SUBDIVISION DEVELOPMENT

AND
PERTINENT LAWS, RULES AND
REGULATIONS
A. LAWS
1. Executive Order No. 648 (1981)
The HLRB was reorganized and revitalized and was vested with
quasi-judicial powers to make it a more effective regulatory agency.
By virtue of said order, it assumed the functions of the National
Housing Authority on real estate management and was mandated
to enforce P.D. 957, P.D. 1216 and P.D. 1517 among others.

2. Executive Order No. 90 (1986)

The HLURB was designated as the sole regulatory body for
housing and land development. It was mandated to encourage
greater private sector participation in low cost housing through
liberalization of development standards, simplification of
regulations and decentralization of permits and licenses. It was
identified together with National Housing Authority (NHA), National
Home Mortgage and Finance Corp. (NHMFC) and Home Guaranty
Corporation (HGC), as a key shelter agency under the housing
activities of the government to ensure the accomplishment of
National Shelter Program.
3. Presidential Decree 957 (PD 957, 1976)

Otherwise known as the

Subdivision and Condominium Buyers
Protective Decree.
Its features are

- regulates sale of subdivision lots and condominium

units to buyers

- defines sale to be covered by registration

- defines duties and responsibilities of

owner/developer (o/d) of condominium and
subdivision projects.

- defines rights of condominium/subdivision units/lot

buyers.
4. Batas Pambansa 220 (BP 220, S. 1982)

Authorizes HLURB to promulgate different levels of standards and

technical requirements for economic and socialized housing
projects from those provided for under PD 957, PD 1216, PD 1096
and PD 1185.

5. Republic Act 7279 (1992)

Provides for Balanced Socialized Housing Program through

provision of low cost housing program (SHP) intended to benefit
the underprivileged and homeless and to be sold at the lowest
interest rate.
Requires developers of residential subdivision projects to allocate
20% of the projects area/cost into socialized housing.
6. Republic Act No. 8763 or The Home Guaranty Act

Transferred to HLURB all the powers, authorities and

responsibilities with respect to supervision of homeowners
associations.

7. Presidential Decree No. 1216 (1977)

Defines open spaces in residential subdivision and amended Sect.

31 of PD 957. Requires subdivision owners to provide adequate
roads, alleys, sidewalks and reserved open spaces for parks or
recreational use equivalent to 30% of the total area of the
subdivision project; and are non-saleable/non-alienable public
lands.
Republic Act 6652 "Maceda Law" (1972)
Provides protection to buyers of residential units on installments
against scrupulous sellers/contracts (including residential condominium
apartments, but excluding industrial lots, commercial buildings and sales to tenants).

Presidential Decree No. 1517 (1978)

Provides for protection of legitimate tenants and requires clearance
for development proposals and land transactions in proclaimed
Areas for Priority Development (APDs) and Urban Land Reform
Zones (ULRZs). Its important features is under Section 6, defines
legitimate tenants as follows:
a) Ten years residency or more;
b) They were the ones who built their homes;
c) Legally occupied the lands by virtue of contract with landowners
continuously for ten years;
d) Used the lands for residential purpose only.
Republic Act 7160 or
the Local Government Code of 1991:

Devolves the following function of HLURB to the local government

units:
- Issuance of approval of subdivision plans to local
government units (LGUs) subject to national laws
and standards;

- Devolves to the Sangguniang Panlalawigan,

subject to national guidelines and standards the
approval of comprehensive land use plans of
municipalities.

Executive Order No. 71 (1993)

Provides for implementing guidelines and role of HLURB in the

devolution of approval of subdivision plans to the LGUs.
Executive Order No. 72 (1993)

a) Provides that HLURB shall review and approve land use plans of
provinces, highly urbanized cities, and all of the independent
component cities/municipalities within Metro Manila; b) Devolves the
issuance of locational clearance to LGUs.

Republic Act 7899 (1995)

Amends Sections 4 and 16 of RA 4726 or the "Condominium Act,"

where HLURB is given the following authorities: a) Approval of any
amendment to or revocation of the enabling or master deed of a
condominium project subject to consent by a simple majority of all
registered owners, and where prior notification to all registered
owners is done. b) Approval of the expansion of a condominium
corporation or integration of a condominium project with another
project upon the affirmative vote of a simple majority of registered
owners.
Republic Act 6657 or the Comprehensive Agrarian Reform Law
(June 15, 1988)
Implements a comprehensive agrarian reform with the intention that
any conversion of a private agricultural land to non-agricultural
uses should first be cleared before hand by the Department of
Agrarian Reform. (Please see attached notes on this RA 6657 or
CARP).

Presidential Decree No. 1586 (1979)

Requires all person, partnership or corporation to secure an
Environment Compliance Certificate prior to undertaking any
activity.

Proclamation No. 2146 (1981)

Proclaimed certain areas and types of projects as environmentally
critical and within the scope of the requirements of PD 1586.
B. DEFINITION OF TERMS
1. SALE: As defined under Section 1(b) of PD 957:

Sale or Sell. "Sale" of "Sell" shall include every disposition, or

attempt to dispose for a valuable consideration of a subdivision lot
including the building and other improvements thereon, if any, in a
condominium project. "Sell" or "Sale" shall also include a Contract
to Sell, a contract of purchase and sale, an exchange, an attempt
to sell, an option of sale or purchase, a solicitation of a sale, letter,
advertisement or otherwise.

A privilege given to a member of a cooperative, corporation,

partnership, or any association and/or the issuance of certificate or
receipt evidencing of giving the right of participation in, or right to
any land in consideration of payment of the membership fee or
dues, shall be deemed a sale.
SOCIALIZED HOUSING PROJECT As defined
pursuant to Section 18 of RA 7279:

Refers to housing programs and projects covering houses and lots

or homelots only undertaken by the Government or the private
sector for the underprivileged and homeless citizens which shall
include sites and services development, long term financing,
liberalization terms on interest payments, and such other benefits in
accordance with RA 7279.

In addition to the definition in RA 7279, it shall refer to projects

intended for the under-privileged and homeless wherein the housing
package-selling price is within the lowest interest rate under the
Unified Home Lending Program or any equivalent housing program
of the government, the private sector or non-government
organizations.
BULK BUYING

Refers to the purchase by a person, natural of juridical,

of more than one saleable lot or unit within an HLRB
approved subdivision for the purpose of re-selling the
same with or without introducing alteration in the
approved plan. (Please refer to notes on exempt
transaction).
CERTIFICATE OF REGISTRATION (CR)

An issuance of HLURB that is proper only upon compliance with

Section 4 of PD 957 and other similar provisions of the various
rules. It vests legal status in a project such that its name may be
changed only upon proper application and publication among other
requirements.3

LICENSE TO SELL (LS)

A document granting authority to any registered owner/developer to

sell lots or units within an approved subdivision or condominium
project and providing for the duties and responsibilities of said
owner/developer.
TOWN PLAN

a) It is an official public document adopted by a local government

unit as guide to decision regarding the physical and socio-
economic development of their community. b) It provides for the
directions on how the local leaders and their population would want
their community to develop within a given framework of time. c) It
sets the goals, objectives and policy guidelines of the local
government unit after defining the strengths and weaknesses,
identifying its opportunities and threats in relation to its environs. In
the Philippines, a town plan is synonymous to comprehensive
development plan, city plan, physical framework plan,
comprehensive land use plan, or municipal development plan.
7. LAND USE PLAN

It is the rational and deliberate allocation of land resources to

different uses based on the comprehensive and integrated plan for
the area. It translates the socio-economic, the infrastructure and
environmental plan into land allocations.

8. ZONING

It is the division of the community into functional zones based on

the present and potential uses of properties for the purpose of
regulating the use and growth of properties in accordance with the
comprehensive development plan of the town/city.
9. ZONING ORDINANCE
It is the locally enacted legislation which embodies among other a)
regulations affecting uses allowed or disallowed in each zone or
district; b) conditions for allowing them; c) procedures for processing
a request for a clearance and d) penalties for violating any of its
provisions.
10. LOCATIONAL CLEARANCE
It is a written authorization or permit to develop or use or construct
in certain areas of any parcel of land based on an approved land
use plan or zoning ordinance; in the absence of a zoning ordinance
the grant of permit shall be based on HLRB planning standards and
guidelines.
11. ECOLOGY
A branch of science concerned with the interrelationships of
organisms and their environment.
12. ENVIRONMENT

Includes the physical factors of the total surroundings of human

being including the land, water, atmosphere, climate, sound, odor,
tastes, the biological factors of animals and plants and the social
factors of aesthetics. In a broad sense, it shall include the total
environment of man such as economics, social, cultural, political
and historic factors.

13. CONVERSION

The act of authorizing the change of the current use of a piece of

agricultural land into non-agricultural use; such permit is proper
only upon issuance of a clearance from the Department of
Agrarian Reform.
14. AGRICULTURAL LAND

Refers to land devoted to or suitable to agriculture as defined in

RA 6657 and owned by natural or judicial person/s, or by the
government in its proprietary capacity.

15. PRIVATE AGRICULTURAL LAND

Lands devoted to or suitable to agriculture as defined in R.A. 6657

and owned by natural or juridical persons, or by the government in
its proprietary capacity. (For Nos. 13, 14 & 15 please refer to
attached notes on RA 6657 or CARP).
DEALER
Shall mean any person directly engaged as principal in the
business of selling; or exchanging real estate whether on full-time
or part-time basis (Section 2 (k), PD 957. A bulk buyer, which is for
purposes of this guidelines, is covered in the definition of a dealer,
shall mean any person who acquires a lot or a portion of the
subdivision and who, with or without re-subdividing or introducing
housing or other facilities, sells the same, under its previous
license to sell or in a license to sell in his name to the public.

SUBDIVISION PROJECT
As defined under Section 2(d) of PD 957, a tract or a parcel of land
registered under Act No. 496 which is partitioned primarily for
residential purposes into individual lots with or without
improvements thereon and offered to the public for sale, in cash or
installment terms. It shall include all residential, commercial,
industrial and recreational areas as well as open spaces and other
community and public areas in the project.
 “HABITUALLY ENGAGED
IN REAL ESTATE BUSINESS”
IN ACCORDANCE WITH
REVENUE REGULATIONS NO. 2-98

A person or entity habitually engaged in real estate business is one

who, as owner or developer undertakes development and
construction of subdivision / housing for sale to the general public
as his / its regular source of income; and has submitted and
updated his / its reportorial requirements to HLURB in accordance
with the government standards, rules and regulations.
C. ENVIRONMENTALLY CRITICAL AREA (ECA):Refer to
areas that are ecologically, socially, or geologically
sensitive as declared by law such as:

1. Areas declared by law as national parks, watershed reserves, wildlife

preserves and sanctuaries;
2. Areas identified as potential tourist spots;
3. Areas that are habitats of endangered or threatened species of
indigenous Philippine plants and animals;
4. Areas of unique historic, archeological or scientific interest;
5. Areas traditionally occupied by indigenous people or cultural
communities;
6. Areas frequently hit by natural calamities (geologic hazards, floods,
typhoons and; volcanic activities);
7. Areas with critical slopes of 18% and above;
8. Areas classified as prime agricultural lands;
9. Recharged areas of aquifer;
10. Water bodies used for domestic supply used to support fisheries and
wildlife;
11. Mangrove areas with critical ecological functions or on which people
depend for livelihood; or
12. Coral reefs
C. DIFFERENT TYPES OF PROJECTS
REQUIRING CERTIFICATE OF
REGISTRATION AND LICENSE TO SELL
FROM THE HLURB

1. Condominium

1.1 Residential
1.2 Commercial
1.3 Mixed Residential – Commercial

2. Residential
3. Farmlots Subdivision

4. Commercial Subdivision

5. Industrial Subdivision

6. Industrial Estate

7. Memorial Parks and Cemeteries

F. BASIC REQUIREMENTS IN PROCESSING REQUEST FOR
CERTIFICATE OF REGISTRATION AND LICENSE TO SELL

1. For residential projects

2. For commercial, farmlots, memorial parks and industrial
estates
3. Condominium Projects
3.1 Plans to be approved by HLURB
3.2 Master Deed with Declaration of Restrictions
3.3 Building Permit
3.4 Number 1.1 up to 1.8 above

In cases where the project is not yet started or fully developed, the
remaining development shall be covered by a performance bond. All of
these projects can only be registered after the required publications and
upon findings that the sale will not be fraudulent, the owner / developer is
not ill refute and that they are organizationally and financially capable to
compete the project.
 G. TRANSACTIONS
EXEMPTED FROM SECURING
CR/LS
1. Section 7, P.D. 957

a) Sale of a subdivision lot resulting from partition

of land among co-owners and heirs;

b) Sale or transfer of subdivision lot by the original

purchase thereof and any subsequent sale of
the same lot;

c) Sale of subdivision lot or a condominium unit

for the account of a mortgages in the ordinary
course of business when necessary to liquidate
a bonafide debt.
2. Per Resolution No. R-546 s. 1994: Rules on
Bulk Buying as an Exempt Transaction

a) Bulk Buying as exempt transaction:

Bulk-buying of lots and subsequent introduction of housing

unit without altering the original plan.

b) Bulk Buying as not Exempted from securing CR /

LS:

Bulk Buying with construction of housing units resulting in

increased density from the original plan approval. Bulk
Buying resulting in the re-subdivision of lots and issuance
of new TCTs.
3. On site Community Mortgage Projects

4. NHA controlled projects

5. On-site housing projects of non-

governmental and non-profit organizations
and foundations engaged in community
development for underprivileged and the
homeless sector from the licensing
requirements of the HLURB.
H. Mode of Compliance with Section 18 of R.A. 7279
The developer may choose any of the following as compliance:
1. Development of a New Settlement
2. Slum Upgrading. To be certified by the National Housing
Authority or the Local Government Unit concerned.
3. Participation in the Community Mortgage Program either as a
financier or a developer
4. Joint Venture Project with the Local Government Unit
concerned consisting of:
5. Participation equivalent to 20% of the project area or 20% of
the total development cost of the main project. It may consists
in or include the purchase of socialized housing bonds by the
owner-developer.
6. Purchase of socialized housing bonds from PAG-IBIG.
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
J. Rules and Regulations on the
Conversion of Agricultural
Lands to Non-Agricultural
Uses
(DAR Administrative Order 01,
SERIES OF 2002)
Legal Bases

R.A. 6657: Comprehensive Agrarian Reform Law of 1987

R.A. 8435: The Agricultural and Modern Fisheries Modernization

Governing Policies

Preservation of agricultural lands to ensure food security.

Provide all economic sectors and all regions optimum opportunity
to maximize agricultural productivity.
Conversion shall be strictly regulated and allowed only according to
R.A. 6657 and R.A. 8435.
Coverage: Agricultural lands to be converted to:

Agricultural lands to be converted to non-agricultural uses

Agricultural lands to be converted to another type of agricultural

activities sucj as livestock, poultry and fishpond, the effect of which
is to exempt the land from Comprehensive Agrarian reform
Program (CARP).

Agricultural lands to be converted to non-agricultural use other than

previously

Agricultural lands reclassified to non-agricultural uses by the LGU

after June 15, 1988.
Who May Apply

Owners of private agricultural lands or other persons duly

authorized by the landowners.

Beneficiaries of the agrarian reform program alter the lapse of 5

years from award reckoned from date of issuance of the Certificate
of Land Ownership Award (CLOA) with fully paid obligation and
qualified to apply

Government agencies, including government owned or controlled

corporations, LGUs owners of agricultural lands as patrimonial
property
Priority Development Areas for Conversion
In accordance with R.A. 7916, EO-124 of 1993 and EO-258 of 2000:

1.1 Specific areas in Regional-Agri-Industrial Centers/Regional Industrial

Centers (RAIC/RIC) identified by Department of Trade and Industry
and Department of Agriculture pursuant to EO-124 of 1993.

1.2 Tourism development areas identified by the Department of Tourism

pursuant to EO-124 of 1993.

1.3 Agricultural areas intended for Eco Zone Projects, endorsed by

Philippine Economic Zone Authority (PEZA) pursuant to R.A. 7916

1.4 Agricultural land, owned by the government, to be converted for

projects of national interest, as certified by proper government
agency.

1.5 Agricultural land proposed to be developed as sites for processing

plants of agricultural products, as certified by the Department of
Agriculture.

1.6 Sites identified for telecommunication facilities endorsed by the

National Telecommunications Commission.
2. Housing projects.

In case of mixed use of housing projects and

non-housing projects, the application shall not
enjoy the privileges of housing projects unless at
least 80% of the land applied for conversion shall
be used directly and exclusively for housing.
Areas Non-Negotiable for Conversion

Lands within protected areas designated under the NIPAS

(National Integrated Protection System), including mossy and
virgin forest, riverbanks, swamp forest or marshlands.

All irrigated lands, as delineated by DA and/or NIA, where water is

available to support rice and corn production (Department of
Agriculture/National Irrigation Authority).
All irrigated land where water is not available for rice and corn
production but are within areas programmed for irrigation facility
by DA and/or NIA.

All irrigable lands already covered by irrigation projects with firm

finding commitment as delineated by DA and/or NIA.

All agricultural lands with irrigation facilities.

Areas Highly Restricted for Conversion
Irrigable lands not covered by irrigation project with firm funding
commitment.

Agro-industrial croplands, or lands presently planted to industrial

crops that support the economic viability of existing agricultural
infrastructure and agro-based enterprises.
Highlands or areas located in elevations of 500 meters or above
have the potentials for growing semi-temperate and usually high
value crops.
Land used with notice of land valuation and acquisition or subject
of a perfected agreement between the landowner and the
beneficiaries under the voluntary land transfer / direct payment
scheme under the CARP.
Environmentally critical areas as determined by the DENR in
accordance with law.
Conversion to Home lot

Conversion to home lot is allowable when:

the applicant owns that lot that he proposes to
convert;

- he intends to establish a dwelling place

for himself on said lot;
- the lot has an area not exceeding 500
square meters and
- the conversion shall be from agricultural
to purely residential use.
Disturbance Compensation

Cash or in kind shall be paid by landowner or developer to tenants,

farm workers, or bonafide occupants to be affected by the
conversion.

Mutually agrees upon between land owners or the developer.

Not less 5 times the average of the gross harvest on their

landholdings for the past 5 proceeding calendar years.

Fee housing, homelots, employment and other benefits

Must be approved by DAR.

In case of disagreement on the amount of, may be brought to the

DAR Adjudication Board for resolution.
Effects of Conversion Approval

Shall be limited to the specific use of the land authorized in the

conversion.
Subject to the schedule indicated in the plan, but in no case shall
exceed beyond five years from issuance of conversion order,
excepts as allowed.
Condition shall be binding upon successor-in-interest of the
property .
DAR representative shall henceforth allowed entry to monitor
compliance with conversion order.
Use authorized in the conversion order shall be annotated at the
back of
Shall be without prejudice to ancestral domain claims of indigenous
peoples, if any, subject to Indigenous Peoples Right Act.
Approving Authorities: Official Authorized to Approve/Disapprove
Conversion Requests

1. Five (5) hectares: Regional Director

2. Above 5 hectares involving several parcel that total areas

exceed 5 hectares:

- Located within the same or adjacent barangays

- Adjacent to an area previously granted conversion
order
- Single project, with different owners, within same or
two or more barangays
Grounds for revocation of Conversion Order

1. Lack of jurisdiction by approving authority

2. Misrepresentation of facts

3. Non-compliance with the conditions of conversion order

4. Non-compliance with the agreement on disturbance

compensation payment

5. Conversion to other use other than authorized

6. Any other serious violation of agrarian laws

Penalties and Sanctions
1. Administrative

- cancellation
- blacklisting
- automatic disapproval of subsequent application
- CDO, in case of premature conversion
- Forfeiture of cash bond or performance bond

2. Criminal

- imprisonment: 2 to 6 years
- fine or
- both
Exemption: DAR AO#6 of 1994 (Guidelines for the Issuance
of Exemption Clearance base of Sec. 3 (c) of R.A. 6657 and
DOJ Opinion No. 44 Series of 1990).

Section 3 (c) of R.A. 6657 to agricultural lands devoted to

agricultural activity and not classified as mineral, forest, residential,
commercial or industrial land.

DOJ Opinion:

Ruled that the authority classified as commercial, industrial,

residential before June 15, 1998 no longer need conversion
clearance.
REPUBLIC ACT NO. 7279 (UDHA)

Section 3 Definition of Terms – For purposes of this Act:

Affordable cost refers to the most reasonable price of land and

shelter based on the needs and financial capability of Program
beneficiaries and appropriate financing schemes;

"Areas for priority development" refers to those areas declared

as such under existing statutes and pertinent executive issuances.

"Blighted lands’ refers tot he areas where the structures are

dilapidated, obsolete and unsanitary, tending to depreciate the
value of the land and prevent normal development and use of the
area.
"Consultation" refers to the constitutionally mandated process
whereby the public, on their own or through people’s organizations,
is provided an opportunity to be heard and to participate in the
decision-making process on matters involving the protection and
promotion of its legitimate collective interests, which shall include
appropriate documentation and feedback mechanisms;

"Idle lands" refers to non-agricultural lands in urban and

urbanizable areas on which no improvements, as herein defined,
have been made by the owner, as certified by the city, municipal or
provincial assessor;

"Improvements refers to all types of buildings and residential units,

walls, fences structures or constructions of all kinds of a fixed
character or which are adhered to the soil but shall not include trees,
plants and growing fruits, and other fixtures that are mere super
impositions on the land, and the value of improvements shall not be
less that fifty percent (50%0 of the assessed value of the property;
"Joint venture" refers to the commitment or agreement by two
(2) or more persons to carry out a specific or single business
enterprise for their mutual benefit, for which purpose they combine
their funds, land resources, facilities and services;

"Land assembly or consolidation" refers to the acquisition

of lots of varying ownership through purchase or expropriation for
the purpose of planned and rational development and socialized
housing programs without individual property boundary restrictions;

"Land banking" refers to the acquisition of land at values based

on existing use in advance of actual need to promote planned
development and socialized housing programs;
"Land swapping" refers to the process of land acquisition by
exchanging land for another piece of land of equal value, or for
shares of stock in a government or quasi-government corporations
whose book value is of equal value to the land being exchanged, for
the purpose of planned and rational development and provision for
socialized housing where land values are determined based on land
classification, market value and assessed value taken from existing
tax declarations: Provided, That more valuable lands owned by
private persons maybe exchanged with less valuable lands to carry
out the objectives of this Act;

"Land use plan" refers to the rational approach of allocating

available land resources as equitably as possible among competing
user groups and for different functions consistent with the
development plan of the area and the Program under this Act;
"On–site development" refers to the processed of upgrading and
rehabilitation of blighted and slum urban areas with a view of
minimizing displacements of dwellers in said areas, and with
provisions for basic services as provided for in Section 21 hereof;

"Professional squatters" refers to individuals or groups who

occupy lands without the express consent of the landowner and who
have sufficient income for legitimate housing. The term shall also
apply to persons who have been previously awarded home lots or
housing units by the Government but who sold, leased or transferred
the same to settle illegally in the same place or in another urban
area, and non-bona fide occupants and intruders of lands reserved
for socialized housing period. The term shall not apply to individuals
or groups who simply rent land and housing from professional
squatters or squatting syndicates;

"Resettlement areas" refers to areas identified by the appropriate

national agency or by the local government unit with respect to areas
within its jurisdiction, which shall be used for the relocation of the
underprivileged and homeless citizens;
"Security of tenure" refers to the degree of protection afforded to
qualified Program beneficiaries against infringement or unjust,
unreasonable and arbitrary eviction or disposition, by virtue of the
right of ownership, lease agreement, usufruct and other contractual
arrangements;

"Slum Improvement and Resettlement Program or SIR" refers to

the program of the National Housing Authority of upgrading and
improving blighted squatter areas outside of Metro Manila pursuant
to existing statutes and pertinent executive issuances;

"Small property owners" refers to those whose only real property

consists of residential land not exceeding three hundred square
meters (300 sq. m.) in highly urbanized cities and eight hundred
square meters (800 sq. m.) in other urban areas;
"Socialized housing" refers to housing programs and projects
covering houses and lots or home lots only undertaken by the
Government or the private sector for the underprivileged and
homeless citizens which shall include sites and services
development, long-term financing, liberalized terms on interest
payments, and such other benefits in accordance with the provisions
of this Act;

"Squatting syndicates" refers to groups of persons engaged in the

business of squatter housing for profit or gain;

"Underprivileged and homeless citizens" refers to the

beneficiaries of this Act and to individuals or families residing in
urban and urbanizable areas whose income or combined household
income falls within the poverty threshold as defined by the National
Economic and Development Authority and who do not own housing
facilities. This shall include those who live in makeshift dwelling units
and do not enjoy security of tenure;
"Unregistered or abandoned lands’ refers to lands in urban and
urbanizable areas which are not registered with the Register of
Deeds, or with the city of municipal assessor’s office concerned, or
which are uninhabited by the owner and have not been developed of
devoted for any useful purpose, of appears unutilized for a period of
three (3) consecutive years immediately prior to the issuance and
receipt of publication of notice of acquisition by the Government as
provided under this Act. It does not included land which has been
abandoned by reason of force majeure of any other fortuitous event:
Provided, That prior to such event, such land was previously used
for some useful or economic purpose;

" Urban areas" refers to all cities regardless of their population

density and to municipalities with a population density of at least five
hundred (500) persons per square kilometer;
" Urbanizable areas" refers to sites and lands which, considering
present characteristics and prevailing conditions, display marked and
great potential of becoming urban areas within the period of five (5)
years; and

"Zonal Improvement Program of ZIP" refers to the program of the

National Housing Authority of upgrading and improving blighted
squatter areas within the cities and municipalities of Metro Manila
pursuant to existing statutes and pertinent executive issuances.
PRESIDENTIAL DECREE NO. 957

THE SUBDIVISION AND CONDOMINIUM

BUYER'S PROTECTIVE DECREE.

REGULATING THE SALE OF

SUBDIVISION LOTS AND CONDOMINIUMS
PROVIDING PENALTIES FOR VIOLATIONS THEREOF.
SECTION II. Definition of Terms. - When used in this Decree,
the following terms shall, unless the context otherwise indicates, have the
following respective meanings:

a) Person. - "Person" shall mean a natural or a juridical person. A

juridical person refers to a business firm whether a
corporation, partnership, cooperative or association or a
single proprietorship.

b) Sale or Sell. - "Sale or Sell" shall include every disposition, or

attempt to dispose for a valuable consideration, of a
subdivision lot, including the building and other
improvements thereon, if any in a subdivision project or a
condominium unit in a condominium project.

"Sale or Sell" shall also include a contract to sell, a contract

or purchase and sale, an exchange, an attempt to sell, an
option of sale or purchase, a solicitation of a sale, or an offer
to sell, directly or by an agent, or by a circular, letter,
advertisement or otherwise.
SECTION 5. License to Sell. - Such owner or dealer to
whom has been issued a registration certificate shall not, however,
be authorized to sell any subdivision lot or condominium unit in the
registered project unless he shall have first obtained a license to
sell the project within two weeks from the registration of such project.

The Authority, upon proper application therefore, shall issue to such

owner or dealer of a registered project a license to sell the project if,
after an examination statement filed by said owner or dealer and all
the pertinent documents attached thereto, he is convinced that the
owner or dealer is of good repute, that his business is financially
stable, and that the proposed sale of the subdivision lots or
condominium units to the public would not be fraudulent.
SECTION 6. Performance Bond. - No license to sell
subdivision lots or condominium units shall be issued by the
Authority under Section 5 of this Decree unless the owner or dealer
shall have file an adequate performance bond approved by said
Authority to guarantee the construction and maintenance of the
roads, gutters, drainage, sewerage, water systems, lighting systems,
and full development of the subdivision project or the condominium
project and the compliance by the owner or dealer with applicable
laws and rules and regulations.

The performance bond shall be executed in favor of the Republic of

the Philippines and shall authorize the Authority to use the proceeds
thereof for the purposes of its undertakings in case of forfeiture as
provided in this Decree.
SECTION 7. Exempt Transactions. - A license to sell
and performance bond shall not be required in any of the following
transactions:

a) Sale of a subdivision lot resulting from the partition of land

among co-owners and co-heirs.

b) Sale or transfer of a subdivision lot by the original

purchaser thereof and any subsequent sale of the same lot.

c) Sale of a subdivision lot or a condominium unit by or for

the account of a mortgagee in the ordinary course of business
when necessary to liquidate a bonafide debt.
SECTION 8. Suspension of License to Sell. - Upon
verified complaint filed by a buyer of a subdivision lot or a
condominium unit or any interested party, the Authority may, in its
discretion, immediately suspend the owner's or dealer's license to sell
pending investigation and hearing of the case as provided in Section
13 hereof.

The Authority may motu propio suspend the license to sell if, in its
opinion, any information in the registration statement filed by the
owner or dealer is or has become misleading, incorrect, inadequate
or incomplete or the sale or offering for sale of the subdivision or
condominium project may work or tend to work a fraud upon
prospective buyers.
SECTION 8. Suspension of License to Sell . . .

The suspension order may lifted if, after notice and hearing, the
Authority is convinced that the registration statement is accurate or
that any deficiency therein has been corrected or supplemented or
that the sale to the public of the subdivision or condominium project
will neither be fraudulent nor result in fraud. It shall also be lifted
upon dismissal of the complaint for lack of legal basis.

Until the final entry of an order of suspension, the suspension of the

right to sell the project, though binding upon all persons notified
thereof, shall be deemed confidential unless it shall appear that the
order of suspension has in the meantime been violated.
SECTION 9. Revocation of Registration Certificate
and License to Sell. - The Authority may, motu propio or upon
verified complaint filed by a buyer of a subdivision lot or
condominium unit, revoke the registration of any subdivision project
or condominium project and the license to sell any subdivision lot or
condominium unit in said project by issuing an order to this effect,
with his findings in respect thereto, if upon examination into the
affairs of the owner or dealer during hearing as provided for in
Section 14 hereof, it shall appear there is satisfactory evidence that
the said owner or dealer:

a) is insolvent: or
b) has violated any of the provisions of this Decree or any
applicable rule or regulation of the Authority, or any undertaking
of his/its performance bond; or
c) has been or is engaged or is about to engage in fraudulent
transactions; or
d) has made any misrepresentation in any prospectus, brochure,
circular or other literature about the subdivision project or
condominium project that has been distributed to prospective
buyers; or
e) is of bad business repute; or
f) does not conduct his business in accordance with law or sound
business principles.
Where the owner or dealer is a partnership or corporation or an
unincorporated association, it shall be sufficient cause for cancellation of
its registration certificate and its license to sell if any member of such
partnership or any officer or director of such corporation or association
has been guilty of any act or omission which would be cause for refusing
or revoking the registration of an individual dealer, broker or salesman as
provided in Section 11 hereof.
TITLE III - DEALERS, BROKERS
AND SALESMEN
SECTION 11. Registration of Dealers, Brokers and
Salesman. -

No real estate dealer broker or salesman shall engage in the

business of selling subdivision lots or condominium units
unless he has registered himself with Authority in accordance
with the provisions of this section.

If the Authority shall find that the applicant is of good repute and
has complied with the application rules of the Authority, including
the payment of the prescribed fee, he shall register such applicant
as a dealer, broker or salesman upon his filing a bond, or other
security in lieu thereof, in such sum as may be fixed by the
Authority conditioned upon his faithful compliance with the
provisions of this Decree, Provided, that the registration of a
salesman shall cease upon the termination of his employment with
a dealer or broker.
Every registration under this section shall expire on the thirty-first
day of December of each year. Renewal of registration for the
succeeding year shall be granted upon written application therefore
made not less than thirty nor more than sixty days before the first
day of the ensuing year and upon payment of the prescribed fee,
without the necessity of filing further statements or information,
unless specifically required by the Authority. All applications filed
beyond said period shall be treated as original applications.

The names and addresses of all persons registered as dealers,

brokers, or salesmen shall be recorded in a Register or Brokers,
Dealers and Salesmen kept in the Authority which shall be open to
public inspection.
SECTION 12. Revocation of Registration as Dealers,
Brokers or Salesmen. –
Registration under the preceding section may be refused or any
registration granted thereunder, revoked by the Authority if, after
reasonable notice and hearing, it shall determine that such
applicant or registrant:

a) Has violated any provisions of this Decree or any rule or

regulation made hereunder; or

b) Has made a material false statement in his application for

registration; or

c) Has been guilty of a fraudulent act in connection with any

sale of a subdivision lot or condominium unit; or

d) Has demonstrated his unworthiness to transact the

business of dealer, broker, or salesman, as the case may be.
In case of charges against a salesman, notice thereof shall also be
given the broker or dealer employing such salesman.

Pending hearing of the case, the Authority shall have the power to
order the suspension of the dealer's, broker's or salesman's
registration; provided, that such order shall state the cause for the
suspension.

The suspension or revocation of the registration of a dealer or

broker shall carry with it the suspension or revocation of the
registration; provided that such order shall state the cause for the
suspension.
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.
J. REVISED RULES AND REGULATIONS TO
GOVERN ADVERTISEMENT APPROVAL
[ HLURB Board Resolution No. 808, Series of 2007 ]
1. Scope of Application. These Rules and Regulations shall
apply to all applications for Advertisement Approval for the
following projects issued Certificate Of Registration And
License To Sell, hereinafter referred to collectively as
Project:

a. Residential/commercial condominium and subdivision

b. Farmlot subdivision
c. Industrial subdivision
d. Memorial park
e. Columbarium project
f. Any other similar project

Advertisement as referred to in this Rules shall mean any

form of information dissemination, whether through words,
illustrations, scaled models for public display or in any form
of multi-media.
[ Section 1 ]
3. Contents Of Advertisement. The following shall be
indicated/reflected in the advertisement:

a. The exact location of the project in terms of distance from

well known reference point;
c. The License to Sell Number and date issued;
d. Project completion date per approved work program
e. Maximum selling price in case of economic and socialized
housing projects;
f. The name(s) of the owner(s)/developer(s) of the project;
g. Pictures or illustrations if any shall be captioned as “actual
photographs”, ”architect’s perspective” or “artist’s
illustrations”, as the case may be. [ Section 5 ]
4. What Should Not Be Included In The
Advertisement.
The following shall not be included in the
advertisement: [ Section 6 ]

1. Disclaimer(s)
2. Any future development not covered by the
license to sell
3. Exaggerations or misleading information
5. Advertisement Approval.

The Board shall issue the Advertisement Approval when

all the requirements of sections 4 to 6 are complied with.
The approval shall consist of a letter from the HLURB
Regional Officer stating approval of the advertisement
material and authority to publish, display, distribute or
announce the same, and further stating therein all other
conditions as maybe imposed. The letter of approval and
the approved copy of advertisement material shall in all
instances bear the HLURB seal. Further, the latter shall
be stamped “approved” indicating date and duly signed by
the regional officer. Any deviation from the approved
contents of the advertisement material shall be a violation
of the conditions of the approval and a ground for
revocation of the approval [ Section 7 ]
6. Warranties.

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 or developer, jointly and
severally.

Failure to comply with these warranties shall also be

punishable in accordance with the penalties provided for in
PD 957. [ Section 8 ]
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 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 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 the 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.
SECTION 38. Administrative Fines. -

The Authority may prescribe and impose fines not exceeding ten
thousand pesos for violations of the provisions of this Decree or
of any rule or regulations thereunder. Fines shall be payable to
the Authority and enforceable through writs or execution in
accordance with the provisions of the Rules of Court.
SECTION 39. Penalties. - Any person who shall violate
any of the provisions of this Decree and/or any rule or regulation
that may be issued pursuant to this Decree shall, upon conviction,
be punished by

- a fine of not more than

twenty thousand pesos (20,000)

- and/or imprisonment of not more than

ten (10) years;

Provided, that in the case of corporations, partnerships,

cooperatives or associations, the President, Manager or
Administrator or the person who has charge of the administration
of the business shall be criminally responsible for any violation of
this Decree and/or the rules and regulations promulgated
pursuant thereto.
Thank you