SOCIALIZED HOUSING:

FOCUSING ON THE ISSUES AND

OFFERING SOLUTIONS

A closer look
at R.A . 7279,
its provisions,
its IRRs and
the myriad
issues on
Section 1 8;
CLARIFYING THE DEVELOPERS ROLE
 1 . CLARIFYING THE ROLE OF THE PRIVATE
SECTOR IN THE URBAN DEVELOPMENT AND THE
HOUSING PROGRAM: PRIVATE
SECTORS
I n R A 7 27 9 , S e c . 2 , t h e D e c l a r a t io n o f S t a te Po l i c y a n d ROLE
P r o g r am O b j e c t iv e s c l e a r l y s t a te s I t s h a l l b e t h e
p o l i c y o f t h e S t a te to u n d e r t a ke , i n c o o p e r a t io n w i t h t h e
It is not the
p r i va te s e c to r, a c o m p r e h e n s i v e U r b a n D ev e l o p me n t a n d private sector
Housing Program, XXX that is mandated
with the
responsibility to
provide
A s f a r a s t h i s A c t i s c o n c e r n e d , t h e p r i v a te s e c to r i s t h e socialized
s e c o n d a r y a n d s u b s i d i ar y p l aye r i n t h i s f i e l d . N a t u r a l housing;
l aw a n d t h e i n h e r e n t r e s p o n s i b il i t y o f t h e N a t i o n a l
We also put
G o v e r nm e n t d i c t a tes t h a t i t i s t h e S t a te t h a t m u s t c a r e forward the
f o r a n d p r o v i d e d e c e n t h o u s i n g ( a n d / o r t h e m e a n s to position that
cooperation
a t t a i n i t ) to t h e u n d e r p r i v i l e g e d m a s s e s ; should not give
rise to a liability
on the part of the
private sector to
produce
socialized
housing;
T h e r o l e o f t h e p r i va te s e c to r i s c o o p e r a t io n - - - i n t h a t
t h e l aw s i m ply r e c o g n i z e s t h a t i t i s t h e p r i va te s e c to r RA 7279 does not
t h a t c a n d e l iv e r a p o r t io n o f t h e s h e l te r n e e d s w i t h use the word
b et te r e f f ic i e n c y. compliance
anywhere in the
letter of the law.
It stresses
cooperation;
 THE HOUSING BACKLOG

Estimated Housing Needs based on the 2010 Census of

Population and Housing:

By 2017, the Philippines housing

needs will total
6.3 million units

Statistical Report
undertaken by the
Statistical Research &
Training Center
2. HAS GOVERNMENT LOST SIGHT OF THE PRIMARY
OBJECTIVE? WHAT IS
REALLY
NEEDED TO
The ultimate objective that gave impetus to the creation of R.A. 7279 INCREASE
over 20-odd years ago was, and still is, the housing backlog.
HOUSING
DELIVERY?
This mammoth figure, at 3.9 million units, has never decreased.
Every year population growth and home depreciation combine to 1. Liberalize
increase this backlog, which, some sources say, has actually d ev e l o p me n t
ballooned to over 5 million units. financing
programs;
2 . I n te r e s t c o s t
s u b s i d ie s f o r
both
Uplift the conditions of the underprivileged d ev e l o p e r s
and the homeless in urban areas, and end-
by addressing this lack of housing, users;
providing decent homes at 3 . Re d u c t io n o f
affordable cost, providing taxes and
tariffs on
basic services, and providing
basic
employment opportunities. m a te r i al s ;
-- Sec. 2 (a), RA 7279
4 . I m p l em e n t /
p r o v i de I R R s
THIS IS THE OBJECTIVE. for Sections
2 0 a n d 21 ;
 UNDUE TAXATION?
ONLY FOR SUBDIVISION DEVELOPERS ?

Sec. 28, (1) of Article VI of the Philippine Constitution:

The rule of taxation shall be uniform and equitable. XXX
 3. A question of Constitutionality?
WHY IS THIS
LAW NOT
S e c t i o n 1 8 o f R A 7 27 9 i m p o s e s a b u r d e n o n a s u b - s e c to r
o f t h e h o u s i n g i n d u s t r y t h e s u b d i v i s i o n d ev e l o p e r s , MADE
a n d n o o t h e r e c o n o m ic s e c to r ; APPLICABLE
R e s id e n t i a l c o n d o m i n i um d ev e l o p e r s a r e n o t m e n t io n e d , TO ALL?
n o r a r e a ny o t h e r s e c to r s ;
S o , o u r l aw m a ke r s
O n e c a n s u r m is e t h a t t h i s i s , t h e n , u n d u e t a x a t i o n , a n d m ay h a v e
i s ex t r e m el y p r e j ud i ci a l to a s m a l l s u b - s e c to r o f t h e o v e r l o o ke d t h e
a p p l i c a b i li t y
P h i l i p p i n e e c o n o my; aspect?

T h e I R R s a n d t h e i n c r e a s i ng l y p u n i t i ve s t a n c e b e i n g C a n t h ey n o t , s ay,
t a ke n by h o u s i n g r e g ul a to r s a r e n o w t a k i n g i t s to l l o n impose a
t h e s u b d i v i s i o n d ev e l o p e r s , r e s u l t i n g i n r e d u c ed percentage of a
p r o d uc t i o n o f h o u s i n g i n t h e h i g h e r - p r i ce d s t r a t a o f t h e canned sardine
h o u s i n g n e e d s py r a m id ; manufacturers
s a l e s to b e
d e v o te d to
L i m i te d c o r p o r a te r e s o urc e s a n d t h e d i f fi c ult y o f s o c i a l iz e d
a c c e s s i n g d ev e l o p m e n t f u n d i n g f o r s o c i a l i z e d h o u s i n g housing?
p r o j e c t s f u r t h e r c o n s t r i c t s t h e a b i l it y o f d ev e l o p e r s to
deliver; U n d u e Ta x a t i o n ?
T h e o r et ic a l l y, i f a l l t h e s e s u b d i v is io n d ev e l o p e r s t h e n U n c o n s t it u t i o n a l ?
s h i f t t o d o c um e n t in g t h e i r s u b d i v i s io n s a s c o n d o m i n ium s P r e j u d i ci a l ?
( i . e . , C C T i n s te a d o f T C T ) , t h e n t h e r e w i l l b e n o d e l i ve r y These questions
o f s o c ia l i z e d h o u s i n g ; persist.
 NON-COMPLIANCE OF
SOCIALIZED HOUSING COMPONENT

What will happen?

1. LGUs STOP PROCESSING DEVELOPMENT PERMITS
2. BANKS STOP LENDING
3. NEW BUYERS TURN AWAY
4. PREVIOUS BUYERS STOP EQUITY PAYMENTS

C-D-O spells D-I-S-A-S-T-E-R.

4. Is there a rationale for the Mode of Punishment imposed GOVERNM ENT
on subdivision developers for NON-COMPLIANCE? MUST BE MADE
AWARE OF THIS
The actual letter of the law says in cooperation with the private sector--- and LOOMING
this is not embodied in the IRRs; PROBLEM .

Socialized housing
The punitive measure currently employed by housing regulators is the d e v e l o p me n t i s
cancellation of the Licenses to Sell of the main subdivision projects of the fraught with
developer, followed by a Cease-and-Desist Order (CDO) that virtually stops the problems.
developers operations. A f f o r d a b il i t y i s a
major issue.
Suburban
p r o p e r t ie s a r e
To a developer, this is tantamount to DISASTER. LGUs will then prohibit the going up higher in
developer from filing new Development Permits, and will suspend existing price as time
ones, halting all development and selling efforts, completely disabling the passes. Socialized
ability to generate cash flow from sales. Banks, ever watchful in this regard, housing has shown
will likewise refrain from further funding the projects. Buyers will turn away, h i g h r a te s o f
and those that already bought will back out and seek reimbursement. default and
f o r ec l o s u r e .
Direct subsidies
Bankruptcy is the ultimate result.
are needed.

N OT p u n i t iv e
measures.
 SUBDIVISION DEVELOPERS GENERATE HUGE
ECONOMIC ACTIVIT Y

Over 60 downstream GENERATES REVENUES FOR CEMENT

DOWNSTREAM INDUSTRIES STEEL
industries are IRONMONGERY
dependent LIGHTING
PLUMBING
on the housing DOORS
sector WINDOWS
WOOD PRODUCTS
LAMINATES
PAINTS
FURNITURE
SUBDIVISION APPLIANCES
DEVELOPERS ROOFING
DESIGN
PLANNING
ENGINEERING
AND MORE
INCREASES PROPERTY VALUES
INCREASES PROPERTY TAXES

GENERATES EMPLOYMENT GENERATES LOCAL & NATIONAL TAXES

 5. Killing the Goose that lays the Golden Egg?
GOVERNMENT
MUST REVISIT
A d ev e l o p e r p r o v i d e s e m p l oym e n t f o r t h o u s a n d s o f w o r ke r s , THE UDHA
c o n s i d e r i ng t h a t t h e r e a r e o v e r 6 0 d o w n s t r e am i n d us t r i e s
d e p e n d e n t o n t h e h o u s i n g s e c to r. L a w m a ke r s m u s t
a m e n d R A 7 27 9
to a d d r e s s t h e
A d ev e l o p e r g e n e r a te s a h u g e a m o u n t o f e c o n o m i c a c t i v i t y. issue of its
T h e s e a c t i v i t ie s g e n e r a te t a x e s f o r g o v e r n m e n t . c o n s t i t u t i on a l i t y;

A d ev e l o p e r i m p rov e s l a n d u t i l iz a t i o n a n d t h e r e f o r e , r a i s e s The Housing

p r o p e r t y v a l u e s b y s ev e r a l m a g n i t ud e s . H i g h e r p r o p e r t y Agencies should
v a l u e s m e a n b i g g e r t a x c o l l ec t i o n s f o r g o v e r nm e n t , f o r redefine the IRRs
d e c a d e s to c o m e . and the Circulars
to s t r e s s
c o o p e r a t io n a n d
n o t c o m p l i a nc e ;

I s i t , t h e n , f u n da m e n t a l ly r i g h t f o r g o ve r n m e n t to c a u s e t h e O n a n i m m e d ia te
b a n k r up t c y o f a s u b d i v i s i o n d ev e lo p e r u s i n g c o m p l i a nc e basis, housing
as a reason? r e g u l a to r s s h o u l d
a l l ow f o r a
m o r a to r i u m u n t i l
these issues are
addressed;
 SEC 20 (D) OF RA 7279

INCENTIVES
incentive
insen(t)iv/
noun
a thing that motivates or encourages one to do something.
"there is no incentive for customers to conserve water"
synonyms: inducement, motivation, motive, reason, stimulus, stimulant, spur, impetus,
encouragement, impulse;
antonyms: deterrent
a payment or concession to stimulate greater output or investment.
"tax incentives for investing in depressed areas"

EXEMPTION FROM:
1. PROJECT RELATED INCOME TAXES
2. CAPITAL GAINS TAX
3. VALUE-ADDED TAX
4. TRANSFER TAXES
5. DONORS TAXES

Very difficult to get, due to restrictive

policies and procedures, No clear IRR
 AMENDMENT
6. Section 20 : Incentives for Private Sector NEEDED FOR
Participating in Socialized Housing SEC 20 OF
RA 7279
(d) Exemption from the payment of the following:
1) Project-related income taxes; First, the added
2) Capital gains tax on raw lands used for the project; proviso requiring
3) Value-added tax for the project concerned; that all the
4) Transfer tax for both raw and completed projects; and s av i n g s a c c r ue i n
5) Donors tax for both lands certified by the local government units to f av o r o f t h e
have been donated for socialized; XXX b e n e f i c ia r i e s
m u s t b e s t r uc k
out;
There are virtually no incentives being granted. Our housing regulators N ex t , I R R s o n
and concerned government agencies have yet to provide the IRRs that this Section
will implement this provision. m u s t b e c r e a te d ;
The housing
In addition, (another oversight, presumably) --- a proviso inserted at the agencies already
middle of this Section states, Provided, finally, That all the savings provide a cap on
acquired by virtue of this provision shall accrue in favor of the the loanable
beneficiaries subject to the implementing guidelines to be issued by amount. This
the Housing and Urban Development Coordinating Council. XXX s h o u l d s u f fi c e to
curtail over-
pricing;
T h e s e i n c e n t i ve s
will spur
The title to this Section is misleading. There are no incentives. af fordable
s o c i a l iz e d
h o u s i n g d e l i v er y ;
 GOVERNMENTS ROLE UNDER SEC 21

PHILIPPINE GOVERNMENTS ROLE IS TO PROVIDE, VIA THE LGUs

OR THE NATIONAL HOUSING AUTHORIT Y:
a) Potable water;
b) Power and electricity
and an adequate power
distribution system;
c) Sewerage facilities and
an efficient and adequate
solid waste disposal
system; and
d) Access to primary
roads and transportation
facilities

XXX in cooperation with the private developers and

concerned agenciesXXX
 7. Governments Role - S e c t i o n 21 . B a s i c S e r v i c e s . -
S o c i a l i z e d h o u s i n g o r r e s et t l em e n t a r e a s s h a l l b e
p r o v i d e d b y t h e l o c a l g o v e r nm e n t u n i t o r t h e N a t i o n a l NEED FOR THE
H o u s i n g A u t h o r it y i n c o o p e r a t io n w i t h t h e p r i va te
d ev e l o p e r s a n d c o n c e r n e d a g e n c i e s w i t h t h e f o l l ow i n g
IRR FOR SEC
b a s i c s e r v i c e s a n d f a c i l it i e s : 21 BE CREATED
a ) Po t a b l e w a te r ; AND ISSUED
b ) Po w e r a n d e l e c t r ic i t y a n d a n a d e q u a te p o w er
T h e p r o v i si o n
d i s t r i b ut i on s y s te m ;
of these
c ) S ew e r a g e f a c i l i t ie s a n d a n e f f i c i e n t a n d a d e q u a te f a c i l i t ie s a n d
s o l i d w a s te d i s p o s al s y s te m ; a n d t h e i n c e n t i ve s
d ) A c c e s s to p r i m a r y r o a d s a n d t r a n s p o r t a t io n f a c i l it i e s s t a te d i n S e c
XXX 20 comprise a
s i g n i fi ca n t c o s t
r e d u c t io n f o r
C l e a r ly, t h e l aw i s e x p l ic it i n t h e c o o p e r a t i o n a s p e c t o f t h e d ev e l o pe r,
t h e a b ov e p r ov i s i o n s . T h e LG U o r t h e N H A m u s t p r ov i d e which will
result in either
w a te r, p o w e r, s ew e r a g e, w a s te d i s p o s a l , a n d a c c e s s ( r i g h t - reduced
o f - way ) to p r i m a r y r o a d s ; transfer prices
for the house
T h e d ev e l o p e r i s ex p ec te d to b u i l d t h e s o c i a l i z e d and lot units,
s u b d i v i s i o n a n d t h e h o u s e s . B u t t h e a b o v e - m e n t i on e d or more
a c c e pt a bl e
f a c i l i t ie s a n d u t i l i t i e s a r e to b e P ROV I D E D b y e i t h e r t h e living spaces
LG U o r t h e N H A ; (bigger lot
T h i s i s t h e g o ve r n m e n t s c o n t r ib ut i o n t o t h e c o op e r a t iv e and/or house
p a r t n e r s h i p w i t h t h e p r iva te s e c to r ; areas);
 THE ISSUE OF COMPLIANCE OR THE
LACK OF IT

Definition of COMPLIANCE cooperation

kprSH()n/
1 noun
a : the act or process of complying to a desire, the process of working together to the same end.
demand, proposal, or regimen or to coercion "they worked in close cooperation with the AAA"
b : conformity in fulfilling official requirements synonyms: collaboration, joint action, combined effort,
2 teamwork, partnership, coordination, liaison, association,
: a disposition to yield to others synergy, synergism, give and take, compromise
"cooperation between management and workers"
assistance, especially by ready compliance with requests.
"we would like to ask for your cooperation in the survey"
synonyms: assistance, helpfulness, help, helping hand, aid
"thank you for your cooperation"
8. The Issue of Compliance
One must not forget that the economy of a democracy is profit-driven, and that the
private sector can only operate as a delivery vehicle to answer shelter needs if it can
recover cost and make a profit. Requiring a developer to donate or defray the cost of
HOUSING
improvements to slums as a way of compliance, is not realistic, because developers REGULATORS
must recover such costs.
MUST REVIEW
Having these costs subsidized by the developers main business operation will impact AND AMEND
on the market competitiveness of the developers products. A developer, due to the
effect of market forces, may be able to earn a 30% margin on its operations, and
EXISTING IRRS
compliance under this Law charges 20% --- That alone already sums up the problem. Government
m u s t av o i d
being punitive
and cannot
In addition, the private sector is already fulfilling its role in providing an impose Section
answer to shelter requirements on the higher income levels. This must 18 in a manner
also be taken into account. perceived as
undue taxation.
Paralyzing the
So, the only practicable way a developer can comply is to deliver socialized operations of a
developer is not
housing units. Therefore it is but fair for the government to provide the t h e a n s we r.
incentives (Section 20) and the basic utilities and facilities (Section 21) to Amendment of
all ongoing socialized housing projects BEFORE it can have the moral and t h e s e I R R s to
resolve these
legal ascendancy to impose PENALTIES for NON-COMPLIANCE. issues must be
done on an
u r g e n t n ote .
L i ke w i s e ,
RA 7279 in actuality, has a mechanism that will reduce costs and transfer creation of the
prices, which are government subsidies in terms of incentives and IRRs for the
facilities. The present reality is that the government has not done its other Sections
must be done
share, while the private developers are beset by higher costs, and being without further
penalized heavily for lack of compliance. d e l ay.
HLURB HAS TO SCRAP ACCREDITATION FOR
SOCIALIZED HOUSING
9. Is ACCREDITATION necessary? THE CR & LS
MC 7-B of the HLURB mandates that a developer aspiring for ALLOWS THE
accreditation as a socialized housing developer should have built HLURB TO
at least 500 units (down from the initial 2,000 unit requirement) TAKE THE
under BP 220 and/or PD 957 in order to qualify.
ROLE OF
Moreover, if you are an open market housing developer and you JV GATE-
with a subsidiary in which you own at least 50% or more of the KEEPER
capital stock, you need to show a track record of having built a
The proper
minimum of 5,000 housing units. Otherwise, you and your
s a f e ke e p i ng
subsidiary cannot be accredited. and
ex t r a p o l a t io n
of the records
This runs counter to the primary objective of delivering socialized housing to
on the Cert of
the underprivileged in the most effective way, in the soonest possible time. Re g i st r a t i o n &
This proviso shuts out the smaller developers. In a scenario where the L i c e n s e to S e l l
backlog stands at 3.9 million units, shouldnt the government strive to w i l l s u f fi c e to
accommodate as many as possible? e n a b l e H LU R B s
r e g u l ato r y r o l e .
The requirements for registering a project and the application for a License
to Sell already provides the HLURB with the means to adequately regulate It is proposed
both project and developer. Accreditation in order to be allowed to build and that the
sell socialized housing units, more so for compliance purposes, is a needless accreditation
requirement and simply serves to complicate the process. Not only does it process for
s o c i a l iz e d
prejudice the small- and medium-scale developers, it also provides an d ev e l o p e r s b e
additional difficulty for developers to achieve compliance, resulting in dispensed with.
impaired socialized housing delivery.
 WHAT ABOUT POOR, SMALL-FRY,
JUAN DE LA CRUZ?

Sec 3 (e) & (f) of RA 7279, simply put, says

that if poor Juan owns a property in an
urbanized area above 300 square meters,
and he has not introduced improvements
upon it within one year of acquisition, he
stands to lose it to the LGU;

DECLARATION AS IDLE LAND

If the property is in an urbanizable???
301 square meters
area, anything more than 800 sq. meters
may be expropriated.
10. Idle Lands Sec 3 (e) & (f) of RA 7279
NO IRR AS
What about poor Juan de la Cruz? Little does he realize that he himself is affected by YET?
provisions of RA 7279. Very simply put, if Juan owns a property in a highly urbanized area of
Again, the IRR on this
more than 300 square meters or a property in a less urbanized area of more than 800 square must be clearly
meters, he stands to lose this property to the LGUs. defined. Otherwise
the magnitude of the
coverage of this
proviso and its
Article IV, Sec 11 states: Section 11. Expropriation of Idle Lands. - All idle lands in urban and potentials for graft
and corruption cannot
urbanizable areas, as defined and identified in accordance with this Act, shall be expropriated be ignored.
and shall form part of the public domain. These lands shall be disposed of or utilized by the
Government for such purposes that conform with their land use plans. It used to be that the
only problem facing a
Expropriation proceedings shall be instituted if, after the lapse of one (1) year following receipt property owner came
about as a result of
of notice of acquisition, the owner fails to introduce improvements as defined in Section 3(f) the lack, or non-
hereof, except in the case of force majeure and other fortuitous events. Exempted from this payment of property
taxes, which results in
ownership of which is subject of a pending litigation. XXX an enforced auction of
the property to satisfy
the tax liability.
Unless poor Juan is able to introduce improvements (equivalent to at least 50% of the
Expropriation as a
assessed value of Juans land) to his property within one year of his acquisition thereof, the LGU recourse of the state
can identify the property as Idle Land and expropriate. was utilized to further
government projects
for the common good
Even the definitions prevailing of what are urban, highly urbanized or urbanizeable areas and for the
escapes me. Each LGU will have their own version of these definitions, which bodes ill for poor improvement of
Juan de la Cruz. communities, that is,
for road widening, and
construction of public
One can simply postulate that an unscrupulous local government official may utilize this infrastructure. Now,
proviso to cow, coerce and extort from its citizenry, and/or further political aims, considering with the advent of RA
7279, a mere
anything above 300 square meters in the center of town, and any property above 800 meters declaration that the
outside of the center, is fair game. property is idle
suffices for it to be
expropriated!
 POTENTIAL FOR GRAFT AND
CORRUPTION

In the
i n te r p r et a t io n o f
l aw s , o u r
i m p l em e n t i n g
a g e n c i e s h av e
t h e l e ew ay to
either be
p r o g r e s si v e o r
r e s t r i c t i ve . I n
most cases, the
a t t i t ud e i s to b e
r e s t r i c t i ve , i f o n l y
because it is
m o r e p r u d e n t to
err on the side of
caution. However, reality and the natural order dictates:
THE MORE RESTRICTIVE AND PUNITIVE A LAW OR
REGULATION IS, THE HIGHER THE POTENTIAL FOR GRAFT AND
CORRUPTION.
 Potentials for graf t and corruption

R . A . 7 27 9 i s a l a u d a b l e p i e c e o f l e g i s l a t i v e w o r k i n i t s
c o n c e p t a n d i n te n t i o n s . U p l i f t in g t h e p l i g h t o f t h e LET US ALL
underprivileged is a noble ideal . It is in the GO BACK TO
i m p l e m e n t a t i o n t h a t i t f a l te r s .
COOPERATION
W h e n ev e r, a n d w h e r ev e r, t h e l aw b e c o m e s p u n i t i ve , a n d
t h e i m p le m e n t a t i o n o f a l aw g e n e r a te s p r o h i b i t io n s a n d L e t g ov e r n m e n t
contribute its
p r o c e s s e s t h a t t r a n s l a te i n to r e d t a p e , t h i s s c e n a r i o t h e n
share in the
b e c o m e s a f e r t i l e b r e e d i n g g r o u n d f o r p o te n t i a l g r a f t cooperative
a n d c o r r up t i o n . effort;
I n s u c h s i t ua t i o n s , t h e d e g r e e o f d i f fi cul t y a l s o s et s t h e Let non-
a m o u n t o f t h e l a r g e s s e t h a t m ay b e d e m a n d e d . I n t h e compliance or
c a s e o f R A 7 27 9 , t h e m a n n e r o f i t s i m p l em e n t a t i o n i s lack of
p r o v i n g to b e a b a n e to m o s t , i f n o t a l l , s u b d i v i s i o n compliance be
d ev e l o p e r s . p e n a l i z e d by
way o f
monetized
H e r e w e h av e a p o te n t i al to o l f o r t h e u n s c r up ulo us to u s e penalties rather
to c o e r c e , a n d p o s s i b l y ex to r t , l a r g e s u m s f r o m p r i v a te than punitive
s e c to r d ev e l o p e r s . A l l i n t h e n a m e o f c o m p l ia n c e . Cease-and-
Desist Orders;
L e t l aw m a ke r s
ponder and
solve the
C o o p e r a t i o n , w h i c h i s a c t u a l l y w r i t te n i n to t h e l e t te r o f question of
t h e l aw, i s b e i n g c o nve n i e n t l y f o r g o t te n . general
applicability of
t h e U H DA ;
 BOARD RESOLUTION No. 890, Series of 2012
THE IRRS
890- January 1, 2013
Revised Implementing Rules & Regulations to Govern Sec 18 of UDHA
GOVERNING
Memo Circular Nos. 01-07, Series of 2013 SEC 18 OF
MCs Implementing Guidelines and Procedures for Board Reso No. 890, Series of
2013
January 2, 2013
RA 7279
MC No. 01, Series of 2013 Balanced Housing
Development
This will
MC01 Concerns Developers complying with Sec 18 by
developing the compliance project by itself present an
MC No. 02, Series of 2013
organized
Development of New Settlements l i s t in g , i n
MC02 Developers complying with Section 18 By going into joint-
ventures with its accredited subsidiaries or other accredited c h r o n o lo g i ca l
developers of socialized housing projects, or by contributing to
accredited NGOs new socialized housing projects o r d e r, o f t h e
M.C. No. 03, s. of 2013
v a r i o us M e m o
C i r c ul a r s
MC03
Slum Upgrading
Developers complying with Section 18 by contributing
to NHAs programs and projects, or by
i s s u e d by t h e
purchasing NHAs instruments of participation H LU R B to
MC No. O4, s. 2013 i m p l em e n t S e c
Joint-Ventures with LGUs and Housing Agencies
18, Balanced
MC04 Developers complying with Section 18 By going into joint-ventures with the
LGUs or HAs for the development of socialized housing projects or provision
of facilities, centers or amenities Housing
D ev e l o p m e n t ,
MC No. 05, s. 2013
Participation in
o r s o c i al i z e d
MC05 Community Mortgage Program
Developers complying with Section 18 through contribution and
c o m p l ia n c e .
participation in the CMP, including purchase of asset-backed securities

M.C. No. 06, s. of 2013 There is a need

Accreditation of Developers
f o r t h e s e to b e
MC06 of Socialized Housing Projects
Procedure and qualifications for the accreditation of developers of socialized
housing projects to enter into joint-ventures c o n s o l id a te d
a n d s i m p li fi e d .
 M.C. No. 07, s. of 2013
Accreditation of Non-Government Organizations SEC 18
MC07 Procedure and qualifications for the accreditation of NGOs to
receive contributions from developers for the development of
new socialized housing projects
NEEDS TO
BE
M.C. No. 07B, s. of 2013
Amending M.C. No. 06, s. of 2013 REDEFINED
MC7B Reducing the qualification requirement for accreditation of
developers of socialized housing projects from It is true that
2,000 to only 500 housing units built
enforcement is
M.C. No. 07A, s. of 2013 at best a ver y
Amending M.C. No. 06 & 07, s. of 2013 difficult job.
MC7A
Application & doc requirements
Reducing the qualification requirement for accreditation of
developers of socialized housing projects from
2,000 to only 500 housing units built H o we v e r, t h e
HLURB &
Memorandum Circular No. 19, s. of 2013 concerned
Utilization of Unconstructed Housing Components agencies should
MC19 Of Existing Socialized Housing Projects
December 09, 2013
provide for a
more practical
and effective
Memorandum Circular No. 01, s. of 2014 implementation
MC01 Incentivized Compliance To Benefit
o f R A 7 27 9 ,
Calamity-Affected Areas
2014 February 12, 2014 u t i l i z i n g m a r ke t
fo r c e s ,
catalyzing
Board Res. No. 843, s. 2009
demand, and
providing
843
Prescribing a period of utilization of Existing
Inventories of Socialized Housing Units as mechanisms
Advance Credits under Sec 18 RA 7279, and that will
Amending Sec 3 (d) of IRR
enhance the
BR 843 is referred to in the requirements and capability of the
limitations for Advance Credits in MC 019; b e n e f i c i a r i e s to
acquire houses.
 EXCERPTS FROM THE POSITION PAPER
PRESENTED BY OSHDP
AS THIS
POSITION PAPER
For OSHDP, these are the problems: SHOWS, EVEN
1. Production of socialized housing stock is low because there is no real
THE SECTORAL
incentive for the private sector to participate.
1. Profit margin is low,
GROUP OF
2. Administrative and operational costs are higher (than low-cost or even DEVELOP E RS OF
middle cost housing development), and SOCIALIZED
3. Incidences of turn-over and back-outs are very likely, among others; HOUSING
4. Sec. 20, RA 7279 incentives are difficult because of the restrictions in PROJECTS
their granting and availment. (OSHDP)
5. There is a widening gap between the cost of a minimum-standard housing
EMPHASIZE THE
unit and the affordability of a household. Government needs to help the
intended beneficiaries pay (or buy down) their housing loans.
LOW REVENUES,
6. Colliding policies and regulations of various government instrumentalities THE LACK OF
most evident of them are our experiences with the local government units. AFFORDABIL IT Y,
& THE LACK OF
We do not see how the proposed amendments to Sec. 18, RA 7279 in their GOVERNM ENT
present form can solve these problems. xxx INCENTIVES AND
SUBSIDIES.

--- Article published in the Manila Times, (authored by Atty Ryan Tan of OSHDP)
 FINDING A BETTER POLICY: BALANCED AFT E R M ORE
THAN 20 YEARS
DEVELOPMENT HOUSING REQUIREMENT VS. OF
MARKET/ECONOMIC FORCES I M P L E M E NT I N G
T H E U H D P,
If housing is essentially an economic function where the fundamentals of supply THE HOUSING
and demand is to be observed, private developers will be willing to supply B AC K LO G N OW
socialized housing units if there is an effective demand. As a matter of fact, S TA N D S AT A
M AS S I V E N UM B E R
there may be no need for balanced housing development requirement if we O F OV E R 5 . 0
follow this principle. Policy must simply be realigned to let the market forces MILLION UNITS,
work. A F F E C T I N G C LO S E
TO 2 0 % O F T H E
Housing needs do not necessarily translate to effective demand because of the TOTA L
issue of affordability. Government must elevate those underprivileged and P O P U L AT I O N .
homeless members of our society to a level where they can actually afford the
minimum design standard housing unit. Then, their housing needs will become TO S OLV E T H I S ,
effective demand; and effective demand will drive up housing supply. T H E G OV E R N MEN T
MUST CHANGE ITS
This is where subsidy comes in to influence the behavior of the S TA N C E F RO M
underprivileged and homeless and give them access to housing stock. P U N I T I V E TO
It is our position that the state must step up its direct subsidy program, because C O O P E R AT I VE .
indirect subsidies are clearly not enough.
IT MUST REALIZE
What is concerning us in the private sector is the seeming governmental attitude T H AT T H E
of passing on its obligation to provide housing for the poor by compelling P R I VAT E
developers to produce socialized housing, even if it is not in line with their D E V E LO PM EN T
business. This is the impetus for Sec. 18, RA 7279. S E C TO R S RO L E
IS
--- Article published in the Manila Times, (authored by Atty Ryan Tan of OSHDP)
P I VOTA L .

1
Government has the primary
responsibility of providing
housing to the
underprivileged.
Cooperation should not give
rise to a liability on the part of
the private sector to produce
socialized housing;
2
Solving the housing backlog of
over 5 million units is the
governments primary
objective;
RECOMMENDATIONS:
An in-depth review of HLURB
Board Resolution No. 890 and
its resulting Memo Circulars
should be undertaken by the
Committee on Housing and all
concerned agencies with the
objective of revising the IRRs of
RA 7279 to properly
implement cooperation;
Heads of housing agencies
must again be reminded by
the Office of the President and
Congress of the primary task
of addressing the backlog;

3
Justice delayed is justice denied.
After 21 years, lawmakers must be
given a wake-up call to properly
amend RA 7279 & eliminate the
inequities therein, that serve to
prejudice and penalize only a
specific sub-sector of the housing
industry;
4 Extremely punitive
There is a need to urgently redefine
the penalties imposed on non-
compliance, in order to avert a
looming financial crisis facing
affected major developers in the
residential development sector;
A current main project of a
developer should not be stopped in
mid-stream due to lack of
compliance, immediately impairing
his main business operation, and
further impeding his efforts to fund
the compliance projects;
RECOMMENDATIONS:
The Committee on Housing
should hold a series of
public hearings that will
identify the inequities and
other items requiring
amendment of RA 7279.
The current bill being
discussed must take all the
issues into account;
measures such as
withholding issuances of
new licenses to sell and
cease-and-desist orders
should be eliminated in the
penalties for non-
compliance imposed on
developers. Monetized
penalties should instead be
adopted, bearing in mind
that the punitive measures
may result in serious
damage to the developers
business.

5
Restrictive and punitive measures
currently being implemented are
taking too large a toll. There is a
need to assess the overall cost to
the economy and to government
revenues if subdivision developers
go out of business as a result of
these measures;
6 As embodied in Sec 20 of RA
The concerned agencies must
liberalize the access to incentives
provided for in Sec 20, by creating
and issuing an IRR that simplifies
the grant process;
RECOMMENDATIONS:
The fact that private residential
developers generate a huge
amount of economic activity is
being discounted. Government
has to compute the cost-benefit
ratio of the results of punitive
action versus the loss of tax
revenues from this sector.
7279, the Housing Agencies
and the Department of Finance
should immediately finalize the
IRR for Sec 20 (Incentives), and
provide for penalties to
government officials and
personnel who impede or
refuse implementation;

7 The IRR for Sec 21 should
Governments cooperative role is immediately be created and
embodied in Sec 21, in which the
LGU or the NHA is tasked to provide
basic facilities & services. An IRR
is needed, as well as provisions for
enforcement;
8
It is but fair for the Government to
provide the incentives (Sec 20) and
the basic utilities/services (Sec 21)
to all ongoing socialized housing
projects before it can have the
moral and legal ascendancy to
impose penalties for non-
compliance;
RECOMMENDATIONS:
issued, directing the LGUs or the
NHA to deliver the facilities and
utilities required under RA
7279. Non-delivery by these
agencies will absolve the private
developers of non-compliance,
and provisions for penalties
should be included against LGU
& NHA officials who violate this
proviso;
MORATORIUM:
Until the IRR for Sec 21 is
promulgated, the HLURB
should allow a moratorium on
the issuances of suspension,
cancellation, and/or cease-and-
desist orders of licenses to sell
affecting main development
projects;
 RECOMMENDATIONS:
9 We recommend the removal of the
accreditation process for socialized
The proper safekeeping and
housing developers. This
extrapolation of the records on
unnecessarily increases HLURBs
the Cert of Registration &
workload, and is redundant,
License to Sell will suffice to
considering that the Board already
enable HLURBs regulatory role.
has registration and regulatory control
of the projects and the developers, via
It is proposed that the
the CR and the LS. In addition, this is
accreditation process for
a highly restrictive requirement in that
socialized developers be
small developers are denied the
dispensed with.
chance to participate;

Eliminate Article IV, Sec 11. This

10
Lawmakers should revisit and
amend Sec 3 (e) & (f), defining
Idle Lands and the compliance
mechanism for landowners
(improvement), and strike out
Article IV, Sec 11, of RA 7279
Expropriation of Idle Lands, as
these provisions are all too prone to
abuse by persons in authority;
proviso will simply result in potentials
for abuse by those in power. In the case
of non-payment of taxes, the
government has both moral and legal
basis. In this particular case, the
governments right of eminent domain
requires a reason for expropriation that
shall benefit the general public.
Simple expropriation due to failure to do
improvements within one (1) year from
acquisition is confiscatory and punitive.
In addition, this is already redundant
with Sec 19, RA 7160, which clearly
defines expropriation by LGUs;
 A most compelling reason to URGENTLY amend RA 7279 and
immediately redefine the IRRs (Memo Circulars):
The potential for GRAFT and CORRUPTION
R.A. 7279 is a laudable piece of
legislative work in its concept and
intentions. Uplifting the plight of the
underprivileged is a noble ideal. It is
in the implementation that it falters.
EVEN THE SECTORAL GROUP OF
DEVELOPERS OF SOCIALIZED
HOUSING PROJECTS (OSHDP)
EMPHASIZE THE LOW REVENUES,
THE LACK OF AFFORDABILITY, & THE
LACK OF GOVERNMENT INCENTIVES
AND SUBSIDIES.
Main Project developers, who
answer the need for housing of the
higher income levels, are penalized,
not for any violations committed with
their main projects --- but for lack of
delivery of socialized units that are,
actually, the governments sole
responsibility in the first place;
END OF
RECAP
Subdivision developers, faced with
the stoppage of their main
subdivision projects and the resulting Prepared by:
loss of operational cash flows, will
F e r n a nd o
easily succumb to demands for Bondoc
largesse, in exchange for a less
C a g u i gi n, C PA
punitive stance from regulators.
F o r m e r D i r e c t o r,
In the near future, the difficulties Home Guaranty
involved with developing socialized C o r p o r a t io n a n d
p r a c t i c in g
projects hand-in-hand with the
main projects of a developer, D e v e l o pm e nt
following the inequitable 20% ratio, Consultant
will result in shortfalls of the required
deliveries. New Licenses to Sell will And
not be processed, existing ones will
be suspended or cancelled, Cease-
P e d r o C . Ta r i o,
and-Desist Orders will be issued.
Licensed RE Broker
Faced with a choice between
BANKRUPTCY and CORRUPTION, a n d C o n s u l t a nt ,
even YOU will PAY THE PRICE. Immediate Past
Chairman, CREBA