NEW ERA UNIVERSITY

A RESEARCH PAPER FOR THE PURPOSE OF

FOCUSING ON THE ISSUES AND OFFERING
SOLUTIONS IN SOCIALIZED HOUSING IN THE
PHILIPPINES

DEPARTMENT OF ARCHITECTURE

BY

RIMANDIMAN, KEVIN G.

ARC 423: HOUSING

JANUARY 26, 2018

 Contents

Background of the Study……………………………………………………………………...1

a. Laws related to Housing in the Philippines

Statement of the Problem……………………………………………………………..............2

Review of Related Literature…………………………………………………………………3

Case Study Presentation……………………………………………………………………....4

Conclusions and Recommendations………………………………………………………….5

Bibliography…………………………………………………………………………………....6
 1

BACKGROUND OF THE STUDY

The Philippines is a beautiful country until we talk about living conditions and

government. One of the poorest countries in the world, ruled by one of the most corrupted

governments in the world. Corruption and geography isolation keep foreign investment

away, good paying jobs are hard to be found, so about 10% of country population is

working overseas. Philippines have one of the highest income inequality of the

world. They built an impressive business district in Makati City and Fort Bonifacio Global

City in Taguig, while half of population lives in poverty (less than $1.25 per day).

a. LAWS RELATED TO HOUSING IN THE PHILIPPINES

CLARIFYING THE ROLE OF THE PRIVATE SECTOR IN THE URBAN

DEVELOPMENT AND HOUSING PROGRAM:

1. In RA 7279, Sec. 2, the “Declaration of State Policy and Program Objectives” –

clearly states “It shall be the policy of the State to undertake, in cooperation with

the private sector, a comprehensive Urban Development and Housing Program, …

XXX

2. As far as this Act is concerned, the private sector is the secondary and subsidiary

player in this field. Natural law and the inherent responsibility of the National

Government dictates that it is the State that must care for and provide decent

housing (and/or the means to attain it) to the underprivileged masses;

3. The role of the private sector is “cooperation” --- in that the law simply

recognizes that it is the private sector that can deliver a portion of the shelter

needs with better efficiency.

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STATEMENT OF THE PROBLEM

HAS GOVERNMENT LOST SIGHT OF THE PRIMARY OBJECTIVE?

The ultimate objective that gave impetus to the creation of R.A. 7279 over 20-odd years ago

was, and still is, the housing backlog.

This mammoth figure, at 3.9 million units, has never decreased. Every year population

growth and home depreciation combine to increase this backlog, which, some sources say,

has actually ballooned to over 5 million units.

“Uplift the conditions of the underprivileged and the homeless in urban areas, by

addressing this lack of housing, providing decent homes at affordable cost, providing

basic services, and providing employment opportunities. “– Sec. 2 (a), RA 7279

A QUESTION OF CONSTITUTIONALITY?

 Section 18 of RA 7279 imposes a burden on a sub-sector of the housing industry – the

“subdivision developers”, and no other economic sector;

 Residential condominium developers are not mentioned, nor are any other

sectors;

 One can surmise that this is, then, undue taxation, and is extremely prejudicial to a

small sub-sector of the Philippine economy;

 The IRRs and the increasingly punitive stance being taken by housing regulators are

now taking its toll on the subdivision developers, resulting in reduced production of

housing in the higher-priced strata of the housing needs pyramid;

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REVIEW OF RELATED LITERATURE

SEC 20 OF RA 7279

 INCENTIVES

in·cen·tive inˈsen(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. DONOR’S TAXES
Section 20 : Incentives for Private Sector Participating in Socialized Housing

“(d) Exemption from the payment of the following:

1) Project-related income taxes;

2) Capital gains tax on raw lands used for the project;

3) Value-added tax for the project concerned;

4) Transfer tax for both raw and completed projects; and

5) Donor’s tax for both lands certified by the local government units to have been

donated for socialized;”

There are virtually no incentives being granted. Our housing regulators and concerned

government agencies have yet to provide the IRRs that will implement this provision.

In addition, (another oversight, presumably) --- a proviso inserted at the middle of this

Section states, “Provided, finally, That all the savings acquired by virtue of this provision

shall accrue in favor of the beneficiaries subject to the implementing guidelines to be issued

by the Housing and Urban Development Coordinating Council.”.

 GOVERNMENT’S ROLE UNDER SEC. 21

PHILIPPINE GOVERNMENT’S ROLE IS TO PROVIDE, VIA THE LGUs OR THE

NATIONAL HOUSING AUTHORITY:

 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

Government’s Role -“Section 21. Basic Services. - Socialized housing or resettlement areas

shall be provided by the local government unit or the National Housing Authority in

cooperation with the private developers and concerned agencies with the following basic

services and facilities:

 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”

Clearly, the law is explicit in the “cooperation” aspect of the above provisions.

The LGU or the NHA must provide water, power, sewerage, waste disposal, and access

(right-of-way) to primary roads;

 The developer is expected to build the socialized subdivision and the houses. But the

above-mentioned facilities and utilities are to be PROVIDED by either the LGU or the

NHA;

This is the government’s contribution to the “cooperative” partnership with the

private sector.

THE ISSUE OF COMPLIANCE AND THE LACK OF IT

Definition of COMPLIANCE

a : the act or process of complying to a desire, demand, proposal, or regimen or to coercion

b : conformity in fulfilling official requirement

c: a disposition to yield to others

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 improvements to slums

as a way of compliance, is not realistic, because developers must recover such costs.
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CASE STUDY PRESENTATION

WHAT ABOUT “POOR”?

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”??? area, anything more than 800 sq. meters may

be expropriated.

Article IV, Sec 11 states: Section 11. Expropriation of Idle Lands. - All idle lands in

urban and urbanizable areas, as defined and identified in accordance with this Act, shall

be expropriated 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.

Expropriation proceedings shall be instituted if, after the lapse of one (1) year

following receipt of notice of acquisition, the owner fails to introduce improvements as

defined in Section 3(f) hereof, except in the case of force majeure and other fortuitous

events. Exempted from this ownership of which is subject of a pending litigation.”

 Unless poor Juan is able to introduce improvements (equivalent to at least 50% of

the assessed value of Juan’s land) to his property within one year of his acquisition

thereof, the LGU can identify the property as “Idle Land” and expropriate.

Even the definitions prevailing of what are urban, highly urbanized or urbanizeable

areas escapes me. Each LGU will have their own version of these definitions, which

bodes ill for poor Juan de la Cruz.

One can simply postulate that an unscrupulous local government official may utilize

this proviso to cow, coerce and extort from its citizenry, and/or further political aims,

considering anything above 300 square meters in the center of town, and any property

above 800 meters outside of the center, is fair game.

POTENTIAL OF 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.

 Whenever, and wherever, the law becomes punitive, and the implementation of a law

generates prohibitions and processes that translate into red tape, this scenario then

becomes a fertile breeding ground for potential graft and corruption.

 In such situations, the degree of difficulty also sets the amount of the largesse that may

be demanded. In the case of RA 7279, the manner of its implementation is proving to

be a bane to most, if not all, subdivision developers.

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CONCLUSION AND RECOMMENDATIONS

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 government’s primary

objective;

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. 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;

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. 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.

7. Government’s “cooperative” role is 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;

9. We recommend the removal of the accreditation process for socialized housing

developers. This unnecessarily increases HLURB’s workload, and is redundant,

considering that the Board already has registration and regulatory control of the

projects and the developers, via the CR and the LS. In addition, this is a highly

restrictive requirement in that small developers are denied the chance to participate;

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;

 6

BIBLIOGRAPHY

Fernando Bondoc Caguiñgin, CPAFormer Director,Home Guaranty Corporation and

practicing Development Consultant

Pedro C. Tario, Licensed RE Broker and Consultant, Immediate Past Chairman, CREBA