Summary of Title II: Registration and License to Sell of

Subdivision and Condominium Projects by Section

Section 3: National Housing Authority

● The Department of Human Settlements and Urban Development (DHSUD), formerly

known as the National Housing Authority, has exclusive authority to regulate the sale
of subdivision and condominium projects.

Section 4: Registration of Projects

● Project owners submit subdivision or condominium plans to DHSUD for approval

based on relevant regulations.
● DHSUD approves plans considering both land use and building codes.
● The approved plan is submitted to the appropriate land authority (Director of Lands or
Register of Deeds) for final approval.
● Owners or real estate dealers file a registration statement with DHSUD containing
details about themselves, the project, and financial statements (if applicable).
● The registration statement includes project plans, marketing materials, and proof of
land ownership (free of liens,with exceptions for mortgages).
● Upon filing, DHSUD publishes a notice of registration in two newspapers.
● Project registration is deemed complete after publication. DHSUD issues a
registration certificate to the owner or dealer.

Section 5: License to Sell

● Owners or dealers with a registration certificate must obtain a license to sell the
project within two weeks.
● DHSUD reviews the registration statement and documents to assess the
owner/dealer's reputation, financial stability, and potential for fraud.
● Owners or dealers must file an approved performance bond guaranteeing project
development and compliance with regulations.
● DHSUD issues a license to sell if satisfied with the application.

Section 6: Performance Bond

● No license to sell is issued without an approved performance bond from DHSUD.

● This bond guarantees the completion and maintenance of infrastructure (roads,
drainage, utilities) and full development of the project.
● It also ensures the owner/dealer's compliance with applicable laws and regulations.
● The bond is in favor of the Republic of the Philippines and DHSUD can use it for
project completion in case of forfeiture.

Section 7: Exempt Transactions

● A license to sell and performance bond are not required for:

○ Partition of land among co-owners or heirs.
 ○ Sale or transfer by the original purchaser and subsequent sales of the same
lot.
○ Sale of a lot or unit by a mortgagee to settle a debt.
●

Section 8: Suspension of License to Sell

● DHSUD can suspend a license to sell based on verified complaints, misleading

information in the registration statement, or potential fraud.
● The suspension may be lifted after a hearing if the concerns are addressed.
● The suspension order is confidential until a final decision is reached.

Section 9: Revocation of Registration Certificate and License to Sell

● DHSUD can revoke registration and the license to sell based on:
○ Owner/dealer insolvency.
○ Violation of regulations or the performance bond.
○ Fraudulent activity.
○ Misrepresentation in project marketing materials.
○ Poor business reputation.
○ Non-compliance with laws or sound business practices.
●
● Similar actions can be taken against partnerships or corporations if a member or
officer is responsible for such violations.

Section 10: Registers of Subdivision Lots and Condominium Units

● DHSUD maintains public registers of subdivision lots and condominium units,

including any orders affecting their status.
● These registers are accessible for public inspection under DHSUD's regulations.

Title III: Dealers, Brokers and Salesmen by Section

Section 11: Registration of Dealers, Brokers and Salesmen

● Requires registration with DHSUD for anyone acting as a real estate dealer, broker,
or salesman selling subdivision or condominium lots.
● DHSUD verifies applicant's good repute and compliance with regulations, including
fee payment.
● Upon approval, DHSUD registers the applicant and issues a registration certificate.
● Dealers, brokers, and salesmen may need to file a bond or security.
● Salesman registration expires annually and requires renewal within a specific
window. Renewals typically don't require additional information unless requested by
DHSUD.
● Applications submitted outside the renewal window are treated as new registrations.
 ● DHSUD maintains a public Register of Brokers, Dealers and Salesmen accessible for
public inspection.

Section 12: Revocation of Registration as Dealers, Brokers or Salesmen

● DHSUD can refuse registration or revoke an existing registration after a hearing if it

finds the applicant or registrant has:
○ Violated any provision of the Decree or related regulations.
○ Made a material false statement during the registration application.
○ Committed a fraudulent act in connection with selling subdivision or
condominium lots.
○ Demonstrated unworthiness to conduct business as a dealer, broker, or
salesman.
● In case of charges against a salesman, the broker or dealer employing them is also
notified.
● DHSUD has the authority to suspend a dealer's, broker's, or salesman's registration
while investigating a case. The suspension order must state the reason.
● Suspension or revocation of a dealer or broker's registration automatically applies to
all their registered salesmen.

Summary of Title IV: Procedure for Revocation of

Registration Certificate by Section
Section 13: Hearing

● This section outlines the procedures for a hearing regarding the suspension or
revocation of a registration certificate or license to sell.
● Notice: The respondent must be notified of the charges against them and the
purpose of the hearing.
● Venue: The hearing will be held before designated DHSUD officials at a specified
date and location.
● Nature of Proceedings: The hearing is non-litigious and summary, meaning it's
informal and doesn't follow strict court rules. Legal technicalities won't be considered.
● DHSUD Authority: The designated officials can administer oaths, subpoena
witnesses, conduct inspections, take depositions, and demand relevant documents
during the hearing.

Section 14: Contempt

● This section defines two types of contempt that can occur during the hearing:
○ Direct Contempt: Misbehavior in the presence of the hearing officials,
refusing to be sworn in, or refusing to answer questions/provide testimony.
Punishment includes a fine up to 50 pesos or imprisonment up to 5 days, or
both.
○ Indirect Contempt: Violating the hearing process as outlined in the Revised
Rules of Court.

Section 15: Decision

 ● DHSUD must issue a decision within 30 days of the hearing's conclusion.
● The decision may include:
○ Revocation of the subdivision or condominium project registration.
○ Suspension, cancellation, or revocation of the license to sell.
○ Full or partial forfeiture of the performance bond.
○ Ordering the provincial/city engineer to complete project requirements using
forfeited bond funds.
● The decision is immediately enforceable and becomes final after 15 days from
receipt.

Section 16: Cease and Desist Order

● DHSUD can issue a cease and desist order to prevent someone from engaging in
practices that violate the Decree or its regulations. This requires a hearing following
the procedures outlined in Section 13.

Section 17: Registration

● All contracts, deeds of sale, and similar instruments related to subdivision or

condominium lot sales must be registered with the Register of Deeds in the
corresponding province or city.
● When registering a subdivision plan with the Register of Deeds, they must note any
streets, walkways, or open spaces on the plan. These cannot be closed or sold
without DHSUD approval and consent from the homeowners' association (or a
majority of lot buyers if no association exists).

Section 18: Mortgages

● Mortgages on subdivision lots or condominium units require DHSUD approval

beforehand.
● Approval is granted only if the loan proceeds are used for project development and
measures are taken to ensure those funds are used as intended.
● The loan value of each mortgaged lot/unit is determined, and the buyer is notified
before the loan is released.
● Buyers can choose to make payments directly to the mortgagee, who will then apply
them to the specific loan for their lot/unit. This aims to expedite the process of
obtaining ownership titles.

Section 19: Advertisements

● Advertisements for subdivisions or condominiums must be truthful and avoid

misleading the public.
● Owners/developers are responsible for the facilities, improvements, infrastructure,
etc. promised in their advertisements and sales materials. These become sales
warranties enforceable against them.
● Failure to comply with these warranties is punishable under the Decree.

Section 20: Time of Completion

 ● Owners/developers have one year from the license issuance date (or another period
set by DHSUD) to construct and provide the promised facilities, improvements,
infrastructure, etc. in the subdivision or condominium project.

[Following sections are not directly related to revocation procedures but are included
in Title IV]

Section 21: Sales Prior to Decree

● For projects sold before the Decree's effectivity, owners/developers have two years
to comply with their obligations regarding project development. DHSUD extensions or
filing an adequate performance bond are exceptions.
● Failure to comply is punishable under the Decree.

Section 22: Alteration of Plans

● Owners/developers cannot change approved subdivision plans (roads, open spaces,

etc.) or what's represented in their advertisements without DHSUD permission,
written consent from the homeowners' association (or a majority of lot buyers if no
association exists).

Section 23: Non-Forfeiture of Payments

● Buyers can withhold remaining payments if the owner/developer fails to develop the
project according to the approved plans and timeline. They can request a full refund
with interest (excluding delinquency interest).

Summary of Title IV: Procedure for Revocation of

Registration Certificate (continued)
Section 24: Failure to Pay Installments

● This section outlines the rights of buyers who fail to pay installments for reasons
other than the developer's failure to develop the project.
● It refers to Republic Act No. 6552 (Real Estate Service Act) which governs such
situations.
● For pre-1972 contracts, defaulting buyers may be entitled to a refund based on
installments paid after the law's effectivity, unless otherwise specified in the contract.

Section 25: Issuance of Title

● Owners/developers must deliver the title to the buyer upon full payment of the lot or
unit.
● No additional fees can be charged beyond those required for registering the deed of
sale.
● If a mortgage exists on the lot/unit, the owner/developer must redeem it within six
months of title issuance to ensure a clear title for the buyer.
Section 26: Realty Tax

● The owner/developer is responsible for real estate taxes and assessments on the
lot/unit until the title is transferred to the buyer.
● Once the buyer takes possession and occupies the lot/unit, they become liable for
those taxes and assessments starting the following year.

Section 27: Other Charges

● Owners/developers cannot impose fees on buyers for alleged "community benefits."

● Fees for common services (security, sanitation) can only be collected by a properly
organized homeowners' association and require the consent of a majority of
residents.

Section 28: Access to Public Offices

● Owners/developers cannot deny access to government offices or public

establishments located within the subdivision or accessible only through it.

Section 29: Right of Way to Public Road

● If a subdivision lacks access to a public road, the owner/developer must secure a

right of way and develop/maintain it according to government requirements.

Section 30: Organization of Homeowners Association

● Owners/developers are responsible for initiating the organization of a homeowners'

association to represent residents' interests and promote community development.

Section 31: Donations of Roads and Open Spaces

● Upon project completion, the owner/developer can optionally donate roads and open
spaces within the project to the local government.
● Once accepted, the local government cannot convert these areas for other purposes
without a hearing and DHSUD approval.

Section 32: Phases of Subdivision

● For compliance purposes, owners/developers can divide the subdivision

development and sale into phases (minimum 10 hectares each).
● Requirements for the entire subdivision apply to each individual phase.

Section 33: Nullity of Waivers

● Any contract clause where a buyer waives compliance with the Decree or its
regulations is considered void.

Section 34: Visitorial Powers

● DHSUD has the authority to investigate the business affairs, administration, and
condition of anyone selling subdivision lots or condominium units.
 ● Authorized representatives can examine officials, inspect project development for
compliance with standards, and access relevant documents.

Section 35: Take-over Development

● DHSUD can take over or arrange for the completion of a subdivision or condominium
project if the owner/developer fails or refuses to do so as required by the Decree.
● DHSUD can then collect installment payments from buyers to cover development
costs.

Section 36: Rules and Regulations

● DHSUD can issue necessary standards, rules, and regulations to implement the
Decree effectively. These take effect after publication in a newspaper for two
consecutive weeks.

Section 37: Deputization of Law Enforcement Agencies

● DHSUD can deputize law enforcement agencies (e.g., Philippine Constabulary) to

enforce its final orders, rulings, or decisions.

Section 38: Administrative Fines

● DHSUD can impose fines up to 10,000 pesos for violations of the Decree or its
regulations. These fines are payable to DHSUD and enforceable through court writs.

Section 39: Penalties

● Anyone who violates the Decree or its regulations can be fined up to 20,000 pesos
and/or imprisoned for up to 10 years upon conviction.
● For corporations, partnerships, etc., the president, manager, or administrator
responsible for managing the business can be held criminally liable.

Section 40: Liability of Controlling Persons

● Anyone who directly or indirectly controls a person who violates the Decree or its
regulations can be held jointly and severally liable, unless they acted in good faith
and didn't contribute to the violation.

Section 41: Other Remedies

● The rights and remedies provided in this Decree are in addition to any other legal
remedies available under existing laws.