Selling Subdivision Lots Without A License Hlurb Authority AND Criminal Liability Under PD 957

The Supreme Court has clarified an important point for real estate developers and buyers alike: selling subdivision lots without the required license from the Housing and Land Use Regulatory Board (HLURB) is a criminal offense, and obtaining the license later does not erase that liability. The ruling in Cabral v. Uy (G.R. No. 174584, January 22, 2010) settles two questions: which court has jurisdiction over such cases, and whether a subsequent license can extinguish criminal liability.

The Case: A Developer Sold Lots Without a License

The case began when Moldex Realty, Inc. applied for a license to sell subdivision lots in a Bulacan project. The HLURB denied the application for failure to comply with requirements. Despite this, the company's officers proceeded to sell a lot to a buyer.

A property owner filed a criminal complaint for violation of Section 5 of Presidential Decree No. 957, the law regulating the sale of subdivision lots and condominiums. The public prosecutor filed an information before the Regional Trial Court of Quezon City against the company's chairman and other officers.

The twist came when the HLURB later issued the license to sell on September 17, 2003—over a year after the sale in question. The accused officers moved to quash the information, arguing two points: that the prosecutor and trial court had no jurisdiction (claiming the HLURB had exclusive authority), and that the subsequent license extinguished any criminal liability.

The Court's Ruling: Courts Have Jurisdiction

The Supreme Court rejected the argument that only the HLURB could hear such cases. Citing Sia v. People, the Court held that the public prosecutor has the authority to file criminal informations for violations of P.D. 957, and the trial court has the power to hear and decide them.

The reason is straightforward: the penalty for violating P.D. 957 is a fine of up to P20,000.00 and imprisonment of not more than ten years, or both. This penalty places the offense squarely within the jurisdiction of the Regional Trial Court. The HLURB's administrative powers do not displace the courts' criminal jurisdiction.

The Court's Ruling: A Later License Does Not Erase the Crime

The more significant ruling concerns the effect of the subsequent license. The Court emphasized that P.D. 957 was enacted to regulate, for the public good, the sale of subdivision lots and condominiums. Section 5 prohibits such sales without a prior HLURB license.

The crime under P.D. 957 is malum prohibitum—an act wrong because the law prohibits it, not because it is inherently immoral. This means criminal intent or malice is immaterial. The sole question is whether the law was violated.

Since the information alleged that Moldex sold a subdivision lot without a license, the crime was already complete at the moment of sale. The Court rejected the argument that a later license could "reach back" to erase the offense. Even good faith cannot extinguish liability once the prohibited act has been done.

The Court also distinguished an earlier case, Co Chien v. Sta. Lucia Realty, which the Court of Appeals had relied upon. That case involved a civil dispute over a contract's validity, not a criminal prosecution. Notably, even in Co Chien, the HLURB imposed an administrative fine for selling without a license—showing that liability attaches despite a later license.

Practical Takeaways

• Developers must secure an HLURB license before selling any subdivision lot or condominium unit. Selling first and applying later is not a workable strategy.
• A subsequent license does not cure past violations. The crime is committed at the moment of the unlicensed sale, and no later approval can undo it.
• Criminal liability attaches to corporate officers. Under Section 39 of P.D. 957, the president, manager, administrator, or person in charge of the business is criminally responsible for violations.
• The HLURB and the courts have separate roles. The HLURB handles administrative matters, but criminal prosecutions proceed through the public prosecutor and the Regional Trial Court.
• Good faith is not a defense. Because the offense is malum prohibitum, the absence of criminal intent does not matter.

For buyers, this ruling reinforces the importance of verifying that a developer holds a valid license to sell before making any payment. For developers, it serves as a clear warning: comply with the licensing requirements first, or face criminal prosecution that a later license cannot undo.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.