Condominium Redevelopment Act

Offer of tips TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES ) First Regular Session ) AUG -5 P3:44 SENATE RECEVED BY S. No. 922 Introduced by Senator Jinggoy Ejercito Estrada AN ACT LOWERING THE PERCENTAGE REQUIREMENT FOR THE VOLUNTARY DISSOLUTION OF CONDOMINIUM CORPORATIONS FOR CONDEMNED PROJECTS AND PROJECTS IN EXISTENCE FOR MORE THAN THIRTY (30) YEARS, AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 4726, OTHERWISE KNOWN AS "THE CONDOMINIUM ACT" EXPLANATORY NOTE Republic Act No. 4726, otherwise known as "The Condominium Act" was signed into law on June 18, 1966. It was amended by Republic Act No. 7899 on February 23, 1995. The said laws govern the establishment and development of condominium projects in the country to ensure the safety and viability of the structure and define the rights and responsibilities of both the management and the unit owners. Hence, the condominium projects in the country, whether built for residential, commercial, or industrial use, continue to promote efficiency, accessibility, safety, security and even business opportunities. However, just like any other infrastructure, condominiums are also subject to wear and tear, as well as to damages due to man-made and natural calamities. Moreover, the continually evolving requirements and lifestyle of our people require the redesigning and restructuring of certain existing condominiums to be able to respond to the demands of the times while ensuring strength and safety.

Unfortunately, the current legal and regulatory restrictions make it nearly impossible to redevelop and rehabilitate a condominium project. For one, the voting requirements for the redevelopment of condominiums prove to be unreasonable because in order for a condominium corporation to be dissolved and its properties sold for redevelopment purposes, Republic Act No. 4726 currently requires unanimous vote of all shareholders or members of the condominium corporation - for the dissolution of the said corporation. These requirements must be relaxed in order to facilitate the desire of the condominium corporation stakeholders or members to improve their property, investment, and overall quality of life. It will also attract more investments in condominium redevelopment, improve the overall safety of metropolitan areas from natural disasters, and facilitate the corporate dissolution of condominium corporations. Japan and Singapore, in fact, have enacted laws similar to this proposed amendment. The "Condominium Redevelopment Act" seeks to lessen the vote requirements for the dissolution of a condominium corporation. Among the primary amendments that the measure proposes is to reduce the voting requirement for the dissolution of a condominium corporation from the current seventy percent (70%) to a simple majority for projects that have been condemned or expropriated, or projects that are no longer viable. Moreover, for projects that have been in existence for thirty (30) to fifty (50) years, it proposes to reduce from the current one hundred percent (100%) to two-thirds of the stockholders or members the voting requirement for the dissolution of a condominium corporation. Meanwhile, for projects that have been in existence for fifty (50) years or more, the voting requirement is proposed to be reduced from one hundred percent (100%) to a simple majority.

In view of the foregoing, the immediate passage of this bill is highly recommended. HINGGOY EJERCITO ESTRADA

SOCIE TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES ) AUG -5 P3:44 First Regular Session SENATE RECEIVED E! S. No. 922 Introduced by Senator Jinggoy Ejercito Estrada AN ACT LOWERING THE PERCENTAGE REQUIREMENT FOR THE VOLUNTARY DISSOLUTION OF CONDOMINIUM CORPORATIONS FOR CONDEMNED PROJECTS AND PROJECTS IN EXISTENCE FOR MORE THAN THIRTY (30) YEARS, AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 4726, OTHERWISE KNOWN AS "THE CONDOMINIUM ACT" Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

Section 1. Short Title. - This Act shall be known as the "Condominium

2 Redevelopment Act".

Sec. 2. Declaration of Policy. - It is hereby declared the policy of the State to

establish livable communities that provide equitable, inclusive, and resilient 5 opportunities for the improvement of human well-being while contributing to the 6 economic vitality of the community. It is likewise the policy of the State to ensure the safety and integrity of 8 existing and future condominium developments to protect the public against hazards 9 of aged buildings that pose threats to the owners and the general public. To this end, the State shall establish rules for the proper maintenance, repair, reconstruction, and redevelopment of condominium projects, ensuring that the property rights of units owners are respected while addressing the needs of the community and improving the overall quality of life of Filipinos.

Sec. 3. Scope. - This Act shall cover all condominium projects as defined in

Republic Act No. 4726, otherwise known as "The Condominium Act", which as now in existence, under construction, or which may be constructed hereinafter.

Sec. 4. Section 13 paragraph (d) of Republic Act No. 4726 is hereby

5 amended to read as follows: "Sec. 13. xxx "The enabling or master deed may be amended or revoked THROUGH A SPECIAL POWER GRANTED BY THE REGISTERED OWNERS, OR 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, OR MIXED use, simple majority shall be on a per unit of ownership basis, OR [and that in the case of mixed use, simple majority shall be] on a floor area of ownership basis, AS DETERMINED IN THE MASTER DEED: Provided, further, That prior notifications 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] DEPARTMENT OF HUMAN SETTLEMENTS AND URBAN DEVELOPMENT 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. 5. Section 6 of Republic Act No. 4726 is hereby further amended to read

as follows: "Sec. 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:

"(a) The boundary of the unit granted are the interior surfaces of the perimeter walls, floors, ceilings, windows and doors 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 hearing, central refrigeration and central air-conditioning equipment, reservoirs, tanks, pumps and other central services and facilities, pipes, ducts, flues, chutes, conduits, wires and other utility installations, wherever located, except the outlets thereof, when located within the unit. • UNIT AREAS WRITTEN ON ALL CONDOMINIUM CERTIFICATES OF TITLE SHALL BE DEEMED TO BE PRECEDED BY 'APPROXIMATELY' AND FOLLOWED BY 'SQUARE METERS, MORE OR LESS'." "X× x."

Sec. 6. Section 9 of Republic Act No. 4726 is hereby amended to read as

follows: "Sec. 9. xxX. "Such declaration of restrictions, among other things, may also provide: "(a) As to any such management body: "XXX "(8) For entry by its officers, [and] THE DEVELOPER, THEIR agents AND REPRESENTATIVES into any unit DURING EMERGENCY SITUATIONS WHERE THERE IS DANGER OF DAMAGE TO LIFE OR PROPERTY, when necessary in connection with the maintenance or construction for which such body is responsible, OR FOR MAINTENANCE AND REPAIRS RELATIVE TO COMMON AREAS AND OTHER CONDOMINIUM UNITS ARE CONCERNED, AND THE

MANAGEMENT BODY OR DEVELOPER AND THEIR RESPECTIVE AUTHORIZED REPRESENTATIVES SHALL NOT, BY REASON THEREOF, BE LIABLE FOR TRESPASS FOR SUCH ENTRY. IN THE EVENT ENTRY IS NOT GRANTED DESPITE REASONABLE NOTICE GIVEN THE PREVAILING CIRCUMSTANCES, SUCH CONDOMINIUM UNIT OWNER SHALL BE DEEMED AS HAVING ACTED IN BAD FAITH AND SHALL BE RESPONSIBLE FOR ALL DAMAGES WHICH MAY BE REASONABLY ATTRIBUTED TO NOT HAVING ALLOWED ENTRY FOR THE PREVENTION OF DAMAGE OR PERFORMANCE OF MAINTENANCE, CONSTRUCTION AND REPAIR WORKS."

Sec. 7. Section 10 of Republic Act No. 4726 is hereby amended to read as

follows: "Sec. 10. Whenever the common areas in a condominium project are [held] USED by a condominium corporation, such corporation shall constitute the management body of the project. The corporate purposes of such a corporation shall be limited 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. CONDOMINIUM DUES BASED ON THE ACTUAL USE, ACCESS AND ENJOYMENT BY THE MEMBERSHIP OR STOCKHOLDING OF THE COMMON AREAS OF THE PROJECT, WHETHER WHOLLY OR PARTIALLY, MAY BE ASSESSED BY THE CONDOMINIUM CORPORATION UPON INCORPORATION FOR MAINTENANCE OF THE COMMON AREAS.

"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. UNLESS PROVIDED OTHERWISE IN THE BY-LAWS, QUORUM FOR MEETING PURPOSES SHALL BE DETERMINED BY THE SIMPLE MAJORITY OF THE TOTAL CONDOMINIUM UNITS HELD BY MEMBERS IN GOOD STANDING. Membership in a condominium corporation, regardless of whether it is a stock or non-stock 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 an appurtenance. When a member or stockholder ceases to own a unit in the project in which the condominium corporation owns or holds the common areas, he/she shall automatically cease to be a member or stockholder of the condominium corporation. UNLESS PROVIDED OTHERWISE IN THE ARTICLES OF INCORPORATION AND BY-LAWS, JURIDICAL UNIT OWNERS MAY NAME, CONSTITUTE AND APPOINT AN ATTORNEY-IN-FACT WHO SHALL REPRESENT THE SAME IN THE CONDOMINIUM CORPORATION AND WHO MAY LIKEWISE RUN FOR AND BE ELECTED AND APPOINTED TO THE BOARD OR ANY OFFICERSHIP POSITION: PROVIDED, THAT SUCH ATTORNEY-IN-FACT WILL NOT CAUSE THE ALIEN INTEREST IN SUCH CORPORATION TO EXCEED THE LIMITS IMPOSED BY EXISTING LAWS."

Sec. 8. Section 13 of Republic Act No. 4726 is hereby amended to read as

follows: "Sec. 13. Until the enabling or the master deed of the project in which the condominium corporation owns or holds

the common area 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: "x XX "(d) That the project or a material part thereof has been condemned or expropriated and that the project is no longer viable, [er that the members holding in aggregate more than seventy percent interest in the corporation, if non stock, or the stockholders representing more than seventy percent of the capital stock entitled to vote, if a stock corporation,] OR THAT THE CONDOMINIUM OWNERS, BY A VOTE OF A MAJORITY (50% PLUS 1) OF THE STOCKHOLDERS OR MEMBERS THEREOF AT A GENERAL OR SPECIAL MEETING DULY CALLED FOR THE PURPOSE, are opposed to the continuation of the condominium regime after expropriation or condemnation of a material portion thereof; or "XXX. "

Sec. 9. Section 14 of Republic Act No. 4726 is hereby amended to read as

follows: "Sec. 14. The condominium corporation may also be dissolved by [by the affirmative vote of all the stockholder or members thereof at a general or special meeting duly called for the purpose: Provided, That all the requirements of Section sixty two of the Corporation Law are complied with.f IN THE FOLLOWING MANNER: "(A) IF THE PROJECT HAS BEEN IN EXISTENCE FOR THIRTY (30) YEARS OR MORE BUT LESS THAN FIFTY (50) YEARS, BY THE AFFIRMATIVE VOTE OF 2/3 OF THE STOCKHOLDERS OR MEMBERS THEREOF AT A GENERAL OR SPECIAL MEETING DULY CALLED FOR THE PURPOSE: PROVIDED, THAT ALL THE

REQUIREMENTS OF TITLE XIV OF THE REVISED CORPORATION CODE OF THE PHILIPPINES ARE COMPLIED WITH. "FOR PURPOSES OF THIS SECTION, THE VOTES OF EACH UNIT OWNER SHALL BE DETERMINED AND IN ACCORDANCE WITH SECTION 4 ABOVE."

Sec. 10. Section 15 of Republic Act No. 4726 is hereby amended to read as

follows: "Sec. 15. Unless otherwise provide for in the declaration of restrictions upon voluntary dissolution of a condominium corporation in accordance with the provisions of Sections thirteen and fourteen 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 corporate and of individual condominium creditors. A MEMBER OF STOCKHOLDER SHALL BE 2C ENTITLED TO AN ADVANCED PAYMENT OF THEIR PRO RATA SHARE FROM THE PROCEEDS OF THE SALE OF THE ENTIRE PROJECT BASED ON AN AGREED VALUATION BETWEEN THE CONDOMINIUM CORPORATION AND THE BUYER OF THE PROJECT. SUCH ADVANCED PAYMENT SHALL BE DEDUCTED FROM THE FINAL AMOUNT TO BE PAID TO THE MEMBER OR STOCKHOLDER."

Sec. 11. Section 16 of Republic Act No. 4726 is hereby further amended to

read as follows: "Sec. 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: 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] DEPARTMENT OF HUMAN SETTLEMENTS AND URBAN DEVELOPMENT, THE CONDOMINIUM CORPORATION MAY LEASE A PORTION OF THE COMMON AREAS OWNED OR HELD BY IT IN THE CONDOMINIUM PROJECT: PROVIDED, THAT SUCH DOES NOT INTERFERE WITH THE OPERATIONS AND SAFETY OF THE COMMUNITY AS WELL AS WITH THE USE THEREOF BY THE UNIT OWNERS, AND ALL NET RENTAL INCOME THEREOF INURE TO THE BENEFIT OF THE MEMBERS OR STOCKHOLDERS, AS THE CASE MAY BE."

Sec. 12. Section 18 of Republic Act No. 4726 is hereby amended to read as

follows: "Sec. 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 to reproduce the ownership status or series of transactions in force or annotated with respect to other condominiums in the project. A copy of the description of the land, a brief description of the 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 AND THERE ARE NO OUTSTANDING CONDOMINIUM DUES OR ARREARS OWED FROM SUCH UNIT. "In cases of condominium projects registered under the provisions of the Spanish Mortgage Law or Act 3344, as amended, the registration of the deed of conveyance or 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 conveyances of real property under said laws."

Sec. 13. Implementing Rules and Regulations. - The Department of Human

Settlements and Urban Development and the Human Settlements Adjudication Commission shall promulgate within six (6) months from the effectivity of this Act the rules and regulations to implement the provisions of this Act.

Sec. 14. Separability Clause. - If any provision or part hereof is held invalid

or unconstitutional, the remainder of the law or the provision or part not otherwise affected shall remain valid and subsisting.

Sec. 15. 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 are hereby repealed, modified, or amended accordingly.

Sec. 16. Effectivity. - This Act shall take effect fifteen (15) days after its

2 publication in the Official Gazette or in at least two (2) newspapers of general 3 circulation. Approved,