Short answer: the number of houses isn't what matters. What matters is whether you're partitioning land into lots and offering them to the public. Do that, with or without houses on the lots, and PD 957 treats it as a subdivision project: plan approval and registration, a license to sell before you advertise, a performance bond, and criminal penalties if you skip them. Buying lots that are already in a licensed subdivision and reselling them with houses is a different case, because Section 7 exempts resales by the original purchaser.
The idea is simple enough. Buy land, build four good houses, sell them, do it again. The trouble starts with the Facebook post that says "pre-selling, 4 units only, flexible terms". Under Section 2(b) that advertisement is already a sale.
Describe the land and how you plan to sell. The check maps it to the decree's definitions and lists the requirements and exemptions that apply. Take the result to a lawyer and to DHSUD before you advertise.
Section 2(b) defines "sale" to include every disposition or attempt to dispose of a subdivision lot, including the building on it, and expressly includes a contract to sell, an option, a solicitation, and an offer to sell "directly or by an agent, or by a circular, letter, advertisement or otherwise".
Section 2(d) defines a subdivision project as registered land "partitioned primarily for residential purposes into individual lots with or without improvements thereon, and offered to the public for sale, in cash or in installment terms". Section 2(g) covers a condominium project, real property divided primarily for residential purposes into condominium units.
| Section | Requirement |
|---|---|
| 4 | Subdivision or condominium plan approved and the project registered |
| 5 | No selling any lot or unit until a license to sell has been obtained |
| 6 | No license to sell without an adequate performance bond guaranteeing roads, drainage, sewerage, water, lighting and full development |
| 17 | Contracts to sell and deeds of sale registered with the Register of Deeds, whether or not fully paid |
| 20 | Advertised facilities and improvements built within one year from the license, or another period set |
| 23 | A buyer who stops paying because the project wasn't developed as approved may recover the total paid, excluding delinquency interest, with legal interest |
| 25 | Title delivered to the buyer upon full payment |
| 39 | Fine of not more than ₱20,000 and/or imprisonment of not more than ten years; officers of a corporation are criminally responsible |
A license to sell and performance bond are not required for: a lot sold after partition among co-owners and co-heirs; a lot sold or transferred by its original purchaser, and any later sale of the same lot; and a sale by or for a mortgagee to liquidate a bona fide debt. Note that the exemption is from the license to sell and bond. It says nothing about building permits, which every house still needs under PD 1096 Section 301.
PD 957 itself names the National Housing Authority. RA 11201 created the Department of Human Settlements and Urban Development by consolidating HUDCC and HLURB, and made it the sole planning, policy-making and regulatory entity for housing and urban development. Section 12 reconstituted HLURB as the Human Settlements Adjudication Commission, which now carries the adjudicatory function. Registration and licensing questions go to DHSUD; buyer complaints go to HSAC.
Land ownership is its own question before PD 957 even starts. The 1987 Constitution, Article XII Section 7, limits private land to those qualified to hold public-domain land. Our foreigner ownership guide sets out the lease and corporate limits.
Definitions, requirements, exemptions and penalties are quoted from PD 957 Sections 2, 4, 5, 6, 7, 17, 20, 23, 25 and 39. The regulator is RA 11201, including Section 12 on HSAC. The permit rule is PD 1096 Section 301. DHSUD's implementing rules can add requirements the decree doesn't spell out, so check them before you commit.
Does PD 957 apply if I only build a few houses to sell?
It depends on what you are selling, not on how few. Section 2(d) defines a subdivision project as registered land partitioned primarily for residential purposes into individual lots, with or without improvements, and offered to the public for sale in cash or on installment. If you split land into lots and offer them to the public with houses on them, you are inside that definition even at a small scale. Section 2(b) also counts an offer, a solicitation or an advertisement as a sale.
What does PD 957 require before I can sell?
Section 4 requires the subdivision or condominium plan to be approved and the project registered. Section 5 then bars selling any lot or unit until the owner or dealer has obtained a license to sell. Section 6 bars issuing that license until an adequate performance bond has been filed to guarantee construction of the roads, drainage, water, lighting and full development of the project.
What transactions are exempt?
Section 7 says a license to sell and performance bond are not required for a sale of a subdivision lot resulting from partition among co-owners and co-heirs, a sale or transfer of a subdivision lot by the original purchaser and any subsequent sale of the same lot, and a sale by or for a mortgagee in the ordinary course of business to liquidate a bona fide debt.
Who regulates developers now that HLURB is gone?
RA 11201 created the Department of Human Settlements and Urban Development by consolidating HUDCC and HLURB, and made it the sole planning, policy-making and regulatory entity for housing and urban development concerns. Section 12 reconstituted HLURB as the Human Settlements Adjudication Commission and transferred HLURB's adjudicatory function to it.
What are the penalties for selling without a license?
Section 39 of PD 957 provides, upon conviction, a fine of not more than twenty thousand pesos and/or imprisonment of not more than ten years for violating the decree or its rules. For corporations, partnerships, cooperatives and associations, the president, manager or administrator is criminally responsible.
What do I owe buyers if I sell under PD 957?
Section 20 requires the facilities and improvements you advertised to be built within one year of the license or another period set. Section 23 lets a buyer who stops paying because the project was not developed as approved recover the total amount paid, excluding delinquency interest, with interest at the legal rate. Section 25 requires title to be delivered upon full payment.
Statutes used in this guide. Links open in a new tab.
This guide reads the statutes as published. DHSUD issuances and case law can refine how they apply. Get a lawyer's opinion on your specific project before advertising.
Houses that sell are houses that pass inspection and don't come back as complaints.
