Magna Carta for Homeowners and Associations

Registration and juridical personality

Section 4 requires every association of homeowners to register with the HLURB.
Section 4 provides that HLURB registration serves to grant juridical personality to associations that have not previously acquired it by operation of the General Corporation Law or other general law.
Section 4 directs that registration procedure be provided in HLURB implementing rules issued pursuant to Section 28.
Section 4 requires the registration procedure to include an adjudicatory mechanism when a dispute arises involving two (2) or more associations established within the same subdivision/village/community/area/housing project.
Section 4 requires the HLURB, in resolving such disputes, to take into account the date each association was legally established, the date each submitted its registration application, the number of members, and other similar factors.
Section 4 respects the existence of associations previously registered with the Home Insurance Guarantee Corporation or the SEC and bars charging penalties when such associations register with the HLURB after the Act takes effect.

Homeowner rights and association-member rights

Section 5 grants every homeowner the right to enjoy basic community services and facilities, provided that the homeowner pays necessary fees and other pertinent charges.
Section 6 provides that a homeowner as defined under the Act qualifies to be a member of an association provided that a lessee, usufructuary, or legal occupant has written consent/authorization from the owner of the lot or housing unit.
Section 6 states that until the consent/authorization is revoked in writing, the owner is deemed to have waived rights enumerated under Section 7, except subsection (b) of Section 7 which can be simultaneously enjoyed by both owner and lessee.
Section 6 provides that the lessee authorized under the Act qualifies as a member with all rights in Sections 7, 8, and 9.
Section 6 provides that lessees in government socialized housing projects or urban estates and those in communities of underprivileged and homeless citizens covered under the defined categories are considered homeowners for membership qualification without need of written consent/authorization.
Section 7 grants an association member full rights to:
- (a) avail of and enjoy basic community services and use of common areas and facilities;
- (b) inspect association books and records during office hours and receive annual reports, including financial statements, upon request;
- (c) participate, vote, and be eligible for elective or appointive office subject to bylaws qualifications;
- (d) demand and promptly receive deposits required by the association once the condition or period for deposit has been complied with/expired;
- (e) participate in meetings, elections, and referenda as long as bona fide membership subsists; and
- (f) enjoy other rights provided in association bylaws.
Section 7 does not limit these member rights except through the consent/qualification structure in Section 6 and bylaws qualifications referenced in Section 7(c).

Member duties; delinquency and due process

Section 8 provides that a member’s duties are to: (a) pay membership fees, dues, and special assessments; (b) attend association meetings; and (c) support and participate in association projects and activities.
Section 9 requires association bylaws to provide guidelines and procedures for determining delinquent members or members not in good standing.
Section 9 requires bylaws to prescribe administrative sanctions for delinquent members.
Section 9 requires due process when administrative sanctions are imposed on a delinquent member.

Homeowners’ association powers and governance

Section 10 authorizes an association to, among others:
- (a) adopt and amend articles of incorporation and bylaws, rules, and regulations subject to consultation and with approval of a simple majority of members;
- (b) institute, defend, or intervene in litigation and/or administrative proceedings affecting the association and the subdivision/village as a whole, excluding disputes not the association’s responsibility;
- (c) regulate common areas’ use, maintenance, repair, replacement, and modification and cause additional improvements that do not contradict the approved subdivision plan;
- (d) regulate access to/passage through subdivision/village roads for privacy, tranquility, internal security, safety, and traffic order, provided public consultations are held, existing laws are met, relevant government agency authority is obtained, and memoranda of agreement are executed among concerned parties;
- (e) hire/discharge/contract managing agents, employees, and other contractors to ensure full functioning;
- (f) acquire, hold, encumber, and convey in its own name rights to real or personal property with consultation and approval of a simple majority, but approval is not required for acquisition/holding/encumbrance/conveyance of personal properties not exceeding ten percent (10%) of the association’s cash holdings for normal operations;
- (g) ensure quality water services at a reasonable price and administer/manage the waterworks system at the association’s option;
- (h) grant easements, leases, concessions, and authority to use common areas and petition for/consent to the vacation of streets and alleys, provided such grants are not applicable to access roads, main interconnecting roads, alleys, and sidewalks within the subdivision;
- (i) impose or collect reasonable fees for open spaces, facilities, and services subject to limitations and conditions in law, HLURB regulations, and bylaws;
- (j) ensure compliance on height regulations, easements, use of homes/buildings/structures, consistent with the National Building Code, zoning laws, HLURB rules and regulations, local ordinances, and deeds of restriction;
- (k) subject to consultation and with approval of a simple majority, allow establishment of certain institutions affecting subdivision character or opening to outsiders, consistent with the National Building Code, zoning laws, local ordinances, HLURB rules and regulations, and jurisprudence, with no prior approval required for sari-sari stores, home industries, and similar small-scale business enterprises within the subdivision/village classified as socialized housing;
- (l) suspend privileges and services to and/or impose sanctions upon members for violations or noncompliance with bylaws and rules;
- (m) petition for the creation of a separate barangay independently or with neighboring subdivisions provided all requirements of the Local Government Code of 1991 are met; and
- (n) exercise other powers conferred by bylaws and HLURB necessary for governance and operation.
Section 11 requires bylaws to provide the qualifications and number of directors or trustees composing the board.
Section 12 imposes additional board duties and responsibilities:
- (a) maintain an accounting system using generally accepted accounting principles and keep books open for inspection to homeowners and authorized government agency representatives upon request during reasonable business hours;
- (b) collect fees/dues/assessments provided for in bylaws and approved by a majority of members;
- (c) after due notice and hearing in accordance with bylaws and board-adopted rules, collect charges and charge reasonable fines for late payments and violations, using a previously established schedule furnished to homeowners;
- (d) propose measures to raise funds and the utilization of funds for member consideration;
- (e) ensure free orientation by the HLURB or a competent agency deputized by it on meetings, minutes, handling of accounts, laws and pertinent rules within thirty (30) days after election or appointment;
- (f) discharge duties in bylaws; and
- (g) exercise other powers necessary and proper under the Act for the association’s purposes.
Section 12 provides that the board acts on behalf of the association except to amend articles, dissolve the association, elect board members, determine board qualifications/powers/duties/terms of office, and other matters requiring member vote/approval.
Section 12 requires board officers and board members to exercise the degree of care and loyalty required by their positions.
Section 13 allows removal of a director/trustee through a signed petition of a simple majority of members in good standing, subject to HLURB verification and validation, for causes provided in bylaws.
Section 13 provides that if a majority of the board is removed, it is considered dissolution of the entire board and Section 14 governs.
Section 13 requires that within sixty (60) days after removal, the remainder of the board calls an election to determine who holds office for the removed director/trustee’s unexpired term.
Section 14 allows dissolution of the board through a signed petition of two-thirds (2/3) of association members subject to HLURB verification and validation for causes in bylaws.
Section 14 requires that within sixty (60) days from dissolution, an election for a new board be called and conducted by the HLURB for the unexpired term.
Section 14 provides that until new board members are elected and qualified, the HLURB designates an interim board composed of association members in good standing, and interim board members are not eligible to run in the election to replace members of the dissolved board.
Section 15 requires bylaws to be adopted by a simple majority and to include specified governance items: member rights/duties/obligations; membership acquisition/maintenance/loss; meeting schedules/venue/manner, quorum, and proxies; board composition and limits on board term of office not exceeding two (2) years; officers and employees term of office not exceeding two (2) years; prohibition on compensation for officers holding rank of director or trustee; board meetings/venue/manner/quorum/proxies; powers delegable to managing agent/others; officers authorized to prepare/execute/certify/record amendments; grounds/procedure for removal consistent with Section 13; grounds/procedure for dissolution and reconstitution consistent with Sections 13 and 14; provisions on limiting/broadening/denying voting rights and the extent thereof; presiding officer designation; time and manner of regular elections and notice; creation of election/grievance/audit committees and a conciliation/mediation mechanism; dues/fees/special assessments and how imposed/increased; method for adopting/amending/repealing/bylaws; list of acts constituting violations by officers and corresponding penalties; penalties for bylaws violations; and other matters for proper corporate business and affairs.
Section 16 provides that association members may vote in person or by proxy in all meetings of members.
Section 16 requires proxies to be in writing, signed by the member, and filed before the scheduled meeting with the association secretary.
Section 16 provides that unless otherwise provided, a proxy is valid only for the meeting for which intended and cannot be valid/effective for longer than three (3) years at any one time unless earlier revoked by the member.
Section 17 enjoins the association and managing agent to:
- (a) keep financial and other records sufficiently detailed to declare each member’s true financial status; treat checks/bank records/invoices as association property; and require the managing agent to turn over original books and records immediately upon termination of management relationship or upon board demand, while allowing managing agent to keep association records; and make turned-over records reasonably available for the managing agent’s examination/copying;
- (b) make records involving the association’s affairs available for examination by all owners, mortgage holders, and authorized agents upon reasonable advanced notice during normal working hours at the association office, while mortgage holders need written consent of registered owner to access property information;
- (c) prepare an annual financial statement by an auditor, treasurer and/or independent certified public accountant within ninety (90) days from end of accounting period, and post it in the association office/bulletin boards/other conspicuous places and submit it to the HLURB;
- (d) keep association funds in accounts in the name of the association and prohibit joining association funds with funds of any other association or any person responsible for custody.
Section 18 requires associations to complement/support/strengthen LGUs and help implement local policies, programs, ordinances, and rules, and encourages active cooperation.
Section 18 provides that where LGUs lack resources to provide basic services, associations shall endeavor to tap means to provide them, and provides tax-exempt treatment for association dues and income from rentals of facilities used for cleanliness, safety, security and other basic services including maintenance of subdivision/village facilities.
Section 18 requires LGUs, upon due notice, to hold public consultations with members of affected associations—especially officers and directors—where proposed rules, zoning, ordinances, projects, and/or programs affecting jurisdiction and surrounding vicinity are to be implemented prior to effectivity/implementation.
Section 18 provides that in cases of zonal reclassification, approval of a simple majority of homeowners is required.
Section 18 requires consultations to conform to Rule XI, Article 54 of the implementing rules and regulations of Republic Act No. 7160.
Section 19 requires associations to complement/support/strengthen national government agencies’ efforts and encourage cooperation.
Section 19 requires national government agencies to consult associations where proposed rules, projects, and/or programs may affect welfare.

HLURB duties and implementation powers

Section 20 provides that, in addition to powers under Republic Act No. 8763, Presidential Decree No. 902-A, Batas Pambansa Blg. 68, and Executive Order No. 535 (Series of 1981), as amended, the HLURB shall:
- (a) conduct regular free orientation for association officers or deputize another competent agency;
- (b) formulate and publish a Code of Ethics and Ethical Standards for board members detailing prohibited conflicts of interest;
- (c) register all associations, federations, confederations, or umbrella organizations of associations;
- (d) hear and decide intra-association and/or inter-association controversies/conflicts without prejudice to filing civil and criminal cases in regular courts, and provide that HLURB decisions are appealable directly to the Court of Appeals;
- (e) formulate rules/manner of verification and validation of petitions for removal of directors/trustees or dissolution of the board under Sections 13 and 14;
- (f) exercise the same powers over federations, confederations, or umbrella organizations;
- (g) formulate, in consultation with representatives of associations and their umbrella bodies, standard nomenclatures for association books of accounts and a standard articles of incorporation and bylaws for homeowners’ associations for reference purposes;
- (h) formulate, in consultation with such representatives, guidelines regulating kinds of contributions and fees associations may charge/collect; and
- (i) call upon the Philippine National Police, other law enforcement agencies, and other governmental instrumentalities for enforcement if necessary.
Section 21 authorizes the HLURB, upon discretion, to create positions and enlist additional personnel to carry out its mandate.
Section 28 requires the HLURB to formulate and promulgate, in consultation with concerned sectors, rules and regulations necessary to implement the Act within six (6) months from effectivity.
Section 28 prohibits rules/regulations that tend to undermine the organizational and territorial integrity of any association.

Prohibited acts; penalties; bylaws review

Section 22 prohibits any person from:
- (a) compelling a homeowner to join the association, without prejudice to deed of restrictions and its approved extensions/renewals or annotations on title or contract purchase/Award under CMP or similar arrangements;
- (b) depriving a homeowner of the right to enjoy basic community services where dues/charges/fees have been paid;
- (c) preventing a homeowner who has paid required fees and charges from reasonably exercising the right to inspect association books and records;
- (d) preventing a member in good standing from participating in meetings, elections, and referenda;
- (e) denying any member due process in the imposition of administrative sanctions;
- (f) exercising rights and powers under Section 10 in violation of consultation and approval requirements of the required number of homeowners/members;
- (g) unreasonably failing to provide basic community services and facilities or to maintain/repair/replace/modify such facilities;
- (h) unreasonably failing to comply with Section 17; or
- (i) violating any other provision of the Act.
Section 23 imposes criminal penalties for intentional or gross-negligent violations: the violator must be punished with a fine of not less than PHP 5,000.00 but not more than PHP 50,000.00, and permanent disqualification from being elected or appointed as a member of the board, officer, or employee of the association, without prejudice to criminal prosecution under the Revised Penal Code, Civil Code, and other laws.
Section 23 provides liability rules by violator category:
- if the violation is committed by the association, members/officers/directors/trustees who actually participated in, authorized, or ratified the prohibited act are held liable;
- if committed by employees/agents acting in gross violation, officers/directors/trustees or incorporators are jointly and severally liable with the offending employees/agents and the association.
Section 24 requires each homeowners’ association, within six (6) months from effectivity, to conduct a review of its bylaws, draft its own rules of procedure to be incorporated in the bylaws, and conduct a plebiscite for member approval.
Section 24 requires the plebiscite approval to be determined by a simple majority.
Section 25 directs that amounts necessary to implement the Act and carry out HLURB additional functions and responsibilities shall be included in the annual General Appropriations Act.

Effectivity, separability, and repeals

Section 26 contains a separability clause stating that if any provision of the Act is declared invalid or unconstitutional, the remainder remains valid and subsisting.
Section 27 provides that all other issuances, laws, decrees, orders, rules and regulations, or parts thereof inconsistent with the Act are repealed or modified accordingly.
Section 28 requires HLURB implementing rules to be promulgated within six (6) months from effectivity.
Section 29 provides that the Act takes effect fifteen (15) days following its publication in the Official Gazette or in at least two (2) national newspapers of general circulation.
The Act was approved on January 7, 2010 and was finally passed by the Senate and House of Representatives on October 13, 2009.