Subdividing and selling residential land in the Philippines is a highly regulated process governed by a complex interplay of national laws and local ordinances. For developers or individual landowners, compliance is not merely a formality but a legal prerequisite for the validity of sales and the protection of buyers.
1. Primary Governing Laws
The legal landscape is primarily defined by two landmark pieces of legislation:
- Presidential Decree No. 957 (The Subdivision and Condominium Buyers' Protective Decree): This is the "Bill of Rights" for lot buyers. It regulates the sale of subdivision lots and imposes strict requirements on owners and developers regarding infrastructure, titles, and advertising.
- Batas Pambansa Bilang 220 (Socialized and Economic Housing): This provides for relaxed technical standards (e.g., smaller minimum lot sizes and narrower roads) for "socialized" or "economic" housing projects to make land more affordable for lower-income groups.
2. Mandatory Permits and Clearances
Before a single square meter of land can be sold, a landowner must navigate a specific bureaucratic sequence:
A. Preliminary Approval and Location Clearance (PALC)
Issued by the Local Government Unit (LGU) through the Sangguniang Bayan or Panlungsod. This ensures the proposed subdivision aligns with the city or municipality’s Comprehensive Land Use Plan (CLUP) and zoning ordinances.
B. Development Permit (DP)
Once the PALC is secured, the developer must obtain a Development Permit from the LGU. This allows the physical alteration of the land—clearing, grading, and the installation of utilities.
C. Certificate of Registration (CR)
Issued by the Department of Human Settlements and Urban Development (DHSUD), formerly the HLURB. This registers the project as a formal subdivision in the government’s records.
D. License to Sell (LS)
Crucial Requirement: It is illegal to sell, or even offer for sale, any subdivision lot without a License to Sell. This license is only granted after the DHSUD is satisfied that the owner has the legal right to the land and the financial capability to complete the project.
3. Technical Requirements for Small Lots
The minimum requirements for "small lots" vary depending on whether the project falls under PD 957 or BP 220:
| Feature | PD 957 (Open Market) | BP 220 (Socialized) |
|---|---|---|
| Min. Lot Area (Corner) | 120 sqm | 64 sqm |
| Min. Lot Area (Inside) | 100 sqm | 64 sqm |
| Min. Lot Frontage | 8 - 10 meters | 8 meters |
| Road Right-of-Way | 10 - 12 meters (min) | 6.5 - 8 meters (min) |
Note: "Raw land" or "simple subdivision" (less than 10 lots) may follow simpler LGU rules for minor partitions, but if the intent is a commercial housing project, DHSUD rules strictly apply.
4. The "No-Sell" Period and Advertising
Until the License to Sell is issued:
- No Advertising: Any brochures, social media posts, or flyers must not be circulated.
- No Down Payments: Collecting "reservation fees" or down payments is a violation of PD 957 and can lead to cease-and-desist orders and administrative fines.
5. Documentary Requirements for Titling
To successfully transfer ownership to individual buyers, the following must be processed through the Registry of Deeds (RD) and the Land Registration Authority (LRA):
- Verified Survey Plan: A professional geodetic engineer must survey the land and create a "Subdivision Plan," which must be approved by the Land Management Bureau (LMB) or the Department of Environment and Natural Resources (DENR).
- Individual Titles: The original "Mother Title" (OCT or TCT) must be cancelled and replaced by individual Transfer Certificates of Title (TCT) for each subdivided lot.
- Tax Declarations: Each new lot must be issued its own Tax Declaration by the Assessor’s Office.
6. The 70-30 Rule
Under the Urban Development and Housing Act (RA 7279), developers of proposed subdivision projects are required to develop an area for socialized housing equivalent to at least 15% of the total subdivision area or total subdivision project cost (for vertical developments, the requirement is often 5%). This is intended to ensure balanced housing development.
7. Penalties for Non-Compliance
Failure to comply with these requirements results in:
- Voidable Contracts: Buyers may stop payment if the developer fails to develop the project according to the approved plan.
- Criminal Liability: Violations of PD 957 can lead to fines and imprisonment.
- Administrative Fines: Levied by the DHSUD for unauthorized selling or substandard infrastructure.