PRESIDENTIAL DECREE NO. 957

1.) What is the title and general purpose of Presidential Decree No. 957 (Subdivision and Condominium Buyers’ Protective Decree)?

PD 957 is titled the “Subdivision and Condominium Buyers’ Protective Decree.” It aims to protect subdivision and condominium buyers by regulating sales and requiring developers/sellers to provide and maintain basic subdivision/construction requirements, deliver titles free from liens/encumbrances, and prevent fraudulent practices and double sales.

2.) Under PD 957, how is “Sale” defined, and does it include contracts to sell and similar arrangements?

Yes. “Sale” includes every disposition or attempt to dispose for valuable consideration, and expressly includes contracts to sell, contracts of purchase and sale, exchange, option of sale/purchase, solicitation, offer to sell, and even privilege/certificate of receipt in cooperatives/corporations that gives the right to participate in or acquire land.

3.) Who has exclusive jurisdiction to regulate the real estate trade and business under PD 957?

The National Housing Authority (Authority) has exclusive jurisdiction to regulate the real estate trade and business in accordance with PD 957.

4.) What is required before an owner/dealer can sell subdivision lots or condominium units under PD 957?

The owner/dealer must (1) register the project with the Authority, obtain a registration certificate after publication requirements, and then (2) obtain a license to sell from the Authority before selling.

5.) What documents must be attached to the sworn registration statement filed with the Authority?

A copy of the approved subdivision/condominium plan; a copy of any circular/prospectus/brochure/advertisement/letter for public offering; for business firms, a balance sheet and corporate/partnership documents with amendments and by-laws; and a title to the property free from liens and encumbrances (with a permitted mortgage stipulation allowing release per unit/lot upon full payment).

6.) Explain the publication requirement for project registration and when the project is deemed registered.

The Authority requires publication of a notice of filing the registration statement in two newspapers of general circulation (one English, one Pilipino) once a week for two consecutive weeks, at the applicant’s expense. The project is deemed registered upon completion of the publication requirement.

7.) What standards must the Authority be “convinced” of before issuing a license to sell?

The Authority must be convinced that the owner/dealer is of good repute, financially stable, and that the proposed sales to the public would not be fraudulent.

8.) What is a performance bond under PD 957, and what does it guarantee?

No license to sell is issued without an adequate performance bond approved by the Authority. It guarantees construction and maintenance of roads, gutters, drainage, sewerage, water systems, lighting systems, full development of the project, and compliance with applicable laws/rules.

9.) What transactions are exempt from requiring a license to sell and performance bond under PD 957?

Exempt transactions include: (1) sale resulting from partition among co-owners/co-heirs; (2) sale/transfer by the original purchaser and subsequent sale of the same lot; and (3) sale by or for account of a mortgagee in ordinary course when necessary to liquidate a bona fide debt.

10.) Under what circumstances may the Authority suspend a license to sell prior to final decision?

Upon verified complaint by a buyer or interested party, the Authority may immediately suspend pending investigation/hearing. It may also motu proprio suspend if information in the registration statement is misleading/incorrect/inadequate/incomplete or if the offering may tend to work a fraud upon prospective buyers.

11.) When may the Authority revoke the registration certificate and license to sell, and what are at least three grounds?

After examination/hearing (Sections 13 and 14 procedures), revocation may occur if there is evidence that the owner/dealer is insolvent; violated PD 957 or rules/undertakings; engaged/is about to engage in fraudulent transactions; made misrepresentations in sale literature; is of bad business repute; or does not conduct business according to law/sound business principles.

12.) What is the purpose and effect of a cease and desist order under PD 957?

If the Authority appears that a person is engaged or about to engage in acts constituting or leading to violations, it may issue a cease and desist order to enjoin such acts, after due notice and hearing per the hearing procedure.

13.) How does PD 957 address installation payments and the buyer’s right against forfeiture?

No installment payment by a buyer may be forfeited if the buyer, after due notice, desists due to the owner/developer’s failure to develop according to approved plans within the time limit. The buyer may opt for reimbursement of total amount paid plus amortization interests (excluding delinquency interests) at legal rate.

14.) What does PD 957 require regarding the issuance of title to buyers, including timing and fees?

The owner/developer must deliver the title upon full payment. No fee except those required for registration of the deed of sale may be collected for title issuance. If a mortgage remains outstanding at issuance, the owner/developer must redeem the mortgage portion within six months so the fully paid buyer gets title secured and delivered.

15.) How does PD 957 treat realty taxes before and after the buyer takes possession/occupies?

Real estate tax and assessment are paid by the owner/developer without recourse to the buyer as long as title has not passed. If the buyer actually takes possession and occupies, the buyer becomes liable for such tax/assessment effective the year following that taking.

16.) What is the general rule on waivers of PD 957 requirements in contracts?

Any stipulation or condition where a person waives compliance with PD 957 or rules issued pursuant thereto is void (nullity of waivers).

17.) What penalties may be imposed for violations of PD 957, and who can be criminally responsible for corporate/partnership violations?

Upon conviction, violations may be punished by fine not exceeding P20,000 and/or imprisonment not exceeding ten years. For corporations/partnerships/cooperatives/associations, the President/Manager/Administrator or person in charge of administration shall be criminally responsible.

18.) What are the Authority’s visitorial (inspection) powers and how do they support enforcement?

The Authority may examine business affairs and condition of entities engaged in selling, administer oaths, subpoena witnesses and documents, authorize ocular inspections through engineers, and inspect books/papers/letters and other documents.

19.) Under PD 957, what is the effect of altering approved subdivision plans or represented facilities without permission?

No owner/developer may change or alter roads, open spaces, infrastructures/facilities for public use or other subdivision development elements in the approved plan and/or represented in advertisements without Authority permission and written conformity/consent of the homeowners association; or if absent, consent of the majority of buyers.