5/28/2018 RA 4726 & PD 957

1/4

RA No. 4726 PD No. 957

AN ACT TO DEFINE CONDOMINIUM, ESTABLISH

REQUIREMENTS FOR ITS CREATION AND GOVERN ITS

INCIDENTS

Sec. 4 Provisions of this Act shall apply to property

divided or to be divided into condominium only if a

Master Deed has been recorded in the Register ofDeeds 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

Evidence of ownershipIn house and lot, evidenced

by original or transfer certificate of title while in

condominium, ownership is evidenced by

condominium certificate of title (ownership of a

condominium unit issued by the Register of Deeds of

the city or municipality where the condominium

project is located).

Capacity to buyIn house and lot, or lot only or

townhouse, alien acquisition is not allowed. In the

condominium concept, alien ownership not to exceed

40% interest in the project is legally allowed

Extent of ownershipthe interest of the owner in

house and lot consists of absolute ownership of the

inner and outer structures of the building (the entire

building). In the condominium concept, the unit

owner is the absolute owner of the space within theinterior surface of his unit, but is only a co-owner of

the exterior or faade of the unit

THE SUBDIVISION AND CONDOMINIUM PROTECTIVE

BUYERS DECREE

Purpose

P.D. No. 957 was enacted to protect helpless

citizens who may fall prey to the manipulations and

machinations of unscrupulous subdivision andcondominium sellers. (Eugenio v. Drilon, 322 Phil. 112

(1996)). It was issued in the wake of numerous reports

that many real estate subdivision owners, developers,

operators and/or seller have reneged on their

representations and obligations to provide and

maintain properly subdivision roads, drainage,

sewerage, water systems, lighting systems, and other

basic requirements for the health and safety of home

and lot buyers. (Casa Filipina Realty Corp. v. Office of

the Pres., 311 Phil. 170 (1995).

Definition of Terms (Sec 3)

Condominiuman interest in real property

consisting of absolute ownership in a unit in a

residential, industrial and commercial building and

common ownership in the land on which its located

and in common areas of the condominium project.

Condominium Unitthe space bounded by the

interior surface of those intended for independent

use or absolute ownership.

Common areasthe entire project, such as the land,

building structures, hallways, elevators, stairways,

electrical, water and plumbing system, and all

amenities in a condominium project, the exception is

the inside of the individual condominium unit.

Condominium corporationa non-stock and non-

profit corporation consisting of condominium unit

owners which is the management body of the

condominium project and owner of its commonareas. This is synonymous in function and nature to

the homeowners association in subdivisions except

that it is taking the form of a corporation. Take note

therefore that it is the reason why a condominium

unit can be personally owned by possession and title

by foreigners but only up to 40% of the total number

of units of the whole condominium project.

Condominium projectthe entire parcel of land

including all the structures thereon.

Master deedthe enabling act which creates thecondominium and contains the description of the

land, building, common areas facilities use of the

building, declaration of restrictions and plans of the

Sec 2

Condominium project -shall mean the entire parcel of

real property divided or to be divided primarily for

residential purposes into condominium units,

including all structures thereon.

Condominium unit-shall mean a part of the

condominium project intended for any type of

independent use or ownership, including one or more

rooms or spaces located in one or more floors (or part

of parts of floors) in a building or buildings and such

accessories as may be appended thereto.

Owner-shall refer to the registered owner of the land

subject of a subdivision or a condominium project.

Developer-shall mean the person who develops or

improves the subdivision

Buy and purchase-shall include any contract to buy,

purchase, or otherwise acquire for a valuable

consideration a subdivision lot, including the building

and other improvements, if any, in a subdivisionproject or a condominium unit in a condominium

project.

Sec 4 Registration of Projects

In case registered owner of land wishes to convert

such land to a condominium project, he/she must

register project to the National Housing Authority now

HLRUB.

Authority to publish the notice of the filing of theregistration statement at the expense of the

applicant-owner or dealer, in 2 newspapers of general

circulation, one published in English and another in

5/28/2018 RA 4726 & PD 957

2/4

land and buildings and annotated on the certificate of

title.

Declaration of restrictionsrefers to the set of rules,

procedures, policies and limitations as to the

management and usage of units and common areas

in a condominium project which constitutes a lien

upon the project and each unit and building upon all

unit owners, occupants, and others holding any rightor interest in the project, pursuant to the provisions

of the Condominium Act and other related laws.

STEPS IN FORMING CONDOMINIUM

1. Preparation of a Master Deed with Declaration of

Restrictions and registration with the Registry of

Deeds for annotation in the title.

2. Organization of a condominium corporation with

the project owners as incorporators.

3. Causing issuance of individual tax declarations and

condominium titles for the units and common areasfrom the Assessors Office and the Registry of Deeds

respectively.

4. Execution of Deed of Conveyance on the land and

common areas in favor of the condominium

corporation.

5. Application for registrations with the Housing and

Land Use Regulatory Board (HLURB).

CONTENTS OF A CONDOMINIUM MASTER DEED

1. Description of the land including survey plan2. Description of the building/s, enclosing technical

and diagrammatic plans.

3. Description of the common areas and facilities

4. Deed of registration

5. Certification of the registered owner of the

property if it is other than the one executing the

Master Deed, that he consents of the registration of

the deed.

Note: 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. (RA 7899 Amending Secs 4

and 16 of RA 4726)

Sec. 19. Where the enabling or master deed provides

that the land included within a condominium project

are to be owned in common by the condominium

owners therein the Register of Deeds may at the

request of all the condominium owner and uponsurrender of all their condominium owners 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.

CONTENTS OF A DECLARATION OF RESTRICTION

1. Formation of the condominium corporation, the

projects management body.

2. Procedures and guidelines on maintenance of units

and common areas.3. Rules and restrictions on the occupancy and usage

of units and common areas.

4. Provision for insurance coverage.

Pilipino, once a week for two consecutive weeks.

The fact of such registration shall be evidenced by a

registration certificate to be issued to the applicant-

owner or dealer.

Sec 5 After two weeks of obtaining a registration

certificate, the applicant-owner dealer can now applyfor a license to sell the project, and after payment of

performance bond (Sec 6).

Effect of absence of certificate of registration or

license to sell by the HLURB

In Sps. Co Chien v. Sta. Lucia Realty & Dev., Inc., et

al., G.R. No. 162090, January 31, 2007

There was a sale of a realty but there was a

contention that the sale is void for lack of prior

certificate of registration and license to sell by the

HLURB. Is the contention correct? Why?Held: No. P.D. 957 is a law that seeks to regulate the

sale of subdivision lots and condominiums in view of

the increasing number of incidents wherein real

estate subdivision owners, developers, operators,

and/or sellers have reneged on their representations

and obligations to prove and maintain properly the

basic requirements and amenities, as well as reports

of alarming magnitude of swindling and fraudulent

manipulations perpetrated by unscrupulous

subdivision and condominium sellers and operators.As such, P.D. 957 requires the registration not just of

the developers, seller, brokers and/or owners of the

project but also of the project itself. Upon the

registration of the project, a license to sell must be

obtained prior to the sale of the subdivision lots or

condominium units therein. The law also provides for

the suspension and revocation of the registration and

license in certain instances, as well as the procedure

to be observed in the event thereof.

Effect of failure develop subdivision within one year

from the issuance of license.

Under PD 957, the seller is obliged to develop the

subdivision, otherwise, the buyer has the right to

suspend payment and the only requirement under the

law is to give due notice to the owner or developer of

the buyersintention to suspend payment.

Option to suspend payment or demand for

reimbursement given to buyer

In case the developer of a subdivision orcondominium fails in its obligation under Section 20 of

P.D. No, 957, Section 23 of the law gives the buyer the

option to demand reimbursement of the total amount

paid, or to wait for further development of the

subdivision, and when the buyer opts for the latter

alternative, he may suspend payment of installments

until such time that the owner or developer had

fulfilled its obligation to him. (Tamayo v. Huang).

It is thus clear that the law provides two remedies incase of incomplete development of the subdivision

project: (1) reimbursement of the total amount paid,

including amortization interest but excluding

5/28/2018 RA 4726 & PD 957

3/4

5. Realty taxes and assessments on units andcommon areas.

6. Right of assignees, mortgagees, tenants and

occupants of the units.

7. Provision for assessments and fees.

8. Penalty provisions.

9. Procedures in amending restrictions.

RIGHTS OF A CONDOMINIUM OWNER (Sec 6)

1. Absolute ownership of his unit.

2. Limited ownership of walls, ceilings and floor

3. Co-ownership of the land and common areas in

proportion to the unit/s owned.

4. Exclusive easement of the air space within his unit.

5. Non-exclusive easement to common areas for

ingress and egress.

6. Repair, decorate the inner surfaces of his unit as he

pleases.

7. Sell, lease, mortgage his unit.8. Vote and be voted upon during meetings of the

condominium corporation.

CONVEYANCE (Sec 18)

Requisites:

1. A copy of the description of land

2. Brief description of condominium conveyed

3. Name and personal circumstances of the

condominium owner

Upon registration and payment of fees of an

instrument conveying a condominium, the Register of

Deeds shall enter and annotate the conveyance on

the certificate of title covering the land included

within the project. Transferee is then issued a

condominium owners copy of the pertinent portion

of such certificate of title.

In case 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 is sufficient if the

Register of Deed has the original or signed copy,

together with the certificate of the management

body of the project. A copy of said deed of

conveyance will be given 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 in accordance with the

provisions of the declaration of restrictions of such

project.

DISSOLUTION OF A CONDOMINIUM PROJECT

Term of corporationthe life of the condominium

corporation shall be co-terminus with the existence

of the condominium project and the registration and

regulation of the condominium corporation shall be

vested to the Housing and Land Use Regulatory Board

(Sec 11).

As per Building Code, a building has a life of 50 yearssubject to an extension of another 25 years upon

issuance of the soundness of its structure.

delinquency interests, with interest thereon at the

legal rate; or (2) for the buyer to suspend amortization

payments until the completion of the project. These

remedies are available to the prospective buyer to

give effect to the laws intent to protect the buyers

from abusive owners/developers of subdivisions. In

cases of incomplete development, it is the developer

who is the one at fault, as it would then have violatedits promise to the prospective buyers to provide the

necessary facilities in the subdivision. The aggrieved

party, therefore, is the prospective buyer because of

the non-fulfillment of the developers commitment.

As such, it is but logical that the option is given to the

prospective buyer, not to the developer.

5/28/2018 RA 4726 & PD 957

4/4

Note: 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 (RA 7899 Amending Secs 4 and 16

of RA 4726)

Effects of Voluntary Dissolution: (Sec 12)

a. The corporation shall be deemed to hold a power-

of-attorney from all unit owners/ members to sell

their separate interests in the project. (Sec 15)

b. Liquidation of the corporation shall be effected by

the sale of the entire project subject to the rights of

the corporation and individual creditors. (Sec 15)

c. The common areas held by the corporation shall be

transferred to the unit owners in the proportion to

their interests. (Sec 19)

EXCEPT as provided by Sec 13

3. Effects of Involuntary Dissolution:

The transfer shall be deemed full liquidation of the

interest of the members in the corporation.

SOME ADVANTAGES OF CONDOMINIUM

OWNERSHIP

- Enhances affordability

- Accessibility to the amenities of the metropolis.- Better security

- Maximizes land efficiency

- Lesser cost of facilities, services and maintenance

- Privacy

References:

RA 4726

PD 957

RA 7899

Housing and land Use Regulatory Board- /hlrub.gov.ph/

Board of Investments- /boi.gov.ph/

Real Estate Brokers of the Philippines - /rebap.com.ph/

Chamber of Real Estate and Builders Assn. Inc/creba.ph/