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

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 :

The Condominium
Act
RA 4726
(As Amended )

The Subdivision and

Condominium Buyers
Protective Decree
PD 957

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 PROJECTIt is the TOTALITY of the site (land),

condominium units, and
common areas.

CONDOMINIUM UNIT
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.

COMMON AREAS
- 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.
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

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.
RESERVED
FOR UNIT 201
FOR
ONLY
EVERYBODY S
COMMON USE

LIMITED OR DIVIDED Common

areas
which are allocated to the exclusive COMMON
use of one or group of unit owners.
Unit 168

EXTENT OF INTEREST IN
COMMON AREAS
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

DIFFERENCES BETWEEN CONDOMINIUM

vs.
TRADITIONAL OWNERSHIP
CONDOMINIUM
OWNERSHIP

TRADITIONAL
OWNERSHIP

EVIDENCE OF
OWNERSHIP

Condominium Certificate of Transfer Certificate of Title

Title CCT
( TCT, OCT )

PROPERTY RIGHTS

Absolute ownership of unit

and co-ownership on land
and common areas

RESTRICTIONS

Ownership of aliens should Aliens not allowed to own

not go beyond 40% of units land except by hereditary
in condominium corp.
succession/ special laws

Absolute ownership of land

and improvements

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.

reasonableness of the penalties and interests

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.

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

co-ownership of common areas

2. Share in realty tax on

common AREAS and land.

3. Exclusive easement of the air

encompassed by his unit.

3. Pay insurance of his unit.

4. Non-exclusive easement to
common areas.

4. Share the insurance of

common areas

RIGHTS

OBLIGATIONS

5. Repair, paint, redecorate the interior

surfaces of his unit

5. Comply
with use restrictions.

6. Sell, lease or mortgage his unit

6. Pay condominium dues and

assessments.

7. Vote in meetings of condominium

corporation

7. Give "right of first refusal" if

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

(b) Act as the management body.

(a) To hold title to the land and

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 extrajudicial 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

THE CONDOMINIUM ACT

R.A. 4726
( as amended )

Subdivision and
Condominium Buyers
Protective Decree

PD 957

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:

8.

Organization of Homeowners Association: Section 30

9.

Realty Taxes Payment: Section 26

10.

Other Charges: Section 27

Section 31, as amended by PD 1216

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