SIXTEENTH CONGRESS
OF THE REPUBLIC OF THE PHILIPPINES
First Regular Session

HOUSE OF REPRESENTATIVES
395

House Bill No.____

Introduced by Representative Susan A. Yap

EXPLANATORY NOTE

Itis the policy of the State to undertake, in cooperation with the private
sector, a comprehensive and continuing urban development. Subdivision and
condominium projects continued to thrive over the last decade brought about by lower
interest rates and increased remittances from OFWs. This prompted many of our
ababayans to buy houses and condominium units, which correspondingly increased queries
and complaints against property developers.

Due to the obsolete penalties for violations of Presidential Decree No. 957, or The
Subdivision and Condominium Buyer's Protective Degree of 1976, many land and
condominium developers contravene the decree knowing fully well that payment for the
defiance of the law is so small.

This bill seeks to amend PD 957 to make it more responsive and attuned to the
needs of the present times. The bill seeks to increase the penalties for violators from
P 10,000 to P50,000 for each violation of any of its provisions.

Failure to complete the development of the project within the prescribed period
and failure to deliver the title to the paid owner shall be required to fine P500,000 instead
of P20,000, and/or four-year imprisonment for a first-time offender. The penalties of a
P700,000-fine and/or seven-year imprisonment shall be meted out to second-time
offenders for violations such as failure to refund the purchase price ot the installment
payment made in the event of desistance by the buyer to further pay due to the inability to
complete the development of the project according to the approved plans and within the
prescribed period.

For the thitd-time offender, the cancellation of business permits/licenses and
imprisonment of not more than ten years at the discretion of the court shall be slapped,
aside from paying P1 million or 100% of the total purchase price of the property, including
all the charges imposed by the developer whichever is higher. Furthermore, an additional
fine of not less than P500,000 will be charged for every real estate or condominium unit
sold by reason of advertisements

Amending the penalties provided under PD 957 shall serve as a deterrent to the
habitual and deliberate violation by some unscrupulous developers and ensure further
protection to the buyers of subdivision lots and condominium units. The measure gives
emphasis particularly on certain heavy violations such as failure to finish a project on
schedule.

Representative, 2™ Distsiet Of Tarlac


27
28
29
30
31
32
33
34
35

SIXTEENTH CONGRESS )
OF THE REPUBLIC OF THE PHILIPPINES )
First Regular Session )

HOUSE OF REPRESENTATIVES

; ie
House Bill No___ 395

Introduced by Representative Susan A. Yap

AN ACT
TO INSTITUTE REFORMS IN THE SUBDIVISION AND CONDOMINIUM
BUYERS’ PROTECTIVE DECREE

Be it enacted by the Senate and the House of Representatives of the Philippines in Congress assembled:

SEC. 1.Short Title — This Act shall be known as “The Subdivision and Condominium
Buyers’ Protective Decree Amendments of 2013”,

SEC. 2. Declaration of Policy. — It is the policy of the State to undertake, in cooperation with
the private sector, a comprehensive and continuing urban development. Toward this end, certain
remedial reforms ought to be introduced to the operational provisions of the Subdivision and
Condominium Buyers’ Protective Decree in order to strengthen and make the same responsive
and attuned to the needs of the present times.

SEC. 3.Remedial Provisions. — For purposes of this Act and in order to strengthen
Presidential Decree No. 957, entitled: “Regulating the Sale of Subdivision Lots and
Condominiums, Providing Penalties for Violations Thereof’, otherwise known as “The
Subdivision and Condominium Buyers’ Protective Decree”, the following provisions are hereby
amended:

(@) Section 2, paragraph (n) of Presidential Decree No. 957 is hereby amended to read as
follows:
“(a) [Authority. “Authority”] BOARD. “BOARD” shall mean the [National
Housing Authority] HOUSING AND LAND USE REGULATORY BOARD
(HLURB).”
‘The term “Authority” found elsewhere in the Decree is hereby amended to read as
“Board”

(b) Section 3 of Presidential Decree No. 957 is hereby amended to read as follows:

“SEC. 3. [National Housing Authority. - The National Housing Authority]
HOUSING AND LAND USE REGULATORY BOARD (HLURB). -
THE HOUSING AND LAND USE REGULATORY BOARD shall have
exclusive jurisdiction to regulate the real estate trade and business in accordance
with the provisions of this Decree.”

(© Section 5, paragraph 1 of Presidential Decree No. 957 is hereby amended to read

as follows:
“SEC. 5. License to Sel. ~ A CERTIFICATE OF REGISTRATION
DOES NOT AUTHORIZE [S]Such owner or dealer [to whom has been
issued a registration certificate shall not, however, be authorized] to sell any


SocerdsHswne

YYYLYSRASEEEASELY OE YYLYEYYUNDNONONNNNE eee eee ee
FSS2SSSSFTESSSSSRSYRRROCESSRBYSRRBRLBSSGAGEGOS

subdivision lot or condominium unit in the registered project [unless] UNTIL
he shall have first obtained a license to sell the project within two weeks from
the registration of such project.”

(@ Section 17, paragraph 1 of Presidential Decree No. 957 is hereby amended to read as

follows:

“SEC. 17. Registration. ~ All [contracts to sell,] deeds of sale [and other
similar instruments relative to the sale or conveyance] of [the] subdivision lots
and condominium units, [whether or not the] WHOSE purchase price is
ALREADY paid in fullf,] shall be registered by the seller in the Office of the
Register of Deeds of the province or city where the property is situated AT HIS
EXPENSE. IN CASES OF INSTALLMENT PAYMENTS, THE
CONTRACT TO SELL SHALL ALSO BE REGISTERED BY THE
DEVELOPER WITH THE PROPER REGISTER OF DEEDS, THE
EXPENSE FOR WHICH SHALL BE SHARED PROPORTIONATELY
BY THE SELLER AND THE BUYER: PROVIDED, HOWEVER,
THAT IN CASE OF CANCELLATION OR RESCISSION OF SAID
CONTRACT TO SELL, SUCH REGISTRATION OF CONTRACT TO
SELL SHALL BE CANCELLED BY THE PROPER REGISTER OF
DEEDS, WITHOUT NEED OF ANY COURT ORDER, UPON
EXECUTION BY THE SELLER OF AN AFFIDAVIT THAT SAID
CONTRACT TO SELL HAS BEEN CANCELLED OR RESCINDED
DUE TO DEFAULT ON THE PART OF THE BUYER, WITHOUT
PREJUDICE TO THE RIGHTS OF THE BUYER UNDER REPUBLIC
ACT NO. 6552, OTHERWISE KNOWN AS THE ‘REALTY
INSTALLMENT BUYER PROTECTION ACT’: PROVIDED,
FINALLY, THAT THE BOARD SHALL HAVE JURISDICTION OVER
DISPUTES BETWEEN THE BUYER AND THE SELLER
REGARDING THE CANCELLATION OF THE REGISTRATION OF A
CONTRACT TO SELL.”

(©) Section 18 of Presidential Decree No. 957 is hereby amended to read as follows:

“SEC. 18. Mortgages. — No mortgage on any unit or lot shall be made by the owner
or developer without prior written approval of the [Authority] BOARD. 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 ot unit covered by the mortgage shall be determined and the buyer thereof, if
any, shall be notified before the release of the loan. THE DEED OF SALE OR
CONTRACT TO SELL COVERING A LOT OR UNIT SUBJECT OF A
MORTGAGE SHALL INCLUDE A PARTIAL RELEASE CLAUSE OR A
PROVISION GUARANTEEING THE IMMEDIATE RELEASE OF THE
‘TITLE TO SAID LOT OR UNIT UPON FULL PAYMENT BY ITS BUYER.
‘The buyer may[, at his option, pay his] OPT TO PAY THE installment for the lot ot
unit ditectly 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
thereto.

“IN CASE A COMPLAINT IS FILED FOR THE IMMEDIATE
RELEASE OF THE TITLE UPON FULL PAYMENT OF A
PROPERTY, THE MORTGAGEE MUST BE IMPLEADED AS AN
INDISPENSABLE PARTY.

(D Section 20 of Presidential Decree No. 957 is hereby amended to read as follows:


Sowrd sysune

YPUUNRREARAR ER REROOOWUWHRYUBLYUNDNYUYDONNNNe eee eee ee
FONSSSSIFGESSLSESCRASGRSCLSBRYURRRERLRSEIRTESSS

“SEC. 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, AND DEVELOPMENT OF
ROADS, AS PROVIDED FOR [which are offered and indicated] in the approved
subdivision or condominium plans, brochures, prospectus, printed matters, letters or
in any form of advertisement, within [one year] EIGHTEEN (18) MONTHS 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] BOARD: PROVIDED,
THAT IN CASES OF FORTUITOUS EVENTS, THE BOARD SHALL
‘THEREAFTER, UPON EVALUATION OF THE NATURE OF THE
PROJECT AND THE CAPABILITY OF THE DEVELOPER TO
COMPLETE THE SAME, DETERMINE THE REASONABLE TIME
WITHIN WHICH THE PROJECTS SHALL BE COMPLETED.

“IN THE EVENT THAT THE OWNER OR DEVELOPER FAILS TO
COMPLETE THE DEVELOPMENT OF THE PROJECT AFTER THE
PERIOD OF EIGHTEEN (18) MONTHS MANDATED ABOVE FOR ITS
COMPLETION FROM THE DATE OF THE ISSUANCE OF THE
LICENSE FOR THE SUBDIVISION OR CONDOMINIUM PROJECT,
AND UNLESS THE BOARD SETS ANOTHER TIME FOR
COMPLETION OWING TO THE CIRCUMSTANCES STATED ABOVE,
THE BOARD SHALL, UPON WRITTEN NOTICE TO THE DEVELOPER
OR THROUGH PUBLICATION WHERE THE DEVELOPER CANNOT
BELOCATED, DECLARE THE PROJECT ABANDONED AND THE
ROADS IN THE ABANDONED PROJECT SHALL BECOME PUBLIC IN
CHARACTER ONE (1) YEAR FROM THE DECLARATION OF
ABANDONMENT OF THE PROJECT.”

@ Section 22 of Presidential Decree No. 957 is hereby amended to read as follows:
“SEC. 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 OR CONDOMINIUM development as contained in the approved
subdivision OR CONDOMINIUM plan and/or represented in its advertisements,
without the permission of the [Authority] BOARD and the written conformity ot
consent of the duly organized homeowners association OR CONDOMINIUM
CORPORATION, or in the absence of the latter, by the majority of the [lot] buyers
[in the] OF subdivision LOTS OR CONDOMINIUM UNITS WHO HAVE
ALREADY PAID AT LEAST FIFTTY PERCENT (50%) OF THE
PURCHASE PRICE.”
(h) Section 25 of Presidential Decree No. 957 is hereby amended to read as follows:

“SEC. 25. Issuance of Title. - The owner or developer shall deliver the title of the
Jot of unit to the buyer upon full payment of the lot ot unit[.]: PROVIDED, THAT
WHERE THE OWNER OR DEVELOPER PROPERLY PROCESSED AND
SUBMITTED THE DOCUMENTS TO THE GOVERNMENT AGENCIES
CONCERNED FOR THE ISSUANCE OF TITLE AND CAN SHOW
PROOF OF THE SAME AND THE DELAY IN THE ISSUANCE OF
TITLE IS NOT THE FAULT OF SUCH OWNER OR DEVELOPER OR
WHERE THE NON-ISSUANCE IS PURSUANT TO A COURT ORDER,
‘THE OWNER OR DEVELOPER SHALL NOT BE HELD LIABLE FOR
SUCH DELAY OR NON-ISSUANCE OF TITLE.

“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 o the corresponding
portion thereof [within six months] IMMEDIATELY from such issuance in order


Seowmuanevne

ul
12
13,
14
15
16
17
18
19
20
21
2
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
2
4B
44
45
46
47
48
49
50
51
52
33
54

No.1

that the title over any fully paid lot or unit may be secured and delivered to the buyer
in accordance herewith. IN SUCH A CASE, THE MORTGAGEE SHALL NOT
UNREASONABLY REFUSE RELEASE OF THE TITLE BASED ON THE
LOAN VALUE THEREOF.”

@ Section 27 of Presidential Decree No. 957 is hereby amended to read as follows:

“SEC. 27. Osher Charges. — No owner or developer shall levy upon any lot or unit
buyer a fee for an alleged community benefit. Fees to finance services for common
comfort, security and sanitation may be collected only by a properly organized
homeowners association OR CONDOMINIUM CORPORATION and only with
the consent of a majority of the lot or unit buyers actually residing in the subdivision
or condominium project.”

(j)_ Section 31 of Presidential Decree No. 957, as amended by Presidential Decree
216, is hereby amended to read as follow:

“SEC. 31. Roads, Alleys, Sidewalks and Open Spaces. ~The owner [as] OR developer of a
subdivision shall provide adequate roads, alleys and sidewalks. For subdivision projects
one (1) hectare or more, the owner or developer shall reserve thirty percent (30%) of
the gross area for open space EXCLUSIVELY FOR ROADS, ALLEYS,
SIDEWALKS, SCHOOLS, PLACES OF WORSHIP, HOSPITALS, HEALTH
CENTERS, BARANGAY CENTERS, PARKS, PLAYGROUNDS,
RECREATIONAL USES, CLUBHOUSES AND OTHER SIMILAR
FACILITIES AND AMENITIES. Such open space shall have the following
standards allocated exclusively for parks, playgrounds and recreational use:

“(@) 9% of gross area for high density or social housing (66 to 100 family lot per
gross hectare)

“(b) 7% of gross area for medium-density or economic housing (21 to 65 family
lot per gross hectare).

“(© 3.5% of gross area for low-density or open market housing (20 family lots
and below per gross hectare).

“These areas reserved for parks, playgrounds and recreational use shall be [non-
alienable public lands, and non-buildable| EXCLUSIVELY FOR THEIR
INTENDED PURPOSES. The plans of the subdivision project shall include tree
planting on such parts of the subdivision as may be designated by the [Authority]
BOARD.

“Upon their completion PURSUANT TO SECTION 20 HEREOF AND as
certified to by the [Authority] BOARD, the roads, alleys, AND sidewalks [and
playgrounds} shall, WITH THE CONSENT OF THE HOMEOWNERS
ASSOCIATION UPON CONSULTATION, be donated by the owner or
developer to the city or municipality and it shall be mandatory for the local
governments to accept: PROVIDED, THAT OPEN SPACES RESERVED FOR
SCHOOLS, PLACES OF WORSHIP, HOSPITALS, HEALTH CENTERS,
AND BARANGAY CENTERS SHALL BE DONATED BY THE OWNER
OR DEVELOPER TO THE CITY OR MUNICIPALITY AND IT SHALL
LIKEWISE BE MANDATORY FOR THE LOCAL GOVERNMENTS TO
ACCEPT: Provided, however, That the OPEN SPACES RESERVED
EXCLUSIVELY FOR parks, [and] playgrounds, [may] RECREATIONAL USES,
CLUBHOUSES, AND OTHER SIMILAR FACILITIES AND AMENITIES
SHALL be donated to the Homeowners Association of the project with the consent
of the city or municipality concerned. UPON ACCEPTANCE OF THE
DONATION BY THE CITY OR MUNICIPALITY OR THE
HOMEOWNERS ASSOCIATION CONCERNED, [NJNo portion of the
[parks and playgrounds] AREA donated thereafter shall be converted to any other
purpose or purposes: PROVIDED, FURTHER, THAT ROADS IN


Seowrudsauaone

11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
a
34
35
36
37
38
39
40
41
42
43

45
46
47
48
49
50
51
52
53
54

SUBDIVISIONS WHICH HAVE BECOME PUBLIC IN CHARACTER
ONE (1) YEAR AFTER THE DECLARATION OF ABANDONMENT BY
THE BOARD OF THE SUBDIVISION PROJECT WHERE THEY ARE
LOCATED SHALL JPSO FACTO BECOME THE PROPERTY OF THE
LOCAL GOVERNMENT UNIT THAT HAS JURISDICTION OVER THE
SAID ROADS.”

(&) Section 38 of Presidential Decree No. 957 is hereby amended to read as follows:

“SEC. 38.Administrative Fines. — The [Authority] BOARD may prescribe and
impose A fine[s] not exceeding [ten] FIFTY thousand pesos (P50,000.00) for
EACH violations] OF ANY of the provisions of this Decree or of any rule or
regulation thereunder. Fines shall be payable to the [Authority] BOARD and
enforceable through writs of execution in accordance with the provisions of the Rules
of Court.”

() Section 39 of Presidential Decree No. 957 is hereby amended to read as follows:

“SEC. 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,
INCLUDING, BUT NOT LIMITED TO, THE FAILURE TO COMPLETE
‘THE DEVELOPMENT OF THE PROJECT WITHIN THE PRESCRIBED
PERIOD PURSUANT TO SECTION 20 HEREOF, FAILURE TO REFUND
‘THE PURCHASE PRICE OR THE INSTALLMENT PAYMENT MADE IN
VIOLATION OF SECTION 23 HEREOF, FAILURE TO DELIVER THE
TITLE PURSUANT TO SECTION 25 HEREOF, FAILURE TO FOLLOW
CONSTRUCTION SPECIFICATIONS OR POOR WORKMANSHIP
RESULTING TO SUBSTANDARD UNITS OR TO CONSTRUCTION
DEFECTS, shallf, upon conviction, be punished by a fine of not more than twenty
thousand (P20,000.00) pesos and/or imprisonment of not more than ten years:
Provided, That in] SUFFER:

“(A) ON THE FIRST OFFENSE, A FINE OF NOT MORE THAN
FIVE HUNDRED THOUSAND PESOS (P500,000.00) OR FIFTY PERCENT
(60%) OF THE TOTAL PURCHASE PRICE OF THE PROPERTY AS
STATED IN THE CONTRACT TO SELL OR DEED OF SALE,
INCLUDING ALL THE CHARGES IMPOSED BY THE DEVELOPER
WHICHEVER IS HIGHER AND/OR IMPRISONMENT OF NOT MORE
THAN FOUR (4) YEARS, AT THE DISCRETION OF THE COURT;

“(B) ON THE SECOND OFFENSE, A FINE OF NOT MORE THAN
SEVEN HUNDRED FIFTY THOUSAND PESOS (P750,000.00) OR
SEVENTY-FIVE PERCENT (75%) OF THE TOTAL PURCHASE PRICE
OF THE PROPERTY AS STATED IN THE CONTRACT TO SELL OR
DEED OF SALE, INCLUDING ALL THE CHARGES IMPOSED BY THE
DEVELOPER WHICHEVER IS HIGHER AND/OR IMPRISONMENT OF
NOT MORE THAN SEVEN (7) YEARS, AT THE DISCRETION OF THE
COURT; AND

“(©) ON THE THIRD OFFENSE, IN ADDITION TO A FINE OF
NOT MORE THAN ONE MILLION PESOS (P1,000,000.00) OR ONE
HUNDRED PERCENT (100%) OF THE TOTAL PURCHASE PRICE OF
THE PROPERTY AS STATED IN THE CONTRACT TO SELL OR DEED
OF SALE, INCLUDING ALL THE CHARGES IMPOSED BY THE
DEVELOPER WHICHEVER IS HIGHER AND/OR IMPRISONMENT OF
NOT MORE THAN TEN (10) YEARS, AT THE DISCRETION OF THE
COURT, THE BUSINESS PERMITS AND LICENSES, IN THE CASE OF
A BUSINESS ENTITY OR ESTABLISHMENT, SHALL BE REVOKED OR
CANCELLED.


Sowmraueune

11
12
13
14
15
16
17
18
19
20
21

“IF BY REASON OF ADVERTISEMENTS IN VIOLATION OF THIS
DECREE, A REAL ESTATE OR A CONDOMINIUM UNIT IS SOLD, AN
ADDITIONAL FINE OF NOT LESS THAN FIVE HUNDRED
THOUSAND PESOS (P500,000.00) SHALL BE IMPOSED FOR EVERY
UNIT SOLD.

“IN the case of corporations, partnership, 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.”

SEC. 4.Repealing Clause. — All laws, decrees, executive orders, proclamations, rules and
regulations and other issuances, or part or parts thereof which are inconsistent with the
provisions of this Act are hereby repealed or modified accordingly.

5.Separability Clause. — If, for any reason, any provision of this Act is declared invalid
or unconstitutional, the remaining provisions not affected thereby shall continue to be in force
and effect.

SEC. 6.Eiffectvity Clause. — ‘This Act shall take effect fifteen (15) days after the completion
of its publication in the Oficial Gazette or in at least two (2) newspapers of general circulation.

Approved,