SEVENTEENTH CONGRESS )
REPUBLIC OF THE PHILIPPINES )
First Regular Session

HOUSE OF REPRESENTATIVES

House ai No. 4534

Introduced by Representative Victor A. Yap

EXPLANATORY NOTE

It is the policy of the State to undertake, in cooperation with the private
sector, comprehensive and continuing urban development. Subdivision and
condominium projects have thrived over the last decade thanks to lowered interest rates,
increased remittances from OFWs and an overall better economic outlook in recent years.
‘The condominium sales in the Philippines for 2015 may not be as high as the numbers for
2012 (considered as a banner year for the condominium market in terms of sales)but, it
still posted a stellar growth particularly in houses, door apartments, residential lots, and
office spaces. 2015 also marked the rise of many other residential township projects
outside Metro Manila, highlighting a robust and in demand sector.

According to 2015 Philippine Statistic Authority (PSA) data, the value of residential
constructions accounted for 46.5% of the total value of construction in the country for the
2" quarter of 2015. This was a 6.4% increase from 36.7 billion during the same quarter in
2014. During this period, it was the cor of residential condominiums, single type
houses and apartments whi t number of growth in the Sector.

Also, on March 2015, the Housing and Land Use Regulatory Board (HLURB)
released two sets of revised implementing rules and regulations (IRR), which apply to the
Subdivision and Condominium Buyers’ Protective Decree. ‘The new IRRs were aimed at
preventing real estate developers from making false representations in their
advertisements. ‘These include making sure that the following information were clearly
indicated in all real estate marketing materials: license to sell number, project’s complete
address, completion date, and complete name of seller, among others. In addition, real
estate brokers and salespersons employed by developers must register with the HLURB
before they are allowed to sell these proj

Still, the problems which beset the sector, particularly the complaints by buyers or
owners, continue. 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 secks to amend PD 957 to make it more responsive and attuned to the
needs of the present times. The bill sccks to increase the penalties for violators from
P10,000 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 or the installment
payment made in the event of desistance by the buyer to further pay due to the inability to


For the third-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 PI 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.

‘The original bill was filed by Representative Susan Yap during the 16" Congress and
was approved on 3” reading. Unfortunate s not passed into law due to lack of material
time. Thus, this representation is hoping that the bill would be approved soonest.

Reptesentative, 2nd District of Tarlac


SEVENTEENTH CONGRESS )
REPUBLIC OF THE PHILIPPINES)
First Regular Session

HOUSE OF REPRESENTATIVE!
House Bill No. 4534

Introduced by Representative Victor 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 Tit. — "This Act shall be known as

Subdivision and Condominium

Buyers’ Protective Decree Amendments of 2016”.

>, 2.Declaration of Paligy. — It is the policy of the S'

te 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 Buy

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 Decri

the following provisions are hereby

amended:

(@) Section 2, paragraph (n) of Presidential Decree No. 957 is hereby amended to read as
follows:
“(n) [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:


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.”

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

as follows:
“SEC. 5. Liene to Sell. — 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
subdivision lot or condominium unit in the registered project [unless] UN'THL
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 Decrce No. 957 is hereby amended to read as

follows:

“SEC.17.

tration, ~ AM [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 REG 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 S! 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



Seed aue os

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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 valuc of
each lot or unit covered by the mortgage shall be determined and the buyer thercof, if
y, 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

nstallment for the lot or

unit directly to. the mor

sec who shall apply the payments to the cortesponding
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.

= A COMPLAINT IS FILED FOR THE IMMEDIAT
OF THE TITLE UPON FULL PAYMENT OF A
THE MORTGAGEE MUST BE IMPLEADED AS AN
INDISPENSABLE PARTY.”

(f) Section 20 of Presidential Decree No. 957 is hereby amended to read as follows:
“SEC. 20. Time of Completion. ~ Vivery owner ot developer shall construct and

provide the facilities, improvements, inf

structures and other forms of development,

AND DEVELOPMENT OF

including water supply, [and] lighting

ROADS, AS PROVIDED FOR [which are off

iti

red and indicated] in the approved
subdivision or condominium plans, brochure

in any form of advertisement, within [one year] EIGHTEEN (18) MONTHS from

Prospectus, printed matters, letters or

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
BE LOCATED, DECLARE 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,

Allteration of Plans. — No owner ot 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 or
on OR CONDOMINIUM
CORPORATION, or in the absence of the latter, by the majority of the [lot] buyers
fin the] OF subdivision LOTS OR CONDOMINIUM UNITS WHO HAVE
ALREADY PAID AT LEAST FIFTTY PERCENT (50%) OF THE
PURCHASE PRICE.”

consent of the duly organized homeowners asso

(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
lot or unit to the buyer upon full payment of the lot or unit[]: PROVIDED, THAT
WHERE THE OWNER OR DEVELOPER PROPERLY PROCESSED AND
SUBMITTED THE DOCUMENTS TO THE GOVERNMENT AGENCIE:



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 or the corresponding
portion thereof [within six months] IMMEDIATELY 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, IN SUCH A CASE, THE MORTGAGEE SHALL NOT
UNREASONABLY REFUSE RELEASE OF (TTLE BASED ON THE
LOAN VALUE THEREOF.”

(Section 27 of Preside

| Decree No. 957 is hereby amended to read as follows:

“SEC. 27. Other 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
sociation OR CONDOMINIUM CORPORATION and

only with the consent of a majority of the lot or unit buyers actually residing in the

organized homeowners

subdivision or condominium project.”

(i) Section 31 of Presidential Decree No. 957, as amended by Presidential Decree

No. 1216, is hereby amended to read as follows:

‘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 arca 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


nen

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

“(b) 7% of gros

s 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 sh

all 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 CONSULT:
developer to the city or municipality

governments to accept: PROVIDED,

(ON, be donated by the owner or

nd it shall be mandatory for the local
HAT OPEN SPACES RESERVED FOR

OR DEVELOPER TO THE CITY OR MUNICIPALITY AND
LIKEWISE BE MANDATORY FOR THE LOCAL GOVERNMENTS ‘TO
ACCEPT: Provided, however, “Vhat the OPEN SPACE RESERVED
EXCLUSIVELY FOR parks, [and] playgrounds, [may] RECREATIONAL USES,
CLUBHOUSES, AND OTHER SIMILAR FACILITIES AND AMENIT!
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 cry OR MUNICIPALITY OR THE
HOMEOWNERS ASSOCIATION CONCERNED, [N]No portion of the

{parks and playgrounds] AREA donated thereafter shall be converted to any other
purpose or purposes: PROVIDED, FURTHER, THAT ROADS IN
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 /PSO FACTO BECOME THE PROPERTY OF THE
LOCAL GOVERNMENT UNIT THAT HAS JURISDICTION OVER THE

SAID ROADS.”



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(&) 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 violation[s] OF ANY of the provisions of this Decree or of any rule or

gulation 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.”

‘ction 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 COMP
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
DE

ICTS, 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, Vhat in] SUFFER:

“(A)ON THE FIRST OFFENSE, A FINE OF NOT MORE THAN FIVE
HUNDRED THOUSAND PESOS (P500,000.00) OR FIFTY PERCENT
(50%) 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



or unconstitutional, the rem:

of its publication in the Offz

NOT MORE THAN SEVEN (7) YEARS, AT THE DISCRETION OF THE
COURT; AND

“(C) 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 STAT 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.

“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. Repe

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.

SEC. 5.Separability Clause. — Vf, for any reason, any provision of this Act is declared invalid

ng provisions not affected thereby shall continue to be in force

ind effect,

SEG. 6.Effectinty Clause. — “Vhis. Act shall take effec
Gazette or in

fecen (
newspapers of general circulation.

15) days after the completion

Approved,