FOURTEENTH CONGRESS OF THE REPUBLIC) 
OF THE PHILIPPINES 
1 
First Regular Session 
) 
SENATE 
s . N ~ .  2072 
Introduced by Senator Miriam Defensor Santiago 
EXPLANATORY NOTE 
A homeowners’ association is a legal entity, usually a non-profit corporation, created to 
oversee the needs of its member-residents and provide an orderly, safe and peaceful environment 
consistent with the community’s shared values. However, the growing number of residents in 
certain communities has brought about an increase in disputes, particularly when the 
association’s regulations become a contentious issue among its members. Hence, it becomes 
necessary to lay down guidelines for the proper creation of homeowners’ associations, their 
powers, the scope of their authority, and their relationship with local government units (LGUs). 
This bill seeks to create a Magna Carta for Homeowners’ Associations to promote the 
roles of homeowners’ associations in serving the needs and interests of its members and the 
communities surrounding them, in conjunction with efforts of LGUs in providing vital and basic 
services to our citizens and in helping implement local and national government policies, 
programs, rules and ordinances, and to foster the growth and active participation of homeowners’ 
associations in the development of the nation. 


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FOURTEENTH CONGRESS OF THE REPUBLIC) 
OF THE PHILIF’PINES 
1 
First Regular Session 
) 
w: 
SENATE 
S. No. 2072 
Introduced by Senator Miriam Defensor Santiago 
AN ACT 
PROVIDING FOR A MAGNA CARTA FOR HOMEOWNERS’ ASSOCIATIONS 
Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
assem bled: 
SECTION 1. Title. - This Act shall be known as the “Magna Carta for Homeowners’ 
Associations of 2008.” 
SECTION 2. Declaration of Policy. - In fulfillment of the constitutional principles 
directing the State to encourage, promote and respect nongovernmental, community-based and 
people’s organizations in serving their legitimate collective interests in our participatory 
democracy, it is hereby declared the policy of the State to recognize and promote the roles of 
homeowners’ associations in serving the needs and interests of its members and the communities 
surrounding them, in complementing the efforts of local government units (LGUs) in providing 
vital and basic services to our citizens and in helping implement local and national government 
policies, programs, rules and ordinances, and to foster the growth and active participation of 
homeowners’ associations in the development of the nation. 
SECTION 3. Dejnidion of Terms. - For purposes of this Act, the following terms shall 
mean: 
(A) “Homeowners’ association, residents’ association or association” refers to a 
corporation, unincorporated association or other legal entity, duly registered with the Securities 
and Exchange Commission (SEC); each member of which is an owner of a residential real 
property located within the association’s territorial jurisdiction, as described in the governing 
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documents, in accordance with its by-laws and, by virtue of membership or ownership of 
property, is obligated to pay real property taxes, insurance premiums, maintenance costs, etc. 
(B) “Governing document” refers to articles of incorporation, by-laws, conditions, rules 
and regulations of the association, or other written instrument by which the association has the 
authority to exercise any of the powers provided for in this Act. 
(C) “Board of directors or board” refers to the body with primary authority to manage the 
affairs of the association. 
(D)“Residential real property” refers to any real estate property, the use of which is 
limited by law, to primarily residential purposes. 
(E) “Common areas” refers to property owned or othenvise maintained, repaired or 
administered in whole or in part by the association including, but not limited to, roads, parks, 
playgrounds and open spaces as provided in Presidential Decree No. 1216 or other facilities. 
(F) “Common expense” refers to costs incurred by the association to exercise any of the 
powers provided for in this Act. 
(G)“Subdivisiodvillage” refers to a tract or a parcel of land partitioned primarily for 
residential purposes into individual lots with or without improvements thereon. 
(H) “Homeowner” refers to the owner of the lot within a subdivisiodvillage. 
SECTION 4. Association Membership and Rights Theveoj - The membership of the 
association at all times shall consist exclusively of the owners of all real property over which the 
association has jurisdiction, both developed and undeveloped, and as prescribed in the 
association’s Articles of Incorporation and By-laws. An owner or purchaser of real property 
within the jurisdiction of the association automatically becomes a member of the association, 
with full rights to enjoy and use community services and facilities and to participate and vote and 
to be eligible to any elective or appointive office of the association during the annual election 
and to participate in association meetings, elections and referenda as long as hisher bona fide 
membership subsists. 
SECTION 5. Rights and Powers of the Association. - An association has the following 
rights and may exercise the following powers: 
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(A)Adopt and amend by-laws, rules and regulations subject to existing laws and 
regulations; 
(€3) Adopt and amend budgets for revenues, expenditures and reserves, and impose and 
collect membership dues and assessments for common expenses from owners/members; 
(C) Institute, defend or intervene in litigation or administrative proceedings in its own 
name on behalf of itself or two or more ownadmembers on matters affecting the homeowners’ 
association, excluding however disputes that are not the responsibility of the association; 
@)Regulate the use, maintenance, repair, replacement and modification of common 
areas and cause additional improvements to be made as part of the common areas: Provided, 
That the aforementioned do not contradict the provisions of the approved subdivision plan; 
(E) Regulate access to or passage through the subdivision of persons and vehicles for 
purposes of preserving privacy, internal security, safety and traffic order: Provided, That public 
consultation and hearings are held and the appropriate memorandum of agreement between and 
among the parties involved is executed; 
(F) Hire and discharge or contract managing agents and other employees, agents and 
independent contractors; 
(G) Acquire, hold, encumber and convey in its own name any right, title or interest to real 
or personal property and utilities in accordance with the articles and by-laws of the homeowners’ 
association; 
w)At its option, administer and manage the waterworks system of the subdivision, 
which shall be turned over by the developer upon completion of the subdivision; 
(I) Grant easements, leases and concessions through or over the open spaces and 
common areas and give prior consent to any petition for the vacation or temporary closure of 
streets and alleys; 
(J) Impose or collect reasonable fees on members and nonmembers who avail of or 
benefit from the use of open spaces, and the facilities and services of the association, to defray 
necessary operational expenses, subject to the limitations and conditions imposed under the law, 
regulations of the board and association’s by-laws; 
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(K)Suspend privileges and services to andor impose sanctions upon its members for 
violatiom and/or noncompliance with the association’s by-laws, rules and regulations, and upon 
nonmembers by reason of any act and/or omission prejudicial to the interest of the association 
and its members; 
(L) Impose and collect charges for the late payments of assessments and, after notice and 
an opportunity to be heard by the board of directors and in accordance with the procedures as 
provided in the by-laws or rules or regulations adopted by the board of directors, levy reasonable 
fines in accordance with a previously established schedule adopted by the board of directors and 
furnished to the owners for violation of the by-laws, rules and regulations of the association; 
(M) Require the prior approval of the majority of its residents in the establishment of 
certain institutions such as, but not limited to, schools, hospitals, markets, grocery stores and 
other similar establishments that will necessarily affect the character o f  the subdivision in terms 
of traffic to be generated and/or opening the area to outsiders which may result in loss of privacy 
to its residents; 
(N)Petition for the creation of a separate barangay, independently or together with 
neighboring subdivisions, pursuant to its right to self-determination: Provided, That all the 
requirements of the Local Government Code are met, including Article 14(G) of the rules and 
regulations implementing said Code, notwithstanding, the share of the newly created or 
converted barangay in the internal revenue allotment shall be taken from the twenty percent 
(20%) share of barangays, the same to be released one year after such conversion or creation, in 
accordance with the Code; 
(0)Exercise any other powers conferred by the by-laws; and 
(P) Exercise any other powers necessary for the governance and operation of the 
association. 
SECTION 6. Duties and Responsibilities of 
the Board of 
Directors/OfJicers of 
Homeowners ’ Associations. - The Board of directors or officers of homeowners’ associations 
have the following duties and responsibilities: 
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(A)To regularly maintain an accounting system and books of accounts in accordance 
with generally-accepted principles of accounting with nomenclatures conforming to standards 
formulated and prescribed by the SEC, together with representatives of homeowners’ 
associations. Such books of accounts should be submitted to the SEC at a prescribed date every 
year; 
(B)Undergo a free orientation by the SEC or any other competent agency deputized by it 
on how to conduct meetings, preparation of minutes, handling of accounts, laws and pertinent 
rules and regulations within thirty (30) days after election or appointment; 
(C) Discharge the duties and responsibilities provided for in the association’s by-laws; 
@)Exercise such other powers as may be necessary and proper for the effective 
enforcement of this Act and to accomplish the purposes for which the association was organized; 
and to do and perform any and all acts and deeds as are necessary and incidental to the 
attainment of the purposes of the association. 
The board of directors shall act in all instances on behalf of the association, except to 
amend the articles of incorporation, to take any action that requires the vote or approval of the 
homeowners, to terminate the association, to elect members of the board of directors or to 
determine the qualifications, powers and duties, or terms of office of the board of directors; but 
the board of directors may fill vacancies in its membership of the unexpired portion of any term. 
In the performance of their duties, the officers and members of the board of directors shall 
exercise the degree of care and loyalty required by such position. 
SECTION 7. Association’s Bylaws. - The by-laws of the association shall provide for: 
(A)The number, qualifications, powers and duties, terms of office and manner of electing 
and removing the board of directors and officers, and filling vacancies; 
(B) Election by the board of directors or officers of the association as the by-laws specify; 
(C) Which, if any, of its powers the board of directors or officers may delegate to other 
persons or a managing agent; 
@)Which of its officers may prepare, execute, certify and record amendments to the 
governing documents on behalf of the association; 
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(E) The method of amending the by-laws; 
(F) The list of acts constituting an offense/violation by its officers, and the corresponding 
penalties to be meted to erring officers; and 
(G)A list of contributions and fees that may be charged or collected by the association, 
SECTION 8. Review of Association s By-laws. - A homeowners’ association shall, 
within six (6) months from the effectivity of this Act, conduct a review of its by-laws, draft its 
own rules of procedure to be incorporated in the by-laws and conduct a plebiscite for the 
approval of the members of the association. A simple majority shall be used to determine the 
approval of the by-laws. 
SECTION 9. Financial and Other Records. - A homeowners’ association is enjoined to 
observe the following, with regard to its funds, financial and other records: 
(A)The association or its managing agent shall keep financial and other records 
sufficiently detailed to enable the association to filly declare to each member the true statement 
of its financial status. All financial and other records of the association including, but not limited 
to, checks, bank records and invoices, in whatever form they are kept, are the property of the 
association. Each association managing agent shall turn over all original books and records to the 
association immediately upon termination of the management relationship with the association, 
or upon such other demand as is made by the board of directors. An association managing agent 
is entitled to keep association records. All records which the managing agent has turned over to 
the association shall be made reasonably available for the examination and copying by the 
managing agent. 
(B) All financial records of the association, including the names and addresses of the 
owners and other occupants of the lots, shall be available for examination by all owners, holders 
of mortgages on the lots and their respective authorized agents on reasonable advance notice 
during normal working hours at the offices of the association or its managing agent. The 
association shall not release the unlisted telephone number of any owner. 
(C) A financial statement of the association shall be prepared annually by an independent 
certified public accountant and shall, within forty-five (45) days from the close of the accounting 
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period, submit an audited financial statement to the SEC. If the homeowners’ association cannot 
yet afford to retain the services of a certified public accountant as evidenced by its financial 
statements, the LGU that has jurisdiction over the homeowners’ association shall provide the 
services of a certified public accountant upon the written request of the concerned homeowners’ 
association. 
@)The funds of the association shall be kept in accounts in the name of the association 
and shall not be joined with the funds of any other association or any person responsible for the 
custody of such hnds. 
SECTION 10. Relationship with Local Government Units. - The homeowners’ 
associations may complement, support and strengthen LGUs in providing vital services to its 
members and helping implement local government policies, programs, ordinances and rules. 
Homeowners’ associati,ons are encouraged to actively cooperate with LGUs in 
furtherance of their common goals and activities for the benefit of the residents inside and 
outside of the subdivisions. 
LGUs shall secure the concurrence of homeowners’ associations where proposed rules, 
zoning and other ordinances, projects and/or programs affecting their jurisdiction and 
surrounding vicinity are to be implemented, prior to the effectivity or implementation of the 
same. 
SECTION 11. Relationship with National Government Agencies. - The homeowners’ 
associations shall complement, support and strengthen the efforts of the national government 
agencies in providing vital services to its members and in helping implement national 
government policies and programs. 
Homeowners’ associations are encouraged to actively cooperate with national 
government agencies in the furtherance of their common goals and activities for the benefit of 
the residents inside and outside of the subdivisions. 
National government agencies shall secure the concurrence of homeowners’ associations 
where proposed rules, projects and/or programs may affect their welfare. 
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SECTION 12. Duties and Responsibilities of the Securities and Exchange Commission 
(SEC). - In addition to the powers, authorities and responsibilities vested in it by Republic Act 
No. 8799, the SEC shall: 
(A) Conduct free orientation for officers of homeowners’ associations regularly or 
deputize another competent agency to conduct the orientation; 
(B) Prepare a standard copy of articles and by-laws for homeowners’ associations; 
(C) Register all homeowners’ associations, federations, confederations or umbrella 
organizations of homeowners’ associations; 
(D)Exercise the same powers over federations, confederations or umbrella organizations 
of homeowners’ associations; 
(E) Formulate, together with at least two representatives of homeowners’ associations, 
the standard nomenclatures to be used for the homeowners’ associations’ books of accounts; 
(F) Formulate, together with at least two representatives of homeowners’ associations, a 
list of contributions and fees that may be charged or collected by homeowners’ associations that 
will be included in the association’s by-laws; 
(G) Formulate, together with at least two representatives of homeowners’ associations, 
the guidelines in regulating the kinds of contributions and fees that may be charged and/or 
collected by homeowners’ associations other than those provided in the association’s by-laws; 
@)Act on all complaints filed by homeowners’ associations, all of which shall be treated 
as administrative in nature; and 
(I) Act on all complaints filed against homeowners’ associations, all of which shall be 
treated as administrative in nature. 
SECTION 13. Additional Positions and Personnel for the SEC. - For purposes of this 
Act, the SEC shall, upon its discretion, create positions and enlist additional personnel to carry 
out its mandate. 
SECTION 14. Penal Provision. - Any person who violates the provisions of this Act 
shall be punished with a tine of not less than Five Thousand Pesos (P5,OOO.OO) and/or permanent 
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disqualification from being elected or appointed as member of the board of directors, officer or 
staff in the association. 
SECTION 15. Separability Clause. - If any provision of this Act is declared invalid or 
unconstitutional, the remainder of the Act shall remain valid and subsisting. 
SECTION 16. Repealing Clause. - All other issuances, laws, decrees, orders, rules and 
regulations, or parts thereof inconsistent with this Act are hereby repealed or modified 
accordingly. 
SECTION 17. Implementing Rules and Regulations. - The Housing and Urban 
Development Coordinating Council (HUDCC), the Department of the Interior and Local 
Government (DILG) and the SEC shall formulate and promulgate the rules and regulations 
necessary to implement the provisions of this Act within six (6) months of its effectivity. 
SECTION 18. Effectivity. - This Act shall take effect fifteen (15) days following its 
publication in the Official Gazette or in at least two newspapers of general circulation. 
Approved, 
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