The Department of Justice (DOJ) has raised legal concerns over a 2021 issuance of the Department of Human Settlements and Urban Development (DHSUD), saying certain provisions may have effectively reduced developers’ mandatory participation in the government’s balanced housing program.

In a legal opinion dated 3 February 2026, the DOJ flagged Department Order (DO) No. 2021-004, which sets guidelines on balanced housing compliance and its utilization under Republic Act (RA) 7279, or the Urban Development and Housing Act of 1992, as amended by RA 10884.

The DOJ said the order appears to have lowered the required participation rate prescribed by law, noting that RA 7279 sets a statutory minimum contribution of 15 percent or 5 percent, depending on the type of project.

Citing DOJ Opinion No. 37, s. 2024, the department reiterated that while incentivized compliance is not expressly provided in the law, it may be consistent with its objectives. However, it maintained that DO No. 2021-004 “suffers from legal infirmities,” particularly in allowing what it described as an effective reduction of the mandated participation.

The DOJ stressed that the percentage of participation under RA 7279 represents a legislative determination of what constitutes a fair contribution by private developers to socialized housing.

“By authorizing compliance below this standard, D.O. No. 2021-004, in effect, substitutes administrative discretion for legislative prerogative,” the opinion stated.

It added that until Congress amends the law or expressly authorizes a different scheme, the department cannot modify the prescribed percentage of participation or expand the allocation of compliance funds through an administrative issuance.

The issue comes amid proposals from the Chamber of Real Estate Builders Association (CREBA) to reduce the incentivized compliance rate from 25 percent to 10 percent of the Balanced Housing Development Program (BHDP), arguing that a lower cap would help keep projects financially viable.

In response, DHSUD said it remains committed to upholding the rule of law while continuing programs that support socialized housing for underprivileged and homeless families. The agency said it will issue a department order aligned with the DOJ’s findings and give developers adequate time to comply.