C O N D O M I N I U M CONCEPTS

Background Condominium housing was

basically born out of the

condition of limited land

space. In the Philippines,

the concept of

condominiums was

formally recognized with

the passage by Congress on

June 16, 1966 of

R.A. No. 4726 entitled An Act to Define

Condominium, Establish

Requirements for its

Creation, and Govern its

Incidence.

VERTICAL

CONDOMINIUM

Horizontal Condominium

Townhouse Project

The Condominium

Act

RA 4726

(As Amended )

The Subdivision and

Condominium Buyers

Protective Decree

PD 957

MAJOR LAWS GOVERNING CONDOMINIUMS

When it comes to condominium ownership, two (2) laws

affect the purchase and eventually the ownership of a

condominium unit, namely :

ADVANTAGES

OF

CONDOMINIUMS

Affordability is Enhanced - It enhances affordability by fractionalizing the cost

of land and building.

Maximizing Land Space - There is economy in land space. Families or

parties holding title to contiguous land may obtain

adequate housing by consolidating their land and

constructing a condominium thereon.

Facilities and Services

cheaper to build and maintain- This is because, unless otherwise provided in the Master Deed, their costs are distributed

equally among the unit owners.

Exclusive ownership of unit; - Co-ownership of undivided common areas and facilities

It involves retention of the psychological and economic

concepts of a family house through exclusive ownership of a

unit while holding co-ownership rights in the undivided

common areas and facilities.

Closer neighborhood or community

Due to the physical closeness of each unit and the

concept of co-ownership of common areas and facilities,

unit owners are bound to uphold the quality of their living

standards.

DEFINITION OF TERMS

CONDOMINIUM - This is an interest in real estate consisting of 1. absolute ownership in a unit of

residential, commercial or industrial

buildings and

2. common ownership of the land and

common areas of the condominium project.

CONDOMINIUM PROJECT-

It is the TOTALITY of the site (land),

condominium units, and

common areas.

This is the SPACE compassed by the

interior surface of the

floor, ceiling, walls, and

exterior doors and

windows, which is

susceptible of

INDEPENDENT USE and

OWNERSHIP.

CONDOMINIUM UNIT

- Refer to the weight bearing walls, columns and beams,

stairways, halls, elevators, etc. including the electrical,

water and plumbing systems and amenities in a

condominium project.

COMMON AREAS

There are two ( 2 ) kinds of common areas, namely:

(1) General (or undivided) common areas and

(2) Limited (or divided) common areas.

TYPES OF COMMON AREAS

RESERVED

FOR UNIT 201

ONLY

FOR

EVERYBODY S COMMON USE

GENERAL OR UNDIVIDED - These refer to the

parts of the condominium project which are not

subject to the exclusive use of any one or group of

owners.

Examples are: swimming pool, hallways, stairways,

elevator shafts, etc.

LIMITED OR DIVIDED - Common areas

which are allocated to the exclusive COMMON

use of one or group of unit owners.

Unit 168

1. In the absence of any provision in the Master Deed,

all unit owners shall have EQUAL SHARE in the

common areas.

2. The Master Deed may provide any of the following

alternatives:

2.1 Equal Sharing

2.2 Sharing Based on VALUE

2.3 Sharing Based on UNIT AREA in

relation to Total Area

EXTENT OF INTEREST IN

COMMON AREAS

DIFFERENCES BETWEEN CONDOMINIUM

vs.

TRADITIONAL OWNERSHIP

CONDOMINIUM

OWNERSHIP

TRADITIONAL

OWNERSHIP

EVIDENCE OF

OWNERSHIP

Condominium Certificate of

Title CCT

Transfer Certificate of Title

( TCT, OCT )

PROPERTY RIGHTS Absolute ownership of unit

and co-ownership on land

and common areas

Absolute ownership of land

and improvements

RESTRICTIONS Ownership of aliens should

not go beyond 40% of units

in condominium corp.

Aliens not allowed to own

land except by hereditary

succession/ special laws

IMPORTANT DOCUMENTS IN

CONDOMINIUM SALES

MASTER DEED - This is the ENABLING ACT of

any condominium project. This "enables" the

condominium to exist and governs its existence.

DEED OF RESTRICTIONS - The Deed of Restrictions

lays down the provisions for insurance

coverages, the management body, maintenance

costs and assessment basis and audit.

ARTICLES OF INCORPORATION AND BY-LAWS -

This establishes the birth and guidelines of the

condominium corporation.

RULES AND REGULATIONS - Determines what unit

owners and tenants can and cannot do.

MASTER DEED

A condominium project's Master Deed includes the following:

1. Description of LAND(S) included in the condominium project.

2. Description of the BUILDING(S) like the numbers of storeys,

basements, number of units and their attendant accessories.

3. Description of COMMON AREAS and FACILITIES which

are part and parcel of the project.

4. Description of the INTEREST acquired by the unit owners in the

common areas and land(s).

MASTER DEED . . .

5. PURPOSE(S) for which the building and units are to be

used.

6. CERTIFICATION BY REGISTERED OWNER OF THE

PROPERTY if he is other than those executing the Master

Deed, that he consents to the registration of the Deed.

7. DEED OF RESTRICTIONS

8. ANNEXES, land survey plan and building diagrammatic floor

plans.

DEED OF RESTRICTIONS

Deeds of Restrictions indicate:

1. Management Body

2. Provision for Insurance Coverage

3. Provisions for the Maintenance of Common Areas and

Facilities

4. Sharing of Realty Tax on Common Areas

5. Manner of Amending Restrictions

6. Independent Audit

7. Assessments and Dues

8. Project Partitioning and Dissolution of the Condominium

Corporation.

To reiterate, the Condominium Act expressly provides that the

Master Deed may empower the management body of the

Condominium to enforce the provisions of the declaration of restrictions. The Master Deed authorizes petitioner, as the management body, to enforce the provisions of the Master Deed

in accordance with petitioners By-Laws. Thus, petitioners Board of Directors is authorized to determine the

reasonableness of the penalties and interests to be imposed

against those who violate the Master Deed. Petitioner has

validly done this by adopting the House Rules

FIRST DIVISION

[G.R. No. 123552. February 27, 2003]

TWIN TOWERS CONDOMINIUM CORPORATION, petitioner,

vs. THE COURT OF APPEALS, ALS MANAGEMENT &

DEVELOPMENT CORPORATION, ANTONIO LITONJUA and

SECURITIES AND EXCHANGE COMMISSION, respondents.

reasonableness of the penalties and interests

RIGHTS AND OBLIGATIONS

OF UNIT OWNERS

RIGHTS OBLIGATIONS

1. Absolute ownership of unit. 1. Pay the realty tax on his unit.

2. Co-ownership of land and 2. Share in realty tax on

co-ownership of common areas common AREAS and land.

3. Exclusive easement of the air 3. Pay insurance of his unit.

encompassed by his unit.

4. Non-exclusive easement to 4. Share the insurance of

common areas. common areas

RIGHTS OBLIGATIONS

5. Repair, paint, redecorate the interior 5. Comply

surfaces of his unit with use restrictions.

6. Sell, lease or mortgage his unit 6. Pay condominium dues and

assessments.

7. Vote in meetings of condominium 7. Give "right of first refusal" if

corporation so required by Master Deed.

WHY A CONDOMINIUM

CORPORATION?

1. NECESSITY FOR CREATION -

The organization of a condominium corporation is

OPTIONAL IF NO UNIT WILL BE SOLD TO

FOREIGNERS.

The corporation is MANDATORY if some units, not

to exceed 40%, will be sold to foreigners. In such case, title

to the land shall be transferred to the corporation to comply

with the constitutional mandate that corporations may

acquire real estate provided that at least 60% of the capital

or membership is Filipino.

2. PURPOSES OF CORPORATION

(a) To hold title to the land and

(b) Act as the management body.

3. CONFLICTS WITH MASTER DEED

In case of conflict between the provisions of

the Articles of Incorporation of the condominium

corporation and the Master Deed, the latter shall

prevail based on the following reasons:

3.1 It is the Master Deed which gives birth to

the condominium project.

3.2 The Condominium Act provides

that the Articles of Incorporation of the

condominium corporation shall not conflict

with the Master Deed.

4. TERM OF CORPORATION - The life of the condominium corporation shall be co-terminous with the existence of the

condominium project.

5. EFFECTS OF VOLUNTARY DISSOLUTION (A) The corporation shall be deemed to hold a power of

attorney from all stockholders or members to sell their

separate interest in the project.

(B) Liquidation of the corporation shall be effected by the

sale of the entire project subject to the rights of the

Corporation and individual condominium creditors.

6. EFFECTS OF INVOLUNTARY DISSOLUTION (A) The common areas held by the corporation shall be

transferred pro-indiviso and in proportion to their interest to

the members or stockholders.

(B) The transfer shall be deemed full liquidation of the

interest of the members or stockholders in the corporation.

PERTINENT PROVISIONS OF

THE CONDOMINIUM ACT ( R.A. 4726 as amended )

Sec. 4 . x x x 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 the case of mixed use,

simple majority shall be on a floor area of ownership basis:

Provided, further, That prior notifications to all registered owners

are done: and

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/municipal engineer for approval before it can be

registered. Until registration of a revocation, the provisions of this

Act shall continue to apply to such property. (Sec. 4, As amended

by R.A. No. 7899, approved Feb. 23, 1995)

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

shareholdings in the condominium corporation;

transfer or

conveyance of

a unit

transfer or

conveyance of the

undivided interest in

the common areas

Membership/

SHAREHOLDINGS

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 or corporation at least 60% of

the capital stock of which belong to 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 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 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:

a) That three years after damage or destruction to the project which

renders 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

b) 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 percent interest in

the common areas are opposed to repair or restoration of the

project; or

c) That the project has been in existence in excess of 50 years,

that it is obsolete and uneconomical, and that condominium

owners holding in aggregate more than 50 percent interest in

the common areas are opposed to repair or restoration or

remodeling or modernizing of the project; or

d) 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%

interest in the common areas are opposed to the continuation

of the condominium regime after expropriation or condemnation

of a material proportion thereof; or

e) 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.

Action for PARTITION by sale may be made only

upon a showing that:

3 years after damage or destruction Project has not been rebuilt or repaired.

which render a material part thereof

unfit for use.

Damage or destruction has rendered Owners holding in aggregate

one-half (1/2) of the units untenantable. more than 30% interest in common areas

opposed to repair or restoration of the

project.

Project is more than 50 years Owners holding in aggregate

obsolete and uneconomical. more than 50% interest in common areas

opposed to repair or restoration or

remodeling or modernization of the

project.

Project or material part thereof is Owners holding in aggregate

CONDEMNED OR EXPROPRIATED more than 70% interest in common areas

and the project is no longer viable. opposed to the continuation of the

condominium regime after expropriation

or condemnation.

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 purposes of such a 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 declaration of

restrictions of the project.

Membership in a condominium corporation, regardless of

whether it is stock or non-stock corporation, shall not be

transferable separately from the condominium unit of which it is an

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 automatically cease

to be a member or stockholder of the condominium

corporation.

SECTION 11.

The term of a condominium corporation shall be

coterminous with the duration of the condominium project, the provisions of the

Corporation Law to the contrary notwithstanding.

SECTION 14. The condominium corporation may also be dissolved by the affirmative vote 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 Sections 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 interests in the project and liquidation of

the corporation shall be effected 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 notifications 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 Housing and Land Use Regulatory Board. (As amended by R.A. No. 7899, approved Feb. 23, 1995)

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 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.

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) and 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

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 of

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 encumbrances.

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 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 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 25. Whenever real property has been divided into condominiums, each condominium separately owned shall be

separately assessed, for purposes of real property taxation and

other tax purposes, to the owners thereof, and tax on each such

condominium shall constitute a lien solely thereon.

REAL PROPERTY TAXES

(Account of UNIT OWNER)

LAWS

GOVERNING CONDOMINIUMS

Subdivision and

Condominium Buyers Protective Decree

PD 957

THE CONDOMINIUM ACT

R.A. 4726 ( as amended )

PERTINENT PROVISIONS UNDER PD 957 APPLIED TO CONDOMINIUM PROJECTS

I. Duties and Responsibilities of Owners/Developers of

Subdivision and Condominium Projects under PD 957 (Please refer to the particular sections of PD 957 as follows:)

1. Mortgage: Section 18

2. Advertisements: Section 19

3. Time of Completion: Section 20

4. Alteration of Plan: Section 22

5. Non-Forfeiture of Payments: Section 23

6. Issuance of Title: Section 25

7. Donations of Open Spaces: Section 31, as amended by PD 1216

8. Organization of Homeowners Association: Section 30

9. Realty Taxes Payment: Section 26

10. Other Charges: Section 27

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, television, 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 mislead or deceive the public.

The owner or developer shall be answerable and liable for the facilities,

improvements, infrastructures or other forms of development represented

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 of

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 project or

such other period of time as may be fixed by the Authority.

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

with 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 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 of and

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 and occupancy.

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.

THANK YOU