy and Purchase – The terms “buy” and “purchase” shall include any contract to buy, purchase, or otherwise acquire for a valuable consideration subdivision lot, including the building and other improvements, if any, in a subdivision project or a condominium unit in a condominium project.
  4. 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.
  5. Subdivision Lot – “Subdivision Lot” shall mean any of the lots, whether residential, commercial, industrial, or recreational, in a subdivision project.
  6. 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.
  7. Condominium Project – “Condominium Project” shall mean the entire parcel of real property divided or to be divided primarily for residential purpose into condominium units, including all structures thereon.
  8. 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 or parts of floors) in a building or buildings and such accessories as may be appended thereto.
  9. Owner – “Owner” shall refer to the registered owner of the land subject of a subdivision or a condominium project.
  10. Developer – “Developer” shall mean the person who develops or improves the subdivision project or condominium project for and in behalf of the owner thereof.
  11. 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.
  12. 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.
  13. Salesman – “Salesman” shall refer to the person regularly employed by a broker to perform, for and in his behalf, any or all the functions of a real estate broker.
  14. Authority – “Authority” shall mean the National Housing Authority.

TITLE II – REGISTRATION AND LICENSE TO SELL

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

SECTION 4. Registration of Projects – The registered owner of a parcel of land who wishes to convert the same into a subdivision project shall submit his subdivision plan to the Authority which shall act upon and approve the same, upon 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 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 (RA 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 RA No. 440); Provided, that in 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 (RA 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 filing therewith a sworn registration statement containing the following information:

  1. Name of the owner;
  2. The location of the owner’s principal business office, and if the owner is non-resident Filipino, the name and address of his agent or representative in the Philippines authorized to receive notice;
  3. The names and addresses of all the directors and officers of the business firm, if the owners be a corporation, association, trust, or other entity and of all the partners, if it be partnership;
  4. The general character of the business actually transacted or to be transacted by the owner; ande) A statement of the capitalization of the owner, including the authorized and outstanding amounts of capital stock and the proportion thereof with its paid up.

The following documents shall be attached to the registration statement:

  1. A copy of the subdivision plan or condominium plans as approved in accordance with the first and second paragraphs of this section.
  2. 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;
  3. 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 thereto and existing by-laws or instruments corresponding thereto.
  4. A title to the property which is free from all liens and encumbrances; Provide, 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 thereof 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 of general circulation, one published in English and another in Pilipino, once a week for two consecutive weeks, reciting that a registration statement for the 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 or 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 statement filed by said owner or dealer and all 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 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 systems, lighting systems, and full development of the subdivision project or the condominium project and the compliance by the owner or dealer with 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 undertakings 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 subdivision lot or condominium unit by or for the account of a mortgagee in the ordinary course of business when necessary to liquidate a bonafide debt.

SECTION 8. Suspension of License to Sell – Upon verified complain filed by a buyer of a subdivision lot or condominium unit or 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 propio 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 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 nor 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 propio 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 the hearing as provided for in Section 14 hereof, it shall appear there is satisfactory evidence that the said owner or dealer:
a) is insolvent; orb) has violated any provisions of this Decree or any applicable rule or regulation of the Authority, or any undertaking of his/its performance bond; orc) has been or is engaged or is about to engage in fraudulent transactions; ord) 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; ore) is of bad business repute; orf) 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 condition or status thereof. The registers of subdivision lots and condominium units shall be open to public inspection subject to such reasonable rules as the Authority may prescribe.

TITLE III – DEALERS, BROKERS AND SALESMEN SECTION 11. Registration of Dealers, Brokers and Salesmen – No real estate dealer, broker or salesman shall engage in the business of selling subdivision lots or condominium units unless he has registered himself with the Authority in accordance with the provisions of this Section.  If the Authority shall find that the applicant is of good repute and has complied with the application rules of the Authority, including the payment of the prescribed fee, he shall register such applicant as a dealer, broker or salesman upon his filing of a bond, or other security in lieu thereof, in such sums 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;
  2. Has made a material false statement in his application for registration;
  3. Has been guilty of a fraudulent act in connection with any sale of a subdivision lot or condominium unit;
  4. Has demonstrated his unworthiness to transact the business of a dealer, broker, or a salesman as the case may be; In case of charges against a salesman, notice thereof shall also be given to 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 or 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 the suspension or revocation of the registration; Provided, that such order shall state the cause for the suspension.

TITLE IV – PROCEDURE FOR REVOCATION OF REGISTRATION CERTIFICATE

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

  1. 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.
  2. Venue – The hearing may be held before the officer or officers designated by the Authority on the date and place specified in the notice.
  3. Nature of proceedings – The proceedings shall be non-litigious and summary in nature without regard to 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.
  4. Power incidental to the hearings – For the purpose of the hearing or other proceedings under this Decree, the officer or officers designated to hear the complaint shall have the power to administer oath, 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 Pesos (P50.00) 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 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 the forfeiture, in whole or in part, of the performance bond mentioned in Section 6 hereof. In case of 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 be engaged in any act or practice which constitutes 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 hereof, issue a cease and desist order to enjoin such acts 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 if 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 the 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. Mortgage -No mortgage of 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 thereof.

SECTION 19. Advertisements – Advertisements that may be made by the owner or developer through newspaper, radio, televisions, leaflets, circulars or any other form about the subdivision or the condominium or its operations of 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 be answerable and liable for the facilities, improvements, infrastructures or other forms of development presented 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 advertisements, within one year from the date of the issuance of the license for the subdivision or condominium projects 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 (2) 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 obligation 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 developments 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 homeowner’s 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 the same. Such buyer may, at his option, be reimbursed the total amount paid including amortization interests but including delinquency interests, with interest thereon at the legal rate.

SECTION 24. Failure to Pay Installments. – The right of the buyer in the event of his failure to pay the installments due for reasons other than the failure of the owner or developer to develop the project shall governed by Republic Act No. 6552.

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 be paid by the owner or developer without recourse to the buyer for as long as the title has not passed to the buyer; Provided, however, that if the buyer has actually taken possession or 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 or occupancy.

SECTION 27. Other Charges. – No owner or developer shall levy upon any lot or unit 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 Subdivision – 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 public road or street and such right of way must be developed and maintained according to the requirement of the government authorities concerned.

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

SECTION 31. Donation 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 projects are 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 (10) hectares. The requirement imposed by this Decree on the subdivision as a whole shall be deemed imposed by phase.

SECTION 33. Nullity of Waivers – Any condition, stipulation or provision in a contract of sale whereby any person waives compliance with any provisions 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 to do so 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 expense of the owner or developer, jointly or severally, in case 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 installments 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 (P10,000.00) for violations of the provisions of this Decree or of any rule or regulations 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 Pesos (P20,000.00) and/or imprisonment of not more than ten (10) 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 parts 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.

(Sgd.) FERDINAND E. MARCOS
President Republic of the Philippines

Philippine Rental Law

Congress of the Philippines
Twelfth Congress

REPUBLIC ACT NO. 9161

AN ACT ESTABLISHING REFORMS IN THE REGULATION OF RENTALS OF CERTAIN RESIDENTIAL UNITS, PROVIDING THE MECHANISMS THEREFOR AND FOR OTHER PURPOSES

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

Section 1. Short Tittle. – This ACT shall be known and cited as the “Rental Reform Act of 2002″

Section 2. Declaration of Policy. – The State shall for the common good, undertake a continuing of urban land reform an housing which will make available at affordable cost decent housing and basic services to underprivileged and homeless citizens in urban centers and resettlement areas. Toward this end, the State shall establish reforms in the regulation of retails of certain residential units.

Section 3. Monthly Rental and Maximum Increase. – Beginning 01 January 2002 and for a duration of three (3) years thereafter ending on 31 December 2004, the monthly rentals of all residential units in the National Capital Region and other highly urbanized cities not exceeding Seven thousand five hundred pesos (P7,500.00) and the monthly rentals of all residential units is all other areas not exceeding Four thousand pesos (P4,000.00) shall not be increased annually by the lessor, without prejudice to existing contracts, by more than ten (10%).

Section 4. Definition of Terms. – The following terms as used in this Act shall be understood as:

  1. “Rental” shall mean the amount paid for the use or occupancy of a residential unit whether payment is made on a monthly or other basic.
  2. “Residential unit” shall refer to an apartment, house and/or land on which another’s dwelling is located and used for residential purpose and shall include not only buildings parts or units thereof used solely as dwelling places, boarding houses, dormitories, rooms and bedspaces offered for rent by their owners, except motels, motel rooms, hotels, hotels rooms, but also those used for home industries, retail stores or other business purposes if the owner thereof and his or her family actually live therein and use it principally for dwelling purposes.
  3. “Immediate members of family of the lessee or lessor” for purposes of repossessing the leased promises, shall be limited to his or her spouse, direct descendants or ascendants, by consanguinity or affinity.
  4. “Lessee” shall mean the person renting a residential unit.
  5. “Owner/Lessor” shall include the owner or administrator or agent of the owner of the residential unit.
  6. “Sublessor” shall mean the person who leases or rents out a residential unit leased to him by an owner.
  7. “Sublessee” shall mean the person who leased or rents out a residential unit from a sublessor.
  8. “Assignment of lease” shall mean the act contemplated in Article 1649 of the Civil Code of the Philippines.

Section 5. Rental and Deposit. – Rental shall be paid in advance within the first five (5) days of every current month or the beginning of the lease agreement unless the contract of lease provides for a later date of payment. The lessor cannot demand more than one (1) month advance rental and two (2) month’s deposit.

Section 6. Assignment of Lease of Subleasing. – Assignment of lease of subleasing of the whole or any portion of the residential unit, including the acceptance of boarders or bedspacers, without the written consent of the owner/lessor is prohibited.

Section 7. Grounds for Judicial Ejectment. – Ejectment shall be allowed on be the following grounds;

  1. Assignment of lease or subleasing of residential units in whole or part, including the acceptance of boarders or bedspacers, without the written consent of the owner/lessor.
  2. Arrears in payment of rent for a total of three (3) months Provided. That in the case of refusal by the lessor to accept payment of the rental agreed upon, the leased may either deposit by way of consignation, the amount in court, or with the city or municipal treasurer, as the case may be, or in a bank in the name of and with notice to the lessor, within one (1) month after the refusal of the lessor to accept payment.The lessee shall thereafter deposit the rental within ten (10) days of every current month. Failure to deposit the rental for three (3) month shall constitute a ground for ejectment. If an ejectment case is already pending, the court upon proper motion may order the lessee or any person or persons claiming under him to immediately vacate the leased premises without prejudice to the continuation of the ejectment proceedings. At any time, the lessor may, upon the authority of the court, withdraw the rentals deposited.The lessor, upon authority of the court in case of consignation or upon joint affidavit by him and the lessee to be submitted to the city or municipal treasure and to the bank where deposit was made, shall be allowed to withdraw the deposits;
  3. Legitimate need of the owner/lessor to repossess his or her property for his or her own use or for the use of any immediate member of his or her family as a residential unit: Provided, however. That the lease for a definite period has expired: Provided, further, That the lessor has given the lessee formal notice three (3) months in advance of the lessor’s intention to repossess the property and: Provided finally; That the owner/lessor is prohibited from leasing the residential unit or allowing its use by a third party for a period of at least one year from the time of repossession;
  4. Need of the lessor to make necessary repairs of the leased premises which is the subject of an existing order of condemnation by appropriate authorities concerned in order to make the said premises safe and habitable: Provided. That after said repair, the lessee ejected shall have the first preference to lease the same promises: Provided, however. That the new rental shall be reasonably commensurate with the expenses incurred for the repair of the said residential unit and: Provided, finally; That if the residential unit is condemned or completely demolished, the lease of the new building will no longer be subject to the aforementioned first-preference rule in this subsection; and
  5. Expiration of the period of the lease contract.

Section 8. Prohibition Against Ejectment by Reason of Sale or Mortgage. – No lessor or his successor-in-interest shall be entitled to eject the lessee upon the ground that the leased premises have been sold or mortgaged to a third person regardless of whether the lease or mortgage is registered or not.

Section 9. Ret-to-Own Scheme. – At the option of the lessor, he or she may engage the lessee in a written rent-to-own agreement that will result in the transfer or ownership of the particular dwelling in favor of the latter. Such an agreement shall be except from the coverage of Section 3 of this Act.

Section 10. Application of the Civil Code and Rules of Court of the Philippines. – Except when the lease is for a definite period, the provisions of paragraph (1) of Article 1673 of the Civil Code of the Philippines, insofar as they refers to residential units covered by this Act, shall be suspended during the effectivity of this Act, but other provisions of the Civil Code and the Rules of Court on lease contracts, insofar as they are not in conflict with the provisions of this Act shall apply.

Section 11. Coverage of this Act. – All residential units in the National Capital Region and other highly urbanized cities the total monthly rental for each of which does not exceed Seven thousand five hundred pesos (P7,500.00) and all residential units in all other areas the total monthly rental for each of which does not exceed Four thousand pesos (P4,000.00) as of the effectivity date of this Act shall be covered, without prejudice to existing contracts.

Section 12. Penalties. – a fine of not less than Five thousand pesos (P5,000) nor more than Fifteen thousand pesos (15,000.00) or imprisonment of not less than one (1) month and (1) day to not more than six (6) month or both shall be imposed on any person,natural or juridical, found guilty of violating any provision of this Act.

Section 13. Information Drive. – The Department of the Interior and Local Government and the Housing and Urban Development Coordinating Council, in coordination with other concern agencies, are hereby mandated to conduct a continuing information drive about the provisions of this Act.

Section 14. Transition Program. – The Housing and Urban Development Coordinating Council is hereby mandated to formulate, within six (6) months from effectivity hereof, a transition program which will provide for safety measures to cushion the impact of a free rental market.

Section 15. Separability Clause. – If any provision or part hereof is held invalid or unconstitutional, the remainder of the law or the provision not otherwise affected shall remain valid and subsisting.

Section 16.
 Repealing Clause. – Any law, presidential decree or issuance, executive order, letter of instruction, administrative order, rule or regulation contrary to or inconsistent with, the provisions of this Act is hereby repealed, modified or amended according.

Section 17. Effectivity Clause. – This Act shall take effect on 01 January 2002 following its publication in at least two (2) newspapers of general circulation.

Approved,

(Sgd)FRANKLIN M. DRILON
President of the Senate

(Sgd)JOSE DE VENECIA, JR.
Speaker of the House of Representatives

This Act which is a consolidation of House Bill No. 1949 and Senate Bill No. 214 was finally passed by the House of Representatives and the Senate on 20th December 2001

(Sgd)OSCAR G. YARES
Secretary of the Senate

(Sgd)ROBERTO P. NAZARENO
Secretary GeneralHouse of Representatives

(Sgd)GLORIA MACAPAGAL-ARROYO
President of the Philippines

Approved: December 22, 2001

The Condominium 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. 

Law on Urban Development and Housing Program

REPUBLIC ACT NO. 7279

AN ACT TO PROVIDE FOR A COMPREHENSIVE AND CONTINUING URBAN DEVELOPMENT AND HOUSING PROGRAM, ESTABLISH THE MECHANISM FOR ITS IMPLEMENTATION, AND FOR OTHER PURPOSES.

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

Article I – TITLE, POLICY, PROGRAM AND DEFINITION OF TERMS Section 1. Title – This Act shall be known as the “Urban Development and Housing Act of 1992.” Section 2. Declaration of State Policy and Program Objectives – It shall be the policy of the State to undertake, in cooperation with the private sector, a comprehensive and continuing Urban Development and Housing Program, hereinafter referred to as the Program, which shall:

  1. Uplift the conditions of the underprivileged and homeless citizens in urban areas and in resettlement areas by making available to them decent housing at affordable cost, basic services, and employment opportunities;
  2. Provide for the rational use and development of urban land in order to bring about the following:
    • Equitable utilization of residential lands in urban and urbanizable areas with particular attention to the needs and requirements of the underprivileged and homeless citizens not merely on the basis of market forces;
    • Optimization of the use and productivity of land and urban resources;
    • Development of urban areas conducive to commercial and industrial activities which can generate more economic opportunities for the people;
    • Reduction in urban dysfunctions, particularly those that adversely affect public health, safety and ecology; and
    • Access to land and housing by the underprivileged and homeless citizens;
  3. Adopt workable policies to regulate and direct urban growth and expansion towards a dispersed urban net and more balanced urban-rural interdependence;
  4. Provide for an equitable land tenure system that shall guarantee security of tenure to Program beneficiaries but shall respect the rights of small property owners and ensure the payment of just compensation;
  5. Encourage more effective people’s participation in the urban development process; and
  6. Improve the capability of local government units in undertaking urban development and housing programs and projects.

Section 3. Definition of Terms – For purposes of this Act:

  1. Affordable cost” refers to the most reasonable price of land and shelter based on the needs and financial capability of Program beneficiaries and appropriate financing schemes;
  2. Areas for priority development” refers to those areas declared as such under existing statutes and pertinent executive issuances;
  3. Blighted lands” refers to the areas where the structures are dilapidated, obsolete and unsanitary, tending to depreciate the value of the land and prevent normal development and use of the area.
  4. Consultation” refers to the constitutionally mandated process whereby the public, on their own or through people’s organizations, is provided an opportunity to be heard and to participate in the decision-making process on matters involving the protection and promotion of its legitimate collective interests, which shall include appropriate documentation and feedback mechanisms;
  5. Idle lands” refers to non-agricultural lands in urban and urbanizable areas on which no improvements, as herein defined, have been made by the owner, as certified by the city, municipal, or provincial assessor;
  6. Improvements” refers to all types of buildings and residential units, walls, fences, structures or constructions of all kinds of a fixed character or which are adhered to the soil but shall not include trees, plants and growing fruits, and other fixtures that are mere superimpositions on the land, and the value of improvements shall not be less than fifty percent (50%) of the assessed value of the property;
  7. Joint venture” refers to the commitment or agreement by two (2) or more persons to carry out a specific or single business enterprise for their mutual benefit, for which purpose they combine their funds, land resources, facilities and services;
  8. Land assembly or consolidation” refers to the acquisition of lots varying ownership through purchase or expropriation for the purpose of planned and rational development and socialized housing programs without individual property boundary restrictions;
  9. Land banking” refers to the acquisition of land at values based on existing use in advance of actual need to promote planned development and socialized housing programs;
  10. Land swapping” refers to the process of land acquisition by exchanging land for another price of land equal value, or for shares of stock in a government or quasi-government corporation whose book value is of equal value to the land being exchanged, for the purpose of planned and rational development and provision for socialized housing where land values are determined based on land classification, market value and assessed value taken from existing tax declarations:  Provided, That more valuable lands owned by private persons may be exchanged with less valuable lands to carry out the objectives of this Act;
  11. Land use plan” refers to the rational approach of allocating available land resources as equitably as possible among competing user groups and for different functions consistent with the development plan of the area and the Program under this Act;
  12. On-site development” refers to the process of upgrading and rehabilitation of blighted and slum urban areas with a view of minimizing displacement of dwellers in said areas, and with provisions for basic services as provided for in Section 21 hereof;
  13. Professional squatters” refers to individuals or groups who occupy lands without the express consent of the landowner and who have sufficient income for legitimate housing.  The term shall also apply to persons who have previously been awarded homelots or housing units by the Government but who sold, leased or transferred the same to settle illegally in the same place or in another urban area, and non-bona fide occupants and intruders of lands reserved for socialized housing.  The term shall not apply to individuals or groups who simply rent land and housing from professional squatters or squatting syndicates;
  14. Resettlement areas” refers to areas identified by the appropriate national agency or by the local government unit with respect to areas within its jurisdiction, which shall be used for the relocation of the underprivileged and homeless citizens;
  15. Security of tenure” refers to the degree of protection afforded to qualified Program beneficiaries against infringement or unjust, unreasonable and arbitrary eviction or disposition, by virtue of the right of ownership, lease agreement, usufruct and other contractual arrangements;
  16. Slum Improvement and Resettlement Program or SIR” refers to the program of the National Housing Authority of upgrading and improving blighted squatter areas outside of Metro Manila pursuant to existing statutes and pertinent executive issuances;
  17. Small property owners” refers to those whose only real property consists of residential lands not exceeding three hundred square meters (300 sq. m) in other urban areas;
  18. Socialized housing” refers to housing programs and projects covering houses and lots or homelots 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 the interest payments, and such other benefits in accordance with the provisions of this Act;
  19. Squatting syndicates” refers to groups of persons engaged in the business of squatter housing for profit or gain;
  20. Underprivileged and homeless citizens” refers to the beneficiaries of this Act and to individuals or families residing in urban and urbanizable areas whose income or combined household income falls within the poverty threshold as defined by the National Economic and Development Authority and who do not own housing facilities.  This shall include those who live in makeshift dwelling units and do not enjoy security of tenure;
  21. Unregistered or abandoned lands” refers to lands in urban and uranizable areas which are not registered with the Register of Deeds, or with the city or municipal assessor’s office concerned, or which are uninhabited by the owner and have not been developed or devoted for any useful purpose, or appears unutilized for a period of three (3) consecutive years immediately prior to the issuance and receipt or publication of notice of acquisition by the Government as provided under this Act.  It does not include land which has been abandoned by reason of force majeure or any other fortuitous event:  Provided, That prior to such event, such land was previously used for some useful or economic purpose;
  22. Urban areas” refers to all cities regardless of their population density and to municipalities with a population density of at least five hundred (500) persons per square kilometers;
  23. Urbanizable areas” refers to sites and lands which, considering present characteristics and prevailing conditions, display marked and great potential of becoming urban areas within the period of five (5) years; and
  24. Zonal Improvement Program or ZIP” refers to the program of the National Housing Authority of upgrading and improving blighted squatter areas within the cities and municipalities of Metro Manila pursuant to existing statutes and pertinent executive issuances.

Article II – COVERAGE AND EXEMPTIONS Section 4. Coverage – The Program shall cover all lands in urban and urbanizable areas, including existing areas for priority development, zonal improvement sites, slum improvement and resettlement sites, and in other areas that may be identified by the local government units as suitable for socialized housing. Section 5. Exemptions – The following lands shall be exempt from the coverage of this Act:

  1. Those included in the coverage of Republic Act No. 6657, otherwise known as the Comprehensive Agrarian Reform Law;
  2. Those actually used for national defense and security of the State;
  3. Those used, reserved or otherwise set aside for government offices, facilities and other installations, whether owned by the National Government, its agencies and instrumentalities, including government-owned or controlled corporations, or by the local government units:  Provided, however, That the lands herein mentioned, or portions thereof, which have not been used for the purpose for which they have been reserved or set aside for the past ten (10) years from the effectivity of this Act, shall be covered by this Act;
  4. Those used or set aside for parks, reserves for flora and fauna, forests and watersheds, and other areas necessary to maintain ecological balance or environmental protection, as determined and certified to by the proper government agency; and
  5. Those actually and primarily used for religious, charitable, or educational purposes, cultural and historical sites, hospital and health centers, and cemeteries or memorial parks.The exemptions herein provided shall not apply when the use or purpose of the abovementioned lands has ceased to exist.

Article III – NATIONAL URBAN DEVELOPMENT AND HOUSING RAMEWORK

Section 6. Framework for Rational Development – There shall be a National Urban Development and Housing Framework to be formulated by the Housing and Land Use Regulatory Board under the direction of the Housing and Urban Development Coordinating Council in coordination with all local government units and other concerned public and private sectors within one (1) year from the effectivity of this Act:

The Framework shall refer to the comprehensive plan for urban and urbanizable areas aimed at achieving the objectives of the Program.  In the formulation of the Framework, a review and rationalization of existing town and land use plans, housing programs, and all other projects and activities of government agencies and the private sector which may substantially affect urban land use patterns, transportation and public utilities, infrastructure, environment and population movements shall be undertaken with the concurrence of the local government units concerned.

Article IV – LAND USE, INVENTORY, ACQUISTION AND DISPOSITION

Section 7. Inventory of Lands – Within one (1) year from the effectivity of this Act, all city and municipal governments shall conduct an inventory of all lands improvements thereon within their respective localities.  The inventory shall include the following:

  1. Residential lands;
  2. Government-owned lands, whether owned by the National Government or any of its subdivisions, instrumentalities, or agencies, including government-owned or controlled corporations and their subsidiaries;
  3. Unregistered or abandoned and idle lands; and
  4. Other lands.In conducting the inventory, the local government units concerned, in coordination with the Housing and Land Use Regulatory Board and with the assistance of the appropriate government agencies, shall indicate the type of land use and the degree of land utilization, and other date or information necessary to carry out the purposes of this Act.For planning purposes, the Housing and Urban Development Coordinating Council shall be furnished by each local government unit a copy of its inventory which shall be updated every three (3) years.

Section 8. Identification of Sites for Socialized Housing – After the inventory, the local government units, in coordination with the National Housing Authority, the Housing and Land Use Regulatory Board, the National Mapping Resource Information Authority, and the Land Management Bureau, shall identify lands for socialized housing and resettlement areas for the immediate and future needs of the underprivileged and homeless in the urban areas, taking into consideration the degree of availability of basic services and facilities, their accessibility and proximity to job sites and other economic opportunities and the actual number of registered beneficiaries.

Government-owned lands under paragraph (b) of the preceding section which have not been used for the purpose for which they have been reserved or set aside for the past ten (10) years from the effectivity of this Act and identified as suitable for socialized housing, shall immediately be transferred to the National Housing Authority subject to the approval of the President of the Philippines or by the local government unit concerned, as the case may be, for proper disposition in accordance with this Act.

Section 9.  Priorities in the Acquisition of Land – Lands for socialized housing shall be acquired in the following order:

  1. Those owned by the Government or any of its subdivisions, instrumentalities, or agencies, including government-owned or controlled corporations and their subsidiaries;
  2. Alienable lands of the public domain;
  3. Unregistered or abandoned and idle lands;
  4. Those within the declared Areas for Priority Development, Zonal Improvement Program sites which have not yet been acquired;
  5. Bagong Lipunan Improvement of Sites and Services or BLISS sites which have not yet been acquired; and
  6. Privately owned lands.Where on-site development is found more practicable and advantageous to the beneficiaries, the priorities mentioned in this section shall not apply.  The local government units shall give budgetary priority to on-site development of government lands.

Section 10. Modes of Land-Acquisition – The modes of acquiring lands for purposes of this Act shall include, among others, community mortgage, land swapping, land assembly or consolidation, land banking, donation to the Government, joint-venture agreement, negotiated purchase, and expropriation:  Provided, however, That expropriation shall be resorted to only when other modes of acquisition have been exhausted:  Provided, further, That where expropriation is resorted to, parcels of land owned by small property owners shall be exempted for purposes of this Act:  Provided, finally, That abandoned property, as herein defined, shall be reverted and escheated to the State in a proceeding analogous to the procedure laid down in Rule 91 of the Rules of Court.

For the purpose of socialized housing, government-owned and foreclosed properties shall be acquired by the local government units, or by the National Housing Authority primarily through negotiated purchase:  Provided, That qualified beneficiaries who are actual occupants of the land shall be given the right of first refusal.

Section 11. Expropriation of Idle Lands – All idle lands in urban and urbanizable areas, as defined and identified in accordance with this Act, shall be expropriated and shall form part of the public domain.  These lands shall be disposed of or utilized by the Government for such purposes that conform with their land use plans.  Expropriation proceedings shall be instituted if, after the lapse of one (1) year following receipt of notice of acquisition, the owner fails to introduce improvements as defined in Section 3(f) hereof, except in the case of this provision, however, are residential lands owned by small property owners or those the ownership of which is subject of a pending litigation.

Section 12.  Disposition of Lands for Socialized Housing – The National Housing Authority, with respect to lands belonging to the National Government, and the local government units with respect to other lands within their respective localities, shall coordinate with each other to formulate and make available various alternative schemes for the disposition of lands to the beneficiaries of the Program.  These schemes shall not be limited to those involving transfer of ownership in fee simple but shall include lease, with option to purchase, usufruct or such other variations as the local government units or the National Housing Authority may deem most expedient in carrying out the purposed of this Act.

C onsistent with this provision, a scheme for public rental housing may be adopted.

Section 13. Valuation of Lands for Socialized Housing – Equitable land valuation guidelines for socialized housing shall be set by the Department of Finance on the basis of the market value reflected in the zonal valuation, or in its absence, on the latest real property tax declaration.

For sites already occupied by qualified Program beneficiaries, the Department of Finance shall factor into the valuation the blighted status of the land as certified by the local government unit or the National Housing Authority. Section 14. Limitations on the Disposition of Lands for Socialized Housing – No land for socialized housing, including improvements or rights thereon, shall be sold, alienated, conveyed, encumbered or leased by any beneficiary of this Program except to qualified Program beneficiaries as determined by the government agency concerned.

Should the beneficiary unlawfully sell, transfer, or otherwise dispose of his lot or any right thereon, the transaction shall be null and void.  He shall also lose his right to the land, forfeit the total amortization paid thereon, and shall be barred from the benefits under this Act for a period of ten (10) years from the date of violation.

In the event the beneficiary dies before full ownership of the land is vested on him, transfer to his heirs shall take place only upon their assumption of his outstanding obligations.  In case of failure by the heirs to assume such obligations, the land shall revert to the Government for disposition in accordance with this Act.

Article V – SOCIALIZED HOUSING

Section 15. Policy – Socialized housing, as defined in Section 3 hereof, shall be the primary strategy in providing shelter for the underprivileged and homeless.  However, if the tenurial arrangement in a particular socialized housing program is in the nature of leasehold or usufruct, the same shall be transitory and the beneficiaries must be encouraged to become independent from the Program within a given period of time, to be determined by the implementing agency concerned.

Section 16. Eligibility Criteria for Socialized Housing Program Beneficiaries – To qualify for the socialized housing program, a beneficiary:

  1. Must be a Filipino citizen;
  2. Must be an underprivileged and homeless citizen, as defined in Section 3 of this Act;
  3. Must not own any real property whether in the urban or rural areas; and
  4. Must not be a professional squatter or a member of squatting syndicates.

Section 17. Registration of Socialized Housing Beneficiaries – The Housing and Urban Development Coordinating Council, in coordination with the local government units, shall design a system for the registration of qualified Program beneficiaries in accordance with the Framework.  The local government units, within one (1) year from the effectivity to this Act, shall identify and register all beneficiaries within their respective localities. Section 18. Balanced Housing Development – The Program shall include a system to be specified in the Framework plan whereby developers of proposed subdivision projects shall be required to develop an area for socialized housing equivalent to at least twenty percent (20%) of the total subdivision area or total subdivision project cost, at the option of the developer, within the same city or municipality, whenever feasible, and in accordance with the standards set by the Housing and Land Use Regulatory Board and other existing laws.  The balanced housing development as herein required may also be complied with by the developers concerned in any of the following manner:

  1. Development of new settlement;
  2. Slum upgrading or renewal of areas for priority development either through zonal improvement programs or slum improvement and resettlement programs
  3. Joint-venture projects with either the local government units or any of the housing agencies; or
  4. Participation in the community mortgage program.

Section 19. Incentive for the National Housing Authority – The National Housing Authority, being the primary government agency in charge of providing housing for the underprivileged and homeless, shall be exempted from the payment of all fees and charges of any kind, whether local or national, such as income and real taxes.  All documents or contracts executed by and in favor of the National Housing Authority shall also be exempt from the payment of documentary stamp tax and registration fees, including fees required for the issuance of transfer certificates of titles.

Section 20. Incentives for Private Sector Participating in Socialized Housing – To encourage greater private sector participation in socialized housing and further reduce the cost of housing units for the benefit of the underprivileged and homeless, the following incentives shall be extended to the private sector:

  1. Reduction and simplification of qualification and accreditation requirements for participating private developers;
  2. Creation of one-stop offices in the different regions of the country for the processing, approval and issuance of clearances, permits and licenses:  Provided, That clearances, permits and licenses shall be issued within ninety (90) days from the date of submission of all requirements by the participating private developers;
  3. Simplification of financing procedures; and
  4. Exemption from the payment of the following:
    • Project-related income taxes;
    • Capital gains tax on raw lands used for the project;
    • Value-added tax for the project contractor concerned;
    • Transfer tax for both raw and completed projects; and
    • Donor’s tax for lands certified by the local government units to have been donated for socialized housing purposes.

Provided, That upon application for exemption, a lien on the title of the land shall be annotated by the Register of Deeds:  Provided, further, That the socialized housing development plan has already been approved by the appropriate government agencies concerned:  Provided, finally, That all the savings acquired by virtue of this provision shall accrue in favor of the beneficiaries subject to the implementing guidelines to be issued by the Housing and Urban Development Coordinating Council. Appropriate implementing guidelines shall be prepared by the Department of Finance, in consultation with the Housing and Urban Development Coordinating Council, for the proper implementation of the tax exemption mentioned in this section within one (1) year after the approval, of the Act. Property owners who voluntarily provide resettlement sites to illegal occupants of their lands shall be entitled to a tax credit equivalent to the actual non-recoverable expenses incurred in the resettlement, subject to the implementing guidelines jointly issued by the Housing and Urban Development Coordinating Council and the Department of Finance.

Section 21. Basic Services – Socialized housing or resettlement areas shall be provided by the local government unit or the National Housing Authority in cooperation with the private developers and concerned agencies with the following basic services and facilities:

  1. Potable water;
  2. Power and electricity and an adequate power distribution system;
  3. Sewerage facilities and an efficient and adequate solid waste disposal system; and
  4. Access to primary roads and transportation facilities

The provision of other basic services and facilities such as health, education, communications, security, recreation, relief and welfare shall be planned and shall be given priority for implementation by the local government unit and concerned agencies in cooperation with the private sector and the beneficiaries themselves.

The local government unit, in coordination with the concerned national agencies, shall ensure that these basic services are provided at the most cost-efficient rates, and shall set a mechanism to coordinate operationally the thrusts, objectives and activities of other government agencies concerned with providing basic services to housing projects.

Section 22. Livelihood Component – To the extent feasible, socialize3d housing and resettlement projects shall be located near areas where employment opportunities are accessible. The government agencies dealing with the development of livelihood programs and grant of livelihood loans shall give priority to the beneficiaries of the Program.

Section 23. Participation of Beneficiaries – The local government units, in coordination with the Presidential Commission for the Urban Poor and concerned government agencies, shall afford Program beneficiaries or their duly designated representatives an opportunity to be heard and to participate in the decision-making process over matters involving the protection and promotion of their legitimate collective interests which shall include appropriate documentation and feedback mechanisms.  They shall also be encouraged to organize themselves and undertake self-help cooperative housing and other livelihood activities.  They shall assist the Government in preventing the incursions of professional squatters and members of squatting syndicates into their communities.

In instances when the affected beneficiaries have failed to organize themselves or form an alliance within a reasonable period prior to the implementation of the program or projects affecting them, consultation between the implementing agency and the affected beneficiaries shall be conducted with the assistance of the Presidential Commission for the Urban Poor and the concerned non-government organization.

Section 24. Consultation with Private Sector – Opportunities for adequate consultation shall be accorded to the private sector involved in socialized housing project pursuant to this Act.

Article VI – AREAS FOR PRIORITY DEVELOPMENT, ZONAL IMPROVEMENT PROGRAM SITES AND SLUM IMPROVEMENT AND RESETTLEMENT PROGRAM SITES

Section 25. Benefits – In addition to the benefits provided under existing laws and other related issuances to occupants of areas for priority development, zonal improvement program sites and slum improvement and resettlement program sits, such occupants shall be entitled to priority in all government projects initiated pursuant to this Act. They shall also be entitled to the following support services:

  1. Land surveys and titling at minimal cost;
  2. Liberalized terms on credit facilities and housing loans and one hundred percent (100%) deduction from every homebuyer’s gross income tax of all interest payments made on documented loans incurred for the construction or purchase of the homebuyer’s house;
  3. Exemption from the payment of documentary stamp tax, registration fees, and other fees for the issuance of transfer certificate of titles;
  4. Basic services as provided for in Section 21 of this Act; and
  5. Such other benefits that may arise from the implementation of this Act.

Article VII – URBAN RENEWAL AND RESETTLEMENT

Section 26. Urban Renewal and Resettlement – This shall include the rehabilitation and development of blighted and slum areas and the resettlement of Program beneficiaries in accordance with the provisions of this Act. On-site development shall be implemented whenever possible in order to ensure minimum movement of occupants of blighted lands and slum areas. The resettlement of the beneficiaries of the Program from their existing places of occupancy shall be undertaken only when on-site development is not feasible and after compliance with the procedures laid down in Section 28 of this Act.

Section 27. Action Against Professional Squatters and Squatting Syndicates – The local government units, in cooperation with the Philippine National Police, the Presidential Commission for the Urban Poor (PCUP), and the PCUP accredited urban poor organization in the area, shall adopt measures to identify and effectively curtail the nefarious and illegal activities of professional squatters and squatting syndicates, as herein defined.

Any person or group identified as such shall be summarily evicted and their dwellings or structures demolished; and shall be disqualified to avail of the benefits of the Program. A public official who tolerates or abets the commission of the abovementioned acts shall be dealt with in accordance with existing laws.

For purposes of this Act, professional squatters or members of squatting syndicates shall be imposed the penalty of six (6) years imprisonment or a fine of not less than Sixty thousand pesos (P60,000) but not more than One hundred thousand pesos (P100,000), or both, at the discretion of the court.

Section 28. Eviction and Demolition – Eviction or demolition as a practice shall be discouraged.  Eviction or demolition, however, may be allowed under the following situations:

  1. When persons or entities occupy danger areas such as esteros, railroad tracks, garbage dumps, riverbanks, shorelines, underways, and other public places such as sidewalks, roads, parks, and playgrounds;
  2. When government infrastructure projects with available funding are about to be implemented; or
  3. When there is a court order for eviction and demolition.

In the execution of eviction or demolition orders involving underprivileged and homeless citizens, the following shall be mandatory:

  1. Notice upon the affected persons or entities at least thirty (30) days prior to the date of eviction or demolition;
  2. Adequate consultations on the matter of resettlement with the duly designated representatives of the families to be resettled and the affected communities in the areas where they are to be relocated;
  3. Presence of local government officials or their representatives during eviction or demolition;
  4. Proper identification of all persons taking part in the demolition;
  5. Execution of eviction or demolition only during regular office hours from Mondays to Fridays and during good weather, unless the affected families consent otherwise;
  6. No use of heavy equipment for demolition except for structures that are permanent and of concrete materials;
  7. Proper uniforms for members of the Philippine National Police who shall occupy the first line of law enforcement and observe proper disturbance control procedures; and
  8. Adequate relocation, whether temporary or permanent:  Provided, however, That in cases of eviction and demolition pursuant to a court order involving underprivileged and homeless citizens, relocation shall be undertaken by the local government unit concerned and the National Housing Authority with the assistance of other government agencies within forty-five (45) days from service of notice of final judgment by the court, after which period the said order shall be executed:  Provided, further, That should relocation not be possible within the said period, financial assistance in the amount equivalent to the prevailing minimum daily wage multiplied by sixty (60) days shall be extended to the affected families by the local government unit concerned.

The Department of the Interior and Local Government and the Housing and Urban Development Coordinating Council shall jointly promulgate the necessary rules and regulations to carry out the above provision.

Section 29. Resettlement – Within two (2) years from the effectivity of this Act, the local government units, in coordination with the National Housing Authority, shall implement the relocation and resettlement of persons living in danger areas such as esteros, railroad tracks, garbage dumps, riverbanks, shorelines, waterways, and in other public places such as sidewalks, roads, park, and playgrounds.  The local government unit, in coordination with the National Housing Authority, shall provide relocation or resettlement sites with basic services and facilities and access to employment and livelihood opportunities sufficient to meet the basic needs of the affected families.

Section 30. Prohibition Against New Illegal Structures – It shall be unlawful for any person to construct any structure in areas mentioned in the preceding section.

After the effectivity of this Act, the barangay, municipal or city government units shall prevent the construction of any kind of illegal dwelling units or structures within their respective localities.  The head of any local government unit concerned who allows, abets or otherwise tolerates the construction of any structure in violation of this section shall be liable to administrative sanctions under existing laws and to penal sanctions provided for in this Act.

Article VIII – COMMUNITY MORTGAGE PROGRAM

Section 31. Definition – The Community Mortgage Program (CMP) is a mortgage-financing program of the National Home Mortgage Finance Corporation which assists legally organized associations of underprivileged and homeless citizens to purchase and develop a tract of land under the concept of community ownership.  The primary objective of the program is to assist residents of blighted or depressed areas to own the lots they occupy, or where they choose to relocate to, and eventually improve their neighborhood and homes to the extent of their affordability.

Section 32. Incentives – To encourage its wider implementation, participants in the CMP shall be granted with the following privileges or incentives:

  1. Government-owned or controlled corporations and local government units, may dispose of their idle lands suitable for socialized housing under the CMP through negotiated sale at prices based on acquisition cost plus financial carrying costs;
  2. Properties sold under the CMP shall be exempted from the capital gains tax; and
  3. Beneficiaries under the CMP shall not be evicted nor dispossessed of their lands or improvements unless they have incurred arrearages in payments of amortizations for three (3) months.

Section 33. Organization of Beneficiaries – Beneficiaries of the Program shall be responsible for their organization into associations to manage their subdivisions or places of residence, to secure housing loans under existing Community Mortgage Program and such other projects beneficial to them.  Subject to such rules and regulations to be promulgated by the National Home Mortgage Finance Corporation, associations organized pursuant to this Act may collectively acquire and own lands covered by this Program.  Where the beneficiaries fail to form an association by and among themselves, the National Home mortgage Finance Corporation shall initiate the organization of the same in coordination with the Presidential Commission for the Urban Poor and the local government units concerned.  No person who is not a bona fide resident of the area shall be a member or officer of such association.

Article IX – RELATED STRATEGIES

Section 34. Promotion of Indigenous Housing Materials and Technologies – The local government units, in cooperation with the National Housing Authority, Technology and Livelihood Resource Center, and other concerned agencies, shall promote the production and use of indigenous, alternative, and low-cost construction materials and technologies for socialized housing.

Section 35. Transport System – The local government units, in coordination with the Departments of Transportation and Communications, Budget and Management, Trade and Industry, Finance, Public Works and Highways, the Home Insurance Guaranty Corporation, and other concerned government agencies, shall devise a set of mechanisms including incentives to the private sector so that a viable transport system shall evolve and develop in the urban areas.  It shall also formulate standards designed to attain these objectives:

  1. Smooth flow of traffic;
  2. Safety and convenience of travel;
  3. Minimum damage to the physical environment; and
  4. Adequate and efficient transport service to the people and goods at minimum cost.

Section 36.  Ecological Balance – The local government units shall coordinate with the Department of Environment and Natural Resources in taking measures that will plan and regulate urban activities for the conservation and protection of vital, unique and sensitive ecosystems, scenic landscapes, cultural sites and other similar resource areas.

To make the implementation of this function more effective, the active participation of the citizenry in environmental rehabilitation and in decision-making process shall be promoted and encouraged. The local government units shall recommend to the Environmental and Management Bureau the immediate closure of factories, mines and transport companies which are found to be causing massive pollution.

Section 37. Population Movements – The local government units shall set up an effective mechanism, together with the appropriate agencies like the Population Commission, the National Economic and Development Authority and the National Statistics Office, to monitor trends in the movements of population from rural to urban, urban to urban, and urban to rural areas.  They shall identify measures by which such movements can be influenced to achieve balance between urban capabilities and population, to direct appropriate segments of the population into areas where they can have access to opportunities to improve their lives and to contribute to national growth and recommend proposed legislation to Congress, if necessary.

The Population Commission, the National Economic and Development Authority, and the National Statistics Office shall likewise provide advanced planning information to national and local government planners on population projections and the consequent level of services needed in particular urban and urbanizable areas.  This service will include early-warning systems on expected dysfunctions in a particular urban area due to population increases, decreases, or age structure changes.

Section 38. Urban-rural Interdependence – To minimize rural to urban migration and pursue urban decentralization, the local government units shall coordinate with the National Economic and Development Authority and other government agencies in the formulation of national development programs that will stimulate economic growth and promote socioeconomic development in the countryside.

Article X – PROGRAM IMPLEMENTATION

Section 39.  Role of Local Government Units – The local government units shall be charged with the implementation of this Act in their respective localities, in coordination with the Housing and Urban Development Coordinating Council, the national housing agencies, the Presidential Commission for the Urban Poor, the private sector and other non-government organizations.

They shall prepare a comprehensive land use plan for their respective localities in accordance with the provisions of this Act.

Section 40.  Role of Government Housing Agencies – In addition to their respective existing powers and functions, and those provided for in this Act, the hereunder-mentioned housing agencies shall perform the following:

  1. The Housing and Urban Development Coordinating Council shall, through the key housing agencies, provide local government units with necessary support such as:
    • Formulation of standards and guidelines as well as providing technical support in the preparation of town and land use plans;
    • In coordination with the National Economic and Development Authority and the National Statistics Office, provide data and information for forward-planning by the local government units in their areas, particularly on projections as to the population and development trends in their localities and the corresponding investment programs needed to provide appropriate types and levels of infrastructure, utilities, services and land use patterns; and
    • Assistance in obtaining funds and other resources needed in the urban development and housing programs in their areas of responsibility.
  2. The National Housing Authority, upon request of local government units, shall provide technical and other forms of assistance in the implementation of their respective urban development and housing programs with the objective of augmenting and enhancing local government capabilities in the provision of housing benefits to their constituents;
  3. The National Home Mortgage Finance Corporation shall administer the Community Mortgage Program under this Act and promulgate rules and regulations necessary to carry out the provisions of this Act; and
  4. The Home Insurance Guaranty Corporation shall design an appropriate guarantee scheme to encourage financial institutions to go into direct lending for housing.

Section 41.  Annual Report – The Housing and Urban Development Coordinating Council and the local government units shall submit a detailed annual report with respect to the implementation of this Act to the President and the Congress of the Republic of the Philippines.

Article XI – FUNDING

Section 42. Funding – Funds for the urban development and housing program shall come from the following sources:

  1. A minimum of fifty percent (50%) from the annual net income of the Public Estates Authority, to be used by the National Housing Authority to carry outs its programs of land acquisition for resettlement purposes under this Act;
  2. Proceeds from the disposition of ill-gotten wealth, not otherwise previously set aside for any other purpose, shall be applied to the implementation of this Act and shall be administered by the National Home Mortgage Finance Corporation;
  3. Loans, grants, bequests and donations, whether from local or foreign sources;
  4. Flotation of bonds, subject to the guidelines to be set by the Monetary Board;
  5. Proceeds from the social housing tax and, subject to the concurrence of the local government units concerned, idle lands tax, as provided in Section 236 of the Local Government Code of 1991 and other existing laws;
  6. Proceeds from the sale or disposition of alienable public lands in urban areas; and
  7. Domestic and foreign investment or financing through appropriate arrangements like the build-operate-and-transfer scheme.

Section 43. Socialized Housing Tax – Consistent with the constitutional principle that the ownership and enjoyment of property bear a social function and to raise funds for the Program, all local government units are hereby authorized to impose an additional one-half percent (0.5%) tax on the assessed value of all lands in urban areas in excess of Fifty thousand pesos (P50,000).

Article XII – TRANSITORY PROVISIONS

Section 44.  Moratorium on Eviction and Demolition – There shall be a moratorium on the eviction of all program beneficiaries on the demolition of their houses or dwelling units for a period of three (3) years from the effectivity of this Act:  Provided, That the moratorium shall not apply to those persons who have constructed their structures after the effectivity of this Act and cases enumerated in Section 28 hereof.

Article XIII – COMMON PROVISIONS

Section 45. Penalty Clause – Any person who violates any provision of this Act shall be imposed the penalty of not more than six (6) years of imprisonment or a fine of not less than Five thousand pesos (P5,000) but not more than One hundred thousand pesos (P100,000), or both, at the discretion of the court:  Provided, That, if the offender is a corporation, partnership, association or other juridical entity, the penalty shall be imposed on the officer or officers of said corporation, partnership, association or other juridical entity who caused the violation.

Section 46. Appropriations – The amount necessary to carry out the purposes of this Act shall be included in the annual budget of implementing agencies in the General Appropriation Act of the year following its enactment into law and every year thereafter.

Section 47. Separability Clause – If for any reason, any provision of this Act is declared invalid or unconstitutional, the remaining provisions not affected thereby shall continue to be in full force and effect.

Section 48.  Repealing Clause – All laws, decrees, execution orders, proclamations, rules and regulations, and other issuances, or parts thereof which are inconsistent with the provisions of this Act, are hereby repealed or modified accordingly.

Section 49.  Effectivity Clause – This Act shall take effect upon its publication in at least two (2) national newspapers of general circulation.

Approved, March 24, 1992.

Law on Sale of Mortgaged Property

ACT NO. 3135 AS AMENDED

AN ACT TO REGULATE THE SALE OF PROPERTY UNDER SPECIAL POWERS INSERTED IN OR ANNEXED TO REAL-ESTATE MORTGAGES
(Act No. 3135, as amended)

Section 1. When a sale is made under a special power inserted in or attached to any real estate mortgage hereafter made as security for the payment of money or the fulfillment of any other obligation, the provisions of the following sections shall govern as to the manner in which the sale and redemption shall be effected, whether or not provision for the same is made in the power.

Section 2. Said sale cannot be made legally outside of the province which the property sold is situated; and in case the place within said province in which the sale is to be made is the subject of stipulation, such sale shall be made in said place or in the municipal building of the municipality in which the property or part thereof is situated.

Section 3. Notice shall be given by posting notices of the sale for not less than twenty days in at least three public places of the municipality or city where the property is situated, and if such property is worth more than four hundred pesos, such notice shall also be published once a week for at least three consecutive weeks in a newspaper of general circulation in the municipality or city.

Section 4. The sale shall be made at public auction, between the hours of nine in the morning and four in the afternoon; and shall be under the direction of the sheriff of the province, the justice or auxiliary justice of the peace (now Municipal Judge or Auxiliary Municipal Judge) or the municipality in which such sale has to be made, or of a notary public of said municipality, who shall be entitled to collect a fee of five pesos for each day of actual work performed, in addition to his expenses.

Section 5. At any sale, the creditor, trustee, or other person authorized to act for the creditor, may participate in the bidding, and purchase under the same conditions, as any other bidder, unless the contrary has expressly provided in the mortgage or trust deed under which the sale is made.

Section 6. In all cases in which an extra judicial sale is made under the special power hereinbefore referred to, the debtor, his successors in interest or any judicial creditor or judgment creditor of said debtor, or any person having a lien on the property subsequent to the mortgage or deed of trust under which the property is sold, may redeem the same at any time within the term of one year from and after the date of the sale, and such redemption shall be governed by the provisions of sections four hundred and sixty-four to four hundred and sixty-six, inclusive, of the Code of Civil Procedure (now Secs. 29, 30 and 34, Rule 39, Revised Rules of Court), in so far as these are not consistent with the provisions of this Act. (As amended by Act no. 4118)

Section 7. In any sale made under the provisions of this Act, the purchaser may petition the Court of First Instance of the province or place where the property or any part thereof is situated, to give him possession thereof during the redemption period, furnishing bond in an amount, equivalent to the use of the property for a period of twelve months, to indemnify the debtor in case it be shown that the sale was made without violating the mortgage or without complying with the requirements of this Act.  Such petition shall be made under oath and filed in form of an ex parte motion in the registration or cadastral proceedings if the property is registered, or in special proceedings in the case of property registered under the Mortgage Law or under section one hundred and ninety-four of the Administrative Code, or any other real property encumbered with a mortgage duly registered in the office of any register of deeds in accordance with any existing law, and in each case the clerk of the court shall, upon the filing of such petition, collect the fees specified in paragraph eleven of section one hundred and fourteen of Act Numbered four hundred and ninety-six, as amended by Act Numbered twenty-eight hundred and sixty-six; and the court shall, upon approval of the bond, order that a writ of possession issue, addressed to the sheriff of the province in which the property is situated, who shall execute said order immediately. (As amended by Act No. 4118.)

Section 8. The debtor may, in the proceedings in which possession was requested, but not later than thirty days after the purchaser was given possession, petition that the sale be set aside and the writ of possession cancelled, specifying the damages suffered by him, because the mortgage was not violated or the sale was not made in accordance with the provisions hereof, and the court shall take cognizance of this petition in accordance with the summary procedure provided in section One Hundred and Twelve of Act Numbered Four Hundred and Ninety-Six, and if it finds the complaint of the debtor justified, it shall dispose in his favor of all or part of the bond furnished by their person who obtained possession.  Either of the parties may appeal from the order of the judge in accordance with section fourteen of Act Numbered Four Hundred and Ninety-Six, but the order of possession shall continue in effect during the pendency of the appeal. (As amended by Act No. 4118)

Section 9. When the property is redeemed after the purchaser has been given possession, the redeemer shall be entitled to deduct from the price of redemption any rental that said purchaser may have collected in case the property or any part thereof was rented; if the purchaser occupied the property as his own dwelling, it being town property, or used it gainfully; it being rural property, the redeemer may deduct from the price the interest of one per centum per month provided for in Section Four Hundred and Sixty-Five of the Code of Civil Procedure. (As amended by Act No. 4118.)

Section 10. This Act shall take effect on its approval.

Approved, March 6, 1924.