Magna Carta for Homeowners Associations

Policy and intent

Section 2 mandates the State to uphold constitutional principles that encourage, promote, and respect nongovernmental, community-based and people’s organizations.
Section 2 declares it State policy to uphold the rights of people to form unions, associations, or societies, and to recognize and promote the rights and roles of homeowners as individuals and as members of homeowners’ associations.
Section 2 directs the State to make available resources and assistance that help homeowners and homeowners’ associations serve community needs and complement local government units (LGUs).
Section 2 links homeowners’ associations to implementing local and national government policies, programs, rules, and ordinances for national development.

Key definitions under the law

Section 3 defines “Accounting period” as the fiscal or calendar year adopted by a homeowners’ association for recording and reporting fiscal transactions.
Section 3 defines “Association” as a homeowners’ association that is a nonstock, nonprofit corporation registered with HLURB, or one previously registered with the Home Insurance Guarantee Corporation (now Home Guaranty Corporation) or the Securities and Exchange Commission (SEC).
Section 3 defines “Association member” as a homeowner who is a member of the association where his/her housing unit or lot is situated, and those defined in the association’s articles of incorporation and bylaws.
Section 3 defines “Basic community services and facilities” as services and facilities that benefit all homeowners and cannot practically exclude any homeowner, including security; street and vicinity lights; maintenance, repairs and cleaning of streets; garbage collection and disposal; and other similar services and facilities.
Section 3 defines “Board” as the board of directors or trustees with primary authority to manage the association.
Section 3 defines “Common areas” as property owned or maintained, repaired, or administered by the association, including roads, parks, playgrounds and open spaces as provided in Presidential Decree No. 1216.
Section 3 defines “Common expense” as costs incurred by the association to exercise powers under the Act.
Section 3 defines “Homeowner” to include owners or purchasers; awardees/usufructuaries/legal occupants in government socialized or economic housing and other urban estates; and informal settlers being accredited as beneficiaries/awardees under the Community Mortgage Program (CMP), Land Tenure Assistance Program (LTAP), and similar programs.
Section 3 defines “Simple majority” as fifty percent (50%) plus one (1) of total association members.
Section 3 defines “Socialized housing” by reference to Republic Act No. 7279 and the Urban Development and Housing Act of 1992 (UDHA).
Section 3 defines “Subdivision/Village” as a tract or parcel partitioned into individual lots for primarily residential purposes.

Coverage and homeowner membership

Section 4 requires every homeowners’ association to register with the HLURB; that registration grants juridical personality to associations that have not acquired it through the General Corporation Law or any other general law.
Section 4 authorizes HLURB to provide in implementing rules an adjudicatory mechanism for disputes involving two (2) or more associations established within the same subdivision/village or housing project seeking registration, using factors such as date legally established, date of application, number of members, and similar factors.
Section 4 respects associations previously registered with the Home Insurance Guarantee Corporation or SEC, and they are not charged a penalty when registering with the HLURB after the Act takes effect.
Section 5 grants every homeowner the right to enjoy basic community services and facilities subject to payment of necessary fees and other pertinent charges.
Section 6 provides membership eligibility for homeowners and establishes that lessees, usufructuaries, or legal occupants may become homeowners upon procurement of written consent or authorization from the lot or housing unit owner.
Section 6 states that until consent/authorization is revoked in writing, the lot or unit owner is deemed to have waived rights under Section 7, except subsection (b) which may be simultaneously enjoyed by both owner and lessee.
Section 6 gives authorized lessees the full rights under the Act, including the duties and obligations under Sections 7, 8 and 9.
Section 6 treats lessees in government socialized housing projects or urban estates and lessees in communities of underprivileged and homeless citizens covered under Section 3 as homeowners for membership qualification without written consent or authorization.

Member rights, duties, and sanctions

Section 7 grants association members full rights to:
- avail of and enjoy basic community services and use common areas and facilities;
- inspect association books and records during office hours and receive annual reports including financial statements upon request;
- participate, vote, and be eligible for elective or appointive offices subject to bylaws qualifications;
- demand and promptly receive deposits required by the association once conditions are complied with or the period expires;
- participate in association meetings, elections, and referenda while bona fide membership subsists; and
- enjoy other rights provided in bylaws.
Section 8 obligates members to:
- pay membership fees, dues, and special assessments;
- attend association meetings; and
- support and participate in association projects and activities.
Section 9 requires bylaws to provide guidelines and procedures for determining delinquent members or members not in good standing and to prescribe administrative sanctions, while ensuring due process when sanctions are imposed.

Homeowners’ association governance powers and structure

Section 10 requires an association to exercise enumerated rights and powers, subject to consultation and the approval thresholds stated for specific acts.
Section 10 empowers the association, subject to consultation and simple majority approval, to adopt and amend:
- articles of incorporation and bylaws, rules, and regulations.
Section 10 authorizes the association to institute, defend, or intervene in litigation and/or administrative proceedings affecting the welfare of the association and the subdivision/village as a whole, excluding disputes not the association’s responsibility.
Section 10 empowers the association to regulate use and maintenance of common areas and make additional improvements, provided such actions do not contradict the approved subdivision plan.
Section 10 allows regulation of access and passage through subdivision/village roads to preserve privacy, tranquility, internal security, safety, and traffic order, provided that:
- public consultations are held;
- existing laws and regulations are met;
- relevant government agency authority is obtained; and
- appropriate memoranda of agreement are executed among concerned parties.
Section 10 authorizes the association to hire, discharge, or contract managing agents, employees, agents, and independent contractors for full functioning and operations.
Section 10 permits acquisition, holding, encumbrance, and conveyance of rights in property in the association’s name subject to consultation and simple majority approval, but it exempts personal property transactions not exceeding ten percent (10%) of the association’s cash holdings for normal operations from needing that simple-majority approval.
Section 10 requires the association to ensure quality water services at a reasonable price, and it may administer and manage the waterworks system of the subdivision at its option.
Section 10 allows the association, upon consultation, to grant easements, leases, concessions and authority to use common areas and to petition for or consent to vacation of streets and alleys, but it states the grant is not applicable to access roads, main interconnecting roads, alleys and sidewalks within the subdivision.
Section 10 allows the association to impose or collect reasonable fees for open spaces, facilities, and services to defray necessary operational expenses, subject to legal limitations and bylaws and board regulations.
Section 10 mandates compliance mechanisms for height regulations and land use within the subdivision in line with the National Building Code, zoning laws, HLURB rules and regulations, local ordinances, and deeds of restriction.
Section 10 allows prior consultation and simple majority approval for establishing institutions (including schools, hospitals, markets, grocery stores, and similar establishments) that affect subdivision character via traffic generation and/or opening the area to outsiders, provided it aligns with National Building Code, zoning, local ordinances, HLURB rules, and jurisprudence.
Section 10 exempts prior approval for sari-sari stores, home industries and similar small-scale business enterprises within the subdivision/village classified as socialized housing.
Section 10 allows the association to suspend privileges and services to members and/or impose sanctions for violations and/or noncompliance with bylaws and rules and regulations.
Section 10 allows the association to petition for creation of a separate barangay independently or with neighboring subdivisions if requirements of the Local Government Code of 1991 are met.
Section 10 authorizes the association to exercise other powers conferred by bylaws and HLURB necessary for governance and operation.

Board obligations, elections, and bylaws

Section 11 requires bylaws to provide board qualifications and the number of directors or trustees.
Section 12 requires the board to:
- regularly maintain an accounting system using generally accepted accounting principles and keep books open for inspection by homeowners and duly authorized government representatives upon request during reasonable hours on business days;
- collect fees, dues, and assessments provided by bylaws and approved by a majority of members;
- collect reasonable charges and, after due notice and hearing under bylaws and board rules, charge reasonable fines for late payments and bylaws violations, using a previously established schedule adopted by the board and furnished to homeowners;
- propose fund-raising measures and utilization plans for member consideration;
- undergo free orientation by HLURB or another competent agency deputized by it on how to conduct meetings, prepare minutes, handle accounts, and apply laws and pertinent rules and regulations within thirty (30) days after election or appointment;
- discharge duties under bylaws; and
- exercise other necessary and proper powers to accomplish association purposes.
Section 12 provides that the board acts on behalf of the association except for matters that require member vote or approval: amending articles of incorporation, dissolving the association, electing board members, determining qualifications/powers/duties/terms of office of the board, and other instances requiring members’ vote/approval.
Section 12 imposes a standard that board officers and members must exercise the degree of care and loyalty required by their positions.
Section 13 allows removal of a director/trustee through a signed petition by a simple majority of association members in good standing, subject to HLURB verification and validation, for causes provided in bylaws.
Section 13 states 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 remaining board must call an election to fill office for the unexpired term.
Section 14 allows dissolution of the board through a signed petition by 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 board dissolution, HLURB conducts an election to determine new board members for the unexpired term.
Section 14 mandates that until new board members are elected and qualified, HLURB designates an interim board composed of association members in good standing, and interim board members are not eligible to run in the election replacing the dissolved board.
Section 15 requires bylaws adopted by a simple majority and mandates that bylaws include specific governance and substantive provisions, including:
- member rights, duties, and obligations;
- circumstances for acquisition, maintenance, and loss of membership;
- schedules/venue/manner of regular, special, and emergency meetings of general membership, quorum, and allowable proxies;
- board number, qualifications, powers/duties, term limits, election/removal, and vacancy filling, with board member term not exceeding two (2) years;
- officers and employees’ qualifications/positions/duties/election/appointment/compensation, with officer term not exceeding two (2) years;
- no compensation for any officer holding a rank of director or trustee;
- board meeting procedures, quorum, and proxies;
- powers delegable to a managing agent and/or others;
- which officers can prepare/execute/certify/record amendments to governing documents on behalf of the association;
- grounds and procedure for removal of directors/trustees and vacancy filling consistent with Section 13;
- grounds and procedure for dissolution of the board and reconstitution consistent with Sections 13 and 14;
- rules limiting, broadening, or denying voting rights and the extent of such limitations;
- designation of a presiding officer at board and members’ meetings;
- the time for regular election of directors/trustees and notice mode;
- creation of election, grievance and audit committees and other committees, and a conciliation/mediation mechanism for amicable settlement of disputes among members, directors/trustees, officers, and committee members;
- dues, fees, and special assessments and how imposed/increased;
- method of adopting, amending, repealing, and abrogating bylaws;
- list of violations by officers and corresponding penalties;
- penalties for bylaws violations; and
- other matters necessary for proper corporate transaction.

Voting by proxy; records; financial disclosure

Section 16 authorizes association members to vote in person or by proxy in 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 limits proxies to the specific meeting they are intended for unless otherwise provided.
Section 16 caps proxy validity at no longer than three (3) years at anyone time, unless earlier revoked.
Section 17 requires the association and/or managing agent to keep financial and other records sufficiently detailed to enable truthful declaration of the association’s financial status to each member.
Section 17 states checks, bank records, invoices, and all records are the property of the association.
Section 17 requires the managing agent to turn over original books and records to the association immediately upon termination of management or upon board demand; it allows the managing agent to keep records, but requires records turned over to be reasonably available for examination and copying by the managing agent.
Section 17 grants owners, holders of mortgages, and authorized agents access to records involving association affairs with reasonable advanced notice during normal working hours at the association office.
Section 17 provides that mortgage holders may access property information with the written consent of the registered owner.
Section 17 requires an annual financial statement prepared by an auditor, treasurer and/or an independent certified public accountant within ninety (90) days from end of the accounting period, to be posted in the association office, bulletin boards, or other conspicuous places and submitted to the HLURB.
Section 17 mandates segregation of association funds by requiring accounts kept in the name of the association and prohibiting commingling with other associations or persons responsible for custody.

Relations with LGUs and national government

Section 18 directs homeowners’ associations to complement, support, and strengthen LGUs in providing vital services to members and implementing local policies, programs, ordinances, and rules.
Section 18 encourages cooperation with LGUs for residents’ benefits in the subdivision/village and its environs.
Section 18 requires associations to endeavor to provide basic services if LGUs lack resources.
Section 18 grants a tax exemption for association dues and income derived from rentals of facilities, recognizing association efforts assisting LGUs, provided dues and rental income are 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, or programs are to be implemented prior to their effectivity/implementation.
Section 18 requires simple majority approval of homeowners in cases of zonal reclassification.
Section 18 mandates that public consultations conform to Rule XI, Article 54 of the implementing rules and regulations of Republic Act No. 7160.
Section 19 requires associations to complement and strengthen national government agencies’ efforts in providing vital services and implementing national policies and programs.
Section 19 encourages active cooperation with national government agencies for residents’ benefits.
Section 19 requires national government agencies to consult associations where proposed rules, projects, and/or programs may affect their welfare.

HLURB duties, oversight, and procedures

Section 20 directs the HLURB to perform its functions in addition to its powers and responsibilities under Republic Act No. 8763, Presidential Decree No. 902-A, Batas Pambansa Blg. 68, and Executive Order No. 535 (Series of 1981), as amended.
Section 20 requires HLURB to regularly conduct free orientation for officers of homeowners’ associations or deputize another competent agency to conduct the orientation.
Section 20 requires HLURB to formulate and publish a Code of Ethics and Ethical Standards for board members detailing prohibited conflicts of interest.
Section 20 requires HLURB to register all associations, federations, confederations, or umbrella organizations of associations.
Section 20 authorizes HLURB to hear and decide intra-association and/or inter-association controversies and/or conflicts, without prejudice to civil and criminal cases in regular courts.
Section 20 provides that all HLURB decisions are appealable directly to the Court of Appeals.
Section 20 requires HLURB to formulate rules for the verification and validation of petitions for removal of director(s) or trustee(s) and dissolution of the board under Sections 13 and 14.
Section 20 requires HLURB to exercise the same powers over federations, confederations, or umbrella organizations of associations.
Section 20 requires HLURB to formulate, with association representatives, standard nomenclatures for books of accounts and standard articles of incorporation and bylaws for reference.
Section 20 requires HLURB, with association representatives, to formulate guidelines regulating kinds of contributions and fees associations may charge and/or collect.
Section 20 authorizes HLURB to call upon the Philippine National Police, other law enforcement agencies, and other government instrumentalities if necessary for enforcement of HLURB functions.
Section 21 authorizes HLURB to create positions and enlist additional personnel, upon its discretion, to carry out its mandate.

Prohibited acts and penalties

Section 22 prohibits any person from compelling a homeowner to join the association, without prejudice to deed of restrictions and its approved extensions or renewals, or contractual purchase arrangements, or award under CMP projects or similar tenurial arrangements.
Section 22 prohibits any person from depriving a homeowner of the right to avail or enjoy basic community services and facilities where the homeowner has paid the dues, charges, and other fees for such services.
Section 22 prohibits any person from preventing a homeowner who has paid required fees and charges from reasonably exercising the right to inspect association books and records.
Section 22 prohibits any person from preventing a member in good standing from participating in association meetings, elections, and referenda.
Section 22 prohibits denial of due process in imposing administrative sanctions.
Section 22 prohibits any person from exercising Section 10 rights and powers in violation of consultation and required approval numbers.
Section 22 prohibits unreasonably failing to provide basic community services and facilities, and unreasonably failing to maintain, repair, replace, or modify such facilities.
Section 22 prohibits unreasonably failing to comply with Section 17 obligations.
Section 22 prohibits violation of any other provision of the Act.
Section 23 imposes a fine of not less than Php5,000.00 but not more than Php50,000.00 and permanent disqualification from being elected or appointed as member of the board, officer or employee of the association on any person who intentionally or by gross negligence:
- violates any provision of the Act;
- fails to perform functions under the Act; and/or
- violates members’ rights.
Section 23 preserves liability in regular courts for violations of the Revised Penal Code, Civil Code, and other pertinent laws.
Section 23 holds liable association members, officers, directors, or trustees who actually participated in, authorized, or ratified the prohibited act when the violation is committed by the association.
Section 23 provides that where employees and agents commit violations through gross violation, the officers/directors/trustees/incorporators of the association are jointly and severally liable with the offending employees, agents, and the association.

Association bylaws review and implementation

Section 24 requires homeowners’ associations to conduct, within six (6) months from effectivity, a review of bylaws, draft rules of procedure to be incorporated in the bylaws, and conduct a plebiscite for member approval.
Section 24 requires simple majority to determine approval of the bylaws during the review/plebiscite process.
Section 25 directs that necessary amounts for implementation and HLURB additional functions be included in the annual General Appropriations Act.
Section 28 requires the HLURB to formulate and promulgate, in consultation with concerned sectors, rules and regulations to implement the Act within six (6) months of effectivity.
Section 28 bars HLURB from issuing any rule or regulation that undermines the organizational and territorial integrity of any association.

Separability, repeals, and final rules

Section 26 provides separability: if any provision is declared invalid or unconstitutional, the remainder remains valid and subsisting.
Section 27 repeals or modifies inconsistent issuances, laws, decrees, orders, rules, and regulations, or parts thereof.
Section 29 sets effectivity at fifteen (15) days after required publication.